Project Management Professionals Hot Topics & Challenges 4 - PowerPoint PPT Presentation

Project Management Professionals Hot Topics & Challenges – 4 procurement management processes Topic: Understand PMI's 4 procurement management processes in detail. Presenter: Sohel Akhter, PMP, CCNA,ISMS PMP Instructor, Netcom Learning Adjunct Professor , MBA program, CUNY PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 1

Project Management Professionals Hot Topics & Challenges – 4 procurement management processes Agenda 4 Procurement management processes   1. Plan Procurement Management  2. Conduct Procurements  3.Control Procurements  4. Close Procurements Questions?  PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 2

Project Management Professionals Hot Topics & Challenges – 4 procurement management processes  Includes the processes to purchase or acquire the products, services, or results needed from outside the project team to perform the work. The organization can be either the buyer or seller  Includes the contract management and change control processes required to administer contracts or purchase orders issued by authorized project team members  Most large organizations have procurement departments that are ultimately responsible for soliciting, negotiating, administering and closing contracts  Also includes administering any contract issued by an outside organization (the buyer) that is acquiring the project from the performing organization (the seller), and administering contractual obligations placed on the project team by the contract PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 3

Project Management Professionals Hot Topics & Challenges – 4 procurement management processes The Procurement Management Done During Used For Key Outputs Process Planning The process of documenting Procurement Mgmt . Plan 1. Plan project purchasing decisions, Statement of Work(SOW) Procurement specifying the approach, and Procurement Document Management identifying potential sellers Executing The process of obtaining seller Selected Sellers 2. Conduct responses, selecting a seller, and Agreements Procurements awarding a contract Monitoring & The process of managing Work Performance Information Control procurement relationships, Change requests 3.Control monitoring contract performance, Project Management Plan Procurements and making changes and Updates corrections as needed Closing The process of completing each Closed Procurements 4. Close project procurement. Procurements PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 4

Project Management Professionals Hot Topics & Challenges – 4 procurement management processes Close Procurement Plan Procurement Conduct Procurement Control Procurement  Find potential sellers  Make a make-or- buy  Understand the legal  Perform a procurement through advertising or the Decision implications of your actions audit  Create a procurement internet  Hold procurement  Reach a negotiated  Send procurement mgmt Plan performance reviews settlement  Create the procurement documents  Request changes and  Create lessons learned  Hold a bidder conference  Complete final contract SOW administer claims  Answer sellers’ questions  Select the appropriate  Manage interfaces among performance reporting  Seller makes a decision to contract type  Verify the product sellers  Create terms and bid/propose  Report performance  Issue formal acceptance  Seller creates the conditions, including  Monitor performance  Update records proposals  Create a procurement file standard and special against contract  Receive the proposals conditions  Review cost submittals  Perform financial closure  Compare the proposals to  Create procurement  Make payments  Close Contract source selection criteria  Perform inspections and documents  Create source selection using a weighting or audits screening system to  Maintain records of criteria pick/shortlist sellers everything  Receive presentations from seller(s)  Compare to independent estimates  Hold negotiations  Award Contract PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 5

Project Procurement Management Plan Procurement Management Inputs Goals • Project Management Plan • Is the process of documenting project purchasing decisions, specifying the • Requirements Documentation approach, and identifying potential • Risk Register sellers. It identifies those project needs • Activity Resource Requirements which can best be met by acquiring • Project Schedule products, services, or results outside of • Activity Cost Estimates the project organization, versus which • Stakeholder Register can be accomplished by the project team • Enterprise Environmental Factors • Organizational Process Assets Outputs Tools and Techniques • Procurement Management Plan • Procurement Statements of Work • Make or Buy Analysis • Procurement Documents • Expert Judgment • Source Selection Criteria • Market Research • Make or Buy Decisions • Meetings • Change Requests • Project Documents Updates PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 6

Project Procurement Management Plan Procurement Management: Outputs  Procurement Management Plan: Describes how project procurements will be managed, including – What service, product or result will be produced. – Types of contracts to be used. – Who will prepare independent estimates and when. – What procurements the project team may make on its own. – Which standard procurement documents will be used. – List prequalified sellers if there is any. – How the sellers will be selected. – How sellers’ performance will be measured. – How procurement will be coordinated with other project aspects (scheduling, performance reporting). – Assumptions and constraints related to procurements.  Procurement Statement of Work: Describes the subject item in sufficient detail to allow prospective sellers to determine offerings (bids, proposals, etc.) PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 7

Project Procurement Management Plan Procurement Management: Outputs  Procurement Documents: Used to solicit proposals from prospective sellers. Well- designed procurement documents help in easier comparison of seller responses, more complete proposals, more accurate pricing and decrease in the amount of changes in the project. – Request For Proposal (RFP): Buyer’s request to all potential sellers for the details of how work will be performed. May include specific questions regarding performance of work and aspects of the seller’s business (e.g. service capabilities, experience in this work, warranties, financing, etc. as well as – Background information about the project goal, objective etc from buyer’s prospective. – Procedure for applying. – Guidelines for preparation of the response. – Exact format of response required. – Evaluation criteria that the buyer will use to evaluate the sellers. – Pricing forms. – Procurement Statement of Work. – Terms and conditions. – Invitation For Bid ( IFB or Request for Bid, RFB): Request from buyer for all potential sellers to submit a total price bid for work to be performed . – Request for Quotation (RFQ): Request a price quote per item, hour, foot or other unit of measure. PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 8

Project Procurement Management Plan Procurement Management: Outputs  Source Selection Criteria – Developed and used to rate or score seller proposals, and can be objective or subjective. – Understanding of need – Overall or life-cycle cost – Technical capability – Risk – Management approach – Technical approach – Warranty – Financial capacity – Production capacity and interest – Business size and type – Past performance of sellers – References – Intellectual property rights – Proprietary rights  Change Requests – Request for changes to the project management plan and other subsidiary plans or components PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 9

Project Procurement Management Plan Procurement Management : Outputs  Noncompetitive Forms of Procurement – The project is under extreme schedule pressure – A seller has unique qualifications – There is only one seller who can provide the goods or services – A seller holds a patent for the item you need – Other mechanisms exist to ensure that the seller’s price is reasonable  Two Types Noncompetitive Forms of Procurement – Single Source (Preferred Seller) – Sole Source (only seller) Exercise: What type of issues might occur in term of scope, cost, quality, schedule, customer satisfaction and risk etc in a noncompetitive procurement that would not be as significant in a competitive environment?  Letter of Intent: A letter of intent is a letter expressing the intention of the buyer to hire the seller.  Privity: Contractual relationship PMP Webinar , Netcom Learning, Sohel Akhter (PMP, ISMS, CCNA) 10