Procurement Management Slides
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Transcript of Procurement Management Slides
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Project Procurement
ManagementSections of this presentation were adapted
from A Guide to the Project Management
Body of Knowledge 4th Edition, ProjectManagement nstitute nc!, " #$$%
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4
As Procurement
Contributes To ProfitabilityProcurement is Often
Centralized,-esults in !"tandardized
#ractices$-$%o&er Pa#er &ork Cost$
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Project 6uality Management
9-he processes to purchase or ac&uire the
products, ser(ices, or results needed from
outside the project team to perform the
wor2:
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1hy Procurement Management;
Most all projects will need to ac&uire some
resources from outside
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=ow /o 1e Manage Procurement;
8our processes Plan Procurements onduct Procurements Administer Procurements lose Procurements
onduct
Procurements
Administer
Procurements
Plan
Procurements
lose
Procurements
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Plan ProcurementsScope Baseline
>e&uirements/ocumentation
-eaming Agreements
>is2 >egister
>is2>elated ontract
/ecisions
Acti(ity >esource>e&uirements
Project Schedule
Acti(ity ost Estimates
ost Performance Baseline
Enterprise En(ironmental
8actors
?rgani7ational Process
Assets
Ma2e or Buy Analysis
E@pert udgment
ontract -ypesInputs
"utputs
Tools # TechniquesProcurement
Management Plan
Procurement
Statements of 1or2
Procurement
/ocuments
Source Selection
riteria
hange >e&uests
Ma2e or Buy
/ecisions
onduct
Procurements
Administer
Procurements
Plan
Procurements
lose
Procurements
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Ty#es of contract selectionbased u#on follo&ing:
5! ?(erall degree of Cost ' "chedule >is2#! -ype * comple@ity of >e&uirement )technical >is2+3! E@tent of Price ompetition4! ost'Price Analysis
C! Drgency of >e&uirements! Performance periodF! ontractors >esponsi0ility )and >is2+%! ontractors Accounting System )>eport Earn Halue
reporting;+
! oncurrent ontract )contract ta2e A 0ac2 seat to e@istingwor2;+
5$! E@tent of Su0contracting )how much wor2 contractor outsource;+
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ontract -ypes
8i@ed Price )Iump Sum+ ontracts
ost>eim0ursa0le ontracts ost Plus 8ee )P8+
ost Plus Percentage of ost )PP+
ost Plus 8i@ed 8ee )P88+ ost Plus ncenti(e 8ee )P8+
-ime and Material )-*M+ ontracts
$hich t%pe of contract is the hi&hest risk for the Bu%er' Seller'
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55
(O")OP
*escribe advantage anddisadvantage of each
ty#e as &ell as the bestscenery to use it
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5#
+irst Category
Fixed-price or
Lump-sum contract
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53
ontractor carefully !stimate
Target Cost$!ontractor re&uired to Perform
wor2 at negotiated Contractalue.
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54
/f !stimated target cost$ is
lo& then !Total Profitreduced$ * may (anish!
ontractor may not 0e a0le to!underbid com#etitors$ "o
ontractor assumes a Iargeris2!
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5C
Lump-sum
Pro(ides !0a1 Protection toO&ner$ for ultimate !Cost ofPro2ect$.
*isadvantage:
>e&uiring a Iong Period 8or
Preparation * Adjudications ofBids!
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5
3ecause of a %ack ofkno&ledge of
%ocal conditions,
all contractors /nclude
1cessiveContingency.
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5F
Chang e4uested
By owner after !A&ard ofcontract$ %ead to
Troublesome *Sometimes !Costly
e1tras$
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5%
2 nd Category
Cost-Plus- Fixed-Fee
(CPFF)
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5
Cost Plus Fixed Fee (CPFF)
f Accurate Pricing ewarded e&ually!
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#$
Total s56 Profit likely -o
Produce Iow !ate of eturn$reflects Small !Amount ofisk$ By contractor!
+i1ed +ee - small 7 Age ?f!Tot5true Cost$!
CP++ e4uired Com#any books 0e audited!
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#5
3: Cost-Plus-
Percentage – fee Contract
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##
Provides 0a1imum fle1ibility
to o&ner Permits !O&ner 'Contractor$ to &ork
together coo#eratively onAll !Technical, Commercial,+inancial Problems$.
-8o +inancial Assurance of!9ltimate Cost$.
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#3
!8o financial incentive to
contractor$ this because of !)ighbuilding cost$ Com#ared &ithother forms;.
Only meaningful /ncentive can be:
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#4
>th Category ofContracts
“uaranteed!aximum-"#are
"a$ings%
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#C
Contractor-Gets !+i1ed +ee$ for his
!Profit$ and eimbursed for the!Actual Cost$ of Engineering,Materials, onstruction Ia0or, all
Other ?ob Costs,
But only up to !Ceiling figure
established$ as !Guaranteedma1imum@
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#
"avings belo& the@ Guaranteed
0a1imum$ are Shared 0etween!O&ner ' Contractor$, &here
as Contractor Assumes thees#onsibility
8or any !Overrun beyond$Guaranteed !0a1imum Price$!
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#F
Contract form Combines
advantages as &ell asdisadvantages of 3oth !%um#"um$ ' !Cost-Plus
Contracts$.3est form for 8egotiated
Contract as it stablishes a0a1imum Price At arliestPossible *ate
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#%
Though contract a&arded
&ithout !Com#etitiveTenders$.
-et Protects o&nerAgainst beingOvercharged,
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#
9ni4ue in that !O&ner '
Contractor$ share +inancialisk ' 3oth have eal
incentive -o ompleteProject At lowest !Possible
Cost$.
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3$
Bth Category of Contract
Fixed-Price-
&ncenti$e-fee
Contracts
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3#
8ormula 9Agreed to$ in
ad(ance By !O&ner 'Contractor$!
To use this 3oth !Pro2ector Contract$ >e&uirementsMust 0e firmly esta0lished
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33
Provides An incentive to
Contractor To:a+ >educe ost
0+ ncrease profit
Both !O&ner ' Cost$ Share in
!isk ' "avings$!
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' t#
Cat“Cost-Plus-
&ncenti$e-
Fee C ontracts$
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3C
Same as. !Cost$ Plus Contracts, E@cept
ha(e 9Pro(ide for: Adjustment of !+eeas$ /etermined By a 8ormula.
ompares !Total Pro2ect Cost to Target
Cost$!8ormula agreed to in ad(ance by !O&ner
' Contractor$. Dsed for !%ong
*uration$ or !'* Ty#e Pro2ect$!
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3
B. Contract Admin Cycle
ontract Administrator ises#onsible for Com#liance
By the ontractor to ontracts9-erms * onditions:
-o Ma2e Sure 8inal Product is!+it for 9se$!
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3F
+unctions of contract administrator /nclude:
hange Management
Specification interpretation
Adherence to 6uality
1arranties
Su0contractor Management
Production sur(eillance1ai(ers
ontract 0reach
>esolution of disputes
Project -ermination
Payment 9Schedule:
Project loseout
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-ypes of Scopes of 1or2
Performance 1hat the project wants, how accomplished
and project needs defined 0y seller
8unctional or /etailed /efines what end product should 0e as well
as minimum re&uirements
/esign /efines e@actly what is re&uired and how to
accomplish it
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Procurement /ocuments
>e&uest for Proposal )>8P+ As2s for the price and how'who will do the
wor2
n(itation for Bid )8B+ ?ne simple price to do the wor2
>e&uest for 6uotation )>86+ Price per unit &uote
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Administer Procurements
Procurement
/ocuments
Project
Management Plan
ontract
Performance
>eports
Appro(ed hange
>e&uests
1or2 Performance
nformation
ontract change control
system
Procurement performance
re(iew
nspections and audits
Performance reporting
Payment systems
laims administration
>ecords management
system
Inputs "utputs
Tools # Techniques
Procurement
/ocumentation
?rgani7ational
Process Assets
Dpdateshange >e&uests
Project Management
Plan Dpdates
onduct
Procurements
Administer
Procurements
Plan
Procurements
lose
Procurements
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ontract losure
Project
Management Plan
Procurement
/ocumentation
Procurement audits
ecords management
system
Inputs "utputsTools # Techniques
losed Procurments
?rgani7ational
Process Assets
Dpdates
onduct
Procurements
Administer
Procurements
Plan
Procurements
lose
Procurements
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Procurement -erms
Ar0itration J -hird party dispute resolution
Breach'/efault J 1hen a contract pro(ision is notmet
8orce Majeure J >iots, wars, weather, or other 9Actsof God:
ndemnification J 1ho is lia0le
Ii&uidated /amages J Estimated damages forspecific types of defaults as defined in the contract
Material Breach J A (iolation of the contract ofsufficient magnitude that the contract cannot 0ecompleted
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Procurement -erms ontinued
>etainage J Monies withheld to ensure performance atthe end of the contract
-ermination J Stopping the wor2 0efore it is completed
1ai(er J Statements in the contract that indicate that
rights cannot 0e ignored or modified without writtenagreement 0etween the two parties
-ime is of the essence J Seller is placed on notice thatdeli(ery agreements are strictly 0inding
1or2 for =ire J At the end of the contract the wor2product generated will 0e owned 0y the 0uyer