Plan Procurement Management in project Management (PMP) is the process of writing down choices about how to buy things for a project, explaining the approach, and finding possible sellers. The main benefit of this process is that it figures out if and when to buy goods and services from outside the project. You can get goods and services from outside sources or from other parts of the performing company. This step is either done only once or at set times during the job. Figure below shows the process’s inputs, resources, and products.
Plan Procurement Management: Inputs
Project Charter
The goals, project description, summary milestones, and preapproved cash resources are all in the project charter.
Business Documents
The following are parts of the business documents:
- Business case
- Benefits management plan.
Project Management Plan
The following are some of the parts of a project management plan:
- During the project’s execution phase, the scope management plan spells out how the contractors’ work will be handled.
- Within the quality management plan, the project must adhere to all industry standards and rules. This information is used in bid papers like the RFP and will be used in the contract as well. You can use this information to pre-qualify suppliers or as part of the decision process.
- The resource management plan lists the resources that will be rented or bought, along with any assumptions or limits that might affect the choice.
- The scope statement, WBS, and WBS vocabulary are all in the scope baseline. A project’s scope may still be changing early on. Both the statement of work (SOW) and the terms of reference (TOR) are based on the known parts of the topic.
Project Documents
It’s possible to use the following project documents as inputs for Plan Procurement Management in project Management (PMP) process:
- Milestone list
- Project team assignments.
- Requirements documentation
- Requirements traceability matrix
- Resource requirements
- Risk register
- Stakeholder register
Enterprise Environmental Factors
Among other things, the following Enterprise Environmental Factors can affect the Plan Procurement Management process:
- Conditions in the market;
- the products, services, and outcomes that are on offer in the market;
- sellers, such as how well they’ve done in the past or their name;
- Standard terms and conditions for products,, services, and outcomes, or for the business;
- Unique local needs, like rules about how local workers or sellers can do their jobs;
- legal advice about buying things;
- Systems for managing contracts, such as ways to handle changes to contracts;
- Set up a number of levels of pre-screened sellers based on their past performance, as well as a method for financial accounting and contract payments.
Organizational Process Assets
The different kinds of contracts that the company uses also affect the choices it makes for the Plan Procurement Management process. The following business process assets can have an effect on the Plan Procurement Management process:
- Preapproved seller lists.
- Formal procurement policies, procedures, and guidelines
- Contract types.
- Cost-reimbursable contracts
- Time and material contracts (T&M).
Plan Procurement Management: Tools And Techniques
Expert Judgment
You should think about getting help from people or groups that have expert knowledge or training in the following areas: Buying and selling things, Different types of contracts and contract documents, and Rules and following them.
Data Gathering
If you need to collect data for this process, you can use market research, but it’s not the only one. A part of market research is looking into the business and the specific skills of each seller. To find out what the market can do, procurement teams can use information they get at workshops, from online reviews, and from other places. Additionally, the team may set new specific buying goals to take advantage of technologies that are becoming more mature while weighing the risks that come with having a lot of sellers who can provide the needed goods or services.
Data Analysis
For Plan Procurement Management in project Management (PMP) process , you can use data analysis methods like make-or-buy analysis, but they are not the only ones. A make-or-buy study tells you if the project team can do the work or deliver the goods themselves, or if you should buy them from someone else. When deciding whether to make or buy, things to think about are the organization’s current resource allocation and their skills and abilities, the need for specialized expertise, the desire not to take on more permanent job responsibilities, and the need for independent expertise. It also involves looking at the risks of each “make or buy” choice.
Source Selection Analysis
Before choosing the picking method, it is important to look at how the different needs for the project are ranked in terms of importance. It is a good idea to include the evaluation method in the procurement papers so bidders know how they will be judged. This is because competitive selection methods may require sellers to spend a lot of time and money up front. The following are examples of common ways to choose:
- Least cost.
- Qualifications only
- Quality-based/highest technical proposal score.
- Quality and cost-based
- Sole source
- Fixed budget.
Meetings
Without extra information exchange meetings with potential bidders, research may not give you enough specific information to make a procurement strategy. By working with possible buyers, both the organization buying the goods or services and the seller can come up with a solution or product that is good for both of them. Gatherings can help figure out how to oversee and manage the buying.
Plan Procurement Management: Outputs
Procurement Management Plan
The things that need to be done during the purchase process are written down in the procurement management plan. It needs to be written down if bids should be done internationally, nationally, locally, or any other way. If the project gets money from outside sources, the procurement management plan and the project timeline should match up with the sources and availability of the money.
Procurement Strategy
Once the make-or-buy study is done and it is decided to buy something from outside the project, a plan for how to get it should be made. The procurement strategy’s goal is to reveal the project delivery method, the type(s) of legally binding agreement(s), and the path the procurement will take as it moves through the procurement stages.
- Delivery methods.
- Contract payment types
- Procurement phases
Bid Documents
Bid documents ask potential sellers for their best prices. When the buyer chooses a seller based on price, like when buying standard or commercial items, words like “bid,” “tender,” and “quotation” are used. On the other hand, words like “proposal” are used when other factors, like technical ability or approach, are more important. The specific terms used in procurement may be different depending on the business and location of the procurement.
Based on the products or services required, the bidding documents may include a request for information, a request for quotation, a request for proposal, or some other form of procurement document that is suitable. The following are the rules for using them:
- Request for information (RFI)
- Request for quotation (RFQ)
- Request for proposal (RFP)
Procurement Statement Of Work
The project scope baseline is used to make the statement of work (SOW) for each procurement. The SOW only lists the parts of the project scope that are included in the linked contract. The SOW gives enough information about the purchase item for potential sellers to figure out if they can provide the goods, services, or results. Whatever the item is, the buyer’s needs, or the expected contract form, sufficient information can be different. In a SOW, you can include details like specifications, the amount you want, quality levels, performance data, the length of time you need to do the work, where you need to do it, and other needs.
Source Selection Criteria
When the buyer picks evaluation factors, they want to make sure that the proposal they choose will provide the best quality services. Few examples of the factors used to choose sources are:
- Capability and capacity;
- Product cost and life cycle cost;
- Delivery dates;
- Technical expertise and approach;
- Specific relevant experience;
- Adequacy of the proposed approach and work plan in responding to the SOW;
- Key staff’s qualifications, availability, and competence;
- Financial stability of the firm;
- Management experience; and
- Suitability of the knowledge transfer program, including training.
Make-or-buy Decisions
The make-or-buy study helps the project team decide if they can do certain tasks themselves or if they need to hire someone else to do them.
Independent Cost Estimates
If an organization is buying a lot of things, it can choose to either make its own cost estimate or have a professional outside estimate made as a standard for the answers that are being considered. Large differences in cost estimates may mean that the procurement SOW wasn’t clear or was too short, or that the potential sellers didn’t fully understand or reply to the procurement SOW.
Change Requests
If the choice is about getting products, services, or resources, you may need to make a change request. Other choices made during the planning phase of buying can also lead to the need for more change requests. Make changes to the project management plan, its subplans, and other parts, and you might get change requests that affect how you buy things. The Perform Integrated Change Control method takes change requests and reviews and decides what to do with them.
Project Documents Updates
Because of Plan Procurement Management in project Management (PMP) process , project documents like, but aren’t limited to, the following may be updated:
- Lessons learned register.
- Milestone list.
- Requirements documentation
- Requirements traceability matrix.
- Risk register
- Stakeholder register
Organizational Process Assets Updates
The Plan Procurement Management process updates organizational process assets, such as information on approved sellers.
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