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By: Anand Bobade (nmbobade@gmail.com)
PMBOK Chap 12 – Project Procurement Management
The processes necessary to purchase o...
By: Anand Bobade (nmbobade@gmail.com)
Introduction – Procurement Management Processes
12.1 Plan Procurement Management
• T...
By: Anand Bobade (nmbobade@gmail.com)
Controlling Procurement
PM is
responsible
for
Manage
relationship
Document
Performan...
By: Anand Bobade (nmbobade@gmail.com)
The process of managing procurement relationships,
monitoring contract performance, ...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement
Buyer ensure that they follow through
on their own obligati...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement
Major processes where Buyer to focus:
• Monitor technical
p...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement
Multiple Sellers scenario
Buyer
Seller1
(Buyer for
Seller3)...
By: Anand Bobade (nmbobade@gmail.com)
Inputs (6)
• PMP
• Procurement
documents
• Agreements
• Approved change
requests
• W...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Input
PMP
Procurement
documents
Agreements
Approved Chang...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Input->Procurement Doc’s
Procurement
documents
Contract
C...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Input->WPD
Work
Performance
Data
The raw observations & m...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Input-> Work Performance Reports
Work
Performance
Reports...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Input -> Approved Change Requests
Approved Change
Request...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T
Contract Change
Control System
Procurement
Performanc...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T
Inspections and
audits
Procurement
Performance Review...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T->Record Management System
Records
Management
System
P...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T->Payment System
Payment Systems
Oracle financials Mic...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T->Inspection & Audits
Inspections and
audits
The syste...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T-> Procurement Performance Reviews
Procurement
Perform...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T->Performance Reporting
Performance
Reporting
It’s WPI...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T->CCCS
Contract Change
Control System
Defines process ...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement-> T&T->Claim Administration
Claims
Administration
The proce...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Output
Work Performance
Information
Change Requests PMP U...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Output->WPI
Work
Performance
Information
Performance data...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Output->change Request
Change Requests
Processed
through
...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Output-> PMP Updates
PMP Updates
Update Project
Managemen...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement ->Output->OPA Updates
OPA Updates
Sellers Performance recor...
By: Anand Bobade (nmbobade@gmail.com)
12.3 Control Procurement -> Process Flow
By: Anand Bobade (nmbobade@gmail.com)
Introduction – Procurement Management Processes
12.1 Plan Procurement Management
• T...
By: Anand Bobade (nmbobade@gmail.com)
Procurement 1
Procurement 2
Individual
procurement
Closure
12.4 Close Procurement
Th...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement
Early
Termination
Partial
Termination
Termination for
a Cause...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> ITTO
Inputs (2)
• Project
Management Plan
• Procurement
Do...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement ->Inputs
PMP
Procurement
documents
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> Inputs -> PMP
Procurement Management plan
Closure details ...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> Inputs -> Proc. Documents
Procurement
documents
Procuremen...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> T&T
Procurement
Audits
Procurement
Negotiations
Records
Ma...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> T&T->Procurement Audits
Procurement
Audits
Structured revi...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> T&T->Procurement Negotiations
Procurement
Negotiations
Pri...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> T&T->Records Management System
Records
Management
System
P...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement ->Output
Closed
Procurements
OPA Updates
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement ->Output->Close Procurement
Closed
Procurements
Closure has t...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement ->Output->OPA Updates
OPA Updates
Update procurement document...
By: Anand Bobade (nmbobade@gmail.com)
12.4 Close Procurement -> Process Flow
By: Anand Bobade (nmbobade@gmail.com)
By: Anand Bobade (nmbobade@gmail.com)
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PMP Chap 12 - Project Procurement Management Details - Part2

Project Procurement Management Details - Part2

Regardless of the project, when procurement results in hiring vendors who will complete all or some of the work on a project, Project managers need to understand their role in the procurement process. This presentation summarizes important procurement concepts, vendor selection process and contracting process.

PMP Chap 12 - Project Procurement Management Details - Part2

  1. 1. By: Anand Bobade (nmbobade@gmail.com) PMBOK Chap 12 – Project Procurement Management The processes necessary to purchase or acquire product, services, or results needed from outside the project team. Initiating Planning Executing Monitoring & Controlling Closing Plan Procurement Management Conduct Procurement Control Procurement Close Procurement We cannot solve our problems with the same thinking we used when we created them. - Albert Einstein Detailed Part-2
  2. 2. By: Anand Bobade (nmbobade@gmail.com) Introduction – Procurement Management Processes 12.1 Plan Procurement Management • The process of documenting project procurement decisions, specifying the approach, and identifying potential sellers. 12.2 Conduct Procurement • The process of obtaining seller responses, selecting a seller, and awarding a contract. 12.3 Control Procurement • The process of managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as appropriate 12.4 Close Procurement • The process of completing each procurement.
  3. 3. By: Anand Bobade (nmbobade@gmail.com) Controlling Procurement PM is responsible for Manage relationship Document Performance Monitor and communicate variance Manage Changes
  4. 4. By: Anand Bobade (nmbobade@gmail.com) The process of managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as appropriate. It ensures both seller’s & buyer’s performance meets procurement requirements according to agreement. Managing procurement relationships Monitoring contract performance Making changes and corrections to contracts 12.3 Control Procurement
  5. 5. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement 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
  6. 6. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement Major processes where Buyer to 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:
  7. 7. By: Anand Bobade (nmbobade@gmail.com) 12.3 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
  8. 8. By: Anand Bobade (nmbobade@gmail.com) Inputs (6) • PMP • Procurement documents • Agreements • Approved change requests • Work performance reports • Work performance data Tools & Techniques(7) • Contract change control system • Procurement performance reviews • Inspections and audits • Performance reporting • Payment systems • Claims administration • Records management system Outputs(5) • Work performance information • Change requests • Project management plan updates • Project documents updates • OPA updates By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement -> ITTO
  9. 9. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Input PMP Procurement documents Agreements Approved Change Requests Work Performance Reports Work Performance Data
  10. 10. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Input->Procurement Doc’s Procurement documents Contract Contract Amendments Contract Addendums Technical documentation User Manual Invoices Payment records Contract related documents:
  11. 11. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Input->WPD Work Performance Data The raw observations & measurements related to contract & activities performed as per contract. Deliverables produced Cost - committed Vs incurred Seller invoices (submitted, paid) Quality standards Cost Invoices Deliverables Quality Direct and Manage Project work
  12. 12. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Input-> Work Performance Reports Work Performance Reports The physical or electronic representation of work performance information compiled as reports, to generate decisions, actions, or awareness. Generated reports - IT system generated / Physical Seller performance related documents Technical documentation Work Performance information Monitor & Control Project work Control Procurement
  13. 13. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Input -> Approved Change Requests Approved Change Requests A change request that has been processed through the integrated change control process and approved. Due to change in : Business requirement Technical specification Schedule, Milestone Cost Contract
  14. 14. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T Contract Change Control System Procurement Performance Reviews Inspections and audits Performance Reporting Payment Systems Claims Administration Records Management System
  15. 15. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T Inspections and audits Procurement Performance Reviews Performance Reporting Inspect Control Records Management System Payment Systems Contract Change Control System Claims Administration General Categorization (Not as per PMBOK):
  16. 16. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T->Record Management System Records Management System Processes & tools that are combined to record and retain information about the project. Maintain all Contract related correspondence Contract version control (Amendments/Addendums) Repository of all contract/dispute resolution information It acts as document archive
  17. 17. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T->Payment System Payment Systems Oracle financials Microsoft Dynamics Payment is processed accordance with the terms of the contract. Payment is done only after approval of satisfactory work by an project team. Ensure compliance with agreement The system used to provide and track supplier's invoices and payments for services and products.
  18. 18. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T->Inspection & Audits Inspections and audits The system used to provide and track supplier's invoices and payments for services and products. Inspect seller deliverables. Audit Seller processes. Verify compliance with contract Verify any weakness in process
  19. 19. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T-> Procurement Performance Reviews Procurement Performance Reviews Structured review of seller’s progress to deliver project scope & quality, within cost & on schedule. Performance review objective : To identify seller’s performance • Successes or failures • Progress with respect to the Procurement SOW • Contract noncompliance Allow the buyer to quantify • Seller’s demonstrated ability • Inability to perform work. Review of: Seller‐prepared documentation Buyer inspections Quality audits conducted
  20. 20. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T->Performance Reporting Performance Reporting It’s WPI, compiled as reports, to generate decisions, actions, or awareness. Similar to work performance reports, however focus is on contractual performance. Evaluate sellers work performance Verify sellers processes & deliverable compliance
  21. 21. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T->CCCS Contract Change Control System Defines process to modify procurement. Component of Integrated change control system: Changes will be Documented Tracked Approved Arbitrate Communicated The system used to collect, track, arbitrate, and communicate changes to a contract. Oracle’s Primavera Contract Management Microsoft SharePoint based Contract Management
  22. 22. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement-> T&T->Claim Administration Claims Administration The process of processing, adjudicating, and communicating contract claims. Claim administrations helps PM to solves disputes. Disputes in large projects with multiple sellers can be very complex. Manage according to the terms of contract. Follow documented procedures. If not resolved follow alternative dispute resolution (ADR) How to resolve disputes
  23. 23. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Output Work Performance Information Change Requests PMP Updates Project Documents Updates OPA Updates
  24. 24. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Output->WPI Work Performance Information Performance data collected from various controlling processes and analyzed in contractual context. Work Performance Data, Work Performance Reports Control Procurement T&T - Inspections and audits, Change Control system, Performance Review (Generates data) Work Performance Information
  25. 25. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Output->change Request Change Requests Processed through Integrated Change Control Requested but unresolved changes which are documented leads to disputes. Change requests going through disputes are not implemented. A formal proposal to modify any document, deliverable, or baseline.
  26. 26. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Output-> PMP Updates PMP Updates Update Project Management plan related documents. Update Procurement Management plan Update schedule (Milestones & Delivery dates )
  27. 27. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement ->Output->OPA Updates OPA Updates Sellers Performance record, Preferred seller list. Correspondence with seller. Lesson Learned
  28. 28. By: Anand Bobade (nmbobade@gmail.com) 12.3 Control Procurement -> Process Flow
  29. 29. By: Anand Bobade (nmbobade@gmail.com) Introduction – Procurement Management Processes 12.1 Plan Procurement Management • The process of documenting project procurement decisions, specifying the approach, and identifying potential sellers. 12.2 Conduct Procurement • The process of obtaining seller responses, selecting a seller, and awarding a contract. 12.3 Control Procurement • The process of managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as appropriate 12.4 Close Procurement • The process of completing each procurement.
  30. 30. By: Anand Bobade (nmbobade@gmail.com) Procurement 1 Procurement 2 Individual procurement Closure 12.4 Close Procurement The process of completing each procurement. It documents agreements and related documentation for future reference.
  31. 31. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement Early Termination Partial Termination Termination for a Cause Termination for Convenience When to end an Agreement: Seller is delivering as planned/Agreed Long Silence from both parties is not a termination Notice is required to initiate termination Awareness & abiding by terms and conditions is required Complete all administrative task before termination
  32. 32. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> ITTO Inputs (2) • Project Management Plan • Procurement Documents Tools & Techniques(3) • Procurement Audits • Procurement Negotiations • Records Management System Outputs(2) • Closed Procurements • OPA Updates
  33. 33. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement ->Inputs PMP Procurement documents
  34. 34. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> Inputs -> PMP Procurement Management plan Closure details & Guidelines PMP
  35. 35. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> Inputs -> Proc. Documents Procurement documents Procurement documents, Lesson Learned Contractual agreement documents
  36. 36. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> T&T Procurement Audits Procurement Negotiations Records Management System
  37. 37. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> T&T->Procurement Audits Procurement Audits Structured review of procurement process originating from Plan Procurements through Administer Procurements. Examine & evaluate How was the execution Procurement Audits Was it a best contract? List of success & failures Is the changes implemented correctly?
  38. 38. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> T&T->Procurement Negotiations Procurement Negotiations Primary Goal is to final equitable settlement of all outstanding issues, claims, and disputes by negotiation. Alternative dispute resolution ( ADR) ) including mediation or arbitration may be explored if it cant be settled by direct negotiations. When all else fails, litigation in the courts is the least desirable option.
  39. 39. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> T&T->Records Management System Records Management System Processes & tools that are combined to record and retain information about the project. Maintain all Contract related correspondence Contract version control (Amendments/Addendums) Repository of all contract/dispute resolution information It acts as document archive
  40. 40. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement ->Output Closed Procurements OPA Updates
  41. 41. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement ->Output->Close Procurement Closed Procurements Closure has to be signed by person with appropriate authority Follows the process agreed in procurement management plan Formal notice is required
  42. 42. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement ->Output->OPA Updates OPA Updates Update procurement documents with final notice & contract closure Update with Acceptance or non-compliance details Update Lessons learned
  43. 43. By: Anand Bobade (nmbobade@gmail.com) 12.4 Close Procurement -> Process Flow
  44. 44. By: Anand Bobade (nmbobade@gmail.com)
  45. 45. By: Anand Bobade (nmbobade@gmail.com) Visit Slide Share website & you will find other Knowledge area presentation… Please share!! Thank You!

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