1. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Chapter 12 â
Project Procurement Management
PMP
Trainer: Anand BobadePMBOK 6th Edition, 2019, All rights reserved.
Control
Procurement
SIXTH EDITION
2. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement
Overview
Control Procurement Process definition
Buyer obligations
Process ITTO
Procurement performance review?
What is Performance reports?
Claims administrations
Summary
3. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Procurement Management Processes
Plan Procurement
Management
Conduct Procurement Control Procurement
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Introduction
Manage
relationship
with sellers
Document
contract
Performance
Monitor &
communicate
variance
Manage
contract
Changes
PM is responsible
for
5. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
The process of managing procurement relationships, monitoring
contract performance, and making changes and corrections to
contracts as appropriate, and closing the contract.
Control Procurement Definition
Monitoring
contract
performance
Making
changes and corrections
to contracts
Managing
procurement
relationships
It ensures both sellerâs & buyerâs performance meets
procurement requirements according to agreement.
6. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Control Procurement -> Multiple Sellers scenario
Buyer
Seller1
(Buyer for
Seller3)
Seller3
Seller2
Seller 1: Setup IT infrastructure
Seller2 - Develops application
Seller 3 â Data Center setup
Larger project with Multiple providers (sellers):
â˘Managing communication between various providers
Key aspect of Contract
administration:
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Collection of data & managing project records
Refinement of procurement plans & schedules
Set-up for gathering, analyzing procurement related project data & preparation
of reports.
Monitoring of the procurement environment.
Payment of invoices.
Control Procurement -> administrative activities include:
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Control Procurement -> Buyers Obligation
Buyer ensure that they
follow through on their
own obligations.
Quality will suffer if
obligations are not met.
Schedule/cost will impact
if obligation are not meet.
Process will ensure
adherence to
contract/agreements.
Buyers Obligation
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Control Procurement -> Buyers focus
⢠Monitor technical
performance
Technical:
Scope
Management:
⢠Ensure seller meets
agreed milestones
Schedule:
time Management:
⢠Ensure project cost is
within the Budget
Budget:
Cost Management:
⢠Continually Verify Seller
delivers agreed quality
Verification:
Quality
Management
⢠Contract risk has to be
mitigated.
Risk Mitigation:
Risk Management:
Major processes where Buyer to focus:
10. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Control Procurement -> ITTO
Expert Judgment
Claims administration
Data analysis
Inspection
Audits
Project Management
Plan
Project documents
Agreements
Procurement
Documentation
Approved Change
Request
Work Performance data
Enterprise
environmental factors
Organizational process
assets
Closed procurements
Work Performance
Information
Procurement
Documentation updates
Change Requests
PMP updates
Project document updates
OPA updates
Inputs Tools & Techniques Outputs
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Control Procurement -> Input
Project Management
Plan
Project documents Agreements
Procurement
Documentation
Approved Change
Request
Work Performance data
Enterprise
environmental factors
Organizational process
assets
12. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Project
Management Plan
Control Procurement -> Input -> Project Management Plan
Requirements
management plan
Risk Management
plan
Procurement
Management Plan
Change Management
plan
Schedule baseline
Following subsidiary Project plans may provide input:
13. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Project
Management Plan
Requirements management plan:
⢠How contractor requirements will be analysed,
documented & reviewed.
Risk Management plan
⢠How risk activities created by sellers will be structured
and performed.
Procurement Management Plan
⢠Activities to be performed during the control
procurement.
Change Management plan
⢠How seller created changes will be processed.
Schedule baseline
⢠How slippage created by seller impacting overall
project performance, to be incorporated
Control Procurement -> Input -> Project Management Plan
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Project documents
Following Project documents may provide input:
Assumption log
Lessons learned
register
Milestone list
Quality reports
Requirements
documentation
Requirements
Traceability Matrix
Risk Register Stakeholder Register
Control Procurement -> Input -> Project documents
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Project documents
Assumption log:
â˘Document assumptions made during
procurement process.
Lessons learned register:
â˘Can be used to improve contract performance
& procurement processes.
Milestone list:
â˘List majors milestones, when seller has to
deliver expected results.
Quality reports:
â˘Identify, if anything is out of compliance. e.g.,
processes, procedures or product itself.
Control Procurement -> Input -> Project documents
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Project documents
Requirements documentation
⢠Technical requirements
⢠Requirement with contractual & legal implications.
E.g., Health, safety, security, performance etc.
Requirements Traceability Matrix
⢠Links product requirements from its origin to
deliverables.
Risk Register
⢠Each approved seller comes with its own set of risks.
⢠e.g., Sellers organization, Contract duration, project
delivery method, contract type, final agreed price etc.
Stakeholder Register
⢠Information about stakeholders. E.g., contracted team
member, selected sellers, contracting officer, other
stakeholders involved in procurement.
Control Procurement -> Input -> Project documents
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Procurement
documentation
Complete supporting records for administration of procurement processes:
Procurement
SOW
Payment
information
Contractor
WPI
Plans Drawings Correspondence
Control Procurement ->Input->Procurement documents
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Work Performance
Data
The raw observations & measurements of activities performed by seller:
Deliverables produced
Cost - committed Vs
incurred
Seller invoices
(submitted, paid)
Quality standards
Control Procurement ->Input->WPD
Cost Invoices
Deliverables Quality
Direct and Manage
Project work
Control
Procurement
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Approved Change
Requests
Includes modification to the Terms & conditions of the contract including:
Procurement SOW Pricing Product description
Services or results to be
provided
Formally documented in writing
Approved before implemented though control procurement
process
In complex projects: CR from one seller may influence otherr
seller
Project should have capability of identifying, communicating &
resolving changes that impact multiple sellers.
Control Procurement ->Input -> Approved Change Requests
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Agreements
Agreements are understanding between parties, including understanding of the duty of each
party.
Reviewed to verify terms & conditions are meet.
Control Procurement -> Input -> Agreements
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Enterprise
environmental factors
Contract change control system
Market place conditions
Financial / accounting systems
Buying organizations code of ethics
Control Procurement -> Input -> EEF
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Organizational
process assets
OPA that can influence control procurement processes.
E.g., Procurement policies
Control Procurement -> Input -> OPA
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Control Procurement-> Tools & Techniques
Expert Judgment Claims administration Data analysis
Inspection Audits
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Expert Judgment
Expert with specialised knowledge or training in:
Control Procurement-> Tools & Techniques-> Expert Judgement
Functional expert:
⢠Finance
⢠Engineering
⢠Design
⢠Development
⢠Supply chain etc.
Laws, regulation &
compliance
Claim
administration
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Data analysis
Control Procurement-> Tools & Techniques-> Data analysis
Performance
Reviews
Earn value analysis Trend analysis
Following Data analysis tools may be used:
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Data analysis
Performance Reviews:
â˘Review of sellerâs progress to deliver project scope & quality, within cost & on
schedule.
Identify
work
packages:
Ahead of
schedule
Behind
schedule
Over or
under
budget
Has resource
or quality
issues
Measure, compare & analyses as per agreement:
Quality Resource Schedule Cost performance
Control Procurement-> T &T -> Data analysis-> Performance Reviews
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Data analysis
Earn value analysis:
⢠Determine degree of variance from budget based on:
⢠Schedule & Cost variances
⢠Schedule & Cost performance indexes
Trend analysis:
⢠Develop a forecast Estimate at completion (AEC)
⢠Verify performance is improving or deteriorating.
Control Procurement-> Tools & Techniques-> Data analysis
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Inspection
Structured review of work being performed by the contractor
Review of the deliverables Actual physical review of the work.
⢠Inspection involve walkthrough of site
⢠Contractor ensure mutual understanding of
work in progress.
E.g., Construction /
Engineering or
infrastructure project:
Control Procurement-> Tools & Techniques -> Inspection
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Audits
Structured, independent process used to determine if project activities comply with
organizational & project policies, processes & procedures.
Usually conducted by external team. E.g., Internal Audit dept., PMO or Auditor external to
organization
Audit Rights & obligation should be documented in
Procurement contract
Audit observation should be communicated to both Sellers
& buyers PM's for adjustment to project
Control Procurement-> T&T->Audits
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Audits
Control Procurement-> T&T->Audits
Audit Objectives may be:
Identify non conformity, gaps & short
comings.
Identify good & best practices implemented
Sharing good practices
Proactive assistance to improve process
implantation
Contribute to lessons learned.
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Claims
Administration
The process of processing, adjudicating, and communicating contract claims.
Claim / Contested changes: are those requested changes where the buyer & seller can
not reach an agreement:
on compensation of change Canât agree that change is happened.
Control Procurement-> T&T->Claim Administration
How to resolve disputes
Manage according to
the terms of contract.
If not resolved follow alternative
dispute resolution (ADR)
Claims
Documented
Processed Monitored
Managed
If not resolved,
they become
disputes
32. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)
Control Procurement ->Output
Closed procurements
Work Performance
Information
Procurement
Documentation updates
Change Requests
PMP updates
Project document
updates
OPA updates
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Closed
procurements
Providing a formal written notice through procurement administrator, about contract completion
All deliverables should have been provided on time, and meet technical & quality requirements.
Project Management team should approved those deliverables.
No outstanding claims, or invoices, and all final payments should have been done.
Control Procurement ->Output -> Closed procurements
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Procurement
Documentation updates
Following Procurement Documents may be updated:
Control Procurement ->Output -> Procurement Documentation update
Contract with
supporting schedule
Requested unapproved
contract changes
Seller developed
technical
documentation
WPI - Deliverables
Seller performance
reports
Warranties
Financial documents
(Invoices & payment
records)
Results of inspections
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Performance data collected from various controlling processes and analysed in
contractual context.
Control Procurement ->Output->WPI
Information on how seller is performing
against SOW:
Comparing deliverables received
Technical performance achieved
Cost incurred & accepted
Work Performance
Information
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Change Requests
A formal proposal to modify any document, deliverable, or baseline.
Control Procurement ->Output->change Request
Processed
through
Integrated
Change Control
Requested but
unresolved
changes which
are documented
leads to disputes.
Change requests
going through
disputes are not
implemented.
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PMP updates
Following subsidiary plans & baselines may get updated.
Control Procurement ->Output-> PMP Updates
Risk Management
Plan
Procurement
management Plan
Schedule baseline Cost Baseline
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PMP updates
Risk Management Plan
â˘Each agreement & seller has its own set of risks which may lead
to updates.
Procurement management Plan
â˘Update may require depending on the result of the performance
of the seller.
Schedule baseline
â˘Delivery changes created by seller may impact overall schedule
performance.
â˘baseline need to be updated to reflect current expectations.
Cost Baseline
â˘Contractor & material prices can change frequently due to
fluctuating material & labour prices.
â˘Baseline need to be updated to reflect agreed contract value.
Control Procurement ->Output-> PMP Updates
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Project Documents
Updates
Control Procurement ->Output-> Project documents Updates
Lessons learned
register
Resource
requirements
Requirements
Traceability Matrix
Risk Register
Stakeholder
Register
Following Project Documents may get updated.
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Project Documents
Updates
Lessons learned register
â˘Effective techniques to maintain scope, schedule &cost of procured items.
â˘Variance details, corrective actions & their effectiveness.
â˘Claim details & information on procurement process improvement.
Resource requirements:
â˘Changes to the resource requirements due to work done which is not in
accordance with planned work schedule.
Requirements Traceability Matrix:
â˘Updated with requirements that has been satisfied.
Risk Register
â˘Each approved seller comes with its own set of risks.
â˘e.g., Sellers organization, Contract duration, project delivery method, contract
type, final agreed price etc.
Stakeholder Register
â˘Change in contractor or supplier should reflect in the stakeholder register.
Control Procurement ->Output-> Project documents Updates
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OPA Updates
Payment schedule & requests
Sellers performance evaluation documentation
Prequalified seller list update
Lessons learned respository
PRocurement file
Control Procurement ->Output->OPA Updates
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Control Procurement -> Review
Overview
Control Procurement Process definition
Buyer obligations
Process ITTO
Procurement performance review?
What is Performance reports?
Claims administrations
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