Flashcards in Chapter 12 Project Procurement Management Deck (26):
What is the formula for price?
Price = Cost + Profit
Price is a business decision about what the buyer is expected to pay for the services, product or results.
What are some examples of source selection criteria (a tool and technique for Plan Procurement Management)?
Understanding of need
Overall or life-cycle cost
production capacity and interest
Business size and type
Past performance of sellers
Intellectual property rights
Which factors are considered in a make-or-buy analysis?
Technical ability of the organization to do the work
Capacity of the organization's facilities
Time required to completed the project.
What are some of the components of a procurement management plan?
Procurement documents to be used
Procedure for managing multiple vendors
Processes for handling make-or-buy decisions
Outline of requirements for contract WBS
List of prequalified sellers
Metrics to be used to evaluate and manage sellers.
What are the 3 main types of contracts?
1. Fixed-price contracts
2. Cost-reimbursable contracts
3. Time and materials contracts
What are the 4 Project Procurement Management processes?
1. Plan Procurement Managment
2. Conduct Procurement
3. Control Procurement
4. Close Procurement
What is procurement?
Purchasing goods, services, or results typically from outside the organization.
What are some other terms for contract?
Contract change control system, procurement performance reviews, inspection and audits, performance reporting, payment systems, claims administration, and records management systems are tools and techniques for which Project Procurement Management process?
Which type of items or work should not be contracted out?
Products that require strict quality control
What are the characteristics of a cost-reimbursable contract?
The seller is reimbursed for actual costs, plus profit.
The buyer has the greatest risk for price unless a ceiling is established on cost and/or price.
It is used when there is uncertainty about the project or when the buyer is looking for a solution rather than a specified product.
Incentives or penalties can be included.
What are 2 noncompetitive forms of procurement?
1. Sole source: there is only one provider of the needed service or product.
2. Single source: there are multiple sources from which the buyer selects on, based upon varius reasons or criteria.
What is a teaming agreement?
A legal, contractual agreement between tow or more entities to form a partnership or joint venture.
What are some other terms for seller?
What is PTA (point of total assumption)?
PTA is not-to-exceed cost, set by the buyer, in a cost-plus contract. When the actual costs differ from the estimated costs, the buyer and seller split the difference along agreed upon split. Any costs above the PTA must be paid solely by the seller. The formula for PTA is:
PTA = [ceiling price - total price/buyer share] + Total cost
What is the purpose of the contract SOW?
To describe the work the contractor will provide in enough detail that sellers can determine whether they can provide the needed services.
What are the characteristics of a time and materials contract?
The buyer and seller both share the risk of costs.
It is a cross between fixed-price and cost-plus contracts.
The unit price is established but not the quantity.
The scope of work does not have to be known.
The total price of the contract is initially unknown.
What are some characteristics of a contract?
*It is a formal, mutually binding agreement between parties.
*Terms are enforceable by the legal system.
*Changes must be formally controlled and in writing.
*All requirements should be stated in the contract.
*All contractual requirements must be met.
*All requirements including reporting requirements, payment terms, ownership and copyright terms, etc.. must be documented in the contract.
Which Project Procurement Management process occurs in the Closing process group?
Which procurement documents are generally used with each type of contracts?
RFB (request for bid), IFB (invitation for bid) for fixed-price contracts.
RFQ (request for quote) for time and materials contracts
RFP (request for proposal) for cost plus contracts
What are characteristics of a fixed-price contract?
*Risk (of cost) is highest for the seller
*It is the most common type of contract
*The seller sets a fixed price, including costs to compensate for risks.
*If the scope is not well-defined, the buyer risks not getting what was needed; the seller risks time and cost.
*Incentives or penalties can be added.
What are the 5 elements of a contract? Explain them.
*C = Capacity: The authority to sign contracts for your organization.
*C = Consideration: Money paid for the work performed under the contract
*O = Offer" What the buyer is willing to pay the seller for the work of the contract.
*L = Legal: Purpose for which the work will be complete.
*A = Acceptance: What the seller agrees to take in payment for the work performed.
What is a "proposal"?
Also called a bid, tender, or quote, a proposal is a document prepared by the seller to explain the costs, services, terms, etc., by which the seller will meet the terms of the contract with the buyer.
What are some other terms for "buyer"?
Bidder conference, proposal evaluation techniques, independent estimates, expert judgement, advertising, analytical techniques and procurement negotiations are tools and techniques for which Project Management Process?