What is Project Procurement?

Project procurement involves a systematic process of identifying and procuring, through purchase or acquisition, necessary project services, goods, or results from outside vendors who will carry out the work. It is usually a function of the project manager; however, some organizations choose to select a person other than the project manager to handle these duties. There are six processes widely recognized by the project management industry as integral to project procurement management.

The first of these processes is planning purchases and acquisitions. In this step, needs that require outsourcing are identified. Sources for obtaining the required goods, services or results are differentiated through a market analysis. In planning the procurement, project objectives are reviewed to ensure the acquisition does not stray from the stated objectives. Completion of this step includes identification of the resources necessary for the acquisition, determination of the contract type needed to secure the acquisition, and preparation of a procurement management plan.

Contract planning, requesting seller responses, and selecting the seller are the next three processes that might be completed. In contract planning, it is necessary to describe in detail the products or services requested. Requests for proposals and bids should be documented to avoid problems.

When requesting seller responses and proposals, specific vendors are identified and placed on a qualified sellers list. Selected vendors are considered qualified based on their ability to provide the goods or services considering the constraints of the project, their interest in providing the goods or services, and the reasonableness of their bids. Once the prospective sellers have been set apart, the proposals of the selected sellers are evaluated in order to determine the best vendor to deliver the goods or services. After the sellers are chosen, contracts are negotiated.

Administering contracts is critical to project procurement duties. Clearly outlining the obligations, responsibilities, and performance goals is essential to completing this step. Satisfactory performance of the contract entails tracking the execution of stated goals. At times, the project procurement manager may need to correct processes in order to obtain the desired results. Contract changes should be controlled and documented to prevent unnecessary legal claims.

Once the contract is complete, the final step is to close the contract. The contract is audited to make certain all terms of the contract were fulfilled. Contract closure involves evaluating the performance of vendor and documenting any lessons learned in executing the contract.

Project procurement is not an exact science. Although this process is generally accepted within the industry, actual execution may differ between organizations. Many courses are available that teach the strategies used by project procurement managers. Community colleges and extended education departments of universities often provide classes on this subject.