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PROJECT PROCUREMENT MANAGEMENT

The project procurement management is one of the knowledge area described in


the PMBOK. This knowledge area deals with the all of the procurement of services and
resources for the successful project management.

KEY DEFINITIONS
Back Charge : Cost of corrective action by purchaser and chargeable to the supplier under
terms of the contract.

Bid Protest : Allows an unsuccessful supplier an opportunity to protest the award of a


government contract to another supplier.
Bill of Lading : A receipt issued by a carrier for merchandise to be delivered to a party at
some destination.
Constructive change: Occurs when the PMs conduct enables performance differing from
that prescribed by the contract. The PMs conduct in effecting constructive change may
either be affirmative or a failure to act. Not part of change control of contract: For instance,
if final
product performs better than standard specified in contract, or if the PM increases the
quality over and beyond whats stated in the contract.
Contract : A legal document of purchase or sale which is binding on both parties. When
entering into a contract, the people involved must have legal capacity to do so. (the
definition of legal capacity varies from state to state). Consideration must be provided
to both parties (in other words, there must be sufficient cause to contract). There must be
mutual assent.
Invitation for Bid (IFB) : PMBOK equates this with Request for Proposal and recognizes
that it may have a more specific meaning in certain application areas. (appropriate for high
dollar, standard items.)
Lowball: In order to get an award, a contractor may submit at bid thats unrealistically low.
Pink Team Review : A seller responds to an RFP by developing a proposal. For sanity
purposes, the proposal is passed through the pink team once the outline is completed. The

pink team looks at the outline through the perspective of the buyer. The purpose of the
team is to catch problems with the proposal in the early stages.
Price Forecast: Based on information gathered and analyzed about demand and
supply. This forecast provides a prediction of short and long term prices and the underlying
reasons for those trends.
Privity of Contract : The legal relationship that exist between the parties to a contract that
allows either party to enforce contractual rights against the other party and seek remedy
directly from the other party.
Red Team Review: Once the proposal is in draft form, it passes through a red team which
again looks at the proposal through the buyers perspective.
Reformation: A judicial remedy by which a court interprets the contract so as to express
the real intention of the parties (this is different from changes to the contract).
Request for Proposal: A type of bid document used to solicit proposals from prospective
sellers of products or services. In some application areas, it may have a more specific
meaning. (appropriate for high dollar, non-standard items).