Chapter Twelve | Procurement Management Flashcards by Michelle E

What does BIM stand for

Building information model

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What does CPAF stand for

Cost plus award fee

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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

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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

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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

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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

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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

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What does FPIF stand for

Fixed Price incentive fee

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What does IFB stand for

Invitation for bid

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What does MOA stand for

Memo of agreement

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What does NDA stand for

Non-disclosure agreement

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What does PDP stand for

Procurement document package

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What does RFB stand for

Request for bid

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What does RFI stand for

Request for information

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What does RFP stand for

Request for proposal

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What does RFQ stand for

Request for quotation

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What does T & C stand for

Contract terms and conditions

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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

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What does TOR stand for

Terms Of reference

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What is project procurement management?

The process necessary to purchase or acquire products, services, or results from outside the project team

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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

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Note . The PM is typically not authorized to sign legal agreements

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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 -

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.

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