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Chap 12.3 Control Procurement

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Chap 12.3 Control Procurement

  1. 1. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Chapter 12 – Project Procurement Management PMP Trainer: Anand BobadePMBOK 6th Edition, 2019, All rights reserved. Control Procurement SIXTH EDITION
  2. 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. 3. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Procurement Management Processes Plan Procurement Management Conduct Procurement Control Procurement
  4. 4. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Introduction Manage relationship with sellers Document contract Performance Monitor & communicate variance Manage contract Changes PM is responsible for
  5. 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 seller’s & buyer’s performance meets procurement requirements according to agreement.
  6. 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 – Data Center setup Larger project with Multiple providers (sellers): •Managing communication between various providers Key aspect of Contract administration:
  7. 7. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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:
  8. 8. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  9. 9. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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. 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
  11. 11. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Control Procurement -> Input Project Management Plan Project documents Agreements Procurement Documentation Approved Change Request Work Performance data Enterprise environmental factors Organizational process assets
  12. 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. 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
  14. 14. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  15. 15. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Project documents Assumption log: •Document assumptions made during procurement process. Lessons learned register: •Can be used to improve contract performance & procurement processes. Milestone list: •List majors milestones, when seller has to deliver expected results. Quality reports: •Identify, if anything is out of compliance. e.g., processes, procedures or product itself. Control Procurement -> Input -> Project documents
  16. 16. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  17. 17. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Procurement documentation Complete supporting records for administration of procurement processes: Procurement SOW Payment information Contractor WPI Plans Drawings Correspondence Control Procurement ->Input->Procurement documents
  18. 18. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  19. 19. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  20. 20. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  21. 21. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Enterprise environmental factors Contract change control system Market place conditions Financial / accounting systems Buying organizations code of ethics Control Procurement -> Input -> EEF
  22. 22. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Organizational process assets OPA that can influence control procurement processes. E.g., Procurement policies Control Procurement -> Input -> OPA
  23. 23. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Control Procurement-> Tools & Techniques Expert Judgment Claims administration Data analysis Inspection Audits
  24. 24. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  25. 25. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Data analysis Control Procurement-> Tools & Techniques-> Data analysis Performance Reviews Earn value analysis Trend analysis Following Data analysis tools may be used:
  26. 26. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Data analysis Performance Reviews: •Review of seller’s 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
  27. 27. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  28. 28. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  29. 29. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  30. 30. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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.
  31. 31. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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 Can’t 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. 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
  33. 33. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  34. 34. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  35. 35. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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
  36. 36. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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.
  37. 37. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) PMP updates Following subsidiary plans & baselines may get updated. Control Procurement ->Output-> PMP Updates Risk Management Plan Procurement management Plan Schedule baseline Cost Baseline
  38. 38. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) PMP updates Risk Management Plan •Each agreement & seller has its own set of risks which may lead to updates. Procurement management Plan •Update may require depending on the result of the performance of the seller. Schedule baseline •Delivery changes created by seller may impact overall schedule performance. •baseline need to be updated to reflect current expectations. Cost Baseline •Contractor & material prices can change frequently due to fluctuating material & labour prices. •Baseline need to be updated to reflect agreed contract value. Control Procurement ->Output-> PMP Updates
  39. 39. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) 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.
  40. 40. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Project Documents Updates Lessons learned register •Effective techniques to maintain scope, schedule &cost of procured items. •Variance details, corrective actions & their effectiveness. •Claim details & information on procurement process improvement. Resource requirements: •Changes to the resource requirements due to work done which is not in accordance with planned work schedule. Requirements Traceability Matrix: •Updated with requirements that has been satisfied. 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 •Change in contractor or supplier should reflect in the stakeholder register. Control Procurement ->Output-> Project documents Updates
  41. 41. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) OPA Updates Payment schedule & requests Sellers performance evaluation documentation Prequalified seller list update Lessons learned respository PRocurement file Control Procurement ->Output->OPA Updates
  42. 42. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com) Control Procurement -> Review Overview Control Procurement Process definition Buyer obligations Process ITTO Procurement performance review? What is Performance reports? Claims administrations
  43. 43. PMBOK 6 - All rights reserved; By: Anand Bobade (nmbobade@gmail.com)

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