Procurement

Knowledge area that covers 4 processes to procure goods or services for the project.

• Includes 2 key roles:
• 1) Buyer purchases or procures goods or services provided by the 2) Seller.

• Processes:
• - Plan Procurements (planning)
• - Conduct Procurements (executing)
• - Administer Procurements (M&C)
• - Close Procurements (closing)

This planning process of procurement management focuses on make-or-buy decisions and contract type selection.

• Key Inputs
• Requirements Documentation
• Teaming Agreements

• Key Tools
• Make-or-Buy Analysis
• Contract Types

• Key Outputs
• Procurement Management Plan
• Procurement Statements of Work
• Make-or-Buy Decisions
• Procurement Documents
• Source Selection Criteria

This executing process of procurement management carries out the Procurement Management Plan. The team evaluates proposals, selects sellers, and awards the contract.

• Key Inputs
• Qualified Seller List

• Key Tools
• Bidder Conferences
• Proposal Evaluation Techniques

• Key Outputs
• Selected Sellers
• Procurement Contract Award

Monitoring and controlling process of procurement management where both Buyer and Seller review the contract and work performed to make sure that the plan and the actual results are in line.

• Key Inputs
• (none)

• Key Tools
• Contact Change Control System
• Inspections and Audits
• Claims Administration

• Key Outputs
• Procurement Documentation

1 of only 2 closing processes. The focus is to complete the contract.

No matter why the contact ends (default, cancellation, completion), this process should be carried out.

• Key Inputs
• (none)

• Key Tools
• Procurement Audits
• Negotiated Settlements

• Key Outputs
• Closed Procurements

An output of Plan Procurements and part of the project management plan.

• It describes the following:
• - How other procurement processes will be carried out
• - What will be procured on the project
• - How potential sellers will be made aware of the opportunity
• - What types of contracts will be used
• - How sellers will be selected
• - How contracts will be managed

This tool describes the process of evaluating 2 options: build it or procure it.

• Factors to consider include:
• - Availability
• - Skill levels of internal resources
• - Internal vs. external costs
• - Interest in developing expertise in-house
• - Need to control or protect the work
• - Security
• - Risk

The document describing the portion of the project's scope that is to be delivered by the seller. This SOW should describe the work to be performed in enough detail that potential sellers can understand the work and determine if and how they will respond.

Documents include the following that are typically written by the buyers:

• - RFP - Request for Proposal
• - IFB - Invitation for Bid
• - IFQ - Invitation for Quotation
• - Procurement Statement of Work

The criteria for selecting the seller, developed at the same time as the RFP. Source Selection Criteria will be used to evaluate proposals and determine which seller wins the contract.

Input to Plan Procurements process that describes relationship of 2 or more organizations that join forces to bid on an opportunity or deliver a solution.

• A contract type where buyer and seller agree to a set price in advance.
• The scope must be will-defines for this contract type of work well.
• The seller bears the risk fo any cost overruns.

Contact type where buyer agrees to pay seller for time and materials such as travel or out-of-pocket costs.

Useful in cases where scope is not well-defined.

Buyer bears the risk.

Buyer agrees to reimburse all costs to seller in addition to paying a set amount.

Buyer bears the risk.

Contract type where the buyer agrees to reimburse costs to seller. The seller is motivaed to keep costs down and hit performance targets in order to earn the incentive fee.

Both Buyer and Seller bear some risk.

• Firm Fixed Price (FFP)
• Price is fixed with no provision for overruns. Seller bears all risk.

• Fixed Price Incentive Fee (FPIF)
• Price is fixed with provision for seller to earn incentive fee based on performance or hitting certian targets.

• Fixed Price - Economic Price Adjustment (FP-EPA)
• Price is fixed with provision to adjust contract price as necessary to stay in line with an index. This contract type protects sellers from economic uncertainty.