Procurement Planning for Project Management

Procurement Planning for Project Management
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  • 0:00 Procurement Planning
  • 0:45 Plan Procurement Management
  • 2:02 Conduct Procurements
  • 3:49 Close Procurements
  • 5:12 Lesson Summary
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Lesson Transcript
Instructor: LeRon Haire
The lesson defines the term procurement planning and describes how it relates to project management. It also explores the elements of procurement planning and the procurement process.

Procurement Planning

Let's assume that you're the manager of a brand-new grocery chain with an opening date that is less than a year away. The store is currently empty. There are no groceries and no shelves to put the groceries on. Where do you begin to get your store up and running? The answer is procurement planning. In project management, procurement planning is the process of determining what needs to be purchased and when it should be purchased.

In this lesson, we'll explore the phases of procurement planning so that you can learn how to create a procurement plan for your grocery store. The four phases of procurement planning are:

  • Plan procurement management
  • Conduct procurements
  • Control procurements
  • Close procurements

Plan Procurement Management

The plan procurement management phase of project management is often considered the most critical. It is in this phase that important project elements like plans, procedures, roles, and responsibilities are established. For example, this is when the project team identifies procurement needs or requirements, estimates costs, plans a schedule for the project, makes a list of potential vendors (sellers), and determines the roles and responsibilities for the project team.

Think about all of the things you would have to do in the plan procurement management phase to get your grocery store up and running by the target date. You'd have to decide how many shelves you'll need for the store, and you'd have to decide which type of groceries you want on the shelves. How many eggs? How much milk? How much produce? After identifying procurement requirements, you'd have to identify potential vendors. Who will stock your shelves with groceries, and how much will all of this inventory cost you? When should you buy the groceries? A month before store opening? A week before store opening?

In addition to making all of these decisions, you'd also need to establish roles and responsibilities for the project team. This ensures that everyone understands which part of the project they are in charge of and what they need to do to help accomplish project tasks successfully according to the project schedule.

Conduct Procurements

The second phase of the procurement management process is conduct procurements. The conduct procurement phase is all about executing the plans that were established during the plan procurement management phase. This is when the project team accepts seller bids, looks at seller proposals, selects sellers from a qualified list, and awards procurement contracts to sellers.

For example, let's say that Company ABC is offering to sell your grocery store unlimited milk for just $1.50 per gallon if you promise to stock only their milk, while Company XYZ is offering to sell you milk for $2.50 per gallon and doesn't care if you work with other vendors. You will need to decide which one of these sellers is the best fit for your budget and procurement approach.

The conduct procurements phase is also the time to negotiate with sellers and decide what types of contracts will apply to the procurement. Most contracts establish important details that must be agreed upon by both parties, such as how the seller will be paid, when the seller will be paid, how disputes or problems will be resolved, and how and when items will be delivered.

The goal of the control procurements phase is to monitor and manage procurement relationships and seller performance. This phase helps to ensure that both parties (the buyer and seller) are meeting procurement requirements and contractual obligations.

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