Project Procurement Management
Processes necessary to purchase or acquire products, services, or results needed from outside the project team.
Project Procurement Management Processes
Plan Procurements, Conduct Procurements, Administer Procurements, Close Procurements
Plan Procurements
Process of documenting project purchasing decisions, specifying the approach, and identifying potential sellers
Conduct Procurements
Process of obtaining seller responses, selecting a seller, and awarding a contract
Administer Procurements
Process of managing procurement relationships, monitoring contract performance, and making changes and corrections as needed
Close Procurements
Process of completing each project procurement
Contract
Represents a mutually binding agreement that obigates the seller to provide the specific products, services, or results, and obligates the buyer to provide monetary or other valuable consideration
A contract can also be called ?
An agreement, an understanding, a subcontract, or a purchase order
A procurement contract will include ?
terms and conditions, and may incorporate other items that the buyer specifies to establish what the seller is to perform or provide
Entering into a contract for products or services is ?
1 method of allocating the responsibility for managing or sharing potential risks
Teaming Agreements
Legal contractual agreements between 2 or more entities to form a partnership or joint venture, or some other agreemnet as defined by the parties. The agreement defines buyer-seller roles for each party
Make-or Buy Analysis
A general management technique used to determine whether particular work can best be accomplished by the project team or must be purchased from outside sources. Sometimes project team capability may exist within the project organization, but is not availa
The Firm-Fixed-Price
Type of contractual arrangement most typically preferred, which is encouraged
Fixed-price Contracts
this type of contract involves setting a fixed total price for a defined product or service to be provided. They may incorporate financial incentives for achieving or exceeding select project objectives (bonuses)
Firm Fixed Price Contracts (FFP)
most common, Favored by most buying organizations because the price of goods is set at the outset and not subject to change unless the scope of work changes
Fixed Price Incentive Fee Contracts (FPIF
this fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation from performance, with financial incentives tied to achieving agreed to metrics
Fixed Price with Economic Price Adjustment Contracts (FP-EPA)
This contract type is used whenever the seller's performance period spans a considerable period of years, as is desired with many long-term relationships.
Cost-reimbursable Contracts
this category of contact involves payments (cost reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit.
A contract that gives the project flexibility to redirect a seller whenever the scope of work cannot be precisely defined at the start and needs to be altered, or when high risks may exist in the effort is a ?
Cost-Reimbursable contract
Cost Plus Fixxed Contract (CFPP)
Seller is reimbursed for all allowable cost for performing the contract work, and reeives a fixed fee payment calculated as a percentage of the initial estimated project cost.
Cost Plus Incentive Fee Contracts (CPIF)
Seller is reimbured for all allowable costs for performing the contract work and recieves a predetermined incentive fee based upon achieving certain performance objectives as set forth in contract
Cost Plus Award Fee Contracts (CPAF)
Seller is reimbursed for all legitimate costs, but the majority of the fee is onl earned based on the satisfaction of certain broad subjective performance criteria defined and incorporated into the contract
Time & Materials Contracts (T&M)
Time and material contracts are a hybrid type of contractual arrangement that contains aspects of both cost-reimbursable and fixed-price contracts.
T&M contracts can ?
increase on contract value as if they were cost-reimbursable contracts.
Statement of Work (SOW)
the SOW for each procurement is developed from the project scope baseline and defines only that portion of the project scope that is to be included within the related contract. the procurement SOW describes the procurement item in sufficient detail to all
Each individual procurement items requies ?
A statement of Work SOW, however, multiple products or services can be grouped as 1 procurement item within a single SOW
Make-or-buy Decisions
Document the conclusions reached regarding what project products, services, or results will be acquired from outside the project organization, or will be performed internally by the project team.
Procurement Documents
Used to solicit proposals from prospective sellers. Terms such as bid, tender, or quotation are generally used.
Issusing a procurement request to potential sellers to submit a proposal or bid is normally done how?
In accordance with the policies of the buyer's organization, which can include publication of the request in public newspapers, in trade journals, in public registries, or on the internet.
Contduct Procurements
Process of obtaining seller responses, selecting a seller, and awarding a contract. In this process, the team will receive bids or proposals and will apply previously defined selection criteria to select 1 or more sellers who are qualified to perform the
Teaming Agreement
The buyer and seller roles have already been decided by executive management.
Bidding Conferences
Sometimes called contractor conferences, vendor conferences, and pre-bid conferences they are meeting between the buyer and all prospective sellers prior to submittal of a bid or proposal
Independent Estimates
The procuring organization may elect to either prepare its own independent estimate, or have an estimate of costs prepared by an outside professional estimator, to serve as a benchmark on proposed responses.
Significant differences in cost estimates can be an indication of what?
that the procurement statement of work was deficient, ambiguous, and/or that the prospective sellers either misunderstood or failed to respond fully to the procurement statement of work.
Negotiations
clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached prior to signing the contract.
Is the project manager always the lead negotiator on procurements?
NO
Alternative Dispute Resolution (ADR)
Method that can be decided in advance as a part of the procurement award.
Administer Procurements
Process of managing procurement relationships, monitoring contracr performance, and making changes and corrections as needed
Due to varying organizational structures, many organizations treat contract administration how?
As an administrative function separate from the project organization.
What is 1 concern when making payments to suppliers?
That there is a close relationship of payments made to the work accomplished
Can contracts be amended at any time prior to contract closure?
Yes, with mutual consent, in accordance with the change control terms of the contract. Such amendents may not always be equally beneficial to both the seller and buyer.
Procurement Performance Review
It is a structured review of the seller's progress ro deliver project scope and quality, within cost and on schedule, as compared to the contract.
Contested changes and potential constructive changes
Are those requested changes where the buyer and seller cannot reach an agreement on compensation for the change, or cannot agree that a change has occured.
Correspondance
Contract terms and conditions often require written documentation of certain aspects of buyer/seller communications, such as the need for warnings of unsatisfactory performance and requests for contract change or clarification
Payment Schedules and Requests
All payments should be made in accordance with the procurement contract terms and conditions
Seller Performance Evaluation Documentation
this is prepared by the buyer. Such performance evaluations document the seller's ability to continue to perform work on the current contract, indicate if the seller can be allowed to perform work on future projects, or rate how well the seller is perform
Close Procurements
Process of completing each project procurement. It supports the Close Project or Phase process.
Early Termination of a Contract
A special case of procurement closure that can result from a mutual agreement of both parties, from the default of 1 party, or for convenience of the buyer if provided for in the contract.
Final Equitable Settlement
the settlement of all outstanding issues, claims, and disputes by negotiation is a primary goal.
Procurement file
A complete set of indexed contract documentation, including the closed contract, is prepared for inclusion with the final project files.
Deliverable Acceptance
the buyer, usually through its authorized procurement administrator, provides the seller with formal written notice that the deliverables have been accepted or rejected.
Lessons Learned Documentation
Lessons learned, what has been experienced, and process improvement recommendations should be developed for the project file to improve future procurements.