10 | Planning Project Procurements Flashcards
In this lesson, you will: • Collect the input needed to create a procurement management plan. • Prepare a project procurement management plan. • Prepare procurement documents.
Procurement Management?
is the management of processes involved in acquiring the necessary
products and services from outside the project team. Procurements are managed by constructing
and implementing a procurement management plan, which specifies the procurements that will be
used, determines the process for obtaining and evaluating bids, mandates standardized procurement
documents that must be used, and describes how multiple providers will be managed.
Procurement management includes the management of project contracts and change control
processes developed to administer project procurements. When managing contracts, a project
manager ensures compliance with the terms and conditions stipulated in the contract and
documents any change in the terms that are made to the contract during execution.
Outsourcing?
Refers to moving beyond the organization to secure services and expertise from an outside source on a contract or short-term basis; it is done for core work that has traditionally been done within the organization. Outsourcing is used frequently because it allows businesses to focus more on their core competencies. On the other hand, many businesses are emphasizing that work should be kept in-house whenever possible, in an effort to maintain stricter quality controls and security measures. As a project manager, you will need to work within the expectations and constraints that result from either situation.
Make-or-Buy Analysis?
Is a technique that is used to analyze various parameters, such as cost of making versus buying, capacity (based on size) of making, legal eligibility of making, and technical feasibility of making, and determine whether it will be better to produce a product or service in house or procure it from an outside seller. Make-or-buy decisions can significantly impact project time, cost, and quality. In the case of a buy decision, you must also consider if the product needs to be purchased, leased, or rented.
What are the 4 factors in Make-or-Buy Decisions?
- Impact:
Consider the impact on cost, time, or quality. For instance, if current
personnel must be retrained for services requiring a new skill set, it may be
less expensive to outsource those services. - Ongoing need:
If the organization will continue to need a specific skill set—even for
future, unrelated projects—it may be a worthwhile investment to train
current personnel to perform that service. - Learning curve:
While it may make financial sense to develop an in-house solution, there
may not be enough time to train personnel and implement the necessary
policies and equipment to produce that solution.
` - Cost-effectiveness:
If the required resources are readily available internally, organizations will
usually use them. However, if the project involves technology, skills,
materials, or resources that are beyond the organization’s capabilities, it may
be cost-effective to hire outside help.
The Lease, Rent, or Buy Decision?
Refers to business analysis that determines the most cost-effective way to procure the necessary equipment for a project if purchasing is not an option. Such a decision is primarily based on financial analysis.
Teaming Agreements?
Is a legal contractual agreement between two or more parties to form a joint venture or any other arrangement as defined by the parties to meet the requirements of a business opportunity. The parties can be internal or external to the organization executing the project. When
a teaming agreement is created for a project, it significantly impacts the planning processes for the
project and predefines issues such as the scope of work and competition requirements.
Specifications?
Are descriptions of the work to be done or the service or product to be provided; they define the requirements that must be met in exacting detail. These descriptions can be in the form of words, pictures, or diagrams. Specifications may relate to a product’s design, performance, or functionality.
The Procurement Management plan outlines?
- Whether or not to procure
- What to procure
- How to procure
- How much to procure
- When to procure
Source Selection Criteria?
Are the standards used to rate or score proposals, quotes, or bids and form a part of the procurement solicitation documents. Criteria can be objective or subjective.
- Objective criteria can be readily demonstrated, specific, and measured.
- Subjective criteria are open to different interpretations.
The Procurement SOW?
Is a detailed narrative description of the resources, goods, or services that are being sought from external sources to fulfill a project’s requirements. It is distributed to potential sellers, who will use it to evaluate their capability to perform the work or provide the services. In
addition, the SOW will serve as a basis for developing the procurement documents during the solicitation process. Information in the project scope baseline is used to create the procurement SOW. The procurement SOW goes through multiple rounds of reviews and fixes until the contract award is signed. An effective procurement SOW describes the work being procured in sufficient detail so that potential vendors can evaluate their capability to perform this work. The procurement SOW also serves as a basis for developing the procurement documents during the solicitation process.
Procurement Documents?
Are the documents that are submitted to prospective sellers and service providers to solicit their proposals for the work needed.
What are the 5 common procurement documents?
- Request for Information (RFI)
- Request for Bid (RFB)
- Request for Quote (RFQ)
- Request for Proposal (RFP)
- Invitation for Bid (IFB)
RFI stands for?
Request for Information (RFI)
Request for Information (RFI)?
Is commonly used to develop lists of qualified vendors and gain more input for resource availability. This document is used to gather relevant information about a vendor’s organization and financial history, including:
- Seller organization’s history
- Balance sheets
- Business type (family owned, private, publicly listed, etc.)
- Owner’s history and background
- Bank statements for the past three years
RFB stands for?
Request for Bid (RFB)
