PMP - Procurement

revision and questions

Prepared by:

Engr. Mohamed Maged, PMP

Admin of:

https://www.facebook.com/Prof.Planner

Instructor: Mohamed Maged

Senior Project Control Engineer, B.Sc. of Civil engineering –Ain Shams

University, with experience in MENA region of (construction, infrastructure,

and roads) Mega projects, in professions of Contract administration, Procurement,

Tender estimating, Cost control, Planning & Claim analysis.

Instructor of Planning & Project Management:

- Construction Management Planning and Control (CMPC).

- Delay, Claim and Dispute Resolution (DCDR) in PMBOK, FIDIC & SCL protocol.

- Project Management Professional (PMP).

- Free lectures with cooperation of Egyptian Engineers Association in Saudi:

- Product oriented construction management

- Top 10 planning fundamentals

- Scope creep – cases and preventive actions

- Claims and dispute resolution in FIDIC

Mohamed Maged (Professional Certificates)

PMP Project Management Professional (PMI – USA)

SFC Scrum Fundamentals Certified (SCRUM study)

Associate of Chartered Institute of Arbitrators (CIArb - London)

Fellow of Association of International Arbitration (AIA - Brussels)

FIDIC Contracts Consultant: International academy of mediation and

arbitration - Egypt.

Six Sigma Yellow Belt Professional (6 Sigma Study- PMI)

Mohamed Maged (Prof. Planner)

Admin of the biggest online community of Arab Planners (10,000+)

(Facebook Page: to be prof. planner, related group: Best Advice for

Planners – Public group)

SlideShare: www.slideshare.net/MohamedMaged8/

Planning fundamentals: http://www.slideshare.net/Mohamed

Maged8/50qts-of-planning-fundamentals-ver04

YouTube Channel: https://www.youtube.com/ArabPlanners.

Arranged Two Annual Conferences of Planning and

Project Management (Anniversary of Facebook Page: Prof.Planner)-

American University in Cairo, August 2014 & 2015.

A GUIDE TO THE PROJECT MANAGEMENT BODY OF

KNOWLEDGE (PMBOK® Guide) – Fifth Edition

• Procurement (chapter 12) Review

• Exam - test questions

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Procurement

Management in

PMBOK

12.1. Plan Procurement Management

Plan Procurement

Management. The

process of

documenting project

procurement decisions,

specifying the

approach, and

identifying potential

sellers.

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Definitions

Make-or-Buy Analysis. The process of gathering and organizing data about product

requirements and analyzing them against available alternatives including the purchase or

internal manufacture of the product (consider risk for this strategic decision).

Market Research. The process of gathering information at conferences, online reviews,

and a variety of sources to identify market capabilities.

Source Selection Criteria. required attributes of seller,

objective or subjective (Risk, Capability/ Capacity,

Warranty, Past performance,..) may use screening or

weighting systems- (sole source the only provider available,

single source a preferred vendor).

Make-or-Buy Decisions. Decisions made regarding the

external purchase or internal manufacture of a product

(depends on the duration of use).

8Make-or-Buy Example

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Procurement

documents

The documents in bid and

proposal include: buyer’s

Invitation for Bid (IFB),

Invitation for Negotiations,

Request for Information (RFI),

Request for Quotation (RFQ),

Request for Proposal (RFP),

and seller’s responses.

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What’s Contract

Legally binding relationship between parties to define procurement statement

of work, requirements of reporting, payment, roles, responsibilities, and risk

allocation (helps in better communication, clear responsibilities, good change

management mechanisms).

11Contractual

relationships in

projects

Contract Types:

1- Fixed Price

2- Cost Plus

3- Time & Material

Buyer Vs Seller

Employer Contractor

Contractor Subcontractor

Purchaser Supplier

Pays money Offers service

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Fixed price

- Contract Types

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Cost-Reimbursable

- Contract Types

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Time and Material

- Contract Type

15Contract type

selection

16Incentive contracts

examples

17Contract type and

risk assessment

The project manager has the

identified project risks.

PM needs to make sure

provisions are included in the

contract to address these risks.

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-Agreement -Particular Conditions

-General Conditions -Special Specs.

-General Specs. -Drawings

-B.O.Q.

Words are binding more than no.s

Contract priority

of documents

Good terms are easy to understand: plain language & visual aids.

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12.2. Conduct Procurements

Conduct

Procurements. The

process of obtaining

seller responses,

selecting a seller,

and awarding a

contract.

Conduct

Procurements

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OUTPUTS:Selected Sellers. The sellers selected to

provide a contracted set.

Agreements. the initial intentions of a project after (LOI: letter of intent) if used. This can

take the form of a contract, memorandum of

understanding (MOU), letters of agreement,

verbal agreements, a purchase order, email,

etc. (include terms and conditions).

Conduct

Procurements

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12.3. Control Procurements

Control

Procurements

Organizational

Process Assets

Updates. (Correspondence,

Payment schedules

and requests, Seller

performance

evaluation

documentation).

22Control

Procurements

Contract Change Control System. The system used to collect, track, adjudicate, and communicate changes (CCB might review and approve, but only the procurement manager has the authority to sign a

change).

Procurement Performance Reviews. A structured review of the seller’s progress to deliver project scope and quality, within cost and on schedule, as compared to the contract.

Inspections and Audits. A process to observe performance of contracted work or a promised product

against agreed-upon requirements, any breach happens (Privity: no contractual relationship between client and subcontractors, so he has to deal with him through the main contractor).

Performance Reporting. See work performance reports (Integration – Control).

Payment Systems. The system used to provide and track supplier’s invoices and payments.

Claims Administration. The process of processing, adjudicating, and communicating contract claims (contested or potential constructive changes: requested change can’t reach agreement between

buyer and seller).

Records Management System. A specific set of processes, related control functions, and tools that are consolidated and combined to record and retain information about the project.

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12.4. Close ProcurementsClose Procurements. The

process of completing each

project procurement

(completion or termination),

also involves administrative

activities such as finalizing

open claims, updating

records to reflect final

results, and archiving such

information for future use.

Close

Procurements

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Tools & Techniques:

Procurement Audits. The review of contracts and contracting processes for completeness,

accuracy, and effectiveness (audits are used to improve processes and learn from

success).

Records Management System. by the project manager to manage, archive contract and

procurement documentation , correspondence and records.

OUTPUTS:

Closed Procurements. Project contracts or other procurement agreements that have been

formally acknowledged by the proper authorizing agent as being finalized and signed off.

Organizational Process Assets Updates. (Procurement file, Deliverable acceptance,

Lessons learned documentation).

Close

Procurements

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Pre-contract: clarify the structure, requirements,

and other terms of the purchases so that mutual

agreement can be reached prior to signing the

contract. Final contract language reflects all

agreements reached (in order: performance,

scope, schedule, price).

Post contract: the final equitable settlement of

all outstanding issues, claims, and disputes by

negotiation is preferred. Otherwise some form

of alternative dispute resolution (ADR) including

mediation or arbitration may be explored.

When all else fails, litigation in courts is the least

desirable option.

Procurement

Negotiations

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You may refer to any of these tactics:• Fait Accompli - Standard contract terms that are nonnegotiable. (In reality, anything in the contract is negotiable

although your adversary will never admit it).

• Deadline - Make it clear that this is the time by which they must do. As the deadline approaches, increase the

emotional pressure, talking more about what will happen if the deadline is missed.

• Good guy /bad guy - One person acts in an aggressive and pushy way, making unreasonable demands and requiring

compliance. The other person acts in kind and friendly, asking nicely - and getting compliance.

• Missing man - The person who can actually make the decision is missing from the negotiation. The negotiator can then

negotiate for a lower price or more favorable terms which they claim they can agree to.

• Limited authority - Refusing to give in on items because you have no authority to do what is being requested.

• Fair and reasonable - You can engage the other person by asking them 'what is fair'. You can also bring something

into the negotiation that is, by definition, fair. You can also reject criteria from the adversary on the grounds that it is not

fair.

• Unreasonable - Stating that the other side is making unreasonable demands of you in the negotiation.

• Delay - Stretching out the negotiation, especially at critical moments.

• Attack - A direct attack on your integrity, trustworthiness, competence, or other such bullying bombast designed to

force compliance out of you.

Negotiation

tactics

Procurement test questions

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Thank You

Don’t Hesitate to contact….

M.Magedmagedkom@gmail.com

mobile : 00966-580264968