1 Picture source: Refer bottom left hand corner of picture Project Procurement Management (Outsourcing)
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Picture source: Refer bottom left hand corner of picture
Project Procurement Management(Outsourcing)
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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.
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Tutorial exercise
Bravo Flying Bravo Flying BoatsBoats Alpha Alpha
AircraftAircraft
Charlies CargoCharlies Cargo
Sales Managers Purchase Managers
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Project Procurement Management
ProcurementPlanning
- Make-or-buy
- If, what, when, how?
P-Plan
SolicitationPlanning
SOWs
- Determine SOW
- Determine SelectionCriteria
EvaluationCriteria
RFP
Solicitation
- Inform bidders
- Seek proposals
Proposals
SourceSelection
-Assess proposals
-Contract negotiation
Contract
ContractClose
-Audit
-Close project
Accept-ance
-Assess performance
-Manage changes
ContractAdmin
ContractChanges
Payments
Workdone
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Government Order
What parts have to be outsourced?
A
What can Alpha make itself?
A
B
C
D
E
F
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Government Order
What parts have to be outsourced?
B
What can Bravo make itself?
A
B
C
D
E
F
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Government Order
What parts have to be outsourced?
C
What can Charlie make itself?
A
B
C
D
E
F
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Tutorial: Deciding what to outsourceMmm.. we need to outsource the engine and the undercarriage
We have to
contract out
the frame &
the
undercarriage I’m
hungry
Bravo Flying Bravo Flying BoatsBoats Alpha Alpha
AircraftAircraft
Charlies CargoCharlies Cargo
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Solicitation PlanningProcurement
Planning
- Make-or-buy
- If, what, when, how?
P-Plan
SolicitationPlanning
SOWs
- Determine SOW
- Determine SelectionCriteria
EvaluationCriteria
RFP
Solicitation
- Inform bidders
- Seek proposals
Proposals
SourceSelection
-Assess proposals
-Contract negotiation
Contract
ContractClose
-Audit
-Close project
Accept-ance
-Assess performance
-Manage changes
ContractAdmin
ContractChanges
Payments
Workdone
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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
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Tutorial: RFP to 1st supplier
Alpha Aircraft
Bravo Boats
3:20pm
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A “real” RFP
Source:IT Project Management, Schwalbe
1. Purpose of RFP2. Background of organisation3. Hardware and Software Environment4. The RFP process5. Statement of Work and Schedule Information6. Appendices
a) Current system overviewb) System requirementsc) Volume and size datad) Required contents of Vendor’s repsonse to RFPe) Sample Contract
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Tutorial: RFP to 2nd supplier
Alpha Aircraft
Charlie’s Cargo
3:20pm
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Tutorial: Prepare RFPs
RFP1c-bRFP1c-b RFP1c-aRFP1c-a
RFP2c-bRFP2c-b RFP2c-aRFP2c-a
RFP1b-cRFP1b-cRFP1b-aRFP1b-a
RFP2b-cRFP2b-c RFP2b-aRFP2b-aRFP1a-RFP1a-
bbRFP1a-cRFP1a-c
RFP2a-bRFP2a-b RFP2a-cRFP2a-c
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Solicitation & Source Selection
ProcurementPlanning
- Make-or-buy
- If, what, when, how?
P-Plan
SolicitationPlanning
SOWs
- Determine SOW
- Determine SelectionCriteria
EvaluationCriteria
RFP
Solicitation
- Inform bidders
- Seek proposals
Proposals
SourceSelection
-Assess proposals
-Contract negotiation
Contract
ContractClose
-Audit
-Close project
Accept-ance
-Assess performance
-Manage changes
ContractAdmin
ContractChanges
Payments
Workdone
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Tutorial: Seek Proposals
RFP1c-bRFP1c-b RFP1c-aRFP1c-a
RFP2c-bRFP2c-b RFP2c-aRFP2c-a
RFP1b-cRFP1b-cRFP1b-cRFP1b-c
RFP2b-aRFP2b-a RFP2b-aRFP2b-aRFP1a-RFP1a-
bbRFP1a-cRFP1a-c
RFP2a-bRFP2a-b RFPa-cRFPa-c
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Ok, guys. We have to respond to these 4 RPFs with 4 proposals. Sales
Manager…take the lead!
Tutorial: Write Proposals
...via this...
...to this.
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Write Proposal
Alpha Aircraft
Charlies Cargo
3:20pm2 gold bars5 minutes
From this...
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Tutorial: Submit Proposals
P1c-bP1c-b P1c-aP1c-a
P2c-bP2c-b P2c-aP2c-a
P1b-cP1b-c
P1b-aP1b-a
P2b-cP2b-c
P2b-aP2b-a
P1a-bP1a-b
P1a-cP1a-c
P2a-bP2a-b
P2a-cP2a-c
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Tutorial: Proposals duly received
P1c-bP1c-b
P2c-bP2c-b
P1c-aP1c-a
P2c-aP2c-a
P1b-cP1b-c P1b-aP1b-a
P2b-cP2b-c P2b-aP2b-aP1a-bP1a-b P1a-cP1a-c
P2a-bP2a-b Pa-cPa-c
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Tutorial: Audit
At this point the Purchasing Manager has to show the tutor that he has two proposals for each of two parts
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Solicitation & Source Selection
ProcurementPlanning
- Make-or-buy
- If, what, when, how?
P-Plan
SolicitationPlanning
SOWs
- Determine SOW
- Determine SelectionCriteria
EvaluationCriteria
RFP
Solicitation
- Inform bidders
- Seek proposals
Proposals
SourceSelection
-Identify winning proposal
- Negotiate contract
Contract
ContractClose
-Audit
-Close project
Accept-ance
-Assess performance
-Manage changes
ContractAdmin
ContractChanges
Payments
Workdone
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.
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Which is the correct way to select the winning proposal/bid?
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Tutorial: Select Proposals
P1c-bP1c-b P1c-aP1c-a
P2c-bP2c-b P2c-aP2c-a
P1b-cP1b-c P1b-aP1b-a
P2b-cP2b-c P2b-aP2b-aP1a-bP1a-b P1a-cP1a-c
P2a-bP2a-b P2a-cP2a-c
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Tutorial: Negotiate Contract
You need to agree a contract for each part you outsource
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Contract AdministrationProcurement
Planning
- Make-or-buy
- If, what, when, how?
P-Plan
SolicitationPlanning
SOWs
- Determine SOW
- Determine SelectionCriteria
EvaluationCriteria
RFP
Solicitation
- Inform bidders
- Seek proposals
Proposals
SourceSelection
-Assess proposals
-Contract negotiation
Contract
ContractClose
-Audit
-Close project
Accept-ance
-Assess performance
-Manage changes
ContractAdmin
ContractChanges
Payments
Workdone
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Make, sell, buy, check, accept, pay
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Contract CloseProcurement
Planning
- Make-or-buy
- If, what, when, how?
P-Plan
SolicitationPlanning
SOWs
- Determine SOW
- Determine SelectionCriteria
EvaluationCriteria
RFP
Solicitation
- Inform bidders
- Seek proposals
Proposals
SourceSelection
-Assess proposals
-Contract negotiation
Contract
ContractClose
-Audit
-Close project
Accept-ance
-Assess performance
-Manage changes
ContractAdmin
ContractChanges
Payments
Workdone
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If both sides are happy then sign off.
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Assemble and hand over to government
and keep the gold bars
The finished product in the last photo matches which government proposal?
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A. The one given to AlphaB. The one given to BravoC. The one given to CharlieD. None of them – it’s original work of artE. None of them – there’s been a
diabolical breakdown in communications!
So far, I understand what’s going on
1. Strongly agree2. Agree3. Not sure4. Disagree5. Strongly disagree
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