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• Subcontract

• Purchase order

• Memorandum of understanding

EXAM TIP A letter of intent is not a contract, but a letter the buyer is intending to create a contractual relationship with the seller. A letter contract is a contract that may be used when the work is needed to start immediately. A letter contract is often considered a "stop-gap" solution in procurement.

Contracts have to be signed by a person with the power to authorize the requirements and payment specified in the contract. This role is called the delegation of procurement authority. Whether this person is the project manager depends on the procurement policies of the performing organization.

In some organizations, all contracts flow through centralized contracting. Centralized contracting requires all contracts for all projects to be approved through a central unit within the performing organization. Other organizations use a decentralized contracting approach, which assigns a contract administrator or contract officer to the project.

There are four other outputs of the seller selection process that PMP and CAPM candidates should be familiar with:

• Contract management plan When dealing with large, wieldy contracts, a new subsidiary plan may need to be created. This subsidiary plan, the contract management plan, defines how the contract will be administered through the duration of the project.

• Resource availability The demand and availability of resources related to the contracted decision should be documented. This documentation includes when resources are active in the project and when they're not needed and can be utilized elsewhere.

• Procurement management plan updates The contract may cause integration management to kick in. Changes to the procurement process, or changes to the procured item itself, may cause ripples in the procurement management plan, which means updates.

• Change requests We all know that change requests are likely to happen, and when dealing with procurement management, it's no different. Change requests are fed into the change control system, considered through integration change control, and, if approved, are then reflected in the time, cost, and scope baselines. Nothing new or surprising here.

Contract administration is the process of ensuring that both the buyer and the seller live up to the agreements in the contract. The project manager and the contract administrator must work together to make certain the seller meets its obligations, just as the

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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