■ Capacity, experience and capability of your project personnel to complete the work
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■ Risks associated with doing the work
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■ Intellectual property issues
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■ Costs of completing the work
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■ Time required to complete the work
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■ Available contract types
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■ Market conditions procuring the goods or services you require
It is responsibility of the project manager to take into account all the relevant information before making a make-or-buy decision.
True or false? Regardless of whether you have the skills and experience to complete the work, a make-or-buy analysis should take into account whether it is the cheap-est and least risky way to deliver the work.
Answer: True. There are many factors to consider when deciding whether to make the goods and services yourself or buy them from external sources. For example, you might have the capability and experience to complete the work, but you can procure it at less cost and with less risk using external providers.
Source selection criteria
Another important aspect of your procurement planning processes is the develop-ment of source selection criteria that are used by the buyer of goods and services to assess, evaluate, and make decisions about which potential sellers and vendors will be successful. These criteria are developed as part of your procurement planning activities because they need to be developed early on so that they can be taken into account in all procurement work.
It is not uncommon for the primary source selection criterion to be the price sub-mitted in response to procurement documents, but in addition to the price there are a number of other potential source selection criteria that can be taken into account, including the following:
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■ Product life cycle cost
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■ Health and safety record
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■ Technical capability
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■ Management approach
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■ Financial stability of the organization
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■ Capacity
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■ Intellectual property rights
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■ Environmental record
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■ Complete life cycle cost
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■ Past performance
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■ Relevant experience
True or false? Source selection criteria should be used to choose the external sellers or vendors that best meet the procurement needs of the project.
Answer: True. A key purpose of deciding source selection criteria early on is to give consideration to the factors that will influence your decision about how you choose successful sellers or vendors. As such, your source selection criteria should contrib-ute to choosing the most appropriate seller or vendor.
Can you answer these questions?
You can find the answers to these questions at the end of this chapter.
1. If you have provided all potential sellers with a detailed description of the procurement statement of work as part of your procurement negotiations and want a fixed price from the sellers to complete the work, what form of contract should you use?
2. If you are the seller responding to an RFP with a loosely defined procurement statement of work, what form of contract is better to enter into?
3. Why are any existing organizational process assets important considerations in the procurement planning work?
4. What are you doing if you carry out an assessment of whether your project team members should complete the required work or you should outsource it to another company?
5. Why should a project manager consider involving procurement specialists and legal specialists in the development of the procurement management plan?
Task 8: Develop a quality management plan based on the project scope and requirements, in order to prevent the appearance of defects and reduce the cost of
quality .
This task focuses on the development of a project quality management plan that will assist the project manager and project team members in ensuring that the processes and product of the project meet the requirements. A key element of the work involved in satisfying this task includes the development of a comprehensive approach to quality management throughout the whole project.
Quality is defined as the degree to which a set of characteristics fulfills require-ments. Therefore, to determine whether quality standards are being met, you first require a defined and documented set of requirements and some way of observing and measuring characteristics. There are several foundational concepts that define the expected approach to quality management on a project that should be reflected in the quality management plan. These foundational concepts include the following:
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■ Prevention over inspection Requires that quality should be proactively built into all aspects of your project instead of reactively inspected into the processes or deliverables. This is because the cost of preventing quality er-rors is usually less than the cost of fixing quality erer-rors.
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■ Continuous improvement Also known as kaizen, a commitment to con-tinuous quality improvement throughout the life of the project in relation to both process and product.
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■ Total quality management (TQM) A whole-organization approach to quality management as opposed to a management directive to employees.
It seeks to embed within the entire organizational culture the importance of quality, prevention over inspection, and continuous improvement.
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■ Cost of quality An assessment of the total cost of quality work and the cost of low quality. The cost of quality should be assessed not just within the project but also over the entire product life cycle because quality decisions made during the production of the product will have an impact far beyond the life of the project.
NOTE There are a couple of other quality management terms that you need to understand. “Quality” and “grade” do not mean the same thing: “quality” refers to the degree to which a set of characteristics fulfills requirements; while “grade” refers to the features or technical characteristics of a product. “Low grade” simply means that a product has fewer features or a lower range of technical characteristics. If the requirements specify “low grade,” this is fine, but “low quality” is not fine. “Precision”
refers to how tightly clustered a group of results is. a group of results that is tightly clustered demonstrates a high degree of precision. “accuracy” refers to how close to the expected results the observed data points are. Figure 2-28 shows examples of both accuracy and precision using a bull’s-eye target.
FIGURE 2-28 A diagram showing precision and accuracy
MORE INFO You can find out more about quality management planning processes by reading the Plan Quality Management process in the PMBOK® Guide, 5th edition.
Further information can also be obtained by reading the following ISO standards:
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■ ISO9000 Quality management systems: Fundamentals and vocabulary
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■ ISO9001 Quality management systems: Requirements
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■ ISO10006 Quality management systems: Guidelines for the quality management in projects
Exam need to know...
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