Plan Procurement Management

Plan Procurement Management is a process in the Procurement Management Knowledge Area and part of the Planning Process Group. This process determines what to procure, when to procure it, and how to procure it. The key outputs include the Procurement Management Plan, Procurement Statement of Work (SOW), Procurement Documents, and related decisions and updates.

This article explores the inputs, tools and techniques, and outputs of the Plan Procurement Management process and provides examples to help project managers, procurement specialists, and stakeholders understand its practical application.

Inputs to Plan Procurement Management

Project Management Plan:
- Definition: The comprehensive plan that integrates subsidiary plans, including procurement.
- Purpose: Provides guidance on project scope, schedule, and cost, which influence procurement decisions.
- Example: A construction project’s plan identifies milestones requiring specific material deliveries.
Requirements Documentation:
- Definition: A detailed outline of the project’s requirements.
- Purpose: Helps determine which requirements can be fulfilled internally and which need external procurement.
- Example: A software project requires custom APIs that must be developed by a third-party vendor.
Risk Register:
- Definition: A document identifying potential project risks.
- Purpose: Guides procurement decisions by highlighting risks that can be mitigated through outsourcing.
- Example: A manufacturing project outsources machinery maintenance to reduce operational risks.
Activity Resource Requirements:
- Definition: Details the resources needed to complete project activities.
- Purpose: Identifies gaps in internal resources that may require procurement.
- Example: A marketing project lacks in-house graphic design capabilities and decides to hire a freelancer.
Project Schedule:
- Definition: A timeline of project activities and milestones.
- Purpose: Aligns procurement timelines with project needs.
- Example: A construction project schedules the delivery of concrete to coincide with foundation work.
Activity Cost Estimates:
- Definition: Cost projections for project activities.
- Purpose: Determines budget availability for procurement decisions.
- Example: A telecom project compares in-house development costs with outsourcing costs.
Stakeholder Register:
- Definition: A document listing stakeholders and their roles.
- Purpose: Ensures alignment of procurement decisions with stakeholder needs.
- Example: A client insists on using a specific vendor for ethical compliance reasons.
Enterprise Environmental Factors (EEFs):
- Definition: External factors such as market conditions, regulations, or supplier availability.
- Purpose: Influences procurement strategies and decisions.
- Example: Regional labor shortages may necessitate outsourcing.
Organizational Process Assets (OPAs):
- Definition: Internal resources, templates, and historical data.
- Purpose: Provides guidelines and lessons learned from past procurements.
- Example: A manufacturing firm uses a standard contract template for vendor agreements.

Tools and Techniques for Plan Procurement Management

Make-or-Buy Analysis:
- Definition: Evaluates whether to produce a product/service in-house or procure externally.
- Purpose: Informs decisions by comparing costs, time, and resource availability.
- Example: A company decides to buy pre-assembled components rather than manufacture them due to cost savings.
Expert Judgment:
- Definition: Leverages knowledge and expertise from experienced professionals.
- Purpose: Ensures informed and realistic procurement decisions.
- Example: A legal expert advises on contract terms for international procurement.
Market Research:
- Definition: Gathers information on market trends, supplier capabilities, and pricing.
- Purpose: Identifies potential vendors and procurement opportunities.
- Example: Researching suppliers for solar panels reveals a vendor offering better warranties.
Meetings:
- Definition: Collaborative sessions with project teams and stakeholders.
- Purpose: Facilitates consensus on procurement strategies.
- Example: A project team meeting defines the criteria for vendor selection.

Outputs of Plan Procurement Management

Procurement Management Plan:
- Definition: A document outlining how procurement will be managed, from vendor selection to contract closure.
- Purpose: Serves as a roadmap for procurement activities.
- Example: Specifies that RFPs will be issued for services exceeding $100,000.
Procurement Statement of Work (SOW):
- Definition: Describes the scope of work to be performed by the seller.
- Purpose: Provides clarity and detail for vendor proposals.
- Example: A telecom project’s SOW specifies tower installation requirements.
Procurement Documents:
- Definition: Documents like RFPs, RFQs, or IFBs used to solicit bids or proposals.
- Purpose: Facilitates vendor responses and comparison.
- Example: An RFP for IT services outlines deliverables and evaluation criteria.
Source Selection Criteria:
- Definition: The criteria for evaluating and selecting vendors.
- Purpose: Ensures objective and consistent decision-making.
- Example: A construction project uses criteria such as cost, quality, and delivery time.
Make-or-Buy Decisions:
- Definition: The outcome of the make-or-buy analysis.
- Purpose: Determines which activities will be outsourced.
- Example: A company decides to outsource software testing.
Change Requests:
- Definition: Requests to modify project plans or procurement strategies.
- Purpose: Addresses new procurement needs or changes in scope.
- Example: A delay in a project’s timeline prompts a change request for expedited delivery.
Project Documents Updates:
- Definition: Updates to project documents to reflect procurement decisions.
- Purpose: Ensures consistency across project documentation.
- Example: Updating the risk register to include vendor-related risks.

Practical Examples of Plan Procurement Management

Construction Project:
- Scenario: Building a residential complex.
- Plan Content:
  - Use of fixed-price contracts for subcontractors.
  - Source selection criteria: cost, quality, and local experience.
IT Project:
- Scenario: Implementing a CRM system.
- Plan Content:
  - RFPs issued for third-party API integrations.
  - Procurement timeline aligns with development sprints.
Event Management:
- Scenario: Hosting an international conference.
- Plan Content:
  - Vendor management for catering, AV services, and venue rentals.
  - Evaluation metrics include cost and service reliability.

Summary Table: Plan Procurement Management

Category	Details	Example
Inputs	Project Management Plan, Requirements Documentation, Risk Register, etc.	Risk register identifies risks of delayed supplier delivery
Tools and Techniques	Make-or-Buy Analysis, Expert Judgment, Market Research, Meetings	Market research identifies vendors with competitive pricing
Outputs	Procurement Management Plan, Procurement SOW, Procurement Documents, etc.	RFP issued for external IT services

Conclusion

Plan Procurement Management ensures that procurement activities are aligned with project objectives and constraints. By leveraging inputs such as the risk register and project schedule, applying tools like make-or-buy analysis and market research, and producing detailed outputs like the Procurement Management Plan and Procurement SOW, project teams can effectively manage procurement processes. This structured approach minimizes risks, optimizes costs, and enhances project success.

Knowledge Area

Procurement Management

Process Group

Planning