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1、Chapter 11:Project Procurement Management1Importance of Project Procurement ManagementProcurement means acquiring goods and/or services from an outside sourceOther terms include purchasing and outsourcingExperts predict that by the year 2003 the worldwide information technology outsourcing market wi
2、ll grow to over $110 billion2Why Outsource?To reduce both fixed and recurrent costsTo allow the client organization to focus on its core businessTo access skills and technologiesTo provide flexibilityTo increase accountability3Project Procurement Management ProcessesProcurement planning: determining
3、 what to procure and whenSolicitation planning: documenting product requirements and identifying potential sourcesSolicitation: obtaining quotations, bids, offers, or proposals as appropriateSource selection: choosing from among potential vendorsContract administration: managing the relationship wit
4、h the vendorContract close-out: completion and settlement of the contract4Figure 11-1. Project Procurement Management Processes and Key Outputs5Procurement PlanningProcurement planning involves identifying which project needs can be best met by using products or services outside the organization. It
5、 includes decidingwhether to procurehow to procurewhat to procurehow much to procurewhen to procure6Collaborative ProcurementSeveral organizations, even competitors, have found that it makes sense to collaborate on procurement for some projectsKodak worked with several competitors to develop the Adv
6、antix Advanced Photo System (see What Went Right?)7Procurement Planning Tools and TechniquesMake-or-buy analysis: determining whether a particular product or service should be made or performed inside the organization or purchased from someone else. Often involves financial analysisExperts, both int
7、ernal and external, can provide valuable inputs in procurement decisions8Make-or Buy ExampleAssume you can lease an item you need for a project for $150/day. To purchase the item, the investment cost is $1,000, and the daily cost would be another $50/day.How long will it take for the lease cost to b
8、e the same as the purchase cost?If you need the item for 12 days, should you lease it or purchase it?9Make-or Buy SolutionSet up an equation so the “make” is equal to the “buy”In this example, use the following equation. Let d be the number of days to use the item.$150d = $1,000 + $50dSolve for d as
9、 follows:Subtract $50d from the right side of the equation to get$100d = $1,000Divide both sides of the equation by $100d = 10 daysThe lease cost is the same as the purchase cost at 10 daysIf you need the item for 12 days, it would be more economical to purchase it10Types of ContractsFixed price or
10、lump sum: involve a fixed total price for a well-defined product or serviceCost reimbursable: involve payment to the seller for direct and indirect costsTime and material contracts: hybrid of both fixed price and cost reimbursable, often used by consultantsUnit price contracts: require the buyer to
11、pay the seller a predetermined amount per unit of service11Cost Reimbursable ContractsCost plus incentive fee (CPIF): the buyer pays the seller for allowable performance costs plus a predetermined fee and an incentive bonusCost plus fixed fee (CPFF): the buyer pays the seller for allowable performan
12、ce costs plus a fixed fee payment usually based on a percentage of estimated costsCost plus percentage of costs (CPPC): the buyer pays the seller for allowable performance costs plus a predetermined percentage based on total costs12Figure 11-2. Contract Types Versus Risk13Statement of Work (SOW)A st
13、atement of work is a description of the work required for the procurementMany contracts, mutually binding agreements, include SOWsA good SOW gives bidders a better understanding of the buyers expectations14Figure 11-3. Statement of Work (SOW) Template15Solicitation PlanningSolicitation planning invo
14、lves preparing several documents:Request for Proposals: used to solicit proposals from prospective sellers where there are several ways to meet the sellers needsRequests for Quotes: used to solicit quotes for well-defined procurementsInvitations for bid or negotiation and initial contractor response
15、s are also part of solicitation planning16Figure 11-4. Outline for a Request for Proposal (RFP)17SolicitationSolicitation involves obtaining proposals or bids from prospective sellersOrganizations can advertise to procure goods and services in several waysapproaching the preferred vendorapproaching
16、several potential vendorsadvertising to anyone interestedA bidders conference can help clarify the buyers expectations18Source SelectionSource selection involvesevaluating bidders proposalschoosing the best onenegotiating the contractawarding the contractIt is helpful to prepare formal evaluation pr
17、ocedures for selecting vendorsBuyers often create a “short list”19Figure 11-5. Sample Proposal Evaluation Sheet20Figure 11-6. Detailed Criteria for Selecting Suppliers21Be Careful in Selecting Suppliers and Writing Their ContractsMany dot-com companies were created to meet potential market needs, bu
18、t many went out of business, mainly due to poor business planning, lack of senior management operations experience, lack of leadership, and lack of visions. Check the stability of suppliersEven well-known suppliers can impede project success. Be sure to write and manage contracts well with all suppl
19、iers (see What Went Wrong?)22Contract AdministrationContract administration ensures that the sellers performance meets contractual requirementsContracts are legal relationships, so it is important that legal and contracting professionals be involved in writing and administering contractsMany project
20、 managers ignore contractual issues, which can result in serious problems23Suggestions on Change Control for ContractsChanges to any part of the project need to be reviewed, approved, and documented by the same people in the same way that the original part of the plan was approvedEvaluation of any c
21、hange should include an impact analysis. How will the change affect the scope, time, cost, and quality of the goods or services being provided? Changes must be documented in writing. Project team members should also document all important meetings and telephone phone calls24Contract Close-outContract close-out includesproduct verification to determine if all work was completed correctly and satisfactorilyadministrative activities to update records to reflect final resultsarchiving information for future usePr
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