Flashcards in Procurement Deck (33):
Firm Fixed Price Contracts or
Fixed Price Incentive Fee Contracts - PMBOK
Fixed Price incentive Firm Target - PowerPoint
Fixed Price with Economic Price Adjustment Contracts
Fixed Price Contracts
Set a fixed total price for a defined product, service, or result to be provided.
Involves payments (costs reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit.
Cost Plus Fixed Fee Contracts or
Cost + Fixed Fee
Cost Plus Incentive Fee Contracts or
Cost + Incentive Fee
Cost Plus Award Fee Contracts or
Cost + Award Fee
Cost + % of Cost
Illegal in most states, including Alaska
Time and Materials Contracts (T&M)
Hybrid of fixed price & cost-reimbursable
Fixed Unit Prices (e.g. $/hr, &/cy)
Guaranteed max with split savings
How can you prevent unlimited cost growth with T&M contracts?
Not-to-exceed values and time limits
What is Make-or-Buy Analysis?
General management technique to determine whether particular work can best be accomplished by the project team or should be purchased from outside sources.
What 2 factors should exist if you intend to use Fixed Price?
1. Firm scope of project deliverables
2. Firm scope of work to create deliverables
Statement of Work
What does the Procurement SOW describe?
It describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results.
What information can be included in a Procurement SOW?
Specifications, quantity desired, quality levels, performance data, period of performance, work location, and other requirements.
Which procurement items require a SOW?
Each individual procurement item requires a SOW; however, multiple products or services can be grouped as one procurement item within a single SOW.
What should a Make-or-Buy Analysis consider?
All related costs - direct & indirect.
Both the actual out-of-pocket costs to purchase the product, as well as the indirect costs of supporting the purchasing process and purchased item.
What should you consider when making a "Buy" decision?
Cost (less $)?
Augment labor force
Maintain multiple sources
What should you consider when making a "Make" decision?
Cost (less $)?
Integrations of operations
Idle existing capacity
Stabilize work force
How is risk divided between the customer & seller between FP and CP contracts?
Will have to look this up
What are the Plan Procurement Management Tools and Techniques?
What might a Procurement SOW include?
Specifications, Quantity desired, Quality levels, Performance data, Period of performance, work location and other requirements.
What is the goal of Procurement Negotiations?
Clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached prior to signing the contract.
"Negotiate a price to share the risk"
What should Procurement Negotiations cover or include?
Responsibilities, authority to make changes, applicable terms & governing law, technical & business management approaches, proprietary rights, contract financing, technical solutions, overall schedule, payments & price.
What is a contract?
...a mutually binding legal agreement that obligates the seller to provide the specified products, services, or results, and obligates the buyer to compensate the seller.
Alternative dispute resolution
Method can be decided as part of the procurement award.
What is "Control Procurements?"
The process of managing procurement relationships, monitoring performance, and making changes & corrections to contracts as needed.
What process management processes are applied within Control Procurement?
Direct and Manage Project Work - authorize work at appropriate time
Control Quality - inspect & verify adequacy of the product
Perform Integrity Change Control - assure that changes are properly approved and that all those with a need to know are aware of such changes.
Control Risk - ensure that risks are mitigated.
What is Source Selection Criteria?
Developed and used to rate or score seller proposals. Can be subjective or objective.
Name some possible source selection criteria.
Understanding of need
Overall or life-cycle-cost
Production capacity and interest
Business size and type
Intellectual property rights
What else might the seller be called?
Contractor, subcontractor, vendor, service provider, or supplier.