Assignment 8

Wanda Alexander

ITMG627 IT Project Management HR and Procurement

Dr. Glenda Holcomb, Instructor

June 28, 2015

1. According to PMBOK® Guide, what steps are included in the process of planning procurements?

When a project manager is planning for procurements there are four processes that he will have

to execute because it is a formal process. The project procurement management processes consist

of: the Plan Procurement Management - which is the process that documents the decisions

related to project procurement, it specifies what approach will be used and identifies the vendors;

Conduct Procurement - which is the process of issuing a RFI, RFQ, RFP, etc. to get responses

from vendors, and making a selection and then the awarding of a vendor the contract; Control

Procurements – which is the process of maintaining and monitoring procurement relationships

and contracts and making any adjustments if needed and Close Procurements - which is the

process of closing out the procurement project (PMBOK, 2008).

2. What information does the procurement statement of work contain?

The procurement SOW will be derived from the project scope baseline and it will define only the

information that will be needed in the contract. The procurement SOW will contain a sufficient

amount of information so that the vendors will be able to determine if they will be able to

produce the product or service and fulfill the goals of the project. The details will include

specifications, quality levels, desired quantity, performance reporting requirements, deadlines

and any collateral services that maybe needed. The procurement SOW will then be incorporated

into the procurement documents such as RFI and RFP to be used to solicit proposals to various

sellers. Once the seller makes a proposal to the buyer, the procurement SOW can then be refined

by both sides to into the procurement contract (Fleming, 2003).

3. List three reasons why the project manager should buy scope from a seller.

In trying to fulfill project goals, organizations and project managers will from time to time be

faced with make or buy decisions to determine what can be made internally and what to buy

from an outside seller in order to maximum profits and achieve project goals. When making the

make or buy decision the project manager must consider, the volume, the fixed price of making,

the per unit price when buying and the per unit direct price when making. Some of the reasons

for making are: concerns about cost, need for control over the product, concerns about

intellectual property, not enough quality suppliers and organizational pride. Some of the reasons

to buy scope: technical expertise is lacking, cost concerns, unable to produce in-house and

strategic partnerships. The Cost to Buy and the Cost to Make formulas will determine which

solution would be the best to go with. The higher value will be the loser and the project manager

can go with the least expensive solution (Bajec & Jakomin, 2010).

4. What is the main difference in a Request for Proposal (RFP) and a Request for Quote (RFQ)?

The Request for Proposal (RFP) specifies the scope of work that needs to be performed and

solicits responses to the proposal from vendors describing how they would execute the scope of

work along with cost estimates. The buyer will have to specify all the requirements for the

vendor in great enough detail so that the vendor can design and develop an approach for the

project. The RFP is a clear, concise and complete document whose minimum components will

consist of a cover letter, Statement of Work (SOW) and the technical specifications which could

consist of any special requirements such as their top sells individuals along with their

biographies and cost estimates (Fleming, 2003). The Request for Quotation (RFQ) is used to

engage the vendor to provide specifics for what they can offer in regards to completing the

project. The RFQ will focus on a bids and quotes for a specified time frame for standard items

that the buyer has clearly defined in the document. A RFQ is quicker to execute than a RFP and

it does not take as long to prepare and get responses back from the vendors (Schwalbe, 2011).

5. What information should be included in a bid package?

Organizations vary in how they package their materials for their procurement projects. Some

organizations will use Invitation to Bid (ITB) to obtain formal bids, quotes and prices from

suppliers. If the organization is only looking for information on the company or product, the

company will issue a Request for Information (RFI) form to gain the knowledge that they need

(Fleming, 2003). Government agencies have a formal Bids and Awards committee that is used

for conducting and awarding bids. These bidding packages may contain Instructions for the

Bidders, Technical Specifications and Drawings, General and Specific Contract Conditions RFP,

Form of Bid, Price Form, Forms of Bid Security and Bill of Quantities (Assets and Supply

Management and Control Division, n.d.).

6. What is a valid and enforceable agreement?

For procurement project contracts, a valid and enforceable agreement includes a specific offer

and the acceptance of that offer in which both parties have consented to freely. The parties

involved cannot be forced or coerced into signing the contract and both parties have to agree to

its terms. This is what makes an agreement binding and if both parties do not agree then there is

no contract. The agreement must have something of value to be exchanged between the two

parties and that item of value can be a product or service. If both parties do not exchange

something, then the product or service can be deemed a gift. The parties entering into the

agreement must be of sound mind in order to understand the seriousness of the contract and what

is required. The parties entering into the agreement must be of legal age, sober and mentally

competent. If either party is mentally incompetent the contract will be invalid and the contract

can be disavowed. The contract must be clear, concise, in writing and used for legal purposes

(AllBusiness Editors, n.d.).

7. List all methods that are used to terminate a contract.

The Control Procurements process manages the details for early termination of contract work

due to default, cause or convenience, which is associated with the termination clause that is in

the agreement (PMBOK, 2008). An organization has the right to terminate a contract based on a

default in performance which is a breach of contract. The federal government has provisions in

place which will allow for terminating a contract based on convenience or clause. Termination

for convenience gives the government the right to end part or all of contract based on

performance of work and to enter into settlement agreements. Termination for cause allows the

government to terminate a contract due to breach of contract because the party did not live up to

its obligations which may include failure to comply the terms and conditions of the contract or

the inability to provide adequate reassurance for future performance (FAR, 2013).

8. What is the difference between mediation and arbitration?

Mediation and arbitration are two forms of Alternate Dispute Resolution (ADR), which can be

inserted into a contract. Mediation and Arbitration are similar in that they are alternatives to

litigation. Both processes use a neutral third party to command the procedure and the outcomes

are legally binding (Soskin, 2014). Mediation is conducted with a mediator who facilitates the

discussions and the final resolution to the dispute. Arbitration is conducted with an arbitrator or a

panel of multiple arbitrators, to make decisions about a dispute that is presented and provide a

written opinion that can be legally binding. The process can be informal and not subjected to

common law evidence such a pre-trial discovery and the final rulings can be kept confidential

and not made public (Fleming, 2003).

References

AllBusiness Editors (n.d.), What Must a Contract Contain to Be Legally Binding?, Retrieved June 26, 2015, http://www.allbusiness.com/what-must-a-contract-contain-to-be-legally-binding-731-1.html

Assets and Supply Management and Control Division (n.d.), Bidding and Award Procedures, Retrieved June 26, 2015, http://www.dpwh.gov.ph/doing_business/procurement/supplies/procedures.htm#Section 1.0 INTRODUCTION

Bajec, P. & Jakomin, I. (2010), A Make-or-Buy Decision Process for Outsourcing, Promet – Traffic & Transportation, Vol. 22, 2010, No. 4

FAR -- Part 49 (2013), Termination of Contracts, Retrieved June 26, 2015, http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/49.htm

Fleming, Q. W. (2003), Project Procurement Management: Contracting, Subcontracting, Teaming. Tustin, CA: Quentin W. Fleming

Project Management Institute (2008), A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Fourth Edition, Newtown Square, PA, Project Management Institute

Schwalbe, K. (2011), Information Technology Project Management. (6th ed.). United States of America: Course Technology Cengage Learning.

Soskin, L. (2014), Wondering What The Difference Is Between Mediation and Arbitration?, Retrieved June 26, 2015, http://www.huffingtonpost.com/lance-soskin/wondering-what-the-differ_b_5291286.html