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  • 1. PMP & CAPMExam Preparation March 5, 2013
  • 2. Sessions1. About the exam2. Integration & Scope Management3. Time & Cost Management4. Quality & HR Management5. Communication & Risk Management6. Procurement Management
  • 3. Last Session Key point• Process groups: IPEMCC• 9 Knowledge Area: ISTiCoQuHurCoRiP• Project Integration Management – DevPC.PMP.DirManPex.MoConPW.PerICC.CloPP• Project Scope Management – CoDeWoBVCon
  • 4. Last Session Key point – cont’d• Project Time Management (DeSeReDDevCon)• Project Cost Management (EsCDeBCon)• Project Quality Management (PlanQAQC)• Project Human Resources (Plan ADM)• Project Communication Management (IdS Plan DisInt ManSEx RepPer)• Project Risk Management (PlanR IdR QQ Rp MC)
  • 5. Project Procurement Management• Plan Con Ad Close
  • 6. Project Procurement Management• To acquire / purchase products, services, or results needed from outside the project team• Includes contract management• Contracts: legal document between buyer and seller, represents a legally binding agreement which obligates the seller to provide the specified products, services, or results and obligates the buyer to provide monetary or other valuable consideration
  • 7. Project Procurement Management
  • 8. Project Procurement Management• A complex project may involve managing multiple contracts or subcontracts simultaneously or in sequence• Seller = contractor, subcontractor, vendor, supplier, service provider• Buyer = client, customer, prime contractor, acquiring organization, purchaser, requestor
  • 9. Project Procurement Management• This chapter assumes as buyer and seller is external provider
  • 10. Project Procurement Management• Plan Procurements • Documenting project purchasing decisions • Specify purchasing approach • Identifying potential sellers • Answers, “Should we acquire it externally?, What to require, How to require, How much and When to acquire”
  • 11. Project Procurement Management• Plan Procurements
  • 12. Project Procurement Management• Plan Procurements – I • Scope baseline (…) • Requirement documentation • Teaming agreements • Joint ventures, partnerships, or other form of agreements between defined parties
  • 13. Project Procurement Management• Plan Procurements – I (cont’d) • Risk register • Risk related contract decisions • Activity resource requirements • Project schedule • Activity cost estimates • Cost performance basline • EEF
  • 14. Project Procurement Management• Plan Procurements – TT • Make-or-buy analysis • Expert judgment • Contract types Fixed-price contract Cost-reimbursable contract Time and material
  • 15. Project Procurement Management• Plan Procurements – TT (cont’d) • Contract types (cont’d) Fixed-price contract – Firm fixed price (FFP)  buyer preffered – Fixed price incentive fee (FPIF)  Set price ceiling  Price is based on seller’s performance related to cost, schedule, or technical performance
  • 16. Project Procurement Management• Plan Procurements – TT (cont’d) • Contract types (cont’d) Fixed-price contract (cont’d) – Fixed price with economic price adjustment (FP-EPA)  usually a very long project  Takes inflation and commodities cost, into account  Relies on financial index
  • 17. Project Procurement Management• Plan Procurements – TT (cont’d) • Contract types (cont’d) Cost reimbursable contract – Cost plus fixed fee (CPFF) – Cost plus incentive fee (CPIF)  Seller can reimburse allowable costs  Based on seller’s performance  Utilizes sharing formula, e.g.: 80/20
  • 18. Project Procurement Management• Plan Procurements – TT (cont’d) • Contract types (cont’d) Cost reimbursable contract (cont’d) – Cost plus award fee (CPAF)  Subjective determination of seller performance by buyer  Not a subject for appeals
  • 19. Project Procurement Management• Plan Procurements – TT (cont’d) • Contract types (cont’d) Time and Material – A hybrid type – Used when a precise statement of work cannot be quickly prescribed – A form of cost reimbursable if it is left open ended – A form of fixed price if buyer limits parameters and apply unit labor cost
  • 20. Project Procurement Management• Plan Procurements – O • Procurement management plan  Contract type, risk management issue  Evaluation criteria, multiple contracts criteria  Constraints and assumptions, etc
  • 21. Project Procurement Management• Plan Procurements – O (cont’d) • Procurement statement of work  Developed from project scope baseline and defines only a portion of project scope to be included in related contract  Must be in sufficient detail so that prospective sellers can determine their capability to provide such product, service, or results
  • 22. Project Procurement Management• Plan Procurements – O (cont’d) • Procurement statement of work (cont’d)  Includes specifications, quantity, quality levels, performance data, performance period, work location, etc  Must be clear, complete, and concise  Multiple products / services can be grouped into single SOW  Is subject to change until a contract is awarded
  • 23. Project Procurement Management• Plan Procurements – O (cont’d) • Make-or-buy decisions  May include decision to require insurance policies or performance bonds to address some identified risks • Procurement documents  Quotation, bidding document, tender, RFP, RFQ, RFI, etc
  • 24. Project Procurement Management• Plan Procurements – O (cont’d) • Source selection criteria
  • 25. Project Procurement Management• Plan Procurements – O (cont’d) • Source selection criteria (cont’d)
  • 26. Project Procurement Management• Plan Procurements – O (cont’d) • CR
  • 27. Project Procurement Management• Conduct Procurements • To obtain seller’s response • Selecting a seller • Awarding a contract
  • 28. Project Procurement Management• Conduct Procurements – I • PMP • Procurement document • Source selection criteria • Qualified seller list • Seller proposals • Project documents • Make-or-buy decisions
  • 29. Project Procurement Management• Conduct Procurements – I (cont’d) • Teaming agreement • OPA
  • 30. Project Procurement Management• Conduct Procurements – TT • Bidder conferences  To ensure buyer and seller have a clear and common understanding of the procurement  No sellers received preferential treatment  Every prospective sellers hear individual questions and the answers from buyers • Proposal evaluation techniques
  • 31. Project Procurement Management• Conduct Procurements – TT (cont’d) • Independent estimates • Expert judgment • Advertising • Internet search • Procurement negotiations
  • 32. Project Procurement Management• Conduct Procurements – O • Selected sellers • Procurement contract award
  • 33. Project Procurement Management• Conduct Procurements – O (cont’d) • Resource calendars • CR • PMP U • PD U
  • 34. Project Procurement Management• Administer Procurements • Process of managing procurement relationships, monitoring contract performance, making changes / corrections • To ensure both parties meet their contractual agreements and their own legal rights are protected • Might be carried out by separate function of the organization
  • 35. Project Procurement Management• Administer Procurements • Applied project management processes (but not limited to):  Direct and manage project execution  Report performance  Perform quality control  Perform integrated change control  Monitor and control risk
  • 36. Project Procurement Management• Administer Procurements • Also includes monitoring payments to sellers • Document seller’s performance / evaluation • Contracts can be amended at any time prior to contract closure by mutual consent
  • 37. Project Procurement Management• Administer Procurements
  • 38. Project Procurement Management• Administer Procurements – I • Procurement documents • PMP • Contract • Performance report • Approved CR • WPI
  • 39. Project Procurement Management• Administer Procurements – TT • Contract change control system • Procurement performance review • Inspection and audit • Performance reporting • Payment system • Claims administration • Records management system
  • 40. Project Procurement Management• Administer Procurements – O • Procurement documentations • OPA U • CR • PMP U
  • 41. Project Procurement Management• Close Procurements • Completion of project procurement • Includes administrative activities • Finalizing open claims, update information to project records • In multi phase project, close procurement only applicable to given phase of the project
  • 42. Project Procurement Management• Close Procurements • Early termination also triggers close procurements
  • 43. Project Procurement Management• Close Procurements – I • PMP • Procurement documentation
  • 44. Project Procurement Management• Close Procurements – TT • Procurement audit • Negotiated settlement • Record management system
  • 45. Project Procurement Management• Close Procurements – O • Closed procurements • OPA U
  • 46. Sample Questions1. Which of the following is a false statement about project risks?A. A risk arises out of uncertainty.B. A risk can only have a negative effect on a project.C. Identified risks are usually listed in a document called the risk register.D. Risks can be categorized by developing a risk breakdown structure (RBS).