The document discusses procurement and contract management processes for projects. It describes the key stages as procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract closeout. Procurement planning involves determining what, how, and when to procure goods and services externally. Different types of contracts like fixed price, cost reimbursable, and unit price contracts allocate risk differently between the buyer and seller. Effective contract administration and addressing changes via change control are important to ensure the seller meets requirements.
Project Procurement Management (PPM) includes the processes necessary to purchase or acquire products, services, or results needed from outside the project teams. It also includes the contract management and change control processes required to develop and administer contracts or purchase orders issued by authorized project team members.
Project Procurement Management (PPM) includes the processes necessary to purchase or acquire products, services, or results needed from outside the project teams. It also includes the contract management and change control processes required to develop and administer contracts or purchase orders issued by authorized project team members.
Contractual Steps for Smooth Delivery of Infrastructure ProjectsAM Publications
Governments and public entities spend huge public money for purchase of goods, services and construction of works. Therefore, it is vital that procurement system shall not only be efficient but also be transparent, fair & just without compromising the quality of output. Various stakeholders have different interests in influencing the decision-making. This paper elaborates various possible alternative strategies available for procurement. Depending upon environment and various challenges, one can choose the best mode, method & process of procurement. The procurement could be for goods, work, services, consultancy etc. Consultancy contracts are different game altogether, because they have more emphasis on intellectual inputs rather than mere physical outcome. The scope of this paper is limited to works procurement.
Running head CONTRACT CLOSEOUT 1CONTRACT CLOSEOUT 16.docxjoellemurphey
Running head: CONTRACT CLOSEOUT 1
CONTRACT CLOSEOUT 16
Contract Closeout
Deirdre Martin
Colorado Technical University
September 8, 2015
Procurement Terms and Statement of Work
Deirdre Martin
Colorado Technical University
Professor Johnny Maddox
SCM320-1503B-01
Individual Project 3
Definition of procurement terms
Some of the most widely used procurement terms include: make or buy decisions; terms and conditions, sourcing plans; as well as requests for information, proposal and quotation. Make or buy decisions can be described as the challenges met by a firm when determining whether a product or service need to be purchased from external sources or produced internally. Some of the elements of make or buy decisions include: financial aspects, technological elements, marketing factors, purchasing elements, and strategic aspects (Martland, 2005). The financial elements can be in terms of fixed or variable costs.
A sourcing plan is a well-documented and systematic document that provides guidance to individuals responsible for implementing acquisition policies(Sollish & Semanik, 2010a).A request for proposal is an expression of need or solicitation for services and products. Request for information is a tool utilized in sourcing to assist in determining a supplier’s capacity and financial strength. Furthermore, a request for quotation is a demand for price and delivery where other terms have already been specified. Finally, terms and conditions in procurement refer to the general and specific policies, provisions, guidelines and rules that guide the procurement process (Sollish & Semanik, 2007b).
Statement of Work
A procurement statement of work, such as the one stated below, provides a description of the requirements for products or services. In most cases, statements of work are written down in comprehensive and prescriptive form, detailing not just what has to be done, but also the strategies to be employed. In addition, they indicate how regular the products or services required need to be provided. (Sollish & Semanik, 2007b) The statements may be simply provided in terms of the anticipated products or services. The table below shows a statement of work with defining quality and delivery requirements, alongside the expected schedule and costs.
Project Name:
Project Number:
Prepared by:
Date:
ERP System Project, Webb Communication Company
3454784
John Stevens
25-08-2015
Customer:
Business Unit/ Function Name:
Contact Name:
Project Type (Standard/Complex):
Webb Communication Company
IT Department
Systems Administrator, Telephone Number: 758-378-9272
Complex project involving securing of the company’s information resources
Introduction
Webb Communication and IT Company requires its information systems to be protected from unauthorized access.
Procurement Statement of Work
Procurement Summary
Webb Communications Company requires its information resources to be secured from access, use, and modification by unauthorized pa ...
Tender and Bidding in Construction ProjectsIJERA Editor
Construction Industry plays a key role in the process of economic transformation and growth. Export of projects and services indicate a country's progress in technology and export performance. Most of the companies are versed only with engineering and technology. The decision to bid is a major financial decision because of two reasons. First, the contractor assumes substantial costs for the preparations of the estimates and the tender at the risk of not recovering them if he is not awarded the job. Second, andmost importantly, thecontractor commits himself to investment in the construction of the project if he wins the bid.
CONTEMPORARY PROJECT MANAGEMENT, 4ETimothy J. KloppenborgVit.docxaidaclewer
CONTEMPORARY PROJECT MANAGEMENT, 4E
Timothy J. Kloppenborg
Vittal Anantatmula
Kathryn N. Wells
‹#›
Project Supply Chain Management
Chapter 13
‹#›
Chapter 13 Core Objectives:
Identify the role of supply chain management in project management and its importance for ensuring project success.
Describe how to plan, conduct, & control project procurements.
Chapter 13 Technical Objectives:
Describe the various formats for supply contracts and when each is appropriate.
Given a project situation, determine which activities, supplies, or services should be purchased; create bid documents; determine criteria you would use to select a seller; & determine which type of contract you would use.
Chapter 13 Behavioral Objectives:
Explain how to use the contemporary approach to project partnering and collaboration.
Super Absorbent Polymer Turf (SAPTURF)
“The SAPTURF project required a strong team. Successful commercialization of IP is a long shot, so room for project management error is slim. I realized I would need to compensate for lack of in-house resources. Lack of in-house resources is an advantage! I was free to look for the best resources…”
Chris Tetrault, owner and founder, SAPTURF
6
Introduction to Project Supply Chain Management
Inter-organizational purchasing-related issues supply chain management
A supply chain consists of all parties involved in fulfilling a customer request
Integrating SCM into PM can significantly enhance the effectiveness of project management
Introduction to Project Supply Chain Management
Integration of related functions to acquire needed products and services
Purchasing
Supply management
Procurement
Project Supply Chain Management
A system approach to managing flows of physical products, information, & funds from suppliers and producers, through resellers the project organization for creating customer satisfaction
SCM Components
Make-or-buy decision
Contract types
Collaboration and cooperation
System integration
Make-or-buy decisions – deciding whether to make something in-house or purchase it from a vendor
SCM Factors
The importance of SCM to general project management depends on a number of factors:
Value of outsourced products/services relative to value of the project
The timing of the work being purchased
Capability of the project team
Role of the outsourced work in the entire project
Number of suppliers required
Structure of the procurement supply chain
SCM Decisions
Distribution network configuration
Inventory control in supply chain
Logistics
Supply contracts
Distribution strategies
Supply chain integration & strategic partnering
Outsourcing & procurement strategies
Product design
Information technology & decision-support systems
Matching internal inadequacies with external experience
Project Procurement Management Processes
Plan Procurement Management
Conduct Procurements
Control Procurements
Plan Procurement Management
Plan for purchasing and acquisition
Complete most of pr.
The Ultimate Guide to The Digital Procurement ManagementDanitKellmer1
The ultimate guide to the digital procurement process – Learn how to use technology to
manage your construction procurement, find some great software features, and tips on
what to pay attention to when buying your software.
More info: https://tinyurl.com/mwafxuhz
Procurement Management
Importance of Project Procurement Management
Procurement means acquiring goods and/or services from an outside source
Other terms include purchasing and outsourcing
Debates on Outsourcing
Some companies, such as Wal-Mart, prefer to do no outsourcing at all, while others do a lot of outsourcing.
GM recently announced plans to switch from outsourcing 90% of IT service to only 10%
Most organizations do some form of outsourcing to meet their IT needs and spend most money within their own country
Why Outsource?
To access skills and technologies
To reduce both fixed and recurrent costs
To allow the client organization to focus on its core business
To provide flexibility
To increase accountability
PM Network – Risks of Outsourcing
Boeing’s Dreamliner
Following suit and not minding risks
Vendor Issues
Misunderstanding
Information Exchange
Schedule Overruns
PM Network – The More the Merrier
More providers, more problems
Differing methodologies and tools
Service and Operating Level Agreements
Find a balance that works for the organization
Contracts
A contract is a mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them
Contracts can clarify responsibilities and sharpen focus on key deliverables of a project
Because contracts are legally binding, there is more accountability for delivering the work as stated in the contract
Project Procurement Management Processes
Project procurement management: Acquiring goods and services for a project from outside the performing organization
Processes include:
Planning procurement management
Conducting procurements
Controlling procurements
Closing procurements
Planning Procurement Management
Identifying which project needs can best be met by using products or services outside the organization
Types of Contracts:
Fixed Price (or lump sum)
Cost Reimbursable
Time and Material
Unit Price
Point of Total Assumption
The Point of Total Assumption (PTA) is the cost at which the contractor assumes total responsibility for each additional dollar of contract cost
Contractors do not want to reach the point of total assumption, because it hurts them financially, so they have an incentive to prevent cost overruns
The PTA is calculated with the following formula:
PTA = (ceiling price – target price)/government share + target cost
Cost Reimbursable Contracts
Cost plus incentive fee (CPIF
Cost plus fixed fee (CPFF)
Cost plus percentage of costs (CPPC)
Contract Clauses
Contracts should include specific clauses to take into account issues unique to the project
Can require various educational or work experience for different pay rights
Often includes:
Termination clause
Limitation of liability clause
Tools and Techniques for Planning Purchases and Acquisitions
Expert judgment
Market research
Make-or-buy analysis: General management technique ...
Contractual Steps for Smooth Delivery of Infrastructure ProjectsAM Publications
Governments and public entities spend huge public money for purchase of goods, services and construction of works. Therefore, it is vital that procurement system shall not only be efficient but also be transparent, fair & just without compromising the quality of output. Various stakeholders have different interests in influencing the decision-making. This paper elaborates various possible alternative strategies available for procurement. Depending upon environment and various challenges, one can choose the best mode, method & process of procurement. The procurement could be for goods, work, services, consultancy etc. Consultancy contracts are different game altogether, because they have more emphasis on intellectual inputs rather than mere physical outcome. The scope of this paper is limited to works procurement.
Running head CONTRACT CLOSEOUT 1CONTRACT CLOSEOUT 16.docxjoellemurphey
Running head: CONTRACT CLOSEOUT 1
CONTRACT CLOSEOUT 16
Contract Closeout
Deirdre Martin
Colorado Technical University
September 8, 2015
Procurement Terms and Statement of Work
Deirdre Martin
Colorado Technical University
Professor Johnny Maddox
SCM320-1503B-01
Individual Project 3
Definition of procurement terms
Some of the most widely used procurement terms include: make or buy decisions; terms and conditions, sourcing plans; as well as requests for information, proposal and quotation. Make or buy decisions can be described as the challenges met by a firm when determining whether a product or service need to be purchased from external sources or produced internally. Some of the elements of make or buy decisions include: financial aspects, technological elements, marketing factors, purchasing elements, and strategic aspects (Martland, 2005). The financial elements can be in terms of fixed or variable costs.
A sourcing plan is a well-documented and systematic document that provides guidance to individuals responsible for implementing acquisition policies(Sollish & Semanik, 2010a).A request for proposal is an expression of need or solicitation for services and products. Request for information is a tool utilized in sourcing to assist in determining a supplier’s capacity and financial strength. Furthermore, a request for quotation is a demand for price and delivery where other terms have already been specified. Finally, terms and conditions in procurement refer to the general and specific policies, provisions, guidelines and rules that guide the procurement process (Sollish & Semanik, 2007b).
Statement of Work
A procurement statement of work, such as the one stated below, provides a description of the requirements for products or services. In most cases, statements of work are written down in comprehensive and prescriptive form, detailing not just what has to be done, but also the strategies to be employed. In addition, they indicate how regular the products or services required need to be provided. (Sollish & Semanik, 2007b) The statements may be simply provided in terms of the anticipated products or services. The table below shows a statement of work with defining quality and delivery requirements, alongside the expected schedule and costs.
Project Name:
Project Number:
Prepared by:
Date:
ERP System Project, Webb Communication Company
3454784
John Stevens
25-08-2015
Customer:
Business Unit/ Function Name:
Contact Name:
Project Type (Standard/Complex):
Webb Communication Company
IT Department
Systems Administrator, Telephone Number: 758-378-9272
Complex project involving securing of the company’s information resources
Introduction
Webb Communication and IT Company requires its information systems to be protected from unauthorized access.
Procurement Statement of Work
Procurement Summary
Webb Communications Company requires its information resources to be secured from access, use, and modification by unauthorized pa ...
Tender and Bidding in Construction ProjectsIJERA Editor
Construction Industry plays a key role in the process of economic transformation and growth. Export of projects and services indicate a country's progress in technology and export performance. Most of the companies are versed only with engineering and technology. The decision to bid is a major financial decision because of two reasons. First, the contractor assumes substantial costs for the preparations of the estimates and the tender at the risk of not recovering them if he is not awarded the job. Second, andmost importantly, thecontractor commits himself to investment in the construction of the project if he wins the bid.
CONTEMPORARY PROJECT MANAGEMENT, 4ETimothy J. KloppenborgVit.docxaidaclewer
CONTEMPORARY PROJECT MANAGEMENT, 4E
Timothy J. Kloppenborg
Vittal Anantatmula
Kathryn N. Wells
‹#›
Project Supply Chain Management
Chapter 13
‹#›
Chapter 13 Core Objectives:
Identify the role of supply chain management in project management and its importance for ensuring project success.
Describe how to plan, conduct, & control project procurements.
Chapter 13 Technical Objectives:
Describe the various formats for supply contracts and when each is appropriate.
Given a project situation, determine which activities, supplies, or services should be purchased; create bid documents; determine criteria you would use to select a seller; & determine which type of contract you would use.
Chapter 13 Behavioral Objectives:
Explain how to use the contemporary approach to project partnering and collaboration.
Super Absorbent Polymer Turf (SAPTURF)
“The SAPTURF project required a strong team. Successful commercialization of IP is a long shot, so room for project management error is slim. I realized I would need to compensate for lack of in-house resources. Lack of in-house resources is an advantage! I was free to look for the best resources…”
Chris Tetrault, owner and founder, SAPTURF
6
Introduction to Project Supply Chain Management
Inter-organizational purchasing-related issues supply chain management
A supply chain consists of all parties involved in fulfilling a customer request
Integrating SCM into PM can significantly enhance the effectiveness of project management
Introduction to Project Supply Chain Management
Integration of related functions to acquire needed products and services
Purchasing
Supply management
Procurement
Project Supply Chain Management
A system approach to managing flows of physical products, information, & funds from suppliers and producers, through resellers the project organization for creating customer satisfaction
SCM Components
Make-or-buy decision
Contract types
Collaboration and cooperation
System integration
Make-or-buy decisions – deciding whether to make something in-house or purchase it from a vendor
SCM Factors
The importance of SCM to general project management depends on a number of factors:
Value of outsourced products/services relative to value of the project
The timing of the work being purchased
Capability of the project team
Role of the outsourced work in the entire project
Number of suppliers required
Structure of the procurement supply chain
SCM Decisions
Distribution network configuration
Inventory control in supply chain
Logistics
Supply contracts
Distribution strategies
Supply chain integration & strategic partnering
Outsourcing & procurement strategies
Product design
Information technology & decision-support systems
Matching internal inadequacies with external experience
Project Procurement Management Processes
Plan Procurement Management
Conduct Procurements
Control Procurements
Plan Procurement Management
Plan for purchasing and acquisition
Complete most of pr.
The Ultimate Guide to The Digital Procurement ManagementDanitKellmer1
The ultimate guide to the digital procurement process – Learn how to use technology to
manage your construction procurement, find some great software features, and tips on
what to pay attention to when buying your software.
More info: https://tinyurl.com/mwafxuhz
Procurement Management
Importance of Project Procurement Management
Procurement means acquiring goods and/or services from an outside source
Other terms include purchasing and outsourcing
Debates on Outsourcing
Some companies, such as Wal-Mart, prefer to do no outsourcing at all, while others do a lot of outsourcing.
GM recently announced plans to switch from outsourcing 90% of IT service to only 10%
Most organizations do some form of outsourcing to meet their IT needs and spend most money within their own country
Why Outsource?
To access skills and technologies
To reduce both fixed and recurrent costs
To allow the client organization to focus on its core business
To provide flexibility
To increase accountability
PM Network – Risks of Outsourcing
Boeing’s Dreamliner
Following suit and not minding risks
Vendor Issues
Misunderstanding
Information Exchange
Schedule Overruns
PM Network – The More the Merrier
More providers, more problems
Differing methodologies and tools
Service and Operating Level Agreements
Find a balance that works for the organization
Contracts
A contract is a mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them
Contracts can clarify responsibilities and sharpen focus on key deliverables of a project
Because contracts are legally binding, there is more accountability for delivering the work as stated in the contract
Project Procurement Management Processes
Project procurement management: Acquiring goods and services for a project from outside the performing organization
Processes include:
Planning procurement management
Conducting procurements
Controlling procurements
Closing procurements
Planning Procurement Management
Identifying which project needs can best be met by using products or services outside the organization
Types of Contracts:
Fixed Price (or lump sum)
Cost Reimbursable
Time and Material
Unit Price
Point of Total Assumption
The Point of Total Assumption (PTA) is the cost at which the contractor assumes total responsibility for each additional dollar of contract cost
Contractors do not want to reach the point of total assumption, because it hurts them financially, so they have an incentive to prevent cost overruns
The PTA is calculated with the following formula:
PTA = (ceiling price – target price)/government share + target cost
Cost Reimbursable Contracts
Cost plus incentive fee (CPIF
Cost plus fixed fee (CPFF)
Cost plus percentage of costs (CPPC)
Contract Clauses
Contracts should include specific clauses to take into account issues unique to the project
Can require various educational or work experience for different pay rights
Often includes:
Termination clause
Limitation of liability clause
Tools and Techniques for Planning Purchases and Acquisitions
Expert judgment
Market research
Make-or-buy analysis: General management technique ...
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The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
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Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
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June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
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Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
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• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
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2. PROCUREMENT & CONTRACT MANAGEMENT
Introduction
Procurement
Procurement means acquiring goods and/or services
from an outside source. Procurement is the term
generally used by government, while business uses the
term purchasing and outsourcing is commonly used by
the information technology industry.
Eg. It is estimated that in the year 2003 the worldwide
information technology outsourcing market has grown
to over US$110 billion.
2
Dereje Teklemariam, PhD [Feb.2018]
3. PROCUREMENT & CONTRACT MANAGEMENT
Why Outsource?
Outsourcing is a growing practice within the IT
industry, and it is important to appreciate the reasons
it is adopted:
– To reduce both fixed and recurrent costs.
– To allow the client organization to focus on its
core business.
– To access skills and technologies.
– To provide flexibility.
– To increase accountability.
3
Dereje Teklemariam, PhD [Feb.2018]
4. Procurement Management Processes
Project procurement management includes the
following processes for acquiring goods and
services from outside the project organisation:
– Procurement planning: determining what to procure and when.
– Solicitation planning: documenting product requirements and
identifying potential sources.
– Solicitation: obtaining quotations, bids, offers, or proposals as
appropriate.
– Source selection: choosing from among potential vendors.
– Contract administration: managing the relationship with the
vendor.
– Contract close-out: completion and settlement of the contract.
4
Dereje Teklemariam, PhD [Feb.2018]
5. Procurement Management Processes & Key Outputs
The figure below summarises the major processes involved
in procurement management, and identifies important
milestones associated with each stage.
For example, after procurement planning the key milestone
is the “make or buy decision”. This will determine if further
procurement management processes are required.
5
Dereje Teklemariam, PhD [Feb.2018]
6. Procurement Planning
Procurement planning involves identifying which
project needs can be best met by using products or
services outside the organization. It includes
deciding:
– Whether to procure.
– How to procure.
– What to procure.
– How much to procure.
– When to procure.
It is essential to be thorough and creative when
planning procurement. Even though a company
may be viewed as a competitor, it will often be
advantageous to collaborate on some projects.
6
Dereje Teklemariam, PhD [Feb.2018]
7. Inputs to Procurement Planning
The inputs needed for procurement planning include:
– The project scope statement.
– Product description.
– Market conditions.
– Constraints and assumptions.
It is important to define the scope of the project, the
products, market conditions, and constraints and
assumptions. However, it is also essential to know exactly
why you want to procure goods or services.
7
Dereje Teklemariam, PhD [Feb.2018]
8. Tools and Techniques
Procurement management will often incorporate
the following:
–Make-or-buy analysis: determining whether a
particular product or service should be made or
performed inside the organization or purchased from
someone else. Often involves financial analysis.
–Experts, both internal and external, are valuable assets
in procurement decisions.
• Internal experts are particularly useful in providing knowledge
of organisational and personnel issues.
• External experts can provide expert judgement, especially
with regard to vendors and technology issues.
8
Dereje Teklemariam, PhD [Feb.2018]
9. Types of Contracts
A contract is a mutually and legally binding agreement that
obligates the seller to provide specified products or
services, and obligates the buyer to pay for them. Different
types of contracts are suited to particular circumstances,
there are three broad categories:
– Fixed price or lump sum: involve a fixed total price for
a well-defined product or service.
– Cost reimbursable: involve payment to the seller for
direct and indirect costs.
– Unit price contracts: require the buyer to pay the
seller a predetermined amount per unit of service.
9
Dereje Teklemariam, PhD [Feb.2018]
10. Fixed Price Contracts
Fixed price or lump sum contracts involve a fixed total
price for a well-defined product or service. These
contracts are particularly suited where supplies or
services can be clearly specified before tenders are
invited. The buyer incurs little risk in this situation.
Fixed price contracts may also include incentives for
meeting or exceeding project objectives. They may also
include safeguards in the form of penalty clauses,
however these may be difficult to apply before the
consequences of delay are felt.
An important consideration is that any changes to
resource requirements due to project revision (change) is
likely to lead to additional claims by, and extra payment
to the contractor.
10
Dereje Teklemariam, PhD [Feb.2018]
11. Cost Reimbursable Contracts
Cost reimbursable or cost-plus contracts involve payment to the seller
for direct and indirect actual costs. These contracts are often used for
projects that include the provision of goods and services associated
with new technologies. The buyer absorbs more risk with the type of
contract, which has three forms:
– Cost plus incentive fee (CPIF): the buyer pays the seller for
allowable performance costs plus a predetermined fee and an
incentive bonus.
– Cost plus fixed fee (CPFF): the buyer pays the seller for
allowable performance costs plus a fixed fee payment usually
based on a percentage of estimated costs.
– Cost plus percentage of costs (CPPC): the buyer pays the seller
for allowable performance costs plus a predetermined
percentage based on total costs.
11
Dereje Teklemariam, PhD [Feb.2018]
12. Unit Price Contracts
Unit price contracts require the buyer to pay the seller a
predetermined amount per unit of service, and the total
value of the contract is a function of the quantities needed
to complete the work.
Unit price contracts are also called a time and materials
contract, and may incorporate volume discounts.
This type of contract is often used for services that are
needed when the work cannot be clearly specified and
total costs cannot be estimated in a contract. Many
contract programmers and consultants prefer to use unit
price contracts.
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13. Contract Types Versus Risk
The figure below summarises the spectrum of risk to the
buyer and seller for different types of contract. Note that a
low risk option for a buyer will be high risk for the seller, and
visa-versa.
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14. Statement of Work (SOW)
Many contracts include a statement of work (SOW). A
statement of work is a description of the work required for
the procurement. The SOW describes the work in sufficient
detail to allow prospective sellers to determine if they are
capable of providing the goods and services required, and to
allow them to determine an appropriate price.
A good SOW gives bidders a better understanding of the
buyer’s expectations, and therefore should be as clear, concise
and as complete as possible. It should describe all the services
required, and include performance reporting requirements.
The SOW should specify the product of the project, use
industry terms, and refer to industry standards.
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15. Statement of Work (SOW) Template
I. Scope of Work: Describe the work to be done to detail. Specify the hardware and
software involved and the exact nature of the work.
II. Location of Work: Describe where the work must be performed. Specify the
location of hardware and software and where the people must perform the work
III. Period of Performance: Specify when the work is expected to start and end,
working hours, number of hours that can be billed per week, where the work must
be performed, and related schedule information.
IV. Deliverables Schedule: List specific deliverables, describe them in detail, and
specify when they are due.
V. Applicable Standards: Specify any company or industry-specific standards that
are relevant to performing the work.
VI. Acceptance Criteria: Describe how the buyer organization will determine if the
work is acceptable.
VII. Special Requirements: Specify any special requirements such as hardware or
software certifications, minimum degree or experience level of personnel, travel
requirements, and so on.
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16. Solicitation Planning
Solicitation planning involves preparing of the
documents needed for requesting bids
(solicitation), and determining the evaluation
criteria for the award of a contract. Common
documents used in this process are:
– Request for Proposals: used to solicit proposals from
prospective sellers where there are several ways to
meet the sellers’ needs.
– Requests for Quotes: used to solicit quotes for well-
defined procurements.
– Invitations for bid or negotiation and initial
contractor responses are also part of solicitation
planning.
– Important link: http://globalEDGE.msu.edu
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17. Outline for a Request for Proposal (RFP)
I. Purpose of RFP
II. Organization’s Background
III. Basic Requirements
IV. Hardware and Software Environment
V. Description of RFP Process
VI. Statement of Work and Schedule Information
VII. Possible Appendices
A. Current System Overview
B. System Requirements
C. Volume and Size Data
D. Required Contents of Vendor’s Response to RFP
E. Sample Contract
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18. Solicitation
Solicitation (or tendering) involves obtaining proposals,
tenders or bids from prospective sellers. Prospective
sellers do most the work in this process, usually at no
cost to the buyer or the project. The buying organisation
is responsible for advertising the “request to tender” (the
solicitation).
Organizations can advertise to procure goods and
services in several ways:
– Approaching the preferred vendor.
– Approaching several potential vendors.
– Advertising to anyone interested.
A bidders’ conference or similar meeting between the
buyer and the prospective sellers can help clarify the
buyer’s expectations.
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19. Source Selection
Once buyers receive proposals, they must select a
vendor or decide to cancel the procurement. Source
selection involves:
– Evaluating bidders’ proposals.
– Choosing the best one.
– Negotiating the contract.
– Awarding the contract.
It is highly recommended that buyers use formal
evaluation procedures for selecting vendors.
Buyers often create a “short list”.
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20. Sample Proposal Evaluation Sheet
For instance, templates of the following type can be used
by a project team to help create a short list of the best
three proposals.
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21. Source Selection
After developing a short list of possible sellers,
organisations will often undertake more detailed
evaluation.
The following figure lists items that might be part of
an evaluation of the top three vendors for a large
information technology project.
All of the evaluation criteria are given a certain
number of possible points (based on ranked
importance), and the project team members and
other stakeholders then evaluate each proposal by
assigning points to each criteria.
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23. Contract Administration
Contract administration ensures that the
seller’s performance meets contractual
requirements. Contracts are legal
relationships, and are subject to the contract
law in the country where the project is
conducted, and in the case of international
projects, the country of supply.
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24. Contract Administration
However, due to their complexity, many
project managers ignore contractual issues.
This can result in serious problems. Ideally,
the project manager and the project team
should be actively involved with contract
law experts in the preparation and
administration of contracts.
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25. Contract Administration
Project members must be aware of the legal
problems they might cause by not
understanding a contract. In particular, most
projects involve changes, and these changes
must be handled properly for items under
contract.
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26. Change Control for Contracts
Change control is an important part of the contract
administration process. The following change
control process must be applied where there are
contracts:
– Changes to any part of the project need to be
reviewed, approved, and documented by the same
people in the same way that the original part of the
plan was approved.
– Evaluation of any change should include an impact
analysis. How will the change affect the scope, time,
cost, and quality of the goods or services being
provided?
– Changes must be documented in writing. Project
team members should also document all important
meetings and telephone phone calls.
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27. Contract Close-out
Contract close-out is the final project procurement
management process. It includes:
– Product verification to determine if all work was
completed correctly and satisfactorily.
– Administrative activities to update records to reflect
final results.
– Archiving information for future use.
Procurement audits are often undertaken during contract
close-out to identify lessons learned in the procurement
process.
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28. PROCUREMENT & CONTRACT MANAGEMENT
Conclusion - 1
It is essential that organisations obtain good
contracts that minimise risk while ensuring optimum
results through effective contract administration.
With the current competitive and demanding
conditions found in information technology projects,
it is very important to prepare contracts with great
care and expert assistance. It is equally important to
initiate and follow effective contract administration
procedures.
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29. PROCUREMENT & CONTRACT MANAGEMENT
Conclusion - 2
The following guidelines can help can assist in preparing
proposals, contracts and administrative procedures:
– Use checklists and templates where appropriate.
– Evaluate risks by reference to suggested contract
provisions where appropriate.
– All major proposals and contracts, and contracts with
questionable provisions, should be reviewed by a
contract law expert.
– Appropriate pricing and/or insuring of risk under the
contract.
– Periodic review, improvement and updating of contract
preparation and administration procedures.
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30. End of Chapter Three
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