Engr. Michael L.
Nullas
Conduct Procurements is the process of
obtaining seller responses, selecting a seller,
and awarding a contract. The key benefit of
this process is that it provides alignment of
internal and external stakeholder
expectations through established
agreements.
Bidder conferences
Bidder conferences (sometimes called contractor conferences, vendor
conferences, and pre-bid conferences) are meetings between the buyer
and all prospective sellers prior to submittal of a bid or proposal. They
are used to ensure that all prospective sellers have a clear and common
understanding of the procurement requirements), and that no bidders
receive preferential treatment. To be fair, buyers should take great care
to ensure that all prospective sellers hear every question from any
individual prospective seller and every answer from the buyer. Typically
fairness is addressed by techniques such as collecting questions from
bidders or arranging field visits in advance of the bidder conference.
Responses to questions can be incorporated into the procurement
documents as amendments.
Proposal Evaluation techniques
On complex procurements, where source selection will be made based
on seller responses to previously defined weighted criteria, a formal
evaluation review process will be defined by the buyer’s procurement
policies. The evaluation committee will make their selection for approval
by management prior to the award.
Independent Estimates
For many procurement items, the procuring organization may
elect to either prepare its own independent estimate, or have an
estimate of costs prepared by an outside professional estimator,
to serve as a benchmark on proposed responses. Significant
differences in cost estimates can be an indication that the
procurement statement of work was deficient, ambiguous,
and/or that the prospective sellers either misunderstood or
failed to respond fully to the procurement statement of work.
Expert Judgment
Expert judgment may be used in evaluating seller proposals. The
evaluation of proposals may be accomplished by a multi-
discipline review team with expertise in each of the areas
covered by the procurement documents and proposed contract.
This can include expertise from functional disciplines such as
contracting, legal, finance, accounting, engineering, design,
research, development, sales, and manufacturing.
Advertising
Existing lists of potential sellers often can be expanded by placing
advertisements in general circulation publications such as selected
newspapers or in specialty trade publications. Some organizations use
online resources to communicate solicitations to the vendor community.
Some government jurisdictions require public advertising of certain
types of procurement items, and most government jurisdictions require
public advertising or online posting of pending government contracts.
Analytical techniques
Procurements involve defining a need in such a way that vendors can
bring value through their offerings. To ensure that the need can be and
is met, analytical techniques can help organizations identify the
readiness of a vendor to provide the desired end state, determine the
cost expected to support budgeting, and avoid cost overruns due to
changes. By examining past performance information, teams may
identify areas that may have more risk and that need to be monitored
closely to ensure success of the project.
Procurement negotiations
Procurement negotiations clarify the structure, requirements, and other terms of
the purchases so that mutual agreement can be reached prior to signing the
contract. Final contract language reflects all agreements reached. Subjects covered
should include responsibilities, authority to make changes, applicable terms and
governing law, technical and business management approaches, proprietary
rights, contract financing, technical solutions, overall schedule, payments, and
price. Negotiations conclude with a contract document that can be executed by
both buyer and seller.
For complex procurement items, contract negotiation can be an independent
process with inputs (e.g., issues or an open items listing) and outputs (e.g.,
documented decisions) of its own. For simple procurement items, the terms and
conditions of the contract can be previously set and nonnegotiable, and only need
to be accepted by the seller.
The project manager may not be the lead negotiator on procurements. The project
manager and other members of the project management team may be present
during negotiations to provide assistance, and, if needed, to add clarification of
the project’s technical, quality, and management requirements.
Selected Sellers
The selected sellers are those who have been
judged to be in a competitive range based
upon the outcome of the proposal or bid
evaluation, and who have negotiated a draft
contract that will become the actual contract
when an award is made. Final approval of all
complex, high-value, high-risk procurements
will generally require organizational senior
management approval prior to award.
Agreements
A procurement agreement includes terms and conditions,
and may incorporate other items that the buyer specifies
regarding what the seller is to perform or provide. It is the
project management team’s responsibility to make certain
that all agreements meet the specific needs of the project
while adhering to organizational procurement policies.
Depending upon the application area, an agreement can
also be called an understanding, a contract, a subcontract,
or a purchase order. Regardless of the document’s
complexity, a contract is a mutually binding legal
agreement that obligates the seller to provide the
specified products, services, or results, and obligates the
buyer to compensate the seller. A contract is a legal
relationship subject to remedy in the courts. The major
components in an agreement document will vary, but may
include the following:
Statement of work or Penalties,
deliverables, Incentives,
Schedule baseline, Insurance and performance
Performance reporting, bonds,
Period of performance, Subordinate subcontractor
Roles and responsibilities, approvals,
Seller’s place of performance, Change request handling, and
Pricing, Termination clause and
Payment terms, alternative dispute resolution
(ADR) mechanisms. The ADR
Place of delivery, method can be decided in
Inspection and acceptance advance as a part of the
criteria, procurement award.
Warranty,
Product support,
Limitation of liability,
Fees and retainer,
Resource Calendars
The quantity and availability of contracted
resources and those dates on which each specific
resource or resource group can be active or idle
are documented.
Change Requests
Change requests to the project management
plan, its subsidiary plans, and other components
are processed for review and disposition through
the Perform Integrated Change Control process
(Section 4.5).
Project Management Plan updates
Elements of the project management plan that may be updated
include, but are not limited to:
Cost baseline,
Scope baseline,
Schedule baseline,
Communications management plan, and
Procurement management plan.
Project documents updates
Project documents that may be updated include, but are not
limited to:
Requirements documentation,
Requirements traceability documentation,
Risk register, and
Stakeholder register.
