answer the 4 question attach

Project Procurement Management Chapter 11: Conducting Procurements (2 of 2)

Week 11

Who Can Lead the Solicitation Process?  Project Managers?

Sometimes, but generally lack Delegated Authority

 Procurement Specialists

In the Government, the “Contracting Officer” Receives specialized training, including Ethics, may require financial disclosure

Ethics Defined (Miriam Webster)  The discipline dealing with what is good and bad and with moral duty and

obligation  A set of moral principles : a theory or system of moral values

 The principles of conduct governing an individual or a group; a guiding philosophy; a consciousness of moral importance

Ethics in the Procurement Process

What is the Purpose of Ethics in the Procurement Process?  To maintain the integrity of the solicitation / procurement / acquisition /

contracting process  To present a “level playing field” for all participants in the process

 To establish the expected behavior of these leading the procurement process

Ethical Challenges within the Procurement Process  A Matter of Perception: e.g., Frequent contact with specific participants,

Personal relationships extending into the procurement process, Financial interests in seller companies, Improper influence on the decision / outcome

 Overt Acts: e.g., Bribery, gifts, expense reimbursement(s), gratuities, insider information, including those of your spouse and family

Ethics in the Procurement Process

The Ethical “Bottom Line” “. . . buy your own lunches, pay for your own football tickets, save up for your own trip to Italy, etc. It is just not worth the risk of sending out the wrong impression.” (PPM, p.193)

Other Ethical Issues in Business:  Pay Equality  Deceptive Accounting Practices

 Conflicts of Interest

 Sexual Harassment  Discrimination

 Social Media Networking

 Data Privacy

Ethics in the Procurement Process

Price Analysis  Element-by-Element Comparison of Proposals Received

May not be available on Firm-Fixed-Price solicitations

 Aim of Analysis is to determine “reasonableness” of price(s) received relative to the market, industry, and material

 Ultimately, provides management with confidence that sellers understand the process (via consistency in pricing) and/or, uncertainty in understanding (via disparate pricing)

Cost Analysis  Review of Costs Identified

Again, may not be available on Firm-Fixed-Price solicitations

 Focuses on known costs: e.g., Labor rates, overhead, reimbursables, etc.

 Again, seeks reasonableness and confidence in understanding

Analysis of Procurement Elements

Cost Estimate Analysis  Internal Preliminary Cost Estimates

Generally prepared in advance of solicitation process to set expectations

May be “tainted” by “too much knowledge” of process and product

 Independent Cost Estimates

Performed when requested by Senior Management to validate (unexpected / inconsistent) results

Expectation is that there is NO knowledge if solicitation results

May be “general” in nature, i.e., a range of costs or rounded to general number Expected range for deviation of actual results need to be identified in advance – i.e., $100-million Independent Estimate versus $120-million / $90-million solicitation results: Are they “reasonable?”

Analysis of Procurement Elements

Late Proposals  The “Hard Line:”

“Late proposals are no longer accepted under any circumstances. There is no opportunity to blame the U.S. Postal Service or government mishandling. If a proposal is late it is not accepted.” (PPM, p.196)

 Typically the position of government solicitations  “Inconsistencies” may be waived in Private-sector procurements

Is this a good idea or not?

 What is the purpose of the Procurement? - To successfully implement a project, product, or service

- To maintain the integrity of the procurement process

Does waiving “inconsistencies” do so?

“Unique” Proposals Received

Unsolicited Proposals  Those that seek you, not that you seek.

- Are they of value?

- Are they desired?

- Are they accepted?  Should they trigger a new solicitation?

 Are they an opportunity for a negotiation?

“Unsolicited proposals can be a great source of new technical ideas. Do not spoil these sources by competing someone’s ideas to save a few dollars initially, but do great harm in the long-term relationship of both companies. In procurement, building long-term business relationships is often more important than short term profits.” (PPM, p.197)

“Unique” Proposals Received

Alternate / Non-Responsive Proposals  When a seller “thinks that they have a better idea” to that which you seek  Should be treated like an Unsolicited Proposal

 Becomes an opportunity for a negotiation?

Issues for Negotiation  Professional Negotiators: “These individual share a common trait: They

can talk for hours . . . And commit themselves to doing nothing!” (PPM, p.198)

- Who is in charge - What is the Strategy

- Win-Win, or Take-no-Prisnors

“Unique” Proposals Received

The BAFO The “Best and Final Offer”

 Typically price focused  Should consider: Schedule,

Warranties, Options

Traditional Roles  The Project Manager

Defines and authorizes the work to be done (the SOW)

Defines the timeframe for the work to be done (the Schedule)

Provides the necessary finds to accomplish the work (the Budget)  The Functional Manager

Reviews, takes exception to, and ultimately approves the Project Manager’s plans

Provides the needed staff to the project/PM

Oversees and/or supervises the tasks being performed

Forming Procurement Teams

Levels of Authority of the PM /FM “The matrix organizational form is an attempt to combine the advantages of the pure functional structure with the project organizational structure. This form is ideally suited for companies . . . that are ‘project driven.’ . . . The project manager has total responsibility for project success.” (PPM, p.203)

Forming Procurement Teams

Project Procurement Management, Figure 11.1: A Continuum of Project Organizational Arrangements

Traditional Responsibilities (PPM, p.205)  To organize and plan for the procurement

(Planning for the Procurement)  To define the legal contractual document

(Planning for the Solicitation)

 To formally implement the contractual arrangement (Solicitation and Source Selection)

 To monitor and manage and conclude the performance of the procurements (Contract Administration and Contract Close-out)

The Final Two Steps  Source Selection and Management Approval – Based upon predetermined

criteria, How long does it take to obtain management’s approval?

 Contract Award and Go-Ahead – Codified by signing the contract; Begins at the “Kick-off Meeting”

Complex Procurement Team Responsibilities

Project Procurement Management Chapter 11: Conducting Procurements (2 of 2)

PPM Week 11 Discussion Question

Question 11: What are the ethical considerations surrounding project procurement, and what systems can be put in place to minimize the possibility of ethical lapses within the process?

Project Procurement Management Chapter 11: Conducting Procurements (2 of 2)

Week 11