Flashcards in 12.1 Plan Procurement Deck (21):
Name contract types (3)
Time & Material (T&M)
What is a fixed price contract
Setting a fixed total price for a defined product, service or result to be provided.
Risk to seller
Seller must deliver
Buyer wants well defined
Scope change = increase in contract price.
Name fixed price contracts (3)
Firm fixed price (FFP)
Fixed price incentive fee (FPIF)
Fixed price with economic price adjustment (FP-EPA)
Firm fixed price
Fixed price incentive fee
Fixed price with economic price adjustment
What is Firm Fixed Price contract
Price for goods set upfront, not subject to change unless scope of work changes
Cost increase = seller responsible
Buyer wants well defined.
What is Fixed Price Incentive Fee contract?
Buyer & seller some flexibility
Allows deviation from performance
financial incentives = achieve agreed to metrics.
Incentives related to cost, schedule, or tech perf
Performance targets set upfront
Final price at completion
Price ceiling set, cost overage seller owns
What is a Fixed Price with Economic Price Adjustment contract
Used for seller performance spanning years
Allow pre defined final adjustments due to changed conditions (ie inflation, cost increase/decrease)
EPA relates to reliable financial index
Protect both buyer and seller
What is Cost reimbursable contract
Payments (cost reimbursement) to seller for costs incurred for completed work plus a fee representing seller profit.
May include financial incentive when seller exceeds or fall below defined objectives (ie cost, schedule, tech perf)
Flexibility to redirect seller when scope work cannot be precisely defined at start, needs to alter or high risks
Name cost reimbursable contracts (3)
Cost Plus Fixed Fee (CPFF)
Cost Plus Incentive Fee (CPIF)
Cost Plus Award Fee (CPAF)
Cost Plus Fixed Fee
Cost Plus Incentive Fee
Cost Plus Award Fee
What is a cost plus fee contract
Seller reimbursed for allowable costs for performing contract work
Seller receives fixed fee payment calc as percentage of initial est proj cost
Fee paid only for completed work
Fee does not change based on seller performance
Fee amt not change unless scope chg
What is a cost plus incentive fee contract
Seller reimburse for allowable costs for contract work
Seller receives predetermined incentive fee based on achieving perf objectives set at start.
Final cost less or greater then orig estimates, both buyer & seller share costs
Shared costs based on predetermined formula like 80/20.
What is a Cost Plus Award Fee contract
Seller is reimbursed for all legitimate costs
Majority of fee earned based on satisfaction performance criteria defined
Fee based on buyer's determination of seller's performance.
Name tools / techniques
Determine if work can be done by project team or purchased from outside source
Budget constraints influence
Available contracts types considered in buy
Examine industry and vendor capabilities
Purchasing - inputs for developing or modifying criteria used to eval seller proposals
Legal - assist with issues, terms and conditions.
Info exchange with potential bidders
Procurement Mgmt Plan "how"
Describes how a project team will acquire goods and services form outside performing org
How processes will be managed from developing to closing.
Procurement Mgmt plan guides what?
Contract types used
Risk mgmt issues
Use of independent estimates
Unilateral actions by proj mgmt team
Standardized procurement docs
Coordinating procurement with oth proj aspects
Handling long lead times
Handling make-or-buy decisions, link to est activity resources & dev sched process
Setting sched dates
Identify reqs for perf bonds or ins contracts
Establish seller direction for WBS
Establish SOW form/format
Identify pre-qual sellers
Metrics to manage contracts & eval sellers