Procurement Management Flashcards
(43 cards)
What is a contract?
requires formality, mutually binding
What are the processes for procurement management?
plan procurement management
conduct procurements
control procurements
What is the purpose of project procurement management?
provides the processes necessary to purchase or acquire products, services or results needed from outside the project team
What is a centralised environment?
A centralised environment is when there is a single procurement department that handles all procurements
Usually used in more mature (larger) organisations.
What is a decentralised environment?
A decentralised environment is when there is a full time procurement manager assigned to each project. Usually used in smaller organisations.
What is done at the plan procurement management stage?
The process of documenting project procurement decisions, specifying the approach and identifying potential sellers.
What is a bid?
a bid is an offer of a price, especially at an auction
When would a proposal be used?
a proposal would be used when other considerations such as technical capability or technical approach are the most important
What are the different contract types?
Fixed price, time and materials, cost reimbursable
What is the purpose of the conduct procurements stage?
to obtain sellers responses, select a seller and award a contract
What is the purpose of the control procurements stage?
to manage procurement relationships
monitor contract performance
make any necessary changes or corrections
closing out contracts
What are the trends or emerging practices that need to be taken into consideration before procuring?
Advances in tools More advanced risk management Changing contract processes Logistics and supply chain management Technology and stakeholder relations Trial engagements
What are the outputs of the plan procurement management process?
Procurement management plan Procurement strategy Bid documents Procurement statement of work Source selection criteria Make or buy decisions independent cost estimates Change requests Update to project docs such as lessons learnt/milestone list/risk register/stakeholder register/requirements documentation/requirements traceability matrix Operational Process Assets updates
What are the advantages of a T&M contract?
Quick to create the contract
Contract duration is brief
Best option when you hire resources to increase your staff for a short period of time
What are the disadvantages of a T&M contract?
Seller is making profit for every hour/resource
No incentive for the seller to control costs
Only suitable for small projects
Buyer needs resources to oversee work on a daily basis
What are the different types of Fixed Priced contracts?
Firm Fixed Price Contracts (FFP) - Price doesn’t change unless the scope changes
Fixed Price Incentive Fee Contracts (FPIF) - Financial incentive tied to achieving certain project objectives related to cost, schedule or technical performance of the seller. A price ceiling is set and all costs above the price ceiling are the responsibility of the seller. This is known as the ‘Point of Total Assumption’.
Fixed Price with Economic Price Adjustment Contracts (FP-EPA) For long-term contracts. Provision for pre-defined final adjustments to the contract price due to changed conditions, such as inflation changes, or cost increases / decreases for specific commodities.
What is the purpose of a bidder conference?
Ensuring all vendors have a clear understanding of the procurement
What is a cost reimbursable contract also known as?
A Cost Plus contract
What are the main points for cost reimbursable contracts?
Payment based on actual cost spent on the project, plus a fee representing the seller profit.
Flexibility for scope changes.
Financial incentives to the seller when the seller exceeds the performance targets on cost, schedule and technical performance; financial damages to the seller when the seller falls below performance targets.
What are the different types of cost reimbursable contracts?
Cost Plus Fixed Fee Contracts (CPFF) Seller receives actual cost + fixed fee (a % of the initial estimated project cost).
Cost Plus Incentive Fee Contracts (CPIF) Seller receives actual cost + incentive based on achieving performance objectives. If final costs are less or greater than original cost, both buyer and seller share costs based on a pre-negotiated cost sharing formula.
Cost Plus Award Fee Contracts (CPAF) Seller is reimbursed of legitimate cost but majority of the fee is earned based on performance criteria in the contract.
What are the advantages of a cost reimbursable contract?
Simpler procurement statement of work is required.
Less work is required to define scope than for an FP contract.
Lower cost than FP because the seller does not have to add as much for risk.
What are the disadvantages of a cost reimbursable contract?
Requires auditing the seller’s invoice.
More work for the buyer to manage.
No incentive to control the cost for the seller.
Total price is not known upfront.
What are the inputs for the plan procurement management process?
Project charter
Business documents - business case/benefits mgmt plan
Project management plan - scope baseline/quality mgmt plan/scope mgmt plan/resource mgmt plan
Project documents - milestone list/project team assignment/requirements documentation/requirements traceability matrix/resource requirements/risk register/stakeholder register
Enterprise environmental Factors
Operational process assets
What are the Tools and Techniques required for the plan procurement management process?
Expert Judgement Data gathering Data analysis Source selection analysis Meetings
