Ch5. Procurement Management and Change Control

Procurement Management

Procurement: Acquiring products, services, or results from outside the project team.

Contract Types

Fixed Price

A fixed total amount agreed for all work.

Type	Characteristics	Risk Burden
FFP (Firm Fixed Price)	Most common, clear scope required	Seller
FPIF (Performance Incentive)	Bonus for target achievement	Shared
FP-EPA (Price Adjustment)	For long-term inflation	Shared

Cost Reimbursable

Actual costs + fee paid to seller.

Type	Characteristics	Risk Burden
CPFF (Fixed Fee)	Cost + fixed fee	Buyer
CPIF (Incentive Fee)	Cost + performance-based fee	Shared
CPPC (% of Cost)	Riskiest, not recommended	Buyer (maximum)

T&M (Time and Materials)

Hourly rate + materials. Used when scope is uncertain.

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Change Control

Integrated Change Control (ICC)

All change requests must flow through a formal process:

Change request received
      ↓
Change Control Board (CCB) review
      ↓
Approve / Reject
      ↓
Update baselines (if approved)
      ↓
Notify stakeholders

Change Control Board (CCB): The authority that approves or rejects changes.

Baselines

The approved plan version — the benchmark against which performance is measured:

• Scope baseline: WBS + WBS dictionary + scope statement
• Schedule baseline: Approved project schedule
• Cost baseline: Time-phased budget

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Key Concept Cards

Fixed Price vs. Cost Reimbursable ★★★★★ : Fixed price=clear scope, seller bears risk. Cost reimbursable=unclear scope, buyer bears risk. Choose based on scope certainty.

CCB ★★★★★ : All significant changes must go through the CCB. PMs cannot unilaterally approve major scope changes.

Baselines ★★★★☆ : Scope/schedule/cost baselines. The reference point against which performance is measured and changes are evaluated.

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Practice Quiz

Q1. A software project has unclear requirements. Which contract type is most appropriate?

T&M or Cost Reimbursable (CPFF or CPIF). With unclear requirements, a fixed-price contract either puts excessive risk on the seller (leading to disputes or failure) or results in inflated pricing as the seller buffers for unknowns.

Q2. A stakeholder asks the PM directly to add a new feature. What should the PM do?

Direct the stakeholder to submit a formal Change Request and route it through the Change Control Process (CCB). The PM cannot unilaterally accept scope changes — doing so would modify the baseline without authorization, impacting schedule and cost without proper analysis or approval.