Part of preparing for a project and the PMP Certification Exam, is proper allocation of time. Much like how the majority of your time managing the project is reflected in the Direct and Manage Project Work process, the majority of your time managing contracts is reflected in the Control Procurements process.
Control Procurements. Managing procurement relationships, monitoring contract performance, and making changes and corrections to contracts as needed.
During this process, the seller must meet the procurement requirements, and the buyer must perform according to the terms of the contract. This includes appropriate and timely payments and also contract change management. Thus, you can see that both the buyer and the seller will work with the procurement agreement to ensure that both parties are fulfilling their contractual commitments.
This process requires significant integration across the project. Here are some examples of integration. There are, of course, others, depending upon the nature of the project:
Scope: You need to verify and control the contractor scope. You should recall that verifying scope is the process of formally accepting the result. As a buyer, you want to make sure the contractor is delivering all the scope and only the scope that was promised. You also need to ensure that no one in your organization is making “constructive” changes to the contract.
Constructive change: When a contractor performs work beyond the contract requirements, without a formal order under the changes clause, either due to an informal order from, or through the fault of, the buyer.
Schedule: The contractors’ deliverables need to be coordinated with other deliverables. Many contracts have milestone payments based on deliveries, and some have incentives based on timely or early delivery. In addition, some contracts have a clause that indicates that late delivery is considered a material breach.
Time is of the Essence is a contract clause that indicates that on-time delivery is mandatory, and therefore, contractually binding. Failure to act or deliver within the stated time frame constitutes a breach of contract.
Cost: You need to ensure that the contractor is paid only for work that’s verified and accepted. If interim payments are scheduled, make sure that you’re approving payments consistent with the results. In other words, if the contractor is scheduled to be 50% complete, yet only 25% of the work is done, make sure that you’re paying 25% of the contract and not 50%.
Quality: You use the same quality control techniques on contractor results as you do for in-house work. This ensures that the deliverables meet the requirements and specifications.
Communication: The contractor needs to submit status reports that you will reference when developing your project performance reports. Many times, contracts will specify the format and timing of the reports.
Risk: Information in the contractors risk log should be integrated with the project risk log. Additionally, there may be risks associated with contracting that you should manage throughout the project.
Obviously, the more contractors you have on a project, the more work this entails. For complex procurements, or for projects with multiple vendors, you might have a procurement administrator or a contracting officer’s representative to provide oversight to the contractor and manage much of this work. This is particularly true when the organization has a centralized contracting department.
Control Procurements: Inputs
The procurement management plan (part of the project management plan) provides guidance on who will manage various aspects of the procurement as well as how to go about it. This includes information on how to use the payment systems, contract change control system, and performance reviews.
You use the baselines in the project management plan and compare them against the work performance reports and work performance data provided by the contractor. You should also compare the performance reports against the actual agreements and the procurement documents.
Change requests can include a change to the statement of work (SOW) for the contract, or to the contract itself.
Control Procurements: Outputs
Work performance information includes cost, schedule, and technical performance information from the vendor. This information will be integrated with the in-house performance information to create work performance reports in the Monitor and Control Project Work process. In addition, performance information about the vendor should be collected. This includes information about potential issues that could result in claims or disputes.
The organizational process assets and the procurement documentation are kept up to date via the records management system. Examples of documentation include
Letters, memos, and meeting minutes
Formal acceptance of deliverables
Throughout the contract performance period, change requests will likely be needed. These need to follow the change process outlined in the contract and go through the project Integrated Change Control process. The buyer is concerned only with those changes that affect the contractual terms. If the seller is making changes that are transparent to the buyer and don’t affect any contractual obligations, those changes are not documented.
As in all control processes, the project team updates project management plan components and project documents to maintain accurate and current records.
There are numerous ways that contracts and contractual relationships can be abused. The Code of Ethics and Professional Conduct addresses opportunities for misconduct in the standards on responsibility and honesty. Be prepared for procurement administration questions to address both ethical as well as technical issues on the exam. Specific standards that are likely to be included in procurement questions include the following:
We protect proprietary or confidential information that has been entrusted to us.
We respect the property rights of others.
We make commitments and promises, implied or explicit, in good faith.
We do not engage in dishonest behavior with the intention of personal gain or at the expense of another.