12. Project Procurement Management Flashcards
Define Project Procurement Management.
Includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team.
- 1 Plan Procurement Management
- 2 Conduct Procurements
- 3 Control Procurements
* PMBOK Guide, Sixth Edition, 12 - Project Procurement Management, p. 459*
12.1 Plan Procurement Management.
(P) - The process of documenting project procurement decisions, specifying the approach and identifying potential sellers.
Benefit: determines whether to acquire goods and services from outside the project, if so, what to acquire as well as how and when to acquire it
- Performed once
11.2 - Conduct Procurements.
(E) - The process of obtaining seller responses, selecting a seller, and awarding a contract.
End results = agreements and formal contracts
Benefit: Selects qualified seller and implements legal agreement for delivery
- Performed as needed
12.3 Control Procurements.
(MC) - The process of managing procurement relationships; monitoring contract performance, and making changes and corrections as appropriate; and closing out contracts.
Benefit: Ensures both seller’s and buyer’s performance meet the project’s requirements according to terms of legal agreement
- Performed throughout as needed when agreements are active
Plan Procurement Management ITTO
O - Project Document Updates
O - Procurement statement of work SOW
O - Procurement Mangement Plan
O - Procurement Strategy
O - Bid Documents
O - Make-or-Buy Decsions
O - Independent Cost Estimates
O - Change Requests
O - Source Selection Criteria
O - OPAs updates
12.2 - Conduct Procurements - ITTO
O - Agreements = contracts
O - Selected Sellers - those who have been determined to be in competitive range based on proposal or bed evaluation
O - Change Requests
O - PM Plan Updates
O - Project Documents Updates
O - OPA updates
12.3 Control Procurements - ITTO
O - Work Performance Info
O - Change Requests
O - PM Plan Updates
O - Project Documents Updates
O - Procurement Documentation Updates
O - Closed Procurements
O - OPAs Updates
Identify key concepts for Project Procurement Management.
12.3 Identify key concepts and tailoring considerations for project procurement management, including trends and emerging practices
tl;dr
- [no need to be an expert]
- [agreement between buyer and seller]
- [comply with the law]
- [specific to the project]
- [legally binding]
- [multiple contracts are possible]
quotes
- [no need to be an expert] The project manager should be familiar enough with the procurement process to make intelligent decisions regarding contracts and contractual relationships.
- [agreement between buyer and seller] Procurement involves agreements that describe the relationship between a buyer and a seller. Agreements can be simple or complex, and the procurement approach should reflect the degree of complexity. An agreement can be a contract, a service-level agreement, an understanding, a memorandum of agreement, or a purchase order.
- [comply with the law] Agreements must comply with local, national, and international laws regarding contracts.
- [specific to the project] The project manager should ensure that all procurements meet the specific needs of the project, while working with procurement specialists to ensure organizational policies are followed.
- [legally binding] The legally binding nature of an agreement means it will be subjected to a more extensive approval process, often involving the legal department, to ensure that it adequately describes the products, services, or results that the seller is agreeing to provide, while being in compliance with the laws and regulations regarding procurements.
- [multiple contracts are possible] A complex project may involve multiple contracts simultaneously or in sequence. The buyer-seller relationship may exist at many levels on any one project, and between organizations internal to and external to the acquiring organization.
PMBOK Guide, Sixth Edition, Appendix X4 - X4.9 - Key Concepts for Project Procurement Management, p. 678
Identify tailoring considerations for Project Procurement Management.
- Complexity of procurement. Many procurements, different procurements, etc
- Physical location.
- Governance and regulatory environment.
- Availability of contractors.
trends and emerging practices for Project Procurement Management.
- sAdvances in tools. In the contruction/engineering/infrastructure field, the increasing use of the building information model (BIM) in software tools has been shown to save significant amounts of time and money on projects using it.
- More advanced risk management. An increasing trend in risk management is to write contracts that accurately allocate specific risks to those entities most capable of managing them. …Contracts may specify that risk management be performed as part of the contract.
- Changing contracting processes. Theres significant growth in megaprojects in the past several years, particularly in the areas of infrastructure development and engineering project. …For these projects, the use of internationally recognized standard contract forms is increasing in order to reduce problems and claims during execution.
- Logistics and supply chain management. For long-lead items, both the manufacture of the items and their transportation to the project site become schedule-drivers. …For these projects, long-lead items may be procured in advance of other procurement contracts to meet the planned project completion date.
- Technology and stakeholder relations. Publicly funded projects are under increasing scrutiny. …Some projects have discovered that the use of webcams minimizes disputes relating to the construction work on site, as the websam has recorded the events, so there should be no disagreement about the facts of the matter.
- Trial engagements. Some projects will engage several candidate sellers for initial deliverables and work products on a paid basis before making the full commitment to a larger portion of the project scope.
PMBOK Guide, Sixth Edition, 12 - Project Procurement Management, p. 463-464
Identify the various types of fixed-price contracts and agreements.
12.4 Identify various types of contracts, agreements, and source selection methods
-
Fixed-price contracts - setting a fixed total price for a defined product, service, or result to be provided
- Firm fixed price (FFP) - the price for goods is set at the outset and not subject to change unless the scope of work changes
- Fixed price incentive fee (FPIF) - allows for deviation from performance, with financial incentives tied to achieving agreed-upon metrics
- Fixed price with economic price adjustments (FPEPA) - with a special provision allowing for predefined final adjustments to the contract price due to changed conditions
PBMOK Guide, Sixth Edition, 12.1.1.6 - Organizational Process Assets, p. 471
Identify the various types of cost-reimbursable contracts and agreements.
12.4 Identify various types of contracts, agreements, and source selection methods
-
Cost-reimbursable contracts - involves payments (cost reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit
- Cost plus fixed fee (CPFF) - receives a fixed-fee payment calculated as a percentage of the initial estimated project costs
- Cost plus incentive fee (CPIF) - receives a predetermined incentive fee based on achieving certain performance objectives as set forth in the contract
- Cost plus award fee (CPAF) - the majority of the fee is earned based on the satisfaction of certain broad subjective performance criteria that are defined and incorporated into the contract
PBMOK Guide, Sixth Edition, 12.1.1.6 - Organizational Process Assets, p. 472
Identify the three types of contracts and agreements.
12.4 Identify various types of contracts, agreements, and source selection methods
- Fixed-fee
- Cost-reimbursable
- Time and materials
PBMOK Guide, Sixth Edition, 12.1.1.6 - Organizational Process Assets, p. 471-472
Define a time and materials (T&M) contract.
12.4 Identify various types of contracts, agreements, and source selection methods
A hybrid type of contractual arrangement with aspects of both cost-reimbursable and fixed-price contracts
PBMOK Guide, Sixth Edition, 12.1.1.6 - Organizational Process Assets, p. 472
Identify the various source selection methods.
12.4 Identify various types of contracts, agreements, and source selection methods
- Least cost
- Qualifications only
- Quality-based/highest technical proposal score
- Quality and cost-based
- Sole source
- Fixed budget
PMBOK Guide, Sixth Edition, 12.1.2.4 - Source Selection Analysis, pp. 473-474
