Develop A Procurement Plan—plan Procurements

By Author: Sarah Ryan
Total Articles: 45
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PROJECT SCOPE STATEMENT COMPONENTS providing technical issue information to the Plan Procurements process include:
project needs and strategies
lists of deliverables
acceptance criteria for the project, products, services, and results

THE PROJECT SCOPE STATEMENT, WBS, and WBS DICTIONARY provide the relationship among all components of the project and project deliverables. They also include detailed statements of work that identify deliverables, and describe work within each WBS component required to produce each deliverable.

THE PROJECT MANAGEMENT PLAN includes the risk register, which contains risk-related information such as the identified risks, risk owners, and risk responses.

RISK-RELATED CONTRACTURAL AGREEEMENTS are insurance and services documents within the project management plan, which are prepared to specify each party's responsibility for specific risks. PMP Exam Preparation should conver this topic thoroughly and include examples to help students fully understand this concept.

TOOLS & TECHNIQUES USED IN PLAN PROCUREMENTS:

THE ...
... MAKE-OR-BUY management technique is used to determine if a particular product or service can be produced by the project team, or needs to be purchased.

ANY PROJECT BUDGET CONSTRAINTS are factored into the make-or-buy decision. If a "buy" decision must be made, further decision to purchase or rent is also made.

THE “BUY” DECISION ANALYSES INCLUDE BOTH DIRECT AND INDIRECT COSTS. The buy-side of the analysis includes out-of-pocket costs to purchase the product and the indirect costs of managing the purchasing process. PMP preparation includes discussion and case studies for this topic, along with a review so students can intelligently discuss the concepts involved.

Decisions to purchase or rent equipment or other items for a project may be influenced by an ongoing need for them. A near term "buy" decision to purchase or rent an item may be based upon A MARGIN ANALYSIS. Renting or leasing might be more cost effective from the perspective of the project. However, a near term "buy" decision to purchase or rent an item may be cost allocation based on the organization's possible ongoing need, and also margin analysis. This is key for project financial management.

DIRECT COSTS ARE “HARD COSTS” incurred for the exclusive benefit of the project. They include:

materials
subcontractors
labor

Items are tracked using a unique number code for items.

INDIRECT COSTS ARE ALSO REFERRED TO AS OVERHEAD, GENERAL, OR ADMINISTRATIVE COSTS. They are costs allocated to the project by the project team as a cost of doing business. Indirect costs are calculated as a percentage of direct costs.

COST-PLUS-FEE (CPF) or COST-PLUS-PERCENTAGE-OF-COST-FEE (CPPC) are cost-reimbursable contracts that reimburse the seller for costs for performing the contract work plus a fee calculated as an agreed-upon percentage of the costs. The fee varies with the actual cost.

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