Project management training presentation

1. Procurement Management
Martin Sillaots
2019
# 9

2. Purpose of the Subcontracting
Purchase of products, services or results
outside of the project organisation
www.projektor.ee/pm/#procurement

3. Subcontracting Management
• Procurement planning
• Planning call for bids
• Biding
• Selecting partners
• Contract administration
• Contract closure
www.projektor.ee/pm/#procurement

4. Project Phases and Processes
Initiation
Planning
Execution Control
Closing
www.projektor.ee/pm/#procurement

5. Subcontracting in the Project Plan
Scope
definition
Quality
planning
Activity
definition
Activity
sequencing
Duration
estimation
Schedule
development
Organization
planning
Resource
planning
Communica-
tion planning
Procurement
planning
Plan
Bidding
Select
sellers
Seller
responses
Risk
management
Risk
identification
Qualitative
analysis
Quantitative
analysis
Response
planning
Budgeting
Project
plan
Initiation
Execution
WBS
www.projektor.ee/pm/#procurement

6. Inputs:
- Environment factors
- Organization assets
- Project Scope
- WBS
- Project schedule
- Risks
- Procurement plan
Methods:
- Make or buy analysis
- Contract types
- Standard templates
- Bidder conferences
- Evaluation
techniques
- Evaluation criteria
- Expert judgments
- Contract negotiation
Outputs
- Contract work
statement
- Make or buy
decisions
- Procurement
documents
- Qualified sellers list
- Proposals
- Selected sellers
- Contracts
- Change requests
Subcontracting Planning
www.projektor.ee/pm/#procurement

7. Inputs
Subcontracting
www.projektor.ee/pm/#procurement

8. Procurement Management Plan
• Contract type
• Expert evaluators
• Evaluation methods and criteria
• Standard documents
• Constrains and assumptions
• Responsibilities for project team or procurement office
• Connection with the schedule
www.projektor.ee/pm/#procurement

9. Methods
Subcontracting
www.projektor.ee/pm/#procurement

10. Make or Buy Analysis
www.cleverism.com/make-or-buy-decision-step-by-step-guide

11. Make or Buy Factors (Expenses)
Make:
• Labor
• Inventory
• Capital
• Materials
• Operational
• Management
• Follow-on expenses
Buy:
• Purchase price
• Transportation
• Inspection
• Follow-on expenses
www.projektor.ee/pm/#procurement

12. Contract Types
Fixed sum or lump-sum
CPFF = Cost + Fixed Fee
CPF = Cost + Fee
CPIF = Cost + Incentive Fee
T&M = Time & Materials
Paymentsbasedon
Investor’sControl
WorkDescription
RisktoSupplier
Supplier’smotivation
Result
Time
Low
High
Detail
General
High
Low High
Low

13. Evaluation Techniques
• Weighting system
• Independent estimates
• Screening system
• Seller rating systems
• Proposal evaluation techniques
www.projektor.ee/pm/#procurement

14. Evaluation Criteria
• Understanding of needs
• Overall cost
• Technical capacity and approach
• Management capacity and approach
• Financial capacity
• Production capacity
• Business size and type
• References and previous experience
• IPR www.projektor.ee/pm/#procurement

15. Exercise
Select one task from your project for
subcontracting.
What are the minimum requirements for the
contractor?
www.projektor.ee/pm/#procurement

16. State Procurement Criteria Example
• No criminal or administrative penalties
• No risk to bankruptcy
• No unpaid taxes
• Last 3 years net turnover bigger then 150 000
• Experience in similar projects
– Total turnover at least 75 000
– One project bigger then 50 000
• Project manager has PMI certificate (issued or renewed
during last 3 years)
• …
www.projektor.ee/pm/#procurement

17. Outputs
Subcontracting
www.projektor.ee/pm/#procurement

18. Procurement Documents
• Bidding invitation
• Proposal for cooperation
• Call for price offers
• Call for negotiations
• Initial offer
• Contract
www.projektor.ee/pm/#procurement

19. e.g. State Procurement Documentation
• Call for tender
• Conditions for qualification
• Compliance with conditions
• Evaluation criteria
• Cost template
• Schedule template
https://riigihanked.riik.ee/register/Home.html

20. E.G: Schedule Change Requests
www.projektor.ee/pm/#procurement

21. Procurement Contract
Administration
Ensuring that seller’s performance meets
contractual requirements
www.projektor.ee/pm/#procurement

22. Project Phases and Processes
Initiation
Planning
Execution Control
Closing
www.projektor.ee/pm/#procurement

23. Procurement in the Project Execution
Information
distribution
Project
execution
Procurement
management
Reporting
Team
development
Schedule
control
Scope
verification
Cost
control
Quality
control
Risk
monitoring
Change
management
Planning
Closing
www.projektor.ee/pm/#procurement

24. Inputs:
- Contract
- Selected sellers
- Performance reports
- Approved change
requests
Methods:
- Contract change
control system
- Performance review
- Inspections
- Performance
reporting
- Payment system
- Claims admin
- IS
Outputs
- Documentation
- Change Requests
- Corrective actions
- Plan updates
Procurement Contract
Administration
www.projektor.ee/pm/#procurement

25. Procurement End
martinsillaots@gmail.com