Should selling contract be controlled in procurement management function?
Yan WuTrainer/Consultant| Changeway Management Consulting Co., Ltd.Beijing, China, Mainland
Recently, I met up with a question, "what process should be taken to abort a contract when asked by the client?" And the answer was "end procurement".
After a hard time discussing with friends around, some of whom insist that the selling contract should not be managed in procurement management function. They insist that those work does not belongs to the project work.
In my opinion, procurement management is not simply a function managing sellers, it also manages buyers and selling contracts.
Is there any idea according to PMBOK? Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
Something obvious: you have to monitoring and control the activities that exist inside the project plan. And that´s no matter the knowledge area. On the other side, something missing is the integration component inside a project. I mean, because you have an integrated plan it does means that anything that happend inside the project will have an impact in the whole project components and relations (the systemic concept applied to project management). Specific to your point about the PMBOK, when you read the 12.4. Close Procurement process you have the answer.
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1 reply by Yan Wu
Apr 13, 2016 8:53 PM
Yan Wu
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Thank you for your reply, Conte. See, I can understand all the work happened in the integrated project plan. My question is that, when we deal with contract work such as contract negotiation from the buyer's side, I wanna figure out whether it is a normal work just like coding in a software development project or something we need to manage in procurement management knowledge area.
Saving Changes...
Praveen MalikIndependent Consultant| Independent ConsultantNew Delhi, India
Yan, I could not understand your Q. At one place you are talking about controlling & managing the contract. At other place you mentioned abort the contract. These are 2 separate things. You alsLet me write few statements that might help you in figuring out the answer 1. The contract termination, if happens, can be done either by buyer or the seller 2. The contract termination, if happens, is done as per the provisions of contract itself. 3. The project termination happens in Close Project process. 4. The procurement termination happens in Close Procurements process. 5. Contract controlling/management happens in Control Procurements process. Hope it helps
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1 reply by Yan Wu
Apr 13, 2016 9:09 PM
Yan Wu
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Thank you for your help, Malik.
The question comes from an argument. When I met with the question that the buyer can perform Close Procurements, I started to think about how should the contract bring into the whole project. I think that if the buyer take the contract into management work, the contract itself should be managed in Perform Procurements and Control Procurements, and, of course, should be closed in Close Procurements. But my friends insist that the contract signed as sellers is a seller-side contract. They take the maintenance work as something out of the project.
The key question is that, the contract can be closed by both buyers and sellers, thus, when buyers performs Close Procurement, what process is the sellers performing? Close Procurement or Close Project? And how should this kind of work plan in the project plan?
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
Exactly as mentioned by Sergio - The Procurement Management Knowledge Area clearly mentions that this is part of the procurement under Close Procurement as contracts and agreements are considered as part of buying services related to the project.
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1 reply by Yan Wu
Apr 13, 2016 9:13 PM
Yan Wu
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Thx, Kaibni.
My friends insist that the Procurement Management knowledge area concern only procurement contracts, no upstream contracts. They think the upstream contracts are sales contracts, so it's nothing to do with Procurement Management.
Saving Changes...
fosco frongiaSenior project manager| ENTE PATRIMONIALE CHIESA GESU' CRISTO SUGFino Mornasco, Como, Italy
I agree with Sergio and Rami, you should focus your attention and work on all activities related to your project
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1 reply by Yan Wu
Apr 13, 2016 9:16 PM
Yan Wu
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Thanks, frongia.
Btw: your name reminds me the play "Persons of Interests", : )
Saving Changes...
Yan WuTrainer/Consultant| Changeway Management Consulting Co., Ltd.Beijing, China, Mainland
Apr 13, 2016 6:44 AM
Replying to Sergio Luis Conte
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Something obvious: you have to monitoring and control the activities that exist inside the project plan. And that´s no matter the knowledge area. On the other side, something missing is the integration component inside a project. I mean, because you have an integrated plan it does means that anything that happend inside the project will have an impact in the whole project components and relations (the systemic concept applied to project management). Specific to your point about the PMBOK, when you read the 12.4. Close Procurement process you have the answer.
Thank you for your reply, Conte. See, I can understand all the work happened in the integrated project plan. My question is that, when we deal with contract work such as contract negotiation from the buyer's side, I wanna figure out whether it is a normal work just like coding in a software development project or something we need to manage in procurement management knowledge area. Saving Changes...
Yan WuTrainer/Consultant| Changeway Management Consulting Co., Ltd.Beijing, China, Mainland
Apr 13, 2016 7:10 AM
Replying to Praveen Malik
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Yan, I could not understand your Q. At one place you are talking about controlling & managing the contract. At other place you mentioned abort the contract. These are 2 separate things. You alsLet me write few statements that might help you in figuring out the answer 1. The contract termination, if happens, can be done either by buyer or the seller 2. The contract termination, if happens, is done as per the provisions of contract itself. 3. The project termination happens in Close Project process. 4. The procurement termination happens in Close Procurements process. 5. Contract controlling/management happens in Control Procurements process. Hope it helps
Thank you for your help, Malik.
The question comes from an argument. When I met with the question that the buyer can perform Close Procurements, I started to think about how should the contract bring into the whole project. I think that if the buyer take the contract into management work, the contract itself should be managed in Perform Procurements and Control Procurements, and, of course, should be closed in Close Procurements. But my friends insist that the contract signed as sellers is a seller-side contract. They take the maintenance work as something out of the project.
The key question is that, the contract can be closed by both buyers and sellers, thus, when buyers performs Close Procurement, what process is the sellers performing? Close Procurement or Close Project? And how should this kind of work plan in the project plan? Saving Changes...
Yan WuTrainer/Consultant| Changeway Management Consulting Co., Ltd.Beijing, China, Mainland
Apr 13, 2016 11:27 AM
Replying to Rami Kaibni
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Exactly as mentioned by Sergio - The Procurement Management Knowledge Area clearly mentions that this is part of the procurement under Close Procurement as contracts and agreements are considered as part of buying services related to the project.
Thx, Kaibni.
My friends insist that the Procurement Management knowledge area concern only procurement contracts, no upstream contracts. They think the upstream contracts are sales contracts, so it's nothing to do with Procurement Management. Saving Changes...
Yan WuTrainer/Consultant| Changeway Management Consulting Co., Ltd.Beijing, China, Mainland
Apr 13, 2016 5:36 PM
Replying to fosco frongia
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I agree with Sergio and Rami, you should focus your attention and work on all activities related to your project
Thanks, frongia.
Btw: your name reminds me the play "Persons of Interests", : ) Saving Changes...
Praveen MalikIndependent Consultant| Independent ConsultantNew Delhi, India
Yan, Consider yourself as a PM. You can look at a contract either from the Buyer's (Client, Customer) side or the Seller's (Vendor, Performing organization) side. A PM would be either working for the Buyer's org or the seller's org. The two org. cannot be mixed. If you are talking about Buyer's PM then Procurement KA is applicable. The PM (buyer) makes the payment against the product/services mentioned in the contract. If you are talking about seller's PM then all the other KA are applicable. The PM (seller) has to deliver the product/services mentioned in the contract and receive the payments. Coming to your Q, I am repeating the stmts from my previous comment. Just replace word 'termination' with 'closure' 1. The contract termination, if happens, can be done either by buyer or the seller 2. The contract termination, if happens, is done as per the provisions of contract itself. 3. The project termination happens in Close Project process. 4. The procurement termination happens in Close Procurements process. 5. Contract controlling/management happens in Control Procurements process. For PMP exam, correct use of terminology is very important.
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2 replies by Yan Wu
Apr 14, 2016 4:45 AM
Yan Wu
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Thanks again, Malik.
So, a seller's side PM, he take the whole job the contract signed as the work to be done, and gain no performance in Procurement KA even works happened around the sales contract. Right?
Apr 14, 2016 4:50 AM
Yan Wu
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More over, I've got my certification already. But this time I got totally shocked when facing the question mentioned in the topic. I got it clear again with your help this time.
See, I find the community pretty good, here and the website you recommended. It's a little pitty that the website you recommended cannot always be opened fluently here in China.
Saving Changes...
Yan WuTrainer/Consultant| Changeway Management Consulting Co., Ltd.Beijing, China, Mainland
Apr 14, 2016 3:46 AM
Replying to Praveen Malik
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Yan, Consider yourself as a PM. You can look at a contract either from the Buyer's (Client, Customer) side or the Seller's (Vendor, Performing organization) side. A PM would be either working for the Buyer's org or the seller's org. The two org. cannot be mixed. If you are talking about Buyer's PM then Procurement KA is applicable. The PM (buyer) makes the payment against the product/services mentioned in the contract. If you are talking about seller's PM then all the other KA are applicable. The PM (seller) has to deliver the product/services mentioned in the contract and receive the payments. Coming to your Q, I am repeating the stmts from my previous comment. Just replace word 'termination' with 'closure' 1. The contract termination, if happens, can be done either by buyer or the seller 2. The contract termination, if happens, is done as per the provisions of contract itself. 3. The project termination happens in Close Project process. 4. The procurement termination happens in Close Procurements process. 5. Contract controlling/management happens in Control Procurements process. For PMP exam, correct use of terminology is very important.
Thanks again, Malik.
So, a seller's side PM, he take the whole job the contract signed as the work to be done, and gain no performance in Procurement KA even works happened around the sales contract. Right?
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1 reply by Praveen Malik
Apr 17, 2016 9:02 AM
Praveen Malik
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Wrong...Let me give you an example.
Your company (performing org.) took a contract for building ecom website but your company did not have the capability/competency on payment gateways. So you (PM) outsourced the payment gateway part of the website to a third party.
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