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SEESION 11

Project Procurement
Management

Eng.Mukhlis Mirghani
I RECKON THIS JOB
IS JUST A LITTLE TOO
BIG FOR ME TO DO BY
MYSELF.

Eng.Mukhlis Mirghani
Project Procurement Management
• It includes the processes necessary to:
purchase or acquire products, services, or results needed from
outside the project team.
• The organization can be either the buyer or seller of the
products, services, or results of a project.
• It includes :
the contract management and change control processes
required to develop and administer contracts

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IMPORTANT TERMS
Procurement Contract something of value (e.g., specified
• includes terms and conditions, products, services, or results)
• may incorporate other items that • obligates the buyer to provide
the buyer specifies monetary or other valuable
compensation.
the seller may be identified as:
The seller
• a contractor,
can be viewed during the contract
• subcontractor, life cycle
• Vendor or supplier • first as a bidder,
A Contract • then as the selected source,
represents a mutually binding
agreement that: • and then as the contracted
supplier or vendor.
• obligates the seller to provide

Eng.Mukhlis Mirghani
12.1 Plan Procurements

Definition Key Benefit


Is the process of it determines: whether to
acquire OUTSIDE SUPPORT, and
o documenting project
if so:
procurement decisions,
• what to acquire,
o specifying the approach,
• how to acquire it,
o identifying potential sellers.
• how much is needed,
• when to acquire it.

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.1 Project mgt plan
.2 Reqs. 1 Procurement
documentation management plan
.3 Risk register .2 Procurement
.4 Activity resource statement
of work
requirements .1 Make-or-buy .3 Procurement
.5 Project schedule analysis documents
.6 Activity cost .2 Expert .4 Source selection
estimates judgment criteria
.7 SHs register .3 Market .5 Make-or-buy
.8 EEFs decisions
research
.6 Change requests
.9 OPAs .4 Meetings .7 Project documents
updates

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INPUTS
.1 Project mgt. plan
• . It includes the SCOPE BASELINE contents
.2 Requirements documentation
• Requirements with contractual and legal implications are be
considered.
.4 Activity resource requirements
contain information on specific needs such as people, equipment, or
location
. .5 Project schedule
contains information on required timelines or mandated deliverable
dates.
.6 Activity cost estimates
• used to evaluate the reasonableness of the bids or proposals received
from potential sellers.
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INPUTS

.8 EEFs
• Marketplace conditions;
• Products, services available in the marketplace;
• Suppliers, including past performance or reputation;
• Typical terms and conditions for products for the specific
industry;
.9 OPAs
• The various types of contractual agreements used by the
organization

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TYPES OF CONTRACTS

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Fixed-price contracts.
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Cost-reimbursable
contracts
Risk to buyer and seller
according to contract

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Time and Material Contracts
(T&M)
• The “time” dollars per hour LABOR RATE
• The “materials” part means that the buyer also pays for materials,
equipment,
• A COMBINATION of a cost-plus(left open ended) and fixed-price
contract (fixed rate),

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TOOLS AND TECHNIQUES
.1 Make-or-buy analysis
Which is the BEST:
• By the team (inside the organization)
• Or Outside sources
.3 Market research
includes examination of industry and specific vendor
capabilities

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Outputs
.1 Procurement management plan
• Types of contracts to be used;
• Standardized procurement documents
• Coordinating procurement with other project aspects, such as scheduling
• Any constraints and assumptions
• Handling the long lead times coordinating with the project schedule;
• Establishing the format to be used for the contract;
• Identifying prequalified sellers, if any
• Procurement metrics to manage contracts and evaluate sellers.
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Outputs
.2 Procurement Statement of Work.4 Source Selection Criteria
describes the procurement item in • the purchase price
sufficient detail, should be: • Technical capability
clear, complete, and concise • Management approach
.3 Procurement Documents • Past performance of sellers
• used to solicit proposals from
prospective sellers
• Describes the buyer’s needs to
seller
o RFP detailed proposal
o RFQ
o RFB
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12.2 Conduct Procurements

Definition Key Benefit


It is the process of : it provides alignment of
internal and external
• obtaining seller responses,
stakeholder expectations
• selecting a seller, through established
• awarding a contract agreements

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.1 Procurement
mgt plan .1 Bidder conference .1 Selected sellers
.2 Procurement .2 Proposal evaluation .2 Agreements
documents techniques .3 Resource
.3 Source selection
.3 Independent calendars
criteria
.4 Seller proposals
estimates .4 Change requests
.5 Project documents .4 Expert judgment .5 Project mgt plan
.6 Make-or-buy .5 Advertising updates
decisions .6 Analytical .6 Project
.7 Procurement techniques documents
statement of work .7 Procurement updates
.8 OPA negotiations

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Tools and techniques
.1 Bidder Conference proposal really is
to get all sellers in a room appropriate for the work.
together, so that they can .3 Independent Estimates
ask questions about your turn to a third party to
contract come up with an estimate
.2 Proposal Evaluation of what the work should
Techniques cost
to figure out if the seller’s
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Tools and techniques
.5 Advertising .7 Procurement Negotiations
.6 Analytical Techniques o to Obtain a fair and
• can help organizations reasonable price
identify the readiness of a o to Build good relationship
vendor with seller
oMain items to be
negotiated:
Schedule, Scope, Price
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Outputs
.1 Selected Sellers .3 Resource Calendars
.2 Agreements If your contract makes some of
A contract is a legal the seller’s resources available
relationship to you, you’ll update the
calendar
To define roles and
responsibilities
To make things legally binding

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Outputs
.4 Change Requests
you usually end up making .6 Project documents updates
some adjustments to your Risk register , stakeholders
plans register etc.
.5 Project mgt. plan updates
Baselines (cost , schedule ,
scope)

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12.3 Control Procurements

Definition Key Benefit


is the process of it ensures that BOTH the
seller’s and buyer’s
• managing procurement
performance meets
relationships,
procurement requirements
• monitoring contract according to the terms of the
performance, legal agreement (CONTRACT)
• making changes and
corrections to contracts as
appropriate
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.1 Project mgt. plan
.2 Procurement .1 Contract change .1 WPI
documents control system .2 Change
.3 Agreements .2 Procurement requests
.4 Approved performance reviews .3 Project mgt
change .3 Inspections and audits plan
requests .4 Performance updates
.5 Work reporting .4 Project
performance .5 Payment systems documents
reports .6 Claims administration updates
.6 Work .7 Records mgt .5 OPA updates
system
performance data

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Tools & Techniques
.1 Contract change control system
. a set of procedures that are set up to handle changes in the
contract
.2 Procurement performance reviews
• a structured review to deliver project scope and quality, within
cost and on schedule
• to identify performance successes or failures
.3 Inspections and audits
required by the buyer and supported by the seller
Usually specified in the contract
how the buyer makes sure about seller’s the product

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Tools & Techniques

.4 Performance reporting
• to keep track of the contract work is to write up performance reports.
.5 Payment systems
• how your company pays its sellers.
• It’s usually established by an Accounting Receivable department.
.6 Claims administration
• a dispute between a buyer and a seller(CLAIM)
• Claims are documented, processed, monitored, and managed
• Most contracts explains exactly how Claims should be resolved
.7 Records mgt. system
• invoices, receipts, communications, emails, clarifications, etc.
• You’ll need to put a system in place to manage them.

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Outputs
.1 WPI
Contract compliance reports
reporting on the performance of a vendor
.2 Change requests
.3 Project mgt. plan updates
• Procurement mgt. plan is updated to reflect any approved change requests
.4 Project documents updates
e.g. the procurement contract with all supporting schedules
invoices and payment records
.5 OPA updates
Correspondence buyer/seller communications
Payment schedules and requests
Seller performance evaluation documentation

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12.4 Close Procurements

Definition Key Benefit


It is the process of : it documents agreements and
related documentation for
completing each procurement
future reference.

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.1 Procurement .1 Closed
.1 Project audits procurements
management plan .2 Procurement .2 OPA updates
.2 Procurement negotiations
documents .3 Records
management
system

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Tools and techniques
.1 Procurement audits oSecondly: alternative dispute
 a structured review of ALL resolution (ADR) e.g. mediation
procurement PROCESSES or arbitration
 to identify successes and failures olastly: litigation in the courts
.2 Procurement negotiations
The settlement of all outstanding .3 Records management system
issues and claims used: Where Contract documents and
oFirstly: by negotiation is a correspondence are archived
primary goal

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Outputs
.1 Closed Procurements
• formal written notice that the contract has been completed.
• Requirements for formal procurement closure are defined:
othe contract (T & C)
othe procurement mgt. plan
.2 OPA Updates
Procurement file (closed contract)
Deliverable acceptance
Lessons learned
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ANY
Questions !!

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