PROCUREMENT
MANAGEMENT
Module 1: Framework
Reference
■ Procurement Management: Contracting,
Subcontracting, Teaming 1st Ed by Quentin
Fleming
■ PMBOK Guide 6th Edition by Management
Institute
■ The Wiley Guide to Technology, Supply Chain,
and Procurement Management 1st Ed by Peter
Morris, Jeffrey K. Pinto
■ Procurement Systems: A Cross-Industry
Management Perspective 1st Ed by Derek
Walker, Steve Rawlinson
Definition: Procurement Management
■ Procurement Management includes the processes necessary to purchase or
acquire products, services, or results needed from outside the team. Procurement
Management includes the management and control processes required to develop
and administer agreements such as contracts, purchase orders, memoranda of
agreements (MOAs), or internal service level agreements (SLAs).
PMBOK Guide 6th Edition by Management Institute
Role of Procurement
Make
Project
Buy
Procurement Framework
01 02 03
Plan Conduct Manage
Procurement Procurement Procurement
Procurement processes in PMBOK over
six editions
1996 2000 2004
1st Edition 2000 Edition 3rd Edition
12.1. Procurement Planning 12.1. Procurement Planning 12.1. Plan Purchases and Acquisitions
12.2. Solicitation Planning 12.2. Solicitation Planning 12.2. Plan Contracting
12.3. Solicitation 12.3. Solicitation 12.3. Request Seller Responses
12.4. Source Selection 12.4. Source Selection 12.4. Select Sellers
12.5. Contract Administration 12.5. Contract Administration 12.5. Contract Administration
12.6. Contract Close-out 12.6. Contract Closeout 12.6. Contract Closure
2008 2013 2017
4th Edition 5th Edition 6th Edition
12.1.Plan Procurements 12.1 Plan Procurement Management 12.1 Plan Procurement Management
12.2. Conduct Procurements 12.2 Conduct Procurements 12.2 Conduct Procurements
12.3. Administer Procurements 12.3 Control Procurements
12.3 Control Procurements
12.4. Close Procurements 12.4 Close Procurements
Plan Procurement
Inputs Tools & Techniques Outputs
1.Project charter 1.Expert judgment 1.Procurement management plan
2.Business documents 2.Data gathering 2.Procurement strategy
3.Project management plan 3.Data analysis 3.Bid documents
4.Project documents 4.Source selection analysis 4.Procurement statement of work
5.Enterprise environmental 5.Meetings 5.Source selection criteria
6.factors 6.Make-or-buy decisions
7.Organizational process assets 7.Independent cost estimates
8.Change requests
9.Project documents updates
10.Organizational process asset
updates
PMBOK Guide 6th Edition by Project Management Institute
Conduct Procurement
Inputs Tools & Techniques Outputs
1.Project management 1.Expert judgment 1.Selected sellers
plan 2.Advertising 2.Agreements
2.Project documents 3.Bidder conferences 3.Change requests
3.Procurement 4.Data analysis 4.Project management
documentation 5.Interpersonal and team plan updates
4.Seller proposals skills 5.Project documents
5.Enterprise updates
environmental factors 6.Organizational process
6.Organizational process assets updates
assets
PMBOK Guide 6th Edition by Project Management Institute
Manage Procurement
Inputs Tools & Techniques Outputs
1.Project management plan 1.Expert judgment 1.Closed procurements
2.Project documents 2.Claims administration 2.Work performance
3.Agreements 3.Data analysis information
4.Procurement 4.Inspection 3.Procurement
documentation 5.Audits documentation updates
5.Approved change requests 4.Change requests
6.Work performance data 5.Project management plan
7.Enterprise environmental updates
factors 6.Project documents updates
8.Organizational process 7.Organizational process
assets assets updates
PMBOK Guide 6th Edition by Project Management Institute
PLAN
PROCUREMENT
The process of documenting procurement decisions,
specifying the approach, and identifying potential sellers
Authorization Mode and
Control
■ One could easily separate a into two distinct parts:
– Make: portion which will be done with your own company
employees
■ Authorized by the project manager with use of non-legal
documents typically called work authorizations or
budgets
■ Directly controlled by company
– Buy: portion which will be sent outside of your company for
performance
■ Governed strictly by the legal document the buyer has
issued called the contract, or subcontract, or purchase
order
■ No direct control by company
Procurement
Delegation of Authority (DOA)
■ Formal delegation of authority to buy things on behalf of company or organization
■ Project managers rarely have a delegated authority to buy on behalf of their
companies or organizations. Individuals, no matter what their rank may hold, will not
possess the authority to execute contracts.
■ The assigned buyer will do anything and everything the project manager asks them
to do, but, always working within the formal procurement policies and procedures of
the company. A professional buyer will not violate purchasing policy, even if directed
to do so by a more senior project manager
■ United States Government follows the practice of requiring a distinct separation of
project responsibility from those individuals having procurement authority.
Centralized versus Decentralized
Purchasing Authority
■ "Centralized" Purchasing: General
Manager
– A functional person (Director) has delegated procurement
authority...and assigns a buyer to support the project.
Purchasing
Manager
■ "Decentralized" Purchasing: General
– The project manager has authority to execute contracts Manager
directly with another Company ... to buy something.
Project
Manager
Q&A
