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A Guide to Project Management

Pa 19073 3299 usa chapter 12 project procurement

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Unformatted text preview: For example, a prospective seller might be required to propose a project manager who has specific qualifications--for example, a PMP--before the remainder of the proposal would be considered. .4 Independent estimates. For many procurement items, the procuring organization may prepare its own independent estimates as a check on proposed pricing. Significant differences from these estimates may be an indication that the SOW was not adequate, or that the prospective seller either misunderstood or failed to respond fully to the SOW. Independent estimates are often referred to as should cost estimates. geE L geE PL P 12.4.3 Outputs from Source Selection .1 Contract. A contract is a mutually binding agreement that obligates the seller to provide the specified product and obligates the buyer to pay for it. A contract is a legal relationship subject to remedy in the courts. The agreement may be simple or complex, usually (but not always) reflecting the simplicity or complexity of the product. Contracts may be called, among other names, a contract, an agreement, a subcontract, a purchase order, or a memorandum of understanding. Most organizations have documented policies and procedures specifically defining who can sign such agreements on behalf of the organization, typically called a delegation of procurement authority. Although all project documents are subject to some form of review and approval, the legally binding nature of a contract usually means that it will be subjected to a more extensive approval process. In all cases, a primary focus of the review and approval process should be to ensure that the contract language describes a product or service that will satisfy the identified need. In the case of major projects undertaken by public agencies, the review process may even include public review of the agreement. 12.5 CONTRACT ADMINISTRATION Contract administration is the process of ensuring that the seller's performance meets contractual requirements. On larger projects with multiple product and service providers, a key aspect of contract administration is managing the interfaces among the various providers. The legal nature of the contractual relationship makes it imperative that the project team be acutely aware of the legal implications of actions taken when administering the contract. 156 NAVIGATION LINKS ACROYMNS LIST ACRONYMS LIST ACROYMNS LIST A Guide to the Project Management Body of Knowledge (PMBOK Guide) 2000 Edition 2000 Project Management Institute, Four Campus Boulevard, Newtown Square, PA 19073-3299 USA Chapter 12--Project Procurement Management Contract administration includes application of the appropriate project management processes to the contractual relationship(s) and integration of the outputs from these processes into the overall management of the project. This integration and coordination will often occur at multiple levels when there are multiple sellers and multiple products involved. The project management processes th...
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