Chapter 12 230714

7/24/2019 Chapter 12 230714

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Chapter 12

Project Procurement andClosure

7/24/2019 Chapter 12 230714


7/24/2019 Chapter 12 230714


12.1 Identifying the Need forResources Outside the Org’n

• The factors that inuenceprocurement are primarily cost andschedule but also include risk,

quality, and exibility.

• To determine whether to outsource ordo the work within the organization,

consider which option is less costlyand which option can deliver thework on time.

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12.2 Procurement Plan

• Commodities are purchased through suppliers using arequest for quote !"#$ and selected on the basis of

price. %n exception is the key supplier relationship wherethe supplier&organization relationship is long term and

the supplier passes along some of the savings ofavoiding the bidding process.

• 'endors provide products and services that are designedfor the pro(ect based on a request for proposal !")$ that

invites the vendors to meet the goals of the request

using their products and skills.• *f the organization lacks key skills or relationships, it

might form a partnership arrangement with anothercompany to share the bene+ts and risks of the pro(ect.

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12.3 electing the !ype ofContract

• Contract selection is based on uncertainty of scope,assignment of risk, need for predictable costs, and theimportance of meeting milestone dates.

• Total +xed cost is a single price where the scope is

well de+ned.

• % +xed price with incentive contract oers a rewardfor +nishing early or under budget or a penalty forbeing late.

• % +xed price with ad(ustment allows for increases incost of materials or changes in currency values.

• % +xed unit price contract sets a price per unit, butthe exact number of units is not known.

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7/24/2019 Chapter 12 230714


• *n a cost reimbursable contract, the pro(ect pays forcosts.

• % cost plus +xed fee contract assures the contractorof a known fee.

• % cost plus percentage fee calculates the fee as apercentage of the costs.

• % cost plus incentive fee sets goals for the contractorto achieve that would result in a bonus.

•% cost plus award fee is similar, but the goals aremore sub(ective.

• Time and materials contracts pay for costs plus anhourly rate for the contractor-s time.

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7/24/2019 Chapter 12 230714


12." ProcurementProcess• The procurement plan includes determining the

category of materials or services, choosing thetype of contractual relationship, soliciting bids,selecting bidders, managing the work, andclosing the contracts.

• The decisions made when selecting the type ofcontract are based on whether the materials canbe provided by suppliers, vendors, or partners

how well de+ned the work is how the risk will beshared the importance of the task to theschedule and the need for certainty of the cost.

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• Companies that bid on contracts are evaluated onpast performance and current +nancial status.

• !"#s and !")s are sent to those companies.

• !"#s are evaluated on price and !")s areevaluated on price and method.

• /ong lead time items are identi+ed and monitored.

• *tems that are critical to the schedule or delayedare assigned to an expediter.

• The logistics of handling delivery, storage, andtransportation are determined.

• 0ork and materials are inspected for quality.

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12.# Project Closure

• To close contracts, systems are tested,materials are inspected, and punch lists ofwork to be completed are made.

• The purpose of the post&pro(ect review is toexamine decisions that were made withpartial knowledge with the way the pro(ectactually developed to learn from the

experience and to improve future decisions.• *t is also used to identify processes that can

be improved.

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• 1riginal pro(ect documents, such as the charter,scope statement, and budget, are stored.

• 2ocuments developed during the pro(ect, such as

change agreements, are stored.

• )ost&pro(ect reviews, including a summary of lessonslearned and a +nal pro(ect pro+le description32)C*rating3are saved.

• %t the pro(ect closeout celebration, positive behavioris awarded for individuals, and groups and the clientor sponsor is invited to speak to enforce a sense ofsatisfaction.

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Chapter 12 230714