Smsvn pmp training_slides_chapter_12

SMSVN – PMP Training Course 2013 – Chapter 12 Prepared by Nguyen Quy Son – Nguyen Nam Trung - 03/09/2013

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PROJECT PROCUREMENT MANAGEMENT

The process necessary to process and acquire product or services, or result needed from outside the project team.

Involve planning, acquiring the product or services from sources, choosing a source, administering the contract, and closing out the contract.

Buyers and Sellers Buyers: Client, Customer, prime contractor, contractor,

purchaser. -> that’s us ^^ Sellers: Contractor, Subcontractor, provider, vendor, supplier.


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PROJECT PROCUREMENT MANAGEMENT Centralized/Decentralized Contracting

Centralized Contracting: There is one procurement department, and a procurement manager may handle procurements on many projects.

Decentralized contracting: A procurement manager is assigned to one project full-time and reports directly to the project manager.


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PROJECT PROCUREMENT MANAGEMENT

Knowledge Area

Process

Initiating Planning Executing Monitoring & Contol Closing

ProjectProcurementManagement

12.1 Plan ProcurementManagement

12.2 ConductProcurements

12.3 ControlProcurements

12.4 CloseProcurements


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12.1 PLAN PROCUREMENT MANAGEMENT Plan Procurement Management is the process of documenting

project procurement decisions, specifying the approach, and identifying potential sellers.

The Plan Procurements process answers the questions of "What goods and services do we need to buy for this project, how will we purchase them, and who are potential sellers to use?"

Inputs Tool&Techniques Outputs.1 Project management plan.2 Requirementsdocumentation.3 Risk register.4 Activity resourcerequirements.5 Project schedule.6 Activity cost estimates.7 Stakeholder register.8 EEFs.9 OPAs

.1 Make-or-buy analysis

.2 Expert judgment

.3 Market research

.4 Meetings

.1 Procurementmanagement plan.2 Procurement statementof work.3 Procurement documents.4 Source selection criteria.5 Make-or-buy decisions.6 Change requests.7 Project documentsupdates


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12.1 PLAN PROCUREMENT MANAGEMENT The Plan Procurements process includes the following

activities: Performing make-or-buy analysis Creating a procurement management plan Creating a procurement statement of work for each

procurement Selecting a contract type for each procurement Creating the procurement documents Determining the source selection criteria


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12.1 PLAN PROCUREMENT MANAGEMENT Make-or-Buy Analysis, It is better to "make'' if:

You have a limitted plant or workforce. You want to retain control. The work involves proprietary information or procedures.

One of the main reasons to "buy" is to decrease risk to the project's constraints.

Contract Types Fixed-price contracts Cost-reimbursable contracts Time and Material Contracts (T&M)


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FIXED-PRICE CONTRACTS Used for acquiring goods or services with well defined

specifications or requirements. Bad points:

Seller would need huge amount of reserves Seller can try to increase profit by cutting scope

Type of FP contracts: Fixed Price (FP), or Lump Sum, or Firm Fixed Price (FFP)

Example: ?? Fixed Price Incentive Fee (FPIF)

Example: ?? Fixed Price with Economic Price Adjustment (FP-EPA)

Example: = ?? Purchase order : simplest type of fixed-price contract; unilateral (signed

by one party)


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COST-REIMBURSABLE CONTRACTS

Used when work is uncertain and, therefore, costs cannot be estimated accurately enough

Bad points? Types:

Cost Plus Fixed Fee (CPFF) or Cost Plus Percentage of Cost (CPPC). Ex: Contract = cost + fee (10% of cost)

Cost Plus Incentive Fee (CPIF) : cost + additional fee based on performance

Cost Plus Award Fee (CPAF): cost + additional fee bases on manager satisfaction (performance criteria)


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TIME & MATERIAL (T&M) CONTRACTS

Used for service efforts in which the level of effort cannot be defined at the time the contract is awarded

To make sure the costs do not become higher than budgeted, the buyer may put a "Not to Exceed" and time limits clause in the contract.

Often used for staff overtime, acquisition of experts, outside support


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TYPES OF CONTRACT - EXAMPLES

Fixed-Price? Cost-reimbursable? Time & Material?

100$/shot -> ? 1000$/trip -> ? 500$/month -> ?


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RISK FOR WHO?

Fixed Price

FFP

FPIF

Time and Materials

Cost Reimbursable

CPIF

CPFF

CPF

CPPC

SELLER RISK

Low

BUYERRISK

High

T&M can be a high risk for buyer if contract does not

include a “total not-to-exceed” (NTE)

HighLow


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PROCUMENT DOCUMENTS

Request for Information (RFI) Invitation For Bid (IFB) Request For Proposal (RFP) Request For Quotation (RFQ) Tender notice Invitation for negotiation Invitation for seller’s initial response …. Procurement

documentContract Type

RFP CRIFB FP

RFQ T&M


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11.2 CONDUCT PROCUREMENTS This process involves getting the procurement documents that

were created in the Plan Procurements process to the sellers, answering the sellers‘ questions, having them prepare responses, and reviewing the responses to select a seller.

Inputs Tool&Techniques Outputs.1 Procurementmanagement plan.2 Procurement documents.3 Source selection criteria.4 Seller proposals.5 Project documents.6 Make-or-buy decisions.7 Procurement statement of work.8 Organizational process assets

.1 Bidder conference

.2 Proposal evaluation techniques

.3 Independent estimates

.4 Expert judgment

.5 Advertising

.6 Analytical techniques

.7 Procurement negotiations

.1 Selected sellers

.2 Agreements

.3 Resource calendars

.4 Change requests

.5 Project management planupdates.6 Project documentsupdates


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11.2 CONDUCT PROCUREMENTS Tools and Techniques

Bidder Conferences Proposal Evaluation Techniques Independent Estimates Expert Judgment Advertising Analytical Techniques Procurement Negotiations

Outputs: Selected sellers Agreements Resource calendars Change requests Project management plan opdates Project documents updates


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12.3 CONTROL PROCUREMENTS This process ensures both the seller’s and buyer’s

performance meets procurement requirements according to the terms of the legal agreement.

Inputs Tool&Techniques Outputs

.1 Project management plan

.2 Procurement documents

.3 Agreements

.4 Approved change requests

.5 Work performance reports

.6 Work performance data

.1 Contract change control system.2 Procurement performance reviews.3 Inspections and audits.4 Performance reporting.5 Payment systems.6 Claims administration.7 Records management system

.1 Work performance information.2 Change requests.3 Project management plan updates.4 Project documents updates.5 OPAs updates


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11.4 CLOSE PROCUREMENTS The process of completing each project procurement

Inputs Tool&Techniques Outputs

.1 Project management plan

.2 Procurement documents.1 Procurement audits.2 Procurement negotiations.3 Records management system

.1 Closed procurements

.2 OPAs updates


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Business

Smsvn pmp training_slides_chapter_12