Procurement management, organization, and planning is yet another crucial element to project management. You must be thinking, “what isn’t an important element to project management? This is true. Project management comes with its peaks and valleys, its rewards and its challenges. While project management is a challenging role as a whole, regardless of industry or organization size, it is possible to achieve success for stakeholders and as a professional. Here are some things to consider when implementing a successful project procurement plan.
When project managers consider project procurement management, they need to think of the “what”, “when”, and “how”. Are we going to “make” or “buy”? What are we going to “make” or “buy”? When are we going to make a “make” or “buy” decision? How are we going to “make” or “buy” something? Basically each of these questions pertain to a particular phase in the project procurement management plan process.
Procurement Definition – The “What”: When analyzing a new project in the beginning, there are many things to look at, analyze, organize, and manage. In addition to identifying risk and reviewing stakeholder requirements, a project manager must also define procurement. This involves analyzing project specifications—like we would for any project—and be sure to include any examples or supplemental material that will correspond or be used as evidence in project procurement.
Depending on the industry or project, this could include drawings or technical specifications, a statement of work (SOW) or work breakdown structure (WBS) or model contract. Anything that accurately and clearly explains what a project will involve will adhere to procurement or project scope definition. The WBS will also clearly identify any “make” or “buy” choices and outlining each as such. After the “buy” items are identified and noted, each item will be classified as a “major buy complexity”, a “minor complexity”, or routine costs (also known as COTS).
Seller Selection – The “How”: Once everything noted above has been identified and addressed, the seller selection process can begin. This often involves project managers requesting proposals or RFPs, bid packages, and evaluating everything. Often times a supplier criteria table is necessary and even helpful to some project managers during this phase. A supplier criteria table is basically a chart that identifies each supplier that sent in a bid, and a score for each type of criteria noted by the project manager. This could include cost, schedules, experience, customer service, etc.
Once a seller or supplier is chosen, then this is typically submitted for management approval and an appropriate contract type is agreed upon.
The “When”: When each of the phases above has taken place, then project managers can focus on when each procurement phase should happen. It is pertinent that each procurement phase line up with the project’s master schedule. Even though the project schedule may be separate from procurement, they really go hand in hand. The “make”/”buy” relationship is dependent on one another and each party is responsible for their parts.
In addition, adhering to the appropriate project procurement phases in a timely fashion will also minimize risk down the line with meeting schedules, deliveries, and even buyer/seller relationships.
Finally, the project procurement management process can be a time-consuming, rigorous, and even sticky area of project management. It’s important for professional project managers to be well-versed in contract types, agreements, risk management, and even some basic contract legal knowledge. This will help project managers manage successful project procurement.