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PMP Exam Resources: Planning Procurement Glossary

Free PMP Terms and Definitions

Understanding common project management terms can be a challenge for all project managers. To help you understand those terms and definitions Crosswind Project Management has created a free to use glossary to help in your pmp training. In this page you will find the terms and definitions associated within the component areas of framework to get a better understanding of how this process works and relates to project management.

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TermDefinition
Agreements (Predictive)A document or communication that defines the intentions of a project; examples include a contract, a memorandum of understanding (MOU), and letters of agreement
Bid DocumentsThe documentation utilized to request information, quotations, or proposals from prospective sellers.
Bidder ConferenceMeetings with potential sellers that occur before bids or proposals are prepared and which are used to ensure that all sellers have an unambiguous and common comprehension of the procurement; also known as a contractor conference, vendor conference, or pre-bid conference
Breach of ContractWhen some, or all terms of a contract (agreement) are not performed or met.
Completion ContractA general category of contract that is done when the seller delivers the product, and the buyer accepts it.
ContractA mutually binding agreement that requires, in accordance with the terms of the agreement, the seller to deliver goods or services to the purchaser and the purchaser to compensate the seller for those goods or services
Contract Change Control SystemSystem that manages contract amendments
Cost Plus Award Fee (CPAF) ContractA contract in which the seller receives payments for actual costs related to completed work plus an award that is at the discretion of the buyer; the award that typically represents seller profit
Cost Plus Fixed Fee (CPFF) ContractA contract in which the supplier receives payment for allowable costs plus a fixed fee typically based on estimated cost
Cost Plus Incentive Fee (CPIF) ContractA contract in which the supplier receives payment for allowable costs, as well as a pre-negotiated fee and an incentive fee (if incentives are met)
Cost Reimbursable (CR) ContractA mutually binding agreement that compensate the seller for goods or services on the basis of actual costs plus a fee that represents the seller's profit and typically includes an incentive if specific objectives, such as budget or schedule targets, are met
Firm Fixed Price (FFP) Contract A contract that requires the seller to provide products or services for a set price based on a well defined scope of work; the seller assumes the majority of risk
Fixed Price (FP) ContractA mutually binding agreement that compensates the seller for goods or services on the basis of a fixed amount identified in the agreement, notwithstanding the seller's costs
Fixed Price Incentive Fee (FPIF) ContractA contract in which the seller provides products or services based on a well defined scope of work for a set price, but which allow for additional payments to the seller if pre-defined performance objectives are met; the seller assumes the majority of risk
Fixed Price with Economic Price Adjustment (FP-EPA) Contract A contract that requires the seller to provide products or services for a set price based on a well defined scope of work and allows a price adjustment over time in response to a specific indicator, typically a change in the cost of labor or materials; the seller assumes the majority of risk
Indefinite Delivery Indefinite Quantity (IDIQ)A contract that delivers an indefinite quantity of goods and services, with minimums/maximums in a set timeframe.
Invitation for Bid (IFB)A procurement document, typically used when requirements are complete, clear, and accurate or with governmental sealed bids, issued by the seller to request a proposal from the seller; in addition to detailed requirements, it often includes acceptability criteria
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TermDefinition
Make or Buy AnalysisThe process of determining whether specific work should be created by the project team or purchased from an external source
Make or Buy DecisionsThe result of the process of determining whether specific work should be created by the project team or purchased from an external source.
OutsourcingAn approach to procure services from a third party for a contract or short-term duration.
ProcurementThe acquisition of goods or services from an outside source (vendor)
Procurement DocumentsThe instruments used with bid and proposal activities that include the Invitation for Bid (IFB), the Invitation for Negotiation (IFN), the Request for Information (RFI), the Request for Quotation (RFQ), and the Request for Proposal (RFP)
Procurement Management PlanThe document, part of the project or program management plan, used to describe the methods that will be employed by the project team to obtain goods and services from outside the organization
Procurement Statement of WorkA description of a procurement item that is broken down to the appropriate level of detail that will allow potential sellers to determine if they are capable of providing the products or services associated with the contract scope
Request for Information (RFI)A buyer issued procurement document requesting a potential seller to provide information related to the seller's ability to deliver a product, service, or capability
Request for Proposal (RFP)A procurement document issued by the buyer to request a proposal from the seller; typically describes acceptability criteria and a description of the product, service, or capability the buyer wishes to procure
Request for Quote (RFQ)A document used to get bids or quotes from possible suppliers, usually for commodity type items, with minimal customization
Selected SellersVendors chosen to provide products or services
Seller ProposalsAn offer from a vendor who is being considered as a provider of a product or service
Source Selection CriteriaSeller attributes that will be considered by the buyer; typically includes capacity to deliver, costs, delivery dates, expertise, and contract approach
Statement of Work (SOW)A detailed description of the products, services, or results expected from a project or other initiative
Time & Materials (T&M) ContractA contract that pays the contractor the actual cost of labor, the actual cost of materials and equipment usage, and an agreed upon profit
Top-down EstimatingAn estimating technique in which the project manager estimates the cost or duration of the project based on the cost or duration of a previous project that is very similar to the current project
WaiverSurrendering a contract right, term, or condition.
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