Procurement Presentation (1)

7/31/2019 Procurement Presentation (1)

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Project ProcurementManagement

Arti Singh 10th June 2008


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Project Procurement Management

The processes required to acquire goods andservices, to attain project scope, from outsidethe performing organizationDiscussed from the perspective of the buyerin the buyer-seller relationship


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Procurement Planning

The process of identifying which projectneeds can be met by procuring products orservices outside the project organization


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Procurement Planning - Inputs

Scope StatementDescribes the current project boundaries,needs, and strategies

Product DescriptionProvides important information about technicalissues and concerns

Procurement ResourcesEither a formal contracting group or projectteam supplied resources and expertise


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Procurement Planning -Inputs (continued)

Market ConditionsWhat product and services are available in themarketplace

Other Planning Outputssuch as preliminary cost, schedule estimates,identified risks, planned staffing, ect.

Constraints - Factors that limit the buyers optionssuch as funds availability

Assumptions


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Procurement Planning - Tools & Techniques

Make or Buy AnalysisTechnique to determine whether a product canbe produced cost effectively by performingorganization.Should include both direct and indirect costs.

Should reflect the perspective of buyersorganization, not just the needs of the project


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Procurement Planning - Tools & Techniques (cont.)

Contract Type SelectionContracts fall into three broad categories:

Fixed-price or Lump-sum

Cost-reimbursableTime and Material (T&M)


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Contract Type SelectionFixed-price (FP) or Lump-sum Contracts

Involves fixed total price for a well defined product

Buyer and seller are at risk if product is not well defined.Buyer may receive undesired product.Seller can incur additional cost.Incentives for meeting or exceeding defined project

objectives can be included in FP contracts.


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Contract Type SelectionCost-reimbursable Contracts

Involves payment to the seller for its costs, plus a fee

representing seller profit.Direct costs are costs exclusively for the benefit of theproject. Indirect costs or overhead costs are allocated tothe project as a cost of doing business and are usuallycalculated as a % of direct costs.Can include incentives for meeting or exceedingselected project objectives.


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Contract Type SelectionTime and Material (T&M) Contracts

A hybrid arrangement that includes aspects of cost-

reimbursable and fixed-price contractsLike fixed-priced when buyer & seller agree on unitrates.Like cost-reimbursable because they are open-endedand can grow in value.


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Procurement Planning - Outputs

Procurement Management PlanDescribes how the remaining procurementprocesses will be managed.

Statement(s) of WorkDescribes the procurement item in sufficient detailto allow sellers to determine if they are capable ofproviding the item


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Solicitation Planning

Involves preparing the documents needed tosupport solicitation


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Solicitation Planning - Inputs

Procurement Management PlanStatement(s) of WorkOther Planning Output


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Solicitation Planning - Tools & Techniques

Standard FormsMay include standard contract, standarddescriptions of procurement items, standardizedversions of needed bid documents

Expert Judgement

Described as before in procurement planning


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Solicitation Planning - Outputs

Procurement DocumentsUsed to solicit proposals from prospectivesellers.Bid, quotation, or proposal are general termsused in describing procurement documents.Document types include: Invitation for Bid

(IFB), Request for Proposal (RFP), Request forQuotation (RFQ), Invitation for Negotiation,and Contractor Initial Response.


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Solicitation Planning -Outputs (continued)

Evaluation CriteriaUsed to rate score proposals of potential sellers.Often included as part of the procurement docs.Criteria can included:

Purchase PriceUnderstanding of needOverall or life-cycle costsTechnical capabilityManagement approachFinancial capacity


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Solicitation Planning -Outputs (continued)

Statement of Work UpdatesModifications to one or more of the statements ofwork may be identified during solicitation planning.


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Solicitation - Inputs

Procurement DocumentsAs defined earlier

Qualified Seller ListsSome organizations maintain lists with informationof sellers.If not, project teams will need to develop their

owns lists.


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Solicitation - Tools & Techniques

Bidder ConferencesAre meetings with prospective sellers prior topreparation of a proposal. Used to ensure that

sellers have a clear, common understanding ofthe procurement.Sellers remain on equal standing.

AdvertisingAs the term describes.


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Solicitation - Outputs

ProposalsAre seller-prepared documents that describe thesellers ability and willingness to provide the

requested product.Are prepared in accordance with the requirementsof the relevant procurement documents.Can be supplemented with a presentation


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Source Selection (Pick One)

Involves the receipt of bids or proposals andthe application of the evaluation criteria toselect a provider


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Source Selection - Inputs

ProposalsEvaluation criteriaOrganizational policies


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Source Selection - Tools and Techniques

1) Contract Negotiationinvolves clarification and mutual agreement on thestructure and requirements of the contract prior tothe signing of the contract

2) Weighting Systema method for quantifying qualitative data tominimize the effect of personal prejudice on sourceselection


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Source Selection - Tools and Techniques (cont.)3) Screening System

involves establishing minimum requirements ofperformance for one or more of the evaluation

criteria

4) Independent Estimates


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Source Selection - Outputs

1) Contract- a mutually binding agreement that

obligates the seller to provide the specifiedproduct and obligates the buyer to pay for it- other names are:

agreement purchase ordersubcontract memorandum of understanding


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Contract Administration (Admin)

The process of ensuring that the sellersperformance meets contractualrequirements

Project management processes to beapplied:

Project Plan execution

Performance reportingQuality controlChange control


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Contract Administration - Inputs

ContractWork ResultsChange Requests - may include modifications to theterms of the contract or to the descriptionof the project or service to be providedSeller Invoices


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Contract Administration - Tools and Techniques

1) Contract Change Control System

- Changes - all contracts, like projects, havechanges- first, analyze the impact of the change- follow change procedures

- make all changes formally


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Contract Administration - Tools and Techniques

- Contract Interpretation- based on an analysis of intent of the parties to the

contract based on guidelines- the contract supercedes any memos, conversations or

discussions

2) Performance Reporting

3) Payment System


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Contract Administration - Outputs

Correspondence

Contract ChangesPayment Requests


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Contract Closeout (Finish)

Similar to administrative closureinvolves both product verification and

administrative closeouta contract is complete when:

a contract ends

a contract is terminated before the work iscomplete


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Contract Closeout - Inputs

1) Contract Documentation includesthe contract itselfapproved contract changesseller-developer technical documentationseller performance reportsfinancial documentsresults of any contract-related inspections


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Contract Closeout - Inputs

ActivitiesProduct verification

Financial closureUpdate recordsFinal contract performance reportingContract file


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Contract Closeout - Tools and Techniques

Procurement Audits- a structured review of the procurement processfrom procurement planning through contractadministration- similar to a Lessons Learned


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Contract Closeout - Outputs

Contract File

Procurement Audit Results*Formal Acceptance and closure- the person of organization responsible for

contract administration should provide the sellerwith formal written notice that the contract hasbeen completed


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Questions ??

Thank you !

Procurement Presentation (1)

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