15 - Project Procurement Management Terminology Flashcards
Acquisition
Obtaining human and physical resources for project activities .
Advertising
Any activity that results in positive attention to the project.
Agreements
A document or communication that defines the intentions of a project; examples include a contract, a memorandum of understanding (MOU), and letters of agreement.
Bid Documents
The documentation utilized to request information, quotations, or proposals from prospective sellers.
Bidder Conference
Meetings with potential sellers that occur before bids or proposals are prepared and which are used to ensure that all sellers have an unambiguous and common comprehension of the procurement; also known as a contractor conference, vendor conference, or pre-bid conference.
Bill of Materials (BOM)
A formal document showing the hierarchy of the components and subcomponents that make up the product.
Buyer
The person, group, or entity that obtains the products, services, or results of the project.
Claim
A demand, under the terms of the contract, for consideration by the buyer from the seller or the seller from the buyer.
Claims Administration
The process of managing a project’s contract claims.
Closed Procurements
The written formal notification, from the buyer to the seller, that the contract has been completed; typically completion is dependent on the seller meeting the terms and conditions of the contract.
Conduct Procurements
The process of receiving the seller response(s) to the request(s) for quote(s), information, proposal(s), or bid(s), then determining the seller(s), and awarding the contract(s).
Contract
A mutually binding agreement that requires, in accordance with the terms of the agreement, the seller to deliver goods or services to the purchaser and the purchaser to compensate the seller for those goods or services.
Contract Change Control System
System that manages contract amendments.
Control Procurements
The process of managing contract performance.
Cost Plus Award Fee Contract (CPAF)
A contract in which the seller receives payments for actual costs related to completed work plus an award that is at the discretion of the buyer; the award that typically represents seller profit.
Cost Plus Fixed Fee (CPFF) Contract
A contract in which the supplier receives payment for allowable costs plus a fixed fee typically based on estimated cost.
Cost Plus Incentive Fee (CPIF) Contract
A contract in which the supplier receives payment for allowable costs, as well as a pre-negotiated fee and an incentive fee (if incentives are met).
Cost Plus Percentage of Cost (CPPC) Contract
A contract that reimburses the seller for cost, plus a negotiated percentage of the total costs.
Cost Reimbursable (CR) Contract
A mutually binding agreement that compensates the seller for goods or services on the basis of actual costs plus a fee that represents the seller’s profit and typically includes an incentive if specific objectives, such as budget or schedule targets, are met.
Fee
Profit realized by the seller upon completion of a procurement contract.
Fixed Price Contract
A mutually binding agreement that compensates the seller for goods or services on the basis of a fixed amount identified in the agreement, notwithstanding the seller’s costs; also known as a Firm Fixed-Price Contract (FFP).
Fixed-Price Incentive Fee Contract (FPIF)
A contract in which the seller provides products or services based on a well defined scope of work for a set price, but which allow for additional payments to the seller if predefined performance objectives are met; the seller assumes the majority of the risk.
Fixed-Price with Economic Price Adjustment Contract (FP-EPA)
A contract that requires the seller to provide products or services for a set price based on a well defined scope of work and allows a price adjustment over time in response to a specific indicator, typically a change in the cost of labor or materials; the seller assumes the majority of the risk.
Incentive Fee
An amount paid, in addition to the contract amount, for exceeding expectations, particularly in the areas of cost, schedule, or technical performance.
Invitation for Bid (IFB)
A procurement document, typically used when requirements are complete, clear, and accurate or with governmental sealed bids, issued by the seller to request a proposal from the seller; in addition to detailed requirements, it often includes acceptability criteria.
Make-or-Buy Analysis
The process of determining whether specific work should be created by the project team or purchased from an external source.
Make-or-Buy Decision
The result of the process of determining whether specific work should be created by the project team or purchased from an external source.
Negotiated Settlement
The resolution and finalization of any contract related issues, claims, and disputes.
Negotiation
The process of bringing about a final, objective settlement of all outstanding issues, claims, and disputes.
Payment Systems
A system that creates invoices and tracks payments for project products and services.
Plan Procurement Management
The process of documenting purchasing decisions and approaches, as well as identifying potential vendors for contract work.
Point of Total Assumption (PTA)
The total amount of money the buyer will pay regardless of cost overrun on the contract.
Procurement
The acquisition of goods or services from an outside source (vendor).
Procurement Audits
Examinations of contracts and contract processes for legality, completeness, accuracy, and effectiveness.
Procurement Documents
The instruments used with bid and proposal activities that include the Invitation for Bid (IFB), the Request for Information (RFI), the Request for Quotation (RFQ), and the Request for Proposal (RFP).
Procurement Management Plan
The document, part of the project or program management plan, used to describe the methods that will be employed by the project team to obtain goods and services from outside the organization.
Procurement Performance Reviews
An examination of the seller’s execution of the contract, particularly as it relates to the on schedule and within budget delivery and overall quality of the product or service.
Procurement Statement of Work
A description of a procurement item that is broken down to the appropriate level of detail that will allow potential sellers to determine if they are capable of providing the products or services associated with the contract scope.
Procurement Strategy
The buyer’s approach to determining the project delivery method and the class of legally binding agreement(s) that will be used to deliver the desired results.
Project Procurement Management
The processes required to purchase or acquire any products, services, or results from a source outside of the project team.
Proposal Evaluation Techniques
A formal seller review process used with complex procurements and carried out in accordance with the buyer’s procurement policies.
Prospective Sellers of Products or Services
The list of vendors the company has determined to be capable of providing goods or services.
Records Management System
The processes, controls, and tools used to record and maintain project information.
Request for Information (RFI)
A buyer issued procurement document requesting a potential seller to provide information related to the seller’s ability to deliver a product, service, or capability.
Request for Proposal (RFP)
A procurement document issued by the buyer to request a proposal from the seller; typically describes acceptability criteria and a description of the product, service, or capability the buyer wishes to procure.
Request for Quote (RFQ)
A document used to get bids or quotes from possible suppliers, usually for commodity type items, with minimal customization.
Retainage
A part of the payment per the terms of the contract that the buyer retains until the project is complete; used to ensure that the seller completes the work per terms of the contract.
Selected Sellers
Vendors chosen to provide products or services.
Seller
An individual or entity that provides goods or services to a buyer.
Seller Proposals
An offer from a vendor who is being considered as a provider of a product or service.
Service Level Agreement (SLA)
A contract between an internal or external service provider and the end user that delineates the level of service expected from the service provider.
Source Selection Criteria
Seller attributes that will be considered by the buyer; typically includes capacity to deliver, costs, delivery dates, expertise, and contract approach.
Termination Clause
A clause in the contract that allows both the buyer and the seller to end the contract.
Time and Material Contract (T&M)
A mutually binding agreement that compensates the seller for goods or services on the basis of fixed hourly rates for labor and the actual costs of materials; represents a composite of a cost-reimbursable contract (cost of materials can rise) and a fixed-price contract (labor cost are agreed on by buyer and seller before the start of the contract).
