All-in-One Chapter 12 - Managing Project Procurements 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
a meeting of all the project’s potential vendors to clarify the contract statement of work and the details of the contracted work
Claims
these are 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 - though written is preferred.
Contract change control system
this defines the procedures for how the contract may be changed. The process of changing the contract includes the forms; documented communications; tracking; conditions within the project; etc
Contract statement of work (SOW)
this document requires that 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
Cost plus fixed fee contract
a contract that requires the buyer to pay for the cost of the goods and services procured plus a fixed fee for the contracted work. The buyer assumes the risk of a cost overrun.
Cost plus incentive fee
a contract type that requires the buyer to pay a cost for the procured work, plus an incentive fee, or a bonus, for the work if terms and conditions are met.
Cost plus percentage of costs
a contract that requires the buyer to pay for the costs of the goods and services procured plus a percentage of the costs. The buyer assumes all of the risks of cost overruns
Direct costs
these are costs incurred by the project in order for the project to exist.
Fixed-price contracts
also known as firm fixed-price and lump-sum contracts, these are agreements that define a total price for the product the seller is to provide
Fixed-price incentive fee
a fixed-price contract with opportunities for bonuses for meeting goals on costs, schedule, and other objectives. These contracts usually have a price ceiling for costs and associated bonuses.
Fixed-price and economic price adjustments
a fixed-price contract with a special allowance for price increases based on economic reasons such as inflation or the cost of raw materials
Force majeure
an “act of god” that may have a negative impact on the project
Independent estimates
these estimates are often referred to as “should cost” estimates. they are created by the performing organization or outside experts to predict what the cost of the procured product should be
Indirect costs
these are costs attributed to the cost of doing business.
Invitation for Bid (IFB)
from buyer to seller. requests the seller to provide a price for the procured product or service
Letter contract
a letter contract allows the vendor to begin working on the project immediately. It is often used as a stopgap solution.
Letter of intent
a letter of intent is not a contract, but a letter stating that the buyer is intending to create a contractual relationship with the seller
Make-or-buy decision
a process in which the project management team determines the cost-effectiveness, benefits, and feasibility 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
a project management subsidiary plan that documents the decisions made in the procurement planning processes
