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This chapter covers key concepts related to Project Procurement Management.

1. Procurement Management involves getting work done by people outside the project team. Project Procurement Management includes administering contracts and change control process to manage contracts or purchase orders. The knowledge area of Project Procurement Management consists of the following processes -

   Procurement Management Processes

   Process	Project Phase	Key Deliverables
   Plan Procurement Management	Planning	Procurement Management Plan
   Conduct Procurements	Execution	Selected Sellers, Procurement contract award
   Control Procurements	Monitoring and Controlling	Change requests
   Close Procurements	Closure	Closed procurements

   
   
   
2. The Plan Procurement process involves build versus buy decisions. The Inputs, Tools and Techniques, and Outputs of Plan Procurement process are listed in the table below.

   Plan Procurement Management process

   Inputs	Tools and Techniques	Outputs
   Scope baseline	Make-or-buy analysis	Procurement management plan
   Requirements documentation	Expert judgment	Procurement statements of work
   Teaming agreements	Contract types	Make-or-buy decisions
   Risk register		Procurement documents
   Risk-related contract decisions		Source selection criteria
   Activity resource requirements		Change requests
   Project schedule
   Activity cost estimates
   Cost performance baseline
   Enterprise environmental factors
   Organizational process assets

   
   
   
3. A contract is a formal agreement. It is a legal document biding to both seller and buyer. Changes to contract must be in writing and formally controlled. Most Governments back all contracts by providing a court system.
4. The process of Conduct Procurement involves receiving seller responses, selecting a seller, and awarding a contract. During this process bids or proposals from sellers are evaluated, and one or more seller is selected to execute the work.

   Conduct Procurement process

   Inputs	Tools and Techniques	Outputs
   Project Management Plan	Bidder conferences	Selected sellers
   Procurement documents	Proposal evaluation techniques	Procurement contract award
   Source Selection criteria	Independent estimates	Resource calendars
   Qualified seller list	Expert judgment	Change requests
   Seller proposals	Advertising	Project management plan updates
   Project documents	Internet search	Project document updates
   Make-or-buy decisions	Procurement negotiations
   Teaming agreements
   Organizational process assets

   
   
   
5. Sole Source refers to a market condition in which only one qualified seller exists in the market.
   Single Source refers to a market condition in which the company prefers to contract with only one seller.
   Oligopoly refers to a market condition where very few sellers exist, and the action of one seller will have impact on other seller prizes.
6. Bidder conferences are meetings between buyer and sellers before the bid is submitted. The conference is used by buyers to provide consistent information to all sellers.
7. The process of Control Procurement involves managing procurement relationships and ensuring the seller performance meets the procurement requirements.

   Control Procurement process

   Inputs	Tools and Techniques	Outputs
   Procurement documents	Contract change control system	Procurement documentation
   Project management plan	Procurement performance reviews	Organizational assets updates
   Contract	Inspection and audits	Change requests
   Performance reports	Performance reporting	Project management plan updates
   Approved change requests	Payment systems
   Work performance information	Claims administration
   	Records management system

   
   
   
8. Contract can be used as a risk management tool, as in transferring risk.
9. Centralized Contracting refers to a separate contracting office that handles contracts for all projects. In De-centralized Contracting a contract administrator is assigned for each project.
10. Force majeure is a powerful and unexpected event, such as hurricane or other disaster.
11. Privity is contractual information between customer and vendor.
12. The process of Close Procurement involves completing each procurement. The process involves verifying that all planned work as per the contract has been completed.

    Close Procurement process

    
    
    

    Inputs	Tools and Techniques	Outputs
    Project management plan	Procurement audits	Closed procurements
    Procurement documentation	Negotiated settlements	Organizational process updates
    	Records management system

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