# Project & Contract Management Basics # By SN Panigrahi Essenpee Business Solutions Project Management' Project Life Cycle Project Process Groups Project Knowledge Areas Contract Management Types of Contracts

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management, Contract
Management, Supply Chain Management, Procurement, Strategic
Sourcing, Global Sourcing, Logistics, Exports & Imports, Indirect Taxes –
GST etc.
He had done more than 150 Workshops on above
Published more than 500 Articles; More than 60 Youtube Presentations
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India)
ZED Consultant – Certified by QCI – MSME (Govt of India)
Member Board of Studies, IIMM
Co-Chairman, Indirect Tax Committee, FTAPCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
Hyderabad

3. SN Panigrahi 3

4. 4
Maintenance project
is like repairing an
existing building
Development
project is like
building a house as
per need of the
customer
Conversion project is
like changing an
existing feature e.g.
moving to tiled flooring
Enhancement
project is like
extension of an
existing building
Package Implementation
project resembles purchase
of ready-made apartments
with limited customization.

5. 5
Project
Initiation
Project
management is the
practice of initiating,
planning, executing,
controlling, and closing
the work of a team to
achieve specific goals
and meet specific
success criteria at the
specified time
SN Panigrahi

6. SN Panigrahi 6
A project may be a set of interrelated tasks to be executed over a fixed
period and within certain cost, time and other limitations.
Successful Completion - critical issue in all types of Projects : - software,
infrastructure and other time bound projects.
 A Project is a planned set of activities
 A Project has a Scope
 A Project has Time, Cost, Quality and Resource Constraints
•Time and Cost overruns are the norm not Exception
•Cost Escalation has been a prime cause of concern for the exchequer.

7. SN Panigrahi 7
As per PMI (6th Edition) :
Project is a temporary endeavor to achieve defined objectives by creating
a unique product, service, result or outcome with a definite start and end
date.
A project can be defined as a temporary endeavor undertaken to create a
unique product or service.
Projects are different from other ongoing operations in an organization, because
unlike operations, projects have a definite beginning and an end - they have a
limited duration.
Projects are critical to the realization of performing organization's business
strategy because projects are a means by which the strategy of the company is
implemented.

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1. Every project creates a unique product, service, result or outcome
2. The outcome of the project may be Tangible or Intangible
3. A project can create a product that can be a component of another item, an enhancement of an item, or
an end item itself; a service or a capability to perform a service; an improvement in the existing product
or service line; a result such an outcome or document.
4. Temporary doesn’t mean shorter duration of the project it refers to the project’s engagement
having a definite beginning and end
5. A project may involve a single person or multiple persons; a single organization or multiple
organizations
6. Operations are on-going and repetitive process(es)
or series of acts involved in a particular form of work of transforming resources (inputs) into output – Eg
: Operations includes all the normal business functions like Production operations, accounting
operations, administrative functions manufacturing a product etc.
Project Basic Concepts
SN Panigrahi

9. SN Panigrahi 9
When is a
Project
SUCCESSFUL
?
On Time
Within
Budget
Meets the
Requirements
Meets
Quality
Reduces
Risk

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Constructing a building or facility or industrial plant or infrastructure
Developing a new product or service
Business takeovers & acquisitions
Effecting a change in structure, staffing or style of an organization
Designing a new transportation vehicle
Developing or acquiring a new or modified information system
Creating a new piece of software or Upgrade of software
Designing a new network infrastructure or Installing new workstations
Implementing a new business procedure or process
Organizing a Conference; Birth Day Party; Marriage celebration; Holiday trip
Organizing a workshop for imparting knowledge.
Events like organizing Yoga Divas on 21st June, NATCOM by IIMM, management of PMI India National Conference,
organizing IPL cricket match, India's mission Chnadrayan - 2, shooting a film, marriage ceremony, honeymoon trip, birthday
party, family vacation, construction / renovation of a house etc all are temporary in nature, having a defined start and end date,
involving a set of activities, using a defined set of resources (like people, equipment, material or money) to pursue a defined
goal bringing in a unique outcome or result, thus called a project. Projects scope broadly covers a wide range and areas in
business as well as social life.
Projects may involve creation of new product, new process, new assets, or results of execution of strategic initiatives,
development of technology, process improvements etc. Every project creates a unique product, service, result or outcome.
SN Panigrahi

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Project
Characteristics
 Has a Lifecycle (phases)
 Approved Budget
 Limited Resources
 Definable Tasks (Scope)
 Time, Cost, Quality and Resource Constraints
 Specific Objectives / Deliverables
 Have a Defined Timescale (specified start and end date)
 Unique Set of Activities (do not involve repetitive processes)
 Involve an Element of Risk
 Achieve Beneficial Change / enables Business Value Creation
SN Panigrahi
• Projects are Temporary in nature and have a Definite Beginning and End

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Project Operation
Nature Temporary On-Going & Continuous
Purpose Introduce Positive
Change
Sustain Business
To keep the Organization
Functioning
Output Unique Repetitive
•At the completion of a project, the end product (or result) may get turned over to the organization‟s
operational areas for ongoing care and maintenance.
•Project can intersect with operations at various points during the project life cycle, such as
At each closeout phase
When developing a new product, upgrading a product, expanding output
While improving operations
Until the end of product lifecycle
SN Panigrahi

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Project management is the discipline of initiating, planning,
executing, controlling, and closing the work of a team to
achieve specific goals and meet specific success criteria.
It is the application of knowledge, skills, tools, and techniques
to project activities to meet the project requirements.
The major objectives that must be met include performance,
cost, and time goals, while at the same time you control or
maintain the scope of the project at the correct level.

15. 15NTI – SN Panigrahi

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S
• Specific
• Avoid being vague and general.. Does the goal support the strategy of the organization? If the project goals are achieved,
will the organization make significant progress towards the company's mission, vision, values, and corporate goals?
M
• Measurable
• Can the goal be measured in terms of cost, quality, quantity, and timeliness?
A
• Attainable
• Has the team worked together to define the goal? Can everyone support the goal & its Achievable
R
• Relevant & Realistic
• Whether Goals are Relevant & Realistic? Don't fall for the fallacy of stretch goals. Make sure the goals
are relevant or results-oriented.
T
• Time Bound
• All goals should have a deadline. This adds a sense of urgency and keeps the team
focused.
SN Panigrahi

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The three most significant project constraints -- schedule, cost and scope -- are sometimes known as the triple
constraint or the project management triangle. Additionally Three more Constraints are Added : Quality, Risk &
Resources.
SN Panigrahi

18. INITIATING
Develop Project Charter
with Defined Objectives
PLANNING
Develop Detailed Project Plan
EXECUTING
Directing and Managing
Project Execution
MONITORING &
CONTROLLING
Measuring & Taking Corrective
Measures
CLOSING
Complete Formalities,
Contract Closure,
Archive Documents
SN Panigrahi

19. • Combine, Unify and Coordinate the various project management activities within the five process
groups.
Integration
Processes
• Ensure the project includes all the work required, and only the work required, to complete the project
successfully
Scope
Processes
• Manage the Timely Completion of the Project
Schedule
Processes
• Plan, Estimate, Fund, Manage, and Control costs so the project can be completed within the approved
budget
Cost
Processes
• Incorporating the organization’s quality policy regarding planning, managing and controlling project
and product quality requirements in order to meet stakeholders’ expectations.
Quality
Processes
• Identify, acquire, and manage the resources needed for the successfully completion of the project.
Resource
Processes
• Required to ensure the planning, creation, distribution, control and monitoring of project information's
Communications
Processes
• Planning risk management, the identification, analysis, and monitoring of risks on a project, and the
implementation of risk responses.
Risk
Processes
• Necessary to purchase or acquire products, services, or results needed from outside the project team.
Procurement
Processes
• Required to identify stakeholders, to analyze their expectations and impact on the project, and to
develop management strategies for effectively engaging stakeholders in decisions that affect the
project.
Stakeholder
Processes
SNPanigrahi

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Process Groups No. of Processess
5th Edition 6th Edition
Initiating Process Groups 2 2
Planning Process Groups 24 24
Executing Process Groups 8 10
Monitoring & Controlling Process Groups 11 12
Closing Process Groups 2 1
Total 47 49
SN Panigrahi

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Knowledge Areas Initiating Process
Group
Planning Process Group Executing Process Group Monitoring & Controlling
Process Group
Closing Process Group
4. Project Integration
Management
4.1 Develop Project
Charter
4.2 Develop Project
Management Plan
3.Direct and Manage
Project Work
4.Manage Project
Knowledge
5.Monitor and Control
Project Work
6.Perform Integrated
Change Control
4.7 Close Project or
Phase
5. Project Scope Management
1. Plan Scope Management
2. Collect Requirements
3. Define Scope
4. Create WBS
5. Validate Scope
6. Control Scope
6. Project Schedule Management
1. Plan Schedule Management
2. Define Activities
3. Sequence Activities
4. Estimate Activity Durations
5. Develop Schedule
6.6 Control Schedule
7. Project Cost Management 1. Plan Cost Management
2. Estimate Costs
3. Determine Budget
7.4 Control Costs
8. Project Quality Management 8.1 Plan Quality Management 8.2 8.3 Control Quality
9. Project Resource Management 1. Plan Resource Management
2. Estimate Activity Resources
3. Acquire Resources
4. Develop Team
5. Manage Team
9.6 Control Resources
10. Project Communications
Management
10.1 Plan Communications
Management 10.2 Manage Communications 10.3 Monitor Communications
11. Project Risk Management
1.Plan Risk Management
2.Identify Risks
3.Perform Qualitative
Risk Analysis
4.Perform Quantitative
Risk Analysis
5.Plan Risk Responses
11.6 Implement Risk Responses
11.7 Monitor Risks
12. Project Procurement
Management 12.1 Plan Procurement
Management 12.2 Conduct Procurements 12.3 Control Procurements
13. Project Stakeholder
Management
13.1 Identify
Stakeholders
13.2 Plan Stakeholder
Management
13.3 Manage Stakeholder
Engagement
13.4 Monitor Stakeholder
Engagement
ITTO

22. Exercise 1
• Write down three attributes of a good Project Manager

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Responsible for Accomplishing Project Objectives and managing stakeholders‟ Expectations
Works to Balance the Competing Constraints on the project with the resources available
The project manager must Define the Project, reduce it to a set of Manageable Tasks,
obtain appropriate Resources and build a Team to perform the work.
The project manager must set the final goal for the project and Motivate his / her Team to
complete the project on time.
The project manager must Inform all Concerned Stakeholders of Progress on a regular
basis.
The project manager must Assess and Monitor Risks to the project and Mitigate them.
No project ever goes exactly as planned, so project managers must learn to Adapt to and Manage
Change.
SN Panigrahi

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TOP 10 QUALITIES OF A
PROJECT MANAGER
QUALITIES OF
A PROJECT
MANAGER
VISION
COMMUNICATION
INTEGRITY
ENTHUSIASM
/PASSION
EMPATHY
/COMPASSION
COMPETENCE
DELEGATION
COMPOSURE
TEAM BUILDING
PROBLEM
SOLVING
SN Panigrahi
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Project Integration Management
NTI – SN Panigrahi

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Formally Authorizes the Project Manager to Start the Project
Includes the business case explaining why the project is necessary
Define the High-Level Scope
Includes High-Level Budget
Includes Key Stakeholders
Includes Preliminary Risk Register
Signed off by the Project Sponsor
Project Charter
•The project charter is NOT a Contract
•Project Management Office (PMO) can provide expert judgement on how to structure the project charter
SN Panigrahi

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Purpose of
Project
Management
Plan (PMP)
Provide a
Comprehensive
Baseline of what
has to be
achieved by the
project
How it is to be
Achieved
Who will be
Involved
How it will be
Measured &
Reported & How
information will
be
Communicated
Used as a
Reference for
any Decision &
for Clarification of
unclear areas
Used as a Reference throughout the project to ensure that the
management of the project is carried out consistently and in
line with policy and procedures
Purpose of Project Management Plan (PMP)
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Project Scope Management
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Project Time Management
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Project Cost Management
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Project Quality Management
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Project Human Resources Management

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Project Communication Management
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Project Risk Management
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Project Procurement Management
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Project Stakeholder Management
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37. A project milestone is a task of zero duration that shows Significant Achievement along a
project timeline.
The milestones should represent a clear sequence of events that incrementally build up until
your project is complete. ... They have zero duration because they symbolize an achievement, or a
point of time in a project.
Project Milestones are the most visible Indicators of Project Progress.
Milestones typically Mark Critical Decision Points, the completion of major project tasks and the
ends of various project phases.
Research
Deliverable -
1
Approval
Deliverable -
2
Manufacturin
g Deliverable
-3
Market
Launch
Deliverable -
4
Milestone -1
Successful Trial
Milestone -2
Marketing
Authorization
Milestone -3
Products Ready
for Marketing
Time Lines
Total Project Schedule
Clinical Trial
Applications
Start
Manufacturing
File IP
(Patents)
Start of
Marketing
Milestone -4
Launch in New
Markets
Milestone
Example:
Pharmaceutical
SN Panigrah

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Project
Design
Deliverable -
2
Financing
Deliverable -
3
Placing
Contracts
Deliverable -
4
Project
Execution
Deliverable -
5
Milestone -2
Project
Design
Ready by
30th Sep
Milestone - 3
Availability of
Funds
By
2nd Oct
Time Lines
Total Project Schedule
Example:
Common Facility Center (CFC) Project
Project
Handover
Deliverable -
6
Project
Planning
Deliverable -
1
Milestone - 4
Contract
Finalization
By 1st Nov
Milestone - 5
Project Work
Completion
15th Jan
Milestone - 6
Project
Handover to
Customer
By 26th Jan
Milestone - 1
Overall Project
Milestones,
Timelines,
Budgets etc
Finalized
By 15th Sep
SN Panigrahi
Starting of
the Project
15th Aug
End of the
Project
26th Jan

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A deliverable is a Quantifiable tangible or intangible good or service
produced as a result of a project or part of a project that is intended to be
delivered to a customer (either internal or external).
A deliverable could be a Product, a Part, a Report, a Document, a
Software Product, a Server upgrade or any other building block of an
overall project.
A work breakdown structure is based on these deliverables.
Deliverable
Deliverable
Quantifiable
Results
Tangible
or
Intangible
To be
Delivered
To a
Customer
SN Panigrahi

40. A work breakdown structure (WBS) is a key project deliverable that organizes the team's work into
manageable sections.
The Project Management Body of Knowledge (PMBOK) defines the work breakdown structure as a
"deliverable oriented hierarchical decomposition of the work to be executed by the project team.“
It is common practice for work breakdown structure elements to be numbered sequentially to reveal the hierarchical
structure. The purpose for the numbering is to provide a consistent approach to identifying and managing the WBS
across like areas regardless of supplier or trade
WBS Coding System
Defines:
Levels and elements of the WBS
Organization elements
Work packages
Budget and cost information
Allows reports to be consolidated at any level in the organization structure
The most commonly used scheme in practice is numeric indention.
SN Panigrahi

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Drawing
5.1
Marking
of Layout
5.2
Ground
Levelling
5.3
Foundation
5.4
Column
Casting
5.5
Construction
of Walls
5.6
Roofing
5.7
M & E Works
Miscellaneous
Works
5.8
Compacting
the Ground
5.4.1
PCC
5.4,2
Footing
Reinforcement
5.4.3
Shuttering
5.4.4
Footing
Concrete
5.4.5
Conceptualization
of Project
1.0
Design
2.0
Bidding &
Contracting
3.0
Procurement
4.0
Construction
5.0
Closure
6.0
Common Facility Centre (CFC)
Level 0
Broad
Project
Level 1
Control Account
Level 2
Major Planning
Packages
Level 3
Work Packages

42. level 0
level 1
level 2
level 3
level 4
level 5
WBS - Example
GAS-STEAM COMBINED
POWER PLANT
MAIN FUNCTIONS OF PLANT
(Control Accounts)
Planning Packages
GAS – 1.0 INTERFACES – 3.0STEAM – 2.0
TURBINE – 1.1 COMPRESSION STATION – 1.3GENERATOR- 1.2
COMPRESSORS-1.3.1 ENCLOSURE-1.3.3GAS TREATMENT-1.3.2
WORK PACKAGES
Major Planning Packages
COMPRESSOR 1
1.3.1.1
FOUNDATIONS
1.3.1.3
COMPRESSOR 2
1.3.1.2
DESIGN
1.3.1.2.1
INSTALLATION
1.3.1.2.3
PROCUREMENT
1.3.1.2.2

43. SN Panigrahi 43
Tendering & Contract
Management

44. 44
Contracts are essential part of every business – small or medium or
big; private or public or Government – it is ubiquitous; no business is
virtually possible without contracts.
Contracts are important means for achieving goals to acquire
resources – goods and services at competitive prices, of right
quantity and quality, delivered timely by sourcing from reliable
supplier(s).
Contracts help define the scope of services and the deliverables of a
product.
They help define expectations and obligations
Well defined expectations and obligations are imperative to meet
desired objectives and maintain good relationships
Written contracts mitigate ambiguities and misunderstandings -
Reduce risks.
ALL TRANSACTIONS IN THE BUSINESS
WORLD INVOLVE CONTRACTS

45. 45
Service Contract : Consultancy Services / Maintenance Contract /
Vehicle Engagement
Sales Contract : A contract between a company (the Seller) and a
Customer
Purchasing Contract : A contract between your company (the Buyer)
and a Supplier
Partnership Agreement : A contract, which formally establishes the
terms of a partnership between two legal entities
Lease Agreement : Generally an agreement related to rights to enjoy
property
Employment Agreement : Contract between Employer & Employee
Works Contract - Consultancy Contract - Rate Contract etc…. etc…..
Common commercial contracts include Employment Letters, Sales Contract,
Purchase Orders, and Utility Service Agreements etc. Complex contracts are
often necessary for construction projects, goods or services that are highly
regulated, goods or services with detailed technical specifications, intellectual
property (IP) agreements, and International Trade etc.
Contracts Examples

46. Definition of Contract
46
A Contract is an agreement enforceable by law with specific terms
between two or more persons or entities in which there is a promise which
creates obligations to do or not to do something in return for a valuable
benefit known as consideration.
As per Clause 2(h) of
The Indian Contract
Act, 1872,
“An agreement
enforceable by law is
a Contract”

47. 47
Advantages
Contract
Help Define
Scope &
Deliverables
Help
Expectations
& Obligations
Mitigate
Ambiguities &
Uncertainties
- Risks
Clarity on
Terms

48. 48
CONTRACT
AGREEMENT
(meeting of the minds )
+
=
ENFORCEABLE BY LAW
Competent To Contract
Free Consent
Lawful Object
Lawful Consideration
Not Void
PROMISOR /
OFFEROR /
SELLER
PROMISEE /
OFFEREE /
BUYER
PROMISE / OFFER
ACCEPTANCE
Mutuality of Obligation
LEGAL OBLIGATIONS
LegalRelationship
LegalRelationship
Acknowledgment

49. SN Panigrahi
49
a) a Promise / an Offer;
b) an Acceptance of that offer which results in a meeting of the minds
(agreement);
c) a Promise to Perform (Mutuality of Obligation);
d) a Valuable Consideration (which can be a promise or payment in some
form);
e) a time or event when Performance must be made (meet commitments);
f) Definite Terms : Terms of the contract are reasonably certain;
g) Capacity : The parties must have competency and capacity in order to
create a binding contract.
h) a written Instrument.
i) Legal Purpose: A contract must be for a legal purpose in order to be
binding
j) Performance (as per agreement).
Some of the Features of a Contract

50. Essentials Elements of a Valid Contract
1. Agreement.
2. Enforceability by law.
3. At least 2 parties.
4. Proposal.
5. Acceptance.
. 50
6. Intention to legal
relations.
7. Free consent.
8. Contractual capacity.
9. Consideration.
10. Lawful objects.
11. Possibility of
performance.

51. 51
• of the Age of Majority (above 18 yrs of age)
• Of Sound Mind
• Not Disqualified by any Law
Competent
• Free from Coercion, Undue Influence
• Fraud, Misrepresentation or Mistake
Free
Consent
• Not Forbidden by law or Fraudulent
• Would not Defeat the provisions of any laws
• Involves or implies injury to the person or property of
another
• Immoral or opposed to public policy
Lawful
Object
• Not Unlawful
• Void agreements are not contractsNot Void
Contract : Explanation

52. 52
• Promise for a Promise - exchange of mutual promises
• A value that can be objectively determined
• Lawful consideration and with a lawful object.
• An agreement without consideration is void
Consideration
• Performance of contract' means fulfillment of the
obligations by the parties. The parties who make
the contract must fulfill their obligations according to the
terms laid down in the contract
Performance
• In order to form a legally binding contract, the offer must
contain definite and certain terms – that means capable
of readily understanding the terms.
Definite Terms
• A valid contract must be capable of being performed,
An agreement to do an impossible act is void. If the act is
legally or physically impossible to perform,
the agreement cannot be enforced by law.
Possibility of
Performance
Contract : Explanation

53. What is Contract Management?
53
Contract management is the process of managing
contract creation, execution and analysis to maximize
operational and financial performance at an organization,
all while reducing financial risk.
Contract management is the process which ensures all parties to a contract
fully meet their obligations, in order to satisfy the operational objectives of the
contract and the strategic business goals of the customer.
It also involves building a good working relationship between customer and
provider.
It continues throughout the life of a contract and involves managing proactively
to anticipate future needs as well as reacting to situations that arise.

54. SN Panigrahi
54
Through successful contract management organisations can create and
enhance value into the business, increase controls and information
system, increase effectiveness and minimise costs, risks and also
provide strategic and competitive advantages.
Why Contract Management
Strategic Alignment and Streamlining of Operations
Gaining Competitive Advantage
Better Performance Management
Better Compliance & Risk Mitigation
Improved Reporting Benefits
Give clear and Documented Records
Manage and Control Change
Better Business Relationships
Improved Financial Management
Anticipate any Problems

55. Contract
LifeCycle
Contract
Creation
Contract
Collaboration
Contract
Analysis
Contract
Execution &
Administration
Establish
Relationships
Contract
Closure
Contract
Issues &
Resolution
Contract
Monitoring
CONTRACT
LIFE CYCLE MANAGEMENT

56. Phases of the Contracting Process 56
Contract Closure / Feedback
Administration
Ensuring that the contractor adheres to the terms and conditions of the contract, monitoring contractor performance, processing and paying invoices,
executing modifications, handling claims, and closing out the contract.
AwardMaking the best value decision for the award, obtaining all pre-award approvals, executing the contract with the successful offeror, notifying the
unsuccessful offerors, and conducting debriefings.
Evaluation
Evaluating the technical and price proposals submitted by the offerors. The proposals must be responsive to the solicitation package.
Solicitation
Identifying prospective service providers, distributing the solicitation package, and receiving proposals.
Pre-Solicitation
Identifying the requirement, performing market research, and preparing the statement of work and solicitation package.

57. 57
Identify
Needs
Write
Specifications
Raise
Purch. Requisition
Selection of a
Procurement Method
Verification & Study
By Purch. Dept.
Cost / Budget Check & Scrutiny
PR Approval
Vendors Selection &
Bid Notification /
RFQ
Quotes
Receipt and Opening
Award Contract/POProposal Approval
Evaluation
Review By Contracts
Committee
Negotiations
CONTRACT
------- --------- ------- ------ -----
-- --- ------ ------- ------ ------- -
-------- ------ ABCD ------ ------ ----
---- ----------- -------- ------- -----
------- ----- ------- -12345 --- -----
--- ---- ----- ------- ----- ---- ------
----- ------ ------ ------ XYZ
SIGNATURE
VENDOR
Material DeliveryMaterial Receipt & InspectionPayment
`
PROCUREMENT PROCESS & CYCLE

58. SN Panigrahi
58
ContractAdministration
Contract
Maintenance
Monitoring &
Reporting
Payment &
Budget Control
Change Control
Monitoring : Performance & Risk -Reporting (Hard factual)
– Format -Content-Frequency - Channels
Key Performance Indicators - Conducting Contract
milestone reviews - Exceptions
Payment mechanism- Monthly monitoring-Reconciliation-
Budget –commitment- Cash Flow
Planning for the long term
Flexibility for changes within set parameters without
changing the documentation
Change protocol – Authorization – Documentation – Record
Keeping
Performance : Implementation- Control - Monitoring – SQSC;
Resource management and planning
Contract Documentation : Common Data Bank - kept up to date –
Operating from common point -All parties working from the same
documents - Communication; Relationships
CONTRACT ADMINISTRATION

59. SN Panigrahi
59
SCOPE
SCHEDULE
COST
Justification - Scope and the Specifications - Service /
Performance level - Flexibility especially in early stages of long
term contracts
Time Targets – duration- Breakup of schedule of deliveries
Value for money; Price to be paid – CTC – Against Budget –
Outflow – Schedules; Savings in cost & overrun - Revenue
maximization - leakages
MANAGING : SQSC
QUALITY
Set out clearly the expected Performance and Quality - metrics–
quality level & measurement; Improvements above baseline ;
Responsibility : both mutual and individual

60. Firm Fixed Price
(FFP) or Lump
Sum Contract
Fixed Price Plus
Incentive Fee
(FPIF)
Fixed Price
Time &
Material
Fixed Price with
Economic Price
Adjustment (FP/EPA)
Fixed Price with
Re-determination
(FP/RD)
Cost
Reimbursable
Cost
Reimbursement
(CR) or Cost Plus
Fixed Fee (CPFF)
Cost Plus
Incentive Fee
(CPIF)
Cost Plus Award
Fee (CPAF)
Cost Plus
Percentage of
Cost (CPPC)
Types of Contracts

61. Fixed Price Contracts
61
Fixed
Price
Firm Fixed Price Contracts (FFP): The price is fixed firm. Most commonly used
contract type. Favored by buyer if the scope is very Clear. Low Risk to Buyer:
High Risk to Seller
Fixed Price Incentive Fee contracts (FPIF): The price is fixed, with incentive
for over performance and / or penalty for under performance.
Fixed Price with Economic Price Adjustment Contracts (FP-EPA): Applicable
for long term projects. It is a fixed price contract, with special provision for final
price adjustment due to inflation; tied to clear Financial Index like Inflation Index,
Labour Index, Commodity Index, dollar exchange rate etc.,
Price is Fixed Irrespective of Market Fluctuations. Suitable
where Scope is Clearly Defined. Requirement Changes
would typically call for re-negotiating on the Price. Cost &
Time is certain for buyer; but seller bears risk of cost &
time overrun

62. Cost Reimbursable (CR) Cost Plus Contracts
62
Cost
Reimbursable
(CR) Contracts
Cost Plus FIXED FEE contracts (CPFF): Provides the contractor with a fee, or
profit amount, that is determined at the beginning of the contract and does not
change apart from Actual Cost which is Reimbursed.
Cost Plus Percentage of cost contracts (CPPC): Reimburses actual costs +
agreed percentage fee on actual expenses such as 5% of total allowable costs.
More popular over CPFF, as seller gets rational fee based on volume of work..
Cost Plus incentive fee contracts (CPIF): used to encourage performance in
areas critical to the project. Often the contract attempts to motivate contractors to
save or reduce project costs. The use of the cost reimbursable contract with an
incentive fee is one way to motivate cost reduction behaviors.
Cost Plus AWARD fee contracts (CPAF): reimburses the contractor for all allowable costs plus
a fee that is based on performance criteria. The fee is typically based on goals or objectives that
are more subjective. An amount of money is set aside for the contractor to earn through
excellent performance, and the decision on how much to pay the contractor is left to the
judgment of the project team. The amount is sufficient to motivate excellent performance.
In these contracts, all applicable COSTs are reimbursed along with an
agreed FEE representing seller profit. These contracts are inherently
flexible to Scope / Requirement changes. Buyer takes More Risk
as the overall time & cost is open ended.

63. Time & Materials (T&M)
63
The seller charges for TIME and AMOUNT of materials (including travel) used
as per agreed RATE.
The rates are fixed for every category of resources and includes profit. Rates
are charged like DOLLAR per Hour, DOLLAR per Ton...... Per Unit Proce.
These contracts are inherently flexible to Requirement Changes. This
contract is often used in Annual Maintenance Contracts / Rate Contracts,
Resource Engagement Contracts, Material Handling Contracts etc where
Scope is not Very Clear at the begining.
T&M contracts have characteristics of both FP & CR contracts, therefore also
called as Hybrid Contracts.
They resemble FP with predefined unit labor or material rates and at the same
time resemble cost reimbursable as Time & Cost are OPEN ended. Many
buyers place ‘not-to- exceed’ (ceiling) values and time limits placed on all T&M
contracts to prevent unlimited cost growth.
In T&M, some risk is taken by seller as they need to bear the differences
between agreed RATE Vs. Market RATE; but more risk is taken by buyer as still
the time & cost is OPEN ended.

64. 64
Contract Type
Risk
Contract Type & Risk

65. 65
Solicitation Documents
Solicitation documents are the documents used to request potential suppliers to
offer a quotation, bid or proposal to provide the required goods, services or
works.
Preparation of solicitation documents covers the process of assembling and
formalising the information and documentation necessary for potential suppliers
to prepare responsive and easily comparable offers, consistent with the
requirement and procurement strategy.
Solicitation Process

66. Solicitation Documents
RFx
66
Procurement Documents are used to solicit prospective sellers to bid for
procurement items. Examples of procurement documents are :
Request for Information (RFI),
Request for Proposal (RFP),
Request for Quotation (RFQ).
They generally include a description of the expected responses, procurement
statement of work, contractual requirements or conditions. Procurements
documents involving government contracting might be governed by regulations
as well.

67. Types of Solicitation Documents
RFX
67
RFI RFI (Request for Information) is really a preliminary document used
by companies that don’t understand the marketplace they’re about to
enter. RFI is more of a fact-finding document.
RFP RFP (Request for Proposal), is usually follows an RFI. RFP should
contain much more specificity in terms of what a company’s needs.
RFP allows for the flexibility of the vendor to suggest creative solutions
to the problem or Alternate Proposals.
RFQ RFQ (Request for Quotation) is an more detailed document calling
for price bids for exact specifications required by the company.
Typically, an RFQ seeks an itemized list of prices for something that is
well-defined and quantifiable, such as hardware.
RFB Alternative term for invitation to bid (ITB)
IFB An invitation for bid (IfB) or invitation to bid (ItB) is an invitation to
contractors or equipment suppliers to submit an offer on a specific
project to be realized or product or service to be furnished.

68. 68
Request for
Information
(RFI)
It’s often used in the early stages of a procurement process, where
buyers are keen to discover relevant information from potential
suppliers.
It is a request seeking broad data and understanding from
Bidders. It is traditionally undertaken in the planning stage of a
project where Scope is not Very Clear.
A request for information is usually the first step and will
precede either an RFP or RFQ.
Request for
Proposal
(RFP)
An RFP is a request by buyers for potential suppliers to come up
with a proposal for a project. These requests are often used when a
buyer has an understanding of the outcome they want, but are
uncertain of the best way to undertake it.
RFPs tend to be more open than RFIs, allowing a supplier to provide
their own suggestions around how they would design and complete
a particular project. RFPs are Requested to Solicit Innovative
Solutions / Creative Ideas or Proposals. RFPs provide for greater
flexibility to Encourage Innovation.
Solicitation Documents
RFx

69. Procurement Documents
RFx
69
Request for
Quotation
(RFQ)
An RFQ is similar to an RFP but with a more defined scope setting
out the needs of a buyer. It will often have a formal list of work,
supplies and equipment required for a project, that suppliers will then
submit costs for.
An RFQ is generally used to obtain pricing, delivery information,
terms and conditions from suppliers. In this case, requestors have a
clear understanding of what they need, including requirements
and specifications.
Invitation for
bid (IFB)
Invitation For Bid (IFB) solicitation will describe the planned project in
detail, lay out submission requirements including deadlines, project
scope and duration, minimum qualifications, mandatory service
standards and required warranties. It also provides a description of
the overall selection process including timelines. An Invitation to Bid
differs from a Request for Proposal (RFP) in that the objective is to
obtain contractors’ proposals concerning the costs to complete the
project with less emphasis on the bidder introducing its own ideas for
how to complete a project or perform the service.

70. 70
Request for
Tender
(RFT)
Request for tender refers to the open invitation that is sent to the
suppliers to respond to a defined need and not a request that is sent
to potential suppliers.
This is a holistic document that is based on stated delivery
requirements, performance specifications, terms and conditions.
Solicitation Documents
RFx

71. RFx
71

72. 72

73. Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 73