Chapter Twelve | Procurement Management Flashcards
What does BIM stand for
Building information model
What does CPAF stand for
Cost plus award fee
What does CPFF stand for
Cost plus fixed fee
The buyer pays the actual costs plus a fixed fee calculated as a percentage of initial estimate
the fee does not vary based on performance and is paid for only completed work
fee amounts don’t change unless the scope changes and it is mutually approved
What does CR stand for And when is it used
Cost reimbursable
It is used when it does not need to be done quickly and there is no detailed scope.
Expecting significant changes
Scope is expected to change significantly, high risks, or flexibility as required
The buyer pays the actual costs plus a fee for the sellers profit
What does FFP stand for
Firm fixed price
This is the most common contract type
the price is that at the beginning and is not subject to change unless the scope of work changes
any cost increase due to performance issues is the responsibility of
What does FP stand for
when is it used
Who bears the risk
Fixed price
Used when there is a detailed scope of work.
The seller bears the risk of cost overruns due to performance
What does FP-EPA stand for and when is it used
Fix price with economic price adjustment
Are use for multi year contracts, to adjust for future economic conditions (future prices)
used when future costs are not predictable for materials, supplies and equipment or payments are made in different currency
Usually tied to a reliable financial index
What does FPIF stand for
Fixed Price incentive fee
What does IFB stand for
Invitation for bid
What does MOA stand for
Memo of agreement
What does NDA stand for
Non-disclosure agreement
What does PDP stand for
Procurement document package
What does RFB stand for
Request for bid
What does RFI stand for
Request for information
What does RFP stand for
Request for proposal
What does RFQ stand for
Request for quotation
What does T & C stand for
Contract terms and conditions
What does T & M stand for And when is it used
Time and material
It is used when things need to be done quickly and there is no detailed scope of work.
Examples could be service efforts short term staff augmentation small cost consultants or experts emergency contract
What does TOR stand for
Terms Of reference
What is project procurement management?
The process necessary to purchase or acquire products, services, or results from outside the project team
Procurement management begins early in the project. The process is……
Analyzes the detailed scope in WBS
Defines the deliverables
creates a procurement SOW
combined that with contract terms and conditions
this makes up procurement document package
potential sellers review the packages
submit a bill or proposal
the buyer applies selection criteria
negotiate a draft contract
contract is awarded
when the work is complete the procurement is close
Note . The PM is typically not authorized to sign legal agreements
.
Note. For all exam questions assume you are the buyer and never the seller
.
What is it called when there are multiple procurement and purchasing experts who may administer multiple projects?
Centralized contracting
What is it called when there is a contract administrator who is assigned to an individual project and reports to the p.m.?
Decentralized contracting
12.1. What are the four questions a procurement plan should answer?
What to acquire
how to acquire it
how much is needed
when to acquire it
What does It look like to plan procurement
Determine a procurement management plan
determine what to buy, maker by analysis
create a procurement SOW or terms of reference
prepare a high-level cost estimate to determine the budget
advertise the opportunity and identify short list of qualified sellers
prepare and issue bid documents and select a contract type
12.1 NOTE
EEF Can include past sellers
.
What is a contract
A mutually binding agreement that obligates the seller to provide a specific product, service, a result and obligates the buyer to pay for it
What are the three types of basic contracts?
Fixed price FP
cost reimbursable CR
Time and material T & M
Note in practice it is not unusual to combine one or more discrete types of contracts into a single procurement
FPIF
Gives the buyer and seller flexibility by allowing for performance deviation
the seller is paid for actual cost plus an incentive fee based on performance
the buyer and seller share any cost variance
the buyer sets ceiling price
.
FPIF & CPIF
If actual costs are less than target cost, shares the cost saving….. think bonus +
If actual costs are greater than the target costs, shares the cost overrun…..think payment -
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FPIF
The negotiated ratio is always stated how
Buyer/seller
Ex 80/20 the buyer share is 80% in the seller share is 20%
CPIF
Who is paid and for what?
The seller is paid for actual costs plus an incentive fee based on performance objectives stated in the contract
CPIF
NOTE
The seller estimates the total costs (target cost) and a fee or profit (target fee) the buyer and the seller share any cost variance from the target cost
no ceiling price on cost
.
CPIF
What is another name for total cost
Target cost
CPIF
What is another name for a fee or profit
Target fee
What cost reimbursable contract
The buyer pays all actual costs, but the majority of the fee is based on subjective performance criteria that is identified and incorporated into the contract.
Cost plus award fee CPAF
The buyer retains more risk with which contracts?
CPFF. Cost plus fixed fee
CPAF. cost plus award fee
CPIF. cost plus Incentive fee
TM. time and material (per hour)
The seller accepts more risk and what type of contracts
FP - EPA. fixed price with economic price adjustment
FPIF fixed price incentive fee
FFP firm fixed price
Note. Contracts can share or transfer potential project risk
.
12.1 T&T
What is source selection analysis?
Typically included in procurement documents.
Selection methods include lease cost qualifications only quality based/highest technical proposal score quality and cost based fixed budget sole-source noncompetitive form of procurement
12.1 Non-competitive forms of procurement are best used when______
Project schedule is too tight to solicit bids and evaluate the bids
only one seller for the product or service
only seller with specific technical capabilities
seller owns the patent, proprietary rights, or intellectual property
12.1 T&T What does sole source mean
Only one seller
seller and intellectual property proprietary rights or patents
12.1 T&T What does single source mean
Using a single seller you prefer instead of going through the procurement process
12.1. OUTPUT | What does the procurement management plan describe
Describes how to document project procurement decisions, specifies approach and activities, and identify as potential sellers
12.1 Output What does the procurement strategy identify
Identifies the buyers approach including the product delivery method
the type of agreement used
the procurement phases and how they advance
the delivery methods
12.1 Output
What are the two delivery methods for procurement strategies
Professional services delivery
industrial or commercial construction delivery
12.1 Output
What does the procurement statement of work describe
Describes that item in enough detail for perspective Stellers to determine if they are capable of providing it. Descriptions must be clear, complete, and concise
12.1 Output When is terms of reference used TOR
Used when contracting for service. Similar to a procurement SOW
12.1 Output What is source selection criteria
Ensures that the proposal selected will offer the best quality of services. Documents to give the seller an understanding of the buyers needs and help the seller bid.
Source selection criteria is used to rate or score of the bids or proposal. May also use a weighted criteria to evaluate may be a numerical score, color code or written description with a weighted evaluation system
12.3 What does control procurement do
Manages the procurement relationships, managers contract performance, make contract changes or corrections and closes our contracts
12.3 T&T
When our audits conducted
Audits are conducted during execution to verify compliance
Contract terms
What does boilerplate contract mean
The term boilerplate language describes the parts of the contract that are considered standard
Contract privity
Whoever signatures on the contract are in the contractual relationship.
If you sell the house the new owner did not sign a warranty contract.
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LOI info
Non-binding non-legal
used when negotiating a contract
“at this point in time, we expect to sign the contract.”
It is your contract to lose not your contract to win
