Chapter 12

Project Procurement Management

Procurement means acquiring goods and/or services from an outside source. Procurement is sometimes called outsources. We outsources to reduce both fixed and recurrent costs, to allow the client organization to focus on its core business, to access skills and technologies, to provide flexibility and to increase accountability.

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. There are 6 processes in project procuremeny management:
— Planning purchases and acquisitions
— Planning contracting
— Requesting seller responses
— Selecting sellers
— Administering the contract
— Closing the contract

The first process is planning purchases and acquisitions. It can be made by identifying which project needs can best be met by using products or services outside the organization. as make-or-buy analysis is one of the Tools and Techniques for Planning Purchases and Acquisition.


Different types of contracts can be used in different situations:
— Fixed price or lump sum contracts
— Cost reimbursable contracts
— Time and material contracts
— Unit price contracts

The Point of Total Assumption (PTA) is the cost at which the contractor assumes total responsibility for each additional dollar of contract cost. Contracts should include specific clauses to take into account issues unique to the project and require various educational or work experiences for different pay rights. A termination clause is a contract clause that allows the buyer or supplier to end the contract. A statement of work is a description of the work required for the procurement.

Planning contacting involves preparing several documents needed for potential sellers to prepare their responses and determining the evaluation criteria for the contract award. Request for Proposals: used to solicit proposals from prospective sellers. And Requests for Quotes: used to solicit quotes or bids from prospective suppliers.

Requesting Seller Responses is deciding whom to ask to do the work, sending appropriate documentation to potential sellers, and obtaining proposals or bids. In selecting sellers the activities involves
— Evaluating proposals or bids from sellers
— Choosing the best one
— Negotiating the contract
— Awarding the contract

Administering the contract is to ensures that the seller’s performance meets contractual requirements.

Closing the Contract involves completing and settling contracts and resolving any open items. The project team should, determine if all work was completed correctly and satisfactorily.