PMP - Procurement

revision and questions

Prepared by:
Engr. Mohamed Maged, PMP

Admin of:
https://www.facebook.com/Prof.Planner
Instructor: Mohamed Maged
Senior Project Control Engineer, B.Sc. of Civil engineering Ain Shams
University, with experience in MENA region of (construction, infrastructure,
and roads) Mega projects, in professions of Contract administration, Procurement,
Tender estimating, Cost control, Planning & Claim analysis.

Instructor of Planning & Project Management:

- Construction Management Planning and Control (CMPC).
- Delay, Claim and Dispute Resolution (DCDR) in PMBOK, FIDIC & SCL protocol.
- Project Management Professional (PMP).
- Free lectures with cooperation of Egyptian Engineers Association in Saudi:
- Product oriented construction management
- Top 10 planning fundamentals
- Scope creep cases and preventive actions
- Claims and dispute resolution in FIDIC
Mohamed Maged (Professional Certificates)

PMP Project Management Professional (PMI USA)

SFC Scrum Fundamentals Certified (SCRUM study)

Associate of Chartered Institute of Arbitrators (CIArb - London)

Fellow of Association of International Arbitration (AIA - Brussels)

FIDIC Contracts Consultant: International academy of mediation and

arbitration - Egypt.

Six Sigma Yellow Belt Professional (6 Sigma Study- PMI)

Mohamed Maged (Prof. Planner)

Admin of the biggest online community of Arab Planners (10,000+)

(Facebook Page: to be prof. planner, related group: Best Advice for

Planners Public group)

SlideShare: www.slideshare.net/MohamedMaged8/
Planning fundamentals: http://www.slideshare.net/Mohamed
Maged8/50qts-of-planning-fundamentals-ver04

YouTube Channel: https://www.youtube.com/ArabPlanners.

Arranged Two Annual Conferences of Planning and

Project Management (Anniversary of Facebook Page: Prof.Planner)-
American University in Cairo, August 2014 & 2015.
A GUIDE TO THE PROJECT MANAGEMENT BODY OF
KNOWLEDGE (PMBOK Guide) Fifth Edition

Procurement (chapter 12) Review

Exam - test questions

5
 Procurement
6
Management in
PMBOK

12.1. Plan Procurement Management

Plan Procurement
Management. The
process of
documenting project
procurement decisions,
specifying the
approach, and
identifying potential
sellers.
 Definitions
7

Make-or-Buy Analysis. The process of gathering and organizing data about product
requirements and analyzing them against available alternatives including the purchase or
internal manufacture of the product (consider risk for this strategic decision).
Market Research. The process of gathering information at conferences, online reviews,
and a variety of sources to identify market capabilities.
Source Selection Criteria. required attributes of seller,
objective or subjective (Risk, Capability/ Capacity,
Warranty, Past performance,..) may use screening or
weighting systems- (sole source the only provider available,
single source a preferred vendor).
Make-or-Buy Decisions. Decisions made regarding the
external purchase or internal manufacture of a product
(depends on the duration of use).
 Make-or-Buy Example
8
 Procurement
9
documents

The documents in bid and

proposal include: buyers
Invitation for Bid (IFB),
Invitation for Negotiations,
Request for Information (RFI),
Request for Quotation (RFQ),
Request for Proposal (RFP),
and sellers responses.
 Whats Contract
10

Legally binding relationship between parties to define procurement statement

of work, requirements of reporting, payment, roles, responsibilities, and risk
allocation (helps in better communication, clear responsibilities, good change
management mechanisms).
 Contractual
11
relationships in
projects

Contract Types:
Buyer Vs Seller
1- Fixed Price Employer Contractor
Contractor Subcontractor
2- Cost Plus Purchaser Supplier
Pays money Offers service
3- Time & Material
 Fixed price
12

- Contract Types
 Cost-Reimbursable
13

- Contract Types
 Time and Material
14

- Contract Type
 Contract type
15
selection
 Incentive contracts
16
examples
 Contract type and
17
risk assessment

The project manager has the

identified project risks.

PM needs to make sure

provisions are included in the
contract to address these risks.
 Contract priority
18
of documents

-Agreement -Particular Conditions

-General Conditions -Special Specs.
-General Specs. -Drawings
-B.O.Q.

Words are binding more than no.s

Good terms are easy to understand: plain language & visual aids.
19
Conduct
Procurements

12.2. Conduct Procurements

Conduct
Procurements. The
process of obtaining
seller responses,
selecting a seller,
and awarding a
contract.
20
Conduct
Procurements

OUTPUTS:
Selected Sellers. The sellers selected to
provide a contracted set.
Agreements. the initial intentions of a project
after (LOI: letter of intent) if used. This can
take the form of a contract, memorandum of
understanding (MOU), letters of agreement,
verbal agreements, a purchase order, email,
etc. (include terms and conditions).
21
Control
Procurements

12.3. Control Procurements

Organizational
Process Assets
Updates.
(Correspondence,
Payment schedules
and requests, Seller
performance
evaluation
documentation).
22
Control
Procurements

Contract Change Control System. The system used to collect, track, adjudicate, and communicate
changes (CCB might review and approve, but only the procurement manager has the authority to sign a
change).
Procurement Performance Reviews. A structured review of the sellers progress to deliver project scope
and quality, within cost and on schedule, as compared to the contract.
Inspections and Audits. A process to observe performance of contracted work or a promised product
against agreed-upon requirements, any breach happens (Privity: no contractual relationship between
client and subcontractors, so he has to deal with him through the main contractor).
Performance Reporting. See work performance reports (Integration Control).
Payment Systems. The system used to provide and track suppliers invoices and payments.
Claims Administration. The process of processing, adjudicating, and communicating contract claims
(contested or potential constructive changes: requested change cant reach agreement between
buyer and seller).
Records Management System. A specific set of processes, related control functions, and tools that are
consolidated and combined to record and retain information about the project.
23
Close
Procurements

12.4. Close Procurements

Close Procurements. The
process of completing each
project procurement
(completion or termination),
also involves administrative
activities such as finalizing
open claims, updating
records to reflect final
results, and archiving such
information for future use.
24
Close
Procurements

Tools & Techniques:

Procurement Audits. The review of contracts and contracting processes for completeness,
accuracy, and effectiveness (audits are used to improve processes and learn from
success).
Records Management System. by the project manager to manage, archive contract and
procurement documentation , correspondence and records.

OUTPUTS:
Closed Procurements. Project contracts or other procurement agreements that have been
formally acknowledged by the proper authorizing agent as being finalized and signed off.
Organizational Process Assets Updates. (Procurement file, Deliverable acceptance,
Lessons learned documentation).
 Procurement
25
Negotiations

Pre-contract: clarify the structure, requirements,

and other terms of the purchases so that mutual
agreement can be reached prior to signing the
contract. Final contract language reflects all
agreements reached (in order: performance,
scope, schedule, price).

Post contract: the final equitable settlement of

all outstanding issues, claims, and disputes by
negotiation is preferred. Otherwise some form
of alternative dispute resolution (ADR) including
mediation or arbitration may be explored.
When all else fails, litigation in courts is the least
desirable option.
 Negotiation
26
tactics

You may refer to any of these tactics:

Fait Accompli - Standard contract terms that are nonnegotiable. (In reality, anything in the contract is negotiable
although your adversary will never admit it).
Deadline - Make it clear that this is the time by which they must do. As the deadline approaches, increase the
emotional pressure, talking more about what will happen if the deadline is missed.
Good guy /bad guy - One person acts in an aggressive and pushy way, making unreasonable demands and requiring
compliance. The other person acts in kind and friendly, asking nicely - and getting compliance.
Missing man - The person who can actually make the decision is missing from the negotiation. The negotiator can then
negotiate for a lower price or more favorable terms which they claim they can agree to.
Limited authority - Refusing to give in on items because you have no authority to do what is being requested.
Fair and reasonable - You can engage the other person by asking them 'what is fair'. You can also bring something
into the negotiation that is, by definition, fair. You can also reject criteria from the adversary on the grounds that it is not
fair.
Unreasonable - Stating that the other side is making unreasonable demands of you in the negotiation.
Delay - Stretching out the negotiation, especially at critical moments.
Attack - A direct attack on your integrity, trustworthiness, competence, or other such bullying bombast designed to
force compliance out of you.
Procurement test questions

27
28
29
30
31
32
33
34
35
36
37
38
39
 Thank You
Dont Hesitate to contact.

M.Maged
magedkom@gmail.com
mobile : 00966-580264968