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Project Procurement Management Project Procurement Management
 

Project Procurement Management Project Procurement Management

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    Project Procurement Management Project Procurement Management Project Procurement Management Project Procurement Management Presentation Transcript

    • Project Procurement Management Presented by: Michael G. Judd, Ph.D., M.P.A., PMP Adjunct Professor of Project Management Computer Information Systems Department Brigham Young University- Idaho
    • Introduction Michael G. Judd Education Post Doctoral Diploma in Defense Program Management Ph.D. Engineering Management Masters of Public Administration Bachelors of Science in Criminal Justice Professional Certifications Certified Project Management Professional Member of the Army Acquisition Corps Certified Project Manager with U.S. Department of Energy Professional Recognition Outstanding Young Men of America-1987 United Who’s Who in Executives & Professionals- 2003-2007 Experience Retired from Federal Government after 27 years Senior level positions includes: Executive Office of the President (U.S.) – Department of Administration DOE Liaison to the Under Secretary Defense (Environmental Security) Security) DOE Principle Investigator and member of the “Paldiski International Expert Reference Group” PIERG Group” Program Analyst- Air , Space, and Land Combat Systems- U.S. Department of Army Analyst- Systems- Program Manager- DOE Environmental Security Office Manager- Vice President (Education and Certification) Project Management Institute’s-College of Performance Institute’ Management Project Manager- National and Environmental Security Systems Manager- Project Control Manager- Multiple Major System Acquisition Projects Manager- Professor of Program Management – U.S. Department of Defense- Defense Acquisition University Defense- Professor of Project Management (Adjunct Faculty) Brigham Young University-Idaho University- Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 2
    • Outline Procurement Terms & Concepts Review PMBOK’s Procurement Process Groups Current Issues in Procurement Management Questions and Answers Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 3
    • Procurement Terms and Concepts Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 4
    • Procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. Source: www.answer.com Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 5
    • Procurement Plan “The document that describes how procurement processes from developing procurement documentation through contract closure will be managed.” Source: PMBOK 3rd Edition, P. 367 Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 6
    • Make-or-Buy Decision “A business decision that compares the costs and benefits of manufacturing a product or product component against purchasing it…” Source: www.answer.com Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 7
    • Contract Administration “The process of managing the contract and the relationship between the buyer and seller, managing contract related changes and, when appropriate, managing the contractual relationship with the outside buyer of the project.” Source: PMBOK 3rd Edition, p.355 Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 8
    • Invitation For Bid “…Refers to a method of soliciting offers and are used when negotiations are not anticipated. Bids are typically read aloud in public at the time and place specified in the solicitation.” Source: U.S. Army Contracting Agency Customer Desk-side Dictionary Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 9
    • Request For Proposal “… A type of solicitation that is used typically with large dollar contracts when negotiations are anticipated. Offers in response to RFPs can be accepted without negotiations and become legally binding.” Source: U.S. Army Contracting Agency Customer Desk-side Dictionary Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 10
    • The “Contract” A contract is a mutually binding agreement that obligates the seller to provide the specified products or services - obligating the buyer to pay for them. Contracts should clarify responsibilities and define key deliverables. Contracts are used because they are legally binding, there is more accountability! There is a trend to outsource work! Source: IT Project Management-Schwabe 2006 Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 11
    • Contract Types Fixed Price (Lump Sum) Contracts: Firm Fixed Price Fixed Price Incentive Fee Cost Reimbursement Cost Plus Award Fee (CPAF) Cost Plus Fixed Fee (CPFF) Cost Plus Incentive Fee (CPIF) Cost Plus Percentage of Cost (CPPC)- [Feds don’t use] Time and Materials Source: PMBOK 3rd Edition, P. 277&278 Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 12
    • Statement of Work (SOW) “A narrative description of products, services, or results to be supplied.” Source: PMBOK, 3rd Edition, P. 376 Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 13
    • PMI’s PMBOK: Procurement Process Groups Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 14
    • 12.1- Plan Purchases Process Group: And Acquisitions Inputs Outputs Enterprise environmental factors Procurement management plan Organizational process assets Contract statement of work Project scope statement Make-or-buy decisions Make- or- Work breakdown structure Requested changes WBS dictionary Project management plan •Risk register •Risk-related contractual Risk- agreements •Resource requirements Make-or-buy analysis Make- or- Expert judgment •Project schedule Contract types •Activity cost estimates •Cost baseline Tools & Techniques Copyright: JSPM--2007 Copyright: JSPM 2007
    • 12.2- Plan Contract Process Group: Inputs Outputs Procurement management plan Procurement documents Contract statement of work Evaluation criteria Make-or-buy decisions Make- or- Contract statement of work (updates) Project management plan •Risk register •Risk-related contractual Risk- agreements •Resource requirements •Project schedule •Activity cost estimate Standard forms •Cost baseline Expert judgment Tools & Techniques Copyright: JSPM--2007 Copyright: JSPM 2007
    • 12.3- Request Seller Process Group: Responses Inputs Outputs Organizational process assets Qualified sellers list Procurement management plan Procurement document package Procurement documents Proposals Bidder conferences Advertising Develop qualified sellers list Copyright: JSPM--2007 Copyright: JSPM 2007 Tools & Techniques
    • 12.4- Select Sellers Process Group: Inputs Outputs Organizational process assets Selected sellers Procurement management plan Contract Evaluation criteria Contract management plan Procurement document package Procurement management plan (updates) Resource availability Proposals Qualified sellers list Requested changes Project management plan •Risk register •Risk-related contractual Risk- Weighting system agreements Independent estimates Screening system Contract negotiation Seller rating systems Expert judgment Proposal evaluation techniques Tools & Techniques Copyright: JSPM--2007 Copyright: JSPM 2007
    • 12.5- Contract Process Group: Administration Inputs Outputs Contract Contract documentation Contract management plan Requested changes Selected sellers Recommended corrective actions Performance reports Organizational process assets (updates) Approved change requests •Procurement management plan Project management plan (updates) •Contract management plan Work performance information Contract change control system Buyer-conducted performance review Buyer- Inspections and adults Performance reporting Payment system Claims administration Records management system Information technology Tools & Techniques Copyright: JSPM--2007 Copyright: JSPM 2007
    • 12.6- Contract Closure Process Group: Inputs Outputs Procurement management plan Closed contracts Contract management plan Organizational process assets (updates) Contract documentation Contract closure procedure Procurement audits Records management system Tools & Techniques Copyright: JSPM--2007 Copyright: JSPM 2007
    • Current Issues in Procurement Management Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 21
    • The National Contract Management Association NCMA was formed in 1959 to foster the professional growth and educational advancement of its members. NCMA is an membership-based, professional society, whose Leadership is composed of volunteer elected officers. Offers professional certification program for contracting professionals NCMA is located at 21740 Beaumeade Circle, Suite 125, Ashburn, Virginia 20147. Source: NCMA Website: www.ncma.org Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 22
    • Iraq contracting problems House appropriators on Thursday voiced dismay at the depth of contracting problems in Iraq… Billions of reconstruction dollars wasted. The Defense Department, spent $151 billion on service contracts in fiscal 2006 Problem Companies- Parsons, DynCorp International, Haliburton (Kellogg, Brown and Root), Bechtel, Aegis Defense Systems, etc. Source: NCMA Website Article with same title, Washington Post Wednesday, July 6, 2005; Page D01 & GAO Report- GAO-07-832T Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 23
    • Cost Reimbursement Contracting Sector: National Laboratory- EG&G, Lockheed-Martin Idaho and Bechtel Situation: CPAF’s used by DOE with AF ~5% of allocable cost based on performance against award fee criteria- C.O. sole decision-maker (theoretically). Observations: 1. Work scope poorly defined in contract. 2. 95 % of work force remains the same. 3. Approximately 70% of award fee criteria were broad scope statements with no measurable objectives – yet specific requirements were known in advance by DOE staff. R&D work had virtually NO measurable milestones. 4. Most commercial companies could not afford to work with a 5% profit margin. 5. Companies drawn to such contracts probably are motivate by spin-off benefits Results: DOE Management compensated for contracting deficiencies awarding maximum fee (despite poor performance assessments) and profiting from technology developed at taxpayer expense. Source: Personal views of M. Judd at Idaho National Laboratory Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 24
    • Fixed Priced Contracting Sector: Residential Building Construction Situation: General development contractors prefer to use fixed price subcontracts to control costs. Observations: 1. There are many variables that subcontractors can’t anticipate (late material, weather, labor force, poor coordination, etc.). 2. No enforceable knowledge and skill level metrics have been established for some trades. 3. Understaffing, no credentialing of inspectors, general corruption of the inspection process 4. Motivation is to make quick profits then move to new area. 5. Small subcontractors lack the sophistication or resources to protect themselves against unscrupulous General Contractors. 6. Serious lack of knowledge based & ethical licensing requirements of General Contractors. Results: Many general contractors focus on wind-fall profits resulting in highly inflated residential property with poor workmanship and many failed subcontractor businesses Source: Personal views of M. Judd at Trademark Woodworks, LLC, Bozeman, MT Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 25
    • Questions & Answers Judd-PMI-EIC-Spring 2007 Judd- PMI- EIC- 26