Crowe Procurement Flashcards
Procurement Management
Knowledge area that covers 4 processes to procure goods or services for the project.
Includes two key roles:
• The Buyer purchases or procures
• goods or services provided by the Seller.
Processes:
- Plan Procurements (Planning)
- Conduct Procurements (Executing)
- Administer Procurements (Monitoring & Controlling)
- Close Procurements (Closing)
Plan Procurements
This planning process of procurement management focuses on make-or-buy decisions and contract type selection.
Key Inputs
• Requirements Documentation
• Teaming Agreements
Key Tools
• Make-or-Buy Analysis
• Contract Types
Key Outputs • Procurement Management Plan • Procurement Statements of Work • Make-or-Buy Decisions • Procurement Documents • Source Selection Criteria
Conduct Procurements
This executing process of procurement management carries out the Procurement Management Plan. The team evaluates proposals, selects sellers, and awards the contract.
Key Inputs
• Qualified Seller List
Key Tools
• Bidder Conferences
• Proposal Evaluation Techniques
Key Outputs
• Selected Sellers
• Procurement Contract Award
Administer Procurements
Monitoring and controlling process of procurement management where both buyer and seller review the contract and work performed to make sure that the plan and the actual results are in line.
Key Inputs
• (none)
Key Tools
• Contract Change Control System
• Inspections and Audits
• Claims Administration
Key Outputs
• Procurement Documentation
Close Procurements
1 of only 2 closing processes.
The focus is to complete the contract.
No matter why the contract ends (default, cancellation, completion), this process should be carried out.
Key Inputs
• (none)
Key Tools
• Procurement Audits
• Negotiated Settlements
Key Outputs
• Closed Procurements
Teaming Agreements
Input to Plan Procurements process that describes relationship of 2 or more organizations that join forces to bid on an opportunity or deliver a solution.
Make-or-Buy Analysis
This tool describes the process of evaluating 2 options: build it or procure it. Factors to consider include:
- Availability
- Skill levels of internal resources
- Internal vs. external costs
- Interest in developing expertise in-house
- Need to control or protect the work
- Security
- Risk
Fixed Price Contract
A contract type where buyer and seller agree to a set price in advance.
The scope must be well-defined for this contract type to work well.
The seller bears the risk of any cost overruns.
Time & Materials Contract
Contract type where buyer agrees to pay seller for time and materials such as travel or out-of-pocket costs.
Useful in cases where scope is not well-defined.
Buyer bears the risk.
Cost Plus Fixed Fee
Buyer agrees to reimburse all costs to seller in addition to paying a set amount.
Buyer bears the risk.
Cost Plus Incentive Fee
Contract type where the buyer agrees to reimburse costs to seller.
The seller is motivated to keep costs down and hit performance targets in order to earn the incentive fee.
Both buyer and seller bear some risk.
3 Types of Fixed Price Contract
Firm Fixed Price (FFP)
Price is fixed with no provision for overruns. Seller bears all risk.
Fixed Price Incentive Fee (FPIF)
Price is fixed with provision for seller to earn incentive fee based on performance or hitting certain targets.
Fixed Price - Economic Price Adjustment (FP-EPA)
Price is fixed with provision to adjust contract price as necessary to stay in line with an index. This contract type protects sellers from economic uncertainty.
Point of Total Assumption
A specific form of a fixed price incentive fee contract that computes the point at which all cost overruns are assumed by the seller.
Target Cost + (Ceiling Price – Target Price) / Buyer’s share of cost overrun
Procurement Management Plan
An output of Plan Procurements and part of the project management plan. It describes the following:
- How other procurement processes will be carried out
- What will be procured on the project
- How potential sellers will be made aware of the opportunity
- What types of contracts will be used
- How sellers will be selected
- How contracts will be managed
Procurement Statements of Work
The document describing the portion of the project’s scope that is to be delivered by the seller. This SOW should describe the work to be performed in enough detail that potential sellers can understand the work and determine if and how they will respond.
