Project Procurement Management for Project Managers


By Dr. T D Jainendrakumar

Madhyapradesh, India


What is Procurement Management?

Procurement management includes the processes required to acquire goods or services from outside the project team. It includes Contract Management and Change Control Processes. And includes controlling contract issues by an outside organization

What is a CONTRACT?

A Contract is a legally binding detailed formal document that refers to an entire agreement between 2 or more parties. All terms & conditions of a Contract must be met by both the parties. Anything not mentioned in the Contract is not Legally Binding to anyone.

Types of Contracts

  1. Fixed Price (Lump Sum): If the scope is clear and well defined, we can sign a contract on a fixed total price and the risk is on the seller side as the buyer need not bother about any variations in the cost. There are 3 types of fixed price contract as shown below:

A. Firm Fixed Price (FFP). Seller has to fulfill the obligations with in a fixed price. The risk is on the seller side as any cost overrun will be borne by the seller.

B. Fixed Price Incentive Fees Contract (FPIF) (Based on the complexities or certain conditions apart from fixed price buyer will pay some incentive, if the seller is completing the project on time or meet certain performance conditions set by the buyer etc. If the cost reaches above a ceiling limit, the seller has to bear the excess cost.)

C. Fixed Price with Economic Price Adjustment Contracts (FP-EPA) (for a long duration project, to meet the escalation or price variations of some materials or labour charges, buyer has to pay a Fixed Price and cost of escalation within the duration of the project, it protects both the parties from price inflation.)

2. Cost Reimbursable Contract: In this type of contract scope is not exactly defined and not known to both the parties and the price is open based on the final incurred costs of the product. In this type of contract risk is on the buyer side as buyer has to pay for facing the uncertainties. There are 3 type of cost reimbursable contract as given below:


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About the Author

pmwj30-Jan2015-Jainendrakumar-AUTHORDr. T D Jainendrakumar




Dr. T D Jainendrakumar, Hon’ PhD, MCA, PMP is an international PMP trainer, EX-Scientist/Principal Scientist/Joint Director, N.I.C, Ministry of Information and Communication Technology, Government of India. At present he is working as the head of the department, Department of Computer Science and Applications in the St. Joseph’s College of Engineering and Technology, Palai, Kerala, India.

He has over 25 years’ of extensive experience in the areas of IT Project management in e-governance at Ernakulam District Collectorate, District Courts of Kerala, Central Administrative Tribunal Ernakulam, Rajeev Gandhi National Drinking Water Mission (400 crore project), New Delhi and Principal Systems Analyst in National Informatics Centre, Madhya Pradesh State Centre especially in the following areas of specialization: IT practice management (Project Management Methodologies, Tools and techniques, Standards & Knowledge);IT Infrastructure Management (Project Governance, Assessment, Organizational Instructions & Facilities and Equipment’s); IT-Resource Integration Management (Resource Management, Training & Education, Career Development & Team Development);IT-Technical Support (Project Mentoring, Project Planning, Project Auditing and Project Recovery); and Business Alignment Management (Project Portfolio management, Customer Relationship Management, Vendor Management & Business performance management).

Teaching Project Management & ICT Subjects for professionals and post graduates. Holding a degree in Master of Computer Applications (MCA), a three year post graduate course dealing with software Engineering and Project Management from a premier institute Anna University Campus, Chennai, India.

He is a PMP of PMI USA since 2008. Resource person of PMI, you can see his name in the PMBOK 4th edition and 5th edition published by PMI, USA under the list of contributors for project management. Scored 4.11 out of 5 in the project management (2005) examination conducted by brainbench.com, secured a Masters Certificate in Project Management, and is one among the top scorers (First in India and 3rd position in the world in the experienced category).

Published paper in UNICEF in 1995, and published many international journal papers in PM World Today since 2008 having cumulative index factors more than 2 in the areas of specialization of Project Management & Information Technology.

Holding a Hon’ Doctorate from Cosmopolitan University, USA in Project Management & Information Technology. Presently working as an independent project management consultant and an International Project management (PMP) trainer. Provided PMP training to the senior officials of big MNCs like M/S. Earnest & Young and He is a visiting professor and sharing his knowledge and experience and to handle classes in Management Information Systems, Quality Management, Project Management and Software Engineering to some of the big universities. He can be contacted at [email protected].

To view other works by this author, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/t-d-jainendrakumar/