Procurement and Contract Management
What the domain is really testing
Procurement spans make-or-buy analysis, selection, contract type choice, and administration. Candidates must match contract type to risk profile: fixed price (seller carries cost risk, good for well-defined scope), cost reimbursable (buyer carries cost risk, good for evolving scope), time and materials (hybrid, capped where possible), and target cost/incentive arrangements that share overruns. Know the procurement cycle, evaluation criteria weighting, statements of work, and the difference between a contract and a purchase order.
Concepts to hold firmly
- The statement of work defines deliverables and acceptance; vague SOWs cause disputes.
- Negotiation is not the default; it follows a defined selection process.
- Contract change control mirrors project change control.
- Claims and disputes escalate through formal channels before litigation.
- Records of performance feed seller evaluation and closure.
Traps
A frequent trap is choosing fixed price for a poorly defined scope - the seller prices in risk or claims later. Another is assuming the buyer manages the seller's staff; the seller manages its own team. Questions may suggest accepting a verbal variation; variations must be documented and authorised. Watch for the confusion between contract closure and project closure - they are related but distinct.
Rule of thumb
Match the contract type to how well the scope is understood: the less certainty, the more the risk should sit with the party best able to manage it.
Worked example
A buyer needs a bespoke system with evolving requirements. Fixed price invites large contingency pricing and disputes. A target-cost incentive contract with a defined pain/gain share aligns both parties and rewards efficiency.