Project Procurement Management

This chapter covers key concepts related to Project Procurement Management.
Procurement Management involves getting work done by people outside the project team. Project Procurement Management includes administering contracts and change control process to manage contracts or purchase orders. The knowledge area of Project Procurement Management consists of the following processes -

Procurement Management Processes

Process	Project Phase	Key Deliverables
Plan Procurements	Planning	Procurement Management Plan
Conduct Procurements	Execution	Selected Sellers, Procurement contract award
Administer Procurements	Monitoring and Controlling	Change requests
Close Procurements	Closure	Closed procurements

The Plan Procurement process involves build versus buy decisions. The Inputs, Tools and Techniques, and Outputs of Plan Procurement process are listed in the table below.

Plan Procurement process

Inputs	Tools and Techniques	Outputs
Scope baseline	Make-or-buy analysis	Procurement management plan
Requirements documentation	Expert judgment	Procurement statements of work
Teaming agreements	Contract types	Make-or-buy decisions
Risk register		Procurement documents
Risk-related contract decisions		Source selection criteria
Activity resource requirements		Change requests
Project schedule
Activity cost estimates
Cost performance baseline
Enterprise environmental factors
Organizational process assets

A contract is a formal agreement. It is a legal document biding to both seller and buyer. Changes to contract must be in writing and formally controlled. Most Governments back all contracts by providing a court system.
The process of Conduct Procurement involves receiving seller responses, selecting a seller, and awarding a contract. During this process bids or proposals from sellers are evaluated, and one or more seller is selected to execute the work.

Conduct Procurement process

Inputs	Tools and Techniques	Outputs
Project Management Plan	Bidder conferences	Selected sellers
Procurement documents	Proposal evaluation techniques	Procurement contract award
Source Selection criteria	Independent estimates	Resource calendars
Qualified seller list	Expert judgment	Change requests
Seller proposals	Advertising	Project management plan updates
Project documents	Internet search	Project document updates
Make-or-buy decisions	Procurement negotiations
Teaming agreements
Organizational process assets

Sole Source refers to a market condition in which only one qualified seller exists in the market.
Single Source refers to a market condition in which the company prefers to contract with only one seller.
Oligopoly refers to a market condition where very few sellers exist, and the action of one seller will have impact on other seller prizes.
Bidder conferences are meetings between buyer and sellers before the bid is submitted. The conference is used by buyers to provide consistent information to all sellers.
The process of Administer Procurement involves managing procurement relationships and ensuring the seller performance meets the procurement requirements.

Administer Procurement process

Inputs	Tools and Techniques	Outputs
Procurement documents	Contract change control system	Procurement documentation
Project management plan	Procurement performance reviews	Organizational assets updates
Contract	Inspection and audits	Change requests
Performance reports	Performance reporting	Project management plan updates
Approved change requests	Payment systems
Work performance information	Claims administration
	Records management system

Contract can be used as a risk management tool, as in transferring risk.
Centralized Contracting refers to a separate contracting office that handles contracts for all projects. In De-centralized Contracting a contract administrator is assigned for each project.
Force majeure is a powerful and unexpected event, such as hurricane or other disaster.
Privity is contractual information between customer and vendor.
The process of Close Procurement involves completing each procurement. The process involves verifying that all planned work as per the contract has been completed.

Close Procurement process

Inputs	Tools and Techniques	Outputs
Project management plan	Procurement audits	Closed procurements
Procurement documentation	Negotiated settlements	Organizational process updates
	Records management system