Chapter 14 - Project Procurement

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Questions and Answers

What is the purpose of a Make or Buy Analysis in project procurement?

To evaluate the cost of different materials needed for the project.

To establish a communication plan for project stakeholders.

To decide whether to create work internally or to hire an external organization. (correct)

To analyze the strengths and weaknesses of team members.

Which document defines the work to be completed during procurement?

Contract Agreement

Request for Proposal (RFP)

Project Charter

Statement of Work (SOW) (correct)

What must buyers do after selecting a seller based on proposals?

Submit an updated Statement of Work.

Immediately begin work without a contract.

Negotiate for lower prices on deliverables.

Award the contract based on evaluative criteria. (correct)

What is the primary purpose of the Request for Proposal (RFP)?

To define the processes sellers will use to submit their proposals. (B) Signup and view all the answers

Which of the following best describes the buyer's responsibilities during the seller's performance phase?

Monitor progress and verify project deliverables. (D) Signup and view all the answers

What is the consequence if communication and negotiation fail during a disagreement?

Legal remedies might be required for contract disputes. (A) Signup and view all the answers

What is the first step in the procurement process after making a procurement decision?

Defining the characteristics of the procurement. (D) Signup and view all the answers

What is one primary reason for outsourcing work in a project?

To access skills or knowledge not available internally (C) Signup and view all the answers

Which phase does the Make or Buy Analysis primarily belong to in the procurement process?

Planning Phase (A) Signup and view all the answers

Which of the following describes what a buyer does in the procurement process?

Contractually agrees upon the procurement terms (A) Signup and view all the answers

What is NOT a term used in the procurement process?

Internalization (D) Signup and view all the answers

During which action is the seller's performance monitored?

Contract Management (C) Signup and view all the answers

In which situation is a Make or Buy Analysis deemed necessary?

When it's unclear whether to outsource (B) Signup and view all the answers

Which of the following is the correct order of the procurement process?

Make or Buy Analysis, Defining the Procurement, Choosing the Seller (C) Signup and view all the answers

What benefit does outsourcing provide concerning project focus?

Allows the team to concentrate on core competencies (C) Signup and view all the answers

Study Notes

Introduction to Procurement

Organizations sometimes outsource work for reasons such as lower cost, accessing skills, or focusing on core strengths.
Outsourcing is called purchasing, procuring, or acquiring goods.
In procurement, the project team acts as the "buyer", while external organizations function as the "seller".
The main steps of procurement consist of the following: Procurement Decision, Make or Buy Analysis, Defining the Procurement, Choosing the Seller, Monitoring the Seller’s Performance

Make or Buy Analysis

Used to determine whether work is completed internally by the project team (Make) or by an external organization (Buy).
Useful when it is not immediately obvious whether to produce deliverables in-house or outsource them.

Defining the Procurement

Documents created to define the procurement process:
- Statement of Work (SOW): This is the detailed scope document describing the work to be completed during procurement.
- Request for Proposal (RFP): This document outlines the process prospective sellers must follow to submit proposals to the buyer.

Choosing the Seller

Potential sellers are identified and sent procurement documents, such as the RFP.
Sellers provide proposals based on the RFP.
The buyer selects the best proposal based on pre-defined evaluation criteria.
A contract is awarded to the winning seller once the proposal has been accepted.

Monitoring the Seller’s Performance

Buyer monitors work progress, verifies deliverables, and manages any issues or changes.
Disagreements between buyer and seller are handled through communication and negotiation, but legal remedies may be used to resolve disputes.

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Description

This quiz covers the fundamentals of procurement, including the main steps involved such as procurement decision-making, make or buy analysis, and defining procurement. Participants will learn about the roles of buyers and sellers and the documentation necessary for a successful procurement process.