Understand Project Procurement

Question 1

2.2.5 procurement

Answer 1

2.2.5 procurement

Question 2

Explain the purpose, typical content and importance of a procurement strategy

Answer 2

Purpose: in the project part of the PMP, specialist knowledge on procurement area
Content:
Importance: must be identified early on in the life cycle, tender delays may cause delays, long lead times and impact schedule

Question 3

Differentiate between different methods of supplier reimbursement (fixed price, cost plus fee, per unit quantity and target cost

Answer 3

The more the price is fixed = less cost risk the customer will face but the supplier will be under greater risk to deliver the scope to the fixed price agreed.

Variable price = customer under more cost risk (customer may enter this if the scope is difficult to define, lots of uncertainty - will be option for flexibility or reimbursement method)

Per unit quantity = allows buyers to a free fixed price for units required in the project (buyer may not know how many units are required so fixed price still uncertain

Question 4

Differentiate between different contractual relationships

Answer 4

• Dependable on the size of the project
• The number of suppliers available in the market
• involvement of the customer

Single supplier: (sequential contract)
Multiple suppliers: ( multiple contractual relationship model)

Question 5

Explain a supplier selection process

Answer 5

Invitation to tender = fair process
Purchasing decision is open to challenge and needs to be objective as possible
Risk is managed = using a number of pre-qualified of preferred suppliers (audited in advanced)