Project Procurement Management

Project Procurement Management

 Processes needed to purchase or acquire products, services, or results needed from outside
the project team.
 Includes the management and control processes required to develop and administer
agreements such as contracts, purchase orders, memoranda of agreements (MOAs), or
internal service level agreements (SLAs).
 We are buyers, not sellers from exam prospective

Process Name Process Group Key Outputs

Plan Procurement
Planning Procurement Mgt. Plan
Management
Selected Sellers,
Conduct Procurements Executing
Agreements
Monitoring and
Control Procurements Close Procurements
Controlling
Agreements (Contracts)
 Should clearly outline the deliverables and results anticipated, including any knowledge transfer from
the seller to the buyer.
 Know the laws and regulations from the local country that could affect the contract
 Generally considered a legally binding documents between buyers and sellers
 Should outline:
 Formal written document
 Scope of work to be performed
 Roles and responsibilities
 How to perform the work, including locations and times?
 Terms and conditions
 Warranties and penalties
 Payment terms
 Termination clauses
 Change request process
 Incentives
 Insurance and performance bonds
Types of Contracts
Contract Types

Cost- Time and

Fixed-Price
reimbursable Material

Firm fixed price Cost plus fixed

fee

Fixed price Cost plus

incentive fee incentive fee

Fixed price with

Cost plus award
economic price
fee
adjustments
Fixed Price (Lump Sum)
 When the buyer pays one flat price (lump sum) for all work in the contract
 This would include all labor and materials
 Use when the scope is well-defined and understood
 All risk is with the seller
 3 Types:
 Firm Fixed Price (FFP): This contract is when the price is fixed and cannot be changed.
 Fixed Price Incentive Fee (FPIF): This contract is when the fixed price includes an additional fee for
meeting a target set forth in the contract.
 Fixed Price Economic Price Adjustment (FP-EPA): This contract is used to adjust the fixed cost over the
life of the contract because of economic conditions.
Cost-reimbursable
 When the buyer pays for the work expenses and then pays the seller a fee for his profit
 The risk is with the buyer because the cost overrun of work expense is covered by the buyer
 3 Types
 Cost plus fixed fee (CPFF): This contract is when the buyer pays the work expense and then a fixed fee
to the seller for profit.
 Cost plus incentive fee (CPIF): This contract is when the buyer pays the work expense and an
additional fee, if a target is met, such as, finishing two weeks earlier.
 Cost plus award fee (CPAF): This contract is when the buyer pays the work expense and pays an award
fee that is based on satisfaction of work.
Time and material
 Time and material contract is when the buyer pays for both labor
and material
 The buyer takes all the risk of cost overrun for both the labor and
materials
 Should only be used when the scope is high-level.
Plan Procurement Management
 Determines whether to obtain goods and services from outside the
project and, if so, what to acquire as well as how and when to
acquire it.
 The process of documenting what procurements are needed for
the project, detailing the approach, defining selection criteria to
identify potential sellers, and putting together a Procurement
management plan.
Plan Procurement Management - ITTO
INPUTS
OUTPUTS
1.Project Charter
1.Procurement Management Plan
Business Documents
Procurement Strategy
a.Business Case
Bid Documents
b.Benefits Management Plan
Procurement Statement of Work
Project Management Plan TOOLS AND TECHNIQUES
Source Selection Criteria
a.Scope Management Plan
1.Expert Judgment Make-or-buy Decisions
b.Quality Management Plan
Data Gathering Independent Cost Estimates
c.Resource Management Plan
a.Market Research Change Requests
d.Scope Baseline
Data Analysis Project Documents Updates
Project Documents
a.Make-or-Buy Analysis Lessons Learned Register
a.Milestone List
Source Selection Analysis Milestone List
b.Project Team Assignments
Meetings Requirements Documentation
c.Requirements Documentation
Requirement Traceability Matrix
d.Requirement Traceability Matrix
Risk Register
e.Resource Requirements
Stakeholder Register
f. Risk Register
Organizational Process Assets Updates
g.Stakeholder Register
Enterprise Environmental Factors
Organizational Process Assets
Plan Procurement Management - Inputs
 Project Charter
 Business Documents
 Business Case
 Benefits Management Plan

 Project Management Plan

 Scope Management Plan
 Quality Management Plan
 Resource Management Plan
 Scope Baseline

 Project Documents
 Milestone List
 Project Team Assignments
 Requirements Documentation
 Requirement Traceability Matrix
 Resource Requirements
 Risk Register
 Stakeholder Register
 Enterprise Environmental Factors
 Organizational Process Assets
 Contract types
Plan Procurement Management - Tools
 Expert Judgement
 Data Gathering
 Market Research
 Data Analysis
 Make-or-buy analysis
 Source Selection Analysis
 Understanding of work
 Risk
 Cost
 Past Performance
 References
 Production ability
 Warranty
 Meetings
Plan Procurement Management - Output
 Procurement Management Plan
 Outlines the activities to be undertaken during the procurement processes
 Make contain a prequalified sellers list
 Procurement Strategy
 Determine how to deliver the deliverables, types of contracts to use, what
phases will be used to complete procurements
 Bid Documents
 Used to Solicit Proposals from potential sellers
 RFI, Request for information
 IFB, Invitation for bid
 RFP, Request for proposal
 RFQ, Request for quote
 Procurement Statement of Work
 Developed from the Scope Baseline, Lists the needs of the buyer
 Allows prospective sellers to determine of they can meet the requirements set
forth by the Buyer
Plan Procurement Management - Output
 Source Selection Criteria
 Cost, location, license, certification, reference, warranty, or experience. This
needs to be determined before seller is selected.
 Make or buy Decisions
 What will the project make or buy
 Independent Cost Estimates
 Cost estimate done by an outside professional
 Change Requests
 Project Documents Updates
 Lessons Learned Register
 Milestone List
 Requirements Documentation
 Requirement Traceability Matrix
 Risk Register
 Stakeholder Register
 Organizational Process Assets Updates
Conduct Procurements
 The process of obtaining a seller response, selecting a seller, and
awarding a contract.
 It selects a qualified seller and implements the legal agreement for
delivery.
Conduct Procurements - ITTO
INPUTS
1.Project Management Plan
a.Scope Management Plan
b.Requirements Management Plan
c.Communications Management Plan
d.Risk Management Plan
e.Procurement Management Plan
f.Configuration Management Plan
g.Cost Baseline
Project Documents
a.Lessons Learned Register
b.Project Schedule
c.Requirements Documentation
d.Risk Register
e.Stakeholder Register
Procurement Documentation
Bid Documents
Procurement Statement of Work
Independent Cost Estimates
Source Selection Criteria
4.Seller Proposals
Enterprise Environmental Factors
Organizational Process Assets
OUTPUTS
1.Selected Sellers
Agreements
Change Requests
Project Management Plan Updates
a.Requirements Management Plan
TOOLS & TECHNIQUES b.Quality Management Plan
1.Expert Judgment c.Communications Management Plan
2.Advertising d.Risk Management Plan
e.Procurement Management Plan
3.Bidder Conferences
f.Scope Baseline
4.Data Analysis
g.Schedule Baseline
a.Proposal Evaluation
h.Cost Baseline
Interpersonal and Team Skills
Project Documents Updates
a.Negotiation
a.Lessons Learned Register
b.Requirements Documentation
c.Requirements Traceability Matrix
d.Resource Calendars
e.Risk Register
f.Stakeholder Register
Organizational Process Assets Updates
Conduct Procurements - Inputs
 Project Management Plan
 Scope Management Plan
 Requirements Management Plan
 Communications Management Plan
 Risk Management Plan
 Procurement Management Plan
 Configuration Management Plan
 Cost Baseline
 Project Documents
 Lessons Learned Register
 Project Schedule
 Requirements Documentation
 Risk Register
 Stakeholder Register
 Procurement Documentation
 Bid Documents
 Procurement Statement of Work
 Independent Cost Estimates
 Source Selection Criteria
 Seller Proposals
 Enterprise Environmental Factors
 Organizational Process Assets
Conduct Procurements - Tools
 Expert Judgement
 Advertising
 Some contracts may be required to be advertised, i.e.
Government
 Bidder Conference (Contractor, Vendor, or Pre-bid
conferences)
 Meeting between buyer and sellers
 Data Analysis
 Proposal evaluation
 Interpersonal and Team Skills
 Negotiations
Conduct Procurements - Outputs
 Selected Sellers
 Agreements
 Change Requests
 Project Management Plan Updates
 Requirements Management Plan
 Quality Management Plan
 Communications Management Plan
 Risk Management Plan
 Procurement Management Plan
 Scope Baseline
 Schedule Baseline
 Cost Baseline
 Project Documents Updates
 Lessons Learned Register
 Requirements Documentation
 Requirements Traceability Matrix
 Resource Calendars
 Risk Register
 Stakeholder Register
 Organizational Process Assets Updates
Control Procurements
 PMBOK - The process of managing procurement relationships; monitoring
contract performance, and making changes and corrections as appropriate;
and closing out contracts.
 Key benefit - It ensures that both the seller’s and buyer’s performance meet
the project’s requirements according to the terms of the legal agreement.
 Buyer and Seller is required to ensure that both parties meet their contractual obligations
and that their own legal rights are protected.
 Inputs (8)
 Project Management Plan
 Requirements Management Plan
 Risk Management Plan
 Procurement Management Plan
 Change Management plan
 Schedule Baseline
 INPUTS
1.Project Management Plan
a.Requirements Management Plan
b.Risk Management Plan
c.Procurement Management Plan
d.Change Management Plan
e.Schedule Baseline
Project Documents
a.Assumption Log
b.Lessons Learned Register
c.Milestone List
d.Quality Reports
e.Requirements Documentation
f.Requirements Traceability Matrix
g.Risk Register
h.Stakeholder Register
Agreements
Procurement Documentation
Approved Change Requests
Work Performance Data
Enterprise Environmental Factors
Organizational Process Assets
OUTPUT
1.Closed Procurements
Work Performance Information
Procurement Documentation Updates
TOOLS & TECHNIQUES Change Requests
1.Expert Judgment Project Management Plan Updates
2.Claims Administration Risk Management Plan
Procurement Management Plan
3.Data Analysis
Schedule Baseline
Performance Reviews
Cost Baseline
Earned Value Analysis
Trend Analysis Project Documents Updates
Inspection Lessons Learned Register
Audits Resource Requirements
Requirement Traceability Matrix
Risk Register
Stakeholder Register
Organizational Process Assets Updates
Control Procurements - Inputs
 PMBOK - The process of managing procurement relationships; monitoring
contract performance, and making changes and corrections as appropriate;
and closing out contracts.
 Key benefit - It ensures that both the seller’s and buyer’s performance meet
the project’s requirements according to the terms of the legal agreement.
 Buyer and Seller is required to ensure that both parties meet their contractual obligations
and that their own legal rights are protected.
 Inputs (8)
 Project Management Plan
 Requirements Management Plan
 Risk Management Plan
 Procurement Management Plan
 Change Management plan
 Schedule Baseline
Control Procurements
 Inputs Cont’d
 Project Documents
 Assumption Log
 Lessons Learned Register
 Milestone List
 Quality Reports
 Agreements
 Procurement Documentation
 Approved Change Requests
 Work Performance Data
 Enterprise Environmental
 Organizational Process Assets
Control Procurements –Tools
 Expert Judgement
 Inspections
 Audits
 Data Analysis
 Performance Reviews
 Earned Value Analysis
 Trend Analysis
 Claims Administration
 How disputed changes can be settled when the buyer and the seller can
not reach and understanding
 Negotiation is the preferred method
Control Procurements - Outputs
 Closed Procurements
 The buyer, usually through its authorized procurement administrator,
provides the seller with formal written notice that the contract has been
completed.
 Work Performance Information
 Procurement Documentation
 Change Requests
 Project Management Plan updates
 Project Documents updates
 Organizational Process Assets Updates