Preparation Course for

Project Management
Domain 2 – Process
Procurements
Management

Eng. Andrew Rizkalla , PMP®, PMI-RMP®, PRMG, CPM

[email protected]
0128-1150-908
 Project

Management

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 Key Concepts For Project
Procurement Management
➢ The Contract is agreements that describe the
relationship between two parties—a buyer and a seller
➢ The Project Manager should be familiar enough with the
procurement process to make intelligent decisions regarding
contracts and contractual relationships.

➢ The contracting approach and the contract itself should reflect

the simplicity or complexity of the deliverables or required
effort and should be written in a manner that complies with
local, national, and international laws regarding contracts.

➢ A purchasing contract includes terms and conditions

➢ A complex project may involve managing multiple contracts

simultaneously or in sequence
• Owner of the final product,
• a contractor, • Subcontractor,
• vendor, • Acquiring organization,
Seller Buyer • A service requestor,
• Service provider
• supplier • Purchaser

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 Key Concepts For Project
Procurement Management

The winning bidder may manage the work as a project

The buyer becomes the customer to subcontractors, suppliers,
and service providers and is therefore a key project stakeholder
from the seller’s perspective.
➢ The seller’s project management team may be concerned with
all the processes involved in performing the work or providing
the services.
➢ Terms and conditions of the contract and the procurement
statement of work (SOW) become key inputs to many of the
seller’s management processes.
➢ The contract can actually contain the inputs (major
deliverables, key milestones, cost objectives) or it can limit the
project team’s options
➢ The procurement SOW may have other names, such as the
technical statement of work.
➢ The seller itself may become a buyer of lower-tiered products,
services, and materials from subcontractors and suppliers.

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 Contracts

• Formal legally binding documents

• AKA agreement, subcontract , PO , or
MOU.
• Obligate seller to deliver
• Obligates buyer to pay.
• Handles entire agreement: legal,
marketing, business model, reporting,
marketing literature, etc.
• Reviewed and approved to guarantee it
describes all requirements.
• Mandatory Confirmation
• Any change must be agreed to by both
parties and formally changed in the
contract before becoming effective.

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 PROJECT PROCUREMENT MANAGEMENT
- PROJECT PROCUREMENT MANAGEMENT includes the processes necessary to
purchase or acquire products, services, or results needed from outside the
project team.
- PROJECT PROCUREMENT MANAGEMENT includes the management and control
processes required to develop and administer agreements such as contracts,
purchase orders, memoranda of agreements ‫( مذكرات تفاهم‬MOAs), or internal
service level agreements (SLAs). The personnel authorized to procure the goods
and/or services required for the project may be members of the project team,
management, or part of the organization’s purchasing department if applicable.
- Project Procurement Management processes include the following:
➢ PLAN PROCUREMENT MANAGEMENT - the process of documenting project
procurement decisions, specifying the approach, and identifying potential
sellers.
➢ CONDUCT PROCUREMENTS - the process of obtaining seller responses, selecting
a seller, and awarding a contract.
➢CONTROL PROCUREMENTS - the process of managing procurement relationships,
monitoring contract performance, making changes and corrections as
appropriate, and closing out contracts.

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- The project manager should be familiar enough with the procurement process to make intelligent
decisions regarding contracts and contractual relationships.

- The project manager is typically not authorized to sign legal agreements binding the organization.

- THE PROJECT PROCUREMENT MANAGEMENT PROCESSES involve agreements that describe the relationship
between two parties—a buyer and a seller

- THE SELLER may be identified as a contractor, vendor, service provider, or supplier. The seller is
assumed to be providing services and/or materials to the project and is usually outside the performing
organization. For larger, more complex projects the seller may become part of an integrated project
team after the contract is awarded. ‫البائع أو المقاول أو مقاول الباطن أو مقدم الخدمة أو المورد‬

- THE BUYER may be the owner of the final product, a subcontractor, the acquiring organization, a service
requestor, or the purchaser. The seller can be viewed during the contract life cycle first as a bidder,
then as the selected source, and then as the contracted supplier or vendor. The buyer of an item for
the project is assigned to the project team and/or is part of the larger organization. ‫المشتري أو العمیل أو‬
‫الزبون أو المقاول الرئیسي أو المؤسسة القائمة بالشراء أو طالب الخدمة أو المشتري‬

- FOR SMALLER ORGANIZATIONS or startup companies and those without a purchasing, contracting, or
procurement department, the project manager may assume the purchasing authority role to negotiate and
sign contracts directly (decentralized purchasing). For more mature organizations, the actual procurement
and contracting functions will be carried out by a separate department with the specific role to purchase,
negotiate, and sign contracts (centralized purchasing).

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TRENDS AND EMERGING PRACTICES IN PROCUREMENT MANAGEMENT
- Trends and emerging practices for Project Procurement Management include but
are not limited to:
➢ Advances in tools ‫التقدم في االدوات‬
➢ More advanced risk management.
➢ Changing contracting processes.
➢ Logistics and supply chain management.
➢ Technology and stakeholder relations.
➢ Trial engagements.

TAILORING CONSIDERATIONS
➢ Complexity of procurement.
➢ Physical location.
➢ Governance and regulatory environment.
➢ Availability of contractors.

===================================

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 Trends & Emerging Practices In Project
Procurement Management

Advances in tools

Trial More advanced

engagements risk management

Major trends to
Projects Success

Technology and Changing

stakeholder contracting
relations processes

Logistics and
supply chain
management

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- PLAN PROCUREMENT MANAGEMENT is the process of documenting project
procurement decisions, specifying the approach and identifying potential
sellers.

- THE KEY BENEFIT OF THIS PROCESS is that it determines whether to acquire goods
and services from outside the project and, if so, what to acquire as well as how
and when to acquire it. Goods and services may be procured from other parts of
the performing organization or from external sources.

PLAN PROCUEMENT MANAGEMENT INPUTS

ORGANIZATIONAL PROCESS ASSETS

- The organizational process assets that can influence the Plan Procurement
Management process include but are not limited to:
➢ Preapproved seller lists.
➢ Formal procurement policies, procedures, and guidelines.
➢ CONTRACT TYPES. All legal contractual relationships generally fall into one of
two broad families: either fixed-price or cost-reimbursable. Also, there is a third
hybrid type commonly used called the time and materials contract.

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• FIXED-PRICE CONTRACTS. This category of contracts involves setting a fixed total price for
a defined product, service, or result to be provided. These contracts should be used when
the type of work is predictable the requirements are well defined and no significant changes
to the scope are expected. Types of fixed-price contract include:
1. FIRM FIXED PRICE (FFP). ‫ السعر ثابت ومحدد‬The most commonly used contract type is the FFP.
It is favored by most buying organizations because the price for goods is set at the
outset and not subject to change unless the scope of work changes.
2. FIXED PRICE INCENTIVE FEE (FPIF). This fixed-price arrangement gives the buyer and seller
some flexibility in that it allows for deviation from performance, with financial incentives tied
to achieving agreed-upon metrics. Typically, such financial incentives are related to cost,
schedule, or technical performance of the seller. Under FPIF contracts, a price ceiling is
set, and all costs above the price ceiling are the responsibility of the seller.
3. FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENTS (FPEPA). This type is used whenever the
seller’s performance period spans a considerable period of years, or if the payments are
made in a different currency. It is a fixed-price contract, but with a special provision allowing
for predefined final adjustments to the contract price due to changed conditions, such as
inflation changes or cost increases (or decreases) for specific commodities.
• COST-REIMBURSABLE CONTRACTS. ‫ عقود استرداد التكلفة‬this category of contract involves
payments (cost reimbursements) to the seller for all legitimate actual costs incurred for
completed work, plus a fee representing seller profit. This type should be used if the scope
of work is expected to change significantly during the execution of the contract and the
work is evolving, likely to change, or not well defined. Variations can include:

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 1. COST PLUS FIXED FEE (CPFF). The seller is reimbursed for all allowable costs for
performing the contract work and receives a fixed-fee payment calculated as a
percentage of
the initial estimated project costs. Fee amounts do not change unless the
project scope changes.

2. COST PLUS INCENTIVE FEE (CPIF). The seller is reimbursed for all allowable costs for
performing the contract work and receives a predetermined incentive fee based on
achieving certain performance objectives as set forth in the contract. In CPIF contracts,
if the final costs are less or greater than the original estimated costs, then both the buyer
and seller share costs from the departures based upon a renegotiated cost-sharing
formula, for example, an 80/20 split over/under target costs based on the actual
performance of the seller.

3. COST PLUS AWARD FEE (CPAF). The seller is reimbursed for all legitimate costs, but the
majority of the fee is earned based on the satisfaction of certain broad subjective
performance criteria that are defined and incorporated into the contract. The
determination of fee is based solely on the subjective determination of seller
performance by the buyer and is generally not subject to appeals.

• TIME AND MATERIAL CONTRACTS (T&M). (Also called time and means) are a hybrid type
of contractual arrangement with aspects of both cost-reimbursable and fixed price
contracts. They are often used for staff augmentation, acquisition of experts, and any
outside support when a precise statement of work cannot be quickly prescribed.

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 Contracts & Risk Level

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PLAN PROCUEMENT MANAGEMENT T&T

DATA GATHERING
- MARKET RESEARCH. Includes examination of industry and specific seller
capabilities.

DATA ANALYSIS
- MAKE-OR-BUY ANALYSIS. It is used to determine whether work or deliverables can
best be accomplished by the project team or should be purchased from outside
sources. Factors to consider in the make-or-buy decision include the
organization’s current resource allocation and their skills and abilities, the need for
specialized expertise. It also includes evaluating the risks involved with each
make-or-buy decision.

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 T&T: Market research
• Includes examination of industry and
specific seller capabilities.

• Procurement teams may leverage

information to identify market
capabilities.
• The team may also refine specific
procurement objectives to leverage
maturing technologies while
balancing risks associated with the
breadth of sellers who can provide
the desired materials or services.

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 Make or
Buy?
• A general management
technique to determine if
the product can be
produced cost-effectively
by the performing
organization.
• Organization Strategy
• Project special needs
• Resources considerations
• Tangible goods?
• Initial price?
Direct/Indirect?
• Buy … as in just buy?!!
• Break even over one
project? Span multiple
projects?

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 Make or Buy Example
A project manager requires the use of a sheet
metal stamping machine. Using the below
information calculate the break event point in
days where is the Buying and renting are the
same

Rent Buy
Initial investment - $10,000
Daily Operation - $20
Daily Rental $100 -
– 5 days
– 75 days
– 125 days
– Never!

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 Source Selection Analysis - T&T
Least cost Quality and cost-based
• appropriate for procurements of a standard or • method allows cost to be included as a factor
routine nature where well-established in the seller selection process
practices and standards exist and from which a • when risk and/or uncertainty are greater for
specific and well-defined outcome is expected, the project, quality should be a key element
which can be executed at different costs. when compared to cost.

Qualifications only Sole source

• The buyer asks a specific seller to prepare
• time and cost don't matter because the value technical and financial proposals
of the procurement is small
• Since there is no competition, this method is
• Select bidder with the best credibility, acceptable only when properly justified and
qualifications, experience, expertise, areas of should be viewed as an exception
specialization, and references.

Fixed budget
Quality-based/highest technical proposal
score • subject to a cost constraint & limited budget,
• The buyer should therefore ensure that the
• Select a proposal with both technical and cost
budget is compatible with the SOW and that
details
the seller will be able to perform the tasks
• negotiate the contract if the technical proposal within the budget.
proves acceptable

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 PLAN PROCUEMENT MANAGEMENT OUTPUTS

PROCUREMENT MANAGEMENT PLAN.

- The procurement management plan can include guidance for:
➢ How procurement will be coordinated with other project aspects.
➢ Timetable of key procurement activities.
➢ Procurement metrics to be used to manage contracts.
➢ Stakeholder roles and responsibilities related to procurement, including authority
and constraints of the project team when the performing organization has a
procurement department.
➢ Constraints and assumptions that could affect planned procurements.
➢ The legal jurisdiction and the currency in which payments will be made.
➢ Determination of whether independent estimates will be used and whether they
are needed as evaluation criteria.

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➢ Risk management issues including identifying requirements for performance bonds
or insurance contracts to mitigate some forms of project risk.
➢ Prequalified sellers, if any, to be used.

PROCUREMENT STRATEGY
- Once the make-or-buy analysis is complete and the decision is made to acquire from outside
the project, a procurement strategy should be identified.

- The objective of the procurement strategy is to determine the project delivery method, the
type of legally binding agreement(s), and how the procurement will advance through the
procurement phases.
BID DOCUMENTS
- Depending on the goods or services needed, the bidding documents can include:-
➢ REQUEST FOR INFORMATION (RFI). It is used when more information on the goods and
services to be acquired is needed from the sellers.
➢ REQUEST FOR QUOTATION (RFQ). It is commonly used when more information is needed on
how vendors would satisfy the requirements and/or how much it will cost.
➢ REQUEST FOR PROPOSAL (RFP).it is used when there is a problem in the project and the
solution is not easy to determine. This is the most formal of the “request for” documents and
has strict procurement rules for content, timeline, and seller responses.

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 Procurement Strategy
The objective of the Procurement Delivery methods
Strategy For industrial /
For professional services
➢ determine the project delivery commercial construction
method • Buyer/services provider with
no subcontracting, • turnkey,
➢ Determine the type of legally • Buyer/ services provider with • design build (DB),
binding agreement subcontracting allowed, • design bid build (DBB),
➢ how the procurement will • Joint venture between buyer • design build operate (DBO),
and services provider, • build own operate transfer
advance through the • Buyer/services provider acts as (BOOT), and others.
procurement phases the representative.

Contract payment types

Procurement phases
• Contract payment types are separate from the project delivery
methods and are coordinated with the buying organization’s
• Sequencing or phasing of the procurement internal financial systems
• Procurement performance indicators and
when the type of work is predictable and the
milestones to be used in monitoring;
Fixed-price requirements are well defined and not likely to
• Criteria for moving from phase to phase; change.
• Monitoring and evaluation plan for tracking when the work is evolving, likely to change, or not
progress; and Cost plus
well defined
• Process for knowledge transfer for use in
subsequent phases Incentives and
used to align the objectives of buyer and seller
awards

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PROCUREMENT STATEMENT OF WORK
- THE STATEMENT OF WORK (SOW) for each procurement is developed from the project scope
baseline and defines only that portion of the project scope that is to be included within the
related contract.
- THE 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. Sufficient detail
can vary based on the nature of the item, the needs of the buyer, or the expected contract
form.
- INFORMATION INCLUDED IN A SOW can include specifications, quantity desired, quality
levels, performance data, period of performance, work location, and other requirements. ‫هام جدا‬
‫جدا‬
- THE PROCUREMENT SOW should be clear, complete, and concise. It includes a description of
any collateral services required, such as performance reporting or post-project operational
support for the procured item.
- THE SOW can be revised as required as it moves through the procurement process until
incorporated into a signed agreement.
INDEPENDENT COST ESTIMATES ‫تقدیرات التكلفة المستقلة‬
- For large procurements, the procuring organization may elect to either prepare its own
independent estimate or have a cost estimate prepared by an outside professional estimator to
serve as a benchmark on proposed responses. Significant differences in cost estimates can be
an indication that the procurement SOW was deficient or ambiguous, or that the prospective
sellers either misunderstood or failed to respond fully to the procurement SOW.

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 Sample SOW (Statement Of Work)
1. Scope of Work: DESCRIBE THE WORK to be done to detail. Specify the hardware
and software involved and the EXACT NATURE of the work.
2. Location of Work: Describe where the work must be performed. Specify the location
of hardware and software and where the people must perform the work
3. Period of Performance: Specify when the work is expected to start and end, working
hours, number of hours that can be billed per week, where the work must be performed,
and related schedule information.
4. Deliverables Schedule: List specific deliverables, describe them in detail, and
specify when they are due.
5. Applicable Standards: Specify any company or industry-specific standards that are
relevant to performing the work.
6. Acceptance Criteria: Describe how the buyer organization will determine if the work
is acceptable.
7. Special Requirements: Specify any special requirements such as hardware or
software certifications, minimum degree or experience level of personnel, travel
requirements, and so on.

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 Source Selection Criteria
➢ Capability and capacity; ➢ Understanding of need.
➢ Product cost and life cycle cost; ➢ Overall or life-cycle cost.
➢ Delivery dates; ➢ Technical capability.
➢ Technical expertise and approach; ➢ Risk.
➢ Specific relevant experience; ➢ Management approach.
➢ Adequacy of the proposed ➢ Technical approach.
approach and work plan in ➢ Warranty.
responding to the SOW; ➢ Financial capacity.
➢ Key staff’s qualifications, availability, ➢ Production capacity
and competence;
➢ Business size and type.
➢ Financial stability of the firm;
➢ Past performance of sellers.
➢ Management experience;
➢ References.
➢ Suitability of the knowledge
➢ Intellectual property rights.
transfer program, including training.
➢ Proprietary rights.

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 Output: Bid Documents
• Request for information (RFI).
– An RFI is used when more information on the goods
and services to be acquired is needed from the sellers.
It will typically be followed by an RFQ or RFP.

• Request for quotation (RFQ).

– An RFQ is commonly used when more information is
needed on how vendors would satisfy the
requirements and/or how much it will cost.

• Request for proposal (RFP).

– An RFP is used when there is a problem in the project
and the solution is not easy to determine. This is the
most formal of the “request for” documents and has
strict procurement rules for content, timeline, and seller
responses.

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 Common Procurement Documents
Request for information Request for quotation Request for proposal
(RFI) (RFQ) (RFP)

••More
More information on • Request
the goods and services PRICE + PROPSAL
to be acquired is on how work will be
needed from the done, who will do it,
• Request for material resumes, company
sellers. or service – asks for experience. Often
a price quote per Evaluated based on
••It
It will typically be item, hour, foot, etc. PRICE + TECHNICAL
followed by an RFQ or criteria
RFP.

• Procurement documents should include:

– The relevant statement of work
– Description of the desired form of the response
– Required contractual provisions

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 Outputs
• Make-or-buy decisions • Independent cost
– Decision on whether particular work can estimates
best be accomplished by the project team or – Cost estimate prepared by an outside
needs to be purchased from outside professional estimator to serve as a
sources. benchmark on proposed responses.

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ORGANIZATIONAL PROCESS ASSETS UPDATES
- Organizational process assets that are updated as a result of the Plan Procurement
Management process include but are not limited to information on qualified sellers.

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OC
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- CONDUCT PROCUREMENTS is the process of obtaining seller responses, selecting a seller,
and awarding a contract. ‫الحصول علي ردود البائع – اختیار البائع – ابرام العقد‬

- THE KEY BENEFIT OF THIS PROCESS is that it selects a qualified seller and implements the legal
agreement for delivery. The end results of the process are the established agreements including
formal contracts.
- On larger projects with multiple providers, a key aspect of contract administration is managing
communication among the various providers.

CONDUCT PROCUREMENTS INPUTS

PROCUREMENT DOCUMENTATION
- BID DOCUMENTS. Include the RFI, RFP, RFQ, or other documents sent to sellers so they can
develop a bid response.
- PROCUREMENT STATEMENT OF WORK. Provides sellers with a clearly stated set of goals,
requirements, and outcomes from which they can provide a quantifiable response.
- INDEPENDENT COST ESTIMATES. Developed either internally or by using external resources and
provide a reasonableness check against the proposals submitted by bidders.
- SOURCE SELECTION CRITERIA. These criteria describe how bidder proposals will be evaluated,
including evaluation criteria and weights. For risk mitigation, the buyer may decide to sign
agreements with more than one seller to mitigate damage caused by a single seller having problems
that impact the overall project.

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SELLER PROPOSALS
- Prepared in response to a procurement document package, form the basic information
that will be used by an evaluation body to select one or more successful bidders (sellers).
If the seller is going to submit a price proposal, good practice is to require that it be
separate from the technical proposal. The evaluation body reviews each submitted
proposal according to the source selection criteria and selects the seller that can best
satisfy the buying organization’s requirements.

CONDUCT PROCUREMENTS T&T

ADVERTISING ‫االعالنات‬
- Advertising is communicating with users or potential users of a product, service, or
result. Existing lists of potential sellers often can be expanded by placing
advertisements in general circulation publications such as selected newspapers or in
specialty trade publications. Most government jurisdictions require public advertising or
online posting of pending government contracts.
BIDDER CONFERENCES
- Bidder conferences (also called contractor conferences, vendor conferences, and pre-
bid conferences) are meetings between the buyer and prospective sellers prior to
proposal submittal. They are used to ensure that all prospective bidders have a clear and
common understanding of the procurement and no bidders receive preferential treatment.

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 T&T
• Advertising • Proposal evaluation
– Evaluated to ensure they are complete
– Potential sellers often can be
and respond in full to the bid documents,
expanded by placing
procurement statement of work, source
advertisements in general
selection criteria, and any other
circulation publications.
documents that went out in the bid
package.
▪ Bidder Conference
•Used to ensure that all prospective ▪ Negotiation
bidders have a clear and common • Discussion aimed at reaching an agreement.
• Clarifies terms of the purchases so a mutual
understanding of the procurement and
agreement can be reached prior the contract.
no bidders receive preferential • Led by a team member has the authority to
treatment. sign contracts.

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 Bidder Conference
✓ Meetings with prospective
sellers PRIOR TO
preparation of a proposal

✓ Ensure all prospective sellers

have a clear, common
understanding of the
procurement

✓ Feedback & responses to

questions may be
incorporated into the
procurement documents as
amendments.

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DATA ANALYSIS
- PROPOSAL EVALUATION. Proposals are evaluated to ensure they are complete and
respond in full to the bid documents, procurement statement of work, source
selection criteria, and any other documents that went out in the bid package.
INTERPERSONAL AND TEAM SKILLS
- NEGOTIATION. It is a discussion aimed at reaching an agreement. It is clarifying
the structure, rights, and obligations of the parties and other terms of the
purchases so that mutual agreement can be reached prior to signing the
contract. Final document language reflects all agreements reached. Negotiation
concludes with a signed contract document or other formal agreement that can
be executed by both buyer and seller. The negotiation should be led by a
member of the procurement team that has the authority to sign contracts.

The project manager and other members of the project management team may be
present during negotiation to provide assistance as needed.

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CONDUCT PROCUREMENTS OUTPUTS
SELECTED SELLERS
- The selected sellers are those who have been judged to be in a competitive range
based on the outcome of the proposal or bid evaluation. Final approval of complex, high-
value, high risk procurements will generally require organizational senior management
approval prior to award.

AGREEMENTS ‫العقد‬
- A contract is a mutually binding agreement that obligates the seller to provide the
specified products, services, or results; obligates the buyer to compensate the seller;
and represents a legal relationship that is subject to remedy in the courts. The major
components in an agreement document will vary, and may include but are not limited to:
- Procurement statement of work or major deliverables; Schedule, milestones, or date by
which a schedule is required; Performance reporting; Pricing and payment terms;
Inspection, quality, and acceptance criteria; Warranty and future product support;
Incentives and penalties; Insurance and performance bonds; Subordinate subcontractor
approvals; General terms and conditions; Change request handling; and Termination
clause and alternative dispute resolution mechanisms.

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 Output: Selected Sellers
• Those who have been judged to be in a competitive range
based on the outcome of the proposal or bid evaluation.
• Final approval of complex, high-value, high-risk procurements
will generally require organizational senior management
approval prior to award.

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OC
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- CONTROL PROCUREMENTS is the process of managing procurement relationships;
monitoring contract performance, and making changes and corrections as
appropriate; and closing out contracts.

- THE KEY BENEFIT OF THIS PROCESS is that it ensures that both the seller’s and buyer’s
performance meet the project’s requirements according to the terms of the legal
agreement.

CONTROL PROCUREMENTS INPUTS

PROCUREMENT DOCUMENTATION
- Contains complete supporting records for administration of the procurement
processes. Procurement documentation includes the statement of work, payment
information, contractor work performance information, plans, drawings, and other
correspondence.

APPROVED CHANGE REQUESTS

- Can include modifications to the terms and conditions of the contract, including
the procurement statement of work (SOW), pricing, and descriptions of the
products, services, or results to be provided.

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 CONTROL PROCUREMENTS T&T
CLAIMS ADMINISTRATION
- Requested changes where the buyer and seller cannot reach an agreement on
compensation for the change or cannot agree that a change has occurred. These contested
changes are called claims.
- If the parties themselves do not resolve a claim, it may have to be handled in accordance
with alternative dispute resolution (ADR) typically following procedures established in the
contract.
- Settlement of all claims and disputes through negotiation is the preferred method.
ONTROL PROCUREMENTS: OUTPUTS

CLOSED PROCUREMENTS
- The buyer, usually through its authorized procurement administrator, provides the seller
with formal written notice that the contract has been completed.
- Requirements for formal procurement closure are usually defined in the terms and
conditions of the contract and are included in the procurement management plan.
- All deliverables should have been provided on time and meet technical and quality
requirements, there should be no outstanding claims or invoices, and all final payments
should have been made. The project management team should have approved all
deliverables prior to closure.

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 Tools and Techniques
• Claims Administration
– Buyer and seller cannot agree on changes.

– External Arbitrator.
– Settlement of all claims and disputes through negotiation is the preferred
method.

• Performance Reviews

– Structure review of seller progress

– Scope, quality, cost schedule compared against contract

– Identify performance failures

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 T&T

Inspection Audit
• Structured review of the work being
performed by the contractor • A structured review of the
procurement process
• Involve
Involve aa simple
simple review
review of
of the
the
deliverables or an actual physical • Rights and obligations related to audits
review of the work itself should be described in the
procurement contract
• On a construction/ engineering/
infrastructure project, • Resulting audit observations should be
brought to the attention of the buyer’s
• inspections involve walkthroughs of the project manager and the seller’s
site by both the buyer and the project manager
contractor

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 Negotiation Mediation

Arbitration

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 And the Final Touches ..

▪Authorized contract administrator at buyer

▪Send with formal written notice
(DELIVERABLE ACCEPTANCE) that
the deliverables have been accepted
or rejected.
▪Requirements for formal deliverable
acceptance, and how to address non-
conforming deliverables, are usually
defined in the contract.
▪LESSONS LEARNED

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 Guidelines to Manage Suppliers and Contracts

▪ Index and store all contract correspondence for ease of retrieval.

▪ Develop and implement an effective contract change control system.
▪ Evaluate the risk of each contract change request.
▪ Document all contract changes and incorporate any effects of the change into the project plan.
▪ Spell out in the contract any performance reporting specifications to be imposed on the seller.
▪ Set performance milestones to monitor project progress.
▪ If work is performed at another site, conduct site visit to determine how the seller’s work is
progressing.
▪ Submit approved invoices for payment in accordance with the contract and the project’s payment
system.

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 ININPPUUTSS T&T OUTPUTS

1. Work performance info.

1. Expert Judgment 2. Cost forecasts
2. Data analysis 3. Change requests
• Earned T
va&lueTmanagement
OUTPUTS
4. Project Management Plan
• Variance analysis
• Trend analysis updates
• Reserve analysis • Cost manage. Plan
• Cost baseline
3. To-complete performance
• Performance measurement
index (TCPI) baseline
4. Project management info. 5. Project documents updates
System • Assumption log
• Basis of estimates

Thank You
• Cost estimates
• Lessons learned register
• Risk register