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Procurement Management Flashcards

1
Q

What is the process of procurement management?

A

Plan Procurement Management

Conduct Procurements

Control Procurements

Close Procurements

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2
Q

What are the inputs to the Plan Procurement Management process?

A

Project management plan

Requirement documentation

Activity resource requirements

Enterprise environmental factos

Organizational process assets

Risk register

Stakeholder register

Any procurement already in place

Project schedule

Initial cost estimates for work to be procured

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3
Q

What are the key outputs of the Plan Procurement Management process?

A

Make-or-buy decision

Procurement management plan

Procurement statements of work

Procurement documents

Source selection criteria

Change requests

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4
Q

What are the key outputs of the Conduct Procurement process?

A

Selected sellers

Signed contracts

Resource calendars

Change requests

Updates to project management plan and project documents

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5
Q

What are the key outputs of the Control Procurement process

A

Subtantial completion of contract requirements and deliverables

Work performance information

Change requests

Updates to project management plan
and project documents

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6
Q

What are the key outputs of the Close Procurement process?

A

Formal acceptance

Closed procurements

Updates to lesson learned and records
(part of organizational process assets)

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7
Q

What is an agreements?

What is a contract?

A

Agreement: A document or communication that outlines
internal or external relationship and their intentions

Contract: A type of written or verbal agreement, typically created with an external entitiy, where there is some exchange of goods or service for some type of compensation (usually monetary); a contract forms a legal relationship between the entities

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8
Q

What is the difference between centralized and decentralized contracting?

A

Centralized: There is one procurement department, and the procurement manager handles procurements for many projects

Decentralized: A procurement manager is assigned to one project full-time and reports directly to the project manager

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9
Q

What are the advantages and disadvantages of centralized contracting?

A

Advantages:
-Higher level of procurement expertise

  • Standardized practise provide efficiency
  • Clear career path in procurement management
  • Continuous improvement, training, and shared lessons learned

Disadvantages:
-Procurement manager’s attention is divided among many projects

-More difficult for the project manager to obtain contracting help when needed

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10
Q

What are the advantages and disadvantages of decentralized contracting?

A

Advantages:
-Project manager has easier access to contracting expertise

  • Procurement manager has more loyalty to the project
  • Procurement manager has a better understanding of the project needs

Disadvantages:
-No home department for the contracts person after the project

  • Difficult to maintain a high level of contracting expertise
  • Duplication of expertise/inefficient use of procurement resources
  • Contracting processes aren’t standardized
  • No career path as a procurement manager in the company
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11
Q

What is required for a legal contract?

A

Offer

Acceptance

Consideration

Legal capacity

Legal purpose

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12
Q

What is included in a contract?

A

Legal terms

Business terms regarding payments

Reporting requirements

Marketing literature

Proposal

Procurement statement of work

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13
Q

Describe the project manager’s role in procurement

A

Understand the procurement processe

Make sure the contract contains all the scope of the work and project management requirements

Incorporate mitigation and allocation of risks into the contract

Help tailor the contract to the project

Be involved during contract negociations to protect the relationship with the seller

Make sure all the work in the contract is done, not just the technical scope

Work with the procurement manager to manager changes to the contract

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14
Q

What is the procurement management plan?

A

A plan that documents how procurement will be planned, executed, controlled and closed

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15
Q

What is a make-or-buy analysis?

A

Deciding whether the performing organization should do the project work itself or outsource some or all the work

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16
Q

What are the three broad categories of contracts?

A

Cost-reimbursable (CR)

Fixed Prices (FP)

Time and Material (TM)

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17
Q

What is a cost-reimbursable contact?

A

All the seller’s costs are reimbursed by the buyer

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18
Q

What is a fixed-price contract?

A

There is one set fee for accomplishing all the work

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19
Q

What is a time and material contract?

A

The buyer pays on per-hour or per-item basis

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20
Q

What is a cost plus fixed price (CPFF) contract?

A

All the seller’s cost are reimbursed by the buyer, and a fixed fee is negociated for the seller’s profit

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21
Q

What is a cost plus percentage of cost (CPPC) contract?

A

All the seller’s cost are reimbursed by the buyer, and the buyer also pays a specified percentage of those costs as fee or profit

22
Q

What is a cost plus incentive fee (CPIF) contract?

A

The seller’s costs are reimbursed by the buyer, and the buyer and seller share any cost saving or overruns

23
Q

What is a cost plus award fee (CPAF) contract?

A

All the seller’s costs are reimbursed by the buyer, and the buyer pays a base fee plus an award amount (a bonus) base on performance

24
Q

What is a fixed price incentive fee (FPIF) contract?

A

The buyer pays a fixed price plus an additional fee if the seller exceeds performance criteria stated in the contract

25
Q

What is a fixed price award fee (FPAF) contract?

A

The buyer pays a fixed price plus an award (paid in full or in part) based on the seller’s performance level

26
Q

What is a fixed price economic price adjustment (FPEPA) contract?

A

A fixed-price contract with a built-in economic price adjustment to cover cost increase due to future economic conditions

27
Q

What is a purchase order?

A

A unilateral contact typically used fo buying commodities

Purchase orders become contracts once they are “accepted” by the seller’s fulfillments of the contract

28
Q

What do incentives accomplish?

What might incentives be used for?

A

They align the seller’s motivation with the buyer’s objectives

Time

Cost

Quality

Scope

29
Q

Who has the cost risk in a cost-reimbursable contract?

Who has the cost risk in fixed-price contract?

A

Cost-reimbursable: The risk is borne by the buyer

Fixed price: The risk is borne by the seller

30
Q

What is the ceiling price?

A

The highest price the buyer will pay

It’s a condition of the contract that must be agreed to by both parties before signing

31
Q

What is the point of total assumption?

A

For fixed price incentive fee contracts, the amount above which the seller bears all the loss of a cost overrun

32
Q

Describe the 3 different type of procurement statement of work.

A

Performance: Conveys what the final product should accomplish

Functional: Convey the end purpose of result (the minimum essential characteristics of the product)

Design: Convey exactly what work is to be done and how it should be completed

33
Q

What are the procurement documents?

A

Request for proposal (RFP)

Invitation for bid (IFB)

Request for quotation (RFQ)

A request for information (RFI) is sometimes considered a procurement document, thought it does not really belong in this category

34
Q

What is a nondisclosure agreement?

A

An agreement between the buyer and the prospective sellers identifying the information or documents they will hold confidential and control, and who in the organization will have access to the confidential information

35
Q

What are standard contract terms and conditions?

What are special provisions?

A

Standard contract terms and conditions: Terms and conditions that are used for all contracts within the company

Special provisions: Terms and conditions created for the unique needs of the project

36
Q

Name common terms and conditions that may be in contract.

A

Please review the long lists of terms and conditions and what they mean in the Procurement Management chapter of CAPM.

37
Q

What is a letter of intent?

A

A letter from the buyers, without legal binding, saying the buying intends to hire the seller

38
Q

What does privity means?

A

A contractual relationship between two or more companies

39
Q

What does noncompetitive procurement mean?

A

The work is awarded to a single source or a sole source without competition

40
Q

What are source selection criteria?

When are these criteria created, and when are they used?

A

The factors the buyer will use to evaluate (weight or score) responses from the sellers

They are created during the Plan Procurement Management process, and are used during the Conduct Procurement process to pick a seller

41
Q

What is a bidder conference?

What should a project manager watch out for during a bidder conference?

A

A meeting with prospective sellers to make sure they all understand the procurement and have a chance to ask questions

Watch for:

  • Collusion
  • Sellers not asking questions in from of the competition

Make sure all the question and answers are documented and distributed to all the potential sellers

42
Q

What is a qualified seller list?

A

A list of sellers that have been preapproved

43
Q

What are the objectives of negotiations?

A

Obtain a fair and reasonable price

Develop a good relationship with the seller

44
Q

What are some examples of negotiation tactics?

A 
Attack
Personal insults
Good guy/Bad guy
Deadline
Lying
Limited authority
Missing man
Fair and reasonable
Delay
Extreme demands
Withdrawal
Fait accompli
45
Q

Wy might there be conflict between the contract administrator and the project manager?

A

The potential administrator is the only one with the power to change contract

46
Q

What is a contract change control system?

A

A system created to control changes to the contract

47
Q

What is the purpose of a procurement performance review?

A

Verify that the seller is performing as they should

Identify what the buyer can do to help the seller do the work

Determine if any change are needed to improve the buyer-seller relationship and processes they are using

48
Q

Define claims administration

A

Managing claims (request by the seller for compensation from the buyer)

49
Q

What is the key function of a records management system?

A

Maintain an index of contract documentation and records so that they can be retrieved if necessary

50
Q

What occurs during the Close Procurement process?

A

Product validation

Procurement negotiation

Financial closure

Procurement audit

Updates to records

Final contract performance reporting

Documentation of lessons learned

Creation of procurement file

51
Q

What is a procurement audit?

A

A structured review of the procurement process and identification of lessons learned to help future procurements

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