6th Edition PMBOK® Guide–Process 12.1 Plan Procurement Management: Tools and Techniques

Plan Procurement Management contains some tools and techniques which are generic, that is, common to other similar planning processes for other knowledge areas, and those specific to this particular process.   The generic tools and techniques are Expert Judgment and Meetings.   You talk to the experts who know about this particular knowledge area, and you discuss their findings at meetings with the project team.

You gather data about procurements, you analyze it, and then you use source selection analysis to help you evaluate the proposals for procurements that will come in the next procedure.

12.1.2 Plan Procurement Management:  Tools & Techniques Expert Judgment

As a project manager, you will help from experts who have expertise in the following areas in order to draft your Procurement Management Plan.

  • Procurement and purchasing
  • Contract types and contract documents
  • Regulations and compliance issues

If your company is large enough, it is possible that all procurements will be managed by a procurement manager.   If not, you will need to seek out experts who will assist you in managing them as the project manager.  Data Gathering

Market research is a data-gathering technique often used to help create the Project Management Plan.   Market research includes the following examination of industry and specific seller capabilities.   The objectives of market research are to:

  • Leverage maturing technologies
  • Balance risks associated with the sellers who can provide the desired materials or services, particularly with risks to various project constraints such as cost, schedule, and quality.  Data Analysis

Make-or-buy analysis is used to determine whether the deliverables of a project (which are found in the project scope statement) can best be accomplished by the project team or should be purchased from outside sources.   The factors to be considered are:

  • the organization’s current resource allocation, as well as their skills and abilities
  • the need for specialized expertise
  • the desire not to expand permanent employment obligations
  • the need for independent expertise
  • the risks involved with the make-or-buy decision

The make-or-buy analysis make use financial tools and techniques, including the same ones used to analyze the viability of the project itself, such as

  • Return on investment (ROI)
  • Internal rate of return (IRR)
  • Discounted cash flow
  • Net present value (NPV)
  • Benefit/cost analysis (BCA)  Source Selection Analysis

You need to look into the organization’s method for selecting the source of procurements.   Bidders need to know how they will be evaluated, because some of the selection methods require them to invest a large amount of time and resources upfront.

Commonly used selection methods include the following:

  • Least cost–appropriate for procurements of a standard or routine nature which have well-established practices and standards and from which a specific and well-defined outcome is expected.
  • Qualifications only–if the value of the procurement is relatively small, a full selection process may not make sense.   The buyer establishes a short list and selects the bidder with the best credibility and qualifications.
  • Quality-based/highest technical proposal score.   For products and/or services that involve technology, the sellers are encouraged to submit a proposal with both technical and cost details.  The seller who submitted the highest-ranked technical proposal is selected if their financial proposal can be negotiated and accepted.
  • Quality and cost-based.   If the risk and/or uncertainty are greater for the project, quality should be a key element when compared to cost.   The previous method of “quality-based and highest technical proposal score” is similar, but for products and services that involve technology.
  • Sole source–if there is no competition, this method is acceptable ONLY when properly justified and viewed as an exception.   It is either for sole providers of a product or service, but for trusted providers with a history of past projects with the company.
  • Fixed budget–when the statement of work (SOW) is well-defined, no changes are anticipated, and the budget is fixed and cannot be exceeded, this method may be appropriate.   The available budget is disclosed to invited sellers in the Request for Proposal (RFP) and the highest-ranking technical proposal given in response to that RFP is then selected.  Meetings

Meetings are used to determine the strategy for managing and monitoring the procurement, which is essentially the next two processes of procurement management.

The next post reviews the outputs of the Plan Procurement Management process.



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