Procurement Management This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Procurement Management • • • • Importance Make or buy decision Types of contracts Procurement cycle This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Procurement Management • The acquisition of products or services not produced or delivered by the project team • May require the assistance of experts • Your project may be on the other side also—providing services to another organization • Legal implications of signing a contract • The make or buy decision • Expertise • Resource availability • Licensing, regulatory requirements This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Procurement Management • Fixed Price • Cost reimbursable • Time and materials This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Fixed Price Contract Figure 17.6.1: A fixed price contract the cost constant regardless of effort applied or delivery date. Illustration from Barron & Barron Project Management for Scientists and Engineers, http://cnx.org/content/col11120/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Cost Reimbursable Contract Figure 17.6.2: In a cost reimbursable or cost plus contract, the seller is guaranteed a fee. Illustration from Barron & Barron Project Management for Scientists and Engineers, http://cnx.org/content/col11120/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Time and Materials Figure 17.6.3: In a time and materials contract the cost (or revenue to the vendor) increases with increased effort. Illustration from Barron & Barron Project Management for Scientists and Engineers, http://cnx.org/content/col11120/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Fixed Price Contract types Figure 17.6.1.1 Table of Fixed Price Contracts and Characteristics Source: http://pm4id.org/9/5/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Cost-Reimbursable Contract Types Figure 17.6.2.1 Table of Contract Types and Characteristics Source: http://pm4id.org/9/5/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Procurement Cycle • Procurement Plan • Selecting the Contract Approach • • • • • • • Skill level, uniqueness Type of relationship: supplier, vendor, partnership RFP, RFQ, personal contact How well known is the scope of the work? Risks—what are they? Who assumes them? How much float if any? How important to be sure of cost in advance? • Soliciting bids This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Procurement Cycle - continued • • • • Qualifying bidders Request for Quote (RFQ) Request for Proposal (RFP) Evaluating the bids • Usually a matrix approach • Cost is NOT the only consideration • • • • Awarding the contract Managing the contracts Logistics and expediting Change coordination This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Procurement Management Summary • Make or buy analysis • Contract types • Fixed Price • Cost reimbursable • Time and materials • The Procurement Cycle • • • • • • Bidder qualification RFP or RFQ Analysis and selection Contract negotiation Contract administration Contract closure This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Chapter Summary • Procurement is an important activity for project managers • Procurement management includes deciding about contracts and relationships with vendors, suppliers, partners • All stages of procurement should be closely monitored • Reporting to the team and to management are important components in budget and procurement management This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Questions? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 13: Procurement Management Quality Planning This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Quality Planning • Definition • Grade • Statistics • Control limits • Normal Distribution • Standard deviation • Quality Planning Tools • Measurement terminology • Tolerances • Defining and meeting client expectations • Quality Assurance This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Definition of Quality • Understand the quality levels expected • Ensure that the levels are met • This includes measuring This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Grades as a measure of quality • Pre-set standards • Octane rating for gasoline • Lumber graded for appearance, strength • Steel and other commodities This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Using statistics to measure and manage quality • Control limits • Upper and lower standards for allowable variation • Central limit theorem • Frequency distribution • Discrete math— “bins” –count the number of measurements that fall in each bin • Normal distribution– “bell-shaped curve” This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Measuring your products • Options: • Measure entire population • Sampling • Smaller amount of data to work with • Sometimes measuring destroys the sample This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Normal Distribution Figure 18.2.2 One Sigma Range Source: http://pm4id.org/10/1/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Normal Distribution • Standard deviation • • • • • • Calculate the mean (or average value) of all measurements Subtract EACH measurement from the mean Square EACH difference Sum the values Divide the sum by ( (number of values) – 1 ) Take the square root • Result can be thought of as the average difference This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning The 68-95-99.7 Rule Figure 18.2.3 The 68-95-99.7 Rule Source: http://pm4id.org/10/1/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Sigma Levels Figure 18.2.4 Meaning of Sigma Levels Source: http://pm4id.org/10/1/ This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Quality Plan • The quality plan specifies the control limits • Often written as the mean ± the acceptable variation • The size of the range is called the tolerance. This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Quality planning techniques • • • • • • Cost-benefit analysis Benchmarking Experimentation design Cost of quality Control Charts Cause and Effect diagrams • Histograms • Pareto diagram This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Quality Assurance • Process Analysis • ISO 9000 requires this This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Summary • Purpose of Quality Management: • Build confidence in clients that quality standards and procedures are being followed • Ensured by • • • • Internal review of plan Testing Revising policies External Review or audit This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning Questions? This work is licensed under a Creative Commons Attribution 3.0 Unported License (CC-BY). Project Management Chapter 14: Quality Planning
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