12
Introducing Project Procurement Management

2

Chapter 12: Introducing Project Procurement Management

P

rojects routinely require procurements. Projects need materials, equipment, consultants, training, and many other goods and services. Project procurement management is the process of purchasing the products necessary for meeting the needs of the project scope. Procurement management involves planning, soliciting sources, choosing a source, administering the contract, and closing out the contract. Procurement management, as far as your PMP exam is considered, focuses on the practices from the buyer’s pointof-view, not the seller’s. The seller can be seen as a contractor, subcontractor, vendor, or supplier. When buying anything from a vendor, the buyer needs a contract. A contract becomes a key input to many of the processes within the project. The contract, above anything else, specifies the rules and agreements for the project. Here’s a neat twist: when the seller is completing its obligations to supply a product, PMI treats those obligations as a project. In other words, if ABC Electricians were wiring a building for your company, ABC Electricians would be the performing organization completing its own project. Your company becomes the customer of their project—and is, of course, a stakeholder in their project. In the scenarios described in this chapter, the seller will be outside of the performing organization. The buyer will be managing a project and procuring resources from a vendor. However, all of the details in this chapter can be applied to internal work orders, formal agreements, and contracts between organizational units within a single entity.

Planning for Procurement
Procurement planning is the process of identifying which part of the project should be procured from resources outside of the organization. Generally, procurement