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IPR Acknowledgement
The materials in this course are based on the text, A Guide to the Project Management Body of Knowledge (PMBOK® Guide),
Sixth edition, Project Management Institute, Inc. 2017.
Project Management Professional (PMP)® is a global credential offered by PMI® Inc.
PMI®, PMP® & PMBOK® are registered marks of Project Management Institute, Inc.
Edureka is a globally recognized brand of Brain4ce Education Solutions, Global Registered Education Provider of PMI®
(G.R.E.P. #4021).
Note: Images in the materials are all based on the text, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Sixth edition, Project Management
Institute, Inc. 2017. All rights reserved.

Course Outline
Introduction to PMP® Certification
The Project Environment
Role of the Project Manager
Project Integration Management
Project Scope Management
Project Schedule Management
Project Cost Management
Project Quality Management
Project Resource Management
Project Communication Management
Project Risk Management
Project Procurement Management
Project Stakeholder Management

Project Procurement Management
Topics
▪ Overview of Project Procurement Management
▪ How Project Procurement is defined, managed and controlled: Deep Dive
• Plan Procurement Management
• Conduct Procurements
• Control Procurements
▪ Project Procurement Management - Key Concepts
▪ Trends & Emerging Practices
▪ Tailoring Considerations
▪ Considerations for Agile/Adaptive Environments

Objectives
After completing this module, you should be able to:
• Apply fair practices relevant to procurement aspects in a project where

applicable
• Review contract performance, manage contract changes and closure

Project Procurement Management Overview
▪ Project Procurement Management 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

Process Deep Dive:
Plan Procurement Management
Inputs, Tools and Techniques and Outputs
Process Group: Planning
Knowledge Area: Project Procurement Management

Plan Procurement Management
The process of documenting project procurement decisions, specifying the approach, and identifying potential
sellers.
When How
Once or at predefined points in By identifying whether to
the project acquire, what & how to acquire,
how much is needed, and when
to acquire it

Plan Procurement Management (Contd.)
▪ Plan procurement management determines:
• Whether to acquire products, services, or results from outside
• What to acquire
• How to acquire
• How much is needed
• When to acquire
▪ Plan procurement management process includes:

• Evaluating potential sellers before starting the procurement process with any of them
• Evaluating the risks involved with each make-or-buy analysis
• Reviewing the type of contract with respect to risk strategy

Plan Procurement Management - Components
Inputs Tools & Techniques Outputs
1. Project charter 1. Expert judgement 1. Procurement management plan
2. Business documents 2. Data gathering 2. Procurement strategy
• Business case • Market research 3. Bid documents
• Benefits management plan 4. Procurement statement of work
3. Data analysis
3. Project management plan 5. Source selection criteria
• Make-or-buy analysis
• Scope management plan 6. Make-or-buy decisions
4. Source selection analysis
• Quality management plan 7. Independent cost estimates
• Resource management plan
5. Meetings
8. Change requests
• Scope baseline 9. Project documents updates
4. Project documents • Lessons learned register
• Milestone list • Milestone list
• Project team assignments • Requirements documentation
• Requirements traceability matrix • Requirements traceability matrix
• Resource requirements • Risk register
• Risk register • Stakeholder register
• Stakeholder register 10. Organizational process assets updates
5. Enterprise environmental factors
6. Organizational process assets
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Fig 12-2 age 466

Plan Procurement Management - Inputs
Project Management Plan
▪ Scope management plan – how contract scope will be managed
▪ Quality management plan – industry standards/codes to be applied to contract and mentioned in bidding
documents
▪ Resource management plan – resources to be procured
▪ Scope baseline – only if available, else SOW will be used

Business Documents
▪ Business case – procurement strategy to be aligned to this
▪ Benefits management plan – benefits which will relate to contract
Project Charter
▪ The project objectives, description, milestones & pre-approved financial resources will influence
procurement

Project Documents
▪ Milestones list – seller related milestones
▪ Project team assignments – procurement related skills and resource availability
▪ Requirements documentation – all requirements for the seller to satisfy, technical and non-technical
• Non-technical can include safety, legal, health, security, environmental, performance, insurance, intellectual
property rights, licenses, permits, equal opportunity employment
▪ Requirements traceability matrix – to trace requirements for sellers
▪ Resource requirements – team and physical resource needs
▪ Risk register - any risks to be transferred to sellers
▪ Stakeholder register – stakeholder expectations for procurement

EEF and OPA
▪ EEFs and OPAs that can influence this process may include (but not limited to):
Enterprise Environmental Factors Organizational Process Assets

▪ Marketplace conditions ▪ Formal procurement
▪ Suppliers, including past policies/procedures/guidelines
performance/reputation ▪ Prequalified Sellers
▪ Terms and conditions for ▪ Contract types
industry/product/service
▪ Unique local requirements
▪ Products/services available in marketplace
▪ Procurement legal advice
▪ Contract management system
▪ Prequalified suppliers & multitier supplier
system
▪ Financial accounting & contract payment
system

Types of Contracts
Increasing risk to SELLER
▪ Fixed Price(FP) contracts
• Firm Fixed Price (FFP)
• Fixed Price with Incentive Fee (FPIF)
• Fixed Price Award Fee (FPAF)
• Fixed Price Economic Price Adjustment (FPEPA) - Long term
contract
▪ Time and Material (T&M) contracts

• Cost-reimbursable contracts
– Cost Plus Incentive Fee Contracts (CPIF)
– Cost Plus Award Fee Contracts (CPAF)
Increasing risk to BUYER
– Cost Plus Fixed Fee Contracts (CPFF)
▪ CPAF risk for buyer is more than CPIF because in the latter buyer can pass
on cost overrun to seller & in CPFF buyer has to pay the fixed fee.
Plan Procurement Management - Tools & Techniques
Data Analysis - Make or Buy Analysis
▪ Decide whether to accomplish work/deliverables by the project team or purchase from outside
▪ Deciding factors will be organization's current resource skills and allocations, special expertise requirements,
not expanding permanent employee base and risks
▪ Risks of the decisions need to be evaluated
▪ Techniques like payback period, return on investment (ROI), internal rate of return (IRR), discounted cash
flow, net present value (NPV), benefit/cost analysis (BCA) or other may be used for making the decision

Expert Judgment
▪ Expertise of procurement of purchasing, contract documents and types, regulation and compliance
Data Gathering - Market Research
▪ Includes examining of industry and specific vendor capabilities
▪ Information may be obtained from online reviews & conferences
▪ Technology being important, associated risks should be reviewed

Meetings
▪ Can be used to collaborate with potential buyers
▪ Procurement management and strategy may be discussed
▪ The buyer may benefit from seller's influence in the meeting

Source Selection Analysis
▪ It is a good practice to specify evaluation criteria and method in the
Least Qualifications
procurement documents for bidders
cost only
• Least cost – for standard or routine work with well defined
practices and outcomes
• Qualifications only – for small value procurements, selection as
per qualifications, credibility, experience, expertise and
references Highest technical
• Quality based/highest technical proposal score – cost specified in Fixed budget proposal score
proposal is negotiated with the highest ranked or acceptable
technical solution quality proposal
• Quality and cost based – both quality and cost are considered,
with weightage depending on project risks
• Sole source – when there is no competition, however cost
negotiation does occur Quality and cost
Sole source
• Fixed budget – when SOW is clearly defined and no changes are
based
expected; seller will adapt scope and quality as per budget
specified in buyer RFP, latter should ensure budget sufficiency for
the work

Plan Procurement Management - Outputs
Procurement Management Plan
▪ The Procurement Management Plan describes how the procurement will be done on that project
▪ Any external funding should be aligned to procurement plan and project schedule
▪ Nature of bidding should be documented, like international/national competitive or local
• Coordination with schedule management
• Procurement timetable
• Metrics for contracts
• Roles and responsibilities, authority and constraints of project team with respect to procurement department
• Procurement related assumption and constraints
• Legal jurisdiction and currency
• Will independent estimates be used and if they will be part of evaluation criteria
• Requirements for performance bonds and insurance for risk mitigation
• Prequalified sellers

Procurement Statement of Work
▪ Developed for each procurement from the project scope baseline
▪ Describes the procurement item in detail to prospective sellers to determine if they are capable of providing the
products, services, or results
▪ Can include details about specifications, quantity, quality, performance, duration, location, etc.
▪ Details of collateral services are also included, like performance reporting, post-project operations support
▪ It may be revised until the contract is signed
▪ Sometimes a Terms of Reference (TOR) is used similar to the SOW which includes
• Contractor tasks, approval data, services, coordination items, standards, submission/review schedule

Bid Documents
▪ To solicit proposals from prospective sellers
▪ May include request for information (RFI), request for proposal (RFP), request for quotation (RFQ)
▪ Bids/tenders/quotations apply for commercial/standard items in which seller is selected based on price
▪ In proposals, selection is based on technical capability, technical/solution approach decide selection

Key Terms Used in Procurement Documents
▪ Target Cost: Seller’s costs and profits
▪ Target Price: Is a measure of success
▪ Target fee: A percentage of the price or an amount, which can have minimum and maximum values also
▪ Sharing Ratio: Incentives sharing is expressed as a ration buyer/seller
▪ Ceiling Price: Highest Price buyer will pay
▪ Point of Total Assumption (PTA): Related to Fixed Price Incentive Fee contracts. This refers to an amount
above which seller bears all the loss of a cost overrun.
• PTA = {(Ceiling Price – Target Price) + Target Cost}/ Buyer’s share ratio

Source Selection Criteria
▪ Criteria should ensure selection of best quality proposal
▪ In international proposals, criteria may include 'local content' requirements, like local staff for example
▪ A weighting system may be used for the criteria prior to negotiation
▪ The following criteria are usually used:
• Capability and capacity
• Production and life cycle cost
• Delivery dates
• Relevant experience, technical expertise and approach
• Approach and work plan
• Key staff qualifications, competence and availability
• Financial stability
• Management experience
• Training and knowledge transfer

Make-or-Buy Decisions
▪ A decision of whether particular work can best be accomplished by the project team or needs to be
purchased from outside sources
Change Requests
▪ A decision that involves procuring goods, services, or resources typically requires a change request
▪ Changes to the project management plan, its subsidiary plans and other components may result in change
request that impact procurement actions

Procurement Strategy
▪ Done after the make-or-buy analysis and decision
▪ Describes the delivery method, contract payment type and procurement phases
▪ Delivery method
• For professional services: buyer-services provider with or without sub-contracting, joint venture
• For industrial/commercial construction: turnkey, design build (DB), design bid build (DBB), design
build operate (DBO), build own operate transfer (BOOT)
▪ Contract payment type

• Fixed price: for well defined work
• Cost plus: evolving work not well defined
• Both above may include incentives and awards

Plan Procurement Management – Outputs (Contd.)
Procurement Strategy
▪ Procurement phases
• Sequence, objectives and description of phases
• Procurement performance indicators and milestones
• Phase exit criteria
• Progress monitoring and evaluation plan
• Knowledge transfer process for phases

Plan Procurement Management – Outputs
Independent Cost Estimates
▪ Prepared internally or by an external professional estimator, usually for large contracts
▪ Serves as a benchmark to compare with seller estimates
▪ Significant differences in estimates can indicate deficient/ambiguous SOW, or failure to fully understand or
respond to the SOW
Organizational Process Assets Updates
▪ Qualified sellers list

Plan Procurement Management – Outputs
Project Document Updates
▪ Lessons learned register – lessons about regulatory, source selection, etc.
▪ Milestones list – pertaining to sellers work
▪ Requirements traceability matrix – for the requirements to be satisfied by the seller
▪ Risk register – related to the sellers, like contract duration, seller organization and external environment
related, delivery approach, contract type and agreed price
▪ Stakeholder register – particularly regulatory/legal & contracting personnel

Quiz
Q
Q. You are managing a project and once you enter the execution phase, you realize that you need to procure one
additional server to fulfil the project requirements. Given the purchase value being small, you prepare a
unilateral contract. This is also known as:
a. Purchase Order
b. SOW
c. Contract
d. RFP

Answers
A
Q. You are managing a project and once you enter the execution phase, you realize that you need to procure one
additional server to fulfil the project requirements. Given the purchase value being small, you prepare a
unilateral contract. This is also known as:
a. Purchase Order
b. SOW
c. Contract
d. RFP
Answer : A
Explanation
Purchase order (PO) is a commercial document issued by a buyer to a seller, Normally PO a unilateral
contract and used for low value purchases (though need not be for low value only always).

Quiz
Q
Q. Contract Statement of Work is prepared with the following inputs except:
a. The project scope statement
b. The cost of the work required
c. The WBS dictionary
d. The project WBS

Answers
A
Q. Contract Statement of Work is prepared with the following inputs except:
a. The project scope statement
b. The cost of the work required
c. The WBS dictionary
d. The project WBS
Answer : B
Explanation
As the name suggests, Contract Statement of Work only contains information about the scope required to
be completed.

Quiz
Q
Q. In a project that you are managing, you have decided to outsource a part of the work which has a higher
amount of risk associated with it. Due to higher risk and complexity of work, not many contractors are willing to
submit the proposal for it. Considering the situation, which type of contract you should choose to attract the
prospective bidders?
a. Cost plus percentage of cost as an award fee
b. Cost plus fixed fee
c. Cost plus incentive fee
d. Firm fixed price

Answers
A
Q. In a project that you are managing, you have decided to outsource a part of the work which has a higher
amount of risk associated with it. Due to higher risk and complexity of work, not many contractors are willing to
submit the proposal for it. Considering the situation, which type of contract you should choose to attract the
prospective bidders?
a. Cost plus percentage of cost as an award fee
b. Cost plus fixed fee
c. Cost plus incentive fee
d. Firm fixed price
Answer : A
Explanation
CPFF, CPAF & CPIF are attractive for seller in decreasing order. And FP contracts are less attractive than CP
contracts for seller.

Quiz
Q
Q. As a project manager, you are discussing with someone from the procurement department about the source
selection approaches. You are told that for this project a quality based (highest technical proposal score) method
will be used. What does this mean?
a. In the seller proposal, both technical solution quality and cost of the seller are considered, in case of
high risks quality will be important
b. The seller proposals found ok from a technical solution quality are ranked first.. The highest ranking is
then negotiated for cost.
c. The budget is informed to the sellers. Highest ranking technical solution within that budget is selected.
d. The seller with the best qualifications, expertise, credibility & references is selected.

Answers
A
Q. As a project manager, you are discussing with someone from the procurement department about the source selection
approaches. You are told that for this project a quality based (highest technical proposal score) method will be used. What does this
mean?
a. In the seller proposal, both technical solution quality and cost of the seller are considered, in case of high risks quality will
be important
b. The seller proposals found ok from a technical solution quality are ranked first. The highest ranking is then negotiated for
cost.
c. The budget is informed to the sellers. Highest ranking technical solution within that budget is selected.
d. The seller with the best qualifications, expertise, credibility & references is selected.
Answer : B
Explanation
This is correct. A is known as quality and cost based. C is fixed budget method. D is qualifications only method which is used for
small procurements. For standards items with well-defined practices and standards, least cost approach is used. In sole source
there is no competition but the proposal is still evaluated from a technical and cost perspective

Quiz
Q
Q. Which of the below are not included in a procurement strategy document?
a. Bid documents and independent cost estimates
b. Contract type
c. Details of the procurement phases
d. Delivery methods like turnkey or joint venture, etc.

Answers
A
Q. Which of the below are not included in a procurement strategy document?
a. Bid documents and independent cost estimates
b. Contract type
c. Details of the procurement phases
d. Delivery methods like turnkey or joint venture, etc.
Answer : A
Explanation
Though bid documents and independent cost estimates are normally used in large procurements, these are
not included in procurement strategy. All the provided options are outputs of Plan Procurement
Management, apart from make or buy decisions, change requests, source selection criteria and procurement
SOW.

Process Deep Dive:
Conduct Procurements
Process Group: Executing

Conduct Procurements
The process of obtaining seller responses, selecting a seller, and awarding a contract
When How
As early as possible in Provides alignment of
execution phase stakeholder expectations
through established agreements

Conduct Procurements - Components
1. Selected sellers
1. Project management plan
1. Expert judgment 2. Agreements
• Scope management plan
• Requirements managements plan
2. Advertising 3. Change requests
• Communications management plan 3. Bidder conferences 4. Project management plan updates
• Risk management plan 4. Data analysis • Requirements management plan
• • Quality management plan
Procurement management plan • Proposal evaluation
• Configuration management plan • Communications management plan
5. Interpersonal and team skills
• Cost baseline • Risk management plan
• Negotiation • Procurement management plan
2. Project documents
• Lessons learned register • Scope baseline
• Project schedule • Schedule baseline
• Requirements documentation • Cost baseline
• Risk register 5. Project documents updates
• Stakeholder register • Lessons learned register
3. Procurement documentation • Requirements traceability matrix
4. Seller proposals • Resource calendars
5. Enterprise environmental factors • Risk register
6. Organizational process assets • Stakeholder register
6. Organizational process assets updates
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Fig 12-4 Page 482

Conduct Procurements - Inputs
Seller Proposals
▪ Received in response to RFP/RFI/RFQ, will be used by an evaluation body to select one or more successful
bidders (sellers)
▪ A good practice is to submit price and technical proposals separately rather than a single one

Organizational Process Assets
▪ OPAs that can influence the Conduct Procurements process may include (but not limited to):
Organizational Process Assets

▪ Prequalified sellers list
▪ Seller selection policies
▪ Agreement templates & guidelines
▪ Invoice and payment policies &
procedures

▪ Scope management plan – how contract scope will be managed
▪ Requirements management plan – how sellers will manage requirements
▪ Communications management plan – between buyer and sellers
▪ Risk management plan
▪ Procurement management plan
▪ Configuration management plan – for compliance by sellers for configuration and change control
▪ Cost baseline – procurement budget including cost of managing sellers and procurement process

Project Documents
▪ Lessons learned register – to apply in later procurement phases
▪ Project schedule – of project & procurement activities, and seller due dates for deliverables
▪ Stakeholder register

Procurement Documentation
▪ These are the written records prior to agreement, can be older project documents also
▪ Bid documents – like RFI, RFQ & RFP for the sellers to respond
▪ Procurement SOW – clear goals, requirements & outcomes for the sellers to respond
▪ Independent cost estimates
▪ Source selection criteria – weightages should also be specified if applicable; buyer may sign agreements with
more than one seller to account for risks

Enterprise Environmental Factors
▪ EEF that can influence the Conduct Procurements process may include (but not limited to):
Enterprise Environmental Factors

▪ Local procurement laws & regulations,
particularly to involve local sellers in major
procurements
▪ External economic constraints of
procurement
▪ Marketplace conditions
▪ Good and bad past experience with sellers
▪ Prior agreements
▪ Contract management system

Conduct Procurements - Tools & Techniques
Bidder Conferences
▪ Meetings between the buyer and all prospective sellers prior to submittal of a bid or proposal
▪ Used to ensure that:

• All prospective sellers have a clear and common understanding of the procurement requirements
• No bidders receive preferential treatment
▪ Also called contractor/vendor/pre-bid conference

Data Analysis - Proposal Evaluation
▪ This ensures completeness of proposal responses by the seller to the buyer's bid package (bid documents,
procurement SOW, source selection criteria)

Expert Judgment
▪ Expertise in proposal evaluation, technical & functional area, industry regulation, laws and negotiation
Advertising
▪ Existing lists of potential sellers can be expanded by placing advertisements in newspapers, trade
publications or websites

Interpersonal and Team Skills - Negotiation
▪ Help clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be
reached prior to signing the contract
Selected Sellers
▪ Sellers who have been judged to be in a competitive range based upon the outcome of the proposal or bid
evaluation

Conduct Procurements - Outputs
Agreements
▪ A mutually binding legal agreement including terms and conditions, and other items that the buyer specifies
regarding what the seller is to perform or provide, and a compensation from the buyer
▪ Major components in an agreement document may include:

Statement of work or deliverables Pricing and payment terms
Schedule milestones Inspection, quality and acceptance criteria
Performance reporting Warranty and future product support
Period of performance Incentives and penalties
Roles and responsibilities Insurance and performance bonds
Seller's place of performance Change request handling
General terms and conditions Termination clause and alternative dispute resolution
mechanisms
Subordinate contractor approvals
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 489

Conduct Procurement – Outputs
Project Management Plan Updates
▪ Requirements management plan – any changes proposed by sellers
▪ Quality management plan – alternative standards/solutions from sellers
▪ Communications management plan – communication needs of sellers
▪ Risk management plan – seller risk management, even risk register to be updated
▪ Procurement management plan – update as a result of the contracting process
▪ Scope baseline – this may change during the procurement process
▪ Schedule baseline – this may change due to seller delivery changes
▪ Cost baseline – may change frequently due to fluctuating external material/labor prices

▪ Lessons learned register – lessons from conducting procurement
▪ Requirements traceability matrix – this may change as per seller capabilities
▪ Resource calendars – as per seller availabilities
▪ Risk register – related to the sellers, like contract duration, seller organization and external environment related,
delivery approach, contract type and agreed price
▪ Stakeholder register – updated when agreements are made with sellers

▪ Change Request
▪ List of prospective and prequalified sellers
▪ Good and bad information about experience with sellers

Quiz
Q
Q. Which of the following best describes the role of a Project Manager while contracting goods or services from a
vendor?
a. Project manager should negotiate all legal and commercial aspects of the procurement
b. Project manager's role is not very critical in project management and so she need not spend much time
on procurements
c. Project manager should guide the purchase department on the contracting process
d. Project manager should bring his understanding of the project risks to the procurement process and
ensure that they are adequately addressed

Answers
A
Q. Which of the following best describes the role of a Project Manager while contracting goods or services from a
vendor?
a. Project manager should negotiate all legal and commercial aspects of the procurement
b. Project manager's role is not very critical in project management and so she need not spend much time
on procurements
c. Project manager should guide the purchase department on the contracting process
d. Project manager should bring his understanding of the project risks to the procurement process and
ensure that they are adequately addressed
Answer : D
Explanation
Option A and C are close but they are subjective but Option D is a must for a project manager. Option B is
incorrect.

Quiz
Q
Q. In response to RFP that your company published, few vendors have submitted their proposals with a price.
Which of the following is a technique to check the proposal pricing?
a. Independent estimates
b. Evaluation criteria
c. Seller rating system
d. Contract negotiation

Answers
A
Q. In response to RFP that your company published, few vendors have submitted their proposals with a price.
Which of the following is a technique to check the proposal pricing?
a. Independent estimates
b. Evaluation criteria
c. Seller rating system
d. Contract negotiation
Answer : A
Explanation
From the given options, A is the only technique to check the proposal pricing. B and C look at other factors
and D is used once you have shortlisted one or more than one vendors.

Process Deep Dive:
Control Procurement
Process Group: Monitoring & Controlling

Control Procurements
The process of managing procurement relationships, monitoring contract performance, and making changes and
corrections to contracts as appropriate and closing contracts.
When How
Periodically in Monitoring & By ensuring that both the
Controlling phase until all seller’s and buyer’s
deliverables by vendor are performance meets
completed procurement requirements

▪ The process of ensuring that both the buyers and sellers meet the terms of the contract
▪ Procurement activities are monitored according to the procurement plan in order to verify compliance with
project objectives
▪ Due to varying organizational structures, many organization treat contract administration as an

administrative function separate from project organization
▪ Quality of procurement controls (like audits) is important
▪ Code of ethics, legal counsel, external legal arrangements & anti-corruption initiatives also important for
control
▪ Changes/amendments to contracts are done with mutual consent

Contract Administration Activities
▪ Collecting, managing & maintaining related project records of performance indicators and performance
▪ Refining plans and schedules
▪ Setting up and gathering/analyzing/reporting procurement data, and preparing reports
▪ Monitoring the procurement environment for facilitating implementation and adjustments
▪ Payment of invoices – this is closely connected to the work performed (outputs) than effort (inputs)

Control Procurements - Components
1. Project management plan 1. Closed procurements
• Requirements management plan 1. Expert judgment
2. Work performance information
• Risk management plan 2. Claims administration
3. Procurement documentation updates
• Procurement management plan 3. Data analysis
4. Change requests
• Change management plan • Performance reviews
• Schedule documents 5. Project management plan updates
• Earned value analysis
2. Project documents • Risk management plan
• Trend analysis
• Assumption log • Procurement management
• Lessons learned register
4. Inspection plan
• Milestone list 5. Audits • Schedule baseline
• Quality reports • Cost baseline
• Requirements documentation
6. Project documents updates
• Requirements traceability matrix
• Lessons learned register
• Risk register
• Stakeholder register
• Resource requirements
3. Agreements • Requirements traceability
4. Procurements documentation matrix
5. Approved change requests • Risk register
6. Work performance data • Stakeholder register
7. Enterprise environmental factors 7. Organizational process assets updates
8. Organizational process assets
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Fig 12-6 Page 492

Control Procurements – Inputs
▪ Requirements management plan – process of managing seller requirements
▪ Risk management plan – how seller risk activities will be performed
▪ Procurement management plan – procurement control activities
▪ Change management plan – process of handling seller initiated changes
▪ Schedule baseline – this may require update in case of slippages by sellers

Project Documents
▪ Assumptions log – assumptions from the procurement process

▪ Lessons learned register – lessons to improve seller performance and procurement process
▪ Quality reports – of seller non-compliance to processes / procedures / products
▪ Requirements traceability matrix – linking origin of requirements to deliverables
▪ Stakeholder register – contracted team members, selected sellers, contracting officers & others involved in
procurement

Procurement Documents
▪ Provide reference to complete supporting records for administration of the procurement processes. This
includes procurement contract awards and the statement of work
▪ Also payment information, contractor work performance information, plans, drawings and any other
communications
Agreements
▪ Agreements are understandings between parties, including understanding of the duties of each party
▪ They are reviewed to verify that terms and conditions are met

Approved Change Requests
▪ It can include modifications to the terms and conditions of the contract, including the procurement
statement of work, pricing, and descriptions of the products, services, or results to be provided
▪ In a multi-seller complex project/program, change requests from one seller can influence other sellers

Work Performance Data
▪ Seller technical performance and activities status

▪ The costs that have been incurred or committed
▪ identification of the seller invoices that have been paid

EEF and OPA
▪ EEFs and OPAs that can influence the Control Procurements may include (but not limited to):
Enterprise Environmental Factors Organizational Process Assets

▪ Contract change control system ▪ Procurement policies
▪ Marketplace conditions
▪ Financial management and accounts
payable system
▪ Buyer organization code of ethics

Control Procurements - Tools & Techniques
Claims Administration
▪ Sometimes buyer and sellers do not agree on change having occurred or for its compensation, these are
contested changes or claims, sometimes these can be constructive changes also
▪ When unresolved, these become disputes and eventually appeals
▪ These will be managed as per the contract
▪ In case of a third party to be involved for resolution, ADR (alternative dispute resolution) procedures will be
applied though mutual negotiation will be preferred first

Expert Judgment
▪ In relevant functional area, laws, regulation, compliance & claims administration
Inspection
▪ Structured review of contractor work – of deliverables or work

▪ Can include site walkthroughs by both buyer and seller in an construction/engineering/infrastructure project

Audits
▪ Structured review of the procurement process
▪ Audit rights and obligations should be documented in the contract
▪ Audit observations must be communicated to project managers of the buyer and seller for making necessary
adjustments
Data Analysis
▪ Performance reviews – of quality, resources, cost and schedule (of work packages) in relation to the contract
▪ Earned value analysis – schedule and cost variances and performance indices
▪ Trend analysis – done to forecast EAC (estimate at completion)

Control Procurements - Outputs
Work Performance Information
▪ About seller deliverables received, technical performance & actual costs in comparison to plan
Change Requests
▪ Change requests to the project management plan, its subsidiary plans, and other components, such as the
cost baseline, schedule baseline, and procurement management plan, may result from this process

Closed Procurements
▪ A formal written notice from the buyer procurement administrator to the seller regarding completion of
contract
▪ As defined in the contract terms and conditions based on the procurement management plan
▪ Done after project management team approves all deliverables based on timeliness, technical and quality
requirements
▪ No outstanding claims and invoices, and all payments completed before closure

Procurement Document Updates
▪ Contract and schedules
▪ Unapproved and approved contract change requests
▪ Seller technical documents
▪ Work performance information – deliverables, seller performance reports, warranties
▪ Financial documents – invoice and payment records
▪ Contract inspection results

Project Management Plan Updates
▪ Risk management plan – due to significant seller risks, note that risk register also to be updated
▪ Procurement management plan – update to activities based on seller performance
▪ Schedule baseline – this may require update due to significant seller schedule changes, can impact other
sellers also
▪ Cost baseline – this may change frequently due to fluctuating material and labor prices from external
economic environment

▪ Lessons learned register – techniques which helped maintain procurement items scope/cost/schedule, and
lessons from corrective actions taken, claims handling & procurement process
▪ Resource requirements – changes in work plan can cause resource changes
▪ Requirements traceability matrix – updated with satisfied requirements
▪ Stakeholder register – suppliers may change during execution

▪ Payment schedule and requests – note that payments are made as per contract terms and conditions
▪ Seller performance evaluation documents – prepared by buyer about seller past and current performance,
ability to continue work, and whether can work in future projects
▪ Prequalified seller list updates – in case any sellers are disqualified
▪ Lessons learned repository – archive all lessons based on procurement results compared with procurement
plan and project objectives, documenting variance reasons where applicable, for use in future procurements
▪ Procurement file – all indexed procurement documents, including the closed contract, for inclusion with final
project files

Quiz
Q
Q. During a long and complex negotiation a buyer makes note of certain commitments made by the vendor, and
the note was signed by both parties. During the project, the vendor refuses to accept this commitment as it was
not included in the subsequent contract. The vendor:
a. Is incorrect, as vendor is obliged to everything that was agreed
b. Is correct as they are bound by the contract only
c. Is insensitive and should accept this in view of long term relationship
d. Should accept if the cost involved is small

Answers
A
Q. During a long and complex negotiation a buyer makes note of certain commitments made by the vendor, and
the note was signed by both parties. During the project, the vendor refuses to accept this commitment as it was
not included in the subsequent contract. The vendor:
a. Is incorrect, as vendor is obliged to everything that was agreed
b. Is correct as they are bound by the contract only
c. Is insensitive and should accept this in view of long term relationship
d. Should accept if the cost involved is small
Answer : B
Explanation
The vendor is not bound to deliver goods or services if they are not included in the contract document. It
was buyer’s responsibility to include the commitments made by vendor in the contract.

Quiz
Q
Q. Which of the following is not an input for the Control Procurement process?
a. Work performance data
b. Work performance reports
c. Change requests
d. Agreements

Answers
A
Q. Which of the following is not an input for the Control Procurement process?
a. Work performance data
b. Work performance reports
c. Change requests
d. Agreements
Answer : C
Explanation
Change requests is not an input for the Control Procurement process.

Quiz
Q
Q. A part of the project work is outsourced to a contractor. During execution, the contractor encountered some
issues which will impact the cost and schedule of the project. which is the right approach for contractor and
performing organization to update the contract agreement?
a. Terminate the existing contract and prepare a new one
b. Submitting the change request to the contract change control system
c. Submitting the change request to the schedule change control system
d. Identify it as a risk and treat it appropriately

Answers
A
Q. A part of the project work is outsourced to a contractor. During execution, the contractor encountered some
issues which will impact the cost and schedule of the project. which is the right approach for contractor and
performing organization to update the contract agreement?
a. Terminate the existing contract and prepare a new one
b. Submitting the change request to the contract change control system
c. Submitting the change request to the schedule change control system
d. Identify it as a risk and treat it appropriately
Answer : B
Explanation
Submitting the change request to the contract change control system is the right approach. A is not ruled
out but that depends on the gravity of the situation and is not the best answer. C is incorrect as there is
nothing as schedule change control system. D is inappropriate as the risk has already happened and it is an
issue.

Quiz
Q
Q. Control procurements includes all of the below except?
a. Applying source selection criteria to seller proposals on an ongoing basis as and when new sellers are
required, and following it up with selection, negotiation and awarding of contract
b. Contract administration in an integrated manner with the procurement department with activities like
performance monitoring, payments, reporting setup and publishing
c. Claims administration for contested changes
d. Various work like performance reviews, including earned value and trend analysis, inspection and audits,
and closing contracts

Answers
A
Q. Control procurements includes all of the below except?
a. Applying source selection criteria to seller proposals on an ongoing basis as and when new sellers are
required, and following it up with selection, negotiation and awarding of contract
b. Contract administration in an integrated manner with the procurement department with activities like
performance monitoring, payments, reporting setup and publishing
c. Claims administration for contested changes
d. Various work like performance reviews, including earned value and trend analysis, inspection and audits,
and closing contracts
Answer : A
Explanation
This is part of conducting procurement.

Additional Concepts

Key Concepts
▪ Partial role of PM & in a small organization the PM can be the procurement manager
▪ Local culture & law differs for same contract language in different countries
▪ Organization rules & legalities important
▪ Projects can be simple/complex with single/multiple contracts or phase wise contracts & with multi-level
relationships

Trends & Emerging Practices
▪ Advances in tools (online, BIM building information model which is now mandated in engineering to save time
& money and to reduce claims)
▪ Advanced risk management (accurately assign risks to different contracts)
▪ Changing contracting process (megaprojects - contractors work closely with client to get discounts & use
International forms)
▪ Logistics & supply chain management - time dependency based on industry, backup resources, minimum
purchase from local vendors
▪ Technology & stakeholder relations (scrutiny of public funded projects, webcams at sites showing progress,
storing of video data for claims)
▪ Trial engagements (work on paid basis initially, evaluate before contract commitment, while work progresses)

Tailoring Considerations
▪ Procurement complexity
▪ Location
▪ Governance & regulation
▪ Availability of contractors

Considerations for Agile/Adaptive Environments
▪ Shared risk model with sellers
▪ MSA (Master Service Agreement) for overall work & appendices/supplements for adaptive work

Assignment
Q1: Explore the procurement scenario for your industry. In particular, how are procurement decisions made,
what types of contracts are used and what are the key criteria for evaluating seller performance. Lastly, what
attributes of the proposal and the seller result in a contract being awarded?

Summary


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How To Make The Best Use Of Live Sessions

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Project Management Professional (PMP)® is a global credential offered by PMI® Inc.

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▪ Project Procurement Management - Key Concepts

▪ Trends & Emerging Practices

▪ Considerations for Agile/Adaptive Environments

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• Apply fair practices relevant to procurement aspects in a project where

• Review contract performance, manage contract changes and closure

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Process Group: Planning

Knowledge Area: Project Procurement Management

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▪ Plan procurement management process includes:

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▪ Scope management plan – how contract scope will be managed

▪ Resource management plan – resources to be procured

▪ Scope baseline – only if available, else SOW will be used

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▪ Business case – procurement strategy to be aligned to this

▪ Benefits management plan – benefits which will relate to contract

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▪ Milestones list – seller related milestones

▪ Project team assignments – procurement related skills and resource availability

▪ Requirements traceability matrix – to trace requirements for sellers

▪ Resource requirements – team and physical resource needs

▪ Risk register - any risks to be transferred to sellers

▪ Stakeholder register – stakeholder expectations for procurement

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Enterprise Environmental Factors Organizational Process Assets

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▪ Time and Material (T&M) contracts

▪ Risks of the decisions need to be evaluated

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Data Gathering - Market Research

▪ Includes examining of industry and specific vendor capabilities

▪ Information may be obtained from online reviews & conferences

▪ Technology being important, associated risks should be reviewed

▪ Can be used to collaborate with potential buyers

▪ Procurement management and strategy may be discussed

▪ The buyer may benefit from seller's influence in the meeting

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▪ Developed for each procurement from the project scope baseline

▪ It may be revised until the contract is signed

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▪ To solicit proposals from prospective sellers

▪ In proposals, selection is based on technical capability, technical/solution approach decide selection

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▪ Target Price: Is a measure of success

▪ Sharing Ratio: Incentives sharing is expressed as a ration buyer/seller

▪ Ceiling Price: Highest Price buyer will pay

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▪ Done after the make-or-buy analysis and decision

▪ Contract payment type

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