project Procurement Management

Project Procurement Management

Knowledge AreaProcess

Initiating Planning Executing Monitoring & Contol Closing

Procurement  

Plan procurement Conduct procurement

Administer procurement

Close procurement

Enter phase/Start project

Exit phase/End project

InitiatingProcesses

ClosingProcesses

PlanningProcesses

ExecutingProcesses

Monitoring &Controlling Processes

Conduct Procurements

• The process of obtaining seller responses, selecting a seller, and awarding a contract.

Inputs

1. Project management plan

2. Procurement documents

3. Source selection criteria4. Qualified seller list5. Seller proposals6. Project documents7. Make-or-buy decisions8. Teaming agreements9. Organizational process 

assets

Tools & Techniques

1. Bidder conferences2. Proposal evaluation 

techniques3. Independent estimates4. Expert judgment5. Advertising6. Internet search7. Procurement 

negotiations

Outputs

1. Selected sellers2. Procurement contract 

award3. Resource calendars4. Change requests5. Project management 

plan updates6. Project document 

updates

Bidder Conferences• Meetings with prospective

sellers prior to Preparation of a Proposal

• Ensure that all prospective sellers have a clear Common understanding of the procurement and constant level of information

• Responses to questions may be incorporated into the procurement documents as amendments

Proposal Evaluation

– Weighting system

Evaluate by weighting the

source selection criteria

• Past performance history

Independent estimate

Estimation created in-house or with

outside assistance

–Screening system

Eliminate sellers who

do no meet minimum

requirement

• Advertising

• placing advertisements

in general circulation

publications such as

selected newspapers

• Internet Search• major influence on most

project procurements and supply chain acquisitions

• many components, be quickly located and secured at a fixed-price

Procurement Negotiations

• PM may be involved during negotiation to clarify requirement, protect relationship.

• Objective of negotiation:

–Obtain fair and reasonable price–Develop good relationship with the seller

Negotiation tactics Attack : your technical proposal is not acceptable but we can choose

it if discount is 10%

Good guy / bad guy: one person is helpful and another is difficult to deal with

Missing man: who have authority outside Deadlines: we can negotiate untill 5Pm because I will travelling abroad

Withdrawal: leave negotiation

Contract Document

• Purpose of contract:– To define role and responsibilities– To make things legally binding.

• A legal contract will need..– An offer – Acceptance– Consideration (Something of value, not necessary money)– Legal capacity (Separate legal parties, competent parties)– Legal purpose (We cannot have a contract for something illegal)

Administer Procurements

• The process of managing procurement relationship, monitoring 

contract performance and making change and corrections as needed.

Inputs

1. Procurement documents

2. Project management Plan

3. Contract4. Performance reports5. Approved change 

request6. Work Performance 

Information

Tools & Techniques

1. Contract change control system

2. Procurement performance reviews

3. Inspections and audits4. Performance reporting5. Payment system6. Claims administration7. Records management 

system

Outputs

1. Procurement documentation

2. Organizational process assets updates

3. Change request4. Project Management 

Plan updates

Contract Administration

• Assuring the performance of both parties to the contract meets contractual requirement.

• Contract change controls system– A process for modifying a contract– Review the impacts– Contract administrator is the only one with authority to change the 

contract– There are potential conflict between project manager and contract 

administrator

• Performance Reporting

• information about

how effectively the

seller is achieving the

contractual objectives.

• Payment Systems• Payments to the seller are processed after

certification of satisfactory work . All payments should be made an documented

Claims Administration a claim is an assertion that the buyer did something hurt the seller and the seller is asking for compensationHow to manage this claims

• Records Management System• A records management system is used to manage

contract and procurement documentation and records.

• system contains a retrievable archive of contract documents and correspondence.

Close Procurements

• The process of completing each project procurement.

Inputs

1. Project Management Plan 

2. Procurement documentation

Tools & Techniques

1. Procurement audits2. Negotiated settlements3. Records management 

system

Outputs

1. Closed procurements2. Organizational process 

assets updates

Closing the Contract• Involves completing and settling contracts and

resolving any open items

• The project team should:– Determine if all work was completed correctly and

satisfactorily

– Update records to reflect final results

– Archive information for future use

• The contract itself should include requirements for formal acceptance and closure

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QUESTIONS?

1-At what part of the Procurement Management

process does procurement negotiations happen?

1.Plan Procurements

2.Conduct Procurements

3.Administer Procurements

4.Close Procurement

2) Complete final contract performance reporting

and verify product is done in _______.

1.Plan Procurements

2.Conduct Procurements

3.Administer Procurements

4.Close Procurements

3-your company is receiving a shipment of goods from the seller when you get the procurement manager who tells you that the shipment does not meet the needs of the project. What should you do NEXT?

A- send the shipment back

B- accept the shipment

C- Issue a change order to change the contract

specifications

D- Expect to receive a claim from the seller

4- the primary objective of contract negotiations is

to:

A- get the most from the other side

B- protect the relationship

C- get the highest monetary return

D- define objectives and stick to them

5- from the sellers perspective what is the status of a project when the project team has completed all the work specified in the procurement statement of work and the final deliverable has been sent to the customer?

A- the project is completed B- the project is in the closing process groupC- the project is at the end of the project

executing process groupD- the project is in the verify scope process

6. In your project, your subcontracting requirements of

the machining of high-value equipment are very

demanding. Hence, you have determined the

technical criteria to evaluate the sellers. This is an

example of:

A. Objective evaluation criteria

B. Source selection criteria

C. Statement of work

D. Work breakdown structure

Thank you