Pmp session 6

PMP & CAPM Exam Preparation

March 5, 2013

Sessions

1. About the exam2. Integration & Scope Management3. Time & Cost Management4. Quality & HR Management5. Communication & Risk

Management6. Procurement Management

Last Session Key point

• Process groups: IPEMCC• 9 Knowledge Area: ISTiCoQuHurCoRiP• Project Integration Management

– DevPC.PMP.DirManPex.MoConPW.PerICC.CloPP

• Project Scope Management– CoDeWoBVCon

Last Session Key point – cont’d

• Project Time Management (DeSeReDDevCon)• Project Cost Management (EsCDeBCon)• Project Quality Management (PlanQAQC)• Project Human Resources (Plan ADM)• Project Communication Management (IdS Plan

DisInt ManSEx RepPer)• Project Risk Management (PlanR IdR QQ Rp

MC)

Project Procurement Management

• Plan Con Ad Close


• To acquire / purchase products, services, or results needed from outside the project team

• Includes contract management• Contracts: legal document between buyer and

seller, represents a legally binding agreement which obligates the seller to provide the specified products, services, or results and obligates the buyer to provide monetary or other valuable consideration


• A complex project may involve managing multiple contracts or subcontracts simultaneously or in sequence

• Seller = contractor, subcontractor, vendor, supplier, service provider

• Buyer = client, customer, prime contractor, acquiring organization, purchaser, requestor


• This chapter assumes as buyer and seller is external provider


• Plan Procurements• Documenting project purchasing decisions• Specify purchasing approach• Identifying potential sellers• Answers, “Should we acquire it externally?, What

to require, How to require, How much and When to acquire”


• Plan Procurements


• Plan Procurements – I• Scope baseline (…)• Requirement documentation• Teaming agreements

• Joint ventures, partnerships, or other form of agreements between defined parties


• Plan Procurements – I (cont’d)• Risk register• Risk related contract decisions• Activity resource requirements• Project schedule• Activity cost estimates• Cost performance basline• EEF• OPA


• Plan Procurements – TT• Make-or-buy analysis• Expert judgment• Contract types

Fixed-price contractCost-reimbursable contractTime and material


• Plan Procurements – TT (cont’d)• Contract types (cont’d)

Fixed-price contract– Firm fixed price (FFP) buyer preffered– Fixed price incentive fee (FPIF)

Set price ceiling Price is based on seller’s performance

related to cost, schedule, or technical performance



Fixed-price contract (cont’d)– Fixed price with economic price adjustment

(FP-EPA) usually a very long project Takes inflation and commodities cost,

into account Relies on financial index



Cost reimbursable contract– Cost plus fixed fee (CPFF)– Cost plus incentive fee (CPIF)

Seller can reimburse allowable costs Based on seller’s performance Utilizes sharing formula, e.g.: 80/20



Cost reimbursable contract (cont’d)– Cost plus award fee (CPAF)

Subjective determination of seller performance by buyer

Not a subject for appeals



Time and Material– A hybrid type– Used when a precise statement of work

cannot be quickly prescribed– A form of cost reimbursable if it is left open

ended– A form of fixed price if buyer limits

parameters and apply unit labor cost


• Plan Procurements – O• Procurement management plan

Contract type, risk management issue Evaluation criteria, multiple contracts criteria Constraints and assumptions, etc


• Plan Procurements – O (cont’d)• Procurement statement of work

Developed from project scope baseline and defines only a portion of project scope to be included in related contract

Must be in sufficient detail so that prospective sellers can determine their capability to provide such product, service, or results


• Plan Procurements – O (cont’d)• Procurement statement of work (cont’d)

Includes specifications, quantity, quality levels, performance data, performance period, work location, etc

Must be clear, complete, and concise Multiple products / services can be grouped

into single SOW Is subject to change until a contract is awarded


• Plan Procurements – O (cont’d)• Make-or-buy decisions

May include decision to require insurance policies or performance bonds to address some identified risks

• Procurement documents Quotation, bidding document, tender, RFP,

RFQ, RFI, etc


• Plan Procurements – O (cont’d)• Source selection criteria


• Plan Procurements – O (cont’d)• Source selection criteria (cont’d)


• Plan Procurements – O (cont’d)• CR


• Conduct Procurements• To obtain seller’s response• Selecting a seller• Awarding a contract


• Conduct Procurements – I • PMP• Procurement document• Source selection criteria• Qualified seller list• Seller proposals• Project documents• Make-or-buy decisions


• Conduct Procurements – I (cont’d) • Teaming agreement• OPA


• Conduct Procurements – TT• Bidder conferences

To ensure buyer and seller have a clear and common understanding of the procurement

No sellers received preferential treatment Every prospective sellers hear individual

questions and the answers from buyers• Proposal evaluation techniques


• Conduct Procurements – TT (cont’d)• Independent estimates• Expert judgment• Advertising• Internet search• Procurement negotiations


• Conduct Procurements – O• Selected sellers• Procurement contract award


• Conduct Procurements – O (cont’d)• Resource calendars• CR• PMP U• PD U


• Administer Procurements• Process of managing procurement relationships,

monitoring contract performance, making changes / corrections

• To ensure both parties meet their contractual agreements and their own legal rights are protected

• Might be carried out by separate function of the organization


• Administer Procurements• Applied project management processes (but not

limited to):Direct and manage project executionReport performancePerform quality controlPerform integrated change controlMonitor and control risk


• Administer Procurements• Also includes monitoring payments to sellers• Document seller’s performance / evaluation• Contracts can be amended at any time prior to

contract closure by mutual consent


• Administer Procurements


• Administer Procurements – I • Procurement documents• PMP• Contract• Performance report• Approved CR• WPI


• Administer Procurements – TT• Contract change control system• Procurement performance review• Inspection and audit• Performance reporting• Payment system• Claims administration• Records management system


• Administer Procurements – O• Procurement documentations• OPA U• CR• PMP U


• Close Procurements• Completion of project procurement• Includes administrative activities

• Finalizing open claims, update information to project records

• In multi phase project, close procurement only applicable to given phase of the project


• Close Procurements• Early termination also triggers close

procurements


• Close Procurements – I • PMP• Procurement documentation


• Close Procurements – TT• Procurement audit• Negotiated settlement• Record management system


• Close Procurements – O• Closed procurements• OPA U

Sample Questions

1. Which of the following is a false statement about project risks?

A. A risk arises out of uncertainty.B. A risk can only have a negative effect on a project.C. Identified risks are usually listed in a document

called the risk register.D. Risks can be categorized by developing a risk

breakdown structure (RBS).

Pmp session 6

Documents

Transcript of Pmp session 6