Procurement Management - PMP

1. Dr. Mostafa Elgamala
PMP-ITIL-IBDL-LDP8
RHCE-MCSA-CCNA/CCAI-CSCU

2.  Project procurement management:
 1- Plan procurement (Planning)
 2- Conduct procurement (execution)
 3- Administer procurement (monitor & control)
 4- Close procurement (closing)

3. Plan procurement
 Process of documenting project purchasing decisions,
and identifying sellers selection criteria.

4. Inputs
• Scope baseline
• Requirements
documentation
• Teaming
agreement
• Risk register
• Risk –related
contract decision
• Activity resource
requirements
• Project schedule
• Activity cost
estimates
• Cost performance
baseline
• EEF
• OPA
Tools & techniques
• Make or buy
analysis
• Expert judgment
• Contract type
Outputs
• Procurement
management plan
• Procurement
statement of
work
• Make or buy
decisions
• Procurement
documents
• Source selection
criteria
• Change requests

5. Input
 Project management plan: Scope baseline
 Requirements documentation
 Risk register
 Activity resource requirements: contain
information on specific needs such as people,
equipment, or location
 Project schedule: contains information on required
timelines or mandated deliverable dates.

6.  Activity cost estimates: used to evaluate the
reasonableness of the bids or proposals received from
potential sellers.
 Stakeholder register
 EEF
 OPA

7. legal contractual relationships:
 Fixed-price contracts: fixed total price for a defined
product, service, may incorporate financial incentives
for achieving or exceeding selected project objectives.
buyers need to precisely specify the product or
services. (seller risk)
 Firm Fixed Price Contracts (FFP).
 Fixed Price Incentive Fee Contracts (FPIF)

8.  Cost-reimbursable contracts: Involves payments to
the seller for all legitimate actual costs incurred for
completed work, plus a fee representing seller profit.
 Scope of work cannot be precisely defined at the start
and needs to be altered, or when high risks may exist
in the effort. (buyer risk)
 Cost Plus Fixed Fee Contracts (CPFF)
 Cost Plus Incentive Fee Contracts (CPIF)

9.  Time and Material Contracts (T&M): often used for
staff augmentation, acquisition of experts, and any
outside support.

10. FP
 Buyer less management ,he know the total price
 More expensive more than CR, more work to specify
SoW

11. CR
 Simpler SoW, lower cost than FP
 Require auditing the seller’s invoices, more work to
manage, the seller has moderate incentive to control
cost.

12. Tools & techniques
 Make-or-Buy Analysis
120 is daily lease cost
1000 is investment cost with 20 daily cost
120 D = 1000 + 20 D
D=10
 Expert Judgment
 Market Research: includes examination of industry and
specific vendor capabilities
 Meetings

13. Output
 Procurement Management Plan: how a project
team will acquire goods and services from outside the
organization:
Types of contracts to be used
Handling the make-or-buy decisions
Standardized procurement documents
Procurement metrics to be used to manage
contracts and evaluate sellers

14.  Procurement Statement of Work:
 defines only that portion of the project scope that is to be
included within the related contract, include:
 Specifications
 Quantity desired & quality levels
 Period of performance
 Work location
 Other requirements.

15.  Procurement Documents: request for information (RFI),
request for proposal (RFP), invitation for bid (IFB), request
for quotation (RFQ), invitation for negotiation (IFN).
 Source Selection Criteria:
 Overall or life-cycle cost
 Technical capability
 Risk
 Warranty
 Past performance of sellers

16.  Make-or-Buy Decisions
 Change Requests
 Project Documents Updates: risk register,
Requirements documentation…

17. Conduct procurement:
 Process of obtaining sellers responses, selecting a
seller and awarding a contract.

18. Inputs
• Project
management plan
• Procurement
documents
• Source selection
criteria
• Qualified seller
list
• Seller proposals
• Project
documents make
or buy decisions
• Teaming
agreement.
• OPA
Tools & techniques
• Bidder conference
• Proposal
evaluation
techniques
• Expert judgment
• Advertising
• Internet search
• Procurement
negotiations
Outputs
• Selected sellers
• Procurement
contract award
• Resource
calendars
• Change requests
• Project
management plan
updates
• Procurement
documents
updates

19. Tools & techniques
 Bidder conference
 Sellers have a clear and common understanding of the
procurement requirements.
 Proposal evaluation techniques:
 formal evaluation review process will be defined by the
buyer’s procurement policies
 Independent Estimates:
 have an estimate of costs prepared by an outside
professional estimator, to serve as a benchmark on
proposed responses

20.  Expert Judgment
 Advertising
 Analytical Techniques: identify the readiness of a
vendor to provide the desired end state, and avoid cost
overruns due to change.
 Procurement Negotiations

21.  Contract contents: usually most of contracts contains
the following :
Statement or work/ deliverables
Schedule baseline
Project period
Pricing
Payment terms
Warranty
Penatlies
Incentives
Insurance arrangements
Change request criteria
Acceptance criteria
Claims handling.

22. Administer procurement
 Process of managing procurement relationships,
monitoring contract performance, and making
changes and corrections as needed.

23. Inputs
• Procurement
documents
• Project
management
plan
• Contract
• Performance
reports
• Approved
change requests
• Work
performance
information
Tools &
techniques
• Contract change
control system
• Procurement
performance
reviews
• Inspection &
audits
• Performance
reporting
• Payment systems
• Claim
administration
• Records
management
system
Outputs
• Procurement
documentation
• organizational
process assets
• Change requests
• Project
management
plan updates

24. Tools & techniques
 Contract Change Control System: defines the
process by which the procurement can be modified. It
includes the paperwork, tracking systems, dispute
resolution procedures
 Procurement Performance Reviews: review of the
seller’s progress to deliver project scope and quality,
within cost and on schedule, as compared to the
contract
 Inspections and Audits: to verify compliance in the
seller’s work processes

25.  Performance Reporting
 Payment Systems:
 Claims Administration: If the parties themselves do
not resolve a claim, it may have to be handled in
accordance with alternative dispute resolution (ADR)
(mediation, arbitration, courts)
 Records Management System: The system contains
a retrievable archive of contract documents and
correspondence

26.  Close procurement: process of competing each
project procurement
Inputs
• Project
management
plan
• Procurement
documentation
Tools &
techniques
• Procurement
audits
• Negotiated
settlements
• Records
management
system
Outputs
• Closed
procurement
• Organizational
process assets
updates

27. Thanks