Questions in the Closing process group account for 8% of the exam.
Close Procurement
Close Procurement supports the Close Project or Phase process but doesn’t necessarily happen at the same time.
However, to close the project, all procurement's must be closed.
Exception:
The exception to this is if you have open claims or appeals. Open claims are handled by the legal department.
To close out a procurement, you use the procurement management plan for the details and guidelines associated with contract closure. All procurement documents need to be indexed for lessons learned and future reference. Procurement documents include performance reports, invoices, and contractual change documentation. Your organization may use information from contractor performance reports and documentation to evaluate contractors for future work.
Termination of a contract
Contracts can be terminated for a variety of reasons, such as
Terminating a contract by mutual agreement:
If both parties agree that the contract should be cancelled, they need to follow the requirements in the termination clause of the contract. Be aware that termination for cause and termination for convenience have different contractual obligations associated with them.
Termination for cause
Termination for cause occurs when either party has breached or is about to breach the contract. This is also known as defaulting on the contract.
Here are two examples of seller default:
The seller can’t deliver the quality of work promised, and there is no evidence that the seller will be able to.
The clause Time is of the Essence is in the contract, and it’s abundantly clear that the seller can’t meet the delivery date.
The following are examples of buyer default:
The buyer is in significant arrears for payment, and it’s obvious that the buyer can’t catch up on back payments and make future payments.
The buyer is obligated to provide some element or component of the deliverable for the seller to be able to complete the contract. If the buyer doesn’t deliver the element, the buyer is defaulting on its part of the contract.
Termination for convenience
Many contracts have a clause that allows the buyer to terminate the contract at its convenience. Examples of reasons to terminate for convenience include the following:
Another project takes higher priority, and the company decides to cancel or delay the current project.
The market changes, and there is no longer a need for the project.
Because of a reorganization, new leadership has other priorities.
Financial landscape has shifted. A company’s quarterly earnings were worse than expected, and the organization has decided to cut costs based on projected earnings.
Close Procurement
Close Procurement supports the Close Project or Phase process but doesn’t necessarily happen at the same time.
However, to close the project, all procurement's must be closed.
Exception:
The exception to this is if you have open claims or appeals. Open claims are handled by the legal department.
To close out a procurement, you use the procurement management plan for the details and guidelines associated with contract closure. All procurement documents need to be indexed for lessons learned and future reference. Procurement documents include performance reports, invoices, and contractual change documentation. Your organization may use information from contractor performance reports and documentation to evaluate contractors for future work.
Termination of a contract
Contracts can be terminated for a variety of reasons, such as
- termination by mutual agreement,
- termination for cause,
- termination for convenience.
Terminating a contract by mutual agreement:
If both parties agree that the contract should be cancelled, they need to follow the requirements in the termination clause of the contract. Be aware that termination for cause and termination for convenience have different contractual obligations associated with them.
Termination for cause
Termination for cause occurs when either party has breached or is about to breach the contract. This is also known as defaulting on the contract.
Here are two examples of seller default:
The seller can’t deliver the quality of work promised, and there is no evidence that the seller will be able to.
The clause Time is of the Essence is in the contract, and it’s abundantly clear that the seller can’t meet the delivery date.
The following are examples of buyer default:
The buyer is in significant arrears for payment, and it’s obvious that the buyer can’t catch up on back payments and make future payments.
The buyer is obligated to provide some element or component of the deliverable for the seller to be able to complete the contract. If the buyer doesn’t deliver the element, the buyer is defaulting on its part of the contract.
Termination for convenience
Many contracts have a clause that allows the buyer to terminate the contract at its convenience. Examples of reasons to terminate for convenience include the following:
Another project takes higher priority, and the company decides to cancel or delay the current project.
The market changes, and there is no longer a need for the project.
Because of a reorganization, new leadership has other priorities.
Financial landscape has shifted. A company’s quarterly earnings were worse than expected, and the organization has decided to cut costs based on projected earnings.
