Blog Number 8

In my most recent class in project management we talked about Procurement Management. What is procurement management? Procurement means acquiring goods and/or services from an outside source. And Project procurement management means to Acquire goods and services for a project from outside the performing organization.
Some processes included in Project procurement management are:

• Planning purchases and acquisitions: Determining what to procure, when, and how.
• Planning contracting: Describing requirements for the products or services desired from the procurement and identifying potential sources or sellers.
• Requesting seller responses: Obtaining information, quotes, bids, offers, or proposals from sellers, as appropriate.
• Selecting sellers: Choosing from among potential suppliers through a process of evaluating potential sellers and negotiating the contract.
• Administering the contract: Managing the relationship with the selected seller.
• Closing the contract: Completing and settling each contract, including resolving any open items.

Why would outsourcing be a good thing to do? Here are some reasons for outsourcing:

• To reduce both fixed and recurrent costs.
• To allow the client organization to focus on its core business.
• To access skills and technologies.
• To provide flexibility.
• To increase accountability.

In class there was also a discussion about the all around love for contracts. However I believe some contracts to be a great asset, as it is a mutually binding agreement that obligates the selling to provide the specified products or services and obligates the buyer to pay for them. This makes it so one side doesn't get "screwed over" by making both sides fair. Contracts show clarity to the responsibilities and focus on key deliverables for a given project. Due to contracts being legally binding, there is more accountability for delivering the work as stated in the contract.

And just to finish off want to talk about the types of contracts that are used in different situations such as:

• Fixed price or lump sum contracts: Involve a fixed total price for a well-defined product or service.
• Cost reimbursable contracts: Involve payment to the seller for direct and indirect costs.
• Time and material contracts: Hybrid of both fixed price and cost reimbursable contracts, often used by consultants.
• Unit price contracts: Require the buyer to pay the seller a predetermined amount per unit of service.

One single contract can actually include all four of these categories, if it would make sense for that particular procurement.