B Tech, Pgdom, PHD: Area of Interest

Centre for
Continuing Education
Session conducted by
Dr Rajesh Gupta
B Tech, PGDOM, PhD
Area of interest
• Operations management
• Project Management
• Quantitative Techniques
• Quality Management
UPES – The Nation Builders University
CERTIFICATE IN PROJECT MANAGEMENT
Session 7
17th February 2017
Centre for
Procurement Management
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Procurement
Acquiring goods and/or services from an outside

source.
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Reasons of Outsourcing
• To reduce both fixed and recurrent costs.

• To allow the client organization to focus on its core
business.
• To access skills and technologies.
• To provide flexibility.
• To increase accountability.
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Procurement Management
Project procurement management includes
• Procurement planning: determining what to procure and when.
• Solicitation planning: documenting product requirements and identifying

potential sources.
• Solicitation: obtaining quotations, bids, offers, or proposals as appropriate.
• Source selection: choosing from among potential vendors.
• Contract administration: managing the relationship with the vendor.
• Contract close-out: completion and settlement of the contract.
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Procurement Planning
Procurement planning involves identifying which project needs can be best
met by using outsourcing. It includes decisions relating to
• Whether to procure.
• How to procure.
• What to procure.
• How much to procure.
• When to procure.
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Make-or-buy analysis
Determining whether a particular product or service should

be made or performed inside the organization or purchased
from someone else. Generally it involves financial analysis.
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CONTRACT ADMINISTRATION
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When the project manager has to get things

done with resources over which he has no
direct authority, it becomes necessary to
acquire required authority in lieu of some
considerations.
• Such an arrangement is called contract

• Authority acquired is contractual
authority
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Internal contracting:
authority acquired in house through a contract
Business contract:
Authority outsourced
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Steps in business contracts

Enquiry Expression of interest
Offer Tender
Acceptance
Agreement
Contract
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3 R’s of contracting
• Responsibility
• Reimbursement
• Risk
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RESPONSIBILITY
• What to entrust to contractors and what to retain
• Defining work precisely so that that no overlapping

or ambiguity is there
• Defining performance parameters for which

contractors must assume responsibility
Often referred to as scope of work
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Types of responsibility arrangements
• Owner does everything

• Owner assumes the task of carrying out project through contracts
• Owner engages a consultant for project management services
• Owner engages number of agencies for specified work packages
• Entire project responsibility to a prime contractor
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REIMBURSEMENT
There are three broad categories:

Fixed price or lump sum: involve a fixed total price for a well-
defined product or service.
Cost reimbursable: involve payment to the seller for direct and
indirect costs.
Unit price contracts: require the buyer to pay the seller a
predetermined amount per unit of service
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REIMBURSEMENT
• Lump sum contracts

• Lump sum
• Cost plus contracts

• Cost plus percent fee
• Cost plus fixed fee
• Cost plus with guaranteed maximum
• Cost plus with guaranteed maximum and
incentive
• Item rate contracts
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Risks
• Risks need to be covered while contracts are

awarded
• Contractors need to be selected on the basis of

competence
• Technical
• Financial
• managerial
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TENDERING PROCEDURE
A well laid down procedure for prequalification of

contractors and tendering
TENDER
An offer to carry out certain work or supply certain

material or services in accordance with clearly detailed
descriptions and conditions
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Tendering procedure
Prequalification of contractors
Preparation of tender documents
Receipt of tenders
Evaluation of tenders
Selection of contractors
Agreement
Form of guarantee
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Statement of Work
A statement of work is a description of the work required
for the procurement. It describes the work in sufficient detail to
allow prospective sellers to determine if they are capable of
providing the goods and services required, and to allow them to
determine an appropriate price.
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Statement of Work
I. Scope of Work: Describe the work to be done to detail.
II. Location of Work: Describe where the work must be performed.
III. Period of Performance: Specify when the work is expected to start and end,
IV. Deliverables Schedule: List specific deliverables, describe them in detail, and
specify when they are due.
V. Applicable Standards: Specify any company or industry-specific standards that
are relevant to performing the work.
VI. Acceptance Criteria: Describe how the buyer organization will determine if the
work is acceptable.
VII. Special Requirements: Specify any special requirements such as hardware or
software certifications, minimum degree or experience level of personnel etc
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B Tech, Pgdom, PHD: Area of Interest

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Centre for

CERTIFICATE IN PROJECT MANAGEMENT

17th February 2017

Acquiring goods and/or services from an outside

• To reduce both fixed and recurrent costs.

• Procurement planning: determining what to procure and when.

• Solicitation planning: documenting product requirements and identifying

• Solicitation: obtaining quotations, bids, offers, or proposals as appropriate.

• Source selection: choosing from among potential vendors.

• Contract administration: managing the relationship with the vendor.

• Contract close-out: completion and settlement of the contract.

• How much to procure.

Determining whether a particular product or service should

When the project manager has to get things

• Such an arrangement is called contract

Steps in business contracts

• What to entrust to contractors and what to retain

• Defining work precisely so that that no overlapping

• Defining performance parameters for which

Often referred to as scope of work

Types of responsibility arrangements

• Owner does everything

There are three broad categories:

• Lump sum contracts

• Cost plus contracts

• Risks need to be covered while contracts are

• Contractors need to be selected on the basis of

A well laid down procedure for prequalification of

An offer to carry out certain work or supply certain

Preparation of tender documents

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