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    Proj Proc MGT Chap5

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    Nikita Ambre
    This document discusses project procurement management. It describes the key processes as procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract close-out. The processes involve determining what and when to procure, documenting requirements, obtaining bids and selecting suppliers, managing contracts, and closing contracts. Procurement planning includes making a make-or-buy analysis and selecting appropriate contract types. Solicitation planning involves preparing requests for proposals and quotes.

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    Proj Proc MGT Chap5

    Uploaded by

    Nikita Ambre
    126 views24 pages
    This document discusses project procurement management. It describes the key processes as procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract close-out. The processes involve determining what and when to procure, documenting requirements, obtaining bids and selecting suppliers, managing contracts, and closing contracts. Procurement planning includes making a make-or-buy analysis and selecting appropriate contract types. Solicitation planning involves preparing requests for proposals and quotes.

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    This document discusses project procurement management. It describes the key processes as procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract close-out. The processes involve determining what and when to procure, documenting requirements, obtaining bids and selecting suppliers, managing contracts, and closing contracts. Procurement planning includes making a make-or-buy analysis and selecting appropriate contract types. Solicitation planning involves preparing requests for proposals and quotes.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    126 views24 pages

    Proj Proc MGT Chap5

    Uploaded by

    Nikita Ambre
    This document discusses project procurement management. It describes the key processes as procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract close-out. The processes involve determining what and when to procure, documenting requirements, obtaining bids and selecting suppliers, managing contracts, and closing contracts. Procurement planning includes making a make-or-buy analysis and selecting appropriate contract types. Solicitation planning involves preparing requests for proposals and quotes.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    The key takeaways are that project procurement management involves planning purchases and acquisitions, soliciting bids, selecting sellers, administering contracts, and closing contracts. The main steps outlined are procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract closeout.

    The main steps in project procurement management process are procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract closeout.

    The main types of contracts used in project procurement are fixed price (FP), cost reimbursable (CR), and time and materials (T&M) contracts. FP includes firm fixed price (FFP) and fixed price incentive fee (FPIF). CR includes cost plus fixed fee (CPFF) and cost plus percentage of costs (CPPC).

    Project Procurement Management

    Objectives Importance Of Project Procurement Management Project Procurement Management Processes Procurement Planning Solicitation Planning Solicitation Source Selection Contract Administration Contract Close-out
    35

    Procurement means acquiring

    goods / services from an outside source.


    Other terms include purchasing

    and outsourcing.

    Project Procurement Management Summary


    Planning

    Process : Plan Purchases and acquisitions Process : Plan Contracting Executing Process : Request seller responses Process : Select Sellers Monitoring & Controlling Process : Administer the contract Closing : Contract Closure

    Project Procurement Management Process

    Procurement Planning :determining what to procure and when. Solicitation Planning :documenting product requirements and identifying potential sources or sellers. Solicitation :obtaining quotations, bids, offers, or proposals as appropriate.

    Source Selection :choosing from among potential sellers. Contract Administration :managing the relationship with the seller. Contract Close-outcompletion and settlement of the contract, including resolution of any open items.

    These processes interact with each other and with the processes in the other knowledge areas as well. Each process may involve effort from one or more individuals or groups of individuals based on the needs of the project.

    Project Procurement Mgt. Process & Key Outputs


    Procurement Planning Make-or-buy decision Source Selection Award Contract Solicitation Planning Issue RFP Solicitation Receive Proposals Contract Close Out Formally Close Contract

    Contract Administration Complete Substantial Amt. of Work

    PLANNING PURCHASES AND ACQUISITIONS (PROCUREMENT PLANNING)

    Procurement planning is the process of identifying which project needs can be best met by procuring products or services outside the project organization. It involves consideration of whether to procure, how to procure, what to procure, how much to procure, and when to procure it.

    Steps in procurement planning


    Inputs
    Scope Statement Product Description Market Condition Other planning Outputs Constraints

    Tools & Technique


    Make-or-buy Analysis Expert Judgment Contract Type Selection

    Outputs
    Procurement Management Plan Statement(s) of Work

    Procurement Planning Tools & Techniques

    Make-or-buy Analysis : to determine whether an organization should make or perform a particular product or service inside the organization or buy from someone else. Experts : Both internal and external, can provide Valuable inputs in procurement decisions.

    Make-or-Buy Example:
    Assume you can lease an item you need for a project for $150/day. To purchase the item, the cost is $1,000 plus a daily operational cost of $50/day. How long will it take for the purchase cost to be the same as the lease cost? If you need the item for 12 days, should you lease it or purchase it?

    Make-or Buy Solution:

    Set up an equation so the make is equal to the buy In this example, use the following equation. Let d be the number of days to use the item. $150d = $1,000 + $50d

    Solve for d as follows: Subtract $50d from the right side of the equation to get $100d = $1,000

    Divide both sides of the equation by $100 d = 10 days The lease cost is the same as the purchase cost at 10 days If you need the item for 12 days, it would be more economical to purchase it

    Expert judgment

    Expert judgment will often be required to assess the inputs to this process. Such expertise may be provided by any group or individual with specialized knowledge or training and is available from many sources including: Other units within the performing organization. Consultants. Professional and technical associations. Industry groups

    Contract type selection

    Different types of contracts are more or less appropriate for different types of purchases. Contracts generally fall into one of three broad categories: Fixed price or lump sum contracts : involves a fixed total price for a welldefined product.

    Cost reimbursable contracts : involves payment (reimbursement) to the seller for its actual costs. Time and material Contracts : Hybrid of both fixed-price and cost-reimbursable contracts. Unit-pricing Contracts : Require the buyer to pay the supplier a predetermined amount per unit of product.

    Cost reimbursable contracts

    With a cost plus incentive fee (CPIF) contract the buyer pays the supplier for allowable performance cost along with a predetermined fee and an incentive bonus. With a cost plus fixed fee (CPFF) contract the buyer pays the supplier for the allowable performance cost plus a fixed fee payment usually based on a percentage of estimated costs.

    With a cost plus percentage of costs(CPPC) contract the buyer pays the supplier for allowable performance costs along with a predetermined percentage based on the total costs. Contract Types Versus Risk

    Outputs from Procurement Planning


    Procurement management plan. The procurement management plan should describe how the remaining procurement processes (from solicitation planning through contract close-out) will be managed. What types of contracts will be used? How will multiple providers be managed?

    Statement(s) of work:

    SOW is a description of work required for the Procurement. Many Contracts, or mutually binding agreements , include SOWs. A good SOWs gives bidders a better understanding of the buyers Expectations. The statement of work should be as clear, as complete, and as concise as possible.

    Statement of Work (SOW) Template

    Solicitation Planning (PLANNING


    CONTRACTING)
    Solicitation planning involves preparing the documents needed to support solicitation. Procurement documents include Request For Proposal (RFP) : used to solicit proposals from prospective suppliers. Request For Quote (RFQ): used to solicit quotes for well defined procurement.

    Steps in Solicitation Planning


    Inputs
    Procurement Management Plan Statement(s) of Work

    Tools & Technique


    Standard Forms Expert Judgment

    Outputs
    Procurement Documents Evolution Criteria

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