PMBOK Ch 12 Flashcards
Test Review
Knowledge Areas
- Integration (I)
- Scope (SAW)
- Schedule (SIX)
- Cost (CROWS)
- Quality (QUIETLY)
- Resources (REFILLING)
- Communication (COFFEE &)
- Risk (READING)
- Procurement (POETIC)
- Stakeholders (SONGS)
Procurement Management Processes (3)
o Ponies Chew Carrots
- Plan Procurement Management - Planning
- Conduct Procurements - Executing
- Control Procurements – Monitoring/Controlling
The process of documenting project procurement decisions, specifying the approach, and identifying potential sellers.
12.1 Plan Procurement Management
The key benefit of this process is that it determines whether to acquire goods and services from outside the project and, if so, what to acquire as well as how and when to acquire it.
Plan Procurement Management Key Benefits
The process of obtaining seller responses, selecting a seller, and awarding a contract.
12.2 Conduct Procurements
o The key benefit of this process is that it selects a qualified seller and implements the legal agreement for delivery.
Conduct Procurements Key Benefits
The process of managing procurement relationships, monitoring contract performance, making changes and corrections as appropriate, and closing out contracts.
12.3 Control Procurements
The key benefit of this process is that it ensures that both the seller’s and buyer’s performance meet the project’s requirements according to the terms of the legal agreement.
Control Procurements Key Benefits
includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team.
Project procurement management
The procurement strategy and business case need to be aligned to ensure the business case remains valid.
Business case
The benefits management plan describes when specific project benefits are expected to be available, which will drive procurement dates and contract language.
Benefits management plan
This list of major milestones show when the sellers are required to deliver their results.
Milestone list
This category of contracts involves setting a fixed total price for a defined product, service, or result to be provided. These contracts should be used when the requirements are well defined and no significant changes to the scope are expected.
Fixed price contracts
This category of contract involves payments (cost reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit. This type should be used if the scope of work is expected to change significantly during the execution of the contract.
Cost-reimbursable contracts
Time and material contracts (also called time and means) are a hybrid type of contractual arrangement with aspects of both cost-reimbursable and fixed-price contracts. They are often used for staff augmentation, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed.
Time and materials contracts
The least cost method may be appropriate for procurements of a standard or routine nature where well-established practices and standards exist and from which a specific and well-defined outcome is expected, which can be executed at different costs.
Least cost source selection
The qualifications only selection method applies when the time and cost of a full selection process would not make sense because the value of the procurement is relatively small. The buyer establishes a short list and selects the bidder with the best credibility, qualifications, experience, expertise, areas of specialization, and references.
Qualifications only source analysis
The buyer asks a specific seller to prepare technical and financial proposals, which are then negotiated. Since there is no competition, this method is acceptable only when properly justified and should be viewed as an exception.
Sole source analysis
The fixed-budget method requires disclosing the available budget to invited sellers in the RFP and selecting the highest-ranking technical proposal within the budget. Because sellers are subject to a cost constraint, they will adapt the scope and quality of their offer to that budget. The buyer should therefore ensure that the budget is compatible with the SOW and that the seller will be able to perform the tasks within the budget. This method is appropriate only when the SOW is precisely defined, no changes are anticipated, and the budget is fixed and cannot be exceeded.
Fixed budget analysis
Once the make-or-buy analysis is complete and the decision is made to acquire from outside the project, a procurement strategy should be identified. The objective of the procurement strategy is to determine the project delivery method, the type of legally binding agreement(s), and how the procurement will advance through the procurement phases.
Procurement strategy
An RFI is used when more information on the goods and services to be acquired is needed from the sellers. It will typically be followed by an RFQ or RFP.
Request for information (RFI)
An RFQ is commonly used when more information is needed on how vendors would satisfy the requirements and/or how much it will cost.
Request for quotation (RFQ)
An RFP is used when there is a problem in the project and the solution is not easy to determine. This is the most formal of the “request for” documents and has strict procurement rules for content, timeline, and seller responses.
Request for proposal (RFP)
The procurement statement of work (SOW) provides sellers with a clearly stated set of goals, requirements, and outcomes from which they can provide a quantifiable response.
Statement of work
These criteria describe how bidder proposals will be evaluated, including evaluation criteria and weights. For risk mitigation, the buyer may decide to sign agreements with more than one seller to mitigate damage caused by a single seller having problems that impact the overall project.
Source selection criteria
A make-or-buy analysis results in a decision as to whether particular work can best be accomplished by the project team or needs to be purchased from outside sources.
Make-or-buy decisions
For large procurements, the procuring organization may elect to either prepare its own independent estimate or have a cost estimate 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 SOW was deficient or ambiguous, or that the prospective sellers either misunderstood or failed to respond fully to the procurement SOW.
Independent cost estimates
Bidder conferences (also called contractor conferences, vendor conferences, and pre-bid conferences) are meetings between the buyer and prospective sellers prior to proposal submittal. They are used to ensure that all prospective bidders have a clear and common understanding of the procurement and no bidders receive preferential treatment.
Bidder conferences
A contract is a mutually binding agreement that obligates the seller to provide the specified products, services, or results; obligates the buyer to compensate the seller; and represents a legal relationship that is subject to remedy in the courts. The major components in an agreement document will vary, and may include but are not limited to
Agreements
As sellers are incorporated into the project’s plan, the requirements register and the traceability matrix may change depending on the capabilities of the specific seller.
Requirement traceability matrix
Contested changes and potential constructive changes are those requested changes where the buyer and seller cannot reach an agreement on compensation for the change or cannot agree that a change has occurred. These contested changes are called claims. When they cannot be resolved, they become disputes and finally appeals. Claims are documented, processed, monitored, and managed throughout the contract life cycle, usually in accordance with the terms of the contract.
Claims administration
An inspection is a structured review of the work being performed by the contractor. This may involve a simple review of the deliverables or an actual physical review of the work itself. On a construction/engineering/infrastructure project, inspections involve walkthroughs of the site by both the buyer and the contractor to ensure a mutual understanding of the work in progress.
Inspection
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. Typically, all deliverables should have been provided on time and meet technical and quality requirements, there should be no outstanding claims or invoices, and all final payments should have been made. The project management team should have approved all deliverables prior to closure.
Closed procurements
Audits are a structured review of the procurement process. Rights and obligations related to audits should be described in the procurement contract. Resulting audit observations should be brought to the attention of the buyer’s project manager and the seller’s project manager for adjustments to the project, when necessary.
Audit
Change requests to the project management plan, its subsidiary plans, and other components such as the cost baseline, schedule baseline, and procurement management plan, may result from the Control Procurements process. Change requests are processed for review and disposition through the Perform Integrated Change Control process.
Change requests
This document contains all the details about the identified stakeholders. The stakeholder register is updated as agreements are made with specific sellers.
Stakeholder register
