Procurement Flashcards
What does the final inspection of closing procurements have?
Request Final Inspection reports for all vendor supplied materials.
Input: QC measurements: Results from testing , to see if we’ve met reqs.
Output: Quality Reports: For all quality issues managed or escalated, recommendations for improvement, and summary of QC findings. Any major outstanding defects?
What does the Control Procurements processs do?
This is where we manage procurement relationships, ensure contracts performing as needed, and closing out contracts.
TT:
* Claim Administration
* Data Analysis: Get data on procurement vendor see how they are performing
-Performance Reviews
-EV analysis
-Trend Analysis: Might forecast EAC for CPI see if we’re on track.
-Inspection: Deliverable
-Audit: Check vendors process following to what we agreed to.
Output: Closed Procurements: When the deliverables have been verified(qlty checked)[QC] and validated(accepted by the customer)[Validate Scope]. * We will provide the seller with formal written notice that the contract has been completed. (And all claims hopefully closed and deliverables validated by now.) * Reqs for formal procurement closure are usually defined in the terms and conditions of the contract and are included in our Project MP*
Ordered Steps/Actions of Procurement?
Fill in later
What happens when we plan procurement process?
This is where we create our Procurement Strategy
* Including deciding if we need to purchase something from outside the project in the first place w/ make or buy analysis
If we do buy outside org, we create our:
* Procurement Strategy
* Procurement SOW
* Source Selection Criteria
* Bid Documents
Procurement Strategy Steps(MEMORIZE)
1. Prepare SOW: What we want vendor to deliver.
2. Prepare High Level Cost Estimate: So we have something to compare bids too.
3. Advertise the Opportunity: Or Bidder Conferences, to give info they need.
4. ID List Qualified Sellers
5. Prepare and issue bid documents: What do we want Quote, Proposal, Info
6. Receive and Review Quality and Cost Proposals
7. Finalize and sign the Contract
What are the procurement Strategy Steps?
- Prepare SOW: What we want vendor to deliver. So they know what to quote us.
* Developed from project scope baseline and defines the scope to be included in contract.
* Might include (TOR)Terms of Reference-Agreement btw parties - Prepare High Level Cost Estimate: So we have something to compare bids too.
- Advertise the Opportunity: Or Bidder Conferences, to give info they need.
- ID List Qualified Sellers
- Prepare and issue bid documents: What do we want Quote, Proposal, Info
- Receive and Review Quality and Cost Proposals
- Finalize and sign the Contract
What is a Terms of Reference(TOR)?
In A procurement SOW given to vendor to quote us on it may include a Terms of Reference.
- Tasks the contractor is required to perform.
- Standards the contractor will fulfill
- Data that needs to be submitted for approval
- Detailed list of all data and services that will be provided to the contractor by the buyer.
* What data and services will we provide to contractor.
5.Schedule for submission and review/approval time.
* How long are we giving them to get back to us w/ the contract and the terms and everything being approved.
What are the Firm Fixed Price Contracts?
Fixed Prices Contracts: Buyer pays fixed amount regardless of sellers cost(riskier for seller) they quoted us, that’s what we pay. SOW usually defined.
Firm Fixed Price(FFP): Fixed total priced for defined product, used when the requirements are well defined no significant changes to the scope are expected.
Fixed Price Incentive Fee(FPIF): A price ceiling is set, and all costs above the price ceiling are the responsibility of the seller.
May have financial incentive tiedto achieving agreed upon metrics(usually basedon cost, sched, quality)
If Seller goes over budget, over cost, or over sched, then that’s their responsibility.
Seller Takes on risk
Fixed Price w/ Econ Adj: Fixed price, w/ special provision allowing for predefined final adjustments to the contract price based on changes(currency or inflation.
What are the different types of Contracts?
OPAs:
Fixed Prices Contracts: Buyer pays fixed amount regardless of sellers cost(riskier for seller) they quoted us, that’s what we pay. SOW usually defined.
1.Firm Fixed Price(FFP): Fixed total priced for defined product, used when the requirements are well defined no significant changes to the scope are expected.
2.Fixed Price Incentive Fee(FPIF): A price ceiling is set, and all costs above the price ceiling are the responsibility of the seller.
* May have financial incentive tiedto achieving agreed upon metrics(usually basedon cost, sched, quality)
* If Seller goes over budget, over cost, or over sched, then that’s their responsibility. Seller Takes on risk
3.Fixed Price w/ Econ Adj: Fixed price, w/ special provision allowing for predefined final adjustments to the contract price based on changes(currency or inflation.
Cost-Reimbursable Contracts: When sow not well defined or subject to frequent change
1.Cost Plus Fixed Fee: Seller reimbursed for all allowable costs for performing the contract work and receives a fixed fee payment(usually % of initial estimate proj costs)
2.Cost Plus Incentive Fee: Seller reimbursed for all allowable costs for performing contract work and receives a predetermined incentive fee based on achieving certain performance objectives.
3.Cost Plus Award Fee: Seller reimbursed for all legitimate costs, but the majority of the fee is earned on the subjective satisfaction of certain broad subjective performance criteria.
4.XX Evil: CPPC- Cost plus percentage costs: Reimburse costs + % of total costs incurred( seller incentivized to spend more to make more. Bad
Time an Materials: Seller reimbursed a cost for their time, plus materials to create the product. Often used when a precise SOW cannot be quickly made.
Contract Types are what type of project resource?
OPA’s: Can tap into existing processes or templates in our org.
What are the Cost Reimbursable Contracts?
Cost-Reimbursable Contracts: When sow not well defined or subject to frequent change
1.Cost Plus Fixed Fee: Seller reimbursed for all allowable costs for performing the contract work and receives a fixed fee payment(usually % of initial estimate proj costs)
2.Cost Plus Incentive Fee: Seller reimbursed for all allowable costs for performing contract work and receives a predetermined incentive fee based on achieving certain performance objectives.
3.Cost Plus Award Fee: Seller reimbursed for all legitimate costs, but the majority of the fee is earned on the subjective satisfaction of certain broad subjective performance criteria.
What’s the difference between Time and materials contract and the other 2 types(fixed and Cost Reimb)?
Time an Materials: Seller reimbursed a cost for their time, plus materials to create the product. Often used when a precise SOW cannot be quickly made.
What Contract Type is Prohibited(not allowed?)
CPPC(Cost Plust Cost Percentage)
* Cost Reimbursement contract where seller is reimbursed for all allowable costs incurred during project and is paid an additional amount representing percentage of these costs.
* Reimburse seller for all allowable costs incurred during project work.: Labor, materials, equip.
* Percentage of Cost Fees: Seller paid a fee that is calculated as a percentage of total allowable costs. Seller s profit.
* Prohibited: Seller is not incentivized to keep costs low.
What are the 4 types of agreements?
Memorandum of Understanding: A non-binding agreement outlining the mutual understanding and intentions of the parties involved in a project.
Letters of Agreement(LoA): A formal but typically non-binding document that outlines specific terms and conditions agreed upon by the parties.
Service Level Agreement(SLA): A legally binding contract that defines the level of service expected from a service provider.
Letters of Intent(LoI): A non-binding document expressing the intent to enter into a formal agreement.
Binding Nature:
* MoU: Non-binding
* LoA: Can be binding or non-binding
* SLA: Legally binding
* LoI: Non-binding
*
Purpose and Use:
* MoU: Preliminary mutual understanding and intentions, framework for cooperation
-Outlines mutual understanding and intentions of parties involved.
-Non-Binding
* LoA: Documenting specific agreed terms, intermediate step before a contract
-More detailed than MoU
-Binding or non binding
* SLA: Ensuring service quality and accountability. Specific measurable performance stds and responsibilities.
-Legally binding.
* LoI: Expressing intent to negotiate and formalize an agreement
-Non Binding
Early stage negotiations, sets stage for formal contract.
Detail Level:
* MoU: High-level, broad terms
* LoA: Specific terms and conditions
* SLA: Detailed performance metrics and service standards
* LoI: Basic terms and intent
1.
What are the differences between all 4 agreements types?
1. Memorandum of Understanding (MoU).
2. Letters of Agreement (LoA)
3. Service Level Agreement (SLA)
4. Letters of Intent (LoI)
Binding Nature:
* MoU: Non-binding
* LoA: Can be binding or non-binding
* SLA: Legally binding
* LoI: Non-binding
*
Purpose and Use:
* MoU: Preliminary mutual understanding and intentions, framework for cooperation
-Outlines mutual understanding and intentions of parties involved.
-Non-Binding
* LoA: Documenting specific agreed terms, intermediate step before a contract
-More detailed than MoU
-Binding or non binding
* SLA: Ensuring service quality and accountability. Specific measurable performance stds and responsibilities.
-Legally binding.
* LoI: Expressing intent to negotiate and formalize an agreement
-Non Binding
Early stage negotiations, sets stage for formal contract.
Detail Level:
* MoU: High-level, broad terms
* LoA: Specific terms and conditions
* SLA: Detailed performance metrics and service standards
* LoI: Basic terms and intent
Agreement
What is a Service Level Agreement?
- Definition: A legally binding contract that defines the level of service expected from a service provider.
- Purpose: Specifies measurable performance standards and responsibilities.
- Use: Common in IT and service industries to ensure quality and accountability.
- Key Points: Legally enforceable; includes metrics for performance, uptime, response time, and penalties for non-compliance.
Agreement
What is a Memorandum of Understanding (MoU)?
- Definition: A non-binding agreement outlining the mutual understanding and intentions of the parties involved in a project.
- Purpose: Establishes roles, responsibilities, and expectations without legal obligations.
- Use: Preliminary step before formal contracts; often used in collaborative projects.
- Key Points: Not legally enforceable; documents intentions and provides a framework for cooperation.
Agreement
What is Letters of Agreement?
- Definition: A formal but typically non-binding document that outlines specific terms and conditions agreed upon by the parties.
- Purpose: Provides detailed terms of the agreement, which may later be formalized into a contract.
- Use: For clear documentation of agreed-upon terms, such as payment schedules or specific deliverables.
- Key Points: More detailed than an MoU; can be binding or non-binding depending on the terms specified.
Agreement
What is Letters of Intent?
- Definition: A non-binding document expressing the intent to enter into a formal agreement.
- Purpose: Indicates the parties’ intention to proceed with negotiations and outlines the basic terms of the prospective agreement.
- Use: Early stage of negotiations; sets the stage for a formal contract.
- Key Points: Not legally binding; signifies intention to move forward with detailed discussions or agreements.
What happens during conduct procurements?
Once Proc mgmt done: we’ve created our Procurement MP, strategy, SOW, and seller’s list(Plan Procmt), it’s time to conduct the procurement.
Conduct Procurements:
This means we’re getting seller’s responses, selecting seller, and awarding a contract.
The main outcome is that we select a qualified seller who can implement the delivery.
What is invovled in Planning procurement process?
Plan Procurement: Define procurement approach, plan procurement activities, and document requirements
Key Activities
* Needs Assmt: Determine goods or services need to be procured.
* Make or Buy Analysis: Decide to make goods internally or purchase from external vendor
* Procurement Strategy Dev: Define Procurement approach, including contract types, procurement timelines, and selection criteria
Deliverables:
* Procurement MP: Outlines how Procurement will be managed, including procurement strategy, roles/resps, procurement timelines, and performance metrics.
* Procurement SOW: Details SOW, deliverables, expectations from vendors
* Procurement Docs: RFP, RFQ, RFI, and other docs needed to solicit bids from vendors
Clarify answer more…
When do we use the Request for Information(RFI) Bid Document?
Before a RFQ, so we can get more information.
Something missing clarify more!!
What is invovled in Conduct Procurements Process?
Conduct Procurements: Obtain Responses from Vendors, select Vendors, and award contracts
Key Activities:
* Vendor Solicitation: Distribute procurement docs to potential vendors and invite them to submit proposals or bids
* Bidder Conference: Clarify reqs and answer questions in meeting
* Proposal Evaluation: Assess vendor proposals based on predefined criteria such as cost, tech capability, past performance, and compliance w/ requirements
* Vendor Selection: Choose most suitable vendor based on evaluation results
* Contract negotiation: Negotiate terms and conditions w/ selected vendors to ensure mutual agreement and understanding
* Contract Award: Finalize and sign contract w/ selected vendor
-Complex high value/risk project needs senior mgmt approval before award letter
Deliverables:
* Bidder Proposals: Submission from potential venords outlining their proposed solutions and pricing
* Evaluation Reports: Documents summarizing the assessment of vendor proposals.
* Contracts: Legal agreements with selected vendors detailing the scope of work, deliverables, timelines, and terms and conditions.
What is invovled in Control Procurements?
Objective: Manage and monitor procurement relationships, ensure compliance with contract terms, and address any issues that arise.
Key Activities:
* Contract Administration: Oversee the execution of contracts to ensure vendors meet their obligations.
* Performance Monitoring: Track vendor performance using key performance indicators (KPIs) and other metrics.
* Change Control: Manage changes to procurement documents and contracts through an integrated change control process.
* Issue Resolution: Address and resolve any disputes or issues with vendors promptly.
* Payments and Financial Management: Approve vendor invoices and ensure payments are made according to contract terms.
* Procurement Audits: Conduct periodic reviews and audits to ensure compliance with procurement policies and procedures.
* Contract Closure: Ensure all contractual obligations are fulfilled, finalize any remaining deliverables, and formally close contracts.
Deliverables:
* Performance Reports: Regular updates on vendor performance and compliance with contract terms.
* Change Logs: Records of any changes to procurement documents or contracts.
* Issue Logs: Documentation of any disputes or issues and their resolution.
* Payment Records: Documentation of payments made to vendors.
* Procurement Audit Reports: Findings from audits of procurement activities.
* Closed Contracts: Documentation confirming that all contractual obligations have been met and contracts are formally closed.
Agile Contract MSA
When would a Multi Tiered Contract be preferred?
An MSA is a contractual agreement that establishes broad terms and conditions for a long-term partnership between parties.
* It’s especially useful for complex projects where the specific details of the work may change over time.
* By setting a general framework, it allows the project manager to add new work or deliverables under the same contract without renegotiating the core terms
* So we can just keep adding to it as needed while maintinaing core t&cs, so very flexible.
