PLANNING STAGE (PROCUREMENT)

Procurement is an act of purchasing or acquiring products, services or results that are needed for the project activities outside from the project team. It sometimes involves agreements and contracts between a seller and a buyer.

Note:

An organization can be the seller or the buyer.

• The seller can be a contractor, subcontractor, service provider, supplier, vendor or a bidder before selected.
• The buyer can be a client, customer, prime contractor, contractor, acquiring organization, service requester or purchaser. The buyer automatically becomes the stakeholder for the seller.

A contract is a mutual binding agreement between the seller and the buyer whereby the seller commits to provide something valuable while the buyer commits to provide monetary or other valuable compensation. The contract includes terms and conditions that the buyer specifies to what the seller must provide such as major deliverables, cost objectives, key milestones and other important inputs. Being into the agreement or contract is a method of managing and sharing potential risks. Depending on the organization, the contract can stand as the agreement or a purchase order. The organization also documents procurement policies and procedures regarding the procurement and the person(s) responsible for authorization to sign the agreements on behalf of the organization.

Project Procurement Management is another knowledge area when the products, services or results are outsourced outside from the project team. Planning Procurement consists of only process called Plan Procurement Management that documents when there is a need to acquire from outside. It includes what to acquire, how to acquire, how much is needed and when to acquire it. Moreover, the approaches of identifying potential sellers if they will bid for the chance of working with you and closing out the contract with them are also documented. 

References:

PMI (2013). A Guide to the Project Management Book of Knowledge (PMBOK Guide 5^th Ed.) USA, Project Management Institute

https://opentextbc.ca/projectmanagement/chapter/chapter-13-procurement-management-project-management/

http://www.mhlnews.com/global-supply-chain/confusion-surrounding-procurement

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