ITPM - project procurement management

Project Procurement Management

Includes the processes required to acquire goods and services from outside the performing organization.

Procurement Planning

Determining what to procure and when.

Solicitation Planning

Documenting product requirements and identifying potential sources.

Solicitation

Obtaining quotations, bids, offers, or proposals as appropriate.

Source Selection

Choosing from among potential sellers.

Contract Administration

Managing the relationship with the seller.

Contract Close-out

Completion and settlement of the contract, including resolution of any open items.

Make-or-Buy Analysis

A general management technique used to determine whether a particular product can be produced cost-effectively by the performing organization.

Expert Judgment (Procurement)

Provided by any group or individual with specialized knowledge or training from sources including other organizational units, consultants, or industry groups.

Contract Type Selection

Choosing among fixed price, cost reimbursable, or unit price contracts based on appropriateness for the procurement.

Procurement Management Plan

Describes how the remaining procurement processes will be managed, including types of contracts and procurement coordination.

Statement of Work (SOW)

Describes the procurement item in sufficient detail to allow prospective sellers to determine if they can provide it.

Standard Forms

May include standard contracts, item descriptions, or bid documents standardized by the organization.

Procurement Documents

Used to solicit proposals from prospective sellers and should include the SOW, response format, and required contractual provisions.

Evaluation Criteria

Used to rate or score proposals; can be objective or subjective.

Qualified Seller Lists

Lists or files with information on prospective sellers, including experience and other characteristics.

Bidder Conferences

Meetings with prospective sellers to ensure clear, common understanding of the procurement.

Advertising (Procurement)

Placing ads in publications to expand seller lists or meet legal requirements.

Proposals

Seller-prepared documents that describe their ability and willingness to provide the requested product.

Contract Negotiation

Involves clarification and mutual agreement on contract structure and requirements prior to signing.

Weighting System

Quantifies qualitative data to minimize bias in source selection.

Screening System

Establishes minimum performance requirements for evaluation criteria.

Independent Estimates

“Should cost” estimates prepared by the buyer to compare against proposals.

Contract

A mutually binding agreement obligating the seller to provide and the buyer to pay for a specified product or service.

Work Results (Contract Admin)

Seller’s deliverables status, quality compliance, and cost data collected during execution.

Change Requests (Contract Admin)

Modifications to the contract terms, product, or services including claims or disputes.

Seller Invoices

Requests for payment submitted by the seller with required documentation.

Contract Change Control System

Defines how the contract may be modified including paperwork, approvals, and dispute procedures.

Performance Reporting (Contract Admin)

Provides information about how well the seller is achieving contractual objectives.

Payment System

A system for processing payments to the seller, requiring project team review and approval.

Correspondence (Contract Admin Output)

Written documentation of buyer/seller communications required by the contract.

Contract Changes

Approved or unapproved changes fed back into procurement and project planning processes.

Payment Requests

Requests for payment processed by external or internal systems.

Contract Close-out

Involves product verification and administrative closure, updating records and archiving.

Contract Documentation

Includes the contract, schedules, changes, technical documents, performance reports, and financial records.

Procurement Audits

Structured reviews of the procurement process to identify lessons for current or future projects.

Contract File

A complete set of indexed records included with the final project documentation.

Formal Acceptance and Closure

Written notice to the seller that the contract has been completed as defined in the contract.

Scope Statement (Procurement Planning Input)

Describes the current project boundaries and provides important information about project needs and strategies to consider during procurement planning.

Product Description (Procurement Planning Input)

Provides important information about any technical issues or concerns that need to be considered during procurement planning.

Procurement Resources

If the performing organization lacks a formal contracting group, the project team must provide the resources and expertise for procurement activities.

Market Conditions

What products and services are available in the marketplace, from whom, and under what terms and conditions.

Other Planning Outputs (Procurement)

Includes preliminary cost and schedule estimates, quality plans, cash flow projections, WBS, risks, and staffing—must be considered during procurement planning.

Constraints (Procurement Planning)

Factors that limit the buyer’s options; funds availability is one of the most common.

Assumptions (Procurement Planning)

Factors considered to be true, real, or certain for planning purposes.

Types of Fixed Price Contracts

Contracts that may include incentives for meeting or exceeding selected project objectives such as schedule targets.

Direct Costs (in Contracts)

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

Indirect Costs (in Contracts)

Also called overhead; costs allocated to the project as part of doing business (e.g., executive salaries).

Unit Price Contracts

The seller is paid a preset amount per unit of service, and the total contract value depends on the quantity needed.

Statement of Requirements (SOR)

Used for procurement items presented as a problem to be solved, in contrast to a clearly specified SOW.

Multiple Items in One SOW

Multiple products or services may be grouped into a single procurement item with one SOW.

Collateral Services in SOW

May include performance reporting or post-project operational support for the procured item.

Proposal Terms

“Bid,” “quotation,” and “proposal” may be used interchangeably but vary in meaning based on financial vs. technical emphasis.

Types of Procurement Documents

Invitation for Bid (IFB), Request for Proposal (RFP), Request for Quotation (RFQ), Invitation for Negotiation, Contractor Initial Response.

Structure of Procurement Documents

Should include SOW, response format, and required contractual provisions, and may be regulated in public sector contexts.

Flexibility of Procurement Documents

Should allow for seller suggestions while ensuring accurate and comparable responses.

Understanding of Need (Evaluation Criteria)

Assessed based on the seller’s proposal and their demonstrated comprehension.

Life Cycle Cost (Evaluation Criteria)

Considers both purchase and operating costs to determine the lowest total cost.

Technical Capability (Evaluation Criteria)

Whether the seller has or can acquire the needed technical skills and knowledge.

Management Approach (Evaluation Criteria)

Whether the seller has or can develop management processes to ensure success.

Financial Capacity (Evaluation Criteria)

Whether the seller has or can obtain the financial resources needed for the project.

Seller Research Methods

May include site visits, previous customer contact, trade catalogs, library directories.

Open Items List (Contract Negotiation)

May be an input to contract negotiation, especially for complex procurement items.

Memorandum of Understanding (Contract Negotiation Output)

May document the outcome of contract negotiations before formal signing.

Project Plan Execution (Contract Admin)

Used to authorize the contractor’s work at the appropriate time.

Quality Control (Contract Admin)

Used to inspect and verify adequacy of the contractor’s product.

Change Control (Contract Admin)

Ensures changes are properly approved and shared with all who need to know.

Payment Terms

Defined in the contract and linked to progress milestones and compensation.

Contested Changes

Disputes where seller and buyer disagree on compensation for contract changes.

Public Review of Contract

May be required in major projects undertaken by public agencies.

Buyer-Seller Relationship

The buyer-seller relationship can exist at many levels on one project, and the seller may be called a contractor, vendor, or supplier.

Seller’s Project Management Responsibility

The seller’s project management team must be concerned with all the processes of project management, not just with those of the procurement knowledge area.

Contract as an Input

The contract may actually contain the input or it may limit the project team’s options.

When Solicitation Planning Is Not Performed

If the project does not obtain products and services externally, the processes from solicitation planning through contract close-out are not performed.

Government Use of SOW vs SOR

In some government jurisdictions, the term SOW is reserved for specified products/services, and SOR is used when presented as a problem to be solved.

Proposal Preparation Effort

Most of the actual effort in solicitation is expended by the prospective sellers, normally at no cost to the project.

Public Advertising Requirements

Some government jurisdictions require public advertising of certain procurement items and subcontracts on government contracts.

Proposal Sections

Proposals are often separated into technical (approach) and commercial (price) sections and evaluated separately.

Use of Multiple Sources

Multiple sources may be required for critical products.

Iterated Evaluation Process

A short list of qualified sellers may be selected based on a preliminary proposal, followed by a detailed evaluation.

Should Cost Estimates

Independent estimates are often referred to as “should cost” estimates.

Legally Binding Nature of Contracts

A contract is a legal relationship subject to remedy in the courts.

Project Records for Contract Review

The legally binding nature of a contract usually means it will be subjected to a more extensive approval process.

Early Contract Termination

Early termination of a contract is a special case of contract close-out.

Structured Review Purpose (Procurement Audit)

The objective of a procurement audit is to identify successes and failures that warrant transfer to other procurement items or projects.

Contract Language Review Focus

The review and approval process should ensure that the contract describes a product or service that will satisfy the need identified.