Understand Project Procurement

Question 1

What is a procurement strategy?

Answer 1

The process by which products and services are acquired from an external provider for incorporation into the project, programme or portfolio

Question 2

What is in a procurement strategy?

Answer 2

Make or buy decision
Supplier selection process
Pricing structure
Type of contract
Number of suppliers to be used

Question 3

What is the importance of a procurement strategy?

Answer 3

X

Question 4

What are the different methods of supplier reimbursement?

Answer 4

Fixed price - most common. Price for goods is set at outset and not subject to change.

Target price - suppliers and customer agree on a target and if savings or additional liabilities are split at the end.

Maximum price/cost - upper limit imposed, supplier takes share of the gain and all the pain.

Time and materials - used for emergency works or small works where total liability is limited and it is not possible to accurately specify the requirement - bit like an emergency plumber.

Question 5

What is a fixed price?

Answer 5

Agreed at start - when you know the work.

Question 6

What is a per unit quantity?

Answer 6

X

Question 7

What is a target cost?

Answer 7

Where agreement is reached for a target and if you go under or over, you share the rewards or pain.