Plan Procurement Management Explained
Plan Procurement Management is a critical process in project management that involves defining how to acquire goods and services needed for the project. This process ensures that the procurement activities are well-planned, documented, and aligned with the project's objectives.
Key Concepts
1. Procurement Management Plan
The Procurement Management Plan is a subsidiary plan of the project management plan. It outlines the strategies, processes, and procedures for acquiring goods and services. This plan includes details on the types of contracts, procurement methods, and the roles and responsibilities for procurement activities.
Example: For a construction project, the procurement management plan might specify that competitive bidding will be used for selecting contractors, and that a procurement team will be responsible for evaluating bids and selecting vendors.
2. Procurement Strategy
The Procurement Strategy defines the approach to be used for acquiring goods and services. This includes determining whether to buy, lease, or build the required items, and selecting the appropriate procurement methods such as competitive bidding, sole sourcing, or negotiated contracts.
Example: In a software development project, the procurement strategy might involve leasing servers for hosting the application instead of purchasing them, and using competitive bidding for selecting software vendors.
3. Contract Types
Contract Types refer to the different ways to structure agreements between the buyer and the seller. Common contract types include fixed-price contracts, cost-reimbursable contracts, and time and materials contracts. The choice of contract type depends on the project's needs, risks, and the level of control required.
Example: For a marketing campaign, a fixed-price contract might be used with an advertising agency to ensure a clear budget and scope, while a time and materials contract might be used for hiring freelance designers to allow for flexibility in the workload.
4. Procurement Documents
Procurement Documents are the documents used during the procurement process to solicit bids, proposals, and quotations from potential vendors. These documents include requests for proposals (RFPs), requests for quotations (RFQs), and invitations to bid (ITBs). They provide detailed information about the project's requirements and the evaluation criteria.
Example: In a construction project, the procurement documents might include an ITB that outlines the scope of work, project timeline, and evaluation criteria for selecting the best contractor.
5. Source Selection Criteria
Source Selection Criteria are the standards used to evaluate and select vendors. These criteria can include price, quality, delivery time, vendor reputation, and past performance. Defining clear selection criteria helps in making objective and fair decisions.
Example: For a software development project, the source selection criteria might include the vendor's experience in similar projects, the quality of their previous work, and their ability to meet the project's timeline and budget.
6. Make-or-Buy Analysis
Make-or-Buy Analysis is a decision-making process that determines whether to produce an item in-house or purchase it from an external supplier. This analysis considers factors such as cost, quality, time, and resource availability to make an informed decision.
Example: In a manufacturing project, a make-or-buy analysis might compare the cost of producing a component in-house versus purchasing it from a supplier. If purchasing is more cost-effective and meets quality standards, the decision would be to buy the component.
7. Procurement Statement of Work (SOW)
The Procurement Statement of Work (SOW) is a document that describes the work to be performed by the vendor. It includes detailed specifications, deliverables, timelines, and performance criteria. The SOW ensures that both the buyer and the seller have a clear understanding of the project's requirements.
Example: For a marketing campaign, the procurement SOW might specify the types of advertisements to be created, the target audience, the expected reach, and the delivery dates for the campaign materials.