So you’ve been assigned and stepped into the role as project manager. Congratulations! You’ve officially given up free time, vacations, and sleep. All joking aside, project management is a big job and there are many important responsibilities, components, and steps that go along with the job. Project procurement is one of them…
What exactly is project procurement from a project management standpoint? Project procurement involves contracts, negotiations, letters of intent, or other signed agreement that a project manager or other team member receives from a client on work about to be done. Procurement can also involve purchase orders, invoices, or other payment contracts that a project manager may approve and send out to contractors or vendors for work being done on a project. Procurement is basically contract management, and anything that would fall into that category for a project manager.
If you ask many experienced project managers, they will most likely tell you that project procurement is not their favorite part of the job. It can involve a lot of correspondence, conflict at times, and red tape and legal jargon, in other cases. So what should project managers keep in mind when ensuring proper project procurement steps.
Contracts and Negotiations. When a project manager first receives a contract, signed agreement, letter of intent or other type of binding contract that a project management firm and client agree on, he or she should compare and cross reference the information and data listed or outlined in the contract or agreement with the specifications received at project submission and assignment. This will prevent conflict and misinterpretations down the line or at project completion.
In addition, once a project-related contract or agreement is received and taken note of, the project manager should then document in the project life cycle that the agreement has in fact been received and filed away in a safe and secure location. This could be in a project folder on a common server, or any secure file sharing location where team member can access the agreement or contract and anything other related correspondence easily.
Purchase Orders (POs) and Invoices. Purchase orders, or commonly referred to as POs by many experienced project managers, and invoices are used when working with contractors or freelancers and/or vendors to do work on a particular project. A purchase order is basically an “agreement” that exists between a company and contractor for hiring purposes. A purchase order, once created and approved by a project manager or supervisor, is then sent to the contractor for his or her records. This is different between a client and firm due to the working relationship between the two.
After, and only after the work is completed, the contractor sends the firm an invoice for the work completed. Depending on the organization, the project manager may be responsible for matching up the PO with the invoice and submitting them to Accounts Payable, but ultimately the project manager should make sure both are properly sent out and received in a timely manner.
One final thing to note when working with POs and invoices during project procurement is that the PO should always be a running and accurate agreement between a project management firm and a contractor or vendor. Any project manager at any point in time should be able to pick up another project manager’s project and refer to the PO for accurate instruction on the work being done on a project.
Finally, while project procurement might seem tedious or boring, but it’s a very important step at both the beginning and the close of the project. It’s important to ensure that specifications are clearly met and outlined in an agreement up front before performing the work and carrying out the project, and it’s important to pay contractors and vendors in a timely manner at the close of the project. All in all, both clients and vendors will be happy with their relationship with you if both areas of procurement are met properly.