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PMP - Procurement
revision and questions
Prepared by:
Engr. Mohamed Maged, PMP
Admin of:
https://www.facebook.com/Prof.Planner
Instructor: Mohamed Maged
Senior Project Control Engineer, B.Sc. of Civil engineering – Ain Shams
University, with experience in MENA region of (construction, infrastructure,
and roads) Mega projects, in professions of Contract administration, Procurement,
Tender estimating, Cost control, Planning & Claim analysis.
Instructor of Planning & Project Management:
- Construction Management Planning and Control (CMPC).
- Delay, Claim and Dispute Resolution (DCDR) in PMBOK, FIDIC & SCL protocol.
- Project Management Professional (PMP).
- Free lectures with cooperation of Egyptian Engineers Association in Saudi:
- Product oriented construction management
- Top 10 planning fundamentals
- Scope creep – cases and preventive actions
- Claims and dispute resolution in FIDIC
Mohamed Maged (Professional Certificates)
PMP Project Management Professional (PMI – USA)
SFC Scrum Fundamentals Certified (SCRUM study)
Associate of Chartered Institute of Arbitrators (CIArb - London)
Fellow of Association of International Arbitration (AIA - Brussels)
FIDIC Contracts Consultant: International academy of mediation and
arbitration - Egypt.
Six Sigma Yellow Belt Professional (6 Sigma Study- PMI)
Mohamed Maged (Prof. Planner)
Admin of the biggest online community of Arab Planners (10,000+)
(Facebook Page: to be prof. planner, related group: Best Advice for
Planners – Public group)
SlideShare: www.slideshare.net/MohamedMaged8/
Planning fundamentals: http://www.slideshare.net/Mohamed
Maged8/50qts-of-planning-fundamentals-ver04
YouTube Channel: https://www.youtube.com/ArabPlanners.
Arranged Two Annual Conferences of Planning and
Project Management (Anniversary of Facebook Page: Prof.Planner)-
American University in Cairo, August 2014 & 2015.
A GUIDE TO THE PROJECT MANAGEMENT BODY OF
KNOWLEDGE (PMBOK® Guide) – Fifth Edition
• Procurement (chapter 12) Review
• Exam - test questions
5
6
Procurement
Management in
PMBOK
12.1. Plan Procurement Management
Plan Procurement
Management. The
process of
documenting project
procurement decisions,
specifying the
approach, and
identifying potential
sellers.
7
Definitions
Make-or-Buy Analysis. The process of gathering and organizing data about product
requirements and analyzing them against available alternatives including the purchase or
internal manufacture of the product (consider risk for this strategic decision).
Market Research. The process of gathering information at conferences, online reviews,
and a variety of sources to identify market capabilities.
Source Selection Criteria. required attributes of seller,
objective or subjective (Risk, Capability/ Capacity,
Warranty, Past performance,..) may use screening or
weighting systems- (sole source the only provider available,
single source a preferred vendor).
Make-or-Buy Decisions. Decisions made regarding the
external purchase or internal manufacture of a product
(depends on the duration of use).
8
Make-or-Buy Example
9
Procurement
documents
The documents in bid and
proposal include: buyer’s
Invitation for Bid (IFB),
Invitation for Negotiations,
Request for Information (RFI),
Request for Quotation (RFQ),
Request for Proposal (RFP),
and seller’s responses.
10
What’s Contract
Legally binding relationship between parties to define procurement statement
of work, requirements of reporting, payment, roles, responsibilities, and risk
allocation (helps in better communication, clear responsibilities, good change
management mechanisms).
11
Contractual
relationships in
projects
Contract Types:
1- Fixed Price
2- Cost Plus
3- Time & Material
Buyer Vs Seller
Employer Contractor
Contractor Subcontractor
Purchaser Supplier
Pays money Offers service
12
Fixed price
- Contract Types
13
Cost-Reimbursable
- Contract Types
14
Time and Material
- Contract Type
15
Contract type
selection
16
Incentive contracts
examples
17
Contract type and
risk assessment
The project manager has the
identified project risks.
PM needs to make sure
provisions are included in the
contract to address these risks.
18
-Agreement -Particular Conditions
-General Conditions -Special Specs.
-General Specs. -Drawings
-B.O.Q.
Words are binding more than no.s
Contract priority
of documents
Good terms are easy to understand: plain language & visual aids.
19
12.2. Conduct Procurements
Conduct
Procurements. The
process of obtaining
seller responses,
selecting a seller,
and awarding a
contract.
Conduct
Procurements
20
OUTPUTS:
Selected Sellers. The sellers selected to
provide a contracted set.
Agreements. the initial intentions of a project
after (LOI: letter of intent) if used. This can
take the form of a contract, memorandum of
understanding (MOU), letters of agreement,
verbal agreements, a purchase order, email,
etc. (include terms and conditions).
Conduct
Procurements
21
12.3. Control Procurements
Control
Procurements
Organizational
Process Assets
Updates.
(Correspondence,
Payment schedules
and requests, Seller
performance
evaluation
documentation).
22
Control
Procurements
Contract Change Control System. The system used to collect, track, adjudicate, and communicate
changes (CCB might review and approve, but only the procurement manager has the authority to sign a
change).
Procurement Performance Reviews. A structured review of the seller’s progress to deliver project scope
and quality, within cost and on schedule, as compared to the contract.
Inspections and Audits. A process to observe performance of contracted work or a promised product
against agreed-upon requirements, any breach happens (Privity: no contractual relationship between
client and subcontractors, so he has to deal with him through the main contractor).
Performance Reporting. See work performance reports (Integration – Control).
Payment Systems. The system used to provide and track supplier’s invoices and payments.
Claims Administration. The process of processing, adjudicating, and communicating contract claims
(contested or potential constructive changes: requested change can’t reach agreement between
buyer and seller).
Records Management System. A specific set of processes, related control functions, and tools that are
consolidated and combined to record and retain information about the project.
23
12.4. Close Procurements
Close Procurements. The
process of completing each
project procurement
(completion or termination),
also involves administrative
activities such as finalizing
open claims, updating
records to reflect final
results, and archiving such
information for future use.
Close
Procurements
24
Tools & Techniques:
Procurement Audits. The review of contracts and contracting processes for completeness,
accuracy, and effectiveness (audits are used to improve processes and learn from
success).
Records Management System. by the project manager to manage, archive contract and
procurement documentation , correspondence and records.
OUTPUTS:
Closed Procurements. Project contracts or other procurement agreements that have been
formally acknowledged by the proper authorizing agent as being finalized and signed off.
Organizational Process Assets Updates. (Procurement file, Deliverable acceptance,
Lessons learned documentation).
Close
Procurements
25
Pre-contract: clarify the structure, requirements,
and other terms of the purchases so that mutual
agreement can be reached prior to signing the
contract. Final contract language reflects all
agreements reached (in order: performance,
scope, schedule, price).
Post contract: the final equitable settlement of
all outstanding issues, claims, and disputes by
negotiation is preferred. Otherwise some form
of alternative dispute resolution (ADR) including
mediation or arbitration may be explored.
When all else fails, litigation in courts is the least
desirable option.
Procurement
Negotiations
26
You may refer to any of these tactics:
• Fait Accompli - Standard contract terms that are nonnegotiable. (In reality, anything in the contract is negotiable
although your adversary will never admit it).
• Deadline - Make it clear that this is the time by which they must do. As the deadline approaches, increase the
emotional pressure, talking more about what will happen if the deadline is missed.
• Good guy /bad guy - One person acts in an aggressive and pushy way, making unreasonable demands and requiring
compliance. The other person acts in kind and friendly, asking nicely - and getting compliance.
• Missing man - The person who can actually make the decision is missing from the negotiation. The negotiator can then
negotiate for a lower price or more favorable terms which they claim they can agree to.
• Limited authority - Refusing to give in on items because you have no authority to do what is being requested.
• Fair and reasonable - You can engage the other person by asking them 'what is fair'. You can also bring something
into the negotiation that is, by definition, fair. You can also reject criteria from the adversary on the grounds that it is not
fair.
• Unreasonable - Stating that the other side is making unreasonable demands of you in the negotiation.
• Delay - Stretching out the negotiation, especially at critical moments.
• Attack - A direct attack on your integrity, trustworthiness, competence, or other such bullying bombast designed to
force compliance out of you.
Negotiation
tactics
Procurement test questions
27
28
29
30
31
32
33
34
35
36
37
38
39
Thank You
Don’t Hesitate to contact….
M.Maged
magedkom@gmail.com
mobile : 00966-580264968

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Pmp procurement rev

  • 1. PMP - Procurement revision and questions Prepared by: Engr. Mohamed Maged, PMP Admin of: https://www.facebook.com/Prof.Planner
  • 2. Instructor: Mohamed Maged Senior Project Control Engineer, B.Sc. of Civil engineering – Ain Shams University, with experience in MENA region of (construction, infrastructure, and roads) Mega projects, in professions of Contract administration, Procurement, Tender estimating, Cost control, Planning & Claim analysis. Instructor of Planning & Project Management: - Construction Management Planning and Control (CMPC). - Delay, Claim and Dispute Resolution (DCDR) in PMBOK, FIDIC & SCL protocol. - Project Management Professional (PMP). - Free lectures with cooperation of Egyptian Engineers Association in Saudi: - Product oriented construction management - Top 10 planning fundamentals - Scope creep – cases and preventive actions - Claims and dispute resolution in FIDIC
  • 3. Mohamed Maged (Professional Certificates) PMP Project Management Professional (PMI – USA) SFC Scrum Fundamentals Certified (SCRUM study) Associate of Chartered Institute of Arbitrators (CIArb - London) Fellow of Association of International Arbitration (AIA - Brussels) FIDIC Contracts Consultant: International academy of mediation and arbitration - Egypt. Six Sigma Yellow Belt Professional (6 Sigma Study- PMI)
  • 4. Mohamed Maged (Prof. Planner) Admin of the biggest online community of Arab Planners (10,000+) (Facebook Page: to be prof. planner, related group: Best Advice for Planners – Public group) SlideShare: www.slideshare.net/MohamedMaged8/ Planning fundamentals: http://www.slideshare.net/Mohamed Maged8/50qts-of-planning-fundamentals-ver04 YouTube Channel: https://www.youtube.com/ArabPlanners. Arranged Two Annual Conferences of Planning and Project Management (Anniversary of Facebook Page: Prof.Planner)- American University in Cairo, August 2014 & 2015.
  • 5. A GUIDE TO THE PROJECT MANAGEMENT BODY OF KNOWLEDGE (PMBOK® Guide) – Fifth Edition • Procurement (chapter 12) Review • Exam - test questions 5
  • 6. 6 Procurement Management in PMBOK 12.1. Plan Procurement Management Plan Procurement Management. The process of documenting project procurement decisions, specifying the approach, and identifying potential sellers.
  • 7. 7 Definitions Make-or-Buy Analysis. The process of gathering and organizing data about product requirements and analyzing them against available alternatives including the purchase or internal manufacture of the product (consider risk for this strategic decision). Market Research. The process of gathering information at conferences, online reviews, and a variety of sources to identify market capabilities. Source Selection Criteria. required attributes of seller, objective or subjective (Risk, Capability/ Capacity, Warranty, Past performance,..) may use screening or weighting systems- (sole source the only provider available, single source a preferred vendor). Make-or-Buy Decisions. Decisions made regarding the external purchase or internal manufacture of a product (depends on the duration of use).
  • 9. 9 Procurement documents The documents in bid and proposal include: buyer’s Invitation for Bid (IFB), Invitation for Negotiations, Request for Information (RFI), Request for Quotation (RFQ), Request for Proposal (RFP), and seller’s responses.
  • 10. 10 What’s Contract Legally binding relationship between parties to define procurement statement of work, requirements of reporting, payment, roles, responsibilities, and risk allocation (helps in better communication, clear responsibilities, good change management mechanisms).
  • 11. 11 Contractual relationships in projects Contract Types: 1- Fixed Price 2- Cost Plus 3- Time & Material Buyer Vs Seller Employer Contractor Contractor Subcontractor Purchaser Supplier Pays money Offers service
  • 14. 14 Time and Material - Contract Type
  • 17. 17 Contract type and risk assessment The project manager has the identified project risks. PM needs to make sure provisions are included in the contract to address these risks.
  • 18. 18 -Agreement -Particular Conditions -General Conditions -Special Specs. -General Specs. -Drawings -B.O.Q. Words are binding more than no.s Contract priority of documents Good terms are easy to understand: plain language & visual aids.
  • 19. 19 12.2. Conduct Procurements Conduct Procurements. The process of obtaining seller responses, selecting a seller, and awarding a contract. Conduct Procurements
  • 20. 20 OUTPUTS: Selected Sellers. The sellers selected to provide a contracted set. Agreements. the initial intentions of a project after (LOI: letter of intent) if used. This can take the form of a contract, memorandum of understanding (MOU), letters of agreement, verbal agreements, a purchase order, email, etc. (include terms and conditions). Conduct Procurements
  • 21. 21 12.3. Control Procurements Control Procurements Organizational Process Assets Updates. (Correspondence, Payment schedules and requests, Seller performance evaluation documentation).
  • 22. 22 Control Procurements Contract Change Control System. The system used to collect, track, adjudicate, and communicate changes (CCB might review and approve, but only the procurement manager has the authority to sign a change). Procurement Performance Reviews. A structured review of the seller’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract. Inspections and Audits. A process to observe performance of contracted work or a promised product against agreed-upon requirements, any breach happens (Privity: no contractual relationship between client and subcontractors, so he has to deal with him through the main contractor). Performance Reporting. See work performance reports (Integration – Control). Payment Systems. The system used to provide and track supplier’s invoices and payments. Claims Administration. The process of processing, adjudicating, and communicating contract claims (contested or potential constructive changes: requested change can’t reach agreement between buyer and seller). Records Management System. A specific set of processes, related control functions, and tools that are consolidated and combined to record and retain information about the project.
  • 23. 23 12.4. Close Procurements Close Procurements. The process of completing each project procurement (completion or termination), also involves administrative activities such as finalizing open claims, updating records to reflect final results, and archiving such information for future use. Close Procurements
  • 24. 24 Tools & Techniques: Procurement Audits. The review of contracts and contracting processes for completeness, accuracy, and effectiveness (audits are used to improve processes and learn from success). Records Management System. by the project manager to manage, archive contract and procurement documentation , correspondence and records. OUTPUTS: Closed Procurements. Project contracts or other procurement agreements that have been formally acknowledged by the proper authorizing agent as being finalized and signed off. Organizational Process Assets Updates. (Procurement file, Deliverable acceptance, Lessons learned documentation). Close Procurements
  • 25. 25 Pre-contract: clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached prior to signing the contract. Final contract language reflects all agreements reached (in order: performance, scope, schedule, price). Post contract: the final equitable settlement of all outstanding issues, claims, and disputes by negotiation is preferred. Otherwise some form of alternative dispute resolution (ADR) including mediation or arbitration may be explored. When all else fails, litigation in courts is the least desirable option. Procurement Negotiations
  • 26. 26 You may refer to any of these tactics: • Fait Accompli - Standard contract terms that are nonnegotiable. (In reality, anything in the contract is negotiable although your adversary will never admit it). • Deadline - Make it clear that this is the time by which they must do. As the deadline approaches, increase the emotional pressure, talking more about what will happen if the deadline is missed. • Good guy /bad guy - One person acts in an aggressive and pushy way, making unreasonable demands and requiring compliance. The other person acts in kind and friendly, asking nicely - and getting compliance. • Missing man - The person who can actually make the decision is missing from the negotiation. The negotiator can then negotiate for a lower price or more favorable terms which they claim they can agree to. • Limited authority - Refusing to give in on items because you have no authority to do what is being requested. • Fair and reasonable - You can engage the other person by asking them 'what is fair'. You can also bring something into the negotiation that is, by definition, fair. You can also reject criteria from the adversary on the grounds that it is not fair. • Unreasonable - Stating that the other side is making unreasonable demands of you in the negotiation. • Delay - Stretching out the negotiation, especially at critical moments. • Attack - A direct attack on your integrity, trustworthiness, competence, or other such bullying bombast designed to force compliance out of you. Negotiation tactics
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  • 40. Thank You Don’t Hesitate to contact…. M.Maged magedkom@gmail.com mobile : 00966-580264968