12. Project procurement management Flashcards
List the processes of the procurement management process and their corresponding process groups!
- Plan Procurement management (planning)
- Conduct procurements (executing)
- Control procurements (controlling)
- Close procurements (closing)
What is the difference between agreements and contracts?
A contract can be an agreement (read outline of internal or external intentions), but an agreement wouldn’t be a contract
What is request for proposal, invitation for bid, request for quotation and request for information?
RFP: Request for a detailed proposal on how work will be accomplished, who will do it, etc.
IFB: Request total price to do all work
RFQ: Request price quote per item
RFI: Just information, might be used before procurement documents are created
List six PMI-isms to remember about procurement!
- Contracts require formality
- All product and project requirements for procurement should be stated in the contract
- If it’s not in the contract, it can only done via CR
- PMs must be assigned on buyer and seller side before a contract is signed
- Not including PM early in procurement management is a mistake!
What is the procurement statement of work and which three types exist?
It is the work done on each procurement and must be as clear, complete and concise as possible.
Types
- Performance: What should the final product be able to accomplish?
- Functional: What is the purpose of the product?
- Design: Which work exactly must be done?
How do fixed price, time and material and cost-reimbursable contracts differ? Explain the follwing subtypes:
Fixed Price:
- Fixed price incentive fee (FPIF)
- Fixed price award fee (FPAF)
- Fixed price economic price adjustment (FPEPA)
- Purchase order
Cost-reimbursable:
Cost plus fee (CPF) or cost plus percentage of costs (CPPC)
Cost plus fixed fee (CPFF)
Cost plus incentive fee (CPIF)
Cost plus award fee (CPAF)
FP: lump sum, used with well definied specifications, less work for buyer to manage
Purchase order: simple form
Time & material: hourly rate, used for short durations, simple to set up, use for body leasing
Cost-reimbursable: Incurred cost + profit, simple procurement statements, more work to manage
- CPF & CPPC: bad, don’t use it!
What are target price, sharing ratio and point of total assumption?
Target price: Price that was aimed for (Target costs + target fee = target price)
Sharing ratio: Describes how cost savings are distributed. First number to buyer, second number to seller!
Point of total assumption: Point above which seller bears all the loss of cost overrun
How to calculate the point of total assumption
PTA = ((ceiling price - target price) / buyer’s share ratio) + target cost
What is meant by arbitration, force majeure, indemnification, liquited damages, retainage, waivers, privity and work for hire in procurement context?
Arbitration: Method to resolve issues outsides of courts
Force majeure: act of nature
Indemnification: Liability
Liquited damages: Estimated damages for defaults before they occur
Retainage: Amount held back from each payment as securement
Waivers: Some form of clause
Privity: Contractual relationship
Work for hire: Work provided under contract will be owned by buyer
What 5 things do you need to have a legal contract?
- An offer
- Acceptance
- Consideration for something of value
- Legal capacity
- Legal purpose
Who is the only one with authority to change the contract?
Procurement or contract manager!
When is Make-or-buy analysis done and what factors need to be considered when doing it?
During Plan Procurement Management
For factors see screenshot
