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What Is Project Procurement Management And How To Perform It?

Last updated on May 22,2019 846 Views
Research Analyst at Edureka. A techno freak who likes to explore different... Research Analyst at Edureka. A techno freak who likes to explore different technologies. Likes to follow the technology trends in market and write about...
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Goods, supplies, and services are the fuel that keeps the project development process in motion. If they are not of good quality or in sufficient quantity, your project might not meet a successful end. Thus, for a project manager, it becomes necessary to establish and maintain relationships with vendors in order to run a project smoothly. This is where the concept of project procurement management comes in and helps a project manager in delivering a successful project. Through this article, I will be giving you a complete insight into how it is done and what are the various processes involved in it.

Below are the topics I will be discussing in this Project Procurement Management article:

To master all the concepts of Project Management, you can check out our structured  PMP Certification Training program, where you will be guided by the PMP certified instructors.

Let’s get started with this article.

What is Project Procurement Management?

According to PMBOK® Guide – Sixth Edition,

Project Procurement Management includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team

Project procurement management is one of the ten Knowledge Areas that acts as a supporting pillar for the Project Management Framework. Its main purpose is to establish and maintain a healthy relationship with the vendors providing goods and services throughout the project lifecycle. The relationships with vendors are generally established and legalized through contracts. It ensures that the required goods and services are received at the right time and qualify the project quality standards as stated by the purchasing organization. This greatly helps in the smooth execution of the project development process and ensures that the project meets its objectives. Project procurement management is also an integral part of supply chain management.

Now, you might be thinking, how exactly does this work! Well, project procurement management follows a logical order where first you need to identify what you need to contract and how you will be doing it. Once done, the next step will be to forward your contract requirement to the sellers. Once your contract is distributed, the sellers start to bid in. Now, you need to select the best one and finalize the contract with them. When the project development begins, you need to continuously monitor in order to ensure that the contract is properly followed. Once the project is completed, you will have to close the project contract and process the necessary paperwork.

So, this was all about how procurement management needs to be done. But what are the aspects that it must contain to provide a proper direction to the project development?

Below I have curated a template that a project procurement plan documents:

  • The complete list of deliverables to that will be procured by proposed contracts.
  • There should be resource management strategies that are effective enough for negotiating and managing the contracts.
  • The selected procurement method must be clearly stated.
  • For the selection of suppliers and vendors, key stages must be mentioned.
  • Key stages of the process for selecting suppliers and vendors.
  • A proper model of procurement funding should be given.
  • The procurement contract’s sample must be there.
  • For reference purpose of approving and assuring quality, and risk management should also be provided.

I hope now you have a fair knowledge regarding what exactly is project procurement management. Let’s now move further with this article and see how exactly it benefits a project.

Procurement Management Benefits

The procurement management knowledge area can benefit a project in many ways. I have listed down a few of them:

  • It helps in identifying the goods and services needed to be procured for the successful project completion.
  • Provides a complete list of Purchase Orders and related issue to the suppliers.
  • It gives agreed timeframes and methods regarding delivery.
  • Helps in reviewing and procuring goods and services from suppliers.
  • It validates the supplier contract milestones and approves their payment.
  • It acts as a reference that helps in reviewing the supplier performance against the contract.
  • It helps in identifying and resolving supplier performance issues.
  • It acts as a communication channel, that updates the project status to the upper management.

Project Procurement Management Processes

The project procurement management knowledge area consists of a total of three processes, about which I have discussed in detail below.

Processes - Project Procurement Management - Edureks

1. Plan Procurement Management

Plan procurement management is the initial process of project procurement management knowledge area. In this process, you need to document various procurement decisions, specify the procurement approach and identify the potential and quality sellers. This process is executed once in a while at the predefined points in the project lifecycle and helps in deciding whether there is a need for acquiring goods and services from the outside or not. In case there is a need, it also helps in identifying which resources are to be acquired and when. Required goods and services can be procured either from internally(other parts of your project organization) or from externally (outside sources).

This process consists of various inputs, tools & techniques and outputs which I have listed down in the below table:

InputsTools & TechniquesOutputs
  1. Project Management Plan
    • Scope Management Plan
    • Quality Management Plan
    • Resource Management Plan
    • Scope Baseline
  2. Project Documents
    • Milestone List
    • Project Team Assignments
    • Requirements Documentation
    • Requirements Traceability Matrix
    • Resource Requirements
    • Risk Register
    • Stakeholder Register
  3. Enterprise Environmental Factors
  4. Organizational Process Assets
  1. Expert Judgment
  2. Data Gathering
    • Market Research
  3. Data Analysis
    • Make or Buy Analysis
  4. Source Selection Analysis
  5. Meetings
  1. Procurement Management Plan
  2. Procurement Strategy
  3. Bid Documents
  4. Procurement Statement of Work
  5. Source Selection Criteria
  6. Make-or-Buy Decisions
  7. Independent Cost Estimates
  8. Change Requests
  9. Project Documents Updates
    • Lessons Learned Register
    • Milestone List
    • Requirements Documentation
    • Requirements Traceability Matrix
    • Risk Register
    • Stakeholder Register
  10. Organizational Process Assets Updates

2. Conduct Procurements

The second process of project procurement management is Conduct Procurements. In this process responses from various sellers are collected, an efficient seller is selected among them and finally, a contract is curated. This process is performed throughout the project after certain time intervals and helps in identifying a qualified vendor and then proceed with the establishment of the legal agreements for the delivery process.

I have listed the involved inputs, tool & techniques and outputs of this process in the below table:

InputsTools & TechniquesOutputs
  1. Project Management Plan
    • Scope Management Plan
    • Requirements Management Plan
    • Communications Management Plan
    • Risk Management Plan
    • Procurement Management Plan
    • Configurations Management Plan
    • Cost Baseline
  2. Project Documents
    • Lessons Learned Register
    • Project Schedule
    • Requirements Documentation
    • Risk Register
    • Stakeholder Register
  3. Procurements Documentation
  4. Seller Proposals
  5. Enterprise Environmental Factors
  6. Organizational Process Assets
  1. Expert Judgment
  2. Advertising
  3. Bidder Conferences
  4. Data Analysis
    • Proposal Evaluation
  5. Interpersonal & Team Skills
    • Negotiation
  1. Selected Sellers
  2. Agreements
  3. Change Requests
  4. Project Management Plan Updates
    • Requirements Management Plan
    • Quality Management Plan
    • Communications Management Plan
    • Risk Management Plan
    • Procurement Management Plan
    • Scope Baseline
    • Schedule Baseline
    • Cost Baseline
  5. Project Documents Updates
    • Lessons Learned Register
    • Requirements Documentation
    • Requirements Traceability Matrix
    • Resource Calendars
    • Risk Register
    • Stakeholder Register
  6. Organizational Process Assets Updates

3. Control Procurements

Third and the final process of this knowledge area is Control Procurement. In this process the procured relations are managed, their contract performance is thoroughly monitored, appropriate adjustments and changes are made and finally, the contracts are closed. This process can be performed at any point of the project lifecycle as per need. It helps in ensuring that the performance of both the involved parties (buyers & seller’s) is up to the project requirement as stated in the legal agreements.

The Control Procurement process involves various inputs, tools & techniques and outputs which I have listed in the below table:

InputsTools & TechniquesOutputs
  1. Project Management Plan
    • Requirements Management Plan
    • Risk Management Plan
    • Change Management Plan
    • Schedule Baseline
  2. Project Documents
    • Assumption Log
    • Lessons Learned Register
    • Milestone List
    • Quality Reports
    • Requirements Documentation
    • Requirements Traceability Matrix
    • Risk Register
    • Stakeholder Register
  3. Agreements
  4. Procurements Documentation
  5. Approved Change Requests
  6. Work Performance Data
  7. Enterprise Environmental Factors
  8. Organizational Process Assets
  1. Expert Judgment
  2. Claims Administration
  3. Data Analysis
    • Performance Reviews
    • Earned Value Analysis
    • Trend Analysis
  4. Inspection
  5. Audits
  1. Closed Procurements
  2. Work Performace Information
  3. Procurement Documentation Updates
  4. Change Requests
  5. Project Management Plan Updates
    • Risk Management Plan
    • Schedule Baseline
    • Cost Baseline
  6. Project Documents Updates
    • Lessons Learned Register
    • Resource Requirements
    • Requirements Traceability Matrix
    • Risk Register
    • Stakeholder Register
  7. Organizational Process Assets Updates

With this, we come to the end of this Project Procurement Management article. There are 10 Knowledge Areas in the project management framework and Procurement Management was just one of them. If you wish to learn more about project management framework or project management certifications, you can check my other articles as well.

If you found this “Project Procurement Management” article relevant, check out the PMP® Certification Exam Training by Edureka, a trusted online learning company with a network of more than 250,000 satisfied learners spread across the globe. 

Got a question for us? Please mention it in the comments section of this Project Procurement Management article and we will get back to you.

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