Conduct
Procurements:
Conduct Procurements is the process of
obtaining seller responses, selecting a seller, and awarding a contract.
The key benefit of this process is
that it provides alignment of internal and external stakeholder expectations through
established agreements.
Inputs Tools
and Techniques Outputs
During the Conduct Procurements
process, the team will receive bids or proposals and will apply previously defined
selection criteria to select one or more sellers who are qualified to perform
the work and acceptable as a seller.
A short list of qualified sellers can
be established based on a preliminary proposal. A more detailed evaluation can
then be conducted based on a more specific and comprehensive requirements
document requested from the sellers on the short list. A weighting system can
be used to:
There may be a prior agreement in
place and in this case, the buyer and seller roles will have already been
decided by executive management. In some cases, the seller may already be
working under a contract funded by the buyer or jointly by both parties. The
effort of the buyer and seller in this process is to collectively prepare a
procurement statement of work that will satisfy the requirements of the
project. The parties will then negotiate a final contract for award.
PM
may not be the lead negotiator on procurement, but may be present to assist may
need senior management approval before awarding the contracts
Bidder’s
conference is a Q&A session with bidders, all bidders receive the same
information (bidder are careful not to expose their technical approach during
the session => may not have many questions)
NOT
to have secret meetings or communications with individual vendors
May
set up qualified sellers lists
Review
seller proposals: weighting systems, independent estimates (organizations own
estimate to ensure that there is no significant difference in the proposals,
screening systems (kick out non-qualified vendors), seller ratings systems (depends
on past performance, experience etc.), expert judgement
Advertising
and Analytical techniques are two important tools of conducting the
procurements.
Resource
Calendars is an important output of Conduct Procurements as The quantity and
availability of contracted resources and those dates on which each specific
resource or resource group can be active or idle are documented.
Contract
Negotiations and Tactics
Fait
Accompli – not negotiable terms
Deadline
– deadline for deliverables, we have to finish this by 4 PM
Good
Guy/ Bad Guy – one friendly, one aggressive
Missing
Man – main person is missing
Limited
Authority – not given authority, I cannot do anything
Fair
and Reasonable – what is fair?
Unreasonable
– making unreasonable demands, you have to do this or get out
Delay
– especially in critical moments
- Attack
– force compliance, you are the worst person, I have ever seen
Agreement is legally binding and
should include (PM should NOT attempt to write the agreement): statement of
work, schedule baseline, performance reporting, period of performance, roles
and responsibilities, warranty, payment terms, fees and retainers, incentives,
liability, penalties, etc.
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Control
Procurements:
Control Procurements is the process of
managing procurement relationships, monitoring contract performance, and making
changes and corrections to contracts as appropriate. The key benefit of this
process is that it ensures that both the seller’s and buyer’s performance meets
procurement requirements according to the terms of the legal agreement.
Procurement is administered
(controlled) by both buyer and seller for their respective interest.
Control Procurement process manage
procurement relationships, monitor contract performance, and make change and
corrections. A procurement administrator is generally not part of the project
team. Most of the times, there is a specialized procurement department.
Agreements can be amended at any time
prior to contract closure by mutual consent, in accordance with the change
control terms of the agreement. Such amendments are typically captured in
writing.
Inputs Tools
and Techniques Outputs
It
may identify early signs and capture details for pre-mature termination of
contract
Claims
administration process deals with changes/disputes, disputes is best to be settled
through negotiation.
If
not settled through negotiation, it may need Alternative Dispute Resolution
(ADR) by 3rd parties.
Contract
Change Control System: for handling change requests to the contracts (defines
who has the authority to approve changes (usually not the PM, but may be
assigned the authority))
Work
performance data means the actual performance data from the project i.e. the cost incurred and the invoice needs to be
paid.
Payment Systems: Payments to the seller are typically
processed by the accounts payable system of the buyer after certification of
satisfactory work by an authorized person on the project team. All payments
should be made and documented in strict accordance with the terms of the
contract.
Question: How you will
monitor the contract performance, in case of all three types of contracts?
Answer:
For
Fixed Price contracts, look out for Bait
and Switch (replacement of good quality material with cheaper materials as
seller is getting the fixed price), look out for excessive change requests by
the seller
For
Cost Reimbursable contracts, audit all invoices, look out for additional
charges, tie payment to milestones, make sure people with the required skill
sets are doing the job (because seller is paid for each invoiced cost, you need
to audit the invoices)
For
Time and Materials contracts, ensure hours are not padded, follow the milestone
dates.
Seller
performance evaluation documentation: Seller performance evaluation
documentation is prepared by the buyer. Such performance evaluations document
the seller’s ability to continue to perform work on the current contract,
indicate if the seller can be allowed to perform work on future projects,
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Close
Procurements:
Close Procurements is the process of
completing each procurement. The key benefit of this process is that it
documents agreements and related documentation for future reference. Please
note it is different from “Close Project or Phase”.
It involves administrative activities
such as finalizing open claims, updating records to reflect final results, and
archiving such information for future use. There may be unresolved claims, but
all those unresolved claims after the procurement closure are subject to
litigation.
The rights and responsibilities of the
parties in the event of an early termination are contained in the terminations
clause of the contract.
Every procurement must be closed,
doesn’t matter whether it has completed, cancelled or terminated.
Inputs Tools
and Techniques Outputs
All
work is completed, deliverables accepted, claims settled OR terminated by
either party
It
is generally done prior to administrative closure of “Close Project or Phase”
Settlement
of claims/invoices, audit, archive (Record Management System), lessons learned
Contract
is complete when all the specifications are satisfied, no matter the customer is
satisfied with the product or not. Note project may not be completed yet.
Procurement
Audit is the structured review of the procurement process from Plan Procurement
Management through Control Procurements is used to capture lessons learned from
the procurement exercise.
