4.1 Procurement Management

The procurement effort on projects varies widely and depends on the type of project. Procurement can happen anytime during the project; however, planning helps set expectations to ensure that the procurement process is performed smoothly. Procurement covers everything from material, capital equipment and supplies to solutions, labor, and services. The “procurement cycle” reflects all procurement-related activities from when the decision is made to outsource equipment all the way through to the payment of bills and closing of procurement contracts.

In less complex projects, the project team performs the work associated with procurement management. This includes:

• Identifying the required materials, equipment, and supplies
• Identifying the potential vendors
• Preparing requests for quotes (RFQs) and requests for proposals (RFPs), which include product/service specifications and a detailed delivery schedule
• Evaluating RFQs and RFPs to select the most suitable vendors
• Awarding and signing contracts
• Administering the contract and monitoring vendors’ performance
• Managing contract changes
• Closing out the contract upon work completion

Procurement Cycle

On more complex projects, procurement professionals may be assigned to assist the team throughout the project’s lifetime.

Procurement management follows a logical order. First, determine what the project needs to contract; then plan to do it. Next, send out contract requirements (solution specifications and timeline requirements) to potential vendors. These vendors bid for the chance to work on the project. The project team selects the best vendor and then signs a contract to formalize acceptance of the terms. Once the work begins, the supplier’s performance is monitored to ensure that the contract is being followed. When the work is done, the contract is closed out.

PMI identifies the following three major procurement processes:

Corporate Procurement and Project Procurement Strategies

Corporate procurement is the relationship of specific procurement actions to the corporate strategy, e.g. centralized procurement.

Project procurement is the relationship of specific procurement actions to the operating environment of a project.

E.g. when the project manager is allowed to perform sole source procurement without necessarily involving the centralized procurement group (such as purchasing one ounce of a special chemical for an R&D project).

Project procurement strategy can differ from corporate procurement strategies because of:

• constraints
• availability of critical resources
• specific customer requirements.

Corporate procurement strategies might promote purchasing small quantities from several qualified vendors, whereas project procurement strategies may dictate sole-source procurement.