Expert answer:Project Management: Procurement Planning Paper hel
Answer & Explanation:Project Management: Procurement Planning Paper
Assignment
Requirements:
Write a 1,050- to 1,400-word paper in which you do the following: Describe the project procurement planning process. See Section 12.1 in the PMBOK®Guide. Identify the most valuable output of the plan procurement process and explain why you believe it is most valuable. Explain the various contract types and describe who–buyer or seller–has the most at risk for each contract type. Describe a source selection criterion that would be applicable to any project and identify three criteria that would apply to most projects. See Section 12.1.3.5 in thePMBOK® Guide. Analyze the ethical concerns that should be considered when identifying source selection criteria. Explain the role of risk management in the procurement planning process. Format your paper consistent with APA guidelines.
Additional
Requirements:
Complete the
assignment using your own words with correct spelling, punctuation, and
grammar in APA format. No plagiarism.
If you are not
using your own words or if you are quoting any information or definitions,
make sure to cite the information by using proper APA format citations and
don’t forget to include the source of the information as a reference on
the references page by using proper APA format.
Read and use the
attached PDF and/or Word document(s) listed under the attachments section
in order to understand the necessary information in order for you to be
able to complete the assignment accurately and completely.
Read and use any other attachments listed under
the attachments section in order for you to be able to complete the
assignment accurately and completely, if applicable. Do not forget
to include any other attachments as references and to use citations from
them, if applicable.
Attachments:Chapter 12.docx
chapter_12.docx
Unformatted Attachment Preview
Chapter 12: Project Procurement Management
Project Procurement Management includes the processes necessary to purchase or
acquire products, services, or results needed from outside the project team. The
organization can be either the buyer or seller of the products, services, or results of a
project.
Project Procurement Management includes the contract management and change
control processes required to develop and administer contracts or purchase orders
issued by authorized project team members.
Project Procurement Management also includes controlling any contract issued by an
outside organization (the buyer) that is acquiring deliverables from the project from the
performing organization (the seller), and administering contractual obligations placed on
the project team by the contract.
Figure 12-1 provides an overview of the Project Procurement Management processes
which include the following:
12.1 Plan Procurement Management—The process of documenting project
procurement decisions, specifying the approach, and identifying potential sellers.
12.2 Conduct Procurements—The process of obtaining seller responses, selecting a
seller, and awarding a contract.
12.3 Control Procurements—The process of managing procurement relationships,
monitoring contract performance, and making changes and corrections as appropriate.
12.4 Close Procurements—The process of completing each project procurement.
These processes interact with each other and with processes in other Knowledge Areas
as described in detail in Section 3 and Annex A1.
Figure 12-1: Project Procurement Management Overview
The Project Procurement Management processes involve agreements, including
contracts, which are legal documents between a buyer and a seller. A contract
represents a mutually binding agreement that obligates the seller to provide something
of value (e.g., specified products, services, or results) and obligates the buyer to provide
monetary or other valuable compensation. An agreement can be simple or complex,
and may reflect the simplicity or complexity of the deliverables or required effort.
A procurement contract includes terms and conditions, and may incorporate other items
that the buyer specifies as to what the seller is to perform or provide. It is the project
management team’s responsibility to make certain that all procurements meet the
specific needs of the project while adhering to organizational procurement policies.
Depending upon the application area, a contract can also be called an agreement, an
understanding, a subcontract, or a purchase order. Most organizations document
policies and procedures specifically defining the procurement rules and specifying who
has authority to sign and administer such agreements on behalf of the organization.
Although all project documents may be subject to some form of review and approval,
the legally binding nature of a contract or agreement usually means it will be subjected
to a more extensive approval process. In all cases, the primary focus of the review and
approval process is to ensure that the contract language describes the products,
services, or results that will satisfy the identified project need.
The project management team may seek support in early phases from specialists in
contracting, purchasing, law, and technical disciplines. Such involvement can be
mandated by an organization’s policies.
The various activities involved in the Project Procurement Management processes form
the life cycle of an agreement. By actively managing the agreement life cycle and
carefully wording the terms and conditions of a procurement, some identifiable project
risks may be shared or transferred to a seller. Entering into an agreement for products
or services is one method of allocating the responsibility for managing or sharing
potential risks.
A complex project may involve managing multiple contracts or subcontracts
simultaneously or in sequence. In such cases, each contract life cycle may end during
any phase of the project life cycle. Project Procurement Management is discussed
within the perspective of the buyer-seller relationship. The buyer-seller relationship may
exist at many levels on any one project, and between organizations internal to and
external to the acquiring organization.
Depending on the application area, the seller may be identified as a contractor,
subcontractor, vendor, service provider, or supplier. Depending on the buyer’s position
in the project acquisition cycle, the buyer may be called a client, customer, prime
contractor, contractor, acquiring organization, service requestor, or 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 seller will typically manage the work as a project if the acquisition is not just for
shelf material, goods, or common products. In such cases:
▪ The buyer becomes the customer, and is thus a key project stakeholder for the
seller.
▪ The seller’s project management team is concerned with all the processes of
project management, not only with those of this Knowledge Area.
▪ Terms and conditions of the contract become key inputs to many of the seller’s
management processes. The contract can actually contain the inputs (e.g., major
deliverables, key milestones, cost objectives), or it can limit the project team’s
options (e.g., buyer approval of staffing decisions is often required on design
projects).
In this section, it is assumed that the buyer of an item for the project is assigned to the
project team and that the seller is organizationally external to the project team. It is also
assumed that a formal contractual relationship will be developed and exists between the
buyer and the seller. However, most of the discussion in this section is equally
applicable to non-contractual work entered into with other units of the project team’s
organization.
12.1 Plan Procurement Management
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 outside support, and if so, what to
acquire, how to acquire it, how much is needed, and when to acquire it. The inputs,
tools and techniques, and outputs of this process are depicted in Figure 12-2. Figure
12-3 depicts the data flow diagram of the process.
Figure 12-2: Plan Procurements: Inputs, Tools & Techniques, and Outputs
Figure 12-3: Plan Procurement Management Data Flow Diagram
Plan Procurement Management identifies those project needs that can best be met or
should be met by acquiring products, services, or results outside of the project
organization, versus those project needs which can be accomplished by the project
team. When the project obtains products, services, and results required for project
performance from outside of the performing organization, the processes from Plan
Procurement Management through Close Procurements are performed for each item to
be acquired.
The Plan Procurement Management process also includes evaluating potential sellers,
particularly if the buyer wishes to exercise some degree of influence or control over
acquisition decisions. Thought should also be given to who is responsible for obtaining
or holding any relevant permits and professional licenses that may be required by
legislation, regulation, or organizational policy in executing the project.
The requirements of the project schedule can significantly influence the strategy during
the Plan Procurement Management process. Decisions made in developing the
procurement management plan can also influence the project schedule and are
integrated with Develop Schedule, Estimate Activity Resources, and make-or-buy
analysis.
The Plan Procurement Management process includes evaluating the risks involved with
each make-or-buy analysis. It also includes reviewing the type of contract planned to be
used with respect to avoiding or mitigating risks, sometimes transferring risks to the
seller.
12.1.1 Plan Procurement Management: Inputs
12.1.1.1 Project Management Plan
Described in Section 4.2.3.1. The project management plan describes the need,
justification, requirements, and current boundaries for the project. It includes, but is not
limited to, the scope baseline contents:
▪ Project scope statement. The project scope statement contains the product
scope description, service description and result description, the list of
deliverables, and acceptance criteria, as well as important information regarding
technical issues or concerns that could impact cost estimating. Identified
constraints may include required delivery dates, available skilled resources, and
organizational policies.
▪ WBS. The work breakdown structure (WBS) contains the components of work
that may be resourced externally.
▪ WBS dictionary. The WBS dictionary and related detailed statements of work
provide an identification of the deliverables and a description of the work in each
WBS component required to produce each deliverable.
12.1.1.2 Requirements Documentation
Described in Section 5.2.3.1. Requirements documentation may include:
▪ Important information about project requirements that is considered during
planning for procurements, and
▪ Requirements with contractual and legal implications that may include health,
safety, security, performance, environmental, insurance, intellectual property
rights, equal employment opportunity, licenses, and permits—all of which are
considered when planning for procurements.
12.1.1.3 Risk Register
Described in Section 11.2.3.1. The risk register provides the list of risks, along with the
results of risk analysis and risk response planning. Updates to the risk register are
included with project document updates described in Section 11.5.3.2, from the Plan
Risk Responses process.
12.1.1.4 Activity Resource Requirements
Described in Section 6.4.3.1. Activity resource requirements contain information on
specific needs such as people, equipment, or location.
12.1.1.5 Project Schedule
Described in Section 6.6.3.2. Project schedule contains information on required
timelines or mandated deliverable dates.
12.1.1.6 Activity Cost Estimates
Described in Section 7.2.3.1. Cost estimates developed by the procuring activity are
used to evaluate the reasonableness of the bids or proposals received from potential
sellers.
12.1.1.7 Stakeholder Register
Described in Section 13.1.3.1. The stakeholder register provides details on the project
participants and their interests in the project.
12.1.1.8 Enterprise Environmental Factors
Described in Section 2.1.5. The enterprise environmental factors that can influence the
Plan Procurement Management process include, but are not limited to:
▪ Marketplace conditions;
▪ Products, services, and results that are available in the marketplace;
▪ Suppliers, including past performance or reputation;
▪ Typical terms and conditions for products, services, and results or for the specific
industry; and
▪ Unique local requirements.
12.1.1.9 Organizational Process Assets
Described in Section 2.1.4. The various types of contractual agreements used by the
organization also influence decisions for the Plan Procurement Management process.
The organizational process assets that influence the Plan Procurement Management
process include, but are not limited to:
▪ Formal procurement policies, procedures, and guidelines. Most organizations
have formal procurement policies and buying organizations. When such
procurement support is not available, the project team should supply both the
resources and the expertise to perform such procurement activities.
▪ Management systems that are considered in developing the procurement
management plan and selecting the contractual relationships to be used.
▪ An established multi-tier supplier system of prequalified sellers based on prior
experience.
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 in use
called the time and materials contract. The more popular contract types in use are
discussed below as discrete types, but in practice it is not unusual to combine one or
more types into a single procurement.
▪ Fixed-price contracts. This category of contracts involves setting a fixed total
price for a defined product, service, or result to be provided. Fixed-price contracts
may also incorporate financial incentives for achieving or exceeding selected
project objectives, such as schedule delivery dates, cost and technical
performance, or anything that can be quantified and subsequently measured.
Sellers under fixed-price contracts are legally obligated to complete such
contracts, with possible financial damages if they do not. Under the fixed-price
arrangement, buyers need to precisely specify the product or services being
procured. Changes in scope may be accommodated, but generally with an
increase in contract price.
o Firm Fixed Price Contracts (FFP). The 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. Any cost increase due to adverse performance is the
responsibility of the seller, who is obligated to complete the effort. Under
the FFP contract, the buyer should precisely specify the product or
services to be procured, and any changes to the procurement
specification can increase the costs to the buyer.
o Fixed Price Incentive Fee Contracts (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. Performance targets are
established at the outset, and the final contract price is determined after
completion of all work based on the seller’s performance. Under FPIF
contracts, a price ceiling is set, and all costs above the price ceiling are
the responsibility of the seller, who is obligated to complete the work.
o Fixed Price with Economic Price Adjustment Contracts (FP-EPA). This
contract type is used whenever the seller’s performance period spans a
considerable period of years, as is desired with many long-term
relationships. It is a fixed-price contract, but with a special provision
allowing for pre defined final adjustments to the contract price due to
changed conditions, such as inflation changes, or cost increases (or
decreases) for specific commodities. The EPA clause needs to relate to
some reliable financial index, which is used to precisely adjust the final
price. The FP-EPA contract is intended to protect both buyer and seller
from external conditions beyond their control.
▪ Cost-reimbursable contracts. This 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. Cost-reimbursable contracts
may also include financial incentive clauses whenever the seller exceeds, or falls
below, defined objectives such as costs, schedule, or technical performance
targets. Three of the more common types of cost-reimbursable contracts in use
are Cost Plus Fixed Fee (CPFF), Cost Plus Incentive Fee (CPIF), and Cost Plus
Award Fee (CPAF).
▪
A cost-reimbursable contract provides the project flexibility to redirect a seller
whenever the scope of work cannot be precisely defined at the start and needs to
be altered, or when high risks may exist in the effort.
o Cost Plus Fixed Fee Contracts (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.
A fee is paid only for completed work and does not change due to seller
performance. Fee amounts do not change unless the project scope
changes.
o Cost Plus Incentive Fee Contracts (CPIF). The seller is reimbursed for all
allowable costs for performing the contract work and receives a
predetermined incentive fee based upon 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 prenegotiated
cost-sharing formula, for example, an 80/20 split over/under target costs
based on the actual performance of the seller.
o Cost Plus Award Fee Contracts (CPAF). The seller is reimbursed for all
legitimate costs, but the majority of the fee is earned only based on the
satisfaction of certain broad subjective performance criteria 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). Time and material contracts are a hybrid
type of contractual arrangement that contain 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. These types of contracts resemble cost-reimbursable
contracts in that they can be left open ended and may be subject to a cost
increase for the buyer. The full value of the agreement and the exact quantity of
items to be delivered may not be defined by the buyer at the time of the contract
award. Thus, T&M contracts can increase in contract value as if they were costreimbursable contracts. Many organizations require not-to-exceed values and
time limits placed in all T&M contracts to prevent unlimited cost growth.
Conversely, T&M contracts can also resemble fixed unit price arrangements
when certain parameters are specified in the contract. Unit labor or material rates
can be preset by the buyer and seller, including seller profit, when both parties
agree on the values for specific resource categories, such as senior engineers at
specified rates per hour, or categories of materials at specified rates per unit.
12.1.2 Plan Procurement Management: Tools and Techniques
12.1.2.1 Make-or-Buy Analysis
A make-or-buy analysis is a general management technique used to determine whether
particular work can best be accomplished by the project team or should be purchased
from outside sources. Sometimes a capability may exist within the project organization,
but may be committed to working on other projects, in which case, the project may need
to source such effort from outside the organization in order to meet its schedule
commitments.
Budget constraints may influence make-or-buy decisions. If a buy decision is to be
made, then a further decision of whether to purchase or lease is also made. A make-orbuy analysis should consider all related costs—both direct costs as well as indirect
support costs. For example, the buy-side of the analysis includes both the actual out-ofpocket costs to purchase the product, as well as the indirect costs of supporting the
purchasing process and purchased item.
Available contract types are also considered during the buy analysis. The risk sharing
between the buyer and seller determines the suitable contract types, while the specific
contract terms and conditions formalize the degree of risk being assumed by the buyer
and seller. Some jurisdictions have other types of contracts defined, for example,
contract types based on the obligations of the seller—not the customer—and the
contract parties have the obligation to identify the appropriate type of contract as soon
as the applicable law has been agreed upon.
12.1.2.2 Exper …
Purchase answer to see full
attachment
How it works
- Paste your instructions in the instructions box. You can also attach an instructions file
- Select the writer category, deadline, education level and review the instructions
- Make a payment for the order to be assignment to a writer
- Download the paper after the writer uploads it
Will the writer plagiarize my essay?
You will get a plagiarism-free paper and you can get an originality report upon request.
Is this service safe?
All the personal information is confidential and we have 100% safe payment methods. We also guarantee good grades