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PROJ410 (Contract and Procurement )All Weeks Discussions , Case Studies, Midterm
and Final Exams
PROJ410 Week 7 Case Study 3 What are the Cost Savings when a company
outsources
Top of Form
Page 1
allow the outsourced firm autonomy to create its own policies and procedures with
no regard for the project's goals
2. (TCO 4) Under this pricing contract, the buyer pays the seller's actual costs and a
fixed fee determined as a percentage of the estimated project costs. (Points : 5)
CPFF
CPF
CBF
CPIF
3. (TCO 7) Which step(s) should a buyer take to evaluate the seller's proposal?
(Points : 5)
Select sellers
Plan contracting
7. (TCO 6) What are some steps to take when communicating with employees that
outsourcing will take place in the company? (Points : 10)
8. (TCO 2 & 6) What typically gets outsourced and what would be the benefits to
outsourcing the items listed? Please list and discuss six reasons. (Points : 10)
9. (TCO 9) What happens after a renegotiation? Why does this happen? (Points : 10)
10. (TCO 8 & 9) What is benchmarking? Give two examples with which you are
familiar, and tell why benchmarking is useful in outsourcing. (Points : 10)
Page 2
2. (TCO 5) What laws should an organization consult before, during, and after a
BPO? Describe two of the laws and how you would include this in a presentation to
executives. (Points : 30)
3. (TCO 5 & 7) List and describe five components of a BPO. Then summarize why
each of the items that you chose are important to the BPO process. (Points : 30)
4. (TCO 2 & 5) Describe in detail how the negotiation process works when this
process is done correctly. Then convince the executive team that the legal team has
to be represented in the negotiation process. (Points : 30)
5. (TCO 8 & 10) What is early termination? Give an example and then discuss how
can this be avoided or minimized. Persuade the legal team that the verbiage to
accomplish this needs to be included in the BPO agreement. (Points : 30)
6. (TCO 5 & 6) What are some considerations when a company will be transferring
employees to the outsourcer? Anticipate issues that will be brought up by the
employees and the responses that the company will provide. (Points : 30)
Bottom of Form
cost-reimbursable contract, the seller pays the buyer's actual costs, and a
percentage of the total project costs
cost-reimbursable contract, the seller pays the buyer's actual costs, and all of the
total project costs
cost-reimbursable contract, the buyer pays the seller's actual costs, and a
percentage of the total project costs
cost-reimbursable contract, the seller pays the buyer's actual costs, and none of the
total project costs
2. (TCO 2) The difference between the project manager and contract administrator
is: ______.
(Points : 5)
the project manager is responsible for the project-related coordination, while the
contract manager is responsible for administering the contract
the contract administrator has the authority to make all contract-related decisions,
like approving a change order. The project manager does not have this level of
authority.
the project manager is responsible for the administering of the contract, while the
contract manager is responsible for project-related coordination.
the project manager has the authority to make all contract-related decisions, like
approving a change order. The contract administrator does not have this level of
authority.
4. (TCO 2) Senior management typically has different reasons for issuing the
directive to outsource than management responsible for the business process.
Senior management typically decides to evaluate outsourcing because: ______.
(Points : 5)
5. (TCO ) When notifying third parties in a transition plan, who would not need to be
notified? (Points : 5)
Third-party vendors
Customer's competitors
Customer's clients
7. If a contract is seen through its full term, list two items that should be completed
as part of contract close-out? What is a close out manager? Why is deliverable
acceptance documents so important?
8. (TCO 8) What are the two ways to rank the seller's proposals before selecting a
seller? (Points : 12)
10. What are some of the common techniques used for establishing service levels?
Page 2.
1. (TCO ) What is benchmarking? Please support your answer. Defend the cost of
benchmarking in an industry. (Points : 30)
3. (TCO ) What are the elements of a Request for Proposal (RFP)? Please list and
discuss five of the elements. (Points : 10)
4. (TCO ) Part 1: Discuss the following types of contract pricing: (a) fixed price, (b)
cost-plus price, (c) time & materials, and (d) unit price. Part 2: Explain the
appropriate utilization of each contract pricing type and the impact of risk to the
contracting parties. Part 3: What type of contract pricing structure misaligns the
buyer's motivations with the seller's? (Points : 30)
5. (TCO ) List and describe five components of a BPO. Then summarize why each of
the items that you chose are important to the BPO process. (Points : 30)
6. What does the outsourcing of the HR function involve? What are pros and cons of
HR Outsourcing? What do you think are three critical considerations that you must
include in the implementation plan for this outsourcing transition?
1. (TCO 2) A firm should concentrate on its _____ processes while outsourcing its
_____ processes. (Points : 5)
overhead, core
core, non-core
non-core, overhead
non-core, core
2. (TCO 5) To assess the impact of a contract on both the buyer and seller, an
analysis of exposure can be completed. Categories analyzed in this exposure
analysis include all of the following except: ______. (Points : 5)
6. (TCO 4) What is the difference between the Cost-Plus-Fixed Fee (CPFF) and the
Cost-Plus-Incentive Fee (CPIF) contract structures? (Points : 12)
7. (TCO 6) List three commonly used evaluation criteria listed in an RFP and explain
why a buyer would want this information before selecting a seller. (Points : 12)
Page 2
1. (TCO 2) Part 1: List and define the six phases of the project procurement
management process. Part 2: How could you organize a simple project such as
renovating a bathroom into the six steps in the project procurement management
process? Part 3: The buyer determines the contract pricing structure during which
step of the project procurement process? (Points : 30)
2. (TCO 1) Part 1: Discuss the following types of contract pricing: (a) fixed price, (b)
cost-plus price, (c) time & materials, and (d) unit price. Part 2: Explain the
appropriate utilization of each contract pricing type and the impact of risk to the
contracting parties. Part 3: What type of contract pricing structure misaligns the
buyer's motivations with the seller's? (Points : 30)
3. (TCO 3) Evaluate the most common business drivers for outsourcing business
processes. Which two drivers would be among the most important? (Points : 30)
4. (TCO 1) List and describe the directives to consider the process of outsourcing if
you are a senior manager. (Points : 30)
Top of Form
Bob Smith, CEO of Smiths Information Services, Inc., was studying the replacement
of the company's data center by an outside service. Smiths Information Services,
located in Lexington, Massachusetts, was in the midst of a corporate overhead
reduction program. As part of this program, Bob had been assigned the task of
reviewing opportunities in outside sourcing for data center services. He was
expecting a report on this issue at the next executive meeting in three days.
The data center at Smiths Information Services was created in the mid-1980s and
has grown very rapidly. Mainframes were installed first, followed by AS400s, and
then servers that were rack mounted. Disk storage, at one time, was at a premium,
but has since gone down in price. Cooling for the data center has gone up as more
and more servers and disks were installed. This cost, along with the electricity cost
to run all of the devices in the data center, has Bob Smith worried that the cost of
doing business is getting out of control.
Along with the rising hardware and software costs, the number of employees
needed to run this data center has grown considerably. The cost of running a data
center 24/7 is becoming rather large, and this is another issue that Bob Smith is
concerned about at the moment. The growth potential for the organization is very
positive, which means that more data will be stored, which will result in higher costs
in all areas of the data center unless cost savings are found.
Outside Services
The CIO has felt that this was coming sooner or later, and has already been quietly
investigating the idea already. There are many options from which to choose,
including: a local data center, a well-known data center, and a data center that is
located overseas. Each of these solutions has pros and cons, and one big issue is
the security of the data. Some of the other issues include service-level agreements
that have to be hammered out, HR issues that will deal with the local and remote
staff members, and other issues, such as informing or not informing the customer
that Smiths Information Services will be outsourcing the data somewhere.
Deadline
The CIOs job is to gather as much data as possible from outside sources, analyze
the data, and then come up with the best choice. The deadline will be the next
executive monthly meeting, which meets in two weeks.
Your Assignment:
Assume that you are CIO. Prepare the analysis requested from Bob and be prepared
to present it at the next executive monthly meeting.
Grading Rubric:
Points
Criteria
Correlation of the assessment with the TCOs outlined above and material covered
through Week 3.
5
20
Assessment of how each of the three (3) outsourcing alternatives impact your
business decision and also whether or not it might be helpful or detrimental to your
core business.
Assessment of any issues that may arise (both in the short-term and long-term) for
each outsourcing alternative.
Assessment of the type of contract chosen for each outsourcing alternative. Provide
a rationale for your choice.
Assessment of the evaluation criteria used to rank the proposals. Again, a rationale
for your choice needs to be included.
Total: 60
(Due Week 5)
This case study allows you to choose the business process that will be outsourced.
You must first decide on the company, and if you use a real one, please do not
reveal any names or trade secrets. This may also be a fictitious organization if you
choose to use one.
Your Assignment:
For those services that you intend to outsource: Establish the preliminary
performance targets / level of service that will be required from the selected
vendors; Establish the type of contract that you will use for each contract (i.e., fixed,
cost-plus, reimbursable, unit); Determine the evaluation criteria that you will use to
select the preferred vendor(s) (e.g., low price, best value, etc.) [Are there different
evaluation criteria for different business units? Why?]; Identify the number of
vendors that you will select to provide the services that will be outsourced (i.e., one
vendor for all services versus individual vendors with specific expertise in each of
the services to be outsourced); and Construct a timeline that summarizes the bid
activities and time duration for each contracting process (i.e., plan purchases and
acquisition through select sellers).
Grading Rubric:
Points
Criteria
Correlation of the assessment with the TCOs outlined above and material covered
through Week 5.
25
Assessment of which business processes you would outsource. Determine whether
it would be cost effective to outsource the business unit, and also, whether or not it
might be helpful or detrimental to your core business.
Assessment of any issues that may arise (both in the short-term and long-term) for
each outsourced business process.
Assessment of the type of contract chosen for each business unit outsourced.
Provide a rationale for your choice.
Assessment of the evaluation criteria used to rank the proposals. Again, a rationale
for your choice needs to be included.
15
Assessment of timeline for bid activities and time duration for each contracting
process.
Total: 70
PROJ410 Week 7 Case Study 3 What are the Cost Savings when a company
outsources
(Due Week 7)
Background:
In this case study, please choose from one of the areas in an organization that may
be outsourced and prepare a cost savings report.
Your Assignment:
Prepare an executive summary document that focuses on the cost savings of the
outsourcing / contracting process for the business process that you decide to
outsource. Your analysis must include the steps below. You need to JUSTIFY your
decision for the business process outsourced (e.g., accounting, editorial,
photography, publishing, distribution, printing, layout, advertising, editing, articles,
etc.); and
For the service that you intend to outsource: Establish the preliminary performance
targets / level of service that will be required from the selected vendors; Establish
the type of contract that you will use for each contract (i.e., fixed, cost-plus,
reimbursable, unit); Determine the evaluation criteria you will use to select the
preferred vendor(s) (e.g., low price, best value, etc.). [Are there different evaluation
criteria for different business units? Why?]; Identify the number of vendors that you
will select to provide the services to be outsourced (i.e., one vendor for all services
versus individual vendors with specific expertise in each of the services to be
outsourced); and Construct a timeline that summarizes the bid activities and time
duration for each contracting process (i.e., plan purchases and acquisition through
select sellers).
Grading Rubric:
Points
Criteria
Correlation of the assessment with the TCOs outlined above and material covered
through Week 6.
25
Assessment of which business processes you would outsource. Determine whether
it would be cost effective to outsource the business unit, and also, whether or not it
might be helpful or detrimental to your core business.
Assessment of the type of contract chosen for each business unit outsourced.
Provide a rationale for your choice.
Assessment of the evaluation criteria used to rank the proposals. Again, a rationale
for your choice needs to be included.
15
Assessment of timeline for bid activities and time duration for each contracting
process.