Project Procurement Management - Conduct Procurements

This process obtains the seller responses, selects a seller and awards a contract. It provides alignment of internal and external stakeholder expectations through established agreements .

Let's take a look at the Inputs, Tools and Techniques, and Outputs of this process.

1) Procurement Management Plan

• Describes how the procurement processes will be managed from developing procurement documentation through contract closure

2) Procurement Documents

• Provide an audit trail for contracts and other agreements

3) Source Selection Criteria

• Information on the supplier's required capabilities, capacity, deliver dates, product cost, life-cycle cost, technical expertise, and the approach to the contract. 

4) Seller Proposals

• Form the basic information that will be used by an evaluation body to select one or more successful bidders

5) Project Documents

• Documents that include risk-related contract decisions 

6) Make-or-Buy Decisions

• Factors that influence these decisions may include:
• Core capabilities of the organization
• Value delivered by vendors meeting the need
• Risks associated with meeting the need in a cost-effective manner
• Capability internally compared with the vendor community

7) Procurement Statement of Work

• Provides suppliers with a clearly stated set of goals, requirements, and outcomes from which they can provide a quantifiable response. 
• Specifications
• Quantity desired
• Quality levels
• Performance data
• Period of performance
• Work location
• Other requirements

8) Organizational Process Assets

• Items that may influence Conduct Procurements:
• Listings of prospectives and previously qualified sellers
• Information on relevant past experience with sellers, both good and bad
• Prior agreements

9) Bidder Conferences

• Meetings between the buyer and all prospective seller prior to submittal of a bid or proposal
• Also known as contractor conferences, vendor conferences, and pre-bid conferences

10) Proposal Evaluation Techniques

• Formal evaluation review process will be defined by the buyer's procurement policies. 

11) Independent Estimates

• An organization can prepare its own independent estimate or get an outside professional to do one so that they can compare the differences in cost to the proposals

12) Expert Judgment

• have the experts review the seller proposals (contracting, legal, finance, accounting, engineering, design, research, development, sales, and manufacturing) 

13) Advertising

• Advertise to get more potential sellers to increase the pool of proposals

14) Analytical Techniques

• Helps organizations identify the readiness of a vendor to provide the desired end state, determine the cost expected to support budgeting, and avoid cost overruns due to changes. 

15) Procurement Negotiations 

• Clarify the structure, requirements, and other terms of the purchases so that mutual agreement can be reached prior to signing the contract. 
• Items covered
• Responsibilities
• Authority to make changes
• Applicable terms and governing law
• Technical and business management approaches
• proprietary rights
• Contract financing
• Technical solutions
• Overall schedule
• Payments
• Price

16) Select Sellers

• Those that have been judged to be in a competitive range based upon the outcome of the proposal or bid evaluation and who have negotiated a draft contract that will become the actual contract when an award is made. 

17) Agreements

• Includes terms and conditions and may incorporate other items that the buyer specifies regarding what the seller is to perform or provide. 
• Also known as - an understanding, a contract, a subcontract, purchase order and is legally binding
• May include:
• Statement of work or deliverables
• Schedule baseline
• performance reporting
• period of performance
• roles and responsibilities
• seller's place of performance
• pricing
• payment terms
• place of delivery
• inspection and acceptance criteria
• warranty
• product support
• limitation of liability
• fees and retainer
• penalties
• incentives
• insurance and performance bonds
• subordinate subcontractor approvals
• change request handling
• Termination clause and alternative dispute resolution (ADR) mechanisms 

18) Resource Calendars

• Identify the dates on which each specific resource or resource group can be active or idle

19) Change Requests

• Any change requests go through the Perform Integrated Change Control process

20) Project Management Plan updates

• May include:
• Cost baselines
• Scope baselines
• Schedule baselines
• Communications management plan
• Procurement management plan

21) Project Document Updates

• May include:
• Requirements documentation
• Requirements traceability documentation
• Risk register
• Stakeholder register

Source: PMBOK 5th ed.