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Single and sole source contracts carry higher risk of nonperformance due to putting all your eggs in one basket
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Performing Contract Closure
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Contract closure involves making sure all the unfinished work (loose ends) are tied up and formally completed Many steps are involved with procurement closure These steps include product verification, administrative closure, financial closure (payments are made/ received), final reports, lessons learned, and updating all project documentation
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You will likely see situational questions on the PMI exams asking whether the project is closed Also, you may see questions asking the difference between contract closure and administrative closure The difference is contract closure should occur first and then administrative closure
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All contract documents, such as the procurement plan, scope statement, WBS, and so on, need to be reviewed to ensure satisfactory completion Reviewing all the project
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documentation (not just the contract) will assist with contract and procurement closure Documents and areas of consideration include the following:
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Scope baseline Approved schedule, deliverables, and milestones Budget reports and other financial documents (such as invoices, payments) Inspections and audit results (as appropriate) Substantial completion (This is defined by The American Institute of Architects, AIA, as the stage in the progress of the Work where the Work or designated portion is sufficiently complete in accordance with the Contract Documents ) Final completion (formal acceptance) Inventory closeout Release of liens/claims (formal)
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Once the deliverables have been accepted by the customer and the contract has been closed, it s time to collect all the contract, procurement, and project information (conduct a lessons learned meeting) and finalize the project control book for record retention Remember, lessons learned should have been collected throughout the project, making the final lessons learned meeting even more effective Make sure more than one person knows where the contract files/documents are stored and that you have more than one key This sounds simple enough, but entire warehouses are full of old project documents needed for
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Ask the Expert
Q: A:
Can you provide an example of project documents needed on an old project Yes, a young PM called me a couple of years ago and asked if I had the scope statement, SOW, or WBS for a project I had worked on some time ago I finally found the documents in my archives They were from over seven years ago, and the customer s recollection of the deliverables of the project was much grander than what was captured in these project documents Needless to say, these documents saved the day and allowed the new PM to get and give a clear picture of the original project This enabled the new PM to manage the customer expectations more effectively as they initiated Phase II of the project
12: Project Procurement Management
audit or customer review but the project manager has since retired or moved on to another company When the client comes back for Phase II or III of the project, unless you have key documents you will have to start all over; otherwise, you could fail an audit if the documents cannot be produced when needed
Summary
Here are the things you need to remember about contract and procurement management:
Know the different types of contracts and who bears the burden of risk between the buyer and seller for each Know the four procurement management processes (and be familiar with inputs, tools and techniques, and outputs of each) For the PMI exam, think of the PM as the buyer in the buyer/seller relationship Be familiar with the elements of a legally binding contract Understand the SOW and contract/agreement details on your project Understand the evaluation criteria Make it as objective as possible Know the importance of good negotiation skills and the need to maintain a good buyer/seller relationship Ensure contract performance reporting/documentation is complete and accurate Know the importance of obtaining formal acceptance and effectively closing procurements
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