Part 161: Procurement Strategy

//Part 161: Procurement Strategy
Part 161: Procurement Strategy2022-08-21T03:59:54+00:00

Part 161: Procurement Strategy
(OUTPUT Project Procurement Management: Plan Procurement Management)

  • The Procurement Strategy tells us
    • How the products/services we procure will be delivered (delivery methods)
    • The type of procurement agreements we will use (payment types)
    • How the procurement process will progress (phases)
  • Procurement Delivery Methods include
    • Professional Services
      • Service Provider isn’t allowed to subcontract
      • Service Provider can subcontract
      • Joint Venture between Buyer and Service Provider
    • Industrial/Commercial Construction
      • Turnkey = Seller is responsible for building the facility, staffing it, starting it up, and then handing it over to the buyer.  The buyer takes over operations from the seller.
      • Design Build (DB) = Seller is responsible for designing and building the facility.  Seller hands over the facility once it’s complete.
      • Design Bid Build (DBB) = Seller is responsible for designing the facility, establishing a bidding process, hiring subcontractors, building the facility, and then handing it over to the seller.
      • Design Build Operate (DBO) = Seller is responsible for designing and building the facility.  Seller is responsible for starting up the facility and operating it on behalf of the buyer.  There may be a long-term contract (10 to 30 years).  The buyer may not pay the seller for the Design or Build phases; the seller will make its money back during the Operate phase.  For example, the government gives the Seller a 30-year contract to supply power to a region.  The seller designs, builds, and operates a power plant.  The cost of the power plant is borne by the seller.  The seller reaps the cost of the plant by selling power to the residents.  After 30 years, ownership of the plant reverts to the government.
      • Build Own Operate (BOOT) = Like DBO, but without the Design phase.  Also, the seller owns the facility after it’s completed.
  • Contract Payment Types include
    • Fixed Price Contract
    • Cost Plus Contract
    • Incentives/Awards
  • Procurement Phases
    • List of procurement phases
    • Objectives for each phase
    • Milestones and indicators for monitoring the procurement process
    • Process to transfer knowledge gained in each phase