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Module 2 - Procurement Framework

Project Procurement Management involves processes for acquiring products, services, or results from outside the project team, including contract management. The framework consists of planning, conducting, and managing procurement, with a detailed evolution of procurement processes outlined in the PMBOK Guide across its editions. The document also discusses the roles of centralized and decentralized purchasing authority and the importance of procurement delegation of authority.

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6 views15 pages

Module 2 - Procurement Framework

Project Procurement Management involves processes for acquiring products, services, or results from outside the project team, including contract management. The framework consists of planning, conducting, and managing procurement, with a detailed evolution of procurement processes outlined in the PMBOK Guide across its editions. The document also discusses the roles of centralized and decentralized purchasing authority and the importance of procurement delegation of authority.

Uploaded by

Nauman
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PROJECT PROCUREMENT

MANAGEMENT
Module 2: Framework
Dr. Khalid Ahmad Khan
Reference

■ Project Procurement Management: Contracting,


Subcontracting, Teaming 1st Ed by Quentin
Fleming
■ PMBOK Guide 6th Edition by Project
Management Institute
■ The Wiley Guide to Project Technology, Supply
Chain, and Procurement Management 1st Ed by
Peter Morris, Jeffrey K. Pinto
■ Procurement Systems: A Cross-Industry Project
Management Perspective 1st Ed by Derek
Walker, Steve Rawlinson
Definition: Project Procurement
Management
■ Project Procurement Management includes the processes necessary to purchase or
acquire products, services, or results needed from outside the project team. Project
Procurement Management includes the management and control processes
required to develop and administer agreements such as contracts, purchase orders,
memoranda of agreements (MOAs), or internal service level agreements (SLAs).

PMBOK Guide 6th Edition by Project Management Institute


Role of Procurement

Make

Project
Buy
Project Procurement Framework

01 02 03
Plan Conduct Manage
Procurement Procurement Procurement
Procurement processes in PMBOK over
six editions
1996 2000 2004
1st Edition 2000 Edition 3rd Edition
12.1. Procurement Planning 12.1. Procurement Planning 12.1. Plan Purchases and Acquisitions
12.2. Solicitation Planning 12.2. Solicitation Planning 12.2. Plan Contracting
12.3. Solicitation 12.3. Solicitation 12.3. Request Seller Responses
12.4. Source Selection 12.4. Source Selection 12.4. Select Sellers
12.5. Contract Administration 12.5. Contract Administration 12.5. Contract Administration
12.6. Contract Close-out 12.6. Contract Closeout 12.6. Contract Closure

2008 2013 2017


4th Edition 5th Edition 6th Edition
12.1.Plan Procurements 12.1 Plan Procurement Management 12.1 Plan Procurement Management
12.2. Conduct Procurements 12.2 Conduct Procurements 12.2 Conduct Procurements
12.3. Administer Procurements 12.3 Control Procurements
12.3 Control Procurements
12.4. Close Procurements 12.4 Close Procurements
Plan Procurement

Inputs Tools & Techniques Outputs

1.Project charter 1.Expert judgment 1.Procurement management plan


2.Business documents 2.Data gathering 2.Procurement strategy
3.Project management plan 3.Data analysis 3.Bid documents
4.Project documents 4.Source selection analysis 4.Procurement statement of work
5.Enterprise environmental 5.Meetings 5.Source selection criteria
6.factors 6.Make-or-buy decisions
7.Organizational process assets 7.Independent cost estimates
8.Change requests
9.Project documents updates
10.Organizational process asset
updates

PMBOK Guide 6th Edition by Project Management Institute


Conduct Procurement

Inputs Tools & Techniques Outputs

1.Project management 1.Expert judgment 1.Selected sellers


plan 2.Advertising 2.Agreements
2.Project documents 3.Bidder conferences 3.Change requests
3.Procurement 4.Data analysis 4.Project management
documentation 5.Interpersonal and team plan updates
4.Seller proposals skills 5.Project documents
5.Enterprise updates
environmental factors 6.Organizational process
6.Organizational process assets updates
assets

PMBOK Guide 6th Edition by Project Management Institute


Manage Procurement

Inputs Tools & Techniques Outputs

1.Project management plan 1.Expert judgment 1.Closed procurements


2.Project documents 2.Claims administration 2.Work performance
3.Agreements 3.Data analysis information
4.Procurement 4.Inspection 3.Procurement
documentation 5.Audits documentation updates
5.Approved change requests 4.Change requests
6.Work performance data 5.Project management plan
7.Enterprise environmental updates
factors 6.Project documents updates
8.Organizational process 7.Organizational process
assets assets updates

PMBOK Guide 6th Edition by Project Management Institute


PLAN
PROCUREMENT
The process of documenting project procurement
decisions, specifying the approach, and identifying
potential sellers
Authorization Mode and
Control
■ One could easily separate a project into two distinct parts:
– Make: portion which will be done with your own company
employees
■ Authorized by the project manager with use of non-legal
documents typically called work authorizations or
budgets
■ Directly controlled by company
– Buy: portion which will be sent outside of your company for
performance
■ Governed strictly by the legal document the buyer has
issued called the contract, or subcontract, or purchase
order
■ No direct control by company
Procurement
Delegation of Authority (DOA)
■ Formal delegation of authority to buy things on behalf of company or organization
■ Project managers rarely have a delegated authority to buy on behalf of their
companies or organizations. Individuals, no matter what their rank may hold, will not
possess the authority to execute contracts.
■ The assigned buyer will do anything and everything the project manager asks them
to do, but, always working within the formal procurement policies and procedures of
the company. A professional buyer will not violate purchasing policy, even if directed
to do so by a more senior project manager
■ United States Government follows the practice of requiring a distinct separation of
project responsibility from those individuals having procurement authority.
Centralized versus Decentralized
Purchasing Authority
■ "Centralized" Purchasing: General
Manager
– A functional person (Director) has delegated procurement
authority...and assigns a buyer to support the project.
Purchasing
Manager

■ "Decentralized" Purchasing:
General
– The project manager has authority to execute contracts Manager
directly with another Company ... to buy something.
Project
Manager
Q&A
[email protected]

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