CAPM Week 5 Chapter 12

1. Certified Associate Project Management
CAPM® Exam Prep – Week 5
Muzette Charles | mcharles2@pace.edu

2. Procurement Management
Chapter 12
• “… is the process necessary to purchase or acquire products, services or results needed from outside the project
team… includes controlling any contract issued outside of the organization.”
• “Involves legal documents, agreements and/or contracts that are mutually binding between the buyer & seller “
• “Contract obligates the Seller to provide something of value & obligates the Buyer to provide monetary or other
value compensation.”
• “The Buyer becomes the customer & thus a key stakeholder for the Seller.”
• “The Seller’s PM Team is concerned with all the processes of PM, not only those of this Knowledge Area.”
Process Process Group Key Deliverables
12.1 Plan Procurements Planning Procurement Management Plan
12.2 Conduct Procurements Execution Selected Sellers
12.3 Control Procurements Monitoring & Controlling Change Requests
12.4 Close Procurements Closing Closed Procurements

3. Procurement Management
Chapter 12
Plan Procurements
Process 1 Key Points
 “… process documents procurement decisions, whether to acquire outside support, what to acquire,
how to acquire, how much is needed, when to acquire and identifies potential Sellers.”
 Cost: refers to how much it costs the Seller to create, develop,
 Price: is the amount the Seller charges the Buyer
 Profit: is the amount of money the Seller has left over after costs are paid
 Contract Terms: Arbitration, Breach, Force Majeure, Indemnification (liability), etc… see page 350

4. Procurement Management
Chapter 12Plan Procurements
Process 1 Key Points
Types of Contracts
 Purchase Order: simplest type of FP, signed by 1 party, PO becomes the contract when “accepted” by the Buyer
 Fixed Price (FP): defined SOW, Buyer gets a fair/reasonable price, Seller high level of risk “Pt of Assumption”
 Cost-Reimbursable (CR): scope is uncertain, cost not accurately estimated, Buyer has high risk
 Time & Material (T&M): hybrid of both FP & CR, Unit Price is known, but not # of Hrs, Seller’s profit is built into rate,
Buyer has medium risk, but can use clause “Not to Exceed”
Tools
 Make or Buy Analysis: does it decrease the project’s constraints, retain control, proprietary info?
 Procurement / Bid Docs: Request for Proposal (RFP), Invitation to Bid (IFB), Request for Quote (RFQ)
 Source Selection Criteria: can the Seller actually do the work, cover the costs, are subcontractors involved?

5. Procurement Management
Chapter 12
Conduct Procurements
Process 2
Key Points
 “… process of obtaining seller responses, selecting a seller & awarding a contract.”
 Qualified Seller List: prequalified list of sellers from OPA speeds up the process
 Seller Proposals: sent to Buyer in response to RFP, IFB, RFQ
 Tools: Bidder conference, Advertisements, Negotiations, etc
 Outputs: Selected Sellers vs. Sole Source

6. Procurement Management
Chapter 12
Control Procurements
Process 3 Key Points
 “… process manages procurement relationships, monitors contract performance & makes changes &
corrections to contracts as appropriate to ensure both the Seller & the Buyer’s performance meets the
procurement requirements according to the terms of the legal agreement.”
 Tools: Inspections & Audits, Payment Systems (accts rcvble/payable), Claims Admin aka Seller change
requests (settled thru negotiations)

7. Procurement Management
Chapter 12
Close Procurements
Process 4 Key Points
 “… process involves administration activities to finalize open claims, update records to reflect final
results & archiving information for future use.”
 Ensures contractual agreements are completed or terminated
 Early Termination: can be mutually agreed upon, default of 1 party or convenience to the Buyer
 Termination Clause: Buyer may have to compensate Seller for any completed & accepted work
 Unresolved Claims: may be subject to litigation after closure

8. Procurement Management
Chapter 12