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
what are cost-reimbursable contracts?
- 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
what are Cost Plus Fixed Fee Contracts (CPFF)?
- 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
what are Cost Plus Incentive Fee Contracts (CPIF)
- 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
what are Cost Plus Award Fee Contracts (CPAF)?
- 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
what are Time and Material Contracts (T&M)
- 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
what goes into the Procurement Management Plan?
- 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
what are procurement statements of work (SOW)
- 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
what are Make-or-Buy Decisions?
- 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
what are procurement documents?
- 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
what is source selection criteria?
- 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
what change requests may be made after the plan procurement process?
- changes to the project management plan, its subsidiary plans and other components may result from the Plan Procurements process.
36
what is Conduct Procurements?
- process of obtaining seller responses, selecting a seller, and awarding a contract
- apply previously defined selection criteria to select one or more sellers
37
what are the inputs to the Conduct Procurements process?
```
.1 Project management plan
.2 Procurement documents
.3 Source selection criteria
.4 Qualified seller list
.5 Seller proposals
.6 Project documents
.7 Make-or-buy decisions
.8 Teaming agreements
.9 Organizational process assets
```
38
what are the tools & techniques of the Conduct Procurements process?
```
.1 Bidder conferences
2 Proposal evaluation techniques
.3 Independent estimates
.4 Expert judgment
.5 Advertising
.6 Internet search
.7 Procurement negotiations
```
39
what are the outputs of the Conduct Procurements process?
```
.1 Selected sellers
.2 Procurement contract award
.3 Resource calendars
.4 Change requests
.5 Project management plan updates
.6 Project document updates
```
40
what part of the project management plan is an input to the Conduct Procurements process?
procurement management plan, part of the project management plan, is an input to Conduct Procurements and describes how the procurement processes will be managed from developing procurement documentation through contract closure
41
what is a qualified seller list?
A listing of sellers who have been pre-screened for their qualifications and past experience, so that procurements are directed to only those sellers who can perform on any resulting contracts.
42
what are seller proposals?
- response to a procurement document package
| - the basic set of information that will be used by an evaluation body to select one or more successful bidders
43
what project documents are considered in the Conduct Procurements process?
- Risk register
| - Risk-related contract decisions
44
how is a teaming agreement an input to the conduct procurements process?
- buyer and seller roles will have already been decided by executive management
- effort of the buyer and seller in this process is to collectively prepare a procurement statement of work that will satisfy the requirements of the project
45
what organizational process assets can influence the Conduct Procurements process
- Listings of prospective and previously qualified sellers
| - nformation on relevant past experience with sellers, both good and bad.
46
what are bidder conferences
- meetings between the buyer and all prospective sellers prior to submittal of a bid or proposal
- ensure that all prospective sellers have a clear and common understanding of the procurement
- buyers must take great care to ensure that all prospective sellers hear every question from any individual prospective seller and every answer from the buyer.
47
what are Proposal Evaluation Techniques
- formal evaluation review process will be defined by the buyer’s procurement policies
- evaluation committee will make their selection for approval by management prior to the award.
48
what are independent estimates?
- rocuring organization may elect to either prepare its own independent estimate, or have an estimate of costs prepared by an outside professional estimator, to serve as a benchmark on proposed responses
- Significant differences in cost estimates can be an indication that the procurement statement of work was deficient, ambiguous, and/ or that the prospective sellers either misunderstood or failed to respond fully to the procurement
49
what expert judgment is used in the conduct procurements process?
- used in evaluating seller proposals
50
how is advertising used in the conduct procurements process?
- Existing lists of potential sellers can often be expanded by placing advertisements in general circulation publications such as selected newspapers or in specialty trade publications
51
how is internet search used in the conduct procurement process?
While many commodities, components, and off-the-shelf-items can be quickly located and secured at a fixed-price on the internet, the high-risk, highly complex, procurement effort that must be closely monitored cannot be obtained by this means.
52
what are procurement negotiations?
- Negotiations clarify the structure, requirements and other terms of the purchases so that mutual agreement can be reached prior to signing the contract
- Negotiations conclude with a contract document that can be executed by both buyer and seller.
53
what are selected sellers?
- sellers who have been judged to be in a competitive range based upon the outcome of the proposal or bid evaluation, and who have negotiated a draft contract that will become the actual contract when an award is made
54
what is a procurement contract?
a mutually binding legal agreement that obligates the seller to provide the specified products, services, or results, and obligates the buyer to compensate the seller
```
includes
• Statement of work or deliverables,
• Schedule baseline,
• Performance reporting,
• Period of performance,
• Roles and responsibilities,
• Seller’s place of performance,
• Pricing,
• Payment terms,
• Place of delivery,
• Inspection and acceptance criteria,
• Warranty,
• Product support,
• Limitation of liability,
• Fees and retainage,
• Penalties,
• Incentives,
• Insurance and performance bonds,
• Subordinate subcontractor approvals,
• Change request handling, and
• Termination and alternative dispute resolution (ADR) mechanisms
```
55
how are resource calendars an output of the conduct procurement process?
- quantity and availability of contracted resources and those dates on which each specific resource can be active or idle are documented.
56
what updates to the project management plan may be made after the Conduct Procurement process?
```
- updates to the
• Cost baseline,
• Scope baseline,
• Schedule baseline, and
• Procurement management plan.
```
57
what project documents that may be updated?
* Requirements documentation,
* Requirements traceability documentation
* Risk register.
58
what is Administer Procurements?
- process of managing procurement relationships, monitoring contract performance, and making changes and corrections as needed
- Each must ensure that both parties meet their contractual obligations and that their own legal rights are protected
- While a procurement administrator may be on the project team, this individual typically reports to a supervisor from a different department.
59
what are the inputs to Administer Procurements?
```
.1 Procurement documents
.2 Project management plan
.3 Contract
.4 Performance reports
.5 Approved change requests
.6 Work performance information
```
60
what are the tools and techniques to the Administer Procurements process?
```
.1 Contract change control system
.2 Procurement performance reviews
.3 Inspections and audits
.4 Performance reporting
.5 Payment systems
.6 Claims administration
.7 Records management system
```
61
what are the outputs to the Administer Procurements process?
.1 Procurement documentation
.2 Organizational process assets updates
.3 Change requests
.4 Project management plan updates
62
what project managment processes are applied to the procurement process?
- includes application of the appropriate project management processes to the contractual relationship(s) and integration of the outputs from these processes into the overall management of the project
- Direct and Manage Project Execution (Section 4.3) to authorize the seller’s work at the appropriate time;
- Report Performance (Section 10.5) to monitor contract scope, cost, schedule, and technical performance;
- Perform Quality Control (Section 8.3) to inspect and verify the adequacy of the seller’s product;
- Perform Integrated Change Control (Section 4.5) to assure that changes are properly approved
and that all those with a need to know are aware of such changes; and
- Monitor and Control Risks (Section 11.6) to ensure that risks are mitigated.
63
what is one of the principal concerns when making payments to suppliers?
that there is a close relationship of payments made to the work accomplished.
64
when can contracts be amended
- at any time prior to contract closure by mutual consent, in accordance with the change control terms of the contract
65
how are procurement documents an input to the administer procurements process?
Procurement documents contain complete supporting records for administration of the procurement processes. This includes procurement contract awards and the statement of work.
66
how is the project management plan an input to the administer procurements process?
- the procurement management plan describes how the procurement processes will be managed from developing procurement documentation through contract closure.
67
what performance reports serves as inputs to the administer procurements process?
- Seller-developed technical documentation and other deliverable information provided in accordance with the terms of the contract
- Seller performance reports (Section 10.5.3.1). The seller’s performance reports indicate which deliverables have been completed and which have not.
68
what approved change requests serve as inputs to the administer procurements process?
- modifications to the terms and conditions of the contract including the procurement statement of work, pricing, and description of the products, services, or results to be provided
69
what work performance information serves as inputs to the administer procurements process?
- extent to which quality standards are being satisfied, what costs have been incurred or committed, and which seller invoices have been paid, are all collected as part of project execution.
70
what is a contract change control system?
- defines the process by which the procurement can be modified. It includes the paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes.
- integrated with the integrated change control system.
71
what is a procurement performance review?
- structured review of the seller’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract.
- review of seller-prepared documentation and buyer inspections, as well as quality audits conducted during seller’s execution of the work
- objective of a performance review is to identify performance successes or failures, progress with respect to the procurement statement of work, and contract non-compliance
72
what are inspections and audits?
- required by the buyer and supported by the seller as specified in the procurement contract
- conducted during execution of the project to verify compliance in the seller’s work processes or deliverables
73
how is performance reporting used as a tool and technique of administer procurements?
- provides management with information about how effectively the seller is achieving the contractual objectives.
74
what are payment systems?
Payments to the seller are typically processed by the accounts payable system of the buyer after certification of satisfactory work by an authorized person on the project team. All payments should be made and documented in strict accordance with the terms of the contract.
75
what is claims administration?
Contested changes and potential constructive changes where the buyer and seller cannot reach an agreement on compensation for the change, or cannot agree that a change has occurred
- documented, processed, monitored, and managed throughout the contract life cycle
- If the parties themselves do not resolve a claim, it may have to be handled in accordance with alternative dispute resolution (ADR) typically following procedures established in the contract.
76
what is a records management system?
- used by the project manager to manage contract and procurement documentation and records
77
what is procurement documentation?
- includes, but is not limited to, the procurement contract with all supporting schedules, requested unapproved contract changes, and approved change requests.
- also includes any seller-developed technical documentation and other work performance information such as deliverables, seller performance reports, warranties, financial documents including invoices and payment records, and the results of contract-related inspections.
78
what organizational process assets that may be updated after the administer procurements process?
- Correspondence.
- Payment schedules and requests
- Seller performance evaluation documentation
79
what is correspondence
written documentation of certain aspects of buyer/seller communications, such as the need for warnings of unsatisfactory performance and requests for contract changes or clarification.
- a complete and accurate written record of all written and oral contract communications, as well as actions taken and decisions made, are maintained by both parties.
80
what is Seller performance evaluation documentation?
- prepared by the buyer
- document the seller’s ability to continue to perform work on the current contract, indicate if the seller can be allowed to perform work on future projects, or rate how well the seller is performing the project work.
81
what change requests may result from the Administer Procurements process?
change requests to the project management plan, its subsidiary plans and other components like cost baseline, project schedule and procurement management plan
82
what Elements of the project management plan that may be updated after the Administer Procurements process?
Procurement management plan. - updated to reflect any approved change requests that affect procurement management, including impacts to costs or schedules.
Baseline schedule. If there are slippages that impact overall project performance, the baseline schedule may need to be updated to reflect the current expectations.
83
what is Close Procurements?
- process of completing each project procurement
- involves verification that all work and deliverables were acceptable.
- involves administrative activities such as finalizing open claims, updating records to reflect final results and archiving such information for future use
84
what happens during early termination of a contract?
- special case of procurement closure that can result from a mutual agreement of both parties, from the default of one party, or for convenience of the buyer if provided for in the contract.
- rights and responsibilities of the parties in the event of an early termination are contained in a terminations clause of the contract.
- buyer may have to compensate the seller for seller’s preparations and for any completed and accepted work related to the terminated part of the contract
85
what are the inputs to the Close Procurements process?
.1 Project management plan
| .2 Procurement documentation
86
what are the toots and techniques to the Close Procurements process?
.1 Procurement audits
.2 Negotiated settlements
.3 Records management system
87
what are outputs to the Close Procurements process?
.1 Closed procurements
| .2 Organizational process assets updates
88
how is procurement documentation an input to the Close Procurements process?
- To close the contract, all procurement documentation is collected, indexed, and filed
Information on contract schedule, scope, quality, and cost performance along with all contract change documentation, payment records, and inspection results are cataloged.
89
how are procurement audits a tool and technique of Close Procurements ?
identify successes and failures that warrant recognition in the preparation or administration of other procurement contracts on the project, or on other projects within the performing organization.
90
what are negotiated settlements?
- In all procurement relationships the final equitable settlement of all outstanding issues, claims, and disputes by negotiation is a primary goal.
some form of alternative dispute resolution (ADR) including mediation or arbitration may be explored Whenever settlement cannot be achieved through direct negotiation.
91
what is closed procurements?
The buyer, usually through its authorized procurement administrator, provides the seller with formal written notice that the contract has been completed. Requirements for formal procurement closure are usually defined in the terms and conditions of the contract and are included in the procurement management plan.
92
what Elements of the organizational process assets that may be updated after the Close Procurements process?
- Procurement file. A complete set of indexed contract documentation, including the closed contract, is prepared for inclusion with the final project files.
- Deliverable acceptance. The buyer, usually through its authorized procurement administrator, provides the seller with formal written notice that the deliverables have been accepted or rejected.
- Lessons learned documentation. Lessons learned, what has been experienced, and process improvement recommendations should be developed for the project file to improve future procurements.
