13.4 Monitor Stakeholder Engagement

Description: It is the process of monitoring stakeholder relationships and tailoring strategies for engagement engaging stakeholder through modification of engagement strategies and plans.

Key benefit: it maintains or increases the efficiency and effectiveness of stakeholder engagement activities as the project evolves and its environment changes.

Frequency: throughout the project.

Process / Asset group	Input	The Process	Output	Process / Asset group
Project Management Plan	Resource management plan	13.4 Monitor Stakeholder Engagement	Work performance information	4.5 Monitor and Control Project Work
	Communication management plan		Change requests	4.6 Perform Integrated Change Control
	Stakeholder engagement plan		Resource management plan	Project Management Plan
Project Documents	Issue log		Communication management plan
	Lesson learned register		Stakeholder engagement plan
	Project communications		Issue log	Project Documents
	Risk register		Lesson learned register
	Stakeholder register		Risk register
4.3 Direct and Manage Project Work	Work performance data		Stakeholder register
Enterprise / Organization	Enterprise environment factors
	Organizational process assets

13.4.1 Inputs

13.4.1.1 Project Management Plan

Include:

• Resource management plan. Identifies the methods for team member management.
• Communications management plan. Describes the plans and strategies for communication to the project's stakeholders.
• Stakeholder engagement plan. Defines the plan for managing stakeholder needs and expectations.

13.4.1.2 Project Documents

Include:

• Issue log. Documents all the known issues related to the project and stakeholders.
• Lessons learned register.
• Project communications. The project communications that have been distributed to stakeholders as defined in the communications management plan and the stakeholder engagement plan.
• Risk register. Contains the identified risks for the project, including those related to stakeholder engagement and interactions, their categorization, and list of potential responses.
• Stakeholder register. Сontains stakeholder information that includes but is not limited to stakeholder identification, assessment, and classification.

13.4.1.3 Work Performance Data

Data on project status such as which stakeholders are supportive of the project, and their level and type of engagement.

13.4.1.4 Enterprise Environmental Factors

• Organizational culture, political climate, and governance framework;
• Personnel administration policies;
• Stakeholder risk thresholds;
• Established communication channels;
• Global, regional, or local trends, practices, or habits; and
• Geographic distribution of facilities and resources.

13.4.1.5 Organizational Process Assets

Include:

• Corporate policies and procedures for social media, ethics, and security;
• Corporate policies and procedures for issue, risk, change, and data management;
• Organizational communication requirement;
• Standardized guidelines for development, exchange, storage, and retrieval of information; and
• Historical information from previous projects.

13.4.2 Tools and Techniques

13.4.2.1 Data Analytics

Include:

• Alternatives analysis. To evaluate options to respond to variances in the desired results of stakeholder engagement.
• Root cause analysis. To determine the basic underlying reason that stakeholder engagement is not having the planned effect.
• Stakeholder analysis. Helps to determine the position of stakeholder groups and individuals at any particular time in the project.

13.4.2.2 Decision Making

Include:

• Multicriteria decision analysis. Criteria for successful stakeholder engagement are prioritized and weighted to identify the most appropriate choice.
• Voting. Used to select the best response for a variance in stakeholder engagement.

13.4.2.3 Data Representation

Stakeholder engagement assessment matrix. Tracking changes in level of engagement for each stakeholder.

13.4.2.4 Communication Skills

• Feedback. To ensure that the information to stakeholders is received and understood.
• Presentations.Provide clear information to stakeholders.

13.4.2.5 Interpersonal and Team Skills

Include:

• Active listening. Used to reduce misunderstandings and other miscommunication.
• Cultural awareness. Helps the project manager to plan communications based on the cultural differences and requirements of stakeholders and team members.
• Leadership.
• Networking. Access to information about levels of engagement of stakeholders.
• Political awareness. Used to understand the strategies of the organization, understand who wields power and influence in this arena, and to develop an ability to communicate with these stakeholders.

13.4.2.6 Meetings

13.4.3 Outputs

13.4.3.1 Work Performance Information

The status of stakeholder engagement, such as the level of current project support and compared to the desired levels of engagement as defined in the stakeholder engagement assessment matrix, stakeholder cube, or other tool.

13.4.3.2 Change Requests

Corrective and preventive actions to improve the current level of stakeholder engagement.

13.4.3.3 Project Management Plan Updates

• Resource management plan. Team responsibilities for stakeholder engagement activities may need to be updated.
• Communications management plan. The project's communication strategies may need to be updated.
• Stakeholder engagement plan. Information about the project's stakeholder community may need to be updated.

13.4.3.4 Project Documents Updates

• Issue log.
• Lessons learned register. Information on challenges and how they could have been avoided. It is also updated with approaches that worked well for engaging stakeholders optimally, and those that did not work well.
• Risk register. Updated with responses to stakeholder risks.
• Stakeholder register. Updated with information as a result of monitoring stakeholder engagement.

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13.3 Manage Stakeholder Engagement

Description: it the process of communicating and working with stakeholders to meet their needs and expectations, address issues, and foster appropriate stakeholder involvement. Involves:

• Engaging stakeholders at appropriate project stages to obtain, confirm, or maintain their continued commitment to the success of the project;
• Managing stakeholder expectations through negotiation and communication;
• Addressing any risks or potential concerns related to stakeholder management and anticipating future issues that may be raised by stakeholders; and
• Clarifying and resolving issues that have been identified.

Key benefit: it allows the project manager to increase support and minimize resistance from stakeholders.

Frequency: throughout the project.

Process / Asset Group	Input	The Process	Output	Process / Asset Group
Project Management Plan	Communications management plan	13.3 Manage Stakeholder Engagement	Communications management plan	Project Management Plan
	Risk management plan		Stakeholder management plan
	Stakeholder engagement plan		Change log	Project documents
	Change management plan		Issue log
Project Documents	Change log		Lesson learned register
	Issue log		Stakeholder register
	Lesson learned register		Change requests	4.6 Perform Integrated Change Control
	Stakeholder register
Enterprise / Organization	Enterprise environment factors
	Organizational process assets

13.3.1 Inputs

13.3.1.1 Project Management Plan

• Communications management plan. Describes the methods, formats, and technologies used for stakeholder communication.
• Risk management plan. Describes the risk categories, risk appetites, and reporting formats that can be used to manage stakeholder engagement.
• Stakeholder engagement plan. Provides guidance and information on managing stakeholder expectations.
• Change management plan. Describes the process for submitting, evaluating and implementing changes to the project.

13.3.1.2 Project Documents

Include:

• Change log. Change requests and their status are documented in the change log and communicated to the appropriate stakeholders.
• Issue log.
• Lessons learned register.
• Stakeholder register. Provides the list of project stakeholders and any information needed to execute the stakeholder engagement plan.

13.3.1.3 Enterprise Environmental Factors

Include:

• Organizational culture, political climate, and governance structure of the organization;
• Personnel administration policies;
• Stakeholder risk thresholds;
• Established communication channels;
• Global, regional, or local trends, practices, or habits; and
• Geographic distribution of facilities and resources.

13.3.1.4 Organizational Process Assets

Include:

• Corporate policies and procedures for social media, ethics, and security;
• Corporate policies and procedures for issue, risk, change, and data management;
• Organizational communication requirements;
• Standardized guidelines for development, exchange, storage, and retrieval of information; and
• Historical information from previous similar projects.

13.3.2 Tools and Techniques

13.3.2.1 Expert Judgement

Topics:

• Politics and power structures in the organization and outside the organization;
• Environment and culture of the organization and outside the organization;
• Analytical and assessment techniques to be used for stakeholder engagement processes;
• Communication methods and strategies;
• Characteristics of stakeholders, stakeholder groups, and organizations involved in the current project that may have been involved in previous projects; and
• Requirements management, vendor management, and change management.

13.3.2.2 Communication Skills

Feedback. Ways to collect:

• Conversations; both formal and informal,
• Issue identification and discussion,
• Meetings,
• Progress reporting, and
• Surveys.

13.3.2.3 Interpersonal and Team Skills

Include:

• Conflict management. Conflicts are resolved in a timely manner.
• Cultural awareness. Used to help the project manager and team to communicate effectively by considering cultural differences and the requirements of stakeholders.
• Negotiation. Used to achieve support or agreement that supports the work of the project or its outcomes and to resolve conflicts within the team or with other stakeholders.
• Observation/conversation. Used to stay in touch with the work and attitudes of project team members and other stakeholders.
• Political awareness. Achieved through understanding the power relationships within and around the project.

13.3.2.4 Ground Rules

Defined in the team charter.

They set the expected behavior.

13.3.2.5 Meetings

Types:

• Decision making,
• Issue resolution,
• Lessons learned and retrospectives,
• Project kick-off,
• Sprint planning, and
• Status updates.

13.3.3 Outputs

13.3.3.1 Change Requests

Project scope or product scope.

13.3.3.2 Project Management Plan Updates

• Communications management plan. Updated to reflect new or changed stakeholder requirements.
• Stakeholder engagement plan. Updated to reflect new or changed management strategies required to effectively engage stakeholders.

13.3.3.3 Project Documents Updates

• Change log.
• Issue log.
• Lessons learned register.
• Stakeholder register. Updated based on new information provided to stakeholders about resolved issues, approved changes, and general project status.

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13.2 Plan Stakeholder Engagement

Description: It is the process of developing approaches to involve project stakeholders based on their needs, expectations, interests, and potential impact on the project.

Key benefit: it provides an actionable plan to interact effectively with stakeholders.

Frequency: periodically.

Trigger situations requiring updates to the plan include but are not limited to:

• When it is the start of a new phase of the project;
• When there are changes to the organization structure or within the industry;
• When new individuals or groups become stakeholders, current stakeholders are no longer part of the stakeholder community, or the importance of particular stakeholders to the project's success changes; and
• When outputs of other project process areas, such as change management, risk management, or issue management, require a review of stakeholder engagement strategies.

Process	Input	The Process	Output	Process
Project Management Plan	Resource management plan	13.2 Plan Stakeholder Engagement	Stakeholder engagement plan	Project Management Plan
	Communications management plan
	Risk management plan
4.1 Develop Project Charter	Project Charter
Project Documents	Assumption log
	Change log
	Issue log
	Project schedule
	Risk register
	Stakeholder register
12.2 Conduct Procurements	Agreements
Enterprise / Organization	Enterprise environmental factors
	Organizational process assets

13.2.1 Inputs

13.2.1.1 Project Charter

Information on the project purpose, objectives, and success criteria.

13.2.1.2 Project Management Plan

Includes:

• Resource management plan. May contain information regarding roles and responsibilities of the team and other stakeholders listed in the stakeholder register.
• Communications management plan. The communications strategies for stakeholder management and their implementation plans.
• Risk management plan. May contain risk thresholds or risk attitudes that can assist in the selection of the optimal stakeholder engagement strategy mix.

13.2.1.3 Project Documents

Include:

• Assumption log. Contains information about assumptions and constraints and may be linked to specific stakeholders.
• Change log. Contains changes to the original scope of the project. It usually links to specific stakeholders because they fall into categories of requesting certain changes, making decisions about change requests, or being impacted by the implementation of approved changes.
• Issue log. Managing and resolving issues contained in the issue log will require additional communications with the stakeholders affected.
• Project schedule. Contains activities that may be linked to specific stakeholders as owners or executors.
• Risk register. Contains the identified risks of the project and usually links them to the specific stakeholders as either risk owners or as subject to risk impact.
• Stakeholder register. Provides the list of project stakeholders including additional classification data and other information.

13.2.1.4 Agreements

the engagement of contractors and suppliers.

13.2.1.5 Enterprise Environmental Factors

Include:

• Organizational culture, political climate, and governance framework;
• Personnel administration policies;
• Stakeholder risk appetites;
• Established communication channels;
• Global regional or local trends, practices, or habits; and
• Geographic distribution of facilities and resources.

13.2.1.6 Organizational Process Assets

Include:

• Corporate policies and procedures for social media, ethics, and security;
• Corporate policies and procedures for issue, risk, change, and data management;
• Organizational communication requirements;
• Standardized guidelines for development, exchange, storage, and retrieval of information;
• Lessons learned repository with information about the preferences, actions, and involvement of stakeholders; and
• Software tools needed to support effective stakeholder engagement.

13.2.2 Tools and Techniques

13.2.2.1 Expert Judgement

Topics:

• Politics and power structures in the organization and outside the organization,
• Environment and culture of the organization and outside the organization,
• Analytical and assessment techniques to be used for stakeholder engagement processes,
• Communication means and strategies, and
• Knowledge from previous projects of the characteristics of stakeholders and stakeholder groups and organizations involved in the current project that may have been involved in previous similar projects.

13.2.2.2 Data Gathering

Benchmarking. Compare with information from other organizations or other projects that are considered to be world class.

13.2.2.3 Data Analysis

Include:

• Assumption and constraint analysis. Analysis of current assumptions and constraints may be conducted in order to tailor appropriate engagement strategies.
• Root cause analysis. Root cause analysis identifies underlying reasons for the level of support of project stakeholders in order to select the appropriate strategy to improve their level of engagement.

13.2.2.4 Decision Making

Prioritization/ranking. Stakeholder requirements need to be prioritized and ranked, as do the stakeholders themselves.

13.2.2.5 Data Representation

Include:

• Mind mapping. Described in Section 5.2.2.3. Mind mapping is used to visually organize information about stakeholders and their relationship to each other and the organization.
• Stakeholder engagement assessment matrix. A stakeholder engagement assessment matrix supports comparison between the current engagement levels of stakeholders and the desired engagement levels required for successful project delivery. One way to classify the engagement level of stakeholders is shown in Figure 13-6. The engagement level of stakeholders can be classified as follows:
  • Unaware. Unaware of the project and potential impacts.
  • Resistant. Aware of the project and potential impacts but resistant to any changes that may occur as a result of the work or outcomes of the project. These stakeholders will be unsupportive of the work or outcomes of the project.
  • Neutral. Aware of the project, but neither supportive nor unsupportive.
  • Supportive. Aware of the project and potential impacts and supportive of the work and its outcomes.
  • Leading. Aware of the project and potential impacts and actively engaged in ensuring that the project is a success.

13.2.2.6 Meetings

13.2.3 Outputs

13.2.3.1 Stakeholder Engagement Plan

It identifies the strategies and actions required to promote productive involvement of stakeholders in decision making and execution. May include but is not limited to specific strategies or approaches for engaging with individuals or groups of stakeholders.

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13.1 Identify Stakeholders

Description: the process of identifying project stakeholders regularly and analyzing and documenting relevant information regarding their interests, involvement, interdependencies, influence, and potential impact on project success.

Key benefit: it enables the project team to identify the appropriate focus for engagement of each stakeholder or groups of stakeholders.

Frequency: periodically throughout the project as needed. It should be performed at the start of each phase and when a significant change in the project is repeated.

Process / Asset Group	Input	The Process	Output	Process / Asset Group
4.1 Develop Project Charter	Project charter	13.1 Identify Stakeholders	Requirements management plan	Project Management Plan
Project Management Plan	Communication management plan		Communications management plan
	Stakeholder management plan		Risk management plan
Project Documents	Change log		Stakeholder management plan
	Issue log		Assumption log	Project Documents
	Requirements documentation		Issue log
Business Documents	Business case		Risk register
	Benefits management plan		Change requests	4.6 Perform Integrated Change Control
12.2 Conduct Procurements	Agreements
Enterprise / Organization	Enterprise environmental factors
	Organizational process assets

13.1.1 Inputs

13.1.1.1 Project Charter

Identifies the key stakeholder list and contains information about the responsibilities of the stakeholders.

13.1.1.2 Business Documents

• Business case. Identifies the project objectives and identifies an initial list of stakeholders affected by the project.
• Benefits management plan. Describes the expected plan for realizing the benefits claimed in the business case. It may identify the individuals and groups that will benefit from the delivery of the outcomes of the project and are thus considered as stakeholders.

13.1.1.3 Project Management Plan

The project management plan is not available when initially identifying stakeholders. Later:

• Communications management plan. Communications and stakeholder engagement are strongly linked. Information included in the communications management plan is a source of knowledge about the project's stakeholders.
• Stakeholder engagement plan. Identifies the management strategies and actions required to effectively engage stakeholders.

13.1.1.4 Project Documents

On later phases:

• Change log. The change log may introduce a new stakeholder or change the nature of an existing stakeholder's relationship to the project.
• Issue log. Issues that may introduce new stakeholders to the project or change the type of participation of existing stakeholders.
• Requirements documentation. Can provide information on potential stakeholders.

13.1.1.5 Agreements

The parties of an agreement are project stakeholders. The agreement can contain references to additional stakeholders.

13.1.1.6 Enterprise Environmental Factors

Include:

• Organizational culture, political climate, and governance framework;
• Government or industry standards (regulations, product standards, and codes of conduct);
• Global, regional, or local trends and practices or habits; and
• Geographic distribution of facilities and resources.

13.1.1.7 Organizational Process Assets

• Stakeholder register templates and instructions,
• Stakeholder registers from previous projects, and
• Lessons learned repository with information about the preferences, actions, and involvement of stakeholders.

13.1.2 Tools and Techniques

13.1.2.1 Expert Judgement

Topics:

• Understanding the politics and power structures in the organization,
• Knowledge of the environment and culture of the organization and other affected organizations including customers and the wider environment,
• Knowledge of the industry or type of project deliverable, and
• Knowledge of individual team member contributions and expertise.

13.1.2.2 Data Gathering

Include:

• Questionnaires and surveys. Questionnaires and surveys can include one-on-one reviews, focus group sessions, or other mass information collection techniques.
• Brainstorming. Brainstorming as used to identify stakeholders can include both brainstorming and brain writing.
  • Brainstorming. A general data-gathering and creativity technique that elicits input from groups such as team members or subject matter experts.
  • Brain writing. A refinement of brainstorming that allows individual participants time to consider the question(s) individually before the group creativity session is held. The information can be gathered in face-to-face groups or using virtual environments supported by technology.

13.1.2.3 Data Analysis

Include:

• Stakeholder analysis. Stakeholder analysis results in a list of stakeholders and relevant information such as their positions in the organization, roles on the project, “stakes,” expectations, attitudes (their levels of support for the project), and their interest in information about the project. Stakeholders’ stakes can include but are not limited to a combination of:
  • Interest. A person or group can be affected by a decision related to the project or its outcomes.
  • Rights (legal or moral rights). Legal rights, such as occupational health and safety, may be defined in the legislation framework of a country. Moral rights may involve concepts of protection of historical sites or environmental sustainability.
  • Ownership. A person or group has a legal title to an asset or a property.
  • Knowledge. Specialist knowledge, which can benefit the project through more effective delivery of project objectives, organizational outcomes, or knowledge of the power structures of the organization.
  • Contribution. Provision of funds or other resources, including human resources, or providing support for the project in more intangible ways, such as advocacy in the form of promoting the objectives of the project or acting as a buffer between the project and the power structures of the organization and its politics.
• Document analysis. Assessing the available project documentation and lessons learned from previous projects to identify stakeholders and other supporting information.

13.1.2.4 Data Representation

Stakeholder mapping/representation. Categorizing stakeholders:

• Power/interest grid, power/influence grid, or impact/influence grid. Each of these techniques supports a grouping of stakeholders according to their level of authority (power), level of concern about the project's outcomes (interest), ability to influence the outcomes of the project (influence), or ability to cause changes to the project's planning or execution. Useful for small projects or for projects with simple relationships between stakeholders and the project, or within the stakeholder community itself.
• Stakeholder cube. This is a refinement of the grid models previously mentioned. This model combines the grid elements into a three-dimensional model that can be useful to project managers and teams in identifying and engaging their stakeholder community. It provides a model with multiple dimensions that improves the depiction of the stakeholder community as a multidimensional entity and assists with the development of communication strategies.
• Salience model. Describes classes of stakeholders based on assessments of their power (level of authority or ability to influence the outcomes of the project), urgency (need for immediate attention, either time-constrained or relating to the stakeholders’ high stake in the outcome), and legitimacy (their involvement is appropriate). There is an adaptation of the salience model that substitutes proximity for legitimacy (applying to the team and measuring their level of involvement with the work of the project). The salience model is useful for large complex communities of stakeholders or where there are complex networks of relationships within the community. It is also useful in determining the relative importance of the identified stakeholders.
• Directions of influence. Classifies stakeholders according to their influence on the work of the project or the project team itself. Stakeholders can be classified in the following ways:
  • Upward (senior management of the performing organization or customer organization, sponsor, and steering committee),
  • Downward (the team or specialists contributing knowledge or skills in a temporary capacity),
  • Outward (stakeholder groups and their representatives outside the project team, such as suppliers, government departments, the public, end-users, and regulators), or
  • Sideward (the peers of the project manager, such as other project managers or middle managers who are in competition for scarce project resources or who collaborate with the project manager in sharing resources or information).
• Prioritization. Prioritizing stakeholders may be necessary for projects with a large number of stakeholders, where the membership of the stakeholder community is changing frequently, or when the relationships between stakeholders and the project team or within the stakeholder community are complex.

13.1.2.5 Meetings

To develop an understanding of significant project stakeholders. They can take the form of facilitation workshops, small group guided discussions, and virtual groups using electronics or social media technologies to share ideas and analyze data.

13.1.3 Outputs

13.1.3.1 Stakeholder Register

Includes:

• Identification information. Name, organizational position, location and contact details, and role on the project.
• Assessment information. Major requirements, expectations, potential for influencing project outcomes, and the phase of the project life cycle where the stakeholder has the most influence or impact.
• Stakeholder classification. Internal/external, impact/influence/power/interest, upward/ downward/ outward/ sideward, or any other classification model chosen by the project manager.

13.1.3.2 Change Requests

13.1.3.3 Project Management Plan Updates

Include:

• Requirements management plan. Newly identified stakeholders can impact how requirements activities will be planned, tracked, and reported.
• Communications management plan. Stakeholder communication requirements and agreed-upon communications strategies are recorded in the communications management plan.
• Risk management plan. Where stakeholder communication requirements and agreed-upon communications strategies affect the approach to managing risk on the project, this is reflected in the risk management plan.
• Stakeholder engagement plan. Agreed-upon communications strategies for identified stakeholders are recorded in the stakeholder engagement plan.

13.1.3.4 Project Documents Updates

Include:

• Assumption l og. Much of the information about the relative power, interest, and engagement of stakeholders is based on assumptions. This information is entered into the assumption log. Additionally, any constraints associated with interacting with specific stakeholders are entered as well.
• Issue log. New issues raised as a result of this process are recorded in the issue log.
• Risk register. New risks identified during this process are recorded in the risk register and managed using the risk management processes.

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13 Project Stakeholder Management

The processes required

• To identify the people, groups, or organizations that could impact or be impacted by the project,
• To analyze stakeholder expectations and their impact on the project, and
• To develop appropriate management strategies for effectively engaging stakeholders in project decisions and execution.

The processes support the work of the project team

• To analyze stakeholder expectations,
• Assess the degree to which they impact or are impacted by the project, and
• Develop strategies to effectively engage stakeholders in support of project decisions and the planning and execution of the work of the project.

Key Concepts for Project Stakeholder Management

Academic research and analyses of high-profile project disasters highlight the importance of a structured approach to the identification, prioritization, and engagement of all stakeholders. The ability of the project manager and team to correctly identify and engage all stakeholders in an appropriate way can mean the difference between project success and failure.

Stakeholder satisfaction should be identified and managed as a project objective. The key to effective stakeholder engagement is a focus on continuous communication with all stakeholders, including team members, to understand their needs and expectations, address issues as they occur, manage conflicting interests, and foster appropriate stakeholder engagement in project decisions and activities.

The process of identifying and engaging stakeholders for the benefit of the project is iterative.

Trends and Emerging Practices in Project Stakeholder Management

Include:

• Identifying all stakeholders, not just a limited set;
• Ensuring that all team members are involved in stakeholder engagement activities;
• Reviewing the stakeholder community regularly, often in parallel with reviews of individual project risks;
• Consulting with stakeholders who are most affected by the work or outcomes of the project through the concept of co-creation. Co-creation places greater emphasis on including affected stakeholders in the team as partners; and
• Capturing the value of effective stakeholder engagement, both positive and negative. Positive value can be based on the consideration of benefits derived from higher levels of active support from stakeholders, particularly powerful stakeholders. Negative value can be derived by measuring the true costs of not engaging stakeholders effectively, leading to product recalls or loss of organizational or project reputation.

Tailoring Considerations

Include:

• Stakeholder diversity. How many stakeholders are there? How diverse is the culture within the stakeholder community?
• Complexity of stakeholder relationships. How complex are the relationships within the stakeholder community? The more networks a stakeholder or stakeholder group participates in, the more complex the networks of information and misinformation the stakeholder may receive.
• Communication technology. What communication technology is available? What support mechanisms are in place to ensure that best value is achieved from the technology?

Considerations for Agile / Adaptive Environments

To facilitate timely, productive discussion and decision making, adaptive teams engage with stakeholders directly rather than going through layers of management.

Regular interactions with the stakeholder community throughout the project mitigate risk, build trust, and support adjustments earlier in the project cycle, thus reducing costs and increasing the likelihood of success for the project.

In order to accelerate the sharing of information within and across the organization, agile methods promote aggressive transparency. The intent of inviting any stakeholders to project meetings and reviews or posting project artifacts in public spaces is to surface as quickly as possible any misalignment, dependency, or other issue related to the changing project.

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12.3 Control Procurements

Description: the process of managing procurement relationships; monitoring contract performance, and making changes and corrections as appropriate; and closing out contracts.

The legal nature of the relationship makes it imperative that the project management team is aware of the implications of actions taken when controlling any procurement. Because of the legal aspect, many organizations treat contract administration as an organizational function that is separate from the project. While a procurement administrator may be on the project team, this individual typically reports to a supervisor from a different department.

Administrative activities may include:

• Collection of data and managing project records, including maintenance of detailed records of physical and financial performance and establishment of measurable procurement performance indicators;
• Refinement of procurement plans and schedules;
• Set up for gathering, analyzing, and reporting procurement-related project data and preparation of periodic reports to the organization;
• Monitoring the procurement environment so that implementation can be facilitated or adjustments made; and
• Payment of invoices.

Control Procurements has a financial management component that involves monitoring payments to the seller. This ensures that payment terms defined within the contract are met and that compensation is linked to the seller's progress as defined in the contract.

Key benefit: it ensures that both the seller's and buyer's performance meet the project requirements according to the term of the legal agreement.

Frequency: throughout the project.

Process / Asset group	Input	The Process	Output	Process / Asset Group
Project Management Plan	Requirements management plan	12.3 Control Procurements	Closed procurements	Procurement Documentation
	Risk management plan		Procurement documentation updates
	Procurement management plan		Work performance information	4.5 Monitor and Control Project Work
	Change management plan		Change requests	4.6 Perform Integrated Change Control
	Schedule baseline		Risk management plan	Project Management Plan
Project Documents	Assumption log		Procurement management plan
	Lesson learned register		Schedule baseline
	Milestone list		Cost baseline
	Quality reports		Lesson learned register	Project Documents
	Requirements documentation		Resource requirements
	Requirement traceability matrix		Requirements traceability matrix
	Risk register		Risk register
	Stakeholder register		Stakeholder register
4.6 Perform Integrated Change Control	Approved change requests		Organizational process assets updates	Enterprise / Organization
4.3 Direct and Manage Project Work	Work performance data
12.1 Plan Procurement Management	Procurement documentation
12.2 Conduct procurements	Agreements
Enterprise / Organization	Enterprise environmental factors
	Organizational process assets

12.3.1 Inputs

12.3.1.1 Project Management Plan

Include:

• Requirements management plan. How contractor requirements will be analyzed, documented, and managed.
• Risk management plan. Describes how risk activities created by sellers will be structured and performed for the project.
• Procurement management plan. Contains the activities to be performed during the Control Procurement process.
• Change management plan. Contains information about how seller-created changes will be processed.
• Schedule baseline. If there are slippages created by sellers that impact overall project performance, the schedule may need to be updated and approved to reflect the current expectations.

12.3.1.2 Project Documents

Include:

• Assumption log. The assumptions that have been made during the procurement process.
• Lessons learned register.
• Milestone list. When the sellers are expected to deliver their results.
• Quality reports. Can identify seller processes, procedures, or products that are out of compliance.
• Requirements documentation. May include:
  • Technical requirements the seller is required to satisfy, and
  • Requirements with contractual and legal implications that may include health, safety, security, performance, environmental, insurance, intellectual property rights, equal employment opportunity, licenses, permits, and other nontechnical requirements.
• Requirements traceability matrix. Links product requirements from their origin to the deliverables that satisfy them.
• Risk register. Each approved seller comes with its own unique set of risks, depending on the seller's organization, the duration of the contract, the external environment, the project delivery method, the type of contracting vehicle chosen, and the final agreed-upon price.
• Stakeholder register. Information about identified stakeholders, including contracted team members, selected sellers, contracting officers, and other stakeholders who are involved in procurements.

12.3.1.3 Agreements

Understandings between parties, including understanding of the duties of each party. The relevant agreements are reviewed to verify terms and conditions are met.

12.3.1.4 Procurement Documentation

Complete supporting records for administration of the procurement processes:

• The statement of work,
• Payment information,
• Contractor work performance information,
• Plans,
• Drawings, and
• Other correspondence

12.3.1.5 Approved Change Requests

Modifications to the terms and conditions of the contract, including

• The procurement statement of work (SOW),
• Pricing,
• Descriptions of the products, services, or results to be provided.

12.3.1.6 Work Performance Data

• Technical performance;
• Activities that have started, are in progress, or have completed; and
• Costs that have been incurred or committed.
• The seller invoices that have been paid.

12.3.1.7 Enterprise Environmental Factors

• Contract change control system
• Marketplace conditions,
• Financial management and accounts payable system, and
• Buying organization's code of ethics.

12.3.1.8 Organizational Process Assets

Procurement policies.

12.3.2 Tools and Techniques

12.3.2.1 Expert Judgement

• Relevant functional areas such as finance, engineering, design, development, supply chain management, etc.;
• Laws, regulations, and compliance requirements; and
• Claims administration.

12.3.2.2 Claims Administration

Claims - contested changes and potential constructive changes are those requested changes where the buyer and seller cannot reach an agreement on compensation for the change or cannot agree that a change has occurred.

When they cannot be resolved, they become disputes and finally appeals.

Claims are documented, processed, monitored, and managed throughout the contract life cycle, usually in accordance with the terms of the contract. If the parties themselves do not resolve a claim, it may have to be handled in accordance with alternative dispute resolution (ADR) typically following procedures established in the contract.

12.3.2.3 Data Analysis

• Performance reviews.
  • Quality,
  • Resource,
  • Schedule, and cost.
• Earned Value Analysis (EVA).
• Trend analysis. A forecast estimate at completion (EAC) for cost performance to see if performance is improving or deteriorating.

12.3.2.4 Inspection

A structured review of the work being performed by the contractor.

12.3.2.5 Audits

A structured review of the procurement process. Rights and obligations related to audits should be described in the procurement contract.

12.3.3 Outputs

12.3.3.1 Closed Procurements

Requirements for formal procurement closure are usually defined in the terms and conditions of the contract and are included in the procurement management plan.

• All deliverables should have been provided on time and meet technical and quality requirements,
• There should be no outstanding claims or invoices, and
• All final payments should have been made.
• All deliverables should have approved prior to closure.

12.3.3.2 Work Performance Information

How a seller is performing by comparing

• The deliverables received,
• The technical performance achieved, and
• The costs incurred and accepted against the SOW budget for the work performed.

12.3.3.3 Procurement Documentation Updates

• Contract with all supporting schedules,
• Requested unapproved contract changes, and
• Approved change requests
• Any seller-developed technical documentation and
• Other work performance information such as
  • Deliverables,
  • Seller performance reports and
  • Warranties,
  • Financial documents including invoices and payment records, and
  • The results of contract-related inspections.

12.3.3.4 Change Requests

Change requests.

Requested but unresolved changes can include direction provided by the buyer or actions taken by the seller, which the other party considers a constructive change to the contract.

12.3.3.5 Project Management Plan Updates

• Risk management plan. Each agreement and seller has its own set of risks that may require updates to the risk management plan. If significant unexpected risks occur during the execution of the contract, the risk management plan may require updating. Specific risks are incorporated into the risk register.
• Procurement management plan. Contains the activities to be undertaken during the procurement process. Updates may be required depending on the results of the performance of the sellers during execution of the work.
• Schedule baseline. If there are significant schedule changes created by sellers that impact overall project schedule performance, the baseline schedule may need to be updated and approved to reflect the current expectations. The buyer should be aware of any cascading impacts of schedule delays created by a seller that impact other sellers.
• Cost baseline. Contractor and material costs can change frequently during the delivery of a project. These changes can occur because of fluctuating materials and labor prices created by the external economic environment and need to be incorporated into the cost baseline.

12.3.3.6 Project Documents Updates

• Lessons learned register. The lessons learned register can be updated with techniques that were effective in maintaining the scope, schedule, and cost of the procured items. Where variances occurred, the register should show the corrective actions that were used to respond to variances and how effective those actions were. If there are any claims, information should be documented to avoid recurrences. Additional information on how to improve the procurement process can also be recorded.
• Resource requirements. As the work progresses by the contractors, there may be changes to the resource requirements resulting from work being done that is not in accordance with the planned work schedule.
• Requirements traceability matrix. The requirements traceability matrix is updated with information on requirements that have been satisfied.
• Risk register. Each approved seller comes with its own unique set of risks, depending on the seller's organization, the duration of the contract, the external environment, the project delivery method, the type of contracting vehicle chosen, and the final agreed-upon price. Changes are made to the risk register during the execution of the project, as early risks may no longer be applicable and new risks occur.
• Stakeholder register. As the work progresses through the execution phase, the contractors and suppliers may change. These changes should be reflected in the stakeholder register.

12.3.3.7 Organizational Process Assets Updates

• Payment schedules and requests. All payments should be made in accordance with the procurement contract terms and conditions.
• Seller performance evaluation documentation. Seller performance evaluation documentation is prepared by the buyer and documents the seller's ability to continue to perform work on the current contract, indicates whether the seller can be allowed to perform work on future projects, or rates how well the seller is performing the project work or has performed in the past.
• Prequalified seller lists updates. Prequalified seller lists are lists of potential sellers who are previously qualified (approved). These lists will be updated according to the Procurement Control process outcomes because sellers could be disqualified and removed from the lists based on poor performance.
• Lessons learned repository. At the end of a contract, the actual results of the procurement are compared with the projected results in the original procurement management plan. These lessons learned state whether the project objectives were achieved and, if not, provides the reasons they were not.
• Procurement file. A complete set of indexed contract documentation, including the closed contract, is prepared for inclusion with the final project files.

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12.2 Conduct Procurement

Description: the process of obtaining seller responses, selecting a seller, and awarding the contract. The end results are the established agreements including formal contracts.

Key benefit: it selects a qualified seller and implements the legal agreement for delivery.

Frequency: periodically throughout the project as needed.

The Process	Input	The Process	Output	The Process
Project Management Plan	Scope management plan	12.2 Conduct Procurement	Selected sellers	12.3 Control Procurements
	Requirements management plan		Change requests	4.6 Perform Integrated Change Control
	Communications management plan		Requirements management plan	Project Management Plan
	Risk management plan		Quality management plan
	Procurement management plan		Communication management plan
	Configuration management plan		Risk management plan
	Cost baseline		Procurement management plan
Project Documents	Lesson learned register		Scope baseline
	Project schedule		Schedule baseline
	Requirements documentation		Cost baseline
	Risk register		Lesson learned register	Project Documents
	Stakeholder register		Project documentation
Procurement Documentation			Requirements traceability matrix
Enterprise/ Organization	Enterprise environmental factors		Resource calendars
	Organizational process assets		Risk register
Seller Proposals	Seller proposals		Stakeholder register
			Organizational process assets	Enterprise / Organization
				4.1 Develop Project Charter
				4.7 Close Project or Phase
				7.3 Determine Budget
				12.3 Control Procurements
				13.2 Plan Stakeholder Engagement
				4.5 Monitor and Control Project Work
				6.5 Develop Schedule
				9.6 Control Resources
				13.1 Identify Stakeholders

12.2.1 Inputs

Include:

• Scope management plan: how the overall scope of work will be managed, including the scope performed by sellers.
• Requirements management plan. Describes how requirements will be analyzed, documented, and managed, may include how sellers will manage the requirements they are under agreement to satisfy.
• Communications management plan. Describes how communications between buyers and sellers will be conducted.
• Risk management plan. Describes how risk management activities will be structured and performed for the project.
• Procurement management plan. Contains the activities to be undertaken during the Conduct Procurements process.
• Configuration management plan. Defines those items that are configurable, those items that require formal change control, and the process for controlling changes to such items. It includes formats and processes for how sellers will provide configuration management in a way that is consistent with the buyer's approach.
• Cost baseline. Includes the budget for the procurement as well as costs associated with managing the procurement process and sellers.

12.1.2.2 Project Documents

Include:

• Lessons learned register.
• Project schedule. Identifies the start and end dates of project activities, including procurement activities. It also defines when contractor deliverables are due.
• Requirements documentation. May include:
  • Technical requirements the seller is required to satisfy, and
  • Requirements with contractual and legal implications that may include health, safety, security, performance, environmental, insurance, intellectual property rights, equal employment opportunity, licenses, permits, and other nontechnical requirements.
• Risk register. Each approved seller comes with its own unique set of risks, depending on
  • The seller's organization,
  • The duration of the contract,
  • The external environment,
  • The project delivery method,
  • The type of contracting vehicle chosen, and
  • The final agreed-upon price.
• Stakeholder register. Identified stakeholders.

12.2.1.3 Procurement Documentation

Procurement documentation provides a written record used in reaching the legal agreement, and may include older documents predating the current project. Include:

• Bid documents. RFI, RFP, RFQ, or other documents sent to sellers so they can develop a bid response.
• Procurement statement of work. Provides sellers with a clearly stated set of goals, requirements, and outcomes from which they can provide a quantifiable response.
• Independent cost estimates. Developed either internally or by using external resources and provide a reasonableness check against the proposals submitted by bidders.
• Source selection criteria. Describe how bidder proposals will be evaluated, including evaluation criteria and weights. For risk mitigation, the buyer may decide to sign agreements with more than one seller to mitigate damage caused by a single seller having problems that impact the overall project.

12.2.1.4 Seller Proposals

12.2.1.5 Enterprise Environmental Factors

• Local laws and regulations regarding procurements;
• Local laws and regulations ensuring that the major procurements involve local sellers;
• External economic environment constraining procurement processes;
• Marketplace conditions;
• Information on relevant past experience with sellers, both good and bad;
• Prior agreements already in place; and
• Contract management systems.

12.2.1.6 Organizational Process Assets

• List of preferred sellers that have been prequalified,
• Organizational policies that influence the selection of a seller,
• Specific organizational templates or guidelines that will determine the way agreements are drafted and built, and
• Financial policies and procedures regarding invoicing and payment processes.

12.2.2 Tools and Techniques

12.2.2.1 Expert Judgement

• Proposal evaluation;
• Technical or subject matter;
• Relevant functional areas such as finance, engineering, design, development, supply chain management, etc.;
• Industry regulatory environment;
• Laws, regulations, and compliance requirements; and
• Negotiation.

12.2.2.2 Advertising

Placing advertisements in general circulation publications such as selected newspapers or in specialty trade publications. Most government jurisdictions require public advertising or online posting of pending government contracts.

12.2.2.3 Bidder Conferences

A meetings between the buyer and prospective sellers prior to proposal submittal. They are used to ensure that all prospective bidders have a clear and common understanding of the procurement and no bidders receive preferential treatment.

12.2.2.4 Data Analysis

Proposal evaluation.

12.2.2.5 Interpersonal and Team Skills

Negotiation. Negotiation is a discussion aimed at reaching an agreement. Procurement negotiation clarifies the structure, rights, and obligations of the parties and other terms of the purchases so that mutual agreement can be reached prior to signing the contract. Final document language reflects all agreements reached. Negotiation concludes with a signed contract document or other formal agreement that can be executed by both buyer and seller.

The negotiation should be led by a member of the procurement team that has the authority to sign contracts. The project manager and other members of the project management team may be present during negotiation to provide assistance as needed.

12.2.3 Outputs

12.2.3.1 Selected Sellers

12.2.3.1 Agreements

Components:

• Procurement statement of work or major deliverables;
• Schedule, milestones, or date by which a schedule is required;
• Performance reporting;
• Pricing and payment terms;
• Inspection, quality, and acceptance criteria;
• Warranty and future product support;
• Incentives and penalties;
• Insurance and performance bonds;
• Subordinate subcontractor approvals;
• General terms and conditions;
• Change request handling; and
• Termination clause and alternative dispute resolution mechanisms.

12.2.3.3 Change Requests

12.2.3.4 Project Management Plan Updates

Via a change request.

Include:

• Requirements management plan. Changes to project requirements due to changes identified by sellers.
• Quality management plan. Sellers may offer alternative quality standards or alternative solutions that impact the quality approaches defined in the quality management plan.
• Communications management plan. As sellers are hired, the communications management plan is updated to incorporate their communications needs and approaches.
• Risk management plan. Each agreement and seller has its own set of risks that may require updates to the risk management plan. Specific risks are incorporated into the risk register.
• Procurement management plan. Updates may be required depending on the results of the contracting and negotiations processes.
• Scope baseline. The project WBS and deliverables documented in the scope baseline are considered when performing procurement activities. Any one or all of these may change during the procurement process.
• Schedule baseline. If there are delivery changes created by sellers that impact overall project schedule performance, the baseline schedule may need to be updated and approved to reflect the current expectations.
• Cost baseline. Contractor and materials prices can change frequently during the delivery of a project. These changes can occur because of fluctuating materials and labor prices created by the external economic environment and need to be incorporated into the cost baseline.

12.2.3.5 Project Documents Updates

Include:

• Lessons learned register. Information on challenges encountered while conducting procurements and how they could have been avoided as well as approaches that worked well.
• Requirements documentation. Requirements documentation may include:
  • Technical requirements that the seller is required to satisfy, and
  • Requirements with contractual and legal implications that may include health, safety, security, performance, environmental, insurance, intellectual property rights, equal employment opportunity, licenses, permits, and other nontechnical requirements.
• Requirements traceability matrix. As sellers are incorporated into the project's plan, the requirements register and the traceability matrix may change depending on the capabilities of the specific seller.
• Resource calendars. Schedule resource calendars may need to be updated depending on the availabilities of the sellers.
• Risk register. Each approved seller comes with its own unique set of risks, depending on the seller's organization, the duration of the contract, the external environment, the project delivery method, the type of contracting vehicle chosen, and the final agreed-upon price. Changes are made to the risk register during the contracting process, which reflect the specific risks of each seller.
• Stakeholder register. The details about the identified stakeholders. The stakeholder register is updated as agreements are made with specific sellers.

12.2.3.6 Organizational Process Assets Updates

• Listings of prospective and prequalified sellers; and
• Information on relevant experience with sellers, both good and bad.

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12.1 Plan Procurement Management

Description: it is the process of documenting project procurement decisions, specifying the approach and identifying potential sellers. Goods and services may be procured from other parts of the organization or from external sources. he project manager should ensure that the project team is staffed with procurement expertise at the level required for the project. Typical steps:

• Prepare the procurement statement of work (SOW) or terms of reference (TOR).
• Prepare a high-level cost estimate to determine the budget.
• Advertise the opportunity.
• Identify a short list of qualified sellers.
• Prepare and issue bid documents.
• Prepare and submit proposals by the seller.
• Conduct a technical evaluation of the proposals including quality.
• Perform a cost evaluation of the proposals.
• Prepare the final combined quality and cost evaluation to select the winning proposal.
• Finalize negotiations and sign contract between the buyer and the seller.

The key benefit: it determines whether to acquire goods and services from outside the project and, if so, what to acquire as well as how and when to acquire to.

Frequency: once or at predefined points in the project. The process should be done early.

The Process / Asset Group	Input	The Process	Output	The Process / Asset Group
4.1 Develop Project Charter	Project charter	12.1 Plan Procurement Management	Procurement management plan	Project Management Plan
Project Management Plan	Scope management plan		Procurement strategy	Procurement Documentation
	Quality management plan		Procurement statement of work
	Resource management plan		Bid documents
	Scope baseline		Make-or-buy decisions
Business Documents	Business Case		Independent cost estimates
	Benefits Management Plan		Change requests	4.6 Perform Integrated Change Control
Project Documents	Milestone list		Source selection criteria	Project Documents
	Project team assignments		Lesson learned register
	Requirements documentation		Milestone List
	Requirements traceability matrix		Requirements documentation
	Resource requirements		Requirements traceability matrix
	Risk register		Risk register
	Stakeholder register		Stakeholder register
Enterprise / Organization	Enterprise environmental factors		Organization process assets update	Enterprise / Organization
	Organizational process assets

12.1.1 Inputs

12.1.1.1 Project Charter

It contains the objectives, project description, summary milestones, and the preapproved financial resources.

12.1.1.2 Business Documents

• Business case. The procurement strategy and business case need to be aligned to ensure the business case remains valid.
• Benefits management plan. Benefits schedule => procurement dates and contract language.

12.1.1.3 Project Management Plan

• Scope management plan.
• Quality management plan. The applicable industry standards and codes the project => RFP => the contract.
• Resource management plan. Which resources will be purchased or leased. Assumptions or constraints that would influence the procurement.
• Scope baseline. The scope statement, WBS, and WBS dictionary. The elements of the scope that are known are used to develop the statement of work (SOW) and the terms of reference (TOR).

12.1.1.4 Project Documents

• Milestone list.
• Project team assignments. It contains information on the skills and abilities of the project team and their availability to support the procurement activities.
• Requirements documentation.
  • Technical requirements that the seller is required to satisfy,
  • Requirements with contractual and legal implications that may include
    • Health,
    • Safety,
    • Security,
    • Performance,
    • Environmental,
    • Insurance,
    • Intellectual property rights,
    • Equal employment opportunity,
    • Licenses, permits, and
    • Other nontechnical requirements.
• Requirements traceability matrix. Specific needs such as team and physical resources.
• Risk register. The list of risks, along with the results of risk analysis and risk response planning.
• Stakeholder register. The project participants and their interests in the project, including regulatory agencies, contracting personnel, and legal personnel.

12.1.1.5 Enterprise Environmental Factors

• Marketplace conditions;
• Products, services, and results that are available in the marketplace;
• Sellers, including their past performance or reputation;
• Typical terms and conditions for products, services, and results or for the specific industry;
• Unique local requirements, such as regulatory requirements for local labor or sellers;
• Legal advice regarding procurements;
• Contract management systems, including procedures for contract change control;
• Established multi-tier supplier system of prequalified sellers based on prior experience; and
• Financial accounting and contract payments system.

12.1.1.6 Organizational Process Assets

• Preapproved seller lists.
• Formal procurement policies, procedures, and guidelines.
• Contract types.
  • Fixed-price contracts. This category of contracts involves setting a fixed total price for a defined product, service, or result to be provided. These contracts should be used when the requirements are well defined and no significant changes to the scope are expected. Types of fixed-price contract include:
    • Firm fixed price (FFP). The most commonly used contract type is the FFP. It is favored by most buying organizations because the price for goods is set at the outset and not subject to change unless the scope of work changes.
    • Fixed price incentive fee (FPIF). This fixed-price arrangement gives the buyer and seller some flexibility in that it allows for deviation from performance, with financial incentives tied to achieving agreed-upon metrics. Typically, such financial incentives are related to cost, schedule, or technical performance of the seller. Under FPIF contracts, a price ceiling is set, and all costs above the price ceiling are the responsibility of the seller.
    • Fixed price with economic price adjustments (FPEPA). This type is used whenever the seller's performance period spans a considerable period of years, or if the payments are made in a different currency. It is a fixed-price contract, but with a special provision allowing for predefined final adjustments to the contract price due to changed conditions, such as inflation changes or cost increases (or decreases) for specific commodities.
  • Cost-reimbursable contracts. Payments (cost reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit.
    • Cost plus fixed fee (CPFF). The seller is reimbursed 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. Fee amounts do not change unless the project scope changes.
    • Cost plus incentive fee (CPIF). The seller is reimbursed for all allowable costs for performing the contract work and receives a predetermined incentive fee based on achieving certain performance objectives as set forth in the contract. In CPIF contracts, if the final costs are less or greater than the original estimated costs, then both the buyer and seller share costs from the departures based upon a prenegotiated cost-sharing formula, for example, an 80/20 split over/under target costs based on the actual performance of the seller.
    • Cost plus award fee (CPAF). The seller is reimbursed for all legitimate costs, but the majority of the fee is earned based on the satisfaction of certain broad subjective performance criteria that are defined and incorporated into the contract. The determination of fee is based solely on the subjective determination of seller performance by the buyer and is generally not subject to appeals.
• Time and material contracts (T&M). Time and material contracts (also called time and means) are a hybrid type of contractual arrangement with aspects of both cost-reimbursable and fixed-price contracts. They are often used for staff augmentation, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed.

12.1.2 Tools and Techniques

12.1.2.1 Expert Judgment

• Procurement and purchasing,
• Contract types and contract documents, and
• Regulations and compliance topics.

12.1.2.2 Data Gathering

Market research (includes examination of industry and specific seller capabilities).

12.1.2.3 Data Analysis

Make-or-buy analysis. Factors to consider in the make-or-buy decision include

• The organization's current resource allocation and their skills and abilities,
• The need for specialized expertise, The desire to not expand permanent employment obligations, and
• The need for independent expertise.
• Evaluating the risks involved with each make-or-buy decision.

The method may use

• Payback period,
• Return on investment (ROI),
• Internal rate of return (IRR),
• Discounted cash flow,
• Net present value (NPV),
• Benefit/cost analysis (BCA), or
• Other techniques.

12.1.2.4 Source Selection Analysis

It is necessary to review the prioritization of the competing demands for the project before deciding on the selection method. it is a good practice to include the evaluation method in the procurement documents so bidders know how they will be evaluated.

• Least cost. The least cost method may be appropriate for procurements of a standard or routine nature where well-established practices and standards exist and from which a specific and well-defined outcome is expected, which can be executed at different costs.
• Qualifications only. The qualifications only selection method applies when the time and cost of a full selection process would not make sense because the value of the procurement is relatively small. The buyer establishes a short list and selects the bidder with the best credibility, qualifications, experience, expertise, areas of specialization, and references.
• Quality-based/highest technical proposal score. The selected firm is asked to submit a proposal with both technical and cost details and is then invited to negotiate the contract if the technical proposal proves acceptable. Using this method, technical proposals are first evaluated based on the quality of the technical solution offered. The seller who submitted the highest-ranked technical proposal is selected if their financial proposal can be negotiated and accepted.
• Quality and cost-based. The quality and cost-based method allows cost to be included as a factor in the seller selection process. In general, when risk and/or uncertainty are greater for the project, quality should be a key element when compared to cost.
• Sole source. The buyer asks a specific seller to prepare technical and financial proposals, which are then negotiated. Since there is no competition, this method is acceptable only when properly justified and should be viewed as an exception.
• Fixed budget. The fixed-budget method requires disclosing the available budget to invited sellers in the RFP and selecting the highest-ranking technical proposal within the budget. Because sellers are subject to a cost constraint, they will adapt the scope and quality of their offer to that budget. The buyer should therefore ensure that the budget is compatible with the SOW and that the seller will be able to perform the tasks within the budget. This method is appropriate only when the SOW is precisely defined, no changes are anticipated, and the budget is fixed and cannot be exceeded.

12.1.2.5 Meetings

12.1.3 Outputs

12.1.3.1 Procurement Management Plan

It contains the activities to be undertaken during the procurement process. It should document whether international competitive bidding, national competitive bidding, local bidding, etc., should be done. If the project is financed externally, the sources and availability of funding should be aligned with the procurement management plan and the project schedule.

Include guidance for:

• How procurement will be coordinated with other project aspects, such as project schedule development and control processes;
• Timetable of key procurement activities;
• Procurement metrics to be used to manage contracts;
• Stakeholder roles and responsibilities related to procurement, including authority and constraints of the project team when the performing organization has a procurement department;
• Constraints and assumptions that could affect planned procurements;
• The legal jurisdiction and the currency in which payments will be made;
• Determination of whether independent estimates will be used and whether they are needed as evaluation criteria;
• Risk management issues including identifying requirements for performance bonds or insurance contracts to mitigate some forms of project risk; and
• Prequalified sellers, if any, to be used.

12.1.3.2 Procurement Strategy

The objective of the procurement strategy is

• To determine the project delivery method,
  • For professional services, delivery methods include:
    • Buyer/services provider with no subcontracting,
    • Buyer/services provider with subcontracting allowed,
    • Joint venture between buyer and services provider, and
    • Buyer/services provider acts as the representative.
  • For industrial or commercial construction, project delivery methods include but are not limited to:
  • Turnkey,
  • Design build (DB),
  • Design bid build (DBB),
  • Design build operate (DBO),
  • Build own operate transfer (BOOT), and
  • Others.
• The type of legally binding agreement(s). Contract payment types are separate from the project delivery methods and are coordinated with the buying organization's internal financial systems. They include but are not limited to these contract types plus variations:
  • Lump sum,
  • Firm fixed price,
  • Cost plus award fees,
  • Cost plus incentive fees,
  • Time and materials,
  • Target cost, and
  • Others.
• How the procurement will advance through the procurement phases:
  • Sequencing or phasing of the procurement, a description of each phase and the specific objectives of each phase;
  • Procurement performance indicators and milestones to be used in monitoring;
  • Criteria for moving from phase to phase;
  • Monitoring and evaluation plan for tracking progress; and
  • Process for knowledge transfer for use in subsequent phases.

12.1.3.3 Bid Documents

To solicit proposals from prospective sellers. Terms such as bid, tender, or quotation are generally used when the seller selection decision is based on price (as when buying commercial or standard items), while a term such as proposal is generally used when other considerations such as technical capability or technical approach are the most important. Depending on the goods or services needed, the bidding documents can include a request for information, request for quotation, request for proposal, or other appropriate procurement documents.

The conditions:

• Request for information (RFI). An RFI is used when more information on the goods and services to be acquired is needed from the sellers. It will typically be followed by an RFQ or RFP.
• Request for quotation (RFQ). An RFQ is commonly used when more information is needed on how vendors would satisfy the requirements and/or how much it will cost.
• Request for proposal (RFP). An RFP is used when there is a problem in the project and the solution is not easy to determine. This is the most formal of the “request for” documents and has strict procurement rules for content, timeline, and seller responses.

12.1.3.4 Procurement Statement of Work (SOW)

The statement of work (SOW) for each procurement is developed from the project scope baseline and defines only that portion of the project scope that is to be included within the related contract. The 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. It includes a description of any collateral services required, such as performance reporting or post-project operational support for the procured item.

Terms of reference (TOR) includes:

• Tasks the contractor is required to perform as well as specified coordination requirements;
• Standards the contractor will fulfill that are applicable to the project;
• Data that needs to be submitted for approval;
• Detailed list of all data and services that will be provided to the contractor by the buyer for use in performing the contract, if applicable; and
• Definition of the schedule for initial submission and the review/approval time required.

12.1.3.5 Source Selection Criteria

It may include:

• Capability and capacity;
• Product cost and life cycle cost;
• Delivery dates;
• Technical expertise and approach;
• Specific relevant experience;
• Adequacy of the proposed approach and work plan in responding to the SOW;
• Key staff's qualifications, availability, and competence;
• Financial stability of the firm;
• Management experience; and
• Suitability of the knowledge transfer program, including training;
• Local country content.

12.1.3.6 Make-or-Buy Decisions

12.1.3.7 Independent Cost Estimates

Significant differences in cost estimates can be an indication that the procurement SOW was deficient or ambiguous, or that the prospective sellers either misunderstood or failed to respond fully to the procurement SOW.

12.1.3.8 Change Requests

12.1.3.9 Project Documents Updates

Include:

• Lessons learned register. Regulations and compliance, data gathering, data analysis, and source selection analysis.
• Milestone list. Shows when the sellers are expected to deliver their results.
• Requirements documentation. May include:
  • Technical requirements that the seller is required to satisfy, and
  • Requirements with contractual and legal implications that may include health, safety, security, performance, environmental, insurance, intellectual property rights, equal employment opportunity, licenses, permits, and other nontechnical requirements.
• Requirements traceability matrix. Links product requirements from their origin to the deliverables that satisfy them.
• Risk register. Each approved seller comes with its own unique set of risks, depending on the seller's organization, the duration of the contract, the external environment, the project delivery method, the type of contracting vehicle chosen, and the final agreed-upon price.
• Stakeholder register. The stakeholder register is updated with any additional information on stakeholders, particularly regulatory agencies, contracting personnel, and legal personnel.

12.1.3.10 Organizational Process Assets Updates

Information on qualified sellers.

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