Join Bob McGannon for an in-depth discussion in this video What is project procurement?, part of Project Management Foundations: Procurement (2014).
- Making a purchase should be simple, right? Have you ever had a problem with something you purchased at a clothing store and then had issues with the store providing a replacement product? Good project procurement processes will ensure you're purchasing goods and services appropriately, to protect you, the buyer, and the seller as well. Project Procurement is about the process by which goods and services are evaluated and purchased, or procured, for your project.
Procurement enables you to obtain a product or service quickly, versus trying to do it yourself. For example, if you have a skills gap for your project, you could train someone and make them your expert, but that will take quite a while. They won't be an expert until they've had the opportunity to use their new skill in your project. Procuring a skill allows you to complete your project more quickly. I don't know about you, but I can't remember the last time I was told to take my time to get a project finished.
So procuring skills can be a life saver. Project procurement includes 4 major processes, planning for project procurement, making the actual purchase, monitoring the procurement process, and procurement closeout. Planning for project procurement will require you to create a procurement plan, even if it's just a few pages long. The procurement plan should document the processes you will follow to purchase items for your project.
The types of items that may be purchased, how you will perform make versus buy decisions, and identify potential sellers. For lynda.com members, I have included a template of a procurement plan that you can download. There are 4 key steps to making the actual purchase, creating the request for proposal, or RFP, or other documentation to obtain information from potential sellers, obtaining seller responses, selecting a seller, negotiating and awarding a contract.
The procurement monitoring process occurs throughout the project life cycle. This process includes the following activities, managing procurement relationships, monitoring contract performance, applying changes and corrections as appropriate. Procurement closeout activities are very important as you don't want an open contract sitting on the books for a long period of time. I have even seen valid vendor invoices surface after a project's been closed out.
That can lead to a very unpleasant experience as you try to explain that to your finance department. In procurement closeout, you need to ensure invoices have been paid, and the contract acceptance criteria are satisfied. Some projects will have minimal items to procure, and others will have millions of dollars of procurement. Regardless of the financial impact, there are fundamental procurement tools and techniques to be applied, which I will share with you during this course, and it might even help you with your wardrobe purchases.
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- Define project procurement.
- Distinguish when to use vendors and partners.
- Compare and contrast building versus buying.
- Identify different types of contracts.
- List types of payment approaches.
- Test your market.
- Build and use a request for information (RFI).