Procurement Management

Question 1

Primary Processes for Procurement Management

Answer 1

• Plan Procurement Management
• Conduct Procurements
• Control Procurements
• Close Procurements

Question 2

Procurement Contract Types

Answer 2

• Fixed Price Contracts
  
  • Firm Fixed Price (FFP)
  • Fixed Price Incentive Fee (FPIF)
  • Fixed Price with Economic Price Adjustment (FP-EPA)
• Cost-Reimbursable Contracts
  
  • Cost Plus Fixed Fee (CPFF)
  • Cost Plus Incentive Fee (CPIF)
  • Cost Plus Award Fee (CPAF)
• Time & Materials (T&M)

Question 3

Fized Price Contracts

Answer 3

• Involves setting a fized total price for a defined product, service, or result to be provided
• May also incorpoarate financial incentives for acheiving or exceeding objectives
• Might also include financial damages for the seller when work is not completed
• Changes in scope generally are additional funds

Question 4

Firm Fixed Price Contracts

(FFP)

Answer 4

• Most commonly used contract type
• Price for goods is set at the beginning of the engagement and not subject ot change unless scope changes
• Adverse performance impacts is the respomnsibility of the seller

Question 5

Fixed Price Incentive Fee Contracts

(FPIF)

Answer 5

• Allows for deviation from performance
• Gives flexibility for buyer and seller to have incentives tied to acheiving objectives early
• Performance targets set at the beginning
• Price ceiling is set, and all costs above it are the responsibility of the seller

Question 6

Fixed Price with Econoimic Price Adjustment Contracts

(FP-EPA)

Answer 6

• Used when the seller’s performance period spans a considerable period of years
• Used with many long-term relationships
• FP contract, but allows for changes due to environemental factors such as inflation, etc
• Intended to protect both buyer and seller from external conditions beyond their control

Question 7

Cost-reimbursable contracts

Answer 7

• involves payments to the the seller for all actual costs incurred for completed work, plus a fee representing seller profit
• May also include financial incentive clauses whenever the seller exceeds or falls short of objectives
• Allows the project flexibility to re-direct a seller whenever the scope of work cannot be precisely defined at the beginning of the engagement or when high risks may exist in the effort

Question 8

Cost Plus Fixed Fee Contracts

(CPFF)

Answer 8

• Seller is reimbursed for all incurred costs, as well as a fixed fee payment calucalted as a percentage of the initial estimated project costs
• Fee is paid only for completed work
• Fee does not change unless the scope changes

Question 9

Cost Plus Incentive Fee

(CPIF)

Answer 9

• Reimbursed for all allowable costs, receives a pre-determined incentive fee based on acheiving certain performance objectives
• If there is a difference in final costs, both the buyer and seller share the overages or under nby a negotiated percentage according to a cost sharing forumla

Question 10

Cost Plus Award Fee Contracts

(CPAF)

Answer 10

• Seller is reimbursed for all ligitimate costs, but the majority of the fee is earned only based on satisfaction certain broad subjective performance criteria defined and incorporated into the contract

Question 11

Time & Materials Contract

(T&M)

Answer 11

• hybrid type of contracts
• contain both cost-reimbursable and fixed fee components
• Can increase in contract value
• typically includes negotiated rates, etc

Question 12

Make-or-Buy Analysis

Answer 12

• Analysis technique to determine whether the work should be done by the project team or an outside source
• Considerations for this include:
  
  • Internal resource constraints or availability
  • Contract type
  • Budget constraints

Question 13

Procurement Statement of Work

(SOW)

Answer 13

• Developed form the project scope baseline
• written to be clear, complete, and concise

Question 14

Procurement Documents

Answer 14

• Request for Information (RFI)
• Invitation for Bid (IFB)
• Request for Proposal (RFP)
• Request for Quotation (RFQ)

Question 15

Possible Source Selection Criteria

Answer 15

• Understanding of need
• Overall or life-cycle cost
• Technical capability
• Risk
• Management Approach
• Technical Approach
• Warranty
• Financial Capacity
• Production Capacity and interest
• Business size and type
• Past performance of sellers
• Intecllectual Propeerty Rights
• Proprietary Rights

Question 16

Bidder Conferences

Answer 16

• Used before submittal of a bid or proposal
• Meetings with tbe buyer and all potential sellers to ensure common understanding
• Example: Supplier summit meeting from AGS