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PMP > 12. Procurement > Flashcards

12. Procurement Flashcards

1
Q

What is the process of procurement mgt?

A
  1. Plan procurement mgt
  2. Conduct procurements
  3. Control procurements
  4. Close procurements
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2
Q

What are the inputs to the plan procurement mgt process?

A
  1. Project mgt plan
  2. Requirements documentation
  3. Activity resource requirements
  4. Enterprise environmental factors
  5. Organizational process assets
  6. Risk register
  7. Stakeholder register
  8. Any procurements already in place
  9. project schedule
  10. Initial cost estimates for work to be procured
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3
Q

What are the key outputs of the plan procurement mgt process?

A
  1. Make-or-buy decisions
  2. procurement mgt plan
  3. procurement statements of work
  4. procurement documents
  5. Source selection criteria
  6. Change request
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4
Q

What are the key outputs of conduct procurements process?

A
  1. Select sellers
  2. Signed contracts
  3. Resource calendars
  4. Change requests
  5. Updates to project mgt plan and project documents
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5
Q

What are the key outputs of the control procurements process?

A
  1. Substantial completion of contract requirements and deliverables
  2. Work performance information
  3. Change requests
  4. Updates to project mgt plan and project documents
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6
Q

What are the key outputs of the close procurements process?

A

1- Formal acceptance
2- Close procurements
3- Update to lessons learned and records (part of organizational process assets)

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7
Q

What is an agreement?

What is a contact?

A

Agreement: A document or communication that outlines internal or external relationship and their intentions.

Contract: A type of written or verbal agreement, typically created with an external entity, where there is some exchange of goods or services for some type of compensation (usually monetary); a contract forms the legal relationship between the entities.

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8
Q

What is the difference between centralized and decentralized contacting?

A

Centralized: There is one procurement department, and the procurement manager handles procurements for many projects.

Decentralized: A procurements manager is assigned to one project full-time and reports directly to the project manager.

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9
Q

What are the advantages and disadvantages of centralized contracting?

A

Advantages:

  • Higher level of procurement expertise
  • Standardized practices provide efficiency
  • Clear career path in procurement mgt
  • Continuous improvements, training, and shared lessons learned.

Disadvantages:

  • Procurement manager’s attention is divided among many projects
  • More difficult for the project manager to obtain contacting help when needed.
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10
Q

What are the advantages and disadvantages of decentralized contracting?

A

Advantages:

  • Project manager has easier access to contracting expertise
  • Procurement manager has more loyalty to the project
  • Procurement manager has better understanding of the project needed

Disadvantages:

  • No hime department for the contracts person after the project.
  • Difficult to maintain a high level of contracting expertise
  • Duplication of expertise/inefficient use of procurement resources
  • Contracting processes aren’t standardized
  • No career path as a procurement manager in the company
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11
Q

What is required for a legal contract?

A
  • Offer
  • Acceptance
  • Consideration
  • Legal capacity
  • Legal purpose
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12
Q

What is included in a contact?

A
  • Legal terms
  • Business terms regarding payments
  • Reporting requirements
  • markting literature
  • Proposal
  • Procurement statement of work
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13
Q

Describe the project manager’s role in procurement

A
  • Understand the procurement process
  • Make sure the contract contains all the scope of work and project mgt requirements
  • Incorporate mitigation and allocations of risks into the contract
  • Help tailor the contract to the project.
  • Be involved during contact negotiations to protect the relationship with the seller.
  • Make sure all the work in the contact is done, not just the technical scope.
  • Work with the procurement manager to manage changes to the contract.
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14
Q

What is a procurement mgt plan?

A

A plan that documents how procurements will be planned, executed, controlled and closed

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15
Q

What is make-or-buy analysis?

A

Deciding whether the performing organization should be do the project work itself or outsource some or all of the work.

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16
Q

What are the three board categories of contacts?

A
  1. Cost-reimbursable (CR)
  2. Fixed price (FP)
  3. time and material (T&M)
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17
Q

What is a cost-reimbursable contract?

A

All the seller’s costs are reimbursed by the buyer

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18
Q

What is a fixed- price contract?

A

There is one set fee for accomplishing all the work.

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19
Q

What is a time and material contract?

A

The buyer on a per-hour or per-item basis

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20
Q

What is a cost pus fixed fee (CPFF) contract?

A

All the seller’s costs are reimbursed by the buyer, and fixed fee is negotiated for the seller’s profit.

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21
Q

What is a cost plus percentage of cost (CPPC) contract?

A

All the seller’s costs are reimbursed by the buyer, and the buyer also pays a specified prearrange of those costs as a fee or profit.

22
Q

What is a cost plus incentive fees (CPIF) contract?

A

The seller’s costs are reimbursed by the buyer, and the buyer and seller share any costs saving or overruns

23
Q

What is a cost plus award fee (CPAF) contract?

A

all the seller’s costs are reimbursed by the buyer, and the buyer pays a base fee plus an award amount (a bonus) based on performance.

24
Q

What is a fixed price incentive fee (FPIF) contact?

A

The buyer pays a fixed price plus an additional fee if the seller exceeds performance criteria stated in the contract

25
Q

What is a fixed price award fee (FPAF) contract?

A

The buyer pays a fixed price plus an award (paid in full or in part) based on the seller’s performance level.

26
Q

What is fixed price economic price adjustment (FPEPA) contact?

A

A fixed-price contract with a build-in economic price adjustment to cover cost increases due to future economic conditions

27
Q

What is a purchase order?

A

A unilateral contract (one side terminal) typically used for buying commodities

Purchase order become contracts once they are accepted by the seller’s fulfillment of the contract.

28
Q

What do incentives accomplish?

What might incentives be used for?

A

They align the seller’s motivations with the buy’s objective

  • Time
  • Cost
  • Quality
  • Scope
29
Q

Who has the cost risk in a cost-reimbursable contract?

Who has the cost risk in a fixed-price contract?

A

Cost-reimbursable: The risk is borne by the buyer

Fixed price: The risk is borne by the seller

30
Q

What is the ceiling price?

A

The highest price the buyer will pay

It’s a condition of the contract that must be agreed to by both parties before signing.

31
Q

What is the point of total assumption?

A

For fixed price incentives fee contracts, the amount above which the seller bears all the loss of a cost overrun.

32
Q

Describe the three different type of procurement statements of work

A

A. Performance: Conveys what the final product should be accomplish.

B. Functional: Conveys the end purpose or result (the minimum essential characteristics of the product.

C. Design: Conveys exactly what work is to be done and how it should be completed.

33
Q

What are the procurement document?

A
  • Request for proposal (RFP)
  • Invitation for bid (IFB)
  • Request for quotation (RFQ)
  • A request for information (RFI) is sometimes considered a procurement document, though it does not really belong in this category.
34
Q

What is a nondisclosure agreement?

A

An agreement between the buyer and prospective sellers identifying the information or document they will hold confidential and control, and who in the organization will have access to the confidential information

35
Q

What are standard contract terms and conditions?

What are special provisions?

A

Standard contract terms and conditions terms and conditions that are used for all contracts within the company.

Special provisions: Terms and conditions created for the unique needs of the project.

36
Q

What is a letter of intent?

A

A letter from the buyer, without legal binding, saying the buyer intends to hire a seller

37
Q

What docs privity means?

A

A contractual relationship between two or more companies.

38
Q

What does noncompetitive procurements mean?

A

The work is awarded to a signal source or a sole source without competition.

39
Q

What are source selection criteria?

When are these criteria created, and when are they used?

A

The factors the buyer will use to evaluate (weigh or score) responses from the sellers.

They are created during the plan procurement mgt process, and are sued during the conduct procurements process to pick a seller.

40
Q

What is a bidder conference?

What should a project manager watch our for during a bidder conference?

A

A meeting with prospective sellers to make sure they all understand procurement and have a chance to ask questions

Watch for:

  • Collusion
  • Sellers not asking a questions in front of the competition

Make sure all the questions and answers are documented and distributed to all the potential sellers.

41
Q

What is a qualified seller list?

A

A list of sellers that have been preapproved

42
Q

What are the objectives of negotiation?

A

Obtain a fair and reasonable price

Develop a good relationship with the seller

43
Q

What are some examples of negotiations tactics?

A
  • Attach
  • Personal insults
  • Good guy / Bad guy
  • Deadline
  • Lying
  • Limited authority
  • Missing man
  • Fair and reasonable
  • Delay
  • Extreme demands
  • Withdrawal
  • Fait accompli
44
Q

Why might there be conflict between the contract administrator and the project manger?

A

The contract administrator is the only one with the power to change the contract.

45
Q

What is a contract change control system?

A

A system created to control changes to the contract

46
Q

What is the purpose of a procurement performance review ?

A

Verify that the seller is performing as they should

Identify what the buyer can do to help the seller do the work

Determine if any changes are needed to improve the buyer-seller relationship and the process they are using.

47
Q

Define claims administrator?

A

Managing clams (request by the seller for compensation from the buyer)

48
Q

What is the key function of a records mgt system

A

Maintain and index of contract documentation and records so that they can be retrieved when needed

49
Q

What occurs during the close procurement process?

A
  1. Product validation
  2. procurement negotiation
  3. financial closure
  4. procurement audit
  5. update to records
  6. final contract performance reporting
  7. Documentation of lessons learned
  8. Creation of procurement file
50
Q

What is a procurement audit?

A

A structured review of the procurement process and identification of lessons learned to help to future procurements

PMP (15 decks)

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