Procurement Flashcards
What is the process of procurement management?
Plan Procurements
Conduct Procurements
Administer Procurements
Close Procurements
Name inputs to the procurement management process.
EEFs OPAs Scope baseline Risk Rgister Project Schedule Initial cost estimates for contracted work Cost baseline
What are key putputs of the Plan contracting process?
Procurement Management Plan
Procurement SOW
Make-or-buy decisions
Procurement documents
What are key outputs of the Conduct Procurements process?
Selected Sellers
Procurement contract
What are key outputs of the Administer Procurements process?
Procurement documentation
Change Requests
Project management plan updates
What are key outputs of te close procurements process?
Closed procurements
Formal acceptance
What is a procurement management plan?
A plan for how each contract procurement will be administered.
What is the differance between centralized and decentralized contracting?
Centralized contracting: There is on eprocurement, and the procurement manager handles procurements on many projects.
Decentralized contracting: A procurement manager is assigned to one project full-time and reports directly to the PM.
What is required for a legal contract?
Offer Acceptance Consideration Legal Capacity Legal Purpose
What is a contract?
It may include all of the following:
Legal terms Business terms Procurement SOW Marketing literature Drawings
Describe the PM’s role in procurement.
Understand the procurement process
Make sure the work described in the contract is complete
Be involved in the whole procurement process
Help tailor the contract to the project
Incorperate mitigation and allocation risks into the contract.
Name the advantages of centralized contracting.
Increased expertise in contracting
Standarized practices
Clear career path
Name the disadvantages of centralized contracting.
One person works on many projects
It may be difficult to obtain contracting help when needed.
Name the advantages of decentralized contracting.
Easier access to contracting expertise
More loyalty to the project
Name the disadvantages of decentralized contracting.
No home for the contracts person after the project
Less focus on improving contracting expertise/process
Inefficient use of resources
Little standardization of contracting processes from one project to the next
What is a make-or-buy decision?
Analysis of whether the performing oganization should do the work or buy the services/supplies from outside the organization.
What are the main types of contracts?
Cost reembursable
Fixed price
Time and materials
Pruchase order
What is a cost reembursable (CR) contract?
All costs are reembursed. Differant types:
- Cost plus fixed fee (CPFF)
- Cost plus incentive fee (CPIF)
- Cost plus award fee (CPAF)
- Cost plus percentage of cost (CPPC) or cost plus fee (CPF)
What is a cost plus fixed fee (CPFF) contract?
All costs are reimbursed. The fee is fixed at a certain monetary amount.
Used when the buyer knows in general what is needed - but lacks detail.
Medium risk for buyer - becuase he doesnt know what he is asking for.
Minimal risk for seller.
What is a cost plus percentage of cost (CPPC) or cost plus fee (CPF) contract?
All costs are reimbursed, plus a specific percentage of costs as a fee or profit.
Covers the sellers cost for building something for a buyer and pays a % of total costs as a fee.
The more the seller spends, the higher the fees.
Most companies will nto enter into this type of contract becuase it can hurt both parties.
What is a cost plus incentive fee (CPIF)contract?
Costs are reimbused plus an incentive, usually an additional fee, for exceeding performance criteria that have been determined in advance.
I.E. I know what I want, but lack some details. I am going to give you an incentive to help out vs. a fixed fee.
What is a time and materials (T&M) contract?
Usually a fixed hourly rate or a fixed cost per item, plus a reimbursable componant for expense or materials.
- Smaller incentives, services, or staff supplimentation
- Minimal risk on both sides
What is a fixed price contract?
There is only one fee for accomplishing the work.
Couple of differant types:
- Firm fixed prioces (aka lump sum)
- Fixed price Incentive Fee (FPIF)
- Fixed proce economic proce adjustment (FPEPA)
What is a fixed price incenive fee (FPIF) contract?
Total price is fixed, but an additional amount may be paid for exceeding performance criteria determined in advance.
Contract w/ incentives
Think road contracts - i.e. bonus for finishing early
Minimal risk for buyer - significant risk for seller
What is a fixed price economic proce adjustment (FPEPA) contract?
A fixed proce contract with an allowable adjustment for price increase, due to cost increases in later time periods.
- Compensates for econmic changes year to year
- i.e. cost of living, etc
- minimal risk for buyer - siginificant risk for seller
What is a purchase order (PO)?
A unilateral contract.
What are incentives? What might they be used for?
Help bring the seller’s objectives in line with the buyer’s. Incentives can be used for:
Time
Cost
Quality
Scope
Who has the cost risk in a cost reembursable contract? What about in a fixed price contract?
Risk in a cost reimbursable contract is borne by the buyer.
Risk in a fixed proce contract is borne by the seller.
Name the types of procurement statements of work.
Performance
Functional
Design
What are procurement documents?
Request for proposal (RFP)
Invitation for bid (IFB)
Request for quotation (RFQ)
What are standard contract terms and conditions? What are special provisions?
Standard contract terms and provisions: Terms and conditions which are used for all contracts within the company.
Special provisions: Terms and conditions created for the unique needs of the project.
Created with the input of the PM.
What is a letter of intent?
A letter from the buyer, without legal binding, saying the buyer intends to hire the seller.
What does privity refer to?
Contractual relationships between two or more companies.
What does non-competative procurement mean?
Work awarded to a single source or sole source without competition.
What are evaluation criteria created and used? What do they refer to?
Rationale that the buyer will use to weigh or score a seller’s proposals.
Created during the Plan Procurements process.
Used during the Conduct Procurements process to pick a seller.
What is a bidder conference? What should be watched out for?
a Meeting with prospective sellers to make sure all understand the procurement and have a chance to ask questions.
Should watch for:
Collusion
Sellers not asking questions
All questions and answers are distributed to all concerned.
What is a qualified seller list?
Obtain a fair and reasonable price.
Develop a good relationship with the other side.
Name some negotiation tactics.
Attacks Good guy/Bad guy Deadline Lying missing man Delay Withdrawal Fait accompli
Name some of the PM’s activities during the Administer Procurements process.
Review invoices Integrated change control Interpret the contract Monitor performance against the contract Risk Management
NOTE PMs DO NOT MANAGE CONTRACTS!
Why might there be conflict between the contract administrator and the PM?
The contract administrator is the only one with the power to change the contract (including project scope).
What is a contract change control system?
A system created to modify the contract and to control changes to the contract.
What must be done for all contract changes?
They must be formally documented.
What is the purpose of a procurement performance review?
To ID seller’s sucesses or failures, and allow the buyer to rate the seller’s ability to perform.
Define claims administration.
Managing contested changes and constructive changes (claims) requested by the seller.
What is the key function of a records management system?
Maintain an index of contract documentation and records to assist in retrieval.
Part of the project management information system
What occurs during the close procurements process?
Product verification
Procurement audit
Financial closure
note formal acceptance can ONLY come in writing
What is a procurement audit?
A structured review of the procurement process and determination of lessons learned to help other procurements.
