Project Procurement Management

Procurement Basics Project Procurement Management

Project Procurement Mgt Includes all the processes used to purchase/acquire --products --services --results needed …from outside the project team to complete the project.

Processes “Plan purchases” and “acquisition process” generates THE PROCUREMENT MANAGEMENT PLAN

Procurement Mgt Plan becomes an input to most of the other procurement processes including the “plan contracting process.” “Plan contracting process” generates, as an OUTPUT, procurement documents….

Those procurement documents are used as an input by the “request seller responses” process. (What might these look like? )

The responses come back, and are reviewed. Then they become an INPUT to the “seller response process” –which generates as an OUTPUT the “qualified sellers list.”

That list becomes an input to “select sellers process” to generate these two OUTPUTs: --The selected sellers list --Contract management plan

The selected sellers list & contract management plan… are parts of the input to the “contract administration process” which generates the contract documentation, which in turn… IS NEEDED BY THE CONTRACT CLOSURE PROCESS TO CLOSE THE PROJECT

Remember these items… The contract statement of work (SOW) is written by the buyer aka “originator” Qualified sellers list comes from those asked to submit a proposal or quote. The SOW for each contract is developed from the Project Scope Statement, the Project WBS, and the WBS dictionary.

Remember for CAPM Invitation to bid, request for quote, and request for proposal travel FROM buyer TO seller. The Seller responds TO the buyer via a bid, quote or proposal.

Of all types of contracts PMBOK discusses, only the firm fixed price contract presents a risk to the seller. The contract management plan is an output of the “select sellers” process –NOT of the plan contracting process.

The contract type that represents the most risk to the buyer is the “cost plus percentage of cost” because the fee goes up in accordance with the cost overrun.

Memorize When a seller selection decision is based on price - as when buying commercial or standard items—terms like bid, tender, or quote are used. When the decision is about a more complex service with many factors, the term used is proposal. (Request for Proposal or RFP).

Typical reasons for discrepancies like significant cost differences between the cost in a proposal and the independent/earlier cost estimate include: Contract statement of work wasn’t accurate The seller misunderstood scope or other details The seller failed to fully respond to RFP or Q The marketplace changed

Ready For CAPM? procurement