Contract Award Project Plan

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Contract Award Project Plan Powered By Docstoc
					     Project Contracting

Procurement & Quality Management

              Unit 6:
 Contract Administration and Contract
              Closure
               Today’s Agenda

 Recap of Unit 5
 Contract Administration and Contract Closure
 Class Exercise
             Recap of Unit 4

 What do you remember about Unit 5?
      Today’s Learning Objectives

 Define the contract administration and contract
  closure process
 Describe the contract change control system
 Summarize the issues and challenges of
  procurement management
            Contract Administration and
                 Contract Closure
  The process of managing the contract and relationship between
the buyer and the seller and ultimately completing and settling the
                              contract
                                        Project
                                      Procurement
                                      Management

   1)               2)           3)             4)            5)                6)
  Plan Purchases                  Request
                     Plan                        Select       Contract      Contract
         &                         Seller
                   Contracting                   Sellers       Admin        Closure
   Acquisitions                  Responses



Project    Procurement     Request         Seller      Contract       Seller         Contract
 Start     Management         for        Proposals      Award        Delivery        Complete
               Plan        Proposal
                                                                     PMBOK, 3rd edition
                       Contract Administration
   Process         Description               Inputs                 T&T                 Outputs

Contract         Managing the    Contract                   Contract change     Contract
Administration   contract and    Contract Management Plan   control system       documentation
                 relationship    Selected Sellers           Buyer conducted     Requested changes
                 between buyer                               performance review   Recommended
                 and seller      Performance reports
                                 Change requests            Inspections and     corrective actions
                                                             audits               Organizational
                                 Work Performance info
                                                             Performance         process assets
                                                             reporting            Project management
                                                             Payment system      plan
                                                             Claims              Procurement
                                                             administration       management plam
                                                             Records mgmt        Contract
                                                             system               management plan
                                                             IT



                                                                             PMBOK, 3rd edition
            Contract Administration

 Two key objectives during contract administration:

      Monitoring of seller performance to ensure contractual
       obligations are being met

      Management of changes to seller’s authorized scope
       using defined change control process
                       Change Control
 Changes in project scope are inevitable
 However, once scope is set, all changes must be
  scrutinized through a formal change control process
 The change control process should include:
      Precise description of the change to scope
      Impacts to the project’s cost, quality and schedule
      Approval process by the appropriate personnel
          Use the sane people to evaluate changes as on the original
           contract where possible.
      Document all changes
                    Change Control
 Changes become progressively more expensive
  to implement as the project progresses

       Project’s
       Life Cycle                                                               Cost of
Cost




                                                                                Implementing
                                                                                Changes




        Concept     Definition           Execution              Impl

                                 Time


                                        Source: Q.Fleming, Project Procurement Management, 2003
                                 Contract Closure
   Process     Description                   Inputs                    T&T                  Outputs

Contract     Completion and      Procurement Management Plan   Procurement audits   Closed contracts
Closure      settlement of the   Contract Management Plan      Records              Organizational
             contract            Contract Documentation        management system     process updates
                                 Contract Closure Procedure




                                                                                PMBOK, 3rd edition
                 Contract Closure

 The desired way for a contract to end is:
      The seller satisfies the statement of work
      All deliveries are made, final payments made
      Administrative documents are filed
      Lessons learned completed
   Unfortunately, not all procurements end this way
   Contracts can be terminated as follows:
      Termination for cause or default
      Termination for convenience
      Absolute right to terminate the agreement
                 Contract Termination
 Termination for Cause or Default
      Normally due to the actions of the seller not satisfying
       the requirements of the contract
      Must be a “material” breach of contract
          Trivial actions by the seller will not likely provide cause
 In cases of breach, the seller:
      May be unable to recover costs incurred
      May not be entitled to profit from work completed
      May be liable for compensatory damages that the buyer
       incurs to otherwise complete the procurement
                 Contract Termination
 Termination for Convenience
      Reserves the right for the buyer to terminate based on
       reasons such as:
          Elimination of the need
          Technological advances
          Budgetary changes
          Anticipated profits not realized
 The buyer normally covers expenses incurred to
  date and a reasonable profit for the work completed
             Contract Termination
 Absolute Right to Terminate
     Contract provision allowing either of the parties
      to cancel their contract by giving notice
     Rarely used – sometimes used in contracts for
      professional services
               Settlement of Claims
 Claims can be settled as follows:
      Negotiation between the parties
      Mediation
      Arbitration
      Litigation
 The most desirable if often negotiation – i.e.
  resolution through discussion, compromise, etc.
 Litigation is often least desirable due to high legal
  costs involved
        Administration and Claims
 Project Closeout checklist
     Product verification
     Archiving



 Lessons Learned
                    Next Week

 Unit 7 – Introduction to Quality Management
 Reading:
     Quality Management text: Chapter I

				
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