Some Project Procurement Management Issues - Assignment Example

? Project Procurement Project Procurement Management The process of administering procurements falls under which process group? A. Planning B. Closing C. Monitoring and Control D. Executing 2. ABC Consulting has a large internal project to be initiated. To staff this project, ABC Consulting is working with XYZ Consulting for XYZ to provide three subcontracted resources for six months. The resources will be part of the team managed by ABC Consulting for the six months. The detail project plan and work breakdown has not yet been developed. Which contract type should be used by ABC Consulting? A. Purchase Order B. Cost plus Fee C. Fixed cost D. Time and Material 3. Joe’s Plumbing Ltd. is planning to buy ten business grade laptops for $1,500 each from a leading computer supplier. Which type of contract will generally be used in this case? A. Purchase Order B. Cost plus Fee C. Fixed cost D. Time and Material 4. A bookstore is getting 200 computers and a POS system installed from a vendor. The vendor will be paid the costs involved and a 10% incentive. Which contract will be used in this case? A. CPPC B. CPIF C. CPFF D. Fixed Cost 5. Sophie is a Project Manager. She is coordinating a bidder conference to allow vendors to get clarification on the work that needs to be performed. Which phase of Project Management is in progress? A. Conduct Procurements B. Plan Procurements C. Administer Procurements D. Close Procurements 6. A significant difference between independent estimates and proposed pricing from respondents to an RFP could mean that: A. The independent estimates are most likely incorrect and the proposed pricing correct B. The SOW was not adequately defined C. The prospective seller either misunderstood or failed to respond fully to the SOW D. b or c E. a or c 7. Which of the following are examples of indirect costs? A. Salaries of corporate executives B. Salaries of full-time project staff C. Overhead costs (such as building rent and office equipment) D. a and b E. a and c 8. Which of the following contract types places the greatest risk on the seller? A. Cost-plus-fixed-fee contract B. Cost plus-incentive-fee contract C. Time and Materials contract D. Fixed-price-incentive contract E. Firm-fixed-price contract 9. Which is not an element of procurement management? A. Purchasing B. Expediting C. Acquisition D. Marketing E. C and D 10. Requesting the submission of proposals from sellers to perform work is the avenue for acquiring most projects. The proposals, when submitted, must contain specific items to obligate or bind the tendering organization. The most important item is? A. A complete description of the work to be performed B. The list of legal terms and conditions C. The signature of a corporate officer of the seller D. A statement of work that describes how the work will be accomplished E. A firm price for the complete work to be performed 11. __??___ is a formal invitation to submit a price for goods and / or services as specified. A. Bid response B. Request for quotation C. Intention to bid D. Invitation for bid E. Request for proposal 12. Payment bonds are often required by the contract and require specific actions under the stated conditions. Payment bonds are specifically designed to ensure payment of ___??___ by the prime contractor. A. Insurance premiums B. Weekly payrolls C. Incremental earned value charges D. Subcontractors, laborers, and materials E. Damages for accidents caused 13. Some contracts are not completed because the contractor or vendor fails or refuses to complete the contractual conditions of a signed agreement. This situation is called a___??___ for which damages can be assigned. A. Breach B. Stop-work C. Flawed contract D. Contract in situ E. None of the above 14. The project manager is responsible for all the activities within a project and interfaces with external functions, all of which consume his time. Therefore, when a contract administrator is assigned to the project, the project manager ____??____ the contract. A. Does not need to manage … B. Can transfer all responsibility to the contract administrator for matters related to … C. Must still manage all major aspects of … D. Must know only the general contents of … E. Is not concerned with the management of … 15. When an RFP is issued to vendors, the responses (proposals) must be submitted in a standard format because ____??_____. A. The owner (buyer) has a format that he routinely uses and wants to force the contractors to meet his requirements B. The Uniform Commercial Code specifies that all proposals will comply with the law and the standard format C. The government has specified that proposals must meet the requirements of contract law and this assures the incorporation of all items D. The Association of Contractors has prescribed the format to which all bidders must comply to meet a legal proposal E. It gives the greatest assurance that all items are covered and the proposals can be evaluated in a uniform manner 16. The key difference between Centralized and De-centralized purchasing is __??__ A. Centralized purchasing is easier in a Matrix organization and Decentralized purchasing is easier in a functional organization. B. In Centralized purchasing, a functional executive has delegated procurement authority…and assigned a buyer to support the project and in Decentralized purchasing the project manager has the authority to execute contracts directly with another company… buy something. C. A and B. D. None of the above 17. In Corporate teaming agreements… A. Contracts are necessary, as they are legal agreements between two or more separate organizations B. Contracts are not necessary, as they exist within the same corporation C. Contracts are recommended because there is always a shared risk and reward mechanism involved D. A contract should only be used in the event one party is the prime contractor 18. The “Delphi technique” is used for what purpose? A. To determine specific make or buy decisions B. The help determine the weighting criteria for RFP responses C. To help identify and assess risks D. In the development of a WBS (Work Breakdown Structure) 19. All project procurements go through three distinct major phases: A. Definition of what products or services need to be bought; selection of a seller for the products or services; execution and assessment of the contracted services of products B. Development of a WBS; Execution of the project; Closing of the project procurement C. Development of an RFP; receipt of an RFP; assessment of an RFP D. Assignment of a Purchasing agent; Approval of the purchase; receipt of the products or services. 20. There are only 3 ways a contract may terminate early: A. Force Majeure; termination for convenience, completion of services B. Cause or default by the seller, cause or default by the buyer, for convenience by the buyer C. Termination for cause by either party; Assignment to another seller; completion of contracted services D. None of the above Section 2 – please provide answers to the 3 questions A textile factory (located in Calgary Alberta) needs to procure or build a new software solution to capture the data readings from their emissions systems and consolidate them into a government mandated internal internet site (portal) to be reviewed by the department of the environment. The software needs to read 10 emission gasses, in 5 different manufacturing processes. The data will be compiled every hour and the figures posted to a secure portal with a limited number of allowable viewers. The date is July 20-2012 and the portal has to be ready by April 1-2013, or the company will be fined $5,000 per day for non-compliance by the government. The department of the environment has provided a detailed specification of the data requirements and the exact format to be displayed in the portal. After checking the IT department availability, the company has nobody skilled or available to complete the project, however a senior PM from the company has availability to manage the activity. A “Buy” decision has been made. (A) Define the SOW in bullet form that would be required to properly define the scope, making any necessary assumptions as to the specifications required. A software solution for enabling the capture of date readings from the emission systems must already be ready on or before April 1, 2013. Such software must be able to read 10 emission gasses in 5 different manufacturing processes. The software solution must be able to compile the data every hour Figures and data analyses should be posted to a secure portal with a limited allowed number of viewers. This shall also be ready and running by or before the said date stimulated also for the software solution deadline. Details and specifications should be conforming to the requirements and formatting specified by the department of environment. (B) The SOW will be included in an RFP document to be released to several pre-qualified vendors. Outline the remainder of the content of the RFP which is to be sent to perspective suppliers. Terms and conditions of the project: the project must be accomplished on or before April 1, 2013 Data and Management requirements: software solution must be able to compile the data every hour. Figures and data analyses should be posted to a secure portal with a limited allowed number of viewers. Payment and Provisions: Fees and expenses that will be incurred for the development of the software solution (C) There are 2 local IT companies that have a track record of success with this type of portal. One has some capacity and has worked with the Textile Company before, and the other has limited local capacity. Another IT firm, based in Toronto, has done this exact type of portal recently for a company in northern British Columbia. The VP of sales for the Textile factory also has a brother who owns a small IT company specializing in retail websites. Which sellers should be part of this procurement, which should not and state the reasons why or why not? Sellers that should be part of the procurement are the ones with similar experience in handling similar projects. Sellers with proven records of prior performance are well also qualified for procurement. The firm should be able to provide sound consulting and recommendations for the development of the system. Section 3 (9 pts) – please provide answers to the 3 questions A farmer has been in a family owned farming business for many years. He does all of the work on his farm himself. He wishes to expand his business but needs to focus his efforts on the business development plan and expansion and spend less time in the day to day work of the farm for a 6 month period. To do this, he would like to procure much of his needs rather than doing the work himself. His daily activities include: milking 10 cows, collecting eggs from 50 chickens, picking 10 varieties of vegetables, delivering the goods to the local wholesale market 2 miles away. He also has periodic activities such as plowing fields, planting seeds, harvesting hay, tending to the animals, maintaining his 4 work vehicles in and general carpentry maintaining 4 buildings. He also places weekly orders and picks up general materials he needs around the farm, such as gasoline, office supplies, feed, building materials etc… (A) Define the various types of procurement involved and explain which would apply to the various goods and services involved Since most, if not all, of his tasks are routinary and are scheduled and planned, this kind of procurement is under the category of “Routine buys of Commercial-Off-The-Shelf items or purchased services.” Also, the purchase of materials such as gasoline, office supplies, feed, building material, etc, can be classified under Commercial-Off-The-Shelf (COTS) items and are therefore also classified in like manner. (B) Develop a brief risk profile for his procurement There are risks associated with the quality of the procured items and the performance of the procured services. Since many are scheduled procurements, there is the risk with schedule performance. The possibility of the unavailability of commodities necessary in the time-frame necessary for the business operations will also cause consequences on the entire scheme and operations of the business. Since many of the purchases are Commercial-Off-The-Shelf items, they can also be subject to volatile fluctuations in the market and are therefore subject to risks with cost performance, wherein the costs of the items might exceed the budget that was allocated for the procurement of these items. A partner can be established for these routinary services. A partner is defined as a “firm with whim the company has an ongoing buyer-seller relationship, involving commitment over an extended time-period, a mutual sharing of information and a sharing of risks and rewards resulting from the relationship” (Fleming, 2003). This arrangement shall significantly reduce the risk of procurement since information is generally shared by both parties and proper scheduling adjustments can be more easily and flexibly adjusted in accordance to the needs and compliance with each other. (C) Describe how he would solicit responses for his needs The farmer can solicit price quotations from neighboring stores for the necessary items and goods that he routinely needs. For the services, he could request a pricing quotation from unions or manning agencies which can provide manpower for the services that he requires. Section 4 – please provide answers to the 4 questions. (A) For any project situation requiring procurement management, briefly outline the 4 phases of the procurement cycle and the impact that proper procurement has on the overall project. Procurement definition – this is where specifications and definitions are identified and set for the project. This shall dictate the scope and limitations of the procurement project also with respect to the overall project. The statement of work shall also be formulated and the demand and necessities will be known in this phase Seller Selection – it is crucial to filter sellers whether they are really qualified and good candidates for the procurement of the commodities required by the company. it is important to sift through the proposals of sellers and evaluate the options that are presented to the company. Seller Performance – for the overall success of the project, one must have a good monitoring and feedback system wherein changes and deliveries are properly monitored in order to ensure that the procurement is properly done and implemented. (B) Given any project situation, analyze those factors that are important when firms need to qualify and select suppliers for a project requirement. It is very important to consider suppliers which have a good previous record on fields related to that of the 'to purchased' item, commodity or service. Risks should also be driven to minimum and acceptable levels for all parts of the procurement system. That is why, from the very first step of the procurement, requirements must be clearly identified. This shall then trickle down to choosing the best seller for the project. This can be achieved by employing qualified sellers to submit their quotations for the procured items. Then, proper supervision and management is necessary to oversee that such factors are maintained and accomplished in order to have a successful project implementation. (C) After the receipt of a proposal or competitive proposals for a major construction contract, determine the key factors used when negotiating an agreement or evaluating competitive proposals and establish a negotiating strategy. One very important factor would be the cost of implementation of the procurement. This shall be largely influential in choosing the right seller since every business has a goal of optimizing its profit margin, and thus driving its costs also to the minimum. But costs should not be the only basis for a contract decision. The quality of work should also be put into consideration since there is a known and established trade-off between quality and cost. Depending on the need of the company and how much is the wiling compromise for the quality, the management should decide accordingly. The time constraint is also an important consideration. The effectiveness of the implementation is measured with the swiftness of the accomplishment of the project. (D) After the completion of a large furniture manufacturing procurement project spanning 2 years, 10 suppliers and several subcontract arrangements, it is time to close out the procurement. Explain the steps and the process involved in completely closing the project. What activities would be involved? Firstly, there should be a work evaluation performed for all the procurement contracts that were established. It should also be noted whether the project was finished right on the agreed schedule in accordance with the budget and quality established upon the agreement. The agreements must be reviewed and the project must be inspected to ensure that all the amendments and conditions were and are satisfied by each supplier and every sub-contractor. Documentation of the operations and the record of purchases should also be prepared for future references. Section 5 – please provide answer Briefly describe why proper procurement management is important to any business. What are the benefits of proper procurement management and how does it contribute to the overall success of a business? Proper procurement management practices is very vital to any kind of business since in any kind of business, it is important to note, that there is always a trade or exchange of whatever commodities or goods (Fleming, 2003). It is valuable that such a system is well defined and organized. In any kind of project, one cannot start the operations if there are missing components to begin with. Therefore, procurement management bridges this kind of dilemma by establishing and working with the constraints of the project in order to accomplish the business objectives in a timely fashion. It should also be worth highlighting that a good procurement system will also enable the business to gain and develop systems in order to procure the best sources of their required commodities. By establishing a default system for the procedures in procuring items and goods, the company is set to a better position in order to take advantage of the field and acquire the best option. In conclusion, good procurement management contributes and directly correlates to the success of a business. By doing the initial parts of the project in a very organized manner, savings are generated. For one, time is engaged in the most manageable manner in order to prevent delays and conflicts of schedules in the implementation of the project plan since materials and commodities need not be scarce when they are needed in the operations. Secondly, hard savings in terms of purchase dealings and best pricing alternatives are being employed when such good practices are in place. References Fleming, Quentin W. (2003). Project Procurement Management. First Edition. FMC Press. Pp. 59-166 Read More