Chapter 12 Flashcards
1
Q
what is Project Procurement Management?
A
- processes to purchase or acquire products, services, or results needed from outside the project team
- includes the contract management and change control processes required to develop and administer contracts or purchase orders
- includes administering any contract issued by an outside organization (the buyer) that is acquiring the project from the performing organization (the seller), and administering contractual obligations placed on the project team by the contract.
2
Q
what are the processes in Project Procurement Management?
A
- Plan Procurements
- conduct procurements
- administer procurements
- close procurements
3
Q
what is a contract?
A
- represents a mutually binding agreement that obligates the seller to provide the specified products, services, or results, and obligates the buyer to provide monetary or other valuable consideration
- can also be called an agreement, an understanding, a subcontract, or a purchase order.
4
Q
what is the primary focus of the review and approval process for a contract?
A
- ensure that the contract language describes the products, services, or results that will satisfy the identified project need
5
Q
what are other names for sellers
A
contractor, subcontractor, vendor, service provider, or supplier.
6
Q
what are other names for buyers?
A
- client, customer, prime contractor, contractor, acquiring organization, governmental agency, service requestor, or purchaser
7
Q
seller managers the work as a project. what happens in this case?
A
- buyer becomes a key project stakeholder
- seller’s PM team is concerned with all processes of PM
- terms and conditions of contract become key inputs into many of the sellers’ management processes
8
Q
what is Plan Procurements?
A
- process of documenting project purchasing decisions, specifying the approach, and identifying potential sellers
- identifies project needs which can best be, or must be, met by acquiring products, services, or results outside of the project organization
- also includes consideration of potential sellers, particularly if the buyer wishes to exercise some degree of influence or control over acquisition decision
9
Q
what are the inputs to the Plan Procurements process?
A
.1 Scope baseline .2 Requirements documentation .3 Teaming agreements .4 Risk register .5 Risk-related contract decisions .6 Activity resource requirements .7 Project schedule .8 Activity cost estimates .9 Cost performance baseline .10 Enterprise environmental factors .11 Organizational process assets
10
Q
what are the tools & techniques of the Plan Procurements process?
A
.1 Make-or-buy analysis
.2 Expert judgment .
3 Contract types
11
Q
what are the outputs of the Plan Procurements process?
A
.1 Procurement management plan .2 Procurement statements of work .3 Make-or-buy decisions .4 Procurement documents .5 Source selection criteria .6 Change requests
12
Q
how do the requirements documentation contribute to the Plan Procurements process?
A
may include
- Important information about project requirements that is considered during planning for procurements
= Requirements with contractual and legal implications which are considered when planning for procurements.
13
Q
what are teaming agreements?
A
- legal contractual agreements between two or more entities to form a partnership or joint venture, or some other arrangement
- The agreement defines buyer-seller roles for each party
14
Q
how are activity cost estimates helpful during the Plan Procurements process?
A
- Cost estimates developed by the procuring activity are used to evaluate the reasonableness of the bids or proposals received from potential sellers
15
Q
what enterprise environmental factors can influence the Plan Procurements process
A
- Marketplace conditions;
- Products, services, and results that are available in the marketplace;
- Suppliers
- Typical terms and conditions for products, services, and results or for the specific industry; and
= unique local requirements
16
Q
what org process assets influence the Plan Procurement process?
A
- Formal procurement policies, procedures, and guidelines.
- Management systems that are considered in developing the procurement management plan and selecting the contract
- An established multi-tier supplier system of pre-qualified sellers based on prior experience
17
Q
what is Make-or-Buy Analysis?
A
general management technique used to determine whether particular work can best be accomplished by the project team or must be purchased from outside sources
18
Q
what influences make-or-buy decisions?
A
- Budget constraints
- all related costs; both direct costs as well as indirect support costs.
19
Q
what expert judgment is used in the Plan Procurements process?
A
- used to develop or modify the criteria that will be used to evaluate seller proposals
20
Q
what are possible types of contracts that could be used?`
A
- fixed-price contracts
- – firm fixed price contracts (FFP)
- – fixed price incentive fee contracts (FPIF)
- – fixed price with economic price adjustment contracts (FP-EPA)
- cost-reimbursable contracts
- – cost plus fixed fee contracts (CPFF)
- – cost plus incentive fee contracts (CPIF)
- – cost plus award fee contracts (CPAF)
- time and materials contract (T&M)
21
Q
what are fixed-price contracts
A
- contracts with a fixed total price for a defined product/service to be provided
- can include financial incentives for achieving/exceeding project objectives
- buyers must precisely specific product/services being procured; changes in scope can cause an increase in contract price
22
Q
what are firm fixed price contracts (FFP)?
A
- price for goods set at the outset and not subject to change unless scope changes
- cost increase due to adverse performance is the responsibility of the seller
23
Q
what are fixed price incentive fee contracts (FPIF)?
A
- gives buyer and seller some flexibility because it allows for deviation from performance with financial incentives tied to achieving agreed to metrics
- final contract price determined after all work completed based on the seller’s performance
- all costs above the price ceiling are teh responsibility of the seller
24
Q
what are fixed price with economic price adjustment contracts (FP-EPA)?
A
- used when the seller’s performance period spans a considerable period of years
- fixed-price contract with a special provisions allowing for pre-defined final adjustments to contract price due to changed conditions like inflation or cost changes for specific commodities
- must be related to some reliable financial index to adjust the final price
- protects buyer and seller from external conditions beyond their control
25
Q
what are cost-reimbursable contracts?
A
- payment to the seller for all legitimate actual costs incurred plus a fee representing seller profit
- may also include financial incentive clauses whenever the seller exceeds, or falls below, defined objectives
- Cost Plus Fixed Fee (CPFF)
- Cost Plus Incentive Fee (CPIF)
- Cost Plus Award Fee (CPAF)
- gives the project flexibility to redirect a seller whenever the scope of work cannot be precisely defined at the start and needs to be altered, or when high risks may exist in the effort.
26
Q
what are Cost Plus Fixed Fee Contracts (CPFF)?
A
- seller is reimbursed for all allowable costs for performing the contract work, and receives a fixed fee payment calculated as a percentage of the initial estimated project costs
- Fee is paid only for completed work
27
Q
what are Cost Plus Incentive Fee Contracts (CPIF)
A
- seller is reimbursed for all allowable costs for performing the contract work and receives a predetermined incentive fee based upon achieving certain performance objectives as set forth in the contract.
- if the final costs are less or greater than the original estimated costs, then both the buyer and seller share costs from the departures based upon a prenegotiated cost sharing formula
28
Q
what are Cost Plus Award Fee Contracts (CPAF)?
A
- seller is reimbursed for all legitimate costs, but the majority of the fee is only earned based on the satisfaction of certain broad subjective performance criteria defined and incorporated into the contract
- determination of fee is based solely on the subjective determination of seller performance by the buyer
29
Q
what are Time and Material Contracts (T&M)
A
- hybrid type of contractual arrangement that contain aspects of both cost-reimbursable and fixed-price contracts
- full value of the agreement and the exact quantity of items to be delivered may not be defined by the buyer at the time of the contract award.
- Many organizations require not-to-exceed values and time limits placed in all T&M contracts to prevent unlimited cost growth.
30
Q
what goes into the Procurement Management Plan?
A
- describes how the procurement processes will be managed from developing procurement documents through contract closure
include guidance for:
- Types of contracts to be used
- Risk management issues’
- Whether independent estimates will be used and if they are needed as evaluation criteria
- actions the project management team can take unilaterally
- Standardized procurement documents
- Managing multiple suppliers
- Coordinating procurement with other project aspects
- Any constraints and assumptions that could affect planned procurements
- Handling the required lead times to purchase items from sellers and coordinating them with the project schedule development
- Handling the make-or-buy decisions
- Setting the scheduled dates in each contract for the contract deliverables and coordinating with the schedule development and control processes
- Identifying requirements for performance bonds or insurance contracts
- Establishing the direction to be provided to the sellers on developing and maintaining a work breakdown structure (WBS)
- Establishing the form and format to be used for the procurement/contract statements of work
- Identifying prequalified sellers, if any, to be used
- Procurement metrics to be used to manage contracts and evaluate sellers
31
Q
what are procurement statements of work (SOW)
A
- statement of work (SOW) for each procurement is developed from the project scope baseline and defines only that portion of the project scope that is to be included within the related contract
- describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results
- can include specifications, quantity desired, quality levels, performance data, period of performance, work location, and other requirements
32
Q
what are Make-or-Buy Decisions?
A
- document the conclusions reached regarding what project products, services, or results will be acquired from outside the project organization, or will be performed internally by the project team
33
Q
what are procurement documents?
A
- used to solicit proposals from prospective sellers
- bid, tender, or quotation are generally used when the seller selection decision will be based on price
- proposal is generally used when other considerations, such as technical capability or technical approach are paramount
- terms used could include: request for information (RFI), invitation for bid (IFB), request for proposal (RFP), request for quotation (RFQ), tender notice, invitation for negotiation, and invitation for seller’s initial response
- include a description of the desired form of the response, the relevant procurement statement of work (SOW) and any required contractual provisions
- must be sufficient to ensure consistent, appropriate responses, but flexible enough to allow consideration of any seller suggestions for better ways to satisfy the same requirements
34
Q
what is source selection criteria?
A
- developed and used to rate or score seller proposals, and can be objective or subjective
- include information on the supplier’s required capabilities, capacity, delivery dates, product cost, life-cycle cost, technical expertise, and the approach to the contract
ex:
- Understanding of need. How well does the seller’s proposal address the procurement statement of work?
- Overall or life-cycle cost. Will the selected seller produce the lowest total cost of ownership?
- Technical capability. Does the seller have, or can the seller be reasonably expected to acquire, the technical skills and knowledge needed?
- Risk. How much risk is embedded in the statement of work, how much risk will be assigned to the selected seller and how does the seller mitigate risk?
- Management approach. Does the seller have, or can the seller be reasonably expected to develop, management processes and procedures to ensure a successful project?
- Technical approach. Do the seller’s proposed technical methodologies, techniques, solutions, and services meet the procurement documents requirements or are they likely to provide more or less than the expected results?
- Warranty. What does the seller propose to warrant for the final product, and through what time period?
- Financial capacity. Does the seller have, or can the seller reasonably be expected to obtain, the necessary financial resources?
- Production capacity and interest. Does the seller have the capacity and interest to meet potential future requirements?
- Business size and type. Does the seller’s enterprise meet a specific category of business such as small, women-owned, or disadvantaged small business, as defined by the buyer or established by governmental agency and set forth as a condition of the contract award?
- Past performance of sellers. What has been the past experience with selected sellers?
- References. Can the seller provide references from prior customers
- Intellectual property rights. Does the seller assert intellectual property rights in the work processes or services they will use or in the products they will produce for the project?
- roprietary rights. Does the seller assert proprietary rights in the work processes or services they will use or in the products they will produce for the project?
35
Q
what change requests may be made after the plan procurement process?
A
- changes to the project management plan, its subsidiary plans and other components may result from the Plan Procurements process.
36
Q
what is Conduct Procurements?
A
- process of obtaining seller responses, selecting a seller, and awarding a contract
- apply previously defined selection criteria to select one or more sellers
