PMI CAPM – Blitz Review of the CAPM Course Part 7

13. Procure Goods and Services

Now let’s talk about project procurement management. This is one that beats up a lot of project managers because project managers often aren’t the folks doing the procurement. So the Procurement Management Plan, it’s all about the procurement activities in your organization.

How do you operate, lead time, make or buy? What about scheduling, deliverables, performance bonds, warranties, insurance, things like that? The plan also defines the form and format for your statement of work documents. So what forms will you be using? Do you have a prequalified or a preferred vendors list? How will you measure metrics for evaluation? How do you know the vendors doing a good job performing maker buy so hopefully you have this down.

We’re going to buy 65,000. Monthly fees, 8500 build I’d rather 65,000. If we buy it, it’s 52,000 out of pocket. Monthly fees 10,500. You find the difference, that’s 13 grand. Find the difference of your monthly, that’s two grand 2000 to 13,006 and a half months. So if you’re going to keep the solution longer than six and a half months, it’s better financially to build it. Picking it up from right here. Just cut all that out. Let’s go on. We talked all about these different contract types. We have a firm fixed price, pretty safe. The seller has the cost overruns. Changes to the scope have to be managed as part of the contract. Then we have a fixed price incentive.

Again, it’s a fixed price, but you get some type of a bonus, like for getting done early, there might be a price ceiling. So if you say something like you get $10,000 for every day you’re done early, up to $100,000. So that would prevent someone from being done too quickly and running up the cost for their bonus. So you might have a ceiling fixed price with economic price adjustments.

Know this one long term contract. This accounts for any fluctuation like inflation. Could be supply and demand of the materials. And this is up or down, but it’s predefined in the contract. Usually things that the vendor has no control over that are a long term contract. Cost reimbursable, cost plus a fee. I put this little used car salesman guy in here because these are not good for you, the buyer cost plus a fee. So you might have some high risk because you carry the risk of overruns. We have the cost plus a fixed fee. That’s all allowable cost plus a fixed fee not good for you. A cost plus incentive fee might be good if you’re doing some type of a bonus structure, but it could also have a disincentive. If you’re late, then you’re going to have to pay a penalty.

Remember the cost plus award fee, where it’s all of your allowable cost. And then the seller gets a bonus based on what the buyer believes they deserve. So it’s subjective review by the buyer. A time of materials are a great little contract where you get an hourly fee and then you’re paid for materials not to exceed clause, though we need in time and materials and there’s typically a time limit forms from the buyer statement of work, RFQ. IFB RFP or RFI, the seller then will respond with a quote, a bid information, or more likely, a proposal. Let’s take a look at the whole process as we end procurement. We have the buyer. So you’re going to be the buyer, I’ll be the seller. So you create a statement of work and an invitation for bid. Request for quote request for proposal. Let’s say it’s an RFP.

You send it out to all the sellers and all the sellers look at it and we come to this bidders conference. At the bidders conference, we ask you all sorts of questions about this proposal and then you will answer those questions and then update the statement of work and redistribute that to the sellers because this ensures that everyone who’s going to create a proposal has the same information.

So we’ll send it back to you, all of me and my competition that are bidding or creating the proposal. You then the buyer will look at these proposals. You’re going to choose two or three to enter in negotiations with and talk to. Then you will choose a vendor. So source selection. And then from that you get a contract. One of those contract types we looked at, that’s it no procurement. No. These details on procurement, especially close procurement, remember, that was one of our two closing processes.

14. Engage and Manage Stakeholders

Now let’s zip through this last section in the pinbox. Stakeholder management. We begin by identifying and do some analysis on our stakeholders. Remember, we did stakeholder identification. They go into the Stakeholder Register and we analyze stakeholders. So we’re looking at all of our stakeholders and their information, finding out who’s a key stakeholder, people that have a decision role. We interview stakeholders and then that helps us to identify more stakeholders.

As we identify stakeholders, we can create one of these grids, a power, interest or influence impact grid, where we map out people with high power in relation to high interest. We manage closely people that have a low power, low interest. We just monitor people with a high amount of power and low interest. Rather, we keep satisfied and those people that have a high amount of interest but very little power, we keep informed.

The Stakeholder Register, as I mentioned, it’s where we keep all of the stakeholder identification and an assessment of how they feel about the project. What are they concerned with in the project. This is also where we can classify stakeholders by their role or type of stakeholder they are. Our next process was to create the Stakeholder Management plan. So we plan for stakeholder management.

What we’re really trying to define here are the engagement levels and how will we retain stakeholder engagement. So when we go into planning, we can use a lot of experts to help us create a plan. But our goal really is about stakeholder engagement. So we have these five layers of stakeholder engagement unaware, resistant, neutral, supportive and leading like a champion of your project, the Stakeholder Management Plan.

What we’re really after is what’s your current engagement level and then where do you want to go? What’s the scope and impact of the change to stakeholders? How do stakeholders work with one another? Stakeholder communication requirements? What will you distribute? Why will you distribute that? And what’s the time frame and the frequency for distribution? Fantastic. We hit the big stuff. Here the things you must know in this new knowledge area on stakeholder management.

15. Wrap Up the Whole CAPM Exam Prep Super Awesome Review Section

Let’s wrap up the CAPM blitz session. I just have some final thoughts to share with you as you prepare to pass the CAPM. A very important question for you. Are you going to take the CAPM exam? You’ve done all of this work, you’ve invested this time, you’re preparing. So are you going to take the CAPM exam? No, you are not going to take the exam. You’re going to pass the exam.

So a more important question, are you going to pass the CAPM exam? It’s the mindset that we’ve created as we move through this course that you’re preparing to pass the exam. Now, I really believe that having a sense of confidence is so important. As you go into pass this test, create your scope, if you’ve not already done. So your scope includes a commitment to pass the exam that you’ve focused every day in this class. If there are some areas that you’re still weak in, go back and review those areas. So focus every day in this class.

Create a smart goal to pass the CAPM. That it’s specific, it’s measurable, it is achievable, and yes, it’s realistic. But most important is you create a timetable. Don’t wait too long. Many people wait, they put it off and they wait before they even apply. So don’t wait too long. And then I hope that you give yourself a reward for passing. Make it something worthwhile. So plan your project.

Treat this as a project. You have a scope. The scope is to pass the exam. That’s been the scope of this course. If you want to, you can create a work breakdown structure of all the exam objectives and look at each of those objectives and determine, are you really prepared? Do you really understand those different knowledge areas and the ETOs? What are the risks? Well, the risk could be that you fail. It’s possible that you fail the CAPM exam. So that’s a risk.

So we want to mitigate that risk by completing this course and spending the necessary time and investing in the time in order to pass. And then again, you have a schedule, create a deadline. When is this project due? When is the project complete? When you pass the exam. Finally, deciding and choosing. Deciding is when you have to do it. That it’s a drudgery that you are forced to do it. You’re required to do it like you decide to follow doctors orders, or you decide to find a job, or you decide to earn a certification. There’s power, though, in deciding because it’s a mental mindset that you are going to get this done. I believe, though, that choosing is a more important asset to have, that you want want to do it like you choose to lose weight or you choose to start a business, or you choose your career, that there’s an emotional attachment to choosing. So I want you to decide to pass the CAPM. But hopefully you’ve also chosen to pass the CAPM.