Procurement Management

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Procurement Management

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This chapter covers key concepts related to Project Procurement Management.

  1. Procurement Management involves getting work done by people outside the project team. Project Procurement Management includes administering contracts and change control process to manage contracts or purchase orders. The knowledge area of Project Procurement Management consists of the following processes -

    Procurement Management Processes

    Process Project Phase Key Deliverables
    Plan Procurement Management Planning Procurement Management Plan
    Conduct Procurements Execution Selected Sellers, Procurement contract award
    Control Procurements Monitoring and Controlling Change requests
    Close Procurements Closure Closed procurements

  2. The Plan Procurement process involves build versus buy decisions. The Inputs, Tools and Techniques, and Outputs of Plan Procurement process are listed in the table below.

    Plan Procurement Management process

    Inputs Tools and Techniques Outputs
    Scope baseline Make-or-buy analysis Procurement management plan
    Requirements documentation Expert judgment Procurement statements of work
    Teaming agreements Contract types Make-or-buy decisions
    Risk register   Procurement documents
    Risk-related contract decisions   Source selection criteria
    Activity resource requirements   Change requests
    Project schedule    
    Activity cost estimates    
    Cost performance baseline    
    Enterprise environmental factors    
    Organizational process assets    

  3. A contract is a formal agreement. It is a legal document biding to both seller and buyer. Changes to contract must be in writing and formally controlled. Most Governments back all contracts by providing a court system.
  4. The process of Conduct Procurement involves receiving seller responses, selecting a seller, and awarding a contract. During this process bids or proposals from sellers are evaluated, and one or more seller is selected to execute the work.

    Conduct Procurement process

    Inputs Tools and Techniques Outputs
    Project Management Plan Bidder conferences Selected sellers
    Procurement documents Proposal evaluation techniques Procurement contract award
    Source Selection criteria Independent estimates Resource calendars
    Qualified seller list Expert judgment Change requests
    Seller proposals Advertising Project management plan updates
    Project documents Internet search Project document updates
    Make-or-buy decisions Procurement negotiations  
    Teaming agreements    
    Organizational process assets    

  5. Sole Source refers to a market condition in which only one qualified seller exists in the market.
    Single Source refers to a market condition in which the company prefers to contract with only one seller.
    Oligopoly refers to a market condition where very few sellers exist, and the action of one seller will have impact on other seller prizes.
  6. Bidder conferences are meetings between buyer and sellers before the bid is submitted. The conference is used by buyers to provide consistent information to all sellers.
  7. The process of Control Procurement involves managing procurement relationships and ensuring the seller performance meets the procurement requirements.

    Control Procurement process

    Inputs Tools and Techniques Outputs
    Procurement documents Contract change control system Procurement documentation
    Project management plan Procurement performance reviews Organizational assets updates
    Contract Inspection and audits Change requests
    Performance reports Performance reporting Project management plan updates
    Approved change requests Payment systems  
    Work performance information Claims administration  
      Records management system  

  8. Contract can be used as a risk management tool, as in transferring risk.
  9. Centralized Contracting refers to a separate contracting office that handles contracts for all projects. In De-centralized Contracting a contract administrator is assigned for each project.
  10. Force majeure is a powerful and unexpected event, such as hurricane or other disaster.
  11. Privity is contractual information between customer and vendor.
  12. The process of Close Procurement involves completing each procurement. The process involves verifying that all planned work as per the contract has been completed.

    Close Procurement process

    Inputs Tools and Techniques Outputs
    Project management plan Procurement audits Closed procurements
    Procurement documentation Negotiated settlements Organizational process updates
      Records management system  

Questions on Project Procurement Management are available at Procurement Questions.

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