Project Procurement Management

Procurement Management Plan

A component of the project or program management plan that describes how a project team will acquire goods and services from outside the performing organization.

Assumption

A factor in the planning process that is considered to be true, real, or certain, without proof or demonstration.

Contract

A mutually binding agreement that obligates the seller to provide the specified product or service or result, and obligates the buyer to pay for it.

Independent estimates

A process of using a third party to obtain and analyze information to support prediction of cost, schedule or other items.

Source Selection Criteria

A set of attributes desired by the buyer which a seller is required to meet or exceed to be selected for a contract.

Procurement performance reviews

A structured review of the seller`s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract.

Cost-reimbursable contract

A type of contract involving payment to the seller for the seller`s actual costs, plus a fee typically representing seller`s profit. It often include incentive clauses where, if the seller meets or exceeds selected project objectives, such as schedule targets or total cost, then the seller receives from the buyer an incentive or bonus payment.

Time and Material (T&M) Contracts

A type of contract that is a hybrid contractual arrangement containing aspects of both cost-reimbursable and fixed-price contracts. Time and material contracts resemble cost-reimbursable type arrangements in that they have no definitive end, because the full value of the arrangement is not defined at the time of the award. Thus, time and material contracts can grow in contract value as if they were cost-reimbursable-type arrangements. Conversely, time and material arrangements can also resemble fixed-price arrangements. For example, the unit rates are preset by the buyer and seller, when both parties agree on the rates for the category of senior engineers.

Fixed-price contracts

An agreement that sets the fee that will be paid for a defined scope of work regardless of the cost or effort to deliver it.

Procurement negotiations

Clarify the structure, requirements and other terms of the purchases so that mutual agreement can be reached prior to signing the contract.

Procurement file

Complete set of indexed contract documentation, including the closed contract, is prepared for inclusion with the final project files.

Indirect costs / Overhead costs

Costs allocated to the project by the performing organization as a cost of doing business (e.g., salaries of corporate executives). Usually calculated as a percentage of direct costs.

Scope baseline

Describes the need, justification, requirements, and current boundaries for the project.

Procurement Statements of Work (SOW)

Describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results.

Product description

Description of the product of the project - provides important information about any technical issues or concerns that would need to be considered during procurement planning.

Constraints

Factors that limit a buyer`s options. E.g., funds availability

Seller Proposals

Formal responses from sellers to a request for proposal or other procurement document specifying the price, commercial terms of sale, and technical specifications or capabilities the seller will do for the resulting organization that, if accepted, would bind the seller to perform the resulting agreement.

Formal acceptance and closure

Formal written notice from a person or organization responsible for contract administration, informing that the contract has been completed.

Proposal

Generally used when considerations like technical approach and technical skills are paramount in source selection

Procurement resources

If the performing organization does not have a formal contracting group, then the project team will have to supply both the resources and expertise to support procurement activities

Project Procurement Management

Includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team.

Direct costs

Incurred for the exclusive benefit of the project (e.g., salaries of full-time project staff).

Qualified seller lists

Lists or files maintained with information on prospective sellers. These lists will generally have information on relevant past experience and other characteristics of the prospective sellers

Close procurements

Process of completing each procurement. Involves procedures required to close a contract as specified in the prescribed procedures for close procurements. Includes product verification and administrative closure.

Plan Procurement Management

Process of documenting project procurement decisions, specifying the approach, and identifying potential sellers.

Make-or-buy analysis

Process of gathering and organizing data about product requirements and analyzing them against available alternatives including the purchase or internal manufacture of the product.

Control Procurements

Process of managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as appropriate.

Conduct Procurements

Process of obtaining seller responses, selecting a seller, and awarding a contract.

Buyer-Seller relationship

Seller is a subcontractor, vendor, or supplier, who will typically manage the work of the project. Buyer is the customer who has outsourced work to the seller.

Bid/quotation

Terms used when the source selection decision will be based on price

Procurement Documents

The documents utilized in bid and proposal activities, which include the buyer`s Invitation for Bid, Invitation for Negotiations, Request for Information, Request for Quotation, Request for Proposal and seller`s responses.

Bidder Conferences

The meetings with prospective sellers prior to the preparation of a bid or proposal to ensure all prospective vendors have a clear and common understanding of the procurement. Also known as contractor conferences, vendor conferences, or pre-bid conferences.

Procurement audits

The review of contracts and contracting processes for completeness, accuracy, and effectiveness.

Contract Change Control System

The system used to collect, track, adjudicate, and communicate changes to a contract.