Control Procurements manages procurement relationships while monitoring the performance of contracts, taking corrective actions if required, and control of change. It ensures that the work results match the contract.
Most of the project manager’s time with regard to contract management takes place within the control procurements process. It covers monitoring the vendor’s performance and ensuring
that all contract requirements are being met.
The borrower must perform against the contractual terms, and the seller must meet the procurement requirements by ensuring appropriate monthly payments along with contract change management.
It is highly likely that change requests by the to the contract terms and conditions, or the statement of work (SOW). Any such changes occurring in the administer procurements process must of course go through to the project Integrated Change Control process.
In line with all of the PMBOK control processes, within the control procurements process, the project team will be required to update any project management plan components or other project documents in order to maintain adequate and current records. Constructive changes may lead to disputes or claims, which will require negotiation, mediation, or arbitration in order to bring the dispute or claim to a satisfactory resolution.
For projects that need to work with multiple vendors, it might be necessary to employ a procurement administrator to act within the control procurements process.
The impact of the control procurements process causes the need for it to be integrated across the whole of the project, and it is therefore closely linked with the project management processes actions of:
During the control procurements process, the project manager needs to be constantly asking:
The procurement management plan provides all the information and guidance pertaining to the individuals responsible for managing the various aspects of the procurement as well as help contract change control system, between the systems, and performance reviews will be used. This is therefore the major input to support the control procurements process.
Other key inputs to the control procurements process are the project management plan, work performance information, performance reports, approved change requests, and of course the contract.
The project management plan will contain the baselines that are used to compare against the performance reports and work performance information provided by the contractor. Any change requests may affect the contract itself, or the work laid down within the statement of work (SOW).
This entails monitoring the vendors work and their deliverables against the project management plan during the administer procurements process. Vendors request payment for delivered goods or services via seller invoices which should describe the work or services that were completed.
Changes to a contract must first be agreed by all parties concerned, and follow the change control process outlined within the contract itself.
Organizational Process Asset Updates and Procurement Documentation. These consist of organizational policies, procedures, and there are three outputs that relate to contracts:
Information that needs to be communicated in writing to either the vendor or the buyer payment schedules and requests. Sometimes contracts stipulate that payment is made on a predefined performance schedule, and the project manager is responsible for checking that progress, or maybe deliverables are acceptable before the payment is authorized.
PMBOK states that payment schedules and requests are only used when the payment system is outside of the project. If it is internal it is simply called payments within the administer procurements process.
Seller performance evaluation.
This is a written record of the sellers performance against the contract. It will include performance against schedule, requirements, work quality, etc. This information could be used within control procurements to terminate a contract, or to add them to the qualified sellers list.
Other aspects of documentation may include audit results, technical or specialist documentation, formal deliverable acceptance documents, meeting minutes, or letters and memos.
Contract Change Control System.
The purpose is to establish a formal system for submitting contract change requests during control procurements. It should cover:
The System must also contain a tracking system to allocate each change with a unique number to each change and record its status.
Procurement Performance Reviews.
These examine the seller’s performance on the contract during the control procurements process, and can be conducted on a regular basis or at the end of the contract. The reviews may cover:
The payment system will be used to match up the contract number, the statement of work, invoices and accounts payable categories. The records management system is vital for the control procurements process as it keeps all correspondence associated with each contract in good order, including managing and maintaining information, procedures, software, and processes throughout the life of the project and contract.
Inspections and Audits.
Either the buyer or a designated third party will inspect the vendor’s work, and perform audits to check for any deficiencies.
Involves documenting, monitoring and managing changes to the contract. Any changes that can’t be agreed are called contested changes. Contested Changes are also known as claims, disputes, or appeals.
Arbitration is to gain agreement without having to go to court. Another method is called Mediation, and is used to settle claims and disputes in an informal manner aided by an independent party to help settle the claim dispute.
There are two contractual terms used mostly during control procurements, which need special mention here:
This describes an event that is the result of elements of nature, sometimes called ‘acts of god’. A force majeure announced by the party to delay its contractual obligations because of these circumstances that were beyond their control. Examples might be natural disasters, strikes, all bad weather.
This is a contract provision establishing a predetermined award if a party fails to perform as promised within the contract. Liquidated damages can only be in the form of a compensation against the damages and should therefore be in line with the damage cost.
Contested Changes during control procurements can be settled by:
A claim is a demand by a party in a contract for money, property, damages, or the enforcement of a right. If your claim is not honoured, it may result in a lawsuit.
Records Management System.
This is an organized system for contract documentation, tools, procedures, and policies and is vital during the control procurements process.
This provides stakeholders with information regarding the vendor’s progress against contract objectives. This can be done by simply reviewing a contractors status report, or it may require face to face performance reviews including on-site inspections and contract audits.
This ensures that invoices and payments tally with each other, and that the correct amount is being invoiced for the right deliverables at the right time.
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