2. Project procurement management:
1- Plan procurement (Planning)
2- Conduct procurement (execution)
3- Administer procurement (monitor & control)
4- Close procurement (closing)
3. Plan procurement
Process of documenting project purchasing decisions,
and identifying sellers selection criteria.
4. Inputs
• Scope baseline
• Requirements
documentation
• Teaming
agreement
• Risk register
• Risk –related
contract decision
• Activity resource
requirements
• Project schedule
• Activity cost
estimates
• Cost performance
baseline
• EEF
• OPA
Tools & techniques
• Make or buy
analysis
• Expert judgment
• Contract type
Outputs
• Procurement
management plan
• Procurement
statement of
work
• Make or buy
decisions
• Procurement
documents
• Source selection
criteria
• Change requests
5. Input
Project management plan: Scope baseline
Requirements documentation
Risk register
Activity resource requirements: contain
information on specific needs such as people,
equipment, or location
Project schedule: contains information on required
timelines or mandated deliverable dates.
6. Activity cost estimates: used to evaluate the
reasonableness of the bids or proposals received from
potential sellers.
Stakeholder register
EEF
OPA
7. legal contractual relationships:
Fixed-price contracts: fixed total price for a defined
product, service, may incorporate financial incentives
for achieving or exceeding selected project objectives.
buyers need to precisely specify the product or
services. (seller risk)
Firm Fixed Price Contracts (FFP).
Fixed Price Incentive Fee Contracts (FPIF)
8. Cost-reimbursable contracts: Involves payments to
the seller for all legitimate actual costs incurred for
completed work, plus a fee representing seller profit.
Scope of work cannot be precisely defined at the start
and needs to be altered, or when high risks may exist
in the effort. (buyer risk)
Cost Plus Fixed Fee Contracts (CPFF)
Cost Plus Incentive Fee Contracts (CPIF)
9. Time and Material Contracts (T&M): often used for
staff augmentation, acquisition of experts, and any
outside support.
10. FP
Buyer less management ,he know the total price
More expensive more than CR, more work to specify
SoW
11. CR
Simpler SoW, lower cost than FP
Require auditing the seller’s invoices, more work to
manage, the seller has moderate incentive to control
cost.
12. Tools & techniques
Make-or-Buy Analysis
120 is daily lease cost
1000 is investment cost with 20 daily cost
120 D = 1000 + 20 D
D=10
Expert Judgment
Market Research: includes examination of industry and
specific vendor capabilities
Meetings
13. Output
Procurement Management Plan: how a project
team will acquire goods and services from outside the
organization:
Types of contracts to be used
Handling the make-or-buy decisions
Standardized procurement documents
Procurement metrics to be used to manage
contracts and evaluate sellers
14. Procurement Statement of Work:
defines only that portion of the project scope that is to be
included within the related contract, include:
Specifications
Quantity desired & quality levels
Period of performance
Work location
Other requirements.
15. Procurement Documents: request for information (RFI),
request for proposal (RFP), invitation for bid (IFB), request
for quotation (RFQ), invitation for negotiation (IFN).
Source Selection Criteria:
Overall or life-cycle cost
Technical capability
Risk
Warranty
Past performance of sellers
19. Tools & techniques
Bidder conference
Sellers have a clear and common understanding of the
procurement requirements.
Proposal evaluation techniques:
formal evaluation review process will be defined by the
buyer’s procurement policies
Independent Estimates:
have an estimate of costs prepared by an outside
professional estimator, to serve as a benchmark on
proposed responses
20. Expert Judgment
Advertising
Analytical Techniques: identify the readiness of a
vendor to provide the desired end state, and avoid cost
overruns due to change.
Procurement Negotiations
21. Contract contents: usually most of contracts contains
the following :
Statement or work/ deliverables
Schedule baseline
Project period
Pricing
Payment terms
Warranty
Penatlies
Incentives
Insurance arrangements
Change request criteria
Acceptance criteria
Claims handling.
22. Administer procurement
Process of managing procurement relationships,
monitoring contract performance, and making
changes and corrections as needed.
23. Inputs
• Procurement
documents
• Project
management
plan
• Contract
• Performance
reports
• Approved
change requests
• Work
performance
information
Tools &
techniques
• Contract change
control system
• Procurement
performance
reviews
• Inspection &
audits
• Performance
reporting
• Payment systems
• Claim
administration
• Records
management
system
Outputs
• Procurement
documentation
• organizational
process assets
• Change requests
• Project
management
plan updates
24. Tools & techniques
Contract Change Control System: defines the
process by which the procurement can be modified. It
includes the paperwork, tracking systems, dispute
resolution procedures
Procurement Performance Reviews: review of the
seller’s progress to deliver project scope and quality,
within cost and on schedule, as compared to the
contract
Inspections and Audits: to verify compliance in the
seller’s work processes
25. Performance Reporting
Payment Systems:
Claims Administration: If the parties themselves do
not resolve a claim, it may have to be handled in
accordance with alternative dispute resolution (ADR)
(mediation, arbitration, courts)
Records Management System: The system contains
a retrievable archive of contract documents and
correspondence
26. Close procurement: process of competing each
project procurement
Inputs
• Project
management
plan
• Procurement
documentation
Tools &
techniques
• Procurement
audits
• Negotiated
settlements
• Records
management
system
Outputs
• Closed
procurement
• Organizational
process assets
updates