Procurement Process Essay

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Pages: 6
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Procurement Process
Deanna Thele
CPMGT/302
January 30, 2012
Pamela Hill

Procurement Process
Procurement management is the processes to purchase or acquire the products, services or results needed from outside the project team to perform the work. Project Procurement Management involves not just purchasing products, services or results, but also ensuring that those that are purchased are right for the project, meets standards and is based on project requirements. This life cycle includes tracking from order through deployment and completing with invoice reconciliation.

All projects are defined by the purpose, objectives and deliverables. Properly defining these, as well as the other aspects of the project management plan will …show more content…
A cost-reimbursable contract is a variant of a contract that involves making a payment from the buyer to the seller in reimbursement for the seller’s actual costs. Added to that is a fee that typically represents the seller’s profit. When analyzing costs they are typically broken down into direct costs and indirect costs. Direct costs are defined as the costs that have been incurred only for the purpose of the project. One example of this type of cost can be the salaries of the full time staff members, or equipment purchased exclusively for use in the project. Indirect costs represent costs that refer to more general, broader types of costs, such as administrative costs and general overhead costs. Cost-reimbursable contracts often contain incentive-based contracts in which the seller will receive a bonus payment or incentive if the seller meets or exceeds a series of pre-determined target objectives, such as meeting a particular schedule or keeping the activity below a certain cost.
Time and Materials contracts provide for acquiring supplies/services on the basis of direct Labor Hours at specified fixed hourly rates and materials at cost, including material handling costs if appropriate. Time and Material contracts are used when it is not possible to estimate accurately the extent or duration of the work or to anticipate costs with any degree of confidence.
Life cycle costing
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