3/2/2017 DigitalTransformationforTheEnterpriseProjectManagementOffice(EPMO)ProjectProcurementManagement|BassamSammanPMPPSPEVPG

Digital Transformation for The Enterprise

Project Management Oice (EPMO)
Project Procurement Management
Published on March 1, 2017

Bassam Samman PMP PSP EVP GPM 6 0 0

Sustainable Digital Transformation For the Enterprise Project Mana

Theprojectperformancebudgetrepresentsthemostrealisticinvestmentthatan
organizationexpectstospendonaprojectaspertheagreedscopeofwork.Thisbudget
takesintoconsiderationtheassumptionsthattheorganizationhaverecognizedand
identifiedthecontingencyitneedstoallowtoaddressthoseassumptions.Inalater
article,wewilladdresstheprojectriskmanagementknowledgeareawhichexplainsthe
processesthatneedtobefollowedinidentifying,analyzingandrespondingtotherisks
thathaveresultedfromthoseassumptions.Oneoftheapprovedriskresponseactionsis
totransferprojectriskstoanotherorganizationwhoisbetterqualifiedandableto
managethoserisks.Theprocurementmanagementknowledgeareaaddresshowto
transferthescopeofworkthathasresultedinthoserisksbyprocuringcontractsfor
deliveringtheproductsandservicesassociatedwiththeoutsourcedscopeofwork.

VendorPreQualification

Theobjectiveofprocurementmanagementistotransfertherisksassociatedwithpartof
theprojectscopeofworktoanorganization,knownasaContractor,VendororSupplier,
whoarequalifiedtodeliverthisscopeofwork.Therefore,thecommonsensedictates
thattheEPMOneedstoenforceaformalvendorprequalificationprocesstoensurethat
onlycapableandqualifiedcompaniesareinvitedorallowedtobidontheorganizations
contracts.PMWebVendorPreQualificationdocumenttemplatecanbedesignedto
allowvendorstoprovidetheneededdetailsalongwithallsupportivedocuments.This
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willenabletheteamresponsibleforqualifyingvendorstouseapredefinedscoring
matrixtoscoreeachqualificationcriteriabasedonthedetailsprovidedbyeachvendor.

Theprequalifiedvendorswillbecomeofthecentralcompanydirectoryavailableforall
projectsthataremanagedbytheEPMO.Thisalsohelpsincapturingdetailsofthe
actualperformanceofthosecompaniesoncurrentprojectsbeingdeliveredbythe
organization.Ofcourse,prequalificationshouldnotbelimitedtothecompanyitself
butalsototheiremployeesthatareinvolvedindeliveringprojects.Attheend,having
therightprojectteamassignedtotheprojectwillmakegreatdifference.PMWeb
companydirectorycaptureallthosedetailsandmakesitavailablefortheEPMO.

ContractsBidding

Tomaintaintraceability,itishighlyrecommendedthatthebidpackagestobeprocured
bytheorganizationisgeneratedfromtheapprovedcostestimate.Afeaturethata
projectmanagementinformationsystemlikePMWeboffersbydefault.Thiswillenable
theorganizationtoinvitequalifiedbidderstosubmittheirbestoffersforthespecified
scopeofwork.

Withmoreorganizationsoptingtorequirebidderstosubmittheirbidsonline,thedigital
transformationoftheEPMOneedstoaddressthisrequirement.Thechallengethatis
encounteredwithmanyorganizations,thattheonlinebiddingshouldusean
organizationportalthatisusuallymanagedbytheprocurementsorcontractsdepartment
andnottheEPMO.Forthepublicsector,thiscanbemorerestrictedwhereallonline
bidsmustusethebidsportalusedbyallpublicsectorentities.Havingsaidso,mostof
thoseportalsdonotrequirethebidderstosubmittheirbidonlinebutratherasummary
oftheirbid.Thedetailedbidpricesisusuallyuploadedasattachmentfilestotheonline
bid.

TotakeadvantageoftheonlinebiddingmodulewhichonewouldexpectanyPMIS
wouldhavebydefault,theorganizationcanaskthebidderstosubmittheirdetailed
onlinebidusingthePMISbyprovidingtheneededlink.Thiswillhelpincomplying
withtheoverallbiddingpolicyoftheorganizationaswellascapturethedetailsofthe
submittedbidsonline.

Whenthebidsaresubmittedonline,theorganizationcancomparethesubmittedprices
forlineitemwiththeapprovedcostestimate.Thishelpinimmediatelyidentifycost

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variancesbetweenthedifferentbiddersandtheapprovedestimateaswellasifanyof
thevendorshasfrontloadedhisbidorunbalancedbidlineitems.

TheEPMOwillprovidetheprojectteammembersandotherstakeholderswiththebid
analysisdatapresentedinthedesiredformattodisplaytheresultsinaneasyyet
comprehensiveformat.Thereportcanalsobeextendedtoincludedetailsofthe
technicalevaluationofthesubmittedbidproposals.

ContractAward

Basedonthetechnicalandcommercialbidanalysis,theorganizationwillselectthe
successfulbidder.Usually,therecouldaletterofintent(LOI)issuedforthesuccessful
bidderdetailstheorganizationintentiontoawardthecontract.Thiswillbefollowedby
theformalletterofaward(LOA)forwhichthecontractdurationwillcommence.The
organizationneedsalsotoissueregretletterfortheotherbiddersthatwerenotselected.
Itisrecommendedthatallthoselettertemplatesbecomestandardproject
communicationwheretheycanbeusedonallfutureprojectsandcontracts.Project
ManagementInformationSystems(PMIS)likePMWebincludesacorrespondence
modulewheresuchlettersandallothercontractrelatedlettersarecreatedasreadyto
uselettertemplates.

ContractAgreement

Theagreementbetweentheorganizationandsuccessfulbidder,contractororvendor,
willlistthedetailsofthetwopartiesofthecontract,contractreferenceanddate,
effectivedataoftheagreement,contractduration,paymenttermsandconditionsaswell
asthedetailsofprojectpayitemsorbillofquantity.Foreachpayitems,itwilllistthe
quantityofthework,unitofmeasure,unitrate,costbreakdownstructure(CBS)and
workbreakdownstructure(WBS)thepayitemrelatesto.

Theanticipatedcostprojectionoraswhatisknownsometimesascostloadedschedule
isimportanttohaveforeachawardedcontract.Thiswillhelpinverifyingthatthe
amountofanticipatedinvoicingbythecontractorisalignedwiththeanticipatedbudget
spending.Thiswillhelpinensuringthattheprojectwillnotfaceshortageoffundtopay
forcompletedworkswhichwillresultincontractualimplicationsagainstthe
organizationbeingtheprojectowner.

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ThecomparisonbetweentheanticipatedbudgetwhichisalsoknownasPlannedValue
(PV)andanticipatedinvoicingoranticipatedactualcostisanimportantreportforthe
organizationtoensurethattheprojecthastheneededfundstopayforworktobe
deliveredbythecontractors.

ContractDocuments

Itisverycommonthatcontractdocumentsgetrevisedbeforeorafterthecontract
award.Thosedocumentsincludedrawings,specifications,agreements,permitsamong
others.MostPMISsolutionslikePMWebhaveamodulefortrackingthosedocuments
usuallyknownasthedrawingsregister.Thisregisterwillcapturethedetailofeach
contractdocumentalongwithrevisionsandthedateofthoserevisions.Theregisterwill
alsoallowattachinganelectronicversionofeachdocumentversiontotheappropriate
registerentry.

ChangeOrders

Onewouldrarelyexpecthavingacontractwithoutchanges.Thosechangescouldresult
duetomanyreasonsincludingbutnotlimitedtointentofdocumentsnot"reasonably
inferable"andcorrectionsrequired,unknownconditionsnecessitatechanges,owner's
requirementschange,changesincodeorchangesininterpretationofcode.specified
productnolongeravailable,considernewproductbecauseofcostsavingsorother
benefitsandspecifiedproductinappropriate.

Thecontractororvendormightrequestforachangeorderifhebelievesthatheis
entitledfordoingadditionalworkthatisnotpartoftheawardedcontract.Thiswill
requireusingtheProposedChangeOrderdocumenttemplateforwhichthecontractor
orvendorwilldetailthecostassociatedwiththeadditionalworkandtheadditionaltime
neededtocompletethiswork.Theproposedchangeorderneedstobeaccompanied
withthedocumentsandcommunicationsthatsupportsthecontractorclaimfor
additionalwork.

Theprojectownerwillreviewthissubmissionanddecideifthecontractororvendoris
entitledforachangeorderornot.TheprojectownerwillusetheChangeOrder
documenttemplatetoproposetheadjustmenttothecontractvalueandduration.Only
whenthischangeorderisapproved,thestatuswillchangefrompendingtoapproved.

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TheEPMOwillmaintainthePMISdataforallprojectswhichwillenableanalyzingthe
reasonsandtrendsinchangeordersandprovidethisinformationinaneasytoreview
andanalyzeformat.Thedashboardbelowisoneofthemanyinteractivedashboardsthat
theEPMOcanmakeavailablefortheprojectmanagementteam.

ProgressInvoices

Asthecontractororvendorperformtheirworkandcompletetheprojectdeliverables,
theywillsubmitamonthlyinvoiceforthecompletedworksduringthatperiod.The
ProgressInvoicedocumenttemplateiswhataPMISsolutionlikePMWebwilluseto
capturethedetailsoftheworkcompletedattheendofeachmonth.Thequantification
ofcompletedworkcanberecordedintermsquantitiesofworkcompletedofpercent
completeofwork.Thepercentcompletecanberecordedmanuallyorimportedfromthe
projectscheduleifascheduleactivityislinkedtothatprogressinvoicelineitem.The
progressinvoiceforthefollowingperiodwillbegeneratedfromthelastapproved
progressinvoicetokeeptrackofworkcompletedattheendofeachperiod.

Ofcourse,actualcostonaprojectisnotlimitedtotheactualcostpaidforworksthat
arepartofspecificcontracts.Sometimes,thereareexpensesthatarenotcontract
related.Forexample,expensesassociatedwithpermits,purchaseoflandandothertype
ofmiscellaneousNonContractSpecificInvoices.Again,aPMISsolutionlikePMWeb
shouldbeabletocaptureallsuchexpenseswhichwillhavedirectimpactontheproject
actualcost.

Thenextarticlewillcompletetheearlierexplanationonhowthedigitaltransformation
fortheenterpriseprojectmanagementofficeisusedtoimplementtheprocessesofthe
costmanagementknowledgeareawhereweendedpartoneatestablishingtheproject
budgetanditsplannedspending.Part2ofthecostmanagementknowledgeareawill
addresshowtomanageandmonitortheprojectcostbytakingintoconsiderationthe
awardedcommitmentsandtheactualcostincurredforexecutingtheprojectscope.

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Bassam Samman PMP PSP EVP GPM

Sustainable Digital Transformation For the Enterprise Project Management Oice (EPMO)

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