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Introduction Inputs Tools and Techniques Outputs

• The process of managing procurement relationships, monitoring contract performance and making changes or corrections as needed

• Undertaken by both the buyer and the seller as both parties need to ensure that the other is meeting their contractual obligations

• Many organisations treat contract administration as an administrative function separate from the project and it is carried out by a Purchasing Department or by a designated functional manager

• Managing these relationships both internally and externally can be a very complex communication activity with it’s own processes and procedures that must be followed, often dictated by the terms of the contract and internal policies and procedures

• Occurs during Monitoring and Control

12.3 Administer Procurements: Introduction

Adapted from PMBOK 4th Edition

Initiation Planning Execution Close

Monitor

Control

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Introduction Inputs Tools and Techniques Outputs

• This process is closely related to the following project management processes –

– Direct and Manage Project Execution

– Report Performance

– Perform Quality Control

– Perform Integrated Change Control

– Monitor and Control Risks

– Control Costs

• The Project Manager must regularly monitor the efficiency and effectiveness of this process in order to successfully manage the project and any dependencies

• Close financial management is also required to ensure that payments are being made according to the terms in the contract

Adapted from PMBOK 4th Edition

12.3 Administer Procurements: Introduction

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Introduction Inputs Tools and Techniques Outputs

Inputs to Administer Procurements

• Procurement Documents

• Project Management Plan

• Contract

• Performance and Status Reports

– From the Seller

• Approved Change Requests

• Work Performance Information

– Quality

– Costs

– Schedule

– Scope

Adapted from PMBOK 4th Edition

12.3 Administer Procurements: Inputs

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Introduction Inputs Tools and Techniques Outputs

Tools and techniques to Administer Procurements –

Adapted from PMBOK 4th Edition

ContractChangeControl

PaymentSystems

ProcurementPerformance

Reviews

ProcurementPolicies &

Procedures

Inspections& Audits

ClaimsAdministration

12.3 Administer Procurements: Tools and Techniques

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Introduction Inputs Tools and Techniques Outputs

Contract Change Control

– The process by which procurements can be modified, often included in each specific contract and can vary between them

– Closely related to the processes of Control Scope and Perform Integrated Change Control

– Often jointly managed by the Project Manager and the purchasing department

Procurement Performance Reviews

– A structured review of the seller’s progress to delivery the contracted scope and quality within the cost and timeframe that have been agreed

– Performance information is compared against actual outcomes

– Often conducted by the purchasing department or internal audit

Adapted from PMBOK 4th Edition

12.3 Administer Procurements: Tools and Techniques

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Introduction Inputs Tools and Techniques Outputs

Inspections & Audits

– If required by the buyer, then these will be specified in the contract

– Often involves the buyer having access to regular external audit reports on the seller, can include buyer procurement personnel

Performance Reporting

– Regular status reports and performance information required of the seller as specified in the contract

– Tracks the seller’s performance against contractual obligations of scope, quality, time and cost

– Click here for further information

Payment Systems

– Payments to the seller are typically processed by the accounts payable system after they have been authorised by project or procurement personnel

Adapted from PMBOK 4th Edition

12.3 Administer Procurements: Tools and Techniques

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Introduction Inputs Tools and Techniques Outputs

Claims Administration

– Relates to contested changes where the buyer and seller cannot agree on items such as Change Requests, Incentive Payments or Penalties

– Referred to as Claims, Disputes or Appeals

– A resolution process is normally documented in the contract and settlement via negotiation is preferred

– If agreement cannot be reached then legal action may be required

Records Management Systems

– Used by the Project Manager to manage contract and procurement documentation and records

– Contains a retrievable archive of all contract documentation, correspondence and performance reports

Adapted from PMBOK 4th Edition

12.3 Administer Procurements: Tools and Techniques

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Introduction Inputs Tools and Techniques Outputs

Procurement Policies and Procedures

– Most large organisations and all government departments will have comprehensive policies and procedures

– It is critical that the project team are aware of these and that they are followed, otherwise approval may not be obtained for purchasing requirements and timeframes can be severely impacted

– These procedures will also impact the project schedule during the planning stage as critical internal specialist may not be available when required by the project

– It is often mandatory to engage internal purchasing professionals and either internal or external legal professionals

– Purchasing decisions may need to be escalated to senior management or even the Board for approval, depending on the overall cost. This can also impact timelines.

Adapted from PMBOK 4th Edition

12.3 Administer Procurements: Tools and Techniques

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Introduction Inputs Tools and Techniques Outputs

Outputs of this process include –

• Procurement Documentation– Contract and supporting schedules– Change Requests– Claims and disputes

• Organisational Process Assets– Correspondence regarding the contract– Payment schedules and requests– Seller performance evaluation documentation

• Change Requests

• Project Management Plan Updates– Procurement Management Plan– Baseline Schedule and Budget

Adapted from PMBOK 4th Edition

Initiation Planning Execution Close

Monitor

Control

12.3 Administer Procurements: Outputs