12.3 Control Procurements The process of managing procurement relationships, monitoring contract performance and making changes or corrections as needed Undertaken by both the buyer and the seller as both parties need to ensure that the other is meeting their contractual obligations Many organisations treat contract administration as an administrative function separate from the project and it is carried out by a Purchasing Department or by a designated functional manager Managing these relationships both internally and externally can be a very complex communication activity with it’s own processes and procedures that must be followed, often dictated by the terms of the contract and internal policies and procedures Occurs during Monitoring and Control Initiation Planning Execution Close Monitor Control Adapted from PMBOK 5th Edition

12.3 Control Procurements This process is closely related to the following project management processes: Direct and Manage Project Work Control Quality Perform Integrated Change Control Control Risks The Project Manager must regularly monitor the efficiency and effectiveness of this process in order to successfully manage the project and any dependencies Close financial management is also required to ensure that payments are being made according to the terms in the contract Adapted from PMBOK 5th Edition

12.3 Control Procurements Inputs to Control Procurements Project Management Plan Procurement Documents Agreements Approved Change Requests Work Performance Reports: technical and work performance from the Seller Work Performance Data Quality Costs including seller invoices Adapted from PMBOK 5th Edition

12.3 Control Procurements Tools and techniques to Control Procurements – Performance Reporting Inspections & Audits Procurement Policies & Procedures Contract Change Control Procurement Performance Reviews Claims Administration Payment Systems Record Management System Adapted from PMBOK 5th Edition

12.3 Control Procurements Contract Change Control The process by which procurements can be modified, often included in each specific contract and can vary between them Closely related to the processes of Control Scope and Perform Integrated Change Control Often jointly managed by the Project Manager and the purchasing department Procurement Performance Reviews A structured review of the seller’s progress to delivery the contracted scope and quality within the cost and timeframe that have been agreed Performance information is compared against actual outcomes Often conducted by the purchasing department or internal audit Adapted from PMBOK 5th Edition

12.3 Control Procurements Inspections & Audits If required by the buyer, then these will be specified in the contract Often involves the buyer having access to regular external audit reports on the seller, can include buyer procurement personnel Performance Reporting Regular status reports and performance information required of the seller as specified in the contract Tracks the seller’s performance against contractual obligations of scope, quality, time and cost Click here for further information Payment Systems Payments to the seller are typically processed by the accounts payable system after they have been authorised by project or procurement personnel Adapted from PMBOK 5th Edition

12.3 Control Procurements Claims Administration Relates to contested changes where the buyer and seller cannot agree on items such as Change Requests, Incentive Payments or Penalties Referred to as Claims, Disputes or Appeals A resolution process is normally documented in the contract and settlement via negotiation is preferred If agreement cannot be reached then legal action may be required Records Management Systems Used by the Project Manager to manage contract and procurement documentation and records Contains a retrievable archive of all contract documentation, correspondence and performance reports Adapted from PMBOK 5th Edition

12.3 Control Procurements Procurement Policies and Procedures Most large organisations and all government departments will have comprehensive policies and procedures It is critical that the project team are aware of these and that they are followed, otherwise approval may not be obtained for purchasing requirements and timeframes can be severely impacted These procedures will also impact the project schedule during the planning stage as critical internal specialist may not be available when required by the project It is often mandatory to engage internal purchasing professionals and either internal or external legal professionals Purchasing decisions may need to be escalated to senior management or even the Board for approval, depending on the overall cost. This can also impact timelines. Adapted from PMBOK 5th Edition

12.3 Control Procurements Outputs of this process include – Work Performance Information Change Requests Project Management Plan Updates Procurement Management Plan Schedule and Cost baselines Project Document Updates Contract and supporting schedules Contract Change Requests Claims and disputes Results of inspections Invoices and financial information Organisational Process Assets Correspondence regarding the contract Payment schedules and requests Seller performance evaluation documentation Adapted from PMBOK 5th Edition