12 - Project Procurement Management Flashcards
Alternative Dispute Resolution
When there is an issue or claim that must be settled before the contract can be closed, the parties involved in the issue or claim will try to reach a settlement through mediation or arbitration
Bid
From seller to buyer.
Price is the determining factor in the decision-making process.
Bidder conference
Meeting of all project’s potential vendors to clarify the contract statement of work (SOW) and the details of the contracted work.
Claims
These are the disagreements between the buyer and the seller, usually centering on a change, who did the change, and even whether a change has occurred. Claims are also called disputes and appeals, and are monitored and controlled through the project in accordance with the contract terms.
Contract
A contract is a formal agreement between the buyer and the seller.
Contracts can be oral or written - through written is preferred.
Contract change control system
Defines the procedures for how the contract may be changed. The process for changing the contract includes the forms; documented communicaitons; tracking; conditions within the project, business, or marketplace that justify the needed change; dispute resolution procedures; and the procedures for getting the changes approved wihtin the performing organization.
Contract statement of work (SOW, or CSOW)
This document requires the seller fully describe the work to be completed and/or the product to be supplied. The SOW becomes part of the contract between the buyer and the seller.
Cost plus award fee contract
A contract that pays the vendor all costs for the project, but also includes a buyer-determined award fee for the project work.
Buyer assumes risk.
Cost plus fixed fee contract
Contract that requires buyer to pay for the cost of the goods and services procured, plus a fixed fee for the contracted work.
Buyer assumes the risk of a cost overrun.
Cost plus incentive fee
Buyer pays a cost for the procured work, plus an incentive fee or bonus if the T/Cs are met.
Cost plus percentage of costs
Buyer pays for the cost of the good/services procured, plus a percentage of the costs.
Buyer assumes all risks of cost overruns.
Direct costs
Cost incurred by the project in order for the project to exist.
e.g. equipment needed to complete work, salaries of the team, etc.
Fixed price contract
AKA firm fixed-price and lump-sum contracts.
Agreements that define the total price for the product the seller is to provide.
Fixed-price plus economic price adjustments
Fixed price with special allowance for price increases based on economic reasons such as infaltion or raw material prices
Force majeure
act of god
independent estimates
aka “should cost”
Bringing in an outside organization to predict what the cost should be. Sets a baseline.
Indirect costs
These are costs attributed to the cost of doing business
e.g. utilities, office space, and other overhead.
Invitation for Bid (IFB)
From buyer to seller. Requests the seller privide a price for the procured product or service
Letter contract
Letter contract allows the vendor to begin working on the project immeidately. Often used as a stopgap solution.
Letter of intent
Not a contract, but a letter stating that the buyer is intending to create a contractual relationship with teh seller.
Make or buy decision
Process in which the project team determines the cost-effectiveness, benefits, and feasibiliy of making a product or buying it from a vendor
Privity
The contractual relationship between the buyer and the seller is often considered confidential and secret
Procurement management plan
PM subsidiary plan that documents the decisoins made in the procurement planning processes
Procurement planning
Process to identify which parts of the project warrant procurement from a vendor by the buyer
