1. 1 Module : Project Procurement Management Objectives Understand the importance of project procurement management and the increasing use of outsourcing for information technology projects Describe the procurement planning process, procurement planning tools and techniques, types of contracts, and statements of work Discuss what is involved in solicitation planning and the difference between a request for proposal and a request for quote Explain what occurs during the solicitation process Describe the source selection process and different approaches for evaluating proposals or selecting suppliers Discuss the importance of good contract administration Describe the contract close-out process

2. 2 Procurement Management Procurement means acquiring goods and/or services from an outside source. We outsource for the following reasons: 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. 3 Project Procurement Management Processes 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. 4 Project Procurement Management Processes

5. 5 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

6. 6 Make-or-buy analysis Make or Buy Example: Assume you can lease an item you need for a project for $150/day. To purchase the item, the investment cost is $1,000, and the daily cost would be another $50/day. How long will it take for the lease cost to be the same as the purchase cost? If you need the item for 12 days, should you lease it or purchase it? Set up an equation so the “make” is equal to the “buy.” In this example, use the following equation. Let d be the number of days to use the item. $150d = $1,000 + $50d Solve for d as follows: Subtract $50d from the right side of the equation to get $100d = $1,000 Divide both sides of the equation by $100 d = 10 days The lease cost is the same as the purchase cost at 10 days. If you need the item for 12 days, it would be more economical to purchase it

7. 7 Types of Contracts 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 Time and material contracts: hybrid of both fixed-price and cost-reimbursable, often used by consultants Unit price contracts: require the buyer to pay the seller a predetermined amount per unit of service

8. 8 Cost Reimbursable Contracts 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

9. 9 Contract Types Versus Risk

10. 10 Statement of Work A statement of work is a description of the work required for the procurement Many contracts, or mutually binding agreements, include SOWs A good SOW gives bidders a better understanding of the buyer’s expectations

11. 11 Statement of Work

12. 12 Solicitation planning Solicitation planning involves preparing several documents: Request for Proposals: used to solicit proposals from prospective sellers 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

13. 13 Solicitation planning Outline for a Request for Proposal: 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

14. 14 Solicitation Solicitation involves obtaining proposals or bids from prospective sellers 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 can help clarify the buyer’s expectations

15. 15 Source selection Source selection involves: evaluating bidders’ proposals choosing the best one negotiating the contract awarding the contract It is helpful to prepare formal evaluation procedures for selecting vendors. Buyers often create a “short list.”

16. 16 Sample Proposal Evaluation Sheet

17. 17 Detailed Criteria for Selecting Suppliers

18. 18 Contract Administration Contract administration ensures that the seller’s performance meets contractual requirements Contracts are legal relationships, so it is important that legal and contracting professionals be involved in writing and administering contracts Many project managers ignore contractual issues, which can result in serious problems

19. 19 Suggestions on Change Control for 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 calls

20. 20 Contract Close-out Contract close-out 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 identify lessons learned in the procurement process

21. 21 Module : Project Quality Management Objectives Define project quality management Describe quality planning and its relationship to project scope management Discuss the importance of quality assurance Understand the importance of project quality management List the three outputs of the quality control process Understand the tools and techniques for quality control, such as Pareto analysis, statistical sampling, Six Sigma, quality control charts, and testing

22. 22 Quality Management Program Quality management planning and implementing policies, procedures, and requirements. Quality control ensuring that work is being performed and that work is being checked prior to its acceptance. Quality assurance verifying that quality control tasks are being performed. Continuous quality improvement continually pursuing improvement in the quality of the project process. Quality costs redoing a project item even when this increases the item's cost.

23. 23 Quality Planning and Quality Assurance Quality Definitions Quality Materials Quality Events Importance of Quality Management Discuss the importance of quality management and assurance. How may they vary from project to project?

24. 24 Tools and Techniques for Quality Control Pareto Analysis Steps to identify the important causes using Pareto analysis Step 1: Form a table listing the causes and their frequency as a percentage. Step 2: Arrange the rows in the decreasing order of importance of the causes i.e. the most important cause first Step 3: Add a cumulative percentage column to the table Step 4: Plot with causes on x- and cumulative percentage on y-axis Step 5: Join the above points to form a curve Step 6: Draw line at 80% on y-axis parallel to x-axis. Then drop the line at the point of intersection with the curve on x- axis. This point on the x-axis separates the important causes and trivial causes.

25. 25 Pareto Analysis Sample

26. 26 Six Sigma It requires an organization-wide commitment Six Sigma organizations have the ability and willingness to adopt contrary objectives, like reducing errors and getting things done faster It is an operating philosophy that is customer- focused and strives to drive out waste, raise levels of quality, and improve financial performance at breakthrough levels

27. 27 Six Sigma

28. 28 Quality Control Chart

29. 29 Testing Unit test Integration testing System testing A test plan is simply a high-level summary of the areas (functionality, elements, regions, etc.)

30. 30 Quality Control Plan What sort of tools would you use and what will you be looking for when assessing quality in a project?

31. 31 Module : Project Human Resource Management Objectives Discuss the importance of good human resource management on projects Summarize key concepts for managing people by understanding the theories of Abraham Maslow, Frederick Herzberg, David McClelland, and Douglas McGregor on motivation, H. J. Thamhain and D. L. Wilemon on influencing workers, and Stephen Covey on how people and teams can become more effective Discuss organizational planning and be able to create a project organizational chart, responsibility assignment matrix, and resource histogram Understand important issues involved in project staff acquisition and explain the concepts of resource assignments, resource loading, and resource leveling Assist in team development with training, team-building activities, and reward systems

32. 32 Project Human Resources Human resource planning: Identifying and documenting project roles, responsibilities, and reporting relationships. Acquiring the project team: Getting the needed personnel assigned to and working on the project. Developing the project team: Building individual and group skills to enhance project performance. Managing the project team: Tracking team member performance, motivating team members, providing timely feedback, resolving issues and conflicts, and coordinating changes to help enhance project performance.

33. 33 Keys to Managing People Psychologists and management theorists have devoted much research and thought to the field of managing people at work Important areas related to project management include motivation (intrinsic and extrinsic) influence and power effectiveness

34. 34 Abraham Maslow on Motivation

35. 35 Herzberg’s Motivational and Hygiene Factors

36. 36 McClelland’s Acquired-Needs Achievement: People with a high need for achievement seek to excel and thus tend to avoid both low-risk and high-risk situations. Affiliation: Those with a high need for affiliation need harmonious relationships with other people and need to feel accepted by other people. Power: A person's need for power can be one of two types - personal and institutional.

37. 37 McGregor’s Theory X and Theory Y

38. 38 Thamhain and Wilemon’s Ways to Have Influence on Projects 1. Authority: the legitimate hierarchical right to issue orders 2. Assignment: the project manager's perceived ability to influence a worker's later work assignments 3. Budget: the project manager's perceived ability to authorize others' use of discretionary funds 4. Promotion: the ability to improve a worker's position 5. Money: the ability to increase a worker's pay and benefits 6. Penalty: the project manager's ability to cause punishment 7. Work challenge: the ability to assign work that capitalizes on a worker's enjoyment of doing a particular task 8. Expertise: the project manager's perceived special knowledge that others deem important 9. Friendship: the ability to establish friendly personal relationships between the project manager and others

39. 39 Improving Effectiveness - Covey’s 7 Habits Project managers can apply Covey’s 7 habits to improve effectiveness on projects Be proactive Begin with the end in mind Put first things first Think win/win Seek first to understand, then to be understood Synergize Sharpen the saw

40. 40 Creating a Motivating Environment Discuss various instances where you have been motivated and where you have motivated others. Try to associate it to one or more of the principles discussed in this module.

41. 41 Organizational Planning Organizational planning involves identifying, documenting, and assigning project roles, responsibilities, and reporting relationships Outputs and processes include project organizational charts work definition and assignment process responsibility assignment matrixes resource histograms

42. 42 Project Organizational Charts

43. 43 Work Definition and Assignment Process

44. 44 Responsibility Assignment Matrix

45. 45 Resource Histogram

46. 46 Project Staff Acquisition Staffing plans and good hiring procedures are important in staff acquisition, as are incentives for recruiting and retention Research shows that people leave their jobs because they don’t make a difference, don’t get proper recognition, aren’t learning anything new, don’t like their coworkers, and want to earn more money

47. 47 Resource Loading and Leveling Resource loading refers to the amount of individual resources an existing project schedule requires during specific time periods Resource leveling is a technique for resolving resource conflicts by delaying tasks. The main purpose of resource leveling is to create a smoother distribution of resource usage and reduce overallocation

48. 48 Team Development Activities

49. 49 Different types of people Meyers-Briggs Type Indicator (MBTI) Extrovert/Introvert (E/I) Sensation/Intuition (S/N) Thinking/Feeling (T/F) Judgment/Perception (J/P) Social Styles Profile Drivers Expressives Analyticals Amiables

50. 50 General Advice on Teams Be patient and kind with your team. Fix the problem instead of blaming people. Establish regular, effective meetings. Allow time for teams to go through the basic team-building stages. Limit the size of work teams to three to seven members. Plan some social activities to help project team members and other stakeholders get to know each other better. Stress team identity. Nurture team members and encourage them to help each other. Take additional actions to work with virtual team members.