12.1.1 Plan Procurement Management
●Type of Contracts:
All legal contractual relationships generally fall into one of two broad families: either fixed-price or cost reimbursable.
Also, there is a third hybrid type commonly in use called the time and materials contract. The more popular contract types in use are discussed below as discrete types, but in practice it is not unusual to combine one or more types into a single procurement.
12.1.1 Plan Procurement Management: Inputs
- Fixed-Price Contracts
The price is fixed. The seller are legally obligated to complete such contracts, else, a compensation is possible to be claim.
Buyers need to clearly specify the product or services being procured. Possible request changes in scope, but generally with an increase in contract price.
- Firm Fixed Price Contracts (FFP) - Fixed price unless the scope is change. The seller is bear the increase of cost.
- Fixed Price Incentive Fee Contracts (FPIF) -
Fixed price plus the bonus. The bonus are related to cost, schedule, or technical performance of the seller.
The final contract price is determined after completion of all work based on the seller's performance.
Under FPIF contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller, who is obligated to complete the work. - Fixed Price with Economic Price Adjustment Contracts (FP-EPA) - Buyer should choose this contract type if long-term relationships.
The contract is fixed price but allowing for pre defined final adjustments to the contract price due to changed conditions, such as inflation changes or cost increases (or decreases).
This contract type should reference to some reliable financial index.
The FP-EPA contract is intended to protect both buyer and seller from external conditions beyond their control.
- Cost-Reimbursable Contracts
Pay the seller for all actual costs incurred for completed work, plus a fee representing seller profit.
A cost-reimbursable contract provides the project flexibility to redirect a seller whenever the scope of work cannot be precisely defined at the start and needs to be altered, or when high risks may exist in the effort.
- Cost Plus Fixed Fee Contracts (CPFF) -
The seller is reimbursed (補償) for all allowable costs for performing the contract work, and receives a fixed-fee payment calculated as a percentage of the initial estimated project costs. A fee is paid only for completed work and does not change due to seller performance. Fee amounts do not change unless the project scope changes. - Cost Plus Incentive Fee Contracts (CPIF) - Similar to CPFF, but the seller receives a incentive fee if achieving certain performance objectives instead of fixed-fee payment.
If the final costs are less or greater than the original estimated costs, then both the buyer and seller share the costs. - Cost Plus Award Fee Contracts (CPAF) - Similar to CPAF, but the seller receives a bonus depend on buyer's determination.
- Cost Plus Fixed Fee Contracts (CPFF) -
- Time and Material Contracts - A hybrid type of both cost-reimbursable and fixed-price contracts. But defined the maximum values to prevent unlimited cost growth. e.g. the Salary rates per hour, or the price of materials.
12.1.2 Plan Procurement Management: Tools and Techniques
● 12.1.2.1 Make-or-Buy Analysis
The particular work accomplished by the project team (Internal) or should be purchased from outside sources (e.g Vendors).
12.1.3 Plan Procurement Management: Outputs
● 12.1.3.2 Procurement Statement of Work
The statement of work (SOW) for each procurement is developed from the project scope baseline.
The procurement SOW describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results.
Sufficient detail can vary based on the nature of the item, the needs of the buyer, or the expected contract form.
Information included in a SOW can include specifications, quantity desired, quality levels, performance data, period of performance, work location, and other requirements.
Each individual procurement item requires a SOW; however, multiple products or services can be grouped as one procurement item within a single SOW.
● 12.1.3.3 Procurement Documents
Procurement documents are used to solicit(請求) proposals from prospective sellers.
Terms such as bid, tender, or quotation are generally used when the seller selection decision will be based on price.
Common terms are in use for different types of procurement documents and may include request for information (RFI), invitation for bid (IFB), request for proposal (RFP), request for quotation (RFQ), tender notice, invitation for negotiation, and invitation for seller's initial response.
The complexity and level of detail of the procurement documents should be consistent with the value of, and risks associated with.
● 12.1.3.4 Source Selection Criteria
Source selection criteria are often included as a part of the procurement documents. Such criteria are developed and used to rate or score seller proposals, and can be objective or subjective.
Selection criteria may be limited to only the purchase price if the procurement item is readily available from a number of acceptable sellers.
12.2 Conduct Procurements
Conduct Procurements is the process of obtaining seller responses, selecting a seller, and awarding a contract.
12.2.2 Conduct Procurements: Tools and Techniques
●12.2.2.1 Bidder Conferences
Bidder conferences are meetings between the buyer and all prospective sellers prior to submittal of a bid or proposal.
They are used to ensure that all prospective sellers have a clear and common understanding of the procurement requirements,
To be fair, buyers should take great care to ensure that all prospective sellers hear every question from any individual prospective seller and every answer from the buyer.
12.3 Control Procurements
Control Procurements is the process of managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as appropriate.
The key benefit of this process is that it ensures that both the seller's and buyer's performance meets procurement requirements according to the terms of the legal agreement.
12.3.2 Control Procurements: Tools and Techniques
12.3.2.1 Contract Change Control System
A contract change control system defines the process by which the procurement can be modified.
It includes the paperwork, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes.
The contract change control system is integrated with the integrated change control system.
12.3.2.2 Procurement Performance Reviews
A procurement performance review is a structured review of the seller's progress to deliver project scope and quality, within cost and on schedule, as compared to the contract. It can include a review of seller-prepared documentation and buyer inspections, as well as quality audits conducted during seller's execution of the work.
12.4 Close Procurements
Close Procurements is the process of completing each procurement. The key benefit of this process is that it documents agreements and related documentation for future reference.
I came across your article about the CLM, it is very useful for me.
回覆刪除GenAI for Procurement in Contract Management