Project Procurement Management: Importance & Examples

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  • 0:03 Project Procurement Management
  • 0:55 Steps
  • 2:58 Overall Project Management
  • 3:49 Lesson Summary
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Lesson Transcript
Instructor: Shawn Ferguson

Shawn is a recent graduate from Walsh College's MBA program in Michigan. He is currently an instructor at his current company and previously was a substitute teacher.

This lesson discusses the basics of project procurement management. Project procurement management is a critical part of overall project management, and we will use an example to show how this topic fits into everyday project management activities.

Project Procurement Management

Let's say you're building a computer for yourself. This is something that many of us have attempted and completed without even considering that we are building a unique product, which is a product that is custom, or has never been created before. There are many steps and factors along the way when creating our unique product, one of which is project procurement management. Project procurement management is the process that ensures that components needed for a project arrive on time and within budget and work towards finishing the project.

For instance, when building your computer, you will have your own preferred unique features and components, like style of motherboard, processor, case, and monitor. You have to obtain these components to make the computer function. For this task, you need project procurement management. Now that we know what project procurement management is, let's explore the steps involved in it.

Steps

The project procurement management process has four steps.

Step 1 is plan.

This is the step where you are planning what to buy, how to buy it, what suppliers you will use, and the approach to getting what you need. With your computer project, for example, you might plan to buy your motherboard from an online IT company, while you might plan on getting a spare computer case from a friend who has no need for it anymore.

Step 2 is conduct.

This step involves actually purchasing the items, including negotiating contracts and agreements with sellers, suppliers, and contractors. Say that, for your computer, you need a cooling unit for the processor. Instead of buying something off the shelf at a store, you might enter into a contract with a custom cooling unit supplier who will make you a custom product for your computer. So, you would have to enter into a contract with the supplier before work on the cooling unit begins.

Step 3 is control.

This step ensures that everything goes according to plan during the contract creation and purchasing phase. Say that your custom cooling unit is going to take a month to develop, build, and deliver. You might require the contractor to provide weekly progress reports on the cooling unit to make sure your custom computer project doesn't fall behind. If you see that your supplier isn't maintaining a suitable pace on the cooling unit, you might terminate the contract and go somewhere else. During the control step, you also need to control and manage shipments of normal, off-the-shelf parts. If you are scheduled to receive a shipment on a certain date and the items don't arrive, you use this step to find out why and make alternate arrangements if needed.

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