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‫‪01274444662‬‬
‫‪PRMG,PMP‬‬
‫مؤسس مكتب ‪TSC‬‬
‫لالستشارات الهندسيه والتدريب‬
‫‪m.m.ali@ess.aucegypt.edu‬‬
‫‪mohammed.mohammed@sabbour.com‬‬
‫جروب‪INTEGRATED PMP‬‬
‫جروب مهندس تنفيذ‬
‫صفحه المكتب ‪TSC‬‬
‫قناه مهندس دمحم معوض على اليو تيوب‬
‫‪01120955888 & 01027338239‬‬ ‫تى اس سى لالستشارات والتدريب‬ ‫‪1‬‬
 ‫الشهادات العلميه‬

‫‪ ‬بكالٌريٌش ىندضو مدنيو‬

‫‪1999‬‬ ‫جامعو السقازيق‬
‫دبلٌمو اداره مشرًعات ‪PRMG‬‬
‫الجامعو االمريكيو بالقاىره‬
‫مدير مشرًع محترف ‪PMP‬‬
‫معيد اداره المشرًعات االمريكَ‬
‫مدرب محترف ‪TOT‬‬
‫جامعو عين شمص‬
‫دبلٌمو تقييم عقارٍ‬
‫جامعو القاىره‬

‫‪2‬‬
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PROJECT PROCUREMENT MANAGEMENT
Sometimes you need to hire an outside company to do some of your
project work (outsourcing). That’s called procurement, and the outside
company is called the seller. Procurement managers would like to say,
"There is a procurement process designed to obtain the best seller at
the most reasonable price.
Definitions & Terms:
Seller (performing organization) : In the real world, the company or
person who provides services and goods can be called a "contractor;'
"subcontractor;' "supplier;' "designer:' "vendor or the seller
Buyers (requesting organization): The company or person who
purchases the services is called the "buyer, owner , employer or client

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Centralized Contracting:
•One procurement department for all projects.
•Advantages: High level of expertise, training, lessons learned, and clear
career path for individuals
•Disadvantages: Difficult for project manager to get help when needed
Decentralized Contracting:
•A procurement manager is assigned for each project
•Advantages: Project manager has easier access to contract expertise
•Disadvantages: Difficult to maintain a high level of contracting
expertise in the company
Agreement : generally encompasses documents or communications that
outline internal or external relationships and their intentions. The
charter and the project management plans are examples of agreements
that are not contracts; they are internal agreements. Some other
examples of agreements are service level agreements, memos of intent,
letters of intent, letters of agreement, e-mails, and verbal agreements.
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Plan Procurement Management
is the process of documenting project procurement decisions, specifying
the approach, and identifying potential sellers. The Plan Procurement
management process includes the following activities:
Selecting a contract type for each procurement
Creating the procurement documents
Determining the source selection criteria
Creating a procurement statement of work for each procurement
Performing make or buy analysis

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Types of contractual agreements
The types of contracts or agreements that are approved for use within
an organization are considered organizational process assets . From
those contract types , the procurement manager will select the contract
type .
Fixed price (FP)
means that you are going to pay one amount regardless of how much it
costs the contractor to do the work. A fixed-price contract only makes
sense in cases where the scope is very well known. Changes are difficult
and costly.
Firm Fixed Price Contracts (FFP)
The most commonly used contract type is the FFP. It is favored by most
buying organizations because the price for goods is set at the outset and
not subject to change unless the scope of work changes.
Fixed price plus incentive fee (FPIF)
means that you are going to pay a fixed price for the contract and give a
bonus based on some performance goal . ENG.MOHAMMED
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Fixed Price with Economic Price Adjustment Contracts (FP-EPA). This
contract type is used whenever the seller’s performance period spans a
considerable period of years, as is desired with many long-term
relationships. It is a fixed-price contract, but with a special provision
allowing for pre defined final adjustments to the contract price due to
changed conditions, such as inflation changes, or cost increases (or
decreases) for specific commodities.
Cost-reimbursable contracts.
This category of contract involves payments (cost reimbursements) to
the seller for all legitimate actual costs incurred for completed work,
plus a fee representing seller profit. A cost-reimbursable contract is used
when the exact scope of work is uncertain and, therefore, costs cannot
be estimated accurately enough to effectively use a fixed-price contract.
Three of the more common types of cost-reimbursable contracts in use
are :
Cost Plus Fixed Fee Contracts (CPFF).
The seller is reimbursed for all allowable costs forENG.MOHAMMED
performing the
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contract work,
and receives a fixed-fee payment calculated as a percentage of the
initial estimated project costs. A fee is paid only for completed work and
does not change due to seller performance.
Cost Plus Incentive Fee Contracts (CPIF).
The seller is reimbursed for all allowable costs for performing the
contract work and receives a predetermined incentive fee based upon
achieving certain performance objectives as set forth in the contract. If
the final costs are less or greater than the original estimated costs, then
both the buyer and seller share costs from the departures based upon a
prenegotiated cost-sharing formula, for example, an 80/20 split
over/under target costs based on the actual performance of the seller.
Cost Plus Award Fee Contracts (CPAF)
The seller is reimbursed for all legitimate costs, but the majority of the
fee is earned only based on the satisfaction of certain broad subjective
performance criteria defined and incorporated into the contract. The
determination of fee is based solely on the subjective determination of
seller performance by the buyer, and is generally ENG.MOHAMMED
not subject to appeals.
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EX. the cost is estimated at $210,000 and the fee at $25,000. The project
is complete, and the buyer has agreed that the costs were, in fact,
$200,000. Because the seller's costs came in lower than the estimated
costs, the seller shares in the savings: 80 percent to the buyer and 20
percent to the seller. Calculate the final fee and final price.
Target cost $210,000
Target fee $25,000
Target price $235,000
Sharing ratio 80/20
Actual cost $200,000.
Final fee 0.2*(210,000-200,000) +25,000 =$27,000
Final price = $200,000+$27,000 =$227,000

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Time and materials (T&M)

is used in labor contracts. It means that you will pay a rate for each of
the people working on your project plus their materials costs. The
“time” part means that the buyer pays a fixed rate for labor—usually a
certain number of dollars per hour. And the “materials” part means that
the buyer also pays for materials, equipment, office space,
administrative overhead costs, and anything else that has to be paid for.
The seller typically purchases those things and bills the buyer for them.
This is a really good contract to use if you don’t know exactly how long
your contract will last, because it protects both the buyer and seller. A
lot of T&M contracts will have a “not to ” clause to limit risk for the
buyer

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Plan Procurement Management: Tools and Techniques
Make or buy analysis
means figuring out whether or not you should be contracting the work
or doing it yourself. factors that help you make decision may be : How
much does it cost to build it versus buy it? How will this decision affect
the scope of your project? How about your project schedule? Do you
have time to do the work and still meet your commitments?
Market Research
Market research includes examination of industry and specific vendor
capabilities. Procurement teams may leverage information gained at
conferences, online reviews and a variety of sources to identify market
capabilities

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Plan Procurement Management: Outputs
Procurement Management Plan
The procurement management plan can include guidance for:
Types of contracts to be used;
Standardized procurement documents, if needed;
Any constraints and assumptions that could affect planned
procurements;
Handling the long lead times to purchase certain items from sellers and
coordinating the extra time needed to procure these items with the
development of the project schedule;
Handling the make-or-buy decisions
Setting the scheduled dates in each contract
Identifying requirements for performance bonds or insurance contracts
to mitigate some forms of project risk;
identifying prequalified sellers, if any, to be used;
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Procurement Statement of Work
The procurement SOW describes the procurement item in sufficient
detail to allow prospective sellers to determine if they are capable of
providing the products, services, or results. Information included in a
SOW can include specifications, quantity desired, quality levels,
performance data, period of performance, work location, and other
requirements
Procurement Documents
all of the information that you’ll actually give to potential sellers to help
them bid on your contract . the most commonly used procurement
documents are:
RFI: Request for information : sent to ask for information about their
capability to do the work.
Invitation for bid (IFB): need price only
RFP: Request for proposal : is a technical approach (how they’d do the
work)
Request for quotation (RFQ) need breakdown ENG.MOHAMMED
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source selection criteria
is used to evaluate the sellers that respond to you. By evaluating all of
your sellers using the same criteria, you’ll be sure that you evaluate
everyone fairly and find the right seller for your company.
Make-or-Buy Decisions
A make-or-buy analysis results in
a decision of whether particular work
can best be accomplished by the project
team or needs to be purchased from
outside sources.

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Conduct Procurements
Conduct Procurements is the process of obtaining seller responses,
selecting a seller, and awarding a contract. A short list of qualified sellers
can be established based on a preliminary proposal. A more detailed
evaluation can then be conducted based on a more specific and
comprehensive requirements document requested from the sellers on
the short list.
I Seller Proposals
Seller proposals, prepared in response to a procurement document
package, form the basic information that will
be used by an evaluation body to select one or more successful bidders
(sellers).

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T&T Bidder Conferences : Bidder conferences (sometimes called
contractor conferences, vendor conferences, and pre-bid conferences)
are meetings between the buyer and all prospective sellers together
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. Typically fairness is addressed by techniques such as
collecting questions from bidders or arranging field visits in advance of
the bidder conference. That way, you don’t give any one seller an
advantage by providing inside information that the other sellers don’t
have access to. Responses to questions can be incorporated into the
procurement documents as amendments.
T&T 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
(prequalification) will be defined by the buyer’s procurement policies.
The evaluation committee will make their selection for approval by
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management prior to the award.
T&T Independent Estimates : the procuring organization may elect to
either prepare its own independent estimate, or have an estimate of
costs prepared by an outside professional estimator (third party), to
serve as a benchmark on proposed responses to figure out whether or
not a seller is quoting you a fair price. 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.
T&T Advertising : Existing lists of potential sellers often can be
expanded by placing advertisements in general circulation publications
such as selected newspapers or online…etc
T&T Analytical Techniques : By examining past performance
information for prospective sellers, teams may identify areas that may
have more risk and that need to be monitored closely to ensure success
of the project. ENG.MOHAMMED
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T&T Procurement negotiation : Procurement documents usually has
some information about the contract you want to sign: the type of
contract, some of the terms, maybe some rough calculations and
estimates of the total costs, and other numbers. But not all sellers will
want to sign that particular contract, even ones who you’ll eventually
want to work with. That’s why you need to negotiate the terms of the
contract . This is one of those times where your company’s lawyers will
probably do most of the talking—but that doesn’t mean you’re not a
critical part of the process. Your job is to provide the expertise and in-
depth understanding. After all, you’re the one who understands your
project and your project’s needs better than anyone else.
Negotiation Tactics : the most common is:
Attacks If your organization cannot manage the details of its own
operations, perhaps it should get out of the business!"
Good guy/bad guy : One person is helpful to the other side, while
another is difficult to deal with.
Deadline : "We have a flight leaving at 5 p.m. today and must finish
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negotiations before that time.
Objectives of Negotiations
•Obtain a fair and reasonable price.
•Develop a good relationship with the seller.
When would you award work to a company without competition?
(Noncompetitive Forms of Procurement )
•The project is under extreme schedule pressure.
•A seller has unique qualifications.
•There is only one seller (Sole Source ) who can provide the goods or
service
•A seller holds a patent for the item you need.
•Other mechanisms exist to ensure the seller's prices are
reasonable.
• You have a preferred seller (Single Source )

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O 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.
O Agreements
A procurement agreement includes terms and conditions, and may
incorporate other items that the buyer specifies regarding what the
seller is to perform orprovide. 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. ENG.MOHAMMED
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Control Procurements
The Control Procurements process involves
managing the relationship between the
buyer and seller and ensuring that both
parties perform as required by the contract. While the work is
underway, the buyer's needs may change
and, as a result, the buyer may issue a
Change order to the contract. The impacts
of contract changes are then negotiated by
the two parties. Control Procurements also has a financial management
component that involves monitoring payments to the seller. This
ensures that payment terms defined within the contract are met and
that seller compensation is linked to seller progress, as defined in the
contract.

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T&T Contract Change Control System
A contract change control system defines the process by which the
procurement can be modified. This system includes change procedures,
forms, dispute resolution processes, and tracking systems and is
specified in the contract These procedures must be followed, and all
changes should be made formally. Changes may be requested
throughout the procurement process and are handled as part
of the project integrated change control efforts, along with all other
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project changes.
T&T Procurement Performance Reviews
•analyzes all available data to verify that the
•seller is performing as should.
•to determine if changes are needed to
•improve the buyer-seller relationship
•Formal changes to the contract may be
• requested as a result of this meeting
•The objective of a performance review is to identify performance
successes or failures, progress with respect to
•the procurement statement of work, and contract noncompliance
•allow the buyer to quantify the seller’s
•demonstrated ability or inability to perform work.
T&T Inspections and Audits
Inspections and audits required by the buyer and supported by the
seller, as specified in the procurement contract, can be conducted
during execution of the project to verify compliance in the seller’s work
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T&T Performance Reporting
Work performance data and reports supplied by sellers are evaluated
against the agreement requirements. Work performance information
from this evaluation is then reported as appropriate. Performance
reporting provides management with information about how effectively
the seller is achieving the contractual objectives
T&T Payment Systems
Payments to the seller are typically processed by the accounts payable
system of the buyer after certification of satisfactory work by an
authorized person on the project team. All payments should be made
and documented in strict accordance with the terms of the contract

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T&T Claims Administration
Claims are documented, processed, monitored, and managed
throughout the contract life cycle, usually in accordance with the terms
of the contract. If the parties themselves do not resolve a claim, it may
have to be handled in accordance with alternative dispute resolution
(ADR) typically following procedures established in the contract.
Settlement of all claims and disputes through negotiation is the
preferred method
T&T Records management system
There are a lot of records produced by a typical contract: invoices,
receipts, communications, memos, emails, instructions, clarifications,
etc. You’ll need to put a system in place to manage them

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Close Procurements Process
Closing procurements consists of tying up all the loose ends, verifying
that all work and deliverables are completed and accepted, and paying
withheld retainage for each of the procurements on the project. The
buyer will provide the seller with formal notice that the contract has
been completed. There may be some continuing obligations, such as
warranties, that will continue after the procurement is closed. The Close
Procurements process also involves administrative activities such as
finalizing open claims, updating records to reflect final results, and
archiving such information for future use. Unresolved claims may be
subject to litigation after closure . Early termination of a contract is a
special case of procurement closure that can result from a mutual
agreement by both parties, from the default (breach) of one party, or for
convenience of the buyer if provided for in the contract.

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T&T Procurement Audits
A procurement audit is a structured review of the procurement process
originating from the Plan Procurement Management process through
Control Procurements. The objective of a procurement audit is to
identify successes and failures that warrant recognition in the
preparation or administration of other procurement contracts on the
project, or on other projects within the performing organization.
T&T Procurement Negotiations
In all procurement relationships, the final equitable settlement of all
outstanding issues, claims, and disputes by negotiation is a primary goal.
Whenever settlement cannot be achieved through direct negotiation,
some form of alternative dispute resolution
(ADR) including mediation or arbitration may
be explored. When all else fails, litigation in
the courts is the least desirable option

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O Closed Procurements
The buyer, usually through its authorized procurement administrator,
provides the seller with formal written notice that the contract has been
completed. Requirements for formal procurement closure are usually
defined in the terms and conditions of the contract and are included in
the procurement management plan

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