PMI RMP – PROJECT PROCUREMENT MANAGEMENT part 3

8. PROCESS 2: CONDUCT PROCUREMENTS

Hello and welcome to the second process of the Procurement Management Knowledge area. Conduct Procurements as a part of the executing process group. So it’s the process of obtaining the seller responses, selecting the appropriate seller and awarding a contract. So from this sentence, the primary output of the conduct procurement process is the contract, the agreements. This is what we are going to do in this process. The key benefit of the conduct procurement process is that it selects a qualified seller and implements the legal agreement for delivery. This process is performed once or periodically throughout the project life as needed.

Whenever you need to procure something from outside the project, either it was a service or goods or a contractor, you need to go through the conduct procurement process and the end result of this process is the established agreement, including formal contracts and this process periodically performed throughout the project as needed. We have six inputs for this process, five tools and techniques and six outputs with the primary outputs are the selected sellers for the project and the agreements. So what are the inputs needed to conduct a project procurement? First of all, the project Management Plan the Scope management plan that includes the scope to be performed by other sellers.

The requirements management Plan that includes how the sellers will manage the requirements they are under agreement to satisfy. Communications Management Plan that describes how communications between buyers and sellers will be conducted. The Risk Management Plan that describes how risk management activities will be performed for the project. Procurement Management Plan that contains activities to be conducted during conduct procurement process. The Configuration Management Plan that includes formats and processes for how sailors will provide configuration management. The cost baseline that includes the budget of the procurement we need also a few project documents like the lessons learned registered.

The project schedule that defines when contractors derivative due requirements documentation as it includes technical and legal requirements the sellers need to follow in the project. The risk register as each approved or selected seller comes with its own unique sets of risks stakeholder register that contains all details about identified stakeholders on the project. We will need also the project documentation that provides a written record used in reaching the legal agreement. It includes the documents, procurement statement of work, independent estimates and source selection criteria.

All these were prepared in the plan procurement Management Process the Seller Proposals this is the most important input prepared in response to the procurement document package we shared with the potential sellers. The seller proposals will form the basic information that will be used by an evaluation body to select one or more successful bidders. We will need also few enterprise environmental factors and few organizational process assets. What are the tools and techniques of the Conduct procurement process? First of all, the most commonly tool is the expert judgment.

We will need also advertising, communicating with users or potential users of product, service or results advertising is commonly used with governmental projects. Sometimes you open the newspaper in your country, you will find and advertisements for new projects. Governmental or synagogue governmental better Conferences this is the most important tool of the conduct procurement process as shown in this picture. It’s a meeting between the buyer and all the sellers together prior to proposal submitted it’s used. This is the core reason why we perform the better instances to ensure that all potential or prospective sellers have common understanding of the procurement documentation.

This is why we perform the bidder conference. We will need also few data analysis techniques that includes the proposal evaluation. They are evaluated all the proposals to ensure they are complete and respond and call to bed. Documents, interpersonal and team skills includes the negotiation. It’s a discussion aimed at reaching an agreement. This is why we perform or we will use the negotiation. We want to reach an agreement. Objectives of negotiations shall obtain fair and reasonable price and develop a good relationship between the buyer and the seller. The negotiation should be led by a member from the procurement team that has the authority to sign a contract.

The main items to be addressed while negotiating a contract will depend on what’s being purchased. But usually it’s about the scope, schedule and prices which are negotiated. What you are going to have once the conduct procurement is completed. Selected Sellers there are those who have been just to be in competitive range based on the outcome of the proposal or best evaluation. This is the primary output number one. The second primary output are the agreements. The Contracts the contract is a mutually binding agreement that obligates the seller to provide a specified product, services or results.

At the same time, it will obligate the buyer to compensate the seller and represent a legal relationship that is subject to remedy in the courts. Change requests as a result of the conduct procurement process few project management plan components updated like the requirements, management plan changes might affect requirements due to changes identified by the sellers. Quality management plan where the sellers may offer alternative quality standards that impact the quality approaches. Communications management plan as well as it’s updated with hiring new sellers to incorporate their communication needs.

The risk management plan has each agreement and seller has its own set of risks. The procurement management plan as changes might be as a result of negotiation and contracting processes. Scope Baseline the WPS and the scope statement might be changed as a result of this process. Schedule baseline might be updated with any changes to delivery schedules of the sellers. Cost baseline at the contract and material prices might change frequently during the delivery of the product. Sometimes you plan for a budget to award a contract, but once the project starts this budget might be increased or decreased.

Organizational process assets might be updated, especially organizational process assets in relation with the pre approved lists of vendors. Project documents that might be updated are the lessons lane register, the requirements documentation, the requirements traceability matrix, the resource calendar, the risk register and the stakeholder register. All the new approved sellers or awarding sellers will be added to the stakeholder registered. This is all for the conduct procurement process. Thank you so much. Looking forward to see at the next lecture.

9. PROCESS 3: CONTROL PROCUREMENT

Hi and welcome to the third process of the procurement management knowledge area. Control procurements as a part of the monitoring and controlling processing group. So this is the process of managing the procurement relationships within the project, monitoring all signed contracts performance and making changes and corrections as appropriate and closing out the contracts. This is important to remember for the exam, closing the contracts once it’s completed or wherever there is a dispute is done as a part of a control procurement process.

The key benefit of this process is that to make sure that both the sellers and the buyers performance meet the project’s requirements according to the terms of the legal agreement, this is the key benefit of performing control procurements process. This process is performed throughout the project life as needed as per all the monitoring and controlling processes. Control procurements includes the application of the appropriate project management processes to the contractual relationships and integration of the outputs from these processes into the overall management of the project.

 At the end, control procurements has a financial management component that involves monitoring payments to the seller. Monitoring all the payments the buyer is paying for the seller as per the terms of payment mentioned in the contract is done as a part of the control procurement process. We have eight inputs for this process, five tools and techniques and seven outputs. So what are the inputs to start the control procurements process? First of all, the project management plan. So which are the subsidiary plans? We will need first of all, the requirements management plan that describes how the contractor requirements will be analyzed, documented and managed.

The risk management plan that describes how risk activities created by the sellers will be performed for the project. Procurement management plan that contains activities to be conducted during the control procurement process. Change management plan that contains information about how seller created changes will be processed. Schedule Baseline as if there are any changes in the schedule created by the sellers that impact the overall project performance, you might need to update the project schedule and the schedule baseline. The project documents first of all, the listened line register the assumption log that contains assumptions that have been made during the procurement processes.

The Milestone the list of the major milestones shows when the seller are expected to deliver the results. Quality reports can identify sellers processes, procedures or products that are out. Compliance requirements implementation that includes technical and legal the seller need to follow the technical and legal requirements. Requirements traceability matrix that links the product requirements from their origins that is rubbles that satisfy them. The risk register as each approved seller comes with its own unique sets of risks. The stakeholder register that includes information about identified stakeholders. You will need agreements as well.

For me, this is the most important input agreements which were an output of the conduct procurement process. Relevant agreements are reviewed to verify terms and conditions are met in this process you are going to compare the actual performance of the contractors and sellers to the planned one. The planned performance was stated in the agreement or the contract, so the agreements will be the base for this comparison. Procurement documentation that provides a written record used in reaching the legal agreement. It includes documents, procurement statement of ORC independent estimates, and source selection criteria. All these are considered as procurement documentation.

Approved change requests can include modifications to the terms and conditions of the contract or procurement related changes are formally documented in writing and approved before being implemented through the control procurement process. Work performance data contains seller data on the project status. The work performance data is a very important input as the current status of all the vendors and the contractors on the project will be within. The work performance data which was collected during the executing process group also will need few enterprise environmental factors and few organizational process assets.

Now, what are the tools and techniques used in control procurements? First of all, the expert judgment you can make use of the experts within your organization when it comes to controlling procurement claims administration. This is the primary tool used in this process. What’s the claim? The claim is an assertion that the buyer did something wrong, something that hurt the seller and the seller is asking for a compensation and usually this compensation will be an amount of money. When a claim cannot be resolved, it becomes dispute and finally, appeals claims are documented, process, monitored and managed throughout the contract lifecycle, usually in accordance with the contract terms.

And if the parties themselves do not resolve the claim, it may have been handled in accordance with the ADR. The alternative dispute resolution, it might be using the courts or using the arbitration as per the alternative dispute resolution. The third technique will be the data analysis techniques. We are going to use three data analysis techniques. First of all, the performance reviews used for contracts major compare and analyze quality, resource, scheduled and cost performance against the agreement, earnings value analysis, scheduled and cost variances.

Also scheduled and cost performance indexes are all calculated to determine the degree of variance against the target trend analysis using the estimate, the estimate to complete and the variance at completion to see if the performance is improving or deteriorating. We have also the inspection tool. The inspection is a structured review of the work being performed by the contractor. They may involve a simple review of the rubbles or an actual physical review of the work itself. On construction projects, inspections involve work through. The last tool would be the procurement audits. They are very important for the control procurement process.

The procurement audit is a structured review of the procurement process. The rights and obligations related to audits should be described in the contract. Now, what are the outputs of the controlled procurement process? First of all, closed procurements. The buyer usually through its authorized Procurement Administrator, provides the seller with former written notice that the contractor has been completed. Requirements for formal procurement closure are usually defined in the contract terms and conditions. Always remember that procurement can be closed when the work described in the contract is completed or when there is a dispute between the buyer and the seller, but the close procurements are out of the control.

Procurement Process or performance information includes information on how the seller is performing by comparing the problems received, the technical performance achieved and the cost incurred. Procurement Documentation Updates Documents updated may include the contract with all supporting schedules requested, unapproved contract changes and approved change requests. Change requests are primary outputs of this process. Project Management Plan updates like the Risk Management Plan as each agreement and seller has its own set of risks that require updates to Risk Management Plan procurement Management Plan that contains the activities to be undertaken during the procurement process.

Schedule baseline might be updated with any changes to delivery schedules of the sellers and the cost baseline. Contractor and material prices might change frequently during the delivery of the project. The project documents updates of a listened land register, the requirements traceability matrix updated information on requirements that have been satisfied. Resources Requirements There will be changes to resources requirements resulting from work being done that is not in accordance with the plan and work schedule. Rest Register each approach seller comes with its own unique set of rests.

At the end we have the stakeholder register that contains all details about identified stakeholders. It’s updated at suppliers during the control procurements process might change. The last output will be the organization and process assets update includes first of all the payments, schedules and requests. All payments should be made in accordance with the procurement terms and conditions. Seller Performance Evaluation Documentation it’s prepared by the buyer and documents the seller ability to continue to perform work on the current contract.

Pre Qualified Sellers List of days lists of potential sellers who are previously qualified and approved need to be documented in the organizational process assets to make use of these lists and other projects within the organization. License Land Repository procurement License land should be documented in the repository to improve future procurements. At the end we have the procurement file a complete set of indexed contract documentation including the closed contract is prepared for including with final project five. So a lot of updates as an output of the control procurement process. This is all progress this process. Thank you so much. I will see you the next lecture.