Chapter 11 Summary: Conduct Procurements 2 of 2

1. Ethics p. 191
a. Intro: In doesnt matter how honest you are, all
temptation should be removed. PMs rarely have
delegated procurement authority, on purpose. This is
to avoid kickbacks, gifts, graft, etc.
Often, the purchasing is given to a procurement
department agent, often called a buyer.
Larceny and bribes are a type of larceny, can also
happen in other ways, seen as favours. The paramount
rule? All sellers must be kept on an equal process.
E.g. RFP process: A bidders conference is held to
answer all questions and provide all answers to all
people at the same time.
The perception of doing something wrong can be just as
devastating as doing something wrong.
Bottom line? Buy your own lunches, etc.play in your
own sandbox.
2. Price Analysis, Cost analysis, and independent cost
estimates. Often outside consultants are engaged to
prepare an independent estimate of major new jobs. Why is
this a good thing? P. 193
a. Price: p. 194
i. Type of analysis where each of the sellers bottom
line proposals are compared An RFP could ask for
a price breakout of each line item (per a high level
WBS). This would help the buyer be comfortable
that the seller actually knows what they are
talking about.
b. Cost: P. 194-5

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i. This is a detailed look. GREAT detail. Also
includes burdened rates (general admin,
overhead).
ii. Used to assess the proposed costs on both cost
reimbursable and T&M contracts
iii. The analyst will determine what is reasonable, and
aim to compare apples and apples.
c. Independent: P. 195
i. Seniors may ask for further clarification that the
sellers proposed costs are reasonable. This is
usually common in advance of providing a major
award.
3. Special Issues: P. 196
a. Late Seller Proposals:
i. Usually, there is a deadline, and all proposals have
to be in by the deadline. What will you do if the
most qualified source is late? Remember: The
primary mission is to implement and complete a
project, successfully.
b. Unsolicited proposals: P. 197
i. And if you get a proposal you never asked for?
Might be good ideas in that proposal. Brainstorm
what you should do / will do.

c. Alternate (non-responsive) approach proposals:

P. 198
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i. This is when the seller responds to your RFP with
an even better idea. Do you hold another
competition? Usually a criterion is put in the
original weighting model to give extra points for
creative and innovation.
4. Issues for Negotiation: P. 198
a. Who negotiates better? Asia? Middle East? Canadians?
Why and why not?

b. What issues do you need to decide prior to negotiation?

i. Who is in charge?
ii. List your top 5 things you need to do, in order, to
strategize what you need to do to prepare for
negotiation.

c. Best and Final Offer:

i. Usually centered on a price point.
ii. But could include, schedule, warranty, options,
and other things.
5. Forming a Procurement Team to Manage Complex
buys P. 200-205
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a. Traditional Roles of the PM, FM, vs. project teams:

i. Who should be on the team, and what strengths
will they bring? Create a mini RACI

b. Issue: Just where does each project fit into the company
organization?
i. If you have a PMO, this was strategized, and the
project belongs to a sponsors department etc.
c. Authorities, duties, and respons
i. See pg. 205 for the procurement teams mission.
6. Source Selection and Managements Approval: P. 205
a. This is when the responses are review and evaluated to
pre-defined criteria. It is very important to have the
right people doing the evaluation, and to get
meticulous records of the process and results. Why?
SV: Demonstrate sample

7. Contract Award and Go-Ahead: P. 206

a. You got the award!!! Now what? Depending where you
work, it still could be a lot of time before you begin. You
may have to be trained, permissions to systems to set
up, access to premises, parking, kickoff meetings, etc.
At Enbridge, we needed 3 weeks notice before a
contract person was allowed on site.
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