procurement Management

Project Procurement Management
• Project Procurement Management includes the
processes necessary to purchase or acquire
products, services
• Results needed from outside the project team

What is supply chain
• A supply chain is defined as the entire process of
making and selling commercial goods, including every
stage from the supply of materials and the manufacture
of the goods through to their distribution and sale.
• Successfully managing
supply chains is
essential to any
company hoping to
compete

4
Example of an Extended Supply Chain
Product
Designer
Market
Research
Raw Material
Producer
Retail
Customer
Retailer
Distributor
Manufacture
Logistic
Provider Finance
Provider
Business
Customer

Contracts
• Contracts are legal documents between a
buyer and a seller(External entity)
• A contract is a legal relationship subject to
remedy in the courts
• Exchange of good and services(monitory value)
• Disputes are communicated in formal
communiction
5

• Agreement
– An agreement is simply an understanding or
arrangement between two or more parties(trust basis)
– usually an informal arrangement, often unwritten,
between two or more parties
– The parties simply consent to do or refrain from doing
something.
– An agreement can’t be enforced in court through
litigation
– Eg; internal service level agreements, memos, letter of
intent, charter
– Disputes are resolved by conversation and email

Procurement Organization
• Centralize procurement
• Decentralize procurement
7

Centralized Proc
Advantageous
• Good expertise available
• Standardized proc
practices and
procedures
• Continuous
development
opportunities for proc
people
• Clear career paths
Disadvantageous
• PM may not get the
services in a timely
manner
• Proc manager will find
it difficult to
concentrate on many
projects
8

Decentralized Proc
Advantageous
• Procumbent rep has
good understanding of
the needs
• PM gets flexible service
• Proc reps level of
loyalty is high
Disadvantageous
• Lack of standardization
of proc practices and
procedures
• Lack of expertise
• Proc rep does not have
a career path
• No permanent home
9

Plan Procurement Management
• Process of documenting project procurement
decisions, specifying the approach and identifying
potential sellers.

Project Procurement Management Overview
1. Inputs
a. Project charter b. Business documents
c. Project management plan d. Project documents
e. Enterprise environmental factors
f. Organizational process assets
2. Tools & Techniques
a. Expert judgment b. Data gathering
c. Data analysis d. Source selection analysis
e. Meetings
3. Outputs
a. Procurement management plan b. Procurement strategy
c. Bid documents d. Procurement statement of work
e. Source selection criteria f. Make-or-buy decisions
g. Independent cost estimates h. Change requests
i. Project documents updates
j. Organizational process assets updates

1. Inputs
a.Project Charter - Objectives, project description, summary
milestones, and the preapproved financial resources
b. Business Documents
• Business case. The procurement strategy and business case
need to be aligned
•Benefits management plan. The benefits management plan
describes when specific project benefits are expected to be
available
c. Project Management Plan
• Scope management plan – How to manage scope of work by
vendor
• Quality management plan - Standards
• Resource management plan – What resource to purchase
• Scope baseline – Scope and WBS

d. Project Documents
• Milestone list – Delivery dates
• Project team assignments- Team ability to support procurement
• Requirements documentation- Technical, health,safety,security
• Requirements traceability matrix – To be included in deliverables
• Resource requirements- What and what quantities
• Risk register – To transfer through agreements
• Stakeholder register – Regulator, legal, personnel etc to
accommodate their interests

e. Enterprise Environmental Factors
• Marketplace conditions
• Products, services, and results that are available in the
marketplace
• Sellers, including their past performance or reputation
• Typical terms and conditions for products, services, and results
or for the specific industry
f. Organizational Process Assets
• Preapproved seller lists
• Formal procurement policies, procedures, and guidelines
• Contract types

Types of Contracts
Fixed Price Contracts
Firm
fixed
price
Fixed
Price
incentive
fee
Fixed
price
with
economic
price
adjustm
ent
Cost reimbursable
Contracts
Cost
plus
fixed
fee
Cost
plus
incentiv
e fee
Cost
plus
Award
fee
Time and
material
Contracts
15

Fixed-Price or Lump-Sum, Firm Fixed Price
• A type of fixed price contract where the buyer pays the
seller a set amount (as defined by the contractor)
regardless of the seller’s cost
• Example ; Contract = $1,100,000
Source : PMBOK ® Guide 6th Edition, Glossary
16

• Fixed Price Incentive Fee (FPIF)
– A type of contract where the buyer pays the
seller a set amount (as defined by the contract)
and the seller can earn an additional amount if
the seller meets defined performance criteria.
– Contract = $1,100,000. For every month early the
project is finished, and additional $ 10,000 is paid
to the sellers.
17

Fixed Price Economic Price Adjustment
(FPEPA)
• Sometimes a fixed price contract allows for price
increases if the contract is for multiple years
• Price adjustment can be linked to inflation changes,
etc. with the help of a reliable index
18

Advantages Disadvantages
The cost of the contract is
known to the buyer from the
beginning
Buyer has to invest a lot of effort to
write a comprehensive statement of
work
Seller has a strong incentive
to control costs.
Omissions in SOW will lead to cost
increase.
Buyer need not deploy much
resource to administer the
contract. eg; audits etc
Sellers may under price to win bids and
try to make profits through change
requests
Seller will add contingency to deal with
risk
Fixed Price
19

Cost-Reimbursable Contracts
– A type of contract involved in payment to the seller, for
the seller’s actual costs, plus a fee typically representing
seller’s profit. Cost-reimbursable contracts often
includes incentive clauses where if the seller meets or
exceeds selected project objectives, such as scheduled
targets or total costs, then the seller receives from the
buyer an incentive or bonus payment.
20

Cost-Plus-Fixed-Fee (CPFF)
–A type of cost reimbursable contract where the
buyer reimburses the seller for the seller’s
allowable cost (allowable costs are defined by
the contract) plus a fixed amount of profit (fee).
Contract = Cost plus a fee of $100,000
21

• Cost Plus Percentage of Cost
– Cost plus 10% as fee.
22

CPFF vs. CPPC
CPFF
Actual
Cost
$80 $100 $120
Fee $10 $10 $10
Actual
Price
$ 90 $110 $130
CPPC
Actual
Cost
$80 $100 $120
Fee $8 $10 $12
Actual
Price
$ 88 $110 $132
Cost Plus Fixed Fee
Estimate Cost= $100
Fixed Fee=$10
Cost Plus % Cost
Estimate Cost= $100
Fixed %=10%

Cost-Plus-Incentive-Fee (CPIF)
• A type of cost-reimbursable contract where the buyer
reimburses the seller for the seller’s allowable costs
(allowable costs are defined by the contract) and the seller
earns its profits if it meets defined performance criteria
• The incentive fee is usually based on objective criteria
(often cost-based) that are included in the contract. When
cost based, every $ over budget means a greater loss of
incentive fee and every $ under budget means a greater
portion of the incentive fee is earned. The incentive fee
can be based on any criteria such as cost schedule,
technical goals (e.g. ship speed), or delivery/schedule.
24

Cost Plus Award Fee (CPAF)
• A type of cost reimbursable contract that pays all costs
and apportion a bonus based on performance
• Very similar to the CPIF contract except the award
amount is determined in advance and apportioned out
depending on performance
• The award fee is usually based on a subject evaluation
of some component of the work. It is also not usually
subject to dispute.
25

Cost Plus Award Fee (CPAF)
• For example, the buyer might say that there is a
$75,000 award fee available. It will be apportioned
out at the rate of $7,000 for every month production
on the project is over a certain amount
26

The SOW can be prepared
with minimum effort
Buyer need to invest a lot
of effort to administer
Price can be less, as seller
does not add contingency
No motives for seller to
control cost
Price is known at the end
only
Cost Reimbursable
27

Time and Material (T&M) Contracts
– Possess characteristics of cost reimbursable and fixed
price type contracts
– The price of the items to be purchased are agreed but
the quantity is not defined
– Generally used in urgencies and for small requirements
28

Easy way to supplement a
big contract
Can be used for only small
purchase activities
Contracting can be done
quickly
Work has to be supervised
thoroughly
Doest not motivate seller
to control cost
Simple contract Profit is in build to the
rates agreed
Time and Material
29

Firm Fixed Price vs Cost Plus Award Fee
Grass Mowing
(Simplified)
FFP CPAF
Labor $ 30.00 Labor $ 30.00
Fuel $ 3.00 Fuel $ 3.00
Oil $ 2.00 Oil $ 2.00
TOTAL REIMBURSABLE EXPENSES
$35.00 EXPENSES $35.00
Profit/10% $ 3.50 Base Fee/3% $ 1.05
Award Fee/7% $ 2.45
Bid Price $ 38.50 Bid Price $ 38.50
Contract Cost Contract Cost
$38.50 Minimum - $36.05
Maximum - $38.5
30

Situation Type of Contract
to Use
You need start work immediately and has
no time for detailed documentation
You want to hire a designer to design a
product
You have a detailed SOW indicating
functions, features, size etc
You do not have enough staff to
supervise the sellers work
You need to build the hospital as soon as
possible after a Tsunami
You have completed the detailed SOW,
but the project takes more than 3 years
and economy is unstable 31

Situation Type of
Contract
You are going to hire a plumber to do some
repairs that take 2-3 days
The contractor is billing the project $120
per hour, plus materials.
You are negotiating considerations for
inflation and utility prices.
You will pay allowable cost and 8% fee over
and above the allowable cost.
The buyer will pay for the cost of phone
service, rent on the facilities, and
employees, plus an additional $2,500 per
month.
The buyer will pay the seller a total of $
400,000 for installation of the machines
32

Situation Type of
Contract
The buyer will pay for the cost of computers, cables and
servers plus $8,500 per month for
employees’ time. Costs will not exceed $24,500 per
month
servers, employees wages. An additional $ 5000 will be
awarded each month that the seller achieves monthly
performance targets without any defects.
servers, employees wages and agreed fee of 5000. An
additional $ 2000 will be if the seller completes the work
one week earlier than the agreed period.
33

Situation Type of
Contract
The buyer will pay the seller a total of $50000 for
completing the project in one year. An
additional $3000 will be awarded if the work is
competed one month before the agreed
deadline
34

to Use
You need start work immediately and has
no time for detailed documentation
You want to hire a designer to design a
product
You have a detailed SOW indicating
functions, features, size etc
You do not have enough staff to supervise
the sellers work
You need to build the hospital as soon as
possible after a Tsunami
You have completed the detailed SOW, but
the project takes more than 3 years and
economy is unstable 35

You are going to hire a plumber to do some
repairs that take 2-3 days
T and M
The contractor is billing the project $120 per
hour, plus materials.
T and M
You are negotiating considerations for
inflation and utility prices.
FPEPA
You will pay allowable cost and 8% fee over
and above the allowable cost.
Cost % of cost
The buyer will pay for the cost of phone
service, rent on the facilities, and employees,
plus an additional $2,500 per month.
Cos t + fixed fee
The buyer will pay the seller a total of $
400,000 for installation of the machines
Fixed price
36

Situation Type of
Contract
The buyer will pay for the cost of computers, cables
and servers plus $8,500 per month for
employees’ time. Costs will not exceed $24,500 per
month
Time and
material
and servers, employees wages. An additional $ 5000
will be awarded each month that the seller achieves
monthly performance targets without any defects.
Cost plus
award fee
and servers, employees wages and agreed fee of 5000.
An additional $ 2000 will be if the seller completes the
work one week earlier than the agreed period.
Cost plus
incentive
fee
37

Situation Type of
Contract
The buyer will pay the seller a total of $50000 for
completing the project in one year. An
additional $3000 will be awarded if the work is
competed one month before the agreed deadline
Fixed price
incentive
38

Two ways in which a contract can originate: unilaterally or
bilaterally
– Unilaterally:
• Common form for contract is a relatively simple
type of document called a purchase order.
• A purchase order is used when routine, standard
cost items are needed.
• A purchase order is legally binding and should be
specific.
– Bilaterally:
39

Factors that influence the type of contract
selected ;
• How completely a comprehensive and detailed statement of
work can be prepared
• The amount of changes will have to be done to the project
• The amount of resources the buyer can assign to manage the
seller’s work
• Industry practices
• Amount of risks to be shared
• Competitiveness in the market
40

Exercise
• In a cost reimbursable contract, the cost of the
contract is estimated at $300,000 and the fee at
$50,000. If the sellers save money they will share the
savings; 80% to the buyer and 20% to the seller. If the
actual costs come in at $250,000, what is the final fee
and final price ?
Answer
• Fee = $ 60,000
• Project cost = $ 250,000
• Total price = $ 310,000
41

a. Expert Judgment
• Procurement and purchasing,
• Contract types and contract documents
• Regulations and compliance topics
b. Data Gathering
• Market research - Eexamination of industry and specific seller
capabilities, seller risk
c. Data Analysis
• Make-or-buy analysis
.

Make-or-Buy Analysis
– Particular product or service can be produced by
the project team or can be purchased
– Alternatively product or service can be purchased
or rented
43

Make or Buy Analysis - Example
• Company A decides to create its own software
package which will cost $30,000. The maintenance
cost of the software would be $ 2,500
• A software outsourcing company also sells the
same software @ $22,000 and the cost of
maintenance would be $3,500 per month
44

The difference of initial investment
• $30,000 (make) - $22,000 (buy) = $8,000
The difference of maintenance cost
• $2500 (make) -$3500 (buy) = $1000
• Number of months the company should need
the support of software to go for in-house
solutions = $8,000/$1,000= 8 months
45

Factor Reasons to Make In-House Reasons to Buy
Cost Cheaper Cheaper
Skills Availability Can use people in the
organization
Team members are not
capable of doing
Skills Acquisition Can learn new sills Organization is not
interested in new skills
Risks Can manage risk associated Transfer the risk
Work Core project work Not very important
Human Resource
availability
Staff available Vendor available
Reasons for Make or Buy
46

d. Source Selection Analysis - Determine the source selection
method and inform the bidder.
• Least cost-used in standard or routine procurement
• Qualification only- credibility, qualifications, experience,
expertise, areas of specialization, and references
• Quality-based/highest technical proposal score later
negotiate financial proposal
• Quality and cost-based(quality is priority)
• Sole source(no competition/single source( preferred seller)
• Fixed budget- fixed budget indicated to the seller and
select the one with highest quality

e. Meetings
• Meetings with prospective sellers can be used to
determine the strategy for managing and monitoring
the procurement

3. Outputs
a. Procurement Management Plan
• Contains the activities to be undertaken during the
procurement process
• Indicate type of bidding done(international
competitive bidding, national competitive bidding,
local bidding, etc., )

b. Procurement Strategy
• Delivery methods
–For professional services, delivery methods include:
buyer/services provider with no subcontracting,
buyer/services provider with subcontracting allowed
–For industrial or commercial construction, turnkey,
design build (DB), design bid build (DBB), design build
operate (DBO), build own operate transfer (BOOT)
• Contract payment types: fixed price, cost reimbursable,
time and material
• Procurement phases- description of phases, objectives
of phases, exit criteria, tracking plan,

Delivery Methods
• Turnkey- It is a contract under which a firm agrees to
fully design, construct and equip a manufacturing/
business/ service facility and turn the project over to
the purchaser when it is ready for operation for a
remuneration
• Design build - method to deliver a project in which
the design and construction services are contracted by
a single entity known as the design–builder or design–
build contractor

Delivery Methods
• Design Bid Build- Design-Bid-Build is the most
traditional — and most common — project delivery
method. On design-bid-build jobs, the owner
contracts separately with a designer/architect and a
contractor. Once the designer completes the design
documents, the owner then looks for bids from
contractors to perform the work

Delivery Methods
DBO
• The common form of such a contract is a public
private partnership(PPP), in which a public
client(e.g. government or public agency ) enters into
a contract with a private contractor to design,
build and then operate the project, while the client
finances the project and retains ownership.

Delivery Methods
BOOT
• The public partner may provide limited funding or other
benefits (such as tax exemptions) but the
private organization accepts most of the risks
• The private organisation is then granted the right to own,
maintain and operate the project for a set period of time,
during which they can draw fees from users of the asset
• Once the time period has elapsed, the control of
the project transfers to the public sector partner, either
freely or for a fee that is stipulated in the original contract.

55
Types Description When to use
IFB Invitation for bid
Routine items where best price is the
primary objective
RFI Request for information To qualify potential suppliers
RFQ Request for Quote
Specifications are very clear
Relatively low monetary purchases of
commodity items
RFP Request for Proposal
Various approaches are possible
Complex or non standard items of
high monetary value
c. Bid Documents

Document Purpose
Bid Seller sends to buyer. The seller is making the
product. Price is the determining factor in the
decision making process
Quotation Seller sends to buyer. Price is the determining
factor in the decision making process.
Variously called shopping.
Proposal Seller sends to buyer. Other factors – such as
skill sets, reputation, ideas for the project
solution – may be used in the decision making
process 56

d. Procurement Statement of Work
– Description of the work/services to be outsourced
– Ex. Quantity, quality, performance data, work
locations, etc.
57

Procurement
Statement of Work
Characteristics needed to
accurately develop their bid or
proposal,
Expected deliverables
Required materials
Specifications,
Project milestones
Acceptance criteria,
58
Work locations
Quality level
Quantity desired

The phrase terms of reference (TOR) is sometimes used when
contracting for services. Similar to the procurement.
SOW, a TOR typically includes these elements:
– Tasks the contractor is required to perform as well as specified
coordination requirements
– Standards the contractor will fulfill that are applicable to the
project
– Data that needs to be submitted for approval
– Detailed list of all data and services that will be provided to the
contractor by the buyer for use in performing the
contract, if applicable
– Definition of the schedule for initial submission and the
review/approval time required

Types of SOW
Performance: describes final
product in terms of
performance, not the design
characteristics or how it
should be built
I want a car that will run 20 km
per Hr
Functional: describes
characteristics
I want a car with 6 seats
Design: describes exactly what
you want.
Build the car as per my
detailed design
60

e. Source Selection Criteria
• Capability and capacity
• Product cost and life cycle cost
• Delivery dates
• Technical expertise and approach
• Specific relevant experience
• Adequacy of the proposed approach and work plan in
responding to the SOW
• Key staff’s qualifications, availability, and competence
• Financial stability of the firm
• Management experience
• Suitability of the knowledge transfer program, including
training

f. Make-or-Buy Decisions
g. Independent Cost Estimates
• An estimate prepared by the buyer about
products/services to be outsourced
• Can be used to compare seller’s estimates with
own estimates and determine how reasonable
seller’s prices are

h. Change Requests
i. Project Documents Updates
– Lessons learned register
– Milestone list
– Requirements documentation
– Requirements traceability matrix.
– Risk register
– Stakeholder register

j. Organizational Process Assets Updates

Conduct Procurements
• Process of obtaining seller responses, selecting a
seller, and awarding a contract

1. Inputs
a. Project management plan
b. Project documents
c. Procurement documentation d. Seller proposals
e. Enterprise environmental factors f. Organizational process assets
a. Expert judgment b. Advertising
c. Bidder conferences d. Data analysis
e. Interpersonal and team skills
3. Outputs
a. Selected sellers b. Agreements
c. Change requests d. Project management plan updates
e. Project documents updates f. Organizational process assets updates

1. Inputs
a. Project Management Plan
• Scope management plan
• Requirements management plan
• Communications management plan
• Risk management plan
• Procurement management plan
• Configuration management plan
• Cost baseline

b. Project Documents
• Lessons learned register
• Project schedule
• Requirements documentation
• Risk register
• Stakeholder register

c. Procurement Documentation
• Bid documents
• Procurement statement of work
• Independent cost estimates
• Source selection criteria
d. Seller Proposals

e. Enterprise Environmental Factors
• Local laws and regulations regarding procurements
• Local laws and regulations ensuring that the major
procurements involve local sellers
• External economic environnent constraining
procurement processes
• Marketplace conditions
• Information on relevant past experience with sellers,
both good and bad
• Prior agreements already in place
• Contract management systems

f. Organizational Process Assets
• List of preferred sellers that have been prequalified
• Organizational policies that influence the selection of
a seller
• Specific organizational templates or guidelines that
will determine the way agreements are drafted and
built
• Financial policies and procedures regarding invoicing
and payment processes

a. Expert Judgment
• Proposal evaluation
• Technical or subject matter
• Relevant functional areas such as finance, engineering,
design, development, supply chain management, etc.
• Industry regulatory environment
• Laws, regulations, and compliance requirements
• Negotiation
b. Advertising

c. Bidder Conferences
• Also called contractor conferences, vendor
conferences, and pre-bid conferences
• Create an opportunity for all the prospective sellers
to clarify their doubts and gain a common
understanding about the buyers requirement
d. Data Analysis
•Proposal evaluation
.

74
Possible Score 20 20 15 10 10 5 20 100
Value Expe
rienc
e
Certifica
tions
Level IV
Engine
ers
Security
Clearance
Start
Date
Waste
Removal
Price Total
Score
ABC
Constructions
15 20 7 10 10 5 12 79
Allen Builders 12 20 12 10 10 0 10 74
FRJ
Construction
18 20 11 0 10 5 18 82
Howe and
Who
Construction
18 15 5 0 5 5 15 73
Martin and
Martin
9 20 13 10 5 0 18 65
Ralph
Engineers
15 8 18 0 10 5 17 73

Evaluation Criteria – Forced Ranking
Consultant
Vendor
A B C D Rank
Sum
Forced
Rank
1 2 3 2 4 11 3
2 4 1 1 2 8 1
3 6 2 5 5 18 5
4 1 5 3 1 10 2
5 3 4 4 3 14 4
6 5 6 6 6 23 6
75

e. Interpersonal and Team Skills
• Negotiation

3. Outputs
a. Selected Sellers
b. Agreements
• Procurement statement of work or major deliverables
• Schedule, milestones, or date by which a schedule is
required
• Performance reporting
• Pricing and payment terms
• Inspection, quality, and acceptance criteria
• Warranty and future product support

d. Project Management Plan Updates
• Quality management plan
• Communications management plan
• Scope baseline
• Schedule baseline
• Cost baseline

e. Project Documents Updates
• Requirements traceability matrix
• Resource calendars
• Risk register
f. Organizational Process Assets Updates
•Listings of prospective and prequalified sellers
•Information on relevant experience with sellers, both
good and bad

Control Procurements
• Process of managing procurement relationships;
monitoring contract performance, and making
changes and corrections as appropriate; and
closing out contracts.

1. Inputs
a. Project management plan b. Project documents
c. Agreements d. Procurement documentation
e. Approved change requests f. Work performance data
g. Enterprise environmental factors h. Organizational process assets
a. Expert judgment b. Claims administration
c. Data analysis d. Inspection
e. Audits
3. Outputs
a. Closed procurements b. Work performance information
c. Procurement documentation updates d. Change requests
e. Project management plan updates f. Project documents updates
g. Organizational process assets updates

1. Inputs
a. Project Management Plan
• Change management plan
• Schedule baseline

b. Project Documents
• Assumption log
• Milestone list
• Quality reports
• Requirements traceability matrix
• Risk register

c. Agreements – to monitor if terms and conditions are met
d. Procurement Documentation -statement of work, payment
information, contractor work performance
information, plans, drawings, and other correspondence
e. Approved Change Requests -modifications to the terms and
conditions of the contract, including the procurement statement of
work (SOW), pricing, and descriptions of the products, services, or
results to be provided.
f. Work Performance Data -seller data on project status such as
technical performance; activities that have started, are in progress,
or have completed; and costs that have been incurred or
committed.

g. Enterprise Environmental Factors
Contract change control system,
Marketplace conditions,
Financial management and accounts payable system, and
Buying organization’s code of ethics.
h. Organizational Process Assets -procurement policies.

a. Expert Judgment
Relevant functional areas such as finance, engineering, design,
development, supply chain management, etc
Laws, regulations, and compliance requirements; and
Claims administration.
b. Claims Administration
– Outstanding disputes are settled by negotiation
– Can resort to Alternative Claim Resolution Procedures
.

Tools and Techniques
• Negotiated Settlements
Disagreement
s
Whenever settlement cannot be achieved through direct negotiation,
some form of alternative dispute resolution (ADR) including mediation or
arbitration may be explored.
mediation or arbitration
Settlement
of
negotiation
88

Negotiate project agreements
• Analyse the bounds of the negotiations for
agreement
• Assess priorities and determine ultimate
objective(s)
• Verify objective(s) of the project agreement is
met
• Participate in agreement negotiations
• Determine a negotiation strategy

90
Preparation
Exchanging
Information
Bargaining
Closing and
Commitment
Four Stages of Negotiation

Negotiation
Sellers starting point
Buyers starting point Maximum buyer will pay
Minimum Acceptable to
the seller
Bargaining Range

Mediation
• Mediation is a kind of facilitated negotiation
• Uses an mediator to bring both sides together to a settlement.
• The role of the mediator is to find a middle-ground which both
sides will accept as reasonable
93

Arbitration
• Arbitration is the more formal of the two common ADR
processes
• A simplified form of a mini-trial.
• Conducted by a professional arbitrator (or panel of
arbitrators) who will preside as a type of judge and jury
• The final rulings are not necessarily made public.
• Findings in arbitration rulings can be by the terms of the
agreement either binding, or consensual on the parties
94

c. Data Analysis
• Performance reviews-measure, compare, and analyze
quality, resource, schedule, and cost performance against
the agreement.
• Earned value analysis -Schedule and cost variances along
with schedule and cost performance indexes are
calculated
• Trend analysis –to develop forecast
d. Inspection -structured review of the work being
performed by the contractor
e. Audits-structured review of the procurement process

3. Outputs
a. Closed Procurements -provides the seller with formal written notice
that the contract has been completed
b. Work Performance Information -information on how a seller is
performing by comparing the deliverables received, the technical
performance achieved, and the costs incurred and accepted against
the SOW budget for the work performed
c. Procurement Documentation Updates -contract with all supporting
schedules, requested unapproved contract changes, and approved
change requests, seller performance reports and warranties,
financial documents including invoices and payment records.

d. Change Requests -Change requests to the project
management plan, its subsidiary plans, and other
components such as the cost baseline, schedule baseline, and
procurement management plan, may result from the Control
Procurements process.

Project Management Plan Updates
• Risk management plan – new risks arising
• Procurement management plan –updated based on the
performance of the seller
• Schedule baseline- to adjust for schedule changes created by
seller cost base line
• Cost baseline- to adjust for changes in material and labour cost

f. Project Documents Updates
• Lessons learned register –variances, corrective action taken, their
effectiveness.
• Resource requirements – changes to resource requirement
identified as work progresses
• Requirements traceability matrix –to record requirement that
were satisfied
• Risk register – new risks identified
• Stakeholder register –if contractors and suppliers change

g. Organizational Process Assets Updates
– Payment schedules and requests
– Seller performance evaluation documentation
– Prequalified seller lists updates
– Lessons learned repository-actual results of the procurement
are compared with the projected results in the original
procurement management plan
– Procurement file-actual results of the procurement are
compared with the projected results in the original
procurement management plan

101
A contract ends by:
Successful performance
Mutual agreement Last two are Termination
Breach of contract

procurement Management

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