Manual 11

Project Procurement
Management

Book 1 of 5
Procurement Planning and Management
 Manual 11: Project Procurement Management

Contents
Topic 1: Procurement Planning and Management 3
Section A: Introducing Procurement Planning 3
Project Procurement Management 3
Section B: Procurement Planning Overview 7
Introduction 7
Objectives 7
Defining Procurement Planning 7
Procurement Planning Process 7
Inputs, Tools and Techniques, and Outputs of Procurement 8
Section C: Inputs to Procurement Planning 9
Scope Statement 9
Product Description 9
Procurement Resources 9
Market Conditions 9
Other Planning Outputs 9
Constraints 9
Assumptions 9
Section D: Tools and Techniques for Procurement Planning 10
Make-or-Buy Analysis 10
Expert Judgment 10
Contract Type Selection 11
Section E: Outputs from Procurement Planning 12
Procurement Management Plan 12
Statement of Work (SOW) 12
Components of a SOW 13
Summary: Procurement Planning 13
Section F: An Overview of Project Procurement Management 14
Introduction 14
Objectives 14
Defining Project Procurement Management 14
Project Procurement Management in the Project Framework 15
Section G: Processes of the Project Procurement Management Knowledge Area 16
Procurement Processes 16
Section H: Concepts and Principles of Procurement Management 17
Why are Goods and Services Procured? 17
Who Performs Procurement Work? 17
The Buyer-Seller Relationship 17
Summary: Project Procurement Management Overview 17

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 Manual 11: Project Procurement Management

Topic 1: Procurement
Planning and Management
Section A: Introducing Procurement
Planning
Project Procurement Management
Project Procurement Management includes the processes to purchase or acquire the products, services,
or results needed from outside the project team to perform the work. This chapter presents two
perspectives of procurement. The organization can be either the buyer or seller of the product, service, or
results under a contract.

Project Procurement Management includes the contract management and change control processes
required to administer contracts or purchase orders issued by authorized project team members.

Project Procurement Management also includes administering any contract issued by an outside
organization (the buyer) that is acquiring the project from the performing organization (the seller), and
administering contractual obligations placed on the project team by the contract.

Figure 1 provides an overview of the Project Procurement Management processes, and Figure 2 provides
a process flow view of the processes and their inputs, outputs, and related processes from other
Knowledge Areas.

The Project Procurement Management processes include the following:

Plan Purchases and Acquisitions – determining what to purchase or acquire and determining when and
how.

Plan Contracting – documenting products, services, and results requirements and identifying potential
sellers.

Request Seller Responses – obtaining information, quotations, bids, offers, or proposals, as appropriate.

Select Sellers – reviewing offers, choosing among potential sellers, and negotiating a written contract
with each seller.

Contract Administration – managing the contract and relationship between the buyer and seller,
reviewing and documenting how a seller is performing or has performed to establish required corrective
actions and provide a basis for future relationships with the seller, managing contract-related changes
and, when appropriate, managing the contractual relationship with the outside buyer of the project.

Contract Closure – completing and settling each contract, including the resolution of any open items, and
closing each contract applicable to the project or a project phase.

These processes interact with each other and with the processes in the other Knowledge Areas as well.
Each process can involve effort from one or more persons or groups of persons, based on the
requirements of the project. Each process occurs at least once in every project and occurs in one or more
project phases, if the project is divided into phases. Although the processes are presented here as
discrete components with well-defined interfaces, in practice they overlap and interact in ways not
detailed here.

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 Manual 11: Project Procurement Management

The Project Procurement Management processes involve contracts that are legal documents between a
buyer and a seller. A contract is a mutually binding agreement that obligates the seller to provide the
specified products, services, or results, and obligates the buyer to provide monetary or other valuable
consideration. A contract is a legal relationship subject to remedy in the courts. The agreement can be
simple or complex, and can reflect the simplicity or complexity of the deliverables. A contract includes
terms and conditions, and can include other items such as the seller's proposal or marketing literature,
and any other documentation that the buyer is relying upon to establish what the seller is to perform or
provide. It is the project management team’s responsibility to help tailor the contract to the specific needs
of the project. Depending upon the application area, contracts can also be called an agreement,
subcontract, or purchase order. Most organizations have documented policies and procedures specifically
defining who can sign and administer such agreements on behalf of the organization.

Although all project documents are subject to some form of review and approval, the legally binding
nature of a contract usually means that it will be subjected to a more extensive approval process. In all
cases, the primary focus of the review and approval process ensures that the contract language describes
products, services, or results that will satisfy the identified project need. In the case of major projects
undertaken by public agencies, the review process can include public review of the agreement.

The project management team may seek support early from specialists in the disciplines of contracting,
purchasing, and law. Such involvement can be mandated by an organization’s policy.

The various activities involved in the Project Procurement Management processes form the life cycle of a
contract. By actively managing the contract life cycle and carefully wording the terms and conditions of
the contract, some identifiable project risks can be avoided or mitigated. Entering into a contract for
products or services is one method of allocating the responsibility for managing or assuming potential
risks.

A complex project can involve managing multiple contracts or subcontracts simultaneously or in

sequence. In such cases, each contract life cycle can end during any phase of the project life cycle (see
Chapter 2). Project Procurement Management is discussed within the perspective of the buyer-seller
relationship. The buyer-seller relationship can exist at many levels on any one project, and between
organizations internal to and external to the acquiring organization. Depending on the application area,
the seller can be called a contractor, subcontractor, vendor, service provider, or supplier. Depending on
the buyer’s position in the project acquisition cycle, the buyer can be called a client, customer, prime
contractor, contractor, acquiring organization, governmental agency, service requestor, or purchaser. The
seller can be viewed during the contract life cycle first as a bidder, then as the selected source, and then
as the contracted supplier or vendor.

The seller will typically manage the work as a project if the acquisition is not just for materiel, goods, or
common products. In such cases:

• Buyer becomes the customer, and is thus a key project stakeholder for the seller
• Seller’s project management team is concerned with all the processes of project management, not
just with those of this Knowledge Area
• Terms and conditions of the contract become key inputs to many of the seller’s management
processes. The contract can actually contain the inputs (e.g., major deliverables, key milestones, cost
objectives), or it can limit the project team’s options (e.g., buyer approval of staffing decisions is often
required on design projects).

This chapter assumes that the buyer of items for the project is within the project team and that the seller
is external to the project team. This relationship is true if the performing organization is the seller of a
project to a customer. This relationship is also true if the performing organization is the buyer from other
vendors or suppliers of products, services, results, or subproject components used on a project.

This chapter assumes that a formal contractual relationship is developed and exists between the buyer
and the seller. However, most of the discussion in this chapter is equally applicable to non-contractual
formal agreements entered into with other units of the project team’s organizations.

Book 1 of 5: Procurement Planning and Management Page 4 of 17


PROJECT QUALITY
MANAGEMENT
Plan Purchases and
Acquisitions
1. Inputs
1. Enterprise environmental
factors
2. Organizational process
assets
3. Project scope statement
4. Work breakdown structure
5. WBS dictionary
6. Project management plan
- Risk register
- Risk-related contractual
agreements
- Resource requirements
- Project schedule
- Activity cost estimates
- Cost baseline
2. Tools & Techniques
1. Make-or-buy analysis
2. Expert judgment
3. Contract types
3. Outputs
1. Procurement management
plan
2. Contract statement of work
3. Make-or-buy decisions
4. Requested changes Figure 1 - Project Procurement Management Overview
Select Sellers
1. Inputs
1. Organizational process assets
2. Procurement management
plan
3. Evaluation criteria
4. Procurement document
package
5. Proposals
6. Qualified sellers list
7. Project management plan
- Risk register
- Risk related contractual
agreements
2. Tools & Techniques
1. Weighting system
2. Independent estimates
3. Screening system
4. Contract negotiation
5. Seller rating systems
6. Expert judgment
7. Proposal evaluation
techniques
3. Outputs
1. Selected sellers
2. Contract
3. Contract management plan
4. Resource availability
5. Procurement management
plan (updates)
6. Requested changes
Book 1 of 5: Procurement Planning and Management
Manual 11: Project Procurement Management
Plan Contracting Request Seller Responses
1. Inputs
1. Inputs
1. Organizational process assets
1. Procurement management
2. Procurement management
plan
plan
2. Contract statement of work
3. Procurement documents
3. Make-or-buy decisions
4. Project management plan
2. Tools & Techniques
- Risk register
1. Bidder conferences
- Risk related contractual
2. Advertising
agreements
3. Develop qualified sellers list
- Resource requirements
- Project schedule
3. Outputs
- Activity cost estimate
1. Qualified sellers list
- Cost baseline
2. Procurement document
package
2. Tools & Techniques
3. Proposals
1. Standard forms
2. Expert judgment
3. Outputs Contract Closure
1. Procurement documents
2. Evaluation criteria
1. Inputs
3. Contract statement of work
1. Procurement management
(updates)
plan
2. Contract management plan
3. Contract documentation
Contract Administration
4. Contract closure procedure
1. Inputs 2. Tools and Techniques
1. Contract 1. Procurement audits
2. Contract management plan 2. Records management system
3. Selected sellers
4. Performance reports 3. Outputs
5. Approved change requests 1. Closed contracts
6. Works performance 2. Organizational process assets
information (updates)
2. Tools and Techniques
1. Contract change control
system
2. Buyer conducted performance
review
3. Inspections and audits
4. Performance reporting
5. Payment system
6. Claims administration
7. Records management system
8. Information Technology
3. Outputs
1. Contract documentation
2. Requested changes
3. Recommended corrective
actions
4. Organizational process assets
(updates)
5. Project management plan
(updates)
- Procurement management
plan
- Contract management plan
Page 5 of 17
 Manual 11: Project Procurement Management

Marketplace conditions Project Management

Enterprise Purchasing skills plan Develop Project
Environmental Plan Purchases
Management Plan
Factors & Acquisitions

Policies, procedures and Procurement management plan

guidelines Contract statement of work
Lessons learned Make-or-buy decisions
Organizational
Knowledge database
Process Assets
Approved change requests
Plan Approved corrective actions
Contracting
Scope Definition Project scope statement
Procurement documents
Create WBS Work Breakdown structure Evaluation criteria
WBS dictionary Contract statement of work (updates)

Activity Resource
Estimating Activity resource estimating Request Seller
Schedule Response
Project schedule
Development
Qualified sellers list
Procurement document package
Proposals
Cost Estimating
Activity cost estimates
Cost budgeting
Cost budgeting
Requested changes
Select Sellers

Risk Identification Selected sellers

Risk register
Contract
Risk Response Risk-related contractual Contract management plan
planning agreements Resource availability

Contract
Performance Performance reports
Administration Project management plan (updates)
Reporting
Requested changes
Recommended corrective actions

Work performance
Direct & Manage information
Project Execution Contract documentation
Procurement management plan
Contract management plan
Closed
Organizational process contracts
assets (updates)
Close Project Contract Integrated
Contracts closure procedure Closure Change Control

Figure 2 - Project Procurement Management Process Flow Diagram

Note: Not all process interactions and data flow among the processes are shown.

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 Manual 11: Project Procurement Management

Section B: Procurement Planning Overview

Introduction
During this concept, you evaluate the process of procurement planning in your organizations in step-by-
step procedures. You determine how your organizations quantity the needs for resources and how to fulfill
these resources needs.

The step-by-step learning style utilizes a “building block” approach for presenting concepts in a step-by-
step procedural learning style. This approach is particularly appropriate and used in this lesson for the
task-oriented areas that have clear step-by- step procedures involved in them.

Objectives
• Define procurement planning. Understand where procurement planning fits into the overall
procurement management structure.
• Describe the inputs to procurement planning.
• Describe the tools and techniques for procurement planning.
• Describe the outputs from procurement planning.

Defining Procurement Planning

Procurement planning is the process of deciding what elements to procure from outside the organization.
It requires the project manager to determine which project resources should be secured within the
organization and when it is more cost effective or beneficial to acquire resources from outside the
organization.

Definition: Procurement Planning

Determining what to procure and when.

Procurement Planning Process

Procurement planning is the first process performed in project procurement management. It is

considered a facilitating process because if a project manager does not procure resources it is not
necessary to perform procurement planning. As part of the planning process group, procurement
planning produces the same kinds of outputs that other planning process group activities produce.

Process Group
Controlling
Initiating

Planning Executing Closing

Knowledge Area
Project Procurement Procurement Solicitation Contract
Management Planning (Facilitating) Closeout
(Facilitating) (Core)
Source
Solicitation Selection
Planning (Facilitating)
(Facilitating)
Contract
Administration
(Facilitating)

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 Manual 11: Project Procurement Management

Inputs, Tools and Techniques, and Outputs of Procurement

Procurement planning uses information regarding project work and procuring resources as inputs. The
project manager uses make-or-buy analysis and expert judgment techniques to determine why resources
should be procured, and selects the contract type to procure the resources. The results of procurement
planning are the procurement management plan and statements of work for the resources to be
procured. These inputs, tools and techniques, and outputs are explored in further detail.

Inputs
ΠScope statement
Tools and Techniques
ΠProduct description
ΠMake-or-buy analysis
ΠProcurement resources
ΠExpert judgment
ΠMarket conditions
ΠContract type selection
ΠOther planning outputs
ΠConstraints
ΠAssumptions

Outputs
ΠProcurement management plan
ΠStatement(s) for work

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 Manual 11: Project Procurement Management

Section C: Inputs to Procurement Planning

Scope Statement
The scope statement describes the focus of the entire project, not just the item being procured. It should
outline all of the needs to be met at the end of the project. This provides the big picture as context for the
procurement process.

Product Description
The product description describes the end result of the project. It might include some technical details
that need to be incorporated into procurement planning. The product description is usually broader than
the scope statement or statement of work.

Procurement Resources
The human procurement resources need to be identified. If an organization has a formal procurement
group, then a representative of that group should be assigned to the project. If there is no formal
procurement group, then a member of the project team will need to be designated.

Market Conditions
An evaluation of the market conditions needs to be made. Market conditions answer key questions about
the availability of resources, and how they may be procured:

• Are there any resources for the project available to be acquired?

• Are there temporary contract workers with the expertise necessary?

• Are there long lead times required to build certain components?

• What suppliers are there and what cost structure is there for the good or service needing acquisition?

• What are typical terms and conditions?

Other Planning Outputs

Other planning outputs (outputs from other planning processes conducted) need to be included in the
procurement planning process. Items that should usually be considered during procurement planning
include cost and schedule estimates, quality management plans, cash-flow projections, work breakdown
structure, identified risks, and staffing plan.

Constraints

Constraints include any factors that may affect the ability to procure resources. For example, any existing
contracts with suppliers may dictate certain pricing or conditions.

Assumptions

Assumptions are any factors that are assumed to be true or real. For instance, it can be assumed there
will be no additional changes in the current staff assigned to work on the project.

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 Manual 11: Project Procurement Management

Section D: Tools and Techniques for

Procurement Planning
There are three tools and techniques used in the procurement planning phase.

• Make-or-buy analysis
• Expert judgment
• Contract type selection

Make-or-Buy Analysis
Make-or-buy analysis evaluates which resources should be sourced from within the organization and
which should be acquired from outside the organization.

Definition: Make-or-Buy Analysis

Make-or-buy analysis is a general management technique and apart of the initial scope definition
process that can be used to determine whether a particular product can be produced cost
effectively by the performing organization.

The analysis includes a review of the direct and indirect costs involved in either alternative. A variation of
make-or-buy analysis is lease-versus-purchase analysis.

Make-or-buy analysis should also include other factors, such as whether or not a supplier is able to
respond if a customer’s request has to be expedited. Factors such as whether or not a staff is already
assigned to other projects and therefore cannot perform additional work may automatically dictate the
need to outsource certain aspects of the project. Impacts to public relations, company policy, and company
strategy in regards to making or buying the item should be considered. The best alternative is one that
balances the cost with the other factors concerning risk, quality, and strategic fit with company goals.

Project managers should consider what standard products or services are available in the market. It is
usually cheaper to buy standard items than to have them customized. Also, if the company has recurring
needs or uses similar items across multiple projects, it may make sense to acquire the resources with the
whole company in mind, not just the individual project. For example, one major car manufacturer saved
millions of dollars in production costs by requiring that certain components all be the same specification
across its car brands. (Previously, each car style had its own specification for each component.)

Expert Judgment
Checking with other knowledgeable people is often required to evaluate inputs, and it can be helpful in
making sure that a procurement plan makes sense. Using these resources can help the organization to
avoid mistakes and perform more effectively and efficiently.

Experts may be individuals or groups from any of a number of sources:

• Internal to a department
• In another department within the company
• Chain of command
• Consultants
• Professional or technical organizations
• Industry groups

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 Manual 11: Project Procurement Management

Contract Type Selection

Which contract types would be most suitable for the project?

• Fixed-price or lump-sum
• Cost-reimbursable
• Time and material

While focusing on the need for resources, the project manager must start thinking about which contract
type would be best for the situation: fixed-price or lump-sum, cost- reimbursable, or time and material.

Recall that fixed-price is the most common contract type. The risk is on the seller, and there is incentive
to minimize cost.

With cost-reimbursable contracts, the risk is shared between the buyer and the seller; incentives depend
on the terms of the contract.

With lime and material contracts risk is shared between the buyer and the seller; there are no initiatives
to work more efficiently.

Answers to the following questions can provide information to assist the project manager in selecting the
contract type that best supports the needs of the project:

• How much risk does the organization want to take on?

• What kinds of incentives can the contract include to ensure that quality product or services are
provided at the right price?

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 Manual 11: Project Procurement Management

Section E: Outputs from Procurement

Planning
There are two outputs resulting from procurement planning:

• Procurement management plan

• Statement of work

These outputs are explored in greater detail on the next few pages.

Procurement Management Plan

There is no standard format required for the procurement management plan. It may be detailed or broad.
It should, however, address each phase of the procurement management process in enough detail that
people do not have to recreate the work. This will also help people who are new to the project understand
the plan.

The procurement management plan explains how the remaining processes will be handled - from
solicitation planning to contract closeout. It may be formal or informal, detailed or broadly stated, and
becomes part of the overall project plan.

Things to include in the procurement management plan are:

The type of contract to be used

• Levels of responsibility for procurement for any members of the project team and the procurement
department
• Whether any standard documents will be used and which documents will be required
• How procurement will be integrated with other project aspects, like scheduling and quality control
• How sources will be qualified

Statement of Work (SOW)

A statement of work describes the procurement item in enough detail to allow vendors to determine if
they are capable of meeting the stated requirements. It must be as clear, concise, and complete as
possible to ensure a meeting of the minds about what is being procured. SOWs may be revised and refined
as more information becomes available throughout the process.

For example, the supplier may discover a new and improved way of providing the item than what was
initially specified. However, the sooner the details can be laid out, the more certain everyone is that what
is being provided is what is desired. For standard products or services, however, many details may not be
necessary. Any related services or products (such as schedule updates) that need to accompany the
primary item being procured should be specified as well.

Each item being procured needs a SOW. If an item includes multiple products or services, they could be
incorporated into the same SOW. The SOW may be attached to or referenced in the contract.

SOWs are not intended to tell a seller how to make the product. The right people should be included in
specifying and writing the SOW, since this is the likely standard to which the buyer and seller will be held.
These include experts, key managers, and the end users of the product or service supplied.

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 Manual 11: Project Procurement Management

Components of a SOW

Recommended sections of a SOW include:

• An introduction describing the product or service being requested in summary

• A detailed section describing the product or service, including:

• Any functions to be accomplished

• Its performance (how well or how much)
• Any specific design elements
• Required delivery dates or time frames
• Reporting or data required on progress
• Any special conditions

Summary: Procurement Planning

• Procurement planning is the first process performed in project procurement management. It is the
process of deciding what elements to procure from outside the organization.

• Key inputs to procurement planning include the scope statement, the product description, the
identification of procurement resources, and an evaluation of market conditions.

• A well-thought-out procurement plan will provide a roadmap for the work that can be outsourced and
what type of contract should be used. Make-or-buy analysis evaluates the most efficient options.
Expert judgment provides important input on the feasibility of the procurement plan. The project
manager must consider risk and incentives, when thinking about contract type selection.

• The procurement management plan and the statement of work are the outputs from procurement
planning. A detailed SOW will help everyone understand the work required.

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 Manual 11: Project Procurement Management

Section F: An Overview of Project

Procurement Management
Introduction
This concept provides an overview of the key project procurement management definitions, concepts, and
principles, in step-by-step procedures. The unique processes of the project management knowledge area
are introduced, and those individuals who perform procurement work within an organization are
identified.

The step-by-step learning style utilizes a “building block” approach for presenting concepts in a step-by-
step procedural learning style. This approach is particularly appropriate and used in this lesson for the
task-oriented areas that have clear step-by- step procedures involved in them. The audio is
complimentary to the text content and the activities are provided to help you further understand the
concept.

Objectives
• Define project procurement management.

• Relate project procurement management to the PMI® framework for project management.

• Distinguish between the unique project procurement management processes.

• Learn why goods and services are procured.

• Identify those individuals who perform procurement work within an organization.

Defining Project Procurement Management

Project procurement and contract management covers processes used to acquire resources to complete
projects and to ensure fulfillment of requirements. Resources that are procured for the performing
organization may be materials (raw or finished) needed as inputs, as well as human resources, needed to
provide special expertise or additional production capacity.

Sometimes procurement and contracting are used as synonyms; both are related to securing resources
for the performing organization.

Definition: Project Procurement Management

A subset of project management that includes the processes required to acquire goods and
services to attain project scope from outside the performing organization. It consists of
procurement planning, solicitation planning, solicitation, source selection, contract
administration, and contract closeout.

PMI procurement processes include all processes to acquire resources from outside the organization,
from identifying resource needs to concluding contracts.

The project manager will often work with a contract department to procure large or expensive items. The
project manager will sometimes do all the procurement work hint/herself. In larger companies, there may
be professionals who assist the project manager by focusing on this work. However, the project manager
will need to understand the processes performed to provide appropriate information for guiding
procurement professionals, and to participate in the processes when necessary.

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 Manual 11: Project Procurement Management

Project Procurement Management in the Project Framework

Project procurement management is one of the nine knowledge areas in the PMI framework of project
management. Project procurement management includes details on contract administration. The exhibit
below displays the processes related to the project procurement management knowledge area. This
course references topics specifically in this knowledge management area. The processes of project
procurement management span across several of the five project management process groups, noted at
the top of the columns in the diagram.

Process Group
Initiatin
Planning Executing Controlling Closing
g
Knowledge Area
Integration … … …
Scope … … …
Time … …
Cost … …
Quality … … …
Human Resource … …
Communications … … … …
Risk … …
Project Procurement Procurement Solicitation Contract
Management Planning Closeout

Solicitation Source
Planning Selection

Contract
Administration

Mapping of Project Management Processes to the Process Groups and Knowledge Areas.

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 Manual 11: Project Procurement Management

Section G: Processes of the Project

Procurement Management Knowledge
Area
Project procurement management includes the processes required to acquire goods and services from
outside the performing organization. These processes should be performed concurrently with scope
definition. If goods and services are not going to be obtained from outside the performing organization, the
processes may not be performed.

Procurement management processes fall into the project process groups of planning, executing, and
closing. Most of the processes are considered to be facilitating processes, which means that their exact
use is dependent on the project. The processes are performed, as they are needed, depending on the
nature of the project.

Process Group

Controlling
Initiating

Planning Executing Closing

Knowledge Area
Project Procurement Procurement Solicitation Contract
Management Planning (Facilitating) Closeout
(Facilitating) (Core)
Source
Solicitation Selection
Planning (Facilitating)
(Facilitating)
Contract
Administration
(Facilitating)

The contract closeout process is a core process. This process occurs in almost every project in the same
manner, at the same stage of the project. It has a clear relationship with the other closing process of
administrative closure.

Procurement Processes

• Procurement planning - Determining what to procure and when.

• Solicitation planning - Documenting product requirements and identifying potential sources.

• Solicitation - Obtaining quotations, bids, offers, or proposals, as appropriate.

• Source selection - Choosing among potential sellers.

• Contract administration - Managing the relationship with the seller.

• Contract closeout - Completion and settlement of the contract, including resolution of any open
items.

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 Manual 11: Project Procurement Management

Section H: Concepts and Principles of

Procurement Management
Why are Goods and Services Procured?

Over the past few decades, the trend toward outsourcing has risen dramatically. Industry paradigms have
shifted to force organizations to refocus on their core business- what they do best to optimize the value
and profit of their efforts. Any efforts outside of an organization’s core business will require extra labor or
cost for items which can be produced more efficiently elsewhere; often it is strategically more profitable
to procure these items and services rather than produce them internally. Many projects require an
organization to perform a make-or-buy analysis to determine the best way to acquire resources.

Originally procurement was oriented around acquiring raw materials for the production of a product or
supplies and equipment for the employee. It is sometimes more efficient to use resources provided by
another company, e.g., temporary workers, partially assembled parts, etc.

Who Performs Procurement Work?

Some project managers perform procurement work as a part of their duties. Smaller organizations may
require a project manager to be a jack-of-all-trades, performing their own procurement and contracting
work. In some larger organizations, designated procurement professionals focus more on details than the
project manager, who is often too busy. The job of the procurement professional is to act as a facilitator to
ensure that the procurement needs are documented and met, and not to be a barrier between the parties.

Departments or offices involved with procurement are generally called purchasing, procurement, or
contracting. Job titles include purchasing agent, procurement officer, contracting officer, contract
manager, and contract administrator. Good procurement professionals are involved early in the process
and understand how the item being procured fits in the overall scheme.

Different companies have different ways of appointing who is ultimately responsible for procurement
decisions. Company policy and procedures note who makes the final decision regarding contract terms if
the project manager and the contract manager do not agree.

The Buyer-Seller Relationship

For the purpose of this document procurement and contracting is focused from the perspective of the
buyer, who may also be referred to as the customer, client, or another name. This course explores this
perspective, and then reviews procurement from the perspective of the seller, who may also be called the
vendor, supplier, or contractor.

Summary: Project Procurement Management Overview

Project procurement management is a subset of project management that includes the processes
required to acquire goods and services to attain project scope from outside the performing organization.
Procurement management processes fall into the planning, executing, and closing process groups. The
unique processes of procurement management are procurement planning, solicitation planning,
solicitation, source selection, contract administration, and contract closeout.

Project procurement management is increasingly important as companies outsource more work to

manage better costs. Organizations may require that project managers perform procurement
responsibilities if there is no in-house specialist or department dedicated to procurement.

Book 1 of 5: Procurement Planning and Management Page 17 of 17