Procurement Contracts
COST-PLUS-FIXED-FEE (CPFF) contracts reimburse the seller for allowable costs for performing the contract work plus a fixed fee payment calculated as a percentage of the estimated project costs. The fee is fixed and does not vary with actual costs unless the project scope changes.
COST-PLUS-INCENTIVE-FEE (CPIF) contracts reimburse the seller for allowable costs for performing the contract work plus a predetermined fee based on achieving certain performance objectives.
TIME AND MATERIALS contracts are hybrid contractual agreements that are combined cost-reimbursable and fixed-price contracts based on duration of performance and the exact quantity of items to be delivered.
THE TYPE OF CONTRACT AGREEMENT USED might be determined by requirements:
a buyer imposes on a seller
of market competition and risk
of future project acquisition by the project team
THE PROCUREMENT MANAGEMENT PLAN OUTPUT describes how the procurement processes will be managed, from developing procurement documentation through contract closure. PMP Preparation course content will include this along with the various contract types within the course.
THE PROCUREMENT MANAGEMENT PLAN includes items such as:
the types of contracts that will be used
who will manage providers
who will prepare evaluation estimates
make-or-buy decisions
constraints and assumptions
performance bonds and insurance contracts to mitigate identified risks
schedule dates
Source Selection Criteria includes:
technical capability
understanding of requirements
overall cost
risk
management and technical approach
warranty
financial and production capacity
business size and type
past performance and references
proprietary and intellectual property rights
In this task, the project manager develops a quality management plan using the project scope and schedule.
The objective of this task is to ensure that the required project resources will be available.
THE PROJECT QUALITY MANAGEMENT PROCESS includes the activities of the performing organization that determine quality policies and objectives for the project to satisfy the needs for which it was undertaken. The Project Quality Management processes include Plan Quality, Perform Quality Assurance, and Perform Quality Control. These processes interact with each other and may involve effort from one or more persons or groups. Each process takes place at least once in every project and they may overlap. Project management PMP holders will be familiar with these concepts.
Plan Quality is the process of defining the quality requirements and standards for the project and product and documenting how the project will show compliance.
It is the task of the project manager to identify which quality standards are relevant to the project and determine how to satisfy them during the quality planning stage. Specific project guidelines are required or set during the quality planning stage, which determine standards and parameters for quality acceptance.
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