project Procurement Management
project Procurement Management
Project Procurement Management
Knowledge AreaProcess
Initiating Planning Executing Monitoring & Contol Closing
Procurement
Plan procurement Conduct procurement
Administer procurement
Close procurement
Enter phase/Start project
Exit phase/End project
InitiatingProcesses
ClosingProcesses
PlanningProcesses
ExecutingProcesses
Monitoring &Controlling Processes
Conduct Procurements
• The process of obtaining seller responses, selecting a seller, and awarding a contract.
Inputs
1. Project management plan
2. Procurement documents
3. Source selection criteria4. Qualified seller list5. Seller proposals6. Project documents7. Make-or-buy decisions8. Teaming agreements9. Organizational process
assets
Tools & Techniques
1. Bidder conferences2. Proposal evaluation
techniques3. Independent estimates4. Expert judgment5. Advertising6. Internet search7. Procurement
negotiations
Outputs
1. Selected sellers2. Procurement contract
award3. Resource calendars4. Change requests5. Project management
plan updates6. Project document
updates
Bidder Conferences• Meetings with prospective
sellers prior to Preparation of a Proposal
• Ensure that all prospective sellers have a clear Common understanding of the procurement and constant level of information
• Responses to questions may be incorporated into the procurement documents as amendments
Proposal Evaluation
– Weighting system
Evaluate by weighting the
source selection criteria
• Past performance history
Independent estimate
Estimation created in-house or with
outside assistance
–Screening system
Eliminate sellers who
do no meet minimum
requirement
• Advertising
• placing advertisements
in general circulation
publications such as
selected newspapers
• Internet Search• major influence on most
project procurements and supply chain acquisitions
• many components, be quickly located and secured at a fixed-price
Procurement Negotiations
• PM may be involved during negotiation to clarify requirement, protect relationship.
• Objective of negotiation:
–Obtain fair and reasonable price–Develop good relationship with the seller
Negotiation tactics Attack : your technical proposal is not acceptable but we can choose
it if discount is 10%
Good guy / bad guy: one person is helpful and another is difficult to deal with
Missing man: who have authority outside Deadlines: we can negotiate untill 5Pm because I will travelling abroad
Withdrawal: leave negotiation
Contract Document
• Purpose of contract:– To define role and responsibilities– To make things legally binding.
• A legal contract will need..– An offer – Acceptance– Consideration (Something of value, not necessary money)– Legal capacity (Separate legal parties, competent parties)– Legal purpose (We cannot have a contract for something illegal)
Administer Procurements
• The process of managing procurement relationship, monitoring
contract performance and making change and corrections as needed.
Inputs
1. Procurement documents
2. Project management Plan
3. Contract4. Performance reports5. Approved change
request6. Work Performance
Information
Tools & Techniques
1. Contract change control system
2. Procurement performance reviews
3. Inspections and audits4. Performance reporting5. Payment system6. Claims administration7. Records management
system
Outputs
1. Procurement documentation
2. Organizational process assets updates
3. Change request4. Project Management
Plan updates
Contract Administration
• Assuring the performance of both parties to the contract meets contractual requirement.
• Contract change controls system– A process for modifying a contract– Review the impacts– Contract administrator is the only one with authority to change the
contract– There are potential conflict between project manager and contract
administrator
• Performance Reporting
• information about
how effectively the
seller is achieving the
contractual objectives.
• Payment Systems• Payments to the seller are processed after
certification of satisfactory work . All payments should be made an documented
Claims Administration a claim is an assertion that the buyer did something hurt the seller and the seller is asking for compensationHow to manage this claims
• Records Management System• A records management system is used to manage
contract and procurement documentation and records.
• system contains a retrievable archive of contract documents and correspondence.
Close Procurements
• The process of completing each project procurement.
Inputs
1. Project Management Plan
2. Procurement documentation
Tools & Techniques
1. Procurement audits2. Negotiated settlements3. Records management
system
Outputs
1. Closed procurements2. Organizational process
assets updates
Closing the Contract• Involves completing and settling contracts and
resolving any open items
• The project team should:– Determine if all work was completed correctly and
satisfactorily
– Update records to reflect final results
– Archive information for future use
• The contract itself should include requirements for formal acceptance and closure
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QUESTIONS?
1-At what part of the Procurement Management
process does procurement negotiations happen?
1.Plan Procurements
2.Conduct Procurements
3.Administer Procurements
4.Close Procurement
2) Complete final contract performance reporting
and verify product is done in _______.
1.Plan Procurements
2.Conduct Procurements
3.Administer Procurements
4.Close Procurements
3-your company is receiving a shipment of goods from the seller when you get the procurement manager who tells you that the shipment does not meet the needs of the project. What should you do NEXT?
A- send the shipment back
B- accept the shipment
C- Issue a change order to change the contract
specifications
D- Expect to receive a claim from the seller
4- the primary objective of contract negotiations is
to:
A- get the most from the other side
B- protect the relationship
C- get the highest monetary return
D- define objectives and stick to them
5- from the sellers perspective what is the status of a project when the project team has completed all the work specified in the procurement statement of work and the final deliverable has been sent to the customer?
A- the project is completed B- the project is in the closing process groupC- the project is at the end of the project
executing process groupD- the project is in the verify scope process
6. In your project, your subcontracting requirements of
the machining of high-value equipment are very
demanding. Hence, you have determined the
technical criteria to evaluate the sellers. This is an
example of:
A. Objective evaluation criteria
B. Source selection criteria
C. Statement of work
D. Work breakdown structure
Thank you