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Procurment Management

Procurment Management






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    Procurment Management Procurment Management Presentation Transcript

    • PMP Procurement ManagementPresenter: Hazem Soliman, PMP. Emak International Academy 1
    • Procurement weighs 7% in the PMP exam = 15 Questions! Emak International Academy 2
    • What is Procurement Management? Includes the processes required to acquire goods or services from outside the project team. It also includes Contract Management and Change Control Processes. Emak International Academy 3
    • Project Procurement ManagementPlan Procurements Plan Procurements Administer Procurements Administer Procurements Conduct Procurements Close Procurements Emak International Academy 4
    • 1. PLAN PROCUREMENTSINPUTS TOOLS & TECHNIQUES1. Scope Baseline2. Requirements Documentation 1. Make or Buy Analysis3. Teaming Agreements 2. Expert Judgment4. Risk Register 3. Contract Types5. Risk Related Contract Decisions6. Activity Resource Requirements7. Project Schedule8. Activity Cost Estimates9. Cost Performance Baseline10. Enterprise Environmental Factors11. Organizational Process AssetsOUTPUTS1. Procurement Management Plan2. Procurement SOW3. Make or Buy Decisions4. Procurement Documents5. Selection Criteria Emak International Academy 56. Change Requests
    • 1. PLAN PROCUREMENTS - Inputs Identifies products or services that can be acquired from outside the project organization Vs needs that can be accomplished by the project team. Involves consideration of potential sellers. Can influence project schedule, resource estimating and make or buy decisions. Includes reviewing the risks involved and type of contract to be used. Emak International Academy 6
    • 1. PLAN PROCUREMENTS - Inputs1. Scope Baseline2. Requirements Documentation  Project Requirements  Legal and Contractual Requirements; health, safety, warrantees, insurance, IPR, terms and conditions, KPIs, SLAs…etc.3. Teaming Agreements (Contractual Agreements) Emak International Academy 7
    • 1. PLAN PROCUREMENTS - Inputs4. Risk Register5. Risk Related Contract Decisions6. Activity Resource Requirements (People, equipment or location)7. Project Schedule8. Activity Cost Estimates (Internal Cost Estimates for activities being procured)9. Cost Performance Baseline (Planned Budget) Emak International Academy 8
    • 1. PLAN PROCUREMENTS - Inputs10. Enterprise Environmental Factors:  Market place conditions: (Products and services available in the market, from whom and under what terms and conditions.)  Suppliers and typical terms and conditions?11. Organizational Process Assets: Procurement related policies and guidelines. Centralized or Decentralized? Emak International Academy 9
    • 1. PLAN PROCUREMENTS – Tools &Techniques1. Make or Buy Analysis:  Determine whether a product or service needs to be procured or can be produced by the project team.  Purchase or make - Purchase or renting/leasingReasons to Buy:  Capacity and Capability  Exploit Opportunity  Shift risk (cost, time, or scope)Reasons to Make:  Idle resources  Want to control  Confidential information Academy Emak International 10
    • 1. PLAN PROCUREMENTS – Tools & Techniques2. Expert Judgment3. Contract types The primary aim of considering which contract type is most suitable for the procurement situation is to distribute the risk between buyer and seller. The three major types of contracts are:  Fixed-Price  Cost-Reimbursable  Time and Material Emak International Academy 11
    • 1. PLAN PROCUREMENTS –Tools & TechniquesA. Fixed Price: FFP - Well defined scope/ product. - Fixed total Price. FPIF - Risk is on the seller. FP-EPAB. Cost Reimbursable CPFFContract: - Scope and Product aren’t CPIFexactly defined. - Price is open based on the CPAFfinal costs the product will incur. - Risk is on the buyer. Emak International Academy 12
    • 1. PLAN PROCUREMENTS – Tools &TechniquesC. Time and Material: - Cost is charged to identified tasks of an on going activity, ex. research. - Scope per unit is defined. - Risk is on the buyer. (seller has no incentive to control costs) Emak International Academy 13
    • 1. PLAN PROCUREMENTS –Outputs1. Procurement Management Plan: It includes;  Procurement Processes  Risk Management  Standardized Procurement Documents  Types of contracts used  Responsibilities  Pre-qualified sellers  Scheduled dates for deliverables  Managing multiple providers Emak International Academy 14
    • 1. PLAN PROCUREMENTS –Outputs2.Procurement Statement of Work: includes Specifications, quality levels, quantity desired and other requirements. Describes the procurement item in sufficient detail to allow sellers to determine if they are capable of providing the item.3. Make or Buy Decisions: documented decisions.4. Change Requests Emak International Academy 15
    • 1. PLAN PROCUREMENTS – Outputs5. Procurement Documents: are used to solicit proposals, quotes, and bids from sellers Bid / Tender / Quotation (IRB – RFT – RFQ) • Selection is mainly based on price. Proposal • Selection will be based on price and other factors; as technical capability, technical approach…etc. Terminology may vary by industry. Emak International Academy 16
    • 1. PLAN PROCUREMENTS –Outputs6. Source Selection Criteria:  The project team must be prepared to compare the proposals received in an unbiased manner based on identified and documented selection criteria to rate or score proposals.  Includes:  Past performance  Understanding of need  Overall or life cycle cost  References  Technical capability and approach  Risk  Management approach  Financial stability and capacity Emak International Academy 17
    • Q: With a clear scope of work a seller completes work as specified, but the buyer is not pleased with the results. The contract is considered to be:a. Null and voidb. Incompletec. Completed. Waived C. Complete Emak International Academy 18
    • Q. In a fixed price contract, the fee or profit is:a. Unknownb. Part of the negotiation involved in paying every invoicec. Applied as a line item in every invoiced. Determined at the end of the project a. unknown Emak International Academy 19
    • 2. CONDUCT PROCUREMENTSINPUTS TOOLS & TECHNIQUES 1. Bidder Conferences1. Project Management Plan 2. Proposal Evaluation Techniques2. Procurement Documents 3. Independent Estimates3. Source Selection Criteria 4. Expert Judgment4. Qualified Seller List 5. Advertising5. Seller Proposals 6. Internet Search6. Project Documents 7. Procurement Negotiations7. Make or Buy Decisions8. Teaming Agreements9. Organizational Process AssetsOUTPUTS1. Selected Sellers2. Procurement Contract Award3. Resource Calendars4. Change Requests5. Project Management Plan Updates6. Project Documents Updates Emak International Academy 20
    • 2. CONDUCT PROCUREMENTS Obtain sellers’ responses, select sellers and award contracts. Emak International Academy 21
    • 2. CONDUCT PROCUREMENTS - Inputs1. Project Management Plan2. Procurement Documents3. Source Selection Criteria4. Qualified Seller List (Approved Bidders List and new pre-qualified sellers)5. Seller Proposals (obtained from sellers)6. Project Documents (Scope, Schedule, Cost, Risk)7. Make or Buy Decisions8. Teaming Agreements9. Organizational Process Assets (Past Experience, Bidders List) Emak International Academy 22
    • 2. CONDUCT PROCUREMENTS –Tools & Techniques1. Bidder Conferences  Are also known as contractor, vendor, or pre- bid conferences.  The purpose of these conferences is to clarify any of the information not clearly stated in the RFP.  Creates a clear and common understanding of the procurement.  Proposals received will be more clearly aligned with project requirements, due to the fact that bidder conferences make the requirements clear. Emak International Academy 23
    • 2. CONDUCT PROCUREMENTS –Tools & Techniques2. Proposal Evaluation Techniques (agreed by Evaluation Committee)3. Independent Estimates (serves as a benchmark and help uncover SOW deficiencies and ambiguities misunderstanding of Scope)4. Expert Judgment5. Advertising - Is a tool that may be used to increase the number of potential sellers contacted via Newspapers, Professional journals or Websites Emak International Academy 24
    • 2. CONDUCT PROCUREMENTS –Tools & Techniques6. Internet Search7. Procurement Negotiations (Team) Negotiations can cover the following areas:  Responsibilities and authorities  Applicable terms and law  Scope, technical and business management approaches  Contract financing (Payment Schedule)  Price Emak International Academy 25
    • 2. CONDUCT PROCUREMENTS –Outputs1. Selected Sellers2. Procurement contract Award A mutually binding agreement that obligates the seller to provide the specified product and obligates the buyer to pay for it. Major components:SOW Schedule Roles and responsibilitiesPricing Payment Acceptance criteriaWarranty product support IncentivesPenalties Insurance Performance bondsChange requests Termination mechanisms Emak International Academy 26
    • 2. CONDUCT PROCUREMENTS Outputs 3. Resource Calendars 4. Change Requests 5. Project Management Plan Updates (Scope, Cost, Schedule, Procurement Management Plan…etc.) 6. Project Document Updates (SOW and Requirements Documentation) Emak International Academy 27
    • Q: Bidder Conferences are part of :a. Plan Procurementsb. Conduct Procurementsc. Administer Procurementsd. Conduct Purchasing Answer B Emak International Academy 28
    • Q. The project team is arguing about whether they should complete a work package themselves or outsource the work. What part of the procurement process are they in:a. Contract administrationb. Plan Procurementsc. Conduct Procurementsd. Select sellers Answer B Emak International Academy 29
    • 3. ADMINISTER PROCUREMENTSINPUTS TOOLS & TECHNIQUES1. Procurement Documents 1. Contract Change Control System2. Project Management Plan 2. Procurement Performance Reviews3. Contract 3. Inspections and Audits4. Performance Reports 4. Performance Reporting5. Approved Change Requests 5. Payment Systems6. Work Performance Information 6. Claims Administration 7. Records Management SystemOUTPUTS1. Procurement Documentation2. Organizational Process Assets Updates3. Change Requests4. Project Management Plan Updates Emak International Academy 30
    • 3. ADMINISTER PROCUREMENTSManage procurements relationships,monitor contract performance and makechanges and corrections as needed. Emak International Academy 31
    • 3. ADMINISTER PROCUREMENTS -Inputs 1. Procurement Documents 2. Project Management Plan 3. Contract 4. Performance Reports  Technical documentation and other deliverables information developed by the seller.  Seller Performance Reports. Emak International Academy 32
    • 3. ADMINISTER PROCUREMENTS -Inputs5. Approved Change Request.6. Work Performance Information: Includes;  The extent to which quality standards are being met.  Indicates which deliverables have been completed.  Identifies which costs have been incurred.  Seller invoices: submitted from time to time to request payment for work performed. Emak International Academy 33
    • 3. ADMINISTER PROCUREMENTS – Tools and Techniques1. Contract Change Control System Defines the process by which the contract may be modified. It includes the paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes. Should be integrated with the integrated change control system.2. Procurement Performance Review; A structured review on the sellers’ progress to deliver as per planned scope – quality – schedule – quality, etc.. Emak International Academy 34
    • 3. ADMINISTER PROCUREMENTS –Tools and Techniques3. Inspections and Audits; required by the buyer and supported by the seller to identify any weaknesses in the seller’s work performance or deliverables.4. Performance Reporting: Provides information to management about how effectively the seller is achieving the contractual objectives.5. Payment System: Handled by the accounts payable department of the performing organization. Must include reviews and approvals of seller invoices by the project team prior to issuing a payment to a seller. Emak International Academy 35
    • 3. ADMINISTER PROCUREMENTS –Tools and Techniques6. Claims Administration: (disputes or appeals)  Where buyer and seller cannot agree on compensation for the change, or that a change has even occurred.  Should be documented and managed in accordance with the terms of the contract.  Might involve arbitration or litigation.7. Record Management System:  A set of processes and automation tools consolidated into the project Management Information System to manage contract documentation and records.  To maintain an index of contract records, and correspondences for archiving and future use. Emak International Academy 36
    • 3. ADMINISTER PROCUREMENTS –Outputs1. Procurement Documentation: A complete set of indexed records regarding the contract. Includes;  Schedules  Approved and unapproved change requests  Technical documentation  Work performance information  Performance reports  Financial docs (invoices ad payment records)2. Change Requests Emak International Academy 37
    • 3. ADMINISTER PROCUREMENTS –Outputs3. Updated Organizational Process Assets: including  Correspondence: communication between buyer and seller.  Payment Schedules and requests; if the project is using an external payment system.  Seller performance Evaluation documentation: performed by the buyer to document seller’s ability to continue to perform work on the project or to be allowed to work on future projects. Basis for early termination Can be included in qualified seller lists in the organization.4.Updated Project Management Plan Emak International Academy 38
    • Q. All of the following statements about change control are incorrect EXCEPT:a. A fixed price contract will minimize the need for change control.b. Changes seldom provide real benefits to the projectc. Contracts should include procedures to accommodate changes.d. More detailed specifications eliminate the causes of changes. Answer C Emak International Academy 39
    • 4. CLOSE PROCUREMENTSINPUTS TOOLS & TECHNIQUES1. Procurement Documentation 1. Procurement Audits2. Project Management Plan 2. Negotiated Settlements 3. Records Management SystemOUTPUTS1. Closed Procurement2. Organizational Process Assets Updates Emak International Academy 40
    • 4. CLOSE PROCUREMENTSThe process of completing each project procurement.Involves verification that all of the procurement work was completed and accepted. (Product Verification) Emak International Academy 41
    • 4. CLOSE PROCUREMENTS - Inputs1. Project Management Plan2. Procurement Documentation  The contract.  Supporting schedules  Requested and approved changes  Technical documentation  Performance reports  Financial reports Emak International Academy 42
    • 4. CLOSE PROCUREMENTS – Toolsand Techniques1. Procurement Audits:  A structured review of the procurement process from Plan Procurements to Administer Procurements.  The objective is to identify the successes and failures that warrant recognition.2. Negotiated Settlements3. Records Management System. Emak International Academy 43
    • 4. CLOSE PROCUREMENTS – outputs1. Closed Procurements: Formal written notice that the contract has been completed.2. Updated Organizational Process Assets:  Contract File:  A complete set of indexed contract documentation.  Deliverable Acceptance:  A formal written notice from the buyer that the contract has been accepted.  Requirements should be defined in the contract.  Lessons Learned documentation Emak International Academy 44
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    • Q&AEmak International Academy 48