Project Procurement Management

Procurement Basics

Project Procurement Management

Project Procurement Mgt

• Includes all the processes used to purchase/acquire

--products--services--results needed…from outside the project team to complete the

project.

Processes

“Plan purchases” and “acquisition process” generates

THE PROCUREMENT MANAGEMENT PLAN

• Procurement Mgt Plan becomes an input to most of the other procurement processes including the “plan contracting process.”

• “Plan contracting process” generates, as an OUTPUT, procurement documents….

• Those procurement documents are used as an input by the “request seller responses” process. (What might these look like? )

• The responses come back, and are reviewed. Then they become an INPUT to the “seller response process” –which generates as an OUTPUT the “qualified sellers list.”

• That list becomes an input to “select sellers process” to generate these two OUTPUTs:

--The selected sellers list--Contract management plan

The selected sellers list & contract management plan…

• are parts of the input to the “contract administration process” which generates the contract documentation, which in turn…

• IS NEEDED BY THE CONTRACT CLOSURE PROCESS TO CLOSE THE PROJECT

Remember these items…

• The contract statement of work (SOW) is written by the buyer aka “originator”

• Qualified sellers list comes from those asked to submit a proposal or quote.

• The SOW for each contract is developed from the Project Scope Statement, the Project WBS, and the WBS dictionary.

Remember for CAPM

• Invitation to bid, request for quote, and request for proposal travel FROM buyer TO seller.

• The Seller responds TO the buyer via a bid, quote or proposal.

• Of all types of contracts PMBOK discusses, only the firm fixed price contract presents a risk to the seller.

• The contract management plan is an output of the “select sellers” process –NOT of the plan contracting process.

• The contract type that represents the most risk to the buyer is the “cost plus percentage of cost” because the fee goes up in accordance with the cost overrun.

Memorize

• When a seller selection decision is based on price - as when buying commercial or standard items—terms like bid, tender, or quote are used.

• When the decision is about a more complex service with many factors, the term used is proposal. (Request for Proposal or RFP).

Typical reasons for discrepancies like significant cost differences between the cost in a proposal and the independent/earlier cost estimate include:

• Contract statement of work wasn’t accurate• The seller misunderstood scope or other

details• The seller failed to fully respond to RFP or Q• The marketplace changed

Ready For CAPM?

• procurement