The process of obtaining seller responses, selecting a seller and awarding a contract.

Conduct Procurements

Conduct Procurements is the process of obtaining seller responses, selecting a seller, and awarding a contract.

The key benefit of this process is that it provides alignment of internal and external stakeholder expectations

through established agreements.

During the Conduct Procurements process, the team will receive bids or proposals and will apply previously

defined selection criteria to select one or more sellers who are qualified to perform the work and acceptable as a

seller.

On major procurement items, the overall process of requesting responses from sellers and evaluating

those responses can be repeated. A short list of qualified sellers can be established based on a preliminary

proposal. A more detailed evaluation can then be conducted based on a more specific and comprehensive

requirements document requested from the sellers on the short list. In addition, tools and techniques

described here may be used alone or in combination with select sellers. 

For example, a weighting system can be used to:

• Select a single seller that will be asked to sign a standard contract; and

• Establish a negotiating sequence by ranking all proposals by the weighted evaluation scores assigned to

each proposal.

Tools and Techniques

• Bidder Conferences
• Proposal Evaluation Techniques
• Independent Estimates
• Expert Judgment
• Advertising
• Analytical Techniques
• Procurement Negotiations

Selected Sellers

The selected sellers are those who have been judged to be in a competitive range based upon the outcome

of the proposal or bid evaluation, and who have negotiated a draft contract that will become the actual contract

when an award is made. Final approval of all complex, high-value, high-risk procurements will generally require

organizational senior management approval prior to award.

Agreements

A procurement agreement includes terms and conditions, and may incorporate other items that the buyer

specifies regarding what the seller is to perform or provide. It is the project management team’s responsibility

to make certain that all agreements meet the specific needs of the project while adhering to organizational

procurement policies. Depending upon the application area, an agreement can also be called an understanding,

a contract, a subcontract, or a purchase order. Regardless of the document’s complexity, a contract is a mutually

binding legal agreement that obligates the seller to provide the specified products, services, or results, and

obligates the buyer to compensate the seller. A contract is a legal relationship subject to remedy in the courts.

The major components in an agreement document will vary, but may include the following:

• Statement of work or deliverables,

• Schedule baseline,

• Performance reporting,

• Period of performance,

• Roles and responsibilities,

• Seller’s place of performance,

• Pricing,

• Payment terms,

• Place of delivery,

• Inspection and acceptance criteria,

• Warranty,

• Product support,

• Limitation of liability,

• Fees and retainer,

• Penalties,

• Incentives,

• Insurance and performance bonds,

• Subordinate subcontractor approvals,

• Change request handling, and

• Termination clause and alternative dispute resolution (ADR) mechanisms. The ADR method can be decided

in advance as a part of the procurement award.

Control Procurements is the process of managing procurement relationships, monitoring contract performance, and 

making changes and corrections to contracts as appropriate. The key benefit of this process is that it ensures that both 

the seller’s and buyer’s performance meets procurement requirements according to the terms of the legal agreement.

Both the buyer and the seller will administer the procurement contract for similar purposes. Each are required

to ensure that both parties meet their contractual obligations and that their own legal rights are protected. The legal

nature of the contractual relationship makes it imperative that the project management team is aware of the legal

implications of actions taken when controlling any procurement. On larger projects with multiple providers, a key

aspect of contract administration is managing interfaces among the various providers.

Due to varying organizational structures, many organizations treat contract administration as an administrative

function separate from the project organization. While a procurement administrator may be on the project team,

this individual typically reports to a supervisor from a different department. This is usually true if the performing

organization is also the seller of the project to an external customer.

Control Procurements

Control Procurements includes application of the appropriate project management processes to the contractual

relationship(s) and integration of the outputs from these processes into the overall management of the project. This

integration will often occur at multiple levels when there are multiple sellers and multiple products, services, or

results involved. 

The project management processes that are applied may include, but are not limited to:

• Direct and Manage Project Work. To authorize the seller’s work at the appropriate time.

• Control Quality. To inspect and verify the adequacy of the seller’s product.

• Perform Integrated Change Control. To assure that changes are properly approved and that all those

with a need to know are aware of such changes.

• Control Risks. To ensure that risks are mitigated.

Control Procurements also has a financial management component that involves monitoring payments to the

seller. This ensures that payment terms defined within the contract are met and that seller compensation is linked

to seller progress, as defined in the contract. One of the principal concerns when making payments to suppliers is

that there is a close relationship of payments made to the work accomplished.

The Control Procurements process reviews and documents how well a seller is performing or has performed

based on the contract and establishes corrective actions when needed. This performance review may be used as

a measure of the seller’s competency for performing similar work on future projects. Similar evaluations are also

carried out when it is necessary to confirm that a seller is not meeting the seller’s contractual obligations and

when the buyer contemplates corrective actions. Control Procurements includes capturing the necessary details

for managing any early terminations of the contracted work (for cause, convenience, or default) in accordance with

the termination clause of the agreement. These details are used in the Close Procurements process to terminate

the agreement. Agreements can be amended at any time prior to contract closure by mutual consent, in accordance with the

change control terms of the agreement. Such amendments are typically captured in writing.

Tools and Techniques

• Contract Change Control System
• Procurement Performance Reviews
• Inspections and Audits
• Performance Reporting
• Payment Systems
• Claims Administration
• Records Management System

Close Procurements

Close Procurements is the process of completing each procurement. The key benefit of this process is that

it documents agreements and related documentation for future reference

The Close Procurements process also involves administrative activities such as finalizing open claims, updating

records to reflect final results, and archiving such information for future use. Close Procurements addresses each

contract applicable to the project or a project phase. In multiphase projects, the term of a contract may only be

applicable to a given phase of the project. In these cases, the Close Procurements process closes the procurement(s)

applicable to that phase of the project. Unresolved claims may be subject to litigation after closure. The contract

terms and conditions can prescribe specific procedures for agreement closure. The Close Procurements process

supports the Close Project or Phase process by ensuring contractual agreements are completed or

terminated.

Early termination of a contract is a special case of procurement closure that can result from a mutual agreement

by both parties, from the default of one party, or for convenience of the buyer if provided for in the contract. The

rights and responsibilities of the parties in the event of an early termination are contained in the terminations clause

of the contract. Based upon those procurement terms and conditions, the buyer may have the right to terminate

the whole contract or a portion of the contract, at any time, for cause or convenience. However, based upon those

contract terms and conditions, the buyer may have to compensate the seller for seller’s preparations and for any

completed and accepted work related to the terminated part of the contract.

Tools and Techniques

• Procurement Audits
• Procurement Negotiations
• Records Management System

The buyer, usually through its authorized procurement administrator, provides the seller with formal written

notice that the contract has been completed. Requirements for formal procurement closure are usually defined in

the terms and conditions of the contract and are included in the procurement management plan.

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