Procurement Flashcards
What does the final inspection of closing procurements have?
Request Final Inspection reports for all vendor supplied materials.
Input: QC measurements: Results from testing , to see if we’ve met reqs.
Output: Quality Reports: For all quality issues managed or escalated, recommendations for improvement, and summary of QC findings. Any major outstanding defects?
What does the Control Procurements processs do?
This is where we manage procurement relationships, ensure contracts performing as needed, and closing out contracts.
TT:
* Claim Administration
* Data Analysis: Get data on procurement vendor see how they are performing
-Performance Reviews
-EV analysis
-Trend Analysis: Might forecast EAC for CPI see if we’re on track.
-Inspection: Deliverable
-Audit: Check vendors process following to what we agreed to.
Output: Closed Procurements: When the deliverables have been verified(qlty checked)[QC] and validated(accepted by the customer)[Validate Scope]. * We will provide the seller with formal written notice that the contract has been completed. (And all claims hopefully closed and deliverables validated by now.) * Reqs for formal procurement closure are usually defined in the terms and conditions of the contract and are included in our Project MP*
Ordered Steps/Actions of Procurement?
Fill in later
What happens when we plan procurement process?
This is where we create our Procurement Strategy
* Including deciding if we need to purchase something from outside the project in the first place w/ make or buy analysis
If we do buy outside org, we create our:
* Procurement Strategy
* Procurement SOW
* Source Selection Criteria
* Bid Documents
Procurement Strategy Steps(MEMORIZE)
1. Prepare SOW: What we want vendor to deliver.
2. Prepare High Level Cost Estimate: So we have something to compare bids too.
3. Advertise the Opportunity: Or Bidder Conferences, to give info they need.
4. ID List Qualified Sellers
5. Prepare and issue bid documents: What do we want Quote, Proposal, Info
6. Receive and Review Quality and Cost Proposals
7. Finalize and sign the Contract
What are the procurement Strategy Steps?
- Prepare SOW: What we want vendor to deliver. So they know what to quote us.
* Developed from project scope baseline and defines the scope to be included in contract.
* Might include (TOR)Terms of Reference-Agreement btw parties - Prepare High Level Cost Estimate: So we have something to compare bids too.
- Advertise the Opportunity: Or Bidder Conferences, to give info they need.
- ID List Qualified Sellers
- Prepare and issue bid documents: What do we want Quote, Proposal, Info
- Receive and Review Quality and Cost Proposals
- Finalize and sign the Contract
What is a Terms of Reference(TOR)?
In A procurement SOW given to vendor to quote us on it may include a Terms of Reference.
- Tasks the contractor is required to perform.
- Standards the contractor will fulfill
- Data that needs to be submitted for approval
- Detailed list of all data and services that will be provided to the contractor by the buyer.
* What data and services will we provide to contractor.
5.Schedule for submission and review/approval time.
* How long are we giving them to get back to us w/ the contract and the terms and everything being approved.
What are the Firm Fixed Price Contracts?
Fixed Prices Contracts: Buyer pays fixed amount regardless of sellers cost(riskier for seller) they quoted us, that’s what we pay. SOW usually defined.
Firm Fixed Price(FFP): Fixed total priced for defined product, used when the requirements are well defined no significant changes to the scope are expected.
Fixed Price Incentive Fee(FPIF): A price ceiling is set, and all costs above the price ceiling are the responsibility of the seller.
May have financial incentive tiedto achieving agreed upon metrics(usually basedon cost, sched, quality)
If Seller goes over budget, over cost, or over sched, then that’s their responsibility.
Seller Takes on risk
Fixed Price w/ Econ Adj: Fixed price, w/ special provision allowing for predefined final adjustments to the contract price based on changes(currency or inflation.
What are the different types of Contracts?
OPAs:
Fixed Prices Contracts: Buyer pays fixed amount regardless of sellers cost(riskier for seller) they quoted us, that’s what we pay. SOW usually defined.
1.Firm Fixed Price(FFP): Fixed total priced for defined product, used when the requirements are well defined no significant changes to the scope are expected.
2.Fixed Price Incentive Fee(FPIF): A price ceiling is set, and all costs above the price ceiling are the responsibility of the seller.
* May have financial incentive tiedto achieving agreed upon metrics(usually basedon cost, sched, quality)
* If Seller goes over budget, over cost, or over sched, then that’s their responsibility. Seller Takes on risk
3.Fixed Price w/ Econ Adj: Fixed price, w/ special provision allowing for predefined final adjustments to the contract price based on changes(currency or inflation.
Cost-Reimbursable Contracts: When sow not well defined or subject to frequent change
1.Cost Plus Fixed Fee: Seller reimbursed for all allowable costs for performing the contract work and receives a fixed fee payment(usually % of initial estimate proj costs)
2.Cost Plus Incentive Fee: Seller reimbursed for all allowable costs for performing contract work and receives a predetermined incentive fee based on achieving certain performance objectives.
3.Cost Plus Award Fee: Seller reimbursed for all legitimate costs, but the majority of the fee is earned on the subjective satisfaction of certain broad subjective performance criteria.
4.XX Evil: CPPC- Cost plus percentage costs: Reimburse costs + % of total costs incurred( seller incentivized to spend more to make more. Bad
Time an Materials: Seller reimbursed a cost for their time, plus materials to create the product. Often used when a precise SOW cannot be quickly made.
Contract Types are what type of project resource?
OPA’s: Can tap into existing processes or templates in our org.
What are the Cost Reimbursable Contracts?
Cost-Reimbursable Contracts: When sow not well defined or subject to frequent change
1.Cost Plus Fixed Fee: Seller reimbursed for all allowable costs for performing the contract work and receives a fixed fee payment(usually % of initial estimate proj costs)
2.Cost Plus Incentive Fee: Seller reimbursed for all allowable costs for performing contract work and receives a predetermined incentive fee based on achieving certain performance objectives.
3.Cost Plus Award Fee: Seller reimbursed for all legitimate costs, but the majority of the fee is earned on the subjective satisfaction of certain broad subjective performance criteria.
What’s the difference between Time and materials contract and the other 2 types(fixed and Cost Reimb)?
Time an Materials: Seller reimbursed a cost for their time, plus materials to create the product. Often used when a precise SOW cannot be quickly made.
What Contract Type is Prohibited(not allowed?)
CPPC(Cost Plust Cost Percentage)
* Cost Reimbursement contract where seller is reimbursed for all allowable costs incurred during project and is paid an additional amount representing percentage of these costs.
* Reimburse seller for all allowable costs incurred during project work.: Labor, materials, equip.
* Percentage of Cost Fees: Seller paid a fee that is calculated as a percentage of total allowable costs. Seller s profit.
* Prohibited: Seller is not incentivized to keep costs low.
What are the 4 types of agreements?
Memorandum of Understanding: A non-binding agreement outlining the mutual understanding and intentions of the parties involved in a project.
Letters of Agreement(LoA): A formal but typically non-binding document that outlines specific terms and conditions agreed upon by the parties.
Service Level Agreement(SLA): A legally binding contract that defines the level of service expected from a service provider.
Letters of Intent(LoI): A non-binding document expressing the intent to enter into a formal agreement.
Binding Nature:
* MoU: Non-binding
* LoA: Can be binding or non-binding
* SLA: Legally binding
* LoI: Non-binding
*
Purpose and Use:
* MoU: Preliminary mutual understanding and intentions, framework for cooperation
-Outlines mutual understanding and intentions of parties involved.
-Non-Binding
* LoA: Documenting specific agreed terms, intermediate step before a contract
-More detailed than MoU
-Binding or non binding
* SLA: Ensuring service quality and accountability. Specific measurable performance stds and responsibilities.
-Legally binding.
* LoI: Expressing intent to negotiate and formalize an agreement
-Non Binding
Early stage negotiations, sets stage for formal contract.
Detail Level:
* MoU: High-level, broad terms
* LoA: Specific terms and conditions
* SLA: Detailed performance metrics and service standards
* LoI: Basic terms and intent
1.
What are the differences between all 4 agreements types?
1. Memorandum of Understanding (MoU).
2. Letters of Agreement (LoA)
3. Service Level Agreement (SLA)
4. Letters of Intent (LoI)
Binding Nature:
* MoU: Non-binding
* LoA: Can be binding or non-binding
* SLA: Legally binding
* LoI: Non-binding
*
Purpose and Use:
* MoU: Preliminary mutual understanding and intentions, framework for cooperation
-Outlines mutual understanding and intentions of parties involved.
-Non-Binding
* LoA: Documenting specific agreed terms, intermediate step before a contract
-More detailed than MoU
-Binding or non binding
* SLA: Ensuring service quality and accountability. Specific measurable performance stds and responsibilities.
-Legally binding.
* LoI: Expressing intent to negotiate and formalize an agreement
-Non Binding
Early stage negotiations, sets stage for formal contract.
Detail Level:
* MoU: High-level, broad terms
* LoA: Specific terms and conditions
* SLA: Detailed performance metrics and service standards
* LoI: Basic terms and intent
Agreement
What is a Service Level Agreement?
- Definition: A legally binding contract that defines the level of service expected from a service provider.
- Purpose: Specifies measurable performance standards and responsibilities.
- Use: Common in IT and service industries to ensure quality and accountability.
- Key Points: Legally enforceable; includes metrics for performance, uptime, response time, and penalties for non-compliance.
Agile Contract MSA
When would a Multi Tiered Contract be preferred?
An MSA is a contractual agreement that establishes broad terms and conditions for a long-term partnership between parties.
* It’s especially useful for complex projects where the specific details of the work may change over time.
* By setting a general framework, it allows the project manager to add new work or deliverables under the same contract without renegotiating the core terms
* So we can just keep adding to it as needed while maintinaing core t&cs, so very flexible.
https://www.pmi.org/learning/library/modern-agile-approach-initiate-cont
Agile Contract: How is a Multi Structured Contract Structured?
Instead of locking all the terms in a single big contract, parties can achieve more flexibility by using multiple contracts for different aspects of the project.
1. Fixed Stable items: Warranties, arbitration, T&C’s, parties invovled, How often invoices sent and processed, penalties for late fees, Indefinite Suration Quantity(common in gov contracts); Can be locked in a master agreement.
2. Subject to change items: Product description, service rates; can be added to a schedule of services.
* Schedule of Services- Kinds of services buyer needs from Supplier. Ex below initially may only need telecomms product but as it goes into development may need ongoing product support service(broadens scope). Product may cost more than support, so will need different fee structure and satisfaction criteria.
* Ex: Sched Service 1: Telecommunications product.
* Ex: Sched Service 2: Product Support
3. Dynamic Least Stable Items(: Scope of Work(SOW), schedule, budget; Can be added to the statement of work.
* Ex: Initially only wanted a 3G mobile phone, but now need fancy social media features. initially only product engineering support needed, but now also need Customer Support under same service agreement.
* So we need to change the detailed scope of one or more services, so SOW is decomposed from Schedule services.
* Structure: MSA>Sched Serv(1,2,3,..)>SOW(1,2,3,..)
https://www.pmi.org/learning/library/modern-agile-approach-initiate-cont
Agile Contract: Another example of Multi Structured Contract Summary:
Stable items
Schedule of Services
SOW
Master Contracting Agreement(MCA): This contains more stable items.
Like Parties involved, Terms and Conditions.
Example: Indefinite Duration Quantity(IDIQ) contacts prevalent in gov contracts.
Schedule of Services: Contains fairy Tail list of services and products to be offered under the MCA.
A new version of this schedule of service I generated any time ther is a change in broad scope of the engagement.
One example would be multiple Task Orders(TO) that are issued under the IDIQ agreements.
Statement of Work(SOW): This describes the detailed scope items of be addressed in a given service.
Short and Lightweight, a SOW will describe a specific focus to be accomplished in a specific time.
These documents are generated from pre-approved one or two page templates, or reven a formal email.
Construct your contracting artifacts to embody the flexibility you need to do business.
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Agile Contract Clause: Early Cancellation
Formula: OG Fee + 20% Cancelled work remaining
* Projects planned w/ an iterative incremental delivery cycle are called Agile Delivery.
* Each incremental delivery offers a phase gate opportunity, where customer says, “Thank you, I am done now”. At this point project can be cancelled.
* Ex: Project delivered 85% planned value, then cancelled, 15% remained which gets charged the 20% cancellation fee and added to the work completed 20%X 15%= 3% Cancel Fee
* 85%(OG Fee) + 3%( 20% of rem cancelled work[15%]) = 88% of og fee.
Agile Contract
Agile Contract- What is a Fixed Work Package Contract?
Traditional SOW have a narrow fixed scope for single price. Here we decompose the scope into individual work packages an, as we complete work packages, we have the option to re-estimate remaining work packages based on new info and new risks.
Often, because the risk is localized to such a detailed level, the cost variations are small where a customer can secure the additional funding
With this approach to a fixed-price arrangement, the customer retains control over cost and the contractor’s risk is localized to only the work package currently in progress.
