Procurement ManagementDr. Mostafa ElgamalaPMP-ITIL-IBDL-LDP8

RHCE-MCSA-CCNA/CCAI-CSCU

Project procurement management: 1- Plan procurement (Planning)

2- Conduct procurement (execution)

3- Administer procurement (monitor & control)

4- Close procurement (closing)

Plan procurementProcess of documenting project purchasing

decisions, and identifying sellers selection criteria.

Inputs • Scope baseline • Requirements

documentation • Teaming

agreement • Risk register • Risk –related

contract decision

• Activity resource requirements

• Project schedule

• Activity cost estimates

• Cost performance baseline

• EEF• OPA

Tools & techniques

• Make or buy analysis

• Expert judgment

• Contract type

Outputs • Procurement

management plan

• Procurement statement of work

• Make or buy decisions

• Procurement documents

• Source selection criteria

• Change requests

InputProject management plan: Scope baselineRequirements documentationRisk registerActivity resource requirements: contain

information on specific needs such as people, equipment, or location

Project schedule: contains information on required timelines or mandated deliverable dates.

Activity cost estimates: used to evaluate the reasonableness of the bids or proposals received from potential sellers.

Stakeholder registerEEFOPA

legal contractual relationships:Fixed-price contracts: fixed total price for a

defined product, service, may incorporate financial incentives for achieving or exceeding selected project objectives. buyers need to precisely specify the product or services. (seller risk)

Firm Fixed Price Contracts (FFP).

Fixed Price Incentive Fee Contracts (FPIF)

Cost-reimbursable contracts: Involves payments to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit.

Scope of work cannot be precisely defined at the start and needs to be altered, or when high risks may exist in the effort. (buyer risk)

Cost Plus Fixed Fee Contracts (CPFF)Cost Plus Incentive Fee Contracts (CPIF)

Time and Material Contracts (T&M): often used for staff augmentation, acquisition of experts, and any outside support.

FPBuyer less management ,he know the total

price

More expensive more than CR, more work to specify SoW

CRSimpler SoW, lower cost than FP

Require auditing the seller’s invoices, more work to manage, the seller has moderate incentive to control cost.

Tools & techniquesMake-or-Buy Analysis

120 is daily lease cost1000 is investment cost with 20 daily cost120 D = 1000 + 20 DD=10

Expert Judgment

Market Research: includes examination of industry and

specific vendor capabilities

Meetings

OutputProcurement Management Plan: how a

project team will acquire goods and services from outside the organization:

Types of contracts to be used

Handling the make-or-buy decisions

Standardized procurement documents

Procurement metrics to be used to manage contracts and evaluate sellers

Procurement Statement of Work: defines only that portion of the project scope that is to

be included within the related contract, include:

Specifications

Quantity desired & quality levels

Period of performance

Work location

Other requirements.

Procurement Documents: request for information (RFI), request for proposal (RFP), invitation for bid (IFB), request for quotation (RFQ), invitation for negotiation (IFN).

Source Selection Criteria: Overall or life-cycle cost

Technical capability

Risk

Warranty

Past performance of sellers

Make-or-Buy DecisionsChange RequestsProject Documents Updates: risk register,

Requirements documentation…

Conduct procurement:Process of obtaining sellers responses,

selecting a seller and awarding a contract.

Inputs •Project management plan •Procurement documents •Source selection criteria •Qualified seller list •Seller proposals •Project documents make or buy decisions •Teaming agreement. •OPA

Tools & techniques

•Bidder conference •Proposal evaluation techniques •Expert judgment •Advertising •Internet search •Procurement negotiations

Outputs •Selected sellers •Procurement contract award •Resource calendars •Change requests •Project management plan updates •Procurement documents updates

Tools & techniquesBidder conference Sellers have a clear and common

understanding of the procurement requirements.

Proposal evaluation techniques: formal evaluation review process will be

defined by the buyer’s procurement policiesIndependent Estimates: have an estimate of costs prepared by an

outside professional estimator, to serve as a benchmark on proposed responses

Expert JudgmentAdvertisingAnalytical Techniques: identify the

readiness of a vendor to provide the desired end state, and avoid cost overruns due to change.

Procurement Negotiations

Contract contents: usually most of contracts contains the following :Statement or work/ deliverables Schedule baseline Project period Pricing Payment terms Warranty Penatlies Incentives Insurance arrangements Change request criteria Acceptance criteria Claims handling.

Administer procurementProcess of managing procurement

relationships, monitoring contract performance, and making changes and corrections as needed.

Inputs •Procurement documents •Project management plan •Contract •Performance reports •Approved change requests •Work performance information

Tools & techniques

•Contract change control system •Procurement performance reviews •Inspection & audits •Performance reporting •Payment systems •Claim administration •Records management system

Outputs •Procurement documentation •organizational process assets •Change requests •Project management plan updates

Tools & techniquesContract Change Control System: defines

the process by which the procurement can be modified. It includes the paperwork, tracking systems, dispute resolution procedures

Procurement Performance Reviews: review of the seller’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract

Inspections and Audits: to verify compliance in the seller’s work processes

Performance ReportingPayment Systems:Claims Administration: If the parties

themselves do not resolve a claim, it may have to be handled in accordance with alternative dispute resolution (ADR) (mediation, arbitration, courts)

Records Management System: The system contains a retrievable archive of contract documents and correspondence

Close procurement: process of competing each project procurement

Inputs •Project management plan •Procurement documentation

Tools & techniques

•Procurement audits •Negotiated settlements •Records management system

Outputs •Closed procurement •Organizational process assets updates

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