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- 1. Project Procurement Project Procurement Management Management Sectionsof this presentation were adapted Sections of this presentation were adapted from from A Guide to the Project Management A Guide to the Project Management Body of Knowledge Body of Knowledge 4 4th th Edition, Project Edition, Project Management Institute Inc., © 2008 Management Institute Inc., © 2008
- 2. Project Quality Management ProjectQuality Management “ “The processes to purchase or acquire the The processes to purchase or acquire the products, services, or results needed from products, services, or results needed from outside the project team to perform the outside the project team to perform the work” work”
- 3. Why Procurement Management? WhyProcurement Management? Most all projects will need to acquire some Most all projects will need to acquire some resources from outside resources from outside Not understanding the different ways to Not understanding the different ways to contract could result in unnecessary risk for contract could result in unnecessary risk for the project the project Note for Test Takers: PMI Procurement questions are from the BUYERS perspective unless noted otherwise
- 4. How Do WeManage Procurement? How Do We Manage Procurement? Four processes Four processes Plan Procurements Plan Procurements Conduct Procurements Conduct Procurements Administer Procurements Administer Procurements Close Procurements Close Procurements Conduct Procurements Administer Procurements Plan Procurements Close Procurements
- 5. Plan Procurements Plan Procurements ScopeBaseline Requirements Documentation Teaming Agreements Risk Register Risk-Related Contract Decisions Activity Resource Requirements Project Schedule Activity Cost Estimates Cost Performance Baseline Enterprise Environmental Factors Organizational Process Assets Make or Buy Analysis Expert Judgment Contract Types Inputs Outputs Tools & Techniques Procurement Management Plan Procurement Statements of Work Procurement Documents Source Selection Criteria Change Requests Make or Buy Decisions Conduct Procurements Administer Procurements Plan Procurements Close Procurements
- 6. Contract Types Contract Types FixedPrice (Lump Sum) Contracts Fixed Price (Lump Sum) Contracts Cost-Reimbursable Contracts Cost-Reimbursable Contracts Cost Plus Fee (CPF) Cost Plus Fee (CPF) Cost Plus Percentage of Cost (CPPC) Cost Plus Percentage of Cost (CPPC) Cost Plus Fixed Fee (CPFF) Cost Plus Fixed Fee (CPFF) Cost Plus Incentive Fee (CPIF) Cost Plus Incentive Fee (CPIF) Time and Material (T&M) Contracts Time and Material (T&M) Contracts Which type of contract is the highest risk for the Buyer? Seller?
- 7. Conduct Procurements Conduct Procurements Project ManagementPlan Procurement Documents Source Selection Criteria Qualified Sellers List Seller Proposals Project Documents Make-or-Buy Decisions Teaming Agreements Organizational Process Assets Bidder Conference Proposal Evaluation Techniques Independent Estimates Expert Judgment Advertising Internet Search Procurement Negotiations Inputs Outputs Tools & Techniques Selected Seller Procurement Contract Award Resource Calendars Change Requests Project Management Plan Updates Project Document Updates Conduct Procurements Administer Procurements Plan Procurements Close Procurements
- 8. Types of Scopesof Work Types of Scopes of Work Performance Performance What the project wants, how accomplished What the project wants, how accomplished and project needs defined by seller and project needs defined by seller Functional or Detailed Functional or Detailed Defines what end product should be as well Defines what end product should be as well as minimum requirements as minimum requirements Design Design Defines exactly what is required and how to Defines exactly what is required and how to accomplish it accomplish it
- 9. Procurement Documents Procurement Documents Requestfor Proposal (RFP) Request for Proposal (RFP) Asks for the price and how/who will do the Asks for the price and how/who will do the work work Invitation for Bid (IFB) Invitation for Bid (IFB) One simple price to do the work One simple price to do the work Request for Quotation (RFQ) Request for Quotation (RFQ) Price per unit quote Price per unit quote
- 10. Negotiating Tactics Negotiating Tactics Attacks– Argue a point Attacks – Argue a point Personal Insults – Attack Personal Insults – Attack other sides negotiator other sides negotiator Good Guy/Bad Guy Good Guy/Bad Guy Deadline – The offer Deadline – The offer stands until… stands until… Lying Lying Limited Authority – I need Limited Authority – I need to check with ____ to check with ____ Missing Man – She is out Missing Man – She is out today, I will have to get today, I will have to get back tomorrow back tomorrow Fair and Reasonable Fair and Reasonable Delay – Tabling issues Delay – Tabling issues important to the other important to the other side side Extreme Demands Extreme Demands Withdrawal – Feigning Withdrawal – Feigning interest interest Fait Accompli – Done Fait Accompli – Done Deal, this is how we have Deal, this is how we have to do it…. to do it…. These are all tactics, but not necessarily good tactics!
- 11. Administer Procurements Administer Procurements Procurement Documents Project ManagementPlan Contract Performance Reports Approved Change Requests Work Performance Information Contract change control system Procurement performance review Inspections and audits Performance reporting Payment systems Claims administration Records management system Inputs Outputs Tools & Techniques Procurement Documentation Organizational Process Assets Updates Change Requests Project Management Plan Updates Conduct Procurements Administer Procurements Plan Procurements Close Procurements
- 12. Contract Closure Contract Closure Project ManagementPlan Procurement Documentation Procurement audits Negotiated Settlements Records management system Inputs Outputs Tools & Techniques Closed Procurments Organizational Process Assets Updates Conduct Procurements Administer Procurements Plan Procurements Close Procurements
- 13. Procurement Terms Procurement Terms Arbitration– Third party dispute resolution Arbitration – Third party dispute resolution Breach/Default – When a contract provision is not Breach/Default – When a contract provision is not met met Force Majeure – Riots, wars, weather, or other “Acts Force Majeure – Riots, wars, weather, or other “Acts of God” of God” Indemnification – Who is liable Indemnification – Who is liable Liquidated Damages – Estimated damages for Liquidated Damages – Estimated damages for specific types of defaults as defined in the contract specific types of defaults as defined in the contract Material Breach – A violation of the contract of Material Breach – A violation of the contract of sufficient magnitude that the contract cannot be sufficient magnitude that the contract cannot be completed completed
- 14. Procurement Terms Continued ProcurementTerms Continued Retainage – Monies withheld to ensure performance at Retainage – Monies withheld to ensure performance at the end of the contract the end of the contract Termination – Stopping the work before it is completed Termination – Stopping the work before it is completed Waiver – Statements in the contract that indicate that Waiver – Statements in the contract that indicate that rights cannot be ignored or modified without written rights cannot be ignored or modified without written agreement between the two parties agreement between the two parties Time is of the essence – Seller is placed on notice that Time is of the essence – Seller is placed on notice that delivery agreements are strictly binding delivery agreements are strictly binding Work for Hire – At the end of the contract the work Work for Hire – At the end of the contract the work product generated will be owned by the buyer product generated will be owned by the buyer