How project managers can succeed with procurement management

Procurement management is critical to successful project management, and yet some project managers are unfamiliar with the practice, or perhaps intimidated by what appears to be an overwhelming process. These are the basic procurement management concepts you need to know.

What is procurement management?

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Procurement management is the practice or process of acquiring products or services from an external supplier in order to initiate or maintain commercial operations. Acquisitions involve, as a minimum, the process of determining requirements, researching options, requesting information, offers and proposals from suppliers, as well as the final selection, approvals, processing of supplier orders and payment and all activities subsequent until project closure..

Acquisitions are common in the world of project management, where formal processes have been established and identified in the Project Management Body of Knowledge (PMBOK). Procurement management is an area in which it is increasingly focused as more and more companies are outsourced due to the benefits that include cost savings, less administrative burden, greater efficiency and better access to external experts.

According to IDC's global procurement forecast as of June 2016, the procurement software market is expected to reach $ 5.6 billion in 2020. In fact, IDC analysts point out that "acquisitions are the second largest contributor to eight applications markets within the ERM [Enterprise Risk Management] market. "

Four phases of the contracting process.

Procurement plan: Prepare a procurement management plan that identifies all the necessary requirements and details.

Execute the plan: send requests for information (RFI) from suppliers, requests for quotations (RFQ) and requests for proposals (RFP), among other things. During this phase, evaluate all of the supplier's information in relation to the procurement management plan and requirements, as well as the overall project objectives. After the evaluation, select the products or services of a provider.

RFI: This is the first set of requests from suppliers and is an initial step to explore the project requirements, procurement needs and suppliers' offers. This is a broad and simple application and format.

RFQ: After the specific requirements of the project / acquisition are clearly identified and documented, RFQs are sent to suppliers to determine which ones can meet the requirements, as well as request specific prices, which is an important part.

RFP: Companies often send suppliers an RFP and include information about specific problems they are trying to solve, or project goals. Suppliers will use this information to sell the company in their product or service in relation to those needs. This is a much more complete document and leaves providers a significant amount of flexibility to customize their answers and solutions. RFPs are widely used.

Control and supervise acquisitions: The process of control acquisitions should be initiated to manage the supplier's relationship, monitor and evaluate all aspects of suppliers' offers and make the necessary changes.

Close the acquisition: once the supplier's products or services are accepted, the project's acquisitions can be officially closed.

Tips to achieve successful management of purchases.

Each organization develops its own unique internal policies and procedures when it comes to projects and acquisitions; However, these procurement management boards can apply to all companies.

Develop a clear understanding of all the unique objectives and challenges

Focus on the capabilities of the suppliers and how their solutions will help achieve the objectives and address the obstacles

Resist the temptation to weigh final decisions based solely on cost.

Make sure that the solutions are not only short term (unless it is the main objective): sustainability and future support are also factors to consider

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