CTCM

procurement

fairly and objectively select the most qualified contractors

Principled negotiations interests

focus on interests, not position o Position is something you decide upon and interests are the needs, desires and fears that drive positions

6 steps in planning phase Analyze

Analyze the other party's proposal- explore options o Evaluate price, delivery, specifications, and terms. Note any deviations from your requirements o Explore options for mutual gain

6 steps in planning phase

Analyze, establish, formulate, assess, define, develop

Batna

Best alternative to a negotiated agreement (tells you when to accept/reject)

operate

prepare solicitation, copies to CAT/CPA, solicit proposals, evaluate responses, award

6 steps in planning phase define

Define and organize the issues o Consider scarcity of product or services. Where a lack of resources exist to satisfy all parties-including resolving or mitigating this scarcity before negotiations o Are there any self-imposed deadlines that make it harder for our organization to negotiate?

Team dynamics

Forming, storming, norming, performing, adjourning

Steps in risk management

Identify, quantify, minimize

Project Management Process Groups

Initiating, planning, executing, monitoring & controlling, closing

negotiation

Negotiation is often used to build partnerships

Principled negotiations 4 points

People, interests, options, criteria

Project management knowledge areas

Project integration o Scope (statement of work) o Time o Cost o Quality o Human resources (staffing) o Communications o Stakeholders o Procurement o Risk (assessment/evaluating)

Identify and assign resources

Should include: an executive sponsor, a contract manager, contract administrator, purchasing staff and program staff to assist in the contract management process

Project Management

The discipline of defining and achieving specific goals and objectives for TEMPORARY and UNIQUE efforts by effectively managing and controlling technical performance (scope, quality, deliverables), cost, and schedule

lose-lose

Usually when everything starts going south in a negotiation- either you have rubbed the other party the wrong way or they have done something to prevent you from coming to an agreement

Objective standard

Unbiased and widely accepted minimum requirement. Examples: o Market value o Replacement cost o Depreciated book value o Competitive prices o Precedent o Professional standards o What a court would decide

Earned value (EV)

a measurement of a project's progress to date (expressed as value earned which is based on the deliverables provided)

2 ways to change a contract

bilateral amendment and unilaterally

identify process risk process

can occur due to the complexity of the procurement, the experience level of the staff involved, unclear objectives, a faulty internal/external process, or a combination of any of the aforementioned factors. Common factors include unclear definition of the project and unclear procurement strategy.

Gantt chart

common tool used to manage projects in relation to units of time

Required documentation

conflict of interest and non-disclosure statement

Scheduled performance index (SPI)

displays cost performance in terms of percentage

Cost performance index (CPI)

displays cost performance in terms of percentage (when converted to percentage)

contract formation/rate/price establishment

ensure the contract contains provisions that hold the contractor accountable for producing desired results, include all relevant terms and conditions as well as establish processes that are cost-effective and aligned with the cost of providing the goods and services

oversee

execute contract, monitor performance, manage change, approve payment, contract closeout

Principled negotiations options

explore multiple options looking for mutual gains

Contract administration

goal is to ensure the contract is satisfactorily performed and the responsibilities of both parties are property discharged

plan

identify contracting objectives and strategy

outline

identify need, develop CM Team, conduct risk assessment, determine procurement method

Risk probability

impact rating matrix

bilateral amendment

in which all parties to the contract agree that a modification is necessary because the scope of work, the term of the contract, or some other provision of the contract needs to be altered

Principled negotiations criteria

insist that the result be based on some objective standard

Risk avoidance

involves changing the project plan to eliminate the specific risk events or conditions. By avoiding the risk, the project team removes a source of poor product or project performances, including: project cancellation, reducing scope, adding critical resources, working the project in phases, extending the schedule, etc. o How can we avoid this risk event?

Risk transference

involves moving the responsibility for the risk to third party. Examples include; joint ventures, fixed price subcontracting, and purchasing insurance and warranties

identify process risk financial

major contracts $1m or more. Contract Advisory Team (CAT) reviews contracts over $10m

Actual cost (AC)

money that has actually been expended to date to produce or earn value (deliverables)

contract oversight

monitor and enforce the terms of the contract

Risk acceptance

o Active acceptance- developing a contingency plan which typically includes establishing a contingency budget to "buy our way out" of a risk event if it occurs o Passive acceptance- leaves the project team to work around risks as they occur. Typically only low exposure risks are candidates

Contract close-out Sample checklist

o All deliverables accepted by the agency o Final payment made o Evaluate vendor performance - all monitoring issues resolved o Property inventory and ownership issues resolved o Final acceptance by project manager o Any deficiencies found during close out are documented and communicated to all parties o Contractor complies with record retention requirements

Procurement lead time

o Beginning preparation of solicitation document- program staff works with agency purchasing dept. to develop scope of work and contract language (180 days) o Submit final solicitation with required approvals to the purchasing dept. and CPA (150 days) o Advertise and issue solicitation (120 says) o Receipt of responses (90 days) o Evaluation of response (60 days) o Contract negotiation and formation (30 days) o Contract execution- all signatures are obtained (15-60 days) o Performance begins (effective date) (0 days)

Withholding payment circumstances

o Material breach of contract by a vendor o Invoice errors o Undocumented and/or unsupported costs o The need to remedy over payments to the vendor o Vendor noncompliance performance issues

Primary duties of a contract administrator are:

o Monitor vendor performance o Approve payments o Manage contract changes

A good contract administrator shall be

o Objective o Vigilant o Responsive to the contractor o Available to attend meetings o Aware of the responsibilities of both parties

Contract administration and oversight include 7 general processes

o Planning, vendor/monitoring performance, payment approval, change management, dispute resolution, termination, contract closeout o Vendor performance-TX Procurement and Support Services (TPASS) maintains the Vendor Performance Tracking System (VPTS) providing a comprehensive tool for evaluating vendor performance to reduce risk in the contract award process. Required for anything over $25k. o Monitoring performance- purpose is to ensure that the contractor is preforming all duties in accordance with the contract and for the agency to be aware of and address any developing problems or issues.

Principled negotiations people

separate the people from the problem

Primary duties of the purchaser

o Serve as the authorized purchasing agent to bind the contract o Provide procurement knowledge and expertise o Enforce the proper procedures, policies and procurement status o An integral role of a successful contracting process is the role of the purchaser because they are the only one to sign.

a valid contract must have

o offer (RFP) o acceptance- if the state accepts a respondent's offer, a legally binding contract is formed when the state issues a purchase order reflecting the state's acceptance, or when the parties both sign the resulting negotiated agreement o legal purpose- negotiated agreement are not binding until they are written into a contract and that contract is signed o mutuality of obligation- unless both parties are bound to the contract, neither party is bound to the contract. Parties must agree on the essential terms of the contract. o certainty of subject matter- the reason you are entering into the contract must be stated and the terms to which each party is subject to must be clearly defined and specific. If material terms are omitted, there is no contract to enforce. o consideration (cause or motive to enter into a contract)- the cause or motive to enter into a contract o competent parties- both parties must have the proper authority as well as suitable ability to enter into a contract in order for it to be valid

conflict of interest

o recommends getting the statement from: contractors to disclose in their responses any actual or potential conflicts of interest employees involved in specification development or award determination- included in annual procurement plan

3 O's Approach to Contract Management

outline, operate, oversee

Contract management framework

plan, procurement, contract formation/rate/price establishment, contract oversight

Project Management Process Groups executing

processes performed to complete the work defined the project management plan to produce the deliverables

Project Management Process Groups closing

processes performed to conclude all activities required to formally complete the project, phase, or contractual obligations

Project Management Process Groups Initiating

processes performed to define a new project and obtaining authorization to commit resources

Project Management Process Groups planning

processes performed to establish the total scope of the effort and develop the course of action required to attain the project objectives

Project Management Process Groups monitoring & controlling

processes required to track, review, and determine the progress and performance of the project according to the plan o Identify any areas in which changes to the plan are required; and initiate the corresponding changes

risk management identify categories

product, process, financial, schedule

Risk mitigation

reduces the probability or impact of a risk to an acceptable threshold. Modifying an activity (lengthen the schedule, adopt a less complex approach, include more assessment of the deliverables (audit, inspect, test))

identify product risk product

risk factors arise as a result of the nature of the product ex. Gas. To assess product risk establish a plan that reviews known hazards, review uses, understand any applicable regulations regarding the product and establish a plan of action. This in-depth review of product risk is known as product stewardship

Estimate to completion (ETC)

shows how much more budget is required to finish the project if everything continues at the current level of performance

Cost variance (CV)

shows if cost amounts are higher or lower than budgeted

Schedule variance (SV)

shows if the schedule is ahead or behind the original plan

Estimate at completion (EAC)

shows the current estimate of total project cost (assumes the efficiency of future work continues as it has in the past)

Project objectives

specific, measurable, achievable, realistic, and time bound (SMART)

Project goals

stated in clear, concise terms and documented in the project charter and scope. (Where you want to go)

Objectives

tangible activities, outputs, and measures that will ensure you meet your goals. (how you get to where you want to go)

6 steps in planning phase assess

the other party's positions/strengths

Planned value (PV)

the planned cost for activities to be completed during a given time period (which is implicitly liked to the deliverables produced during that time period)

Budget at completion (BAC)

the total cost of the project before work begins

identify process risk schedule

time it takes to complete each phase of the project

Contract close-out purpose

to verify that both parties to the contract have fulfilled their contractual obligations and there are not responsibilities remaining.

Milestone chart

used in scheduling to establish and track significant events through the life cycle o Just markers of time. No work or time duration themselves

Risk Assessment

well written terms and conditions are one of the best ways to protect an agency from unnecessary risk • risk should be reviewed and re-evaluated by the contract manager on a continual basis until the contract is fully performed and final payment is made

unilaterally

where terms and conditions in the original contract set forth the situation under which the agency may exercise a right to modify the contract without the contractor's consent.

Distributive

win-lose o Issues matter more than the relationship

Integrative

win-win o Each party has a vested interest in the issue and the relationship with all parties o Look for mutual gains

6 steps in planning phase establish

your objectives

6 steps in planning phase formulate

your positions

6 steps in planning phase Develop

your strategies and tactics

Overcoming negotiation roadblocks

• Focus on interests, not position • Don't react- the other party may be trying to get you to react- don't

Assumptions

• Is a conclusion that is drawn without affirmation from another source • If you know you are making an assumption, you can prepare for the unexpected

4 major reasons projects fail

• Managerial support diminishes with a lack of organizational commitment • Addressing the wrong requirements • Lack of performance of the triple constraint o Schedule/time o Budget/cost o Technical performance • Communication breaks down

Essential activities for ensuring project success (achieve the triple constraint)

• Organizational commitment • Effective project management practices • Teamwork • Expectation management • Effective communication

Project closeout process

• Primary functions are to formalize project completion and disseminate information to project participants and the organization repository. • 2 processes- contract closure and administrative closure • Come to a close for the following reason: o Normal closure- extinction (run its course) o Premature termination or termination- with or without cause o Some can't be formally closed due to legal or administrative reasons

Project Charter

• Project initiation process develops the charter to officially recognize the existence of a new project charter • Provides the project manager the authority to commit and apply organizational resources to project activities and serves as the foundation for the remaining project processes. • Should include: o Overview of the project o Goals, objectives, and priorities o Deliverables o Business case/need for the project o Required resources o Cost estimates o Procurement strategy o Assumptions, constraints, issues, and risks o Stakeholders, roles and responsibility

Project planning outputs

• Scope statement (statement of work) • Work breakdown structure • List of deliverables and activities • Scope baseline • Procurement determination • Procurement documents • Project network diagram • Project schedule • Schedule baseline • Cost estimates • Cost baseline (budget) • resource requirements document • staffing requirements list • stakeholder management plan • communications management plan • quality acceptance criteria • quality management plan • list of prioritized risks • risk response plan

Change management

• The keys are an effective system and detailed documentation • A change management and payment approval process is needed to manage and control changes and should include: o Formal, written approval of all changes prior to the change taking place. Don't verbally authorize work before the formal change process is complete o Evaluation of the impact of the change to the agency o Document all changes o A single point-of-contact to recommend or define the level of authority needed to authorize changes. Change orders should be handled by the contract manager in coordination with the purchasing division. • Failure to manage and control changes can result in an unintentional modification to the scope of work, extension of the schedule, increase in the contract cost, circumvention of management controls and diminished contractor accountability

Cost of quality

• The total cost of all efforts to achieve product/service quality including: o Prevention cost- cost to plan and execute a project so the customer requirements are completely satisfied without error/defect free o Appraisal cost- cost of examining the processes and product outputs to ensure the project is error/defect free o Failure cost- projects are not performing according to plan. Internal failure- cost incurred to correct an identified error/defect before the customer receives the product External failure- cost related to errors/defects are not detected and corrected before reaching the customer

Project status report content (Activity this Reporting Period and Cumulative)

• Triple constraint (scope, schedule, and budget) • Project progress (planned vs. actual) • Risk (risk encountered, response effectiveness, top imminent risks, responses planned) • Staffing (current team membership, staff changes, etc.) • Issues (resolved and ongoing) • Notable changes (approved or being considered) • Discussion on the next period activities, challenges

Change/configuration management

• When changes are needed ensure there is a FORMAL CHANGE CONTROL SYSTEM in use and use it to manage the changes o Appropriately submitted change requests (in writing), analysis of the request, formulate justified/recommended changes, submit to a Change/Configuration Control Board/Authority [CCB], then following CCB approval o Change control system documents procedures for requesting changes, defines level of authority needed to approve changes, and tracks the status of change requests.

Non-disclosure statement

• a non-disclosure statement should be obtained from anyone wishing to see proposal responses • required of all evaluators prior to reviewing vendor proposals • a non-disclosure statement is NOT required prior to positing on the ESBD (electronic state business daily)

Definitions

• define words that are important for both parties to have a clear and common understanding • define technical terms and acronyms

Essential clauses

• introduction • scope of work • indemnification/damage claims • price • specifications • funding out (leg out if no funding or appropriated funds are taken back • antitrust • payment • affirmation clauses • technology access • dispute resolution • term of contract • confidential information • abandonment or default • right to audit • force majeure (acts of God) • ownership/intellectual property • independent contractor • termination • buy TX

Drafting the contract

• the purpose of any written contract is to serve as the reference document that records the terms of an agreement • creates a legal, binding and enforceable obligation • primary concern should always be for the state of TX or more specifically TX taxpayers