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12 project procurement management
The document discusses project procurement management. It provides definitions of key terms like contracts, procurement, and contract types. It also outlines the processes involved in procurement management according to the Project Management Body of Knowledge, including planning procurements, conducting procurements, controlling procurements, and closing procurements. The inputs, tools and techniques, and outputs of procurement planning are described. Different types of contracts like fixed-price, cost-reimbursable, and time and materials are also defined.
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12 project procurement management
- 1. MBA, PMP, B.Sc.(CivilEng.) : PMO manager EWU-DIU omeralsayed@yahoo.com +249-1234 94 587
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- 4. • Contracts : • legal documents between a buyer and a seller •represents a mutually binding agreement that obligates : • Contracts : • legal documents between a buyer and a seller • represents a mutually binding agreement that obligates : Agreements (simple or complex), including : the seller: • to provide something of value the seller: • to provide something of value the buyer : • to provide monetary or other valuable compensation. the buyer : • to provide monetary or other valuable compensation. Agreement Understanding Subcontract purchase order.
- 5. • a contractor, subcontractor, vendor, service provider, or supplier. • a contractor, subcontractor, vendor, service provider, or supplier. the seller : •A client, customer, prime contractor, contractor, acquiring organization, service requestor, or purchaser. • A client, customer, prime contractor, contractor, acquiring organization, service requestor, or purchaser. the buyer: BIDDER SELECTED SOURCE VENDOR
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- 10. This contract type is used whenever the. It is a fixed‐price contract, • but with a special provision allowing for pre defined • final adjustments to the contract price due to changed conditions •(inflation changes, or cost increases/decreases). needs to relate to some reliable financial index, to precisely adjust the final price. intended to protect both buyer and seller from external conditions beyond their control
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- 14. Inputs Project management plan Requirements documentation Riskregister Activity resource requirements Project schedule Activity cost estimates Stakeholder register Enterprise environmental factors Organizational process assets Tools&Techniques Make-or-buy analysis Expert judgment Market research Meetings Outputs Procurement management plan Procurement statement of work Procurement documents Source selection criteria Make-or-buy decisions Change requests Project documents updates
- 16. • Project scope statement, WBS, WBS Dictionary• Project scope statement, WBS, WBS Dictionary 12.1.1.1 Project Management Plan •Important information about project requirements. • Requirements with contractual and legal implications (HSE, performance, insurance, intellectual property rights, equal employment opportunity, licenses, and permits). • Important information about project requirements. • Requirements with contractual and legal implications (HSE, performance, insurance, intellectual property rights, equal employment opportunity, licenses, and permits). 12.1.1.2 Requirements Documentation • provides the list of risks, along with the results of risk analysis and risk response planning. • provides the list of risks, along with the results of risk analysis and risk response planning. 12.1.1.3 Risk Register
- 17. • contain information on specific needs such as people, equipment, or location.• contain information on specific needs such as people, equipment, or location. 12.1.1.4 Activity Resource Requirements •contains information on required timelines or mandated deliverable dates.• contains information on required timelines or mandated deliverable dates. 12.1.1.5 Project Schedule • Cost estimates developed by the procuring activity are used to evaluate the reasonableness of the bids or proposals received from potential sellers. • Cost estimates developed by the procuring activity are used to evaluate the reasonableness of the bids or proposals received from potential sellers. 12.1.1.6 Activity Cost Estimates • provides details on the project participants and their interests in the project.• provides details on the project participants and their interests in the project. 12.1.1.7 Stakeholder Register
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- 20. 12.1.2.2 Expert Judgment • to assess the inputs to and outputs. • to develop proposals evaluate criteria •services of legal staff. 12.1.2.3 Market Research • examination of industry and specific vendor capabilities. • leverage information gained at conferences, to identify market capabilities. • refine particular objectives to leverage maturing technologies while balancing risks. 12.1.2.4 Meetings • In addition to Research meetings with potential bidders • provide specific information to formulate a procurement strategy
- 21. Types of contracts Risk management issues; independent estimates used/evaluation criteria; team responsibilities Standardized procurement documents Managing multiple suppliers; Coordinating procurement with other constraints and assumptions long lead times make‐or‐buy decisions & linking to Estimate Schedule deliverables scheduled dates performance bonds/insurance (risk) sellers WBS guides Form/format procurement/contract SOW Identifying prequalified sellers Procurement metrics how goods and services will be acquired from outside. how the procurement processes will be managed from developing procurement documents through contract closure.
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- 25. • whether particular work can best be accomplished by the project team or needs to be purchased from outside sources 12.1.3.5 Make‐or‐Buy Decisions • A decision that involves procuring goods, services, or resources typically requires a change request. 12.1.3.6 Change Requests •Requirements documentation, • Requirements traceability matrix, and • Risk register. 12.1.3.7 Project Documents Updates
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- 29. 12.2.1.5 Project Documents • the risk‐related contract decisions included within the risk register. 12.2.1.6 Make‐or‐Buy Decisions • Factors that influence make‐or‐buy decisions may include: 12.2.1.7 Procurement Statement of Work •provides suppliers with a clearly stated set of goals, requirements, and outcomes. • critical component of the procurement • can be modified as needed until a final agreement is in place. • may include: Core capabilities Core capabilities Value delivered by vendors Value delivered by vendors Risks cost‐ effective manner Risks cost‐ effective manner Capability internally vs. vendor Capability internally vs. vendor Specifications Quantity desired, Quality levels, Performance data, Period of performance, Work location Other requirements.
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- 34. clarify the structure, requirements, and other terms of the purchases to be reflected in Final contract. responsibilities, authority to make changes, applicable terms and governing law, technical and business management approaches, proprietary rights, contract financing, technical solutions, Overall schedule, payments, and price. The project manager&PM team may provide assistance, and, if needed, to add clarification of the project’s technical, quality, and management requirements.
- 35. • to be in a competitive range based upon the proposal or bid evaluation, judged • a draft contract that will become the actual contract when an award is made. negotiated •of all complex, high‐value, high‐risk procurements prior to award. Final senior management approval
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- 39. • To authorize the seller’s work at the appropriate time. Direct and Manage Project Work. • To inspect and verify the adequacy of the seller’s product.Control Quality. •To assure that changes are properly approved and that all those with a need to know are aware of such changes. Perform Integrated Change Control. • To ensure that risks are mitigated.Control Risks. • monitoring payments to the seller.financial management
- 40. 12.3.1.1 Project Management Plan • how the procurement processes will be managed 12.3.1.2 Procurement Documents • supporting records for administration of the procurement (contract awards and pSOW) 12.3.1.3 Agreements •understandings between parties, including understanding of the duties of each party. 12.3.1.4 Approved Change Requests • modifications to the terms and conditions (pSOW, pricing, descriptions of the products) 12.3.1.5 Work Performance Reports • Technical documentation & Work performance information 12.3.1.6 Work Performance Data • Quality standards satisfied, costs incurred invoices paid.
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- 42. structured review of the seller’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract. review of seller‐prepared documentation buyer inspections quality audits conducted performance review objective : to identify performance • successes or failures, progress with respect to the pSOW, and contract noncompliance allow the buyer to quantify •the seller’s demonstrated ability or inability to perform work.
- 43. • verify compliance in the seller’s work processes or deliverables. 12.3.2.3 Inspections and Audits • supplied by sellers ,evaluated against the agreement requirements &reported to provides information about how effectively the seller is achieving the contractual objectives. 12.3.2.4 Performance Reporting •processed accordance with the terms of the contract by the accounts payable system after certification of satisfactory work by an authorized person on the project team. 12.3.2.5 Payment Systems
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- 46. • to support later claims or new procurements. provides a basis for identification of current or potential problems • supports improved forecasting, risk management, and decision making. increases knowledge of the performance of the procurement, •there is a dispute with the vendor. assist in the event • potential issues are addressed promptly to the satisfaction of all parties. support improved communications with vendors
- 47. •Requested but unresolved changes lead to a claim (uniquely identified and documented by project correspondence). 12.3.3.2 Change Requests •Procurement management plan ‐ Schedule baseline ‐ Cost baseline. 12.3.3.3 Project Management Plan Updates •procurement documentation (procurement contract with all supporting schedules, requested approved/unapproved contract changes) 12.3.3.4 Project Documents Updates •Correspondence ‐Payment schedules and requests ‐Seller performance evaluation documentation 12.3.3.5 Organizational Process Assets Updates
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- 50. 12.4.1.1 Project Management Plan • contains the procurement management plan, which provides the details and guidelines for closing out procurements. 12.4.1.2 Procurement Documents • all procurement documentation is collected, indexed, and filed. •Information on contract schedule, scope, quality, and cost performance along with all contract change documentation, payment records, and inspection results are cataloged. • lessons learned information ‐ evaluating contractors for future contracts.
- 51. 12.4.2.1 Procurement Audits • structured review of the procurement process to identify successes and failures that warrant recognition in the preparation or administration of other procurement contracts • structured review of the procurement process to identify successes and failures that warrant recognition in the preparation or administration of other procurement contracts 12.4.2.2 Procurement Negotiations •In all procurement relationships, the final equitable settlement of all outstanding issues, claims, and disputes by negotiation is a primary goal (if not >> ADR). • In all procurement relationships, the final equitable settlement of all outstanding issues, claims, and disputes by negotiation is a primary goal (if not >> ADR). 12.4.2.3 Records Management System • to manage contract and procurement documentation and records. • Contract documents and correspondence are archived through the records management system as part of the Close Procurements process. • to manage contract and procurement documentation and records. • Contract documents and correspondence are archived through the records management system as part of the Close Procurements process.
- 52. 12.4.3.1 Closed Procurements • The buyer, provides the seller with formal written notice that the contract has been completed. • Requirements for formal procurement closure are usually defined in the terms and conditions of the contract and are included in the procurement management plan. 12.4.3.2 Organizational Process Assets Updates •Procurement file. • Deliverable acceptance. • Lessons learned documentation
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