 PROJECT LOGISTICS(PLANNING, EXECUTION, AND CONTROL)

 Project logistics: involves the planning, execution, and control of the procurement,
movement, and stationing of personnel, material, and other resources to achieve the
objectives of a campaign, plan, project, or strategy.
 Logistics channel; Network of all participants in a supply chain engaged in the
receiving, handling, storage, transportation, and communications functions.
 PROCUREMENT, LOGISTIC CHANNEL, SUPPLY CHAIN
supply chain
 Entire network of entities, directly or indirectly interlinked and interdependent in
serving the same consumer or customer
 Comprises of vendors that supply raw material, producers who convert the
material into products, warehouses that store, distribution centers that deliver to
the retailers, and retailers who bring the product to the ultimate user.
Procurement
 Procurement means acquiring goods and/or services from an outside source.
 The act of obtaining or buying goods and services. The process includes
preparation and processing of a demand as well as the end receipt and approval
of payment.
 The process of procurement is often part of a company's strategy because the
ability to purchase certain materials will determine if operations will continue.
 Procurement means acquiring goods and/or services from an outside source.
Procurement is the term generally used by government, while business uses the
term purchasing.
 The processes to purchase or acquire the products, services, or results needed
from outside the project team to perform the work.
Objectives of Procurement
The overriding objective is to deliver procurement activities with due considerations to
efficiency and value for money in the use of public funds, while adhering to agreed national
procurement regulations.
Other objectives are :
o Effectiveness
o Transparency
o Accountability
Procurement often involves
o purchase planning,
o standards determination,
o specifications development,
o supplier research and selection,
o value analysis,
o financing,
o price negotiation,
o making the purchase,
 o supply contract administration,
o inventory control and stores, and
o Disposals and other related functions.
 PROJECT PROCUREMENT MANAGEMENT PROCESS
 Four processes
 Plan Procurements: Determining what to procure and when and how to do it
 Conduct Procurements: Obtaining seller responses, selecting sellers, and awarding
contracts
 Administer Procurements: Managing relationships with sellers, monitoring contract
performance, and making changes as needed
 Close Procurements: Completing and settling each contract or agreement, including
resolving of any open items
 PROCUREMENT PLAN
Procurement planning involves identifying which project needs can be best met by using
products or services outside the organization. It includes deciding:
 Whether to procure.
 How to procure.
 What to procure.
 How much to procure.
 When to procure.
 The inputs needed for procurement planning include:
 The project scope statement.
 Product description.
 Market conditions.
 Constraints and assumptions.
 A PLAN PROCUREMENT
STAEMENT OF WORK
 It defines project-specific activities, deliverables and timelines for a vendor providing services to
the client
 SOW should specify the product of the project, use industry terms, and refer to industry standards
IMPORTANT OF SOW
 Provides a clear understanding of the requirements
 Establishes a baseline for proposal evaluation
 Reduces evaluation and negotiation time
 Minimizes need for future changes
 Baselines contractor performance measure
SOW TEMPLETE
 Scope of the work
 Location of the work
 Period of performance
 Deliverable schedule
 Applicable standard
 Acceptable criteria
 Special requirement
PROCUREMENT DOCUMENTS
Procurement documents are the contractual relationship between the customer and the supplier of
goods or services.
Common documents used are:
• Request for Proposals
• Request price
• Invitation for bid, negotiation and initial contractor responses
MAKE OR BY DECISION
• Is a dilemma that organizations face when deciding between keeping logistics services in
house or purchasing them from an outside logistics provider
• it’s the act of making a strategic choice between producing a product internally (in-house) or
buying it externally (from an outside provider).
• It compare the cost of producing a component or providing the service internally with the
cost of purchasing the component or service from an external supplier
SOURCE SELECTION
• Logistics outsourcing is an arrangement whereby a logistics service provider performs
services for a company that could be, or have been, provided in-house
Why outsource?
 Access skills and technologies
 Reduce both fixed and recurrent costs
 Allow the client organization to focus on its core business
 Provide flexibility
 Increase accountability
COMPONENTS OF OUTSOURCING
 Project
 Clients
 Logistic provider
TYPES OF OUT SOURCING
Body shop outsourcing: a means of meeting short term requirement, shortage of in house skills to
meet temporary demand.
Project management outsourcing: for all parts of a particular project, new IT project, training
requirement
Total outsourcing: supplier given full responsibility for selected function, catering, security.
PROBLEMS OF OUT SOURCING
Long term commitment
Communication with suppliers
Dependence on suppliers
Additional training
Reduction in flexibility
Coordinating different suppliers
Quality of service
Poor project management
Lack of control over larger suppliers

B. CONDUCT PROCUREMENTS
 Source Selection generally refers to the process of evaluating a competitive bid or
proposal to enter into a procurement contract.
 Once buyers receive proposals, they must select a vendor or decide to cancel the
procurement. Source selection involves:
o Evaluating bidders’ proposals.
o Choosing the best one.
o Negotiating the contract.
o Awarding the contract.
o It is highly recommended that buyers use formal evaluation procedures for
selecting vendors. Buyers often create a “short list”
D CLOSE PROCUREMENTS
 Procurement
audits
Project Management Closed Procurements
Negotiated
Plan Organizational Process
Inpu Settlements Outp
Assets Updates
Procurement
ts uts
Documentation
Records
management
CHAPTER THREE
system
WHAT IS CONTRACT
 Is a document that describes a relationship between two parties, such as a buyer and seller,
that is defined by an agreement about their respective rights and responsibilities
 Contract: a legally enforceable agreement – the agreement that generates rights and
obligations that may be enforced in the courts
REQUIREMENTS FOR A VALID CONTRACT
 Legal Capacity
 Offer and Acceptance
 Consideration
OBJECTIVE OF CONTRACT
 Intention to Create a Legal Relationship: a promise is to be enforceable it must be shown
that it was intended to be a legally binding commitment

 Breach of contract: the injured party is entitled to legal remedy

 Damages are designed to compensate for the loss one has suffered
TYPES OF CONTRACT
• Different types of contracts can be used in different situations
• Fixed price or lump sum contracts: involve a fixed total price for a well-
defined product or service
• Firm Fixed-Price contract (FFP)
• Fixed Price Incentive Fee contract (FPIF)
• Fixed Price with Economic Price Adjustment contracts (FP-EPA)
• Cost-reimbursable contracts: involve payment to the seller for direct and
indirect costs
• Cost Plus Fixed Fee contract (CPFF)
• Cost Plus Incentive Fee contract (CPIF)
• Cost Plus Award Fee (CPAF)
• Cost Plus Percentage of Cost (CPPC)
• Time and material contracts: hybrid of both fixed price and cost
reimbursable contracts
• Unit price contracts: require the buyer to pay the seller a predetermined
amount per unit of service
HOW TO SELECT BEST CONTRACTORS
 You should always select a contract which provides the optimum value for your time
and money, and protects your project from any risks.
 If the scope of work is well defined and fixed, you should go for a Fixed-Price
contract. However, if the project scope is not fixed and is exploratory, you should
choose the Cost Reimbursable contract.
 If you require only expert opinions, consultancy service or outside support, you
should go for the Time and Materials type of contract.
CHAPTER FOUR
What is contract administration?
Contract administration is the stage of the procurement cycle during which the goods and
services are delivered in a manner that satisfies the requirement stated in the contract
 Preparation for contract administration begins with planning, which should begin
during the bidding and selection process.
 This planning includes the nomination of contract administrators, a strategy for
undertaking periodic performance review, the timeframe for certifying performance
and acceptance of contract deliverables in order to avoid payment delays.
Purpose of contract administration
The purpose of contract administration is to ensure that all parties to the contract fully meet
their respective obligations as efficiently and effectively as possible.
 Administer a contract which defines the need,
 Develop a means and method to meet the need,
 Ensure all the legal requirements are met,
 Assessing any and all risks,
 Allocating necessary resources to ensure that project is built in very close
conformance to all contract provisions,
Competencies of contract administrators
 Obtaining quality supplies and services that meet or exceed contract specifications,
 Schedule – complete project on time,
 Budget – complete project within budget, and
 Closeout – must be problem free
What factors Influence it?
 The following factors influence Contract Administration:
 Nature of the work,
 Type of contract, and
 Experience and commitment of the personnel involved
Characteristics of a Good Contract Administrator
 Effectively communicates orally and in writing ;
 Analytical v. Emotional;
  Minimizes changes/modifications;
 Proactive communicator – keeps lines of communications open throughout contract
completion and
 Document, document, document
 Principles of contract administration
 Ensure that contracts are known and understood for all those who involved
 Be clear about accountability, roles and responsibilities;
 Establish and use strong governance arrangements to manage risk and enable strategic
 Adopt a differentiated approach based on risk;
 Manage contracts for business/public service outcomes;
 Accept that change will happen and plan for it;
 Measure and report on performance and use KPIs and data efficiently to incentivize
good performance;
 Drive continuous improvement, value for money and capture innovation;
 Accept that successful delivery of major projects is best achieved through a single
fully integrated team;
 Ensure that links are made with organization and/or government wide SRM (supply
relationship management) programs; and
 Adopt and encourage mature commercial behaviors
Processes of contract administration

CHAPTER FIVE
Contract administration planning: who does what, where, and when?
 Enabling contract Administration
 In this phase the procurement officer ensures that there is a shared understanding, distribution of
responsibilities and systems and procedures in place to monitor and control contract performance
and effectively deal with potential changes and disputes.
 The supplier should be considered a member of the project team, with all members striving for
success.
 Upon signature of the contract, several steps should be taken to ensure that roles, responsibilities
and obligations are clearly allocated among the parties and proper systems and procedures are put
in place to monitor performance and keep efforts well focused
 Contract file and documentation
 The contract file should be opened by the procurement officer, and the contract
should be carefully analyzed, taking note of the rights and obligations of each
party.
 Any issues requiring clarification or change of the contract should be fully
documented in this file.
 The requisitioner will normally have a separate file, with copy of the contract, as part
of the project administration files
  Part of the contract file include
• original of contract and all amendments
• all related communication with the supplier (electronic, internal and external
correspondence)
• copy of the winning offer
• award documents
• minutes of meetings
• notes of phone conversations
• reports
• pictures, video films
• proof of receipt of goods
• proof of payment
• supplier assessment report
• acceptance report from requisitioned/client
CONTRACT ANALYSIS AND PRE-PERFORMANCE DISCUSSIONS
 Contract analysis
• As soon as possible, the responsible staff member (project manager or
procurement officer) should analyze the terms and conditions of the prospective
contract and develop a contract work breakdown structure that reflects both the
technical and administrative aspects of contract performance.
• The requisitioner and the procurement officer should reach agreement on
intermediate performance goals based on contract performance obligations.
Intermediate goals will enable the organization to measure progress, detect
significant performance variances, take corrective action, and follow up.
 Pre-performance discussions
• Discuss how and when to measure and report actual performance. The
techniques, timing, and frequency of measurement and reporting should reflect
the nature and criticality of the work.
• Clarify any remaining ambiguities and discuss procedures for managing change
and resolving differences.
• Clarify the communication plan.
 Effective Communication
• Successful contract administration is based on an open flow of communication
and willingness to take actions necessary for correction and improvement, and is
facilitated by
• Attitude of teamwork, seeking
• Well organized oral and written reporting system,.
• Contract performance and progress review meetings at appropriate intervals.
 Contract Work Breakdown Structure (CWBS)
• A Work Breakdown Structure (WBS) is arranged in a hierarchy and
constructed for clear and logical groupings, either by activities or deliverables
 which organizes and defines the total scope of the project. Each descending level
represents an increasingly detailed definition of a project component.
 How WBS Helps the Contract Administrator?
• Facilitates evaluation of cost, time, and technical performance of the project.
• Provides management with information appropriate to each organizational level.
• Helps in the development of the organization breakdown structure (OBS). which
assigns project responsibilities to organizational units and individuals
• Helps manage plan, schedule, and budget.
• Defines communication channels and assists
in coordinating the various project elements.
• A work package is the lowest level of the WBS.
• It is output-oriented in that it:
• Defines work (what).
• Identifies time to complete a work package (how long).
• Identifies a time-phased budget to complete a work package (cost).
• Identifies resources needed to complete a work package (how much).
• Identifies a person responsible for units of work (who).
• Identifies monitoring points (milestones)
for measuring success.
CHAPTER SIX
• Once the contract has been awarded, the responsible procurement officer, or contract
administrator monitors performance, collects information, and measures actual
contract achievement
• Require extensive reports, regular progress meetings, formal testing, and technical
reviews and audits.
Control Points
• Observing and collecting information should be directed at four general control
points.
– cost control
– schedule control
– compliance with specifications, terms of reference, statement of work (quality
assurance and control)
– compliance with terms and conditions, paperwork requirements, and
administrative aspects of the performance
Monitoring Methods
• There are two different monitoring methods:
– direct observation and
– indirect observation
Receipt, Inspection and Acceptance Procedures
• Acceptance or rejection of products or services must be based on the standards
identified in the contract or purchase order.
• Organizations rely on two types of standards:
– Strict compliance standards: Requirements based on specific UN technical
descriptions.
 – Subjective standards: Requirements based on a broader, more judgmental,
criterion as applied by the inspector.

Types of Reports
• Receipt and inspection documentation: organizations usually use standard
forms/reports to acknowledge that the inspection has been performed and to record
whether products/services have been accepted or rejected.
• Progress meetings : progress meetings can simply be oral progress reports
• Written reports: rarely provide “real time” information. They do not tell the reader
how things are now; they provide the reader only a picture of some point of time in
the past
Variance Analysis
• The analyst compares actual performance to performance goals to determine whether
there are variances
Taking Corrective Action and Follow-up
• When the procurement officer discovers significant variance between actual and
expected performance, he/she should take corrective action if possible.
• He/she should identify the cause of the problem and determine a solution that
will not only eliminate it as a source of future difficulty, but correct the effect it
has already had, if possible.
• If the effect cannot be corrected, then the parties may need to negotiate a change
to the contract, with compensation to the injured party, if appropriate
• Throughout this process of corrective action and follow-up, all the parties must
keep each other informed
CHAPTER EIGHT
Financial Management (Payment)
• Among the rights of the supplier is the right to be paid timely for efforts completed,
according to the terms of the contract
• Process payments according to the contract and upon certification of requisitioner if
required in the contract.
• Review financial implications of contract changes, in terms of original costs/outputs
and available budget.
• A payment made to a supplier may be one of the following five types:
• Advance is
• a sum of money paid to the supplier upon signature of the contract, in
anticipation of identified early expenses
• Needs to be justified and requires special approval before the procurement
officer can include it in a contract and if it is agreed to, all reasons and to
be documented.
• must provide guarantees, e.g. bank guarantees
• Partial
• Based on the acceptance of a particular product or service.
• To process a document must be on file that confirms the clients acceptance
• Progress
 • referred to as an installment payment, is a form of contract financing
made before final work or deliverables are accepted
• Final
• is a payment made in acknowledgement or approval of the completion of
all contract performance.
• The payment office may make payment based on the supplier’s invoice
and its receipt of a receiving report or delivery receipt.
• Holdback / retention (withholding payment).
• Are used in works and complex consulting assignments to ensure
completion of the contract and in some construction contracts to ensure
that the general supplier has paid its subcontractors.
• Are retained by the client until the supplier has provided proof it has
discharged itself of all its obligations under the contract. This contract
provision allows the client to withhold a portion of payment
CHAPTER NINE
Dispute Management and Resolution
• Contract administration planning should include agreement on the procedure to follow to
resolve disagreement between parties regarding responsibilities and interpretation of the
contract.
Causes of disputes in contacts
• Many contractual disagreements stem from ambiguities in the language of contracts
Basic rules for resolving ambiguous contract language
 When conflict occurs between two sections of the contract and no directions to the
contrary exist, assume that:
 hand-written text takes precedence over typed text
 typed text takes precedence over pre-printed text on a standard form
 Specific clauses take precedence over general clauses.
Additional rules for resolving conflicts
 For resolving ambiguous language, the basic rules apply first.
 If the basic rules fail to provide an answer, additional rules might be applied
• The intent of the parties: finding evidence as to the intent of both parties when they
entered into the contract. For example, evidence might be found in the minutes of the
pre-proposal conference.
• The circumstances: if evidence cannot be found of the intent of the parties, examine
the surrounding circumstances.
Keys to effective dispute resolution
• Recognize that contract documents are not perfect
• Keep larger objectives in mind
• Focus on the facts
• Depersonalize the issues
• Willingness to make reasonable compromises.
Dispute resolution methods
• Negotiation
• Mediation
• Conciliation
• Neutral evaluation.
• Expert determination
• Arbitration
• Litigation