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12 - PROJECT PROCUREMENT MANAGEMENT

12.2.2.7 Procurement negotiations

Procurement negotiations clarify the structure, requirements, and other terms of the purchases so that mutual
agreement can be reached prior to signing the contract. Final contract language reflects all agreements reached.
Subjects covered should include responsibilities, authority to make changes, applicable terms and governing law,
technical and business management approaches, proprietary rights, contract financing, technical solutions, overall
schedule, payments, and price. Negotiations conclude with a contract document that can be executed by both buyer
and seller.
For complex procurement items, contract negotiation can be an independent process with inputs (e.g., issues or
an open items listing) and outputs (e.g., documented decisions) of its own. For simple procurement items, the terms
and conditions of the contract can be previously set and nonnegotiable, and only need to be accepted by the seller.

The project manager may not be the lead negotiator on procurements. The project manager and other members
of the project management team may be present during negotiations to provide assistance, and, if needed, to add
clarification of the project’s technical, quality, and management requirements.

12.2.3 conduct Procurements: outputs
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12.2.3.1 Selected Sellers

The selected sellers are those who have been judged to be in a competitive range based upon the outcome
of the proposal or bid evaluation, and who have negotiated a draft contract that will become the actual contract
when an award is made. Final approval of all complex, high-value, high-risk procurements will generally require
organizational senior management approval prior to award.

12.2.3.2 Agreements

A procurement agreement includes terms and conditions, and may incorporate other items that the buyer
specifies regarding what the seller is to perform or provide. It is the project management team’s responsibility
to make certain that all agreements meet the specific needs of the project while adhering to organizational
procurement policies. Depending upon the application area, an agreement can also be called an understanding,
a contract, a subcontract, or a purchase order. Regardless of the document’s complexity, a contract is a mutually
binding legal agreement that obligates the seller to provide the specified products, services, or results, and
obligates the buyer to compensate the seller. A contract is a legal relationship subject to remedy in the courts.
The major components in an agreement document will vary, but may include the following:

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©2013 Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK Guide) – Fifth Edition 377

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