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Project Procurement Management
Procurement is the act of obtaining goods, supplies, and/or services. Therefore, project
procurement is obtaining all of the materials and services required for the project. Project
procurement management encompasses the processes used for making sure project procurement
is successful.
Project procurement management includes three primary processes. These are:
1. Plan procurements
2. Conduct procurements
3. Administer (or control) procurements
Plan procurements
The first step in successful project procurement management is making a plan. This includes
planning for the following:
What are all the materials and services you will require for the project? This includes all
specifications of the materials and services, such as minimum quality requirements.
What can be provided by your company, and what should you purchase elsewhere? This
is called the make vs. buy decision. Even when your company can do something in-
house, there may be a benefit of outsourcing such as cost savings, faster delivery, etc.
What are your contract requirements for outside purchases?
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Do you have the required delivery dates?
Do you want a fixed price contract or cost-reimbursable?
Are there key milestones to be included?
What about legal terms and conditions that must be met?
How will you search for suppliers of the materials or services you need?
Will you release a request for proposal (RFP)?
Do you have a preferred supplier?
What are the criteria for who will win the work?
Will it be based on price if all contract requirements are met?
Is there another way to evaluate bidders? For example, will their Better Business Bureau ranking
be taken into account?
During the planning stage, it’s also important to determine how changes will be handled once a
contract is awarded.
Conduct procurements
This is the execution phase of project procurement management. It’s when the RFPs are released,
bids are gathered, and selections are made. Any vendor negotiations will occur during this phase,
and then the agreed-upon contracts are signed. Conducting procurements also includes the actual
receipt of and payment for goods and services.
The control or administer procurements process is focused on monitoring and controlling project
procurements to ensure all requirements are met. Two key steps included in this process are:
1. Status or progress updates from vendors
2. Quality checks of products or services delivered
Schedule and cost monitoring for procurements are also part of this process. Any changes and
their impact on the overall project schedule and budget are monitored here. It’s important to
consider that if a piece of material is going to be two weeks late, how will it impact the rest of
the project schedule?
Administer Procurements
The planning process: As the project manager, you will not create the plan in isolation. It will
likely be undertaken with the input of your entire project team, including the procurement team,
legal team (if you have one), and any other relevant subject matter experts within the company.
This may include estimators, finance, scheduling, design or engineering, operations, etc.
Controlling procurements: The project manager does not generally conduct the procurements.
However, you are still responsible for ensuring they are conducted appropriately. This means
you need to be aware of the status of procurements. If something is late, you need to know how it
impacts the rest of your project schedule and mitigate it appropriately. If there is a conflict
between department requirements, it will be up to you to resolve it. For example, imagine that
you are told a key material has a 10-week lead time. Unfortunately, your schedule shows you
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need it in eight weeks. You’re told they can get it in eight weeks if you pay an extra 15% for air
transport. Do you allow the two-week delay, or do you accept the cost overrun? Is there a third
option, such as finding a different supplier? As the project manager, the decision will be your
responsibility.
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