PM0011 [Project Planning & Scheduling] Set2 Q2

Question 2: List the inputs, outputs, tools and techniques for the vendor management process.

Answer:

Vendor Management:

For vendor management the basic requirements the existence of a vendor, which would only happen if product, good or service is acquired at the best cost to meet the need of the project This process is about documentation of purchasing decisions and policies and approaches for product outsourcing. 

The major inputs required for this process are:

• Scope baseline:

This is the component of project plan which gives information about the project scope, listed in the scope statement, lists the work breakdown structure and description of the WBS elements.

• Requirement documentation:

This document would have information about the project requirements both technical and legal along with the legal implications.

• Teaming agreement:

They are contractual agreements made between two or more parties as a result of partnership or joint venture. 

• Risk register:

It is document which lists the identified risks, risks which have already occurred in similar projects in the past, and cost involved in risk mitigation. 

• Activity resource requirements:

This document lists the types and quantity of resource required for project activities. It also lists the skillset required and quality of material required and other characteristics of the resources. 

• Project schedule:

This structured document gives us the start and end date of each activity. It gives a detailed description of the activities to be performed in the project, their dependencies and requirements. They can be represented in the following format:

• Milestone chart 
• Bar charts 
• Project schedule network diagrams

• Activity cost estimates:

They are measurable calculation of the feasible cost required to complete project work

• Cost performance baseline:

It is an approved budget at competition, which is used for monitoring and controlling cost and cost variances. 

• Enterprise environmental factors:

Enterprise environmental factors include information about organizational culture, processes, infrastructure, government standards, human resource data, PMIS and stakeholder information etc.

• Organizational Assets: this includes all process related assets, which an organization captures, which can impact project success. This can range from organization policies, procedure, processes to knowledge base created from previous project experiences. 

The tools and techniques used for this process are:

• Make-or-Buy analysis: This analysis helps take a call whether it is beneficial to buy a product from third party or make it. Even making should happen in-house or should be outsourced. Depending on what gives the maximum profit, choice is made.

• Expert judgment: this is about taking opinion from an experienced about whether the product should be made or bought, or its production should be outsourced.

• Contract types: whenever the product is to be created and procurement form third-party is done, it is assumed that the failure of the product risk i8s shared with the third party. Contract type defines how the risk shared. The various types of contract are Fixed = price, cost reimbursable, time material contact. 

The major outputs of this process are:

• Procurement documents: 

The procurement documents are procurement management plan, which consists of the contract type, issues management, type of estimates, how to manage the multiple vendors, procurement statement of work, which defines the work to be accomplished as a part of the procurement contract, the proposal sent to the vendor, list of vendors who bid for the proposal, terms and conditions of the contract, RFP (request for proposal) etc.

• Make-or-buy decisions: 

This document mentions whether the product is to be bought or made, if any risk sharing policy used etc.