Agreements
Defined relationship and intention(s)
Contracts are agreements, not all agreements are contracts
Procurement management process
Planning: Plan Procurement Management
Executing: Conduct Procurements
Monitoring & Control: Control Procurements
Plan Procurement Management
Inputs: business documents (e.g. benefits mgmt plan & business case), project charter, project mgmt plan, project documents, EEFS, OPAs
Outputs: procurement mgmt plan, make-or-buy decisions, etc.
Make-or-buy analysis
(Tool/technique of Plan Procurement Management)
Completed early in process
Procurement strategy
(Output of Plan Procurement Management)
- how goods/services will be delivered to buyer
- type of contract used
- how procurement carried out each phase
Procurement statement of work (SOW)
(Output of Plan Procurement Management)
Work to be done on each procurement (e.g. drawings, specifications, descriptions)
Source selection criteria
(Output of Plan Procurement Management)
Result of Source Selection Analysis; often numerical weightings assigned
Independent cost estimates
(Output of Plan Procurement Management)
Benchmark against which to evaluating incoming bids
Request for proposal (RFP)
Bid document (Output of Plan Procurement Management)
or request for tender
Request for detailed proposal on how work done, by whom, for how much, etc.
Invitation for bid (IFB)
Bid document (Output of Plan Procurement Management)
or request for bid
Request for total cost of work to be done; usually when procurement statement of work (SOW) is sufficiently detailed
Request for quotation (RFQ)
Bid document (Output of Plan Procurement Management)
Requests price quote by unit of measure (item, hour, etc.)
Request for information (RFI)
Bid document (Output of Plan Procurement Management)
Request to learn more about vendors, e.g. skills and experience
Happens before a request for quote or proposal
Change requests
(Output of Plan Procurement Management)
Procurement often happen well after initial planning, so may necessitate changes.
Fixed price (FP) contract
For clearly-defined situations
Risks: Seller, if cost is higher than expected; lack of specificity can impact buyer (e.g. delays, cost overruns)
Advantages: Simple, seller has incentive to complete work, cost known up-front
Disadvantages: Seller’s profit (or loses) not disclosed, more work on buyer to prepare SOW, can be more expensive
Types: Fixed Price, Purchase Order (usually for commodities)
Time and material (T&M) contract
Charges based on per-time and/or per-item basis; when total quantities not known upfront; best for short contracts of low $ amounts
Risks: Buyer, if seller is not productive
Advantages: Simpler Ts & Cs than other types, brief duration, good for adding staff
Disadvantages: Seller has limited incentive to finish quickly/efficiently, requires more oversight from buyer
Cost-reimbursable (CR) contract
Used when scope is uncertain
Risks: Buyer, as total cost is unknown
Advantages: simpler SOW, can be cheaper than FP since seller will have costs covered
Disadvantages: requires more work by buyer to audit seller’s invoices and manage work, seller has limited incentive to control costs, total cost unknown
Standard contract
Drafted by buyer, and usually reviewed/vetted by lawyers
Can be implemented without special review
Special provisions
Changes from the standard contract
Usually triggered by risk analysis, project requirements, project type, or admin/legal/business requirements
Terms and conditions
Assignment - when rights/responsibilities can be transferred
Breach/default - failure to meet obligations
Force majeure - an “act of nature/God”, allows for failure to meet requirements
Indemnification (liability)
Intellectual property
Management requirements - e.g. meeting attendance, staff approval process
Material breach - serious enough to possibly prevent completion of work
Retainage - amount held back (~5-10%) from each payment, then paid at completion
Risk of loss - allocated between parties in cases of loss or destruction
Waivers - rights can’t be waived without express permission
Conduct Procurements Process
Inputs: procurement mgmt plan, cost baseline, schedule, lessons learned, seller proposal/quote/bid, independent cost assessments
Tools/techniques: advertising
Outputs: contract. change requests, project mgmt plan and project documents updates
Bidder conferences
(Tools/technique of Conduct Procurements)
Chance for bidders to ask questions and get information; document and shared with all bidders via bid document addenda
Proposal evaluation
(Tools/technique of Conduct Procurements)
Used to determine whether vendors meet minimum requirements
Allows for quantitative scoring of vendors
Procurement negotiation
(Tools/technique of Conduct Procurements)
Helps ensure best price, and good working relationship with vendor
All change orders require negotiation
Control Procurements
Inputs: Milestone list, baselines, requirements documentation, quality reports, work performance data
Tools/techniques: inspections, earned value analysis, trend analysis
Outputs: change requests, procurement documents updates
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1. Key Terms and Concepts9
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2. A System for Value Delivery4
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3. Project Management Principles6
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Project Management Framework28
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Project Management Processes24
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Beginning the Project, pt. 138
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Beginning the Project, pt. 239
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Leading a Team46
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Effective Communications20
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Engaging with Stakeholders19
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Managing Risk50
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Quality Management41
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Stewardship4
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Integration Management15
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Scope Management18
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Schedule Management41
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Cost Management35
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Resource Management19
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Procurement Management30
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Understanding Adaptive Approaches10
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Agile Project Processes23
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Adaptive Approaches10
