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29 Cards in this Set

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  • Back
Procurement means
acquiring goods and/or services from an outside source.
Why Outsource
To allow the client organization to focus on its core business.
A contract is a
mutually binding agreement that obligates the seller to provide the specified products or services and obligates the buyer to pay for them.
Contracts can clarify
responsibilities and sharpen focus on key deliverables of a project.
Project procurement management:
Acquiring goods and services for a project from outside the performing organization.
Planning purchases and acquisitions:
Determining what to procure, when, and how.
Processes include Planning contracting:
Describing requirements for the products or services desired from the procurement and identifying potential sources or sellers (contractors, suppliers, or providers who provide goods and services to other organizations).
Processes include Requesting seller responses:
Obtaining information, quotes, bids, offers, or proposals from sellers, as appropriate.
Processes include Selecting sellers:
Choosing from among potential suppliers through a process of evaluating potential sellers and negotiating the contract.
Processes include Administering the contract:
Managing the relationship with the selected seller.
Processes include Closing the contract:
Completing and settling each contract, including resolving any open items.
Planning Purchases and Acquisitions
Identifying which project needs can best be met by using products or services outside the organization. If there is no need to buy any products or services from outside the organization, then there is no need to perform any of the other procurement management processes.
Make-or-buy analysis:
General management technique used to determine whether an organization should make or perform a particular product or service inside the organization or buy from someone else. Often involves financial analysis.
Types of Contracts Fixed price or lump sum
Involve a fixed total price for a well-defined product or service.
Types of Contracts Cost reimbursable
Involve payment to the seller for direct and indirect costs.
Types of Contracts Time and material
Hybrid of both fixed price and cost reimbursable contracts, often used by consultants.
Types of Contracts Unit price
Require the buyer to pay the seller a predetermined amount per unit of service.
Cost Reimbursable Contracts Cost plus incentive fee (CPIF):
The buyer pays the supplier for allowable performance costs plus a predetermined fee and an incentive bonus.
Cost Reimbursable Contracts Cost plus fixed fee (CPFF):
The buyer pays the supplier for allowable performance costs plus a fixed fee payment usually based on a percentage of estimated costs.
Cost Reimbursable Contracts Cost plus percentage of costs (CPPC):
The buyer pays the supplier for allowable performance costs plus a predetermined percentage based on total costs.
Contracts should include specific clauses to
take into account issues unique to the project.
A termination clause is
a contract clause that allows the buyer or supplier to end the contract.
Procurement Management Plan
Describes how the procurement processes will be managed, from developing documentation for making outside purchases or acquisitions to contract closure. Contents varies based on project needs
A statement of work is
a description of the work required for the procurement. A SOW is a type of scope statement.A good SOW gives bidders a better understanding of the buyer’s expectations.
Request for Proposals:
Used to solicit proposals from prospective sellers. A proposal is a document prepared by a seller when there are different approaches for meeting buyer needs.
Requests for Quotes:
Used to solicit quotes or bids from prospective suppliers. A bid, also called a tender or quote (short for quotation), is a document prepared by sellers providing pricing for standard items that have been clearly defined by the buyer
Involves: Evaluating proposals or bids from sellers.Choosing the best one, Negotiating the contract. Awarding the contract.
Administering the Contract
Ensures that the seller’s performance meets contractual requirements.
Contracts are legal relationships, so it is important that
legal and contracting professionals be involved in writing and administering contracts.