PROJECT

Facilitator : Ahmed Aslam, PMP, MPM, ACCA

COURSE OUTLINE
 Week 01 – Introduction
 Week 02 – Procurement in project life cycle
 Week 03 – Assignment, Make or buy analysis
 Week 04 – Buyer & Seller relationships
 Week 05 – Purchasing process
 Week 06 – Quiz, Procurement documents
 Week 07 – Supplier positioning and sourcing strategy
o Week 08 - Mid-term Examination
 Week 09 – Seller pre-qualifications, evaluation & bidding
 Week 10 - Commercial contract management
 Week 11 - Assignment, Bids opening and evaluation
 Week 12 - Conflict & Dispute resolution
o Week 13 - Formal acceptance of deliverables
o Week 14 – Quiz, Procurement involving international suppliers
o Week 15 – Project Presentation
o Week 16 - Final Examination
Control Procurements Process
• The process of managing procurement relationships;
monitoring contract performance, and making changes and
corrections as appropriate; and closing out contracts

• Key Benefit: It ensure that both the seller’s and buyer’s

performance meet the project’s requirements according to the
terms of the legal agreement.

• Frequency: Performed throughout the project as needed

An Overview
• Involves managing relationship between buyer and seller

• Ensuring both parties perform as required by contract

• During execution, if buyer’s needs change, a change order

to the contract is issued

• Impact of contract changes are negotiated

• ‘Tying up all loose ends’

• Verifying all work is complete and accepted

• Finalizing all open claims

An Overview
• Paying withheld retained payments to Suppliers

• Procurement is closed when:

 A contract is completed

 A contract is terminated before work is completed

• Project Manager performs a procurement audit and closes

the procurement

• Typically involves more formal record keeping to safeguard

interests of both parties

• All procurements must be closed out, before project closure

An Overview
• What the project manager should be doing at point in time?

• What problems and issues to watch out for, under different contract
types that might affect the management of the project?

• That all work and legal requirements in the contract must be

accomplished, however small and however seemingly unimportant

• That the project manger must help uphold all parts of the contract,
not just the project scope
Project Manager’s Responsibilities
• Review invoices
• Complete integrated change control
• Document (record everything)
• Manage changes
• Authorize payments to the seller
• Interpret what the contract means
• Resolve disputes
• Make sure only authorized people are communicating with the seller
• Work with the procurement manager regarding requested and approved
changes and contract compliance
• Hold procurement performance review meetings with your team and the seller
• Report on performance (both, Seller’s and Buyer’s)
• Monitor cost, schedule, and technical performance against the contract,
including T&Cs, procurement statement of work, etc.
• Understand the legal implications of actions taken
Constructive Changes
• Definition of ‘Constructive Changes’ (change by implication)
 Alteration or modification ordered to be made in a construction contract by the
principal (client) without issuing a formal change order.
 When Buyer, through actions or inactions, gets in the seller’s way of performing the
work according to the contract.
 May include over-inspection and failing to cooperate

• Seller’s may file a claim if Buyer fails to uphold their end of contract
(e.g. failing to review documents/reports/deliverables on time, as per
the contract)
• PM needs to be particularly sensitive towards constructive changes
• A simple direction to the contractor to perform certain work that may
seem minor, if outside the scope of the contract, can result in a
constructive change – and cost the company a lot of money.
Contract Termination
• Termination for Convenience
 A contract provision which gives a party (or parties) the right to unilaterally
terminate the contract at any time with or without giving any reason

 Although the right could be assigned to one or both parties – but is, most typically,
exclusive to Buyer

• Example:
 “Buyer may terminate this agreement for any reason by giving the Vendor 30 days’
prior written notice”

 “Either party may terminate this Agreement, for any reason or for no reason, upon
not less than 45 days prior written notice to the other party”
Contract Termination
• Termination for Cause
Termination for cause (also called termination for default - TFD) is a contract provision
that permits a party completely or partially to terminate performance of the contract for
material breach or other stated causes

• Example:
 Buyer may terminate the whole or any part of this Agreement, by written notice of
default to Seller, in any one of the following circumstances:
– if Seller fails to perform any duties or obligations within the time specified herein or any written extension
thereof granted by Buyer;

– if Seller fails to comply with any of the material terms and conditions of this Agreement. Such termination
shall become effective if Seller does not cure such failure within a period of ten (10) days after written
notice of default by Buyer”
Procurement Performance Review
• During the control procurement process, Buyer’s project manager
analyzes all available data to verify that the seller is performing as they
should (as per the contract)

• Seller is often present to review the data

• Seller may talk about what the Buyer can do differently to help advance
the work in a better way

• Objectives:
 To see if any changes are needed to improve the relationship

 Changes are required in the processes being used

 Determining how the work is progressing

• Changes may be requested as a result of this meeting