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.

Link to the original post