1. 1 Picture source: Refer bottom left hand corner of picture Project Procurement Management (Outsourcing)

2. 2 What is Procurement Management?  Deciding what work to give to outside contractors (if any) and how to do that.  Requesting and receiving proposals.  Selecting the right contractor and proposal.  Negotiation and managing a contract.

3. 3 Tutorial exercise Bravo Flying Boats Alpha Aircraft Charlies Cargo Sales Managers Purchase Managers

4. 4 Project Procurement Management Procurement Planning -Make-or- buy -If, what, when, how? P-Plan Solicitation Planning SOWs -Determine SOW -Determine Selection Criteria Evaluation Criteria RFP Solicitation -Inform bidders -Seek proposals Proposals Source Selection -Assess proposals -Contract negotiation Contract Close -Audit -Close project Accept- ance -Assess performance -Manage changes Contract Admin Contract Changes Payments Work done

5. 5 Government Order What parts have to be outsourced? A What can Alpha make itself? ABCDEFABCDEF

6. 6 Government Order What parts have to be outsourced? B What can Bravo make itself? ABCDEFABCDEF

7. 7 Government Order What parts have to be outsourced? C What can Charlie make itself? ABCDEFABCDEF

8. 8 Tutorial: Deciding what to outsource Mmm.. we need to outsource the engine and the undercarriag e We have to contract out the frame & the undercarriage I’m hungry Bravo Flying Boats Alpha Aircraft Charlies Cargo

9. 9 Solicitation Planning Procurement Planning -Make-or- buy -If, what, when, how? P-Plan Solicitation Planning SOWs -Determine SOW -Determine Selection Criteria Evaluation Criteria RFP Solicitation -Inform bidders -Seek proposals Proposals Source Selection -Assess proposals -Contract negotiation Contract Close -Audit -Close project Accept- ance -Assess performance -Manage changes Contract Admin Contract Changes Payments Work done

10. 10 Our criteria are “Must look like our drawing” & “A promise that it will be delivered before our time deadline”. Let’s prepare RFP’s for the two items we must outsource and send them to two different suppliers Tutorial – Preparing RFPs

11. 11 Tutorial: RFP to 1 st supplier Alpha Aircraft Bravo Boats 3:20pm

12. 12 A “real” RFP Source:IT Project Management, Schwalbe 1.Purpose of RFP 2.Background of organisation 3.Hardware and Software Environment 4.The RFP process 5.Statement of Work and Schedule Information 6.Appendices a)Current system overview b)System requirements c)Volume and size data d)Required contents of Vendor’s repsonse to RFP e)Sample Contract

13. 13 Tutorial: RFP to 2nd supplier Alpha Aircraft Charlie’s Cargo 3:20pm

14. 14 Tutorial: Prepare RFPs RFP1c-bRFP1c-a RFP2c-bRFP2c-a RFP1b-cRFP1b-a RFP2b-cRFP2b-a RFP1a-bRFP1a-c RFP2a-b RFP2a-c

15. 15 Solicitation & Source Selection Procurement Planning -Make-or- buy -If, what, when, how? P-Plan Solicitation Planning SOWs -Determine SOW -Determine Selection Criteria Evaluation Criteria RFP Solicitation -Inform bidders -Seek proposals Proposals Source Selection -Assess proposals -Contract negotiation Contract Close -Audit -Close project Accept- ance -Assess performance -Manage changes Contract Admin Contract Changes Payments Work done

16. 16 Tutorial: Seek Proposals RFP1c-bRFP1c-a RFP2c-bRFP2c-a RFP1b-cRFP1b-c RFP2b-aRFP2b-a RFP1a-bRFP1a-c RFP2a-b RFPa-c

17. 17 Ok, guys. We have to respond to these 4 RPFs with 4 proposals. Sales Manager…take the lead! Tutorial: Write Proposals

18. ...via this......to this. 18 Write Proposal Alpha Aircraft Charlies Cargo 3:20pm 2 gold bars 5 minutes From this...

19. 19 Tutorial: Submit Proposals P1c-b P1c-a P2c-b P2c-a P1b-c P1b-a P2b-c P2b-a P1a-b P1a-c P2a-b P2a-c

20. 20 Tutorial: Proposals duly receivedP1c-bP2c-bP1c-aP2c-a P1b-cP1b-a P2b-cP2b-a P1a-bP1a-c P2a-b Pa-c

21. 21 Tutorial: Audit At this point the Purchasing Manager has to show the tutor that he has two proposals for each of two parts

22. 22 Solicitation & Source Selection Procurement Planning -Make-or- buy -If, what, when, how? P-Plan Solicitation Planning SOWs -Determine SOW -Determine Selection Criteria Evaluation Criteria RFP Solicitation -Inform bidders -Seek proposals Proposals Source Selection -Identify winning proposal - Negotiate contract Contract Close -Audit -Close project Accept- ance -Assess performance -Manage changes Contract Admin Contract Changes Payments Work done

23. A.Select the proposal with the most beautiful drawing. B.Choose at random so as to be fair to everyone. C.Select the company which employs your best friend. D.Determine which supplier is offering the largest bribe. E.Use the original criteria as the basis for selection. 23 Which is the correct way to select the winning proposal/bid?

24. 24 Tutorial: Select Proposals P1c-bP1c-a P2c-bP2c-a P1b-cP1b-a P2b-cP2b-a P1a-bP1a-c P2a-b P2a-c

25. 25 Tutorial: Negotiate Contract You need to agree a contract for each part you outsource

26. 26 Contract Administration Procurement Planning -Make-or- buy -If, what, when, how? P-Plan Solicitation Planning SOWs -Determine SOW -Determine Selection Criteria Evaluation Criteria RFP Solicitation -Inform bidders -Seek proposals Proposals Source Selection -Assess proposals -Contract negotiation Contract Close -Audit -Close project Accept- ance -Assess performance -Manage changes Contract Admin Contract Changes Payments Work done

27. 27 Make, sell, buy, check, accept, pay

28. 28 Contract Close Procurement Planning -Make-or- buy -If, what, when, how? P-Plan Solicitation Planning SOWs -Determine SOW -Determine Selection Criteria Evaluation Criteria RFP Solicitation -Inform bidders -Seek proposals Proposals Source Selection -Assess proposals -Contract negotiation Contract Close -Audit -Close project Accept- ance -Assess performance -Manage changes Contract Admin Contract Changes Payments Work done

29. 29 If both sides are happy then sign off.

30. 30 Assemble and hand over to government and keep the gold bars

31. The finished product in the last photo matches which government proposal? 31 A.The one given to Alpha B.The one given to Bravo C.The one given to Charlie D.None of them – it’s original work of art E.None of them – there’s been a diabolical breakdown in communications!

32. So far, I understand what’s going on 1.Strongly agree 2.Agree 3.Not sure 4.Disagree 5.Strongly disagree 32