Lecture Project management in practice - Chapter 15: Project procurement management. This chapter presents the following content: Procurement and project management, procurement management plan, outsourcing project work, contracting and contract types,. | CHAPTER 15 Project Procurement Management Procurement and Project Management Procurement and Project Management (cont.) Long lead-time items Large capital items Make or Buy decision Procurement Management Plan Governance Organisational policy and procedures in relation to procurement, contracting and legal processes Requirements of long lead-time items and large capital-purchase items Purchasing assumptions Risk analysis of procurement decision Review of procurement lessons learned from previous projects Common Tender Types Outsourcing Project Work If the decision is to ‘buy’ into the project, one of the most frequently used phases is to outsource. Outsourcing Project Work (cont.) Advantages Cost reduction Faster project completion High level of expertise Flexibility Disadvantages Coordination breakdowns Loss of control Conflict Security issues Outsourcing Project Work (cont.) Best practices Well-defined requirements and procedures Extensive training and team-building . | CHAPTER 15 Project Procurement Management Procurement and Project Management Procurement and Project Management (cont.) Long lead-time items Large capital items Make or Buy decision Procurement Management Plan Governance Organisational policy and procedures in relation to procurement, contracting and legal processes Requirements of long lead-time items and large capital-purchase items Purchasing assumptions Risk analysis of procurement decision Review of procurement lessons learned from previous projects Common Tender Types Outsourcing Project Work If the decision is to ‘buy’ into the project, one of the most frequently used phases is to outsource. Outsourcing Project Work (cont.) Advantages Cost reduction Faster project completion High level of expertise Flexibility Disadvantages Coordination breakdowns Loss of control Conflict Security issues Outsourcing Project Work (cont.) Best practices Well-defined requirements and procedures Extensive training and team-building activities Well-established conflict management processes in place Frequent review and status updates Co-location when needed Fair and incentive-laden contracts Long-term outsourcing relationships Contracting and Contract Types Infrastructure ‘type’ contracts Build, Own, Operate, Transfer (BOOT) Build, Own, Operate (BOO) Build, Operate, Transfer (BOT) Partnerships Time and material contracts Contracting and Contract Types (cont.) Fixed Price Contracts Firm fixed price (FFP) Fixed price incentive fee (FPIF) Fixed price with economic price adjustment (FP-EPA) Cost Reimbursable Contracts Cost plus fixed fee (CPFF) Cost plus incentive fee (CPIF) Cost plus award fee (CPAF) Summary of Contract Types Essential Elements of a Contract 1. Offer and acceptance (agreement). 2. Intention to create legal relations. 3. Consideration. 4. Legal capacity. 5. Consent. 6. Illegal and void contracts. The Art of Negotiating Project Procurement Integration continued Project Procurement Integration (cont) Key Terms BATNA closed tender contract law contract types large capital items long lead-time items make or buy (decision) open tender Outsourcing partnering charter principled negotiation procurement six essential elements of a contract tender process
