As organizations continue to initiate, execute and close complex projects, it has become increasingly important for employees and teams to work together to achieve the set goals. Gone are the days when each department used to work in silos and yet come close to achieving the objectives of the organization. Today, project management is an integral part of the working culture of organizations globally.
Project management includes a variety of roles and activities for different individuals to achieve a set objective for the organization. A project can be solving a particular problem for the organization or exploiting an opportunity to achieve better results for the organization. Procurement is one of the critical activities that are part of overall project management. The procurement activities that are done for a specific project are known as project procurement management.
Here is all you need to know about Project Procurement Management:
What is Procurement Management?
Procurement management is the process of meeting the requirements of products and services for an organization. Any business requires a wide variety of goods and services to manufacture its end products or to meet its day-to-day requirements. Procurement management is responsible for ensuring that the business can get the required goods and services at the right time, at the right price, and with the right specifications.
What is Project Procurement Management?
The procurement management activities, when executed for a specific project, are known as project procurement management. The activities of procurement remain the same as in the case of the general procurement process. However, in this case, the procurement activities are undertaken to meet the needs of a particular project.
Steps of a Project Procurement Management Plan
There are several steps involved in building a project procurement management plan. These steps can be explained as follows:
Step 1: Initiation
The first step in the process of a project procurement management plan is to initiate the procurement exercise. In this stage, the procurement management responsible for a particular project is expected to create a business case, outline the scope and figure out the stakeholders.
Step 2: Preparation
The next step in this project procurement management plan is to prepare for the task ahead. This can include preparing charts and tables such as the GANTT chart, establishing deadlines, and breaking down the project procurement and identifying the team members required to be involved.
Step 3: Implementation
This is the most critical phase in the project procurement management plan. In the implementation stage, the procurement project manager is expected to meet the procurement requirements of the project. In addition, this phase needs managing teams and ensuring strong leadership throughout the implementation stage.
Step 4: Performance Management
This step in the project procurement management plan includes checking the planned procurement activities and if they can meet the designed goals for project completion. The procurement project manager is also expected to ensure that the planned budget for the procurement activities remains in check.
Step 5: Completion
The completion phase may look like the end of the procurement project management plan, but it is not the case. This stage is used to ensure that all procurement activities for the project have been completed. If any gaps are noticed, they are filled in this stage.
Step 6: Documentation
After the procurement exercise for the project is complete, it is important to document the journey properly. Documentation serves as a ready reckoner and reference point, often acting as a benchmark for future projects.
These steps are typical in almost all procurement management plan examples you would come across, but it’s important to realize that these steps can be considered as the roadmap for setting the project procurement plan in place.
Additional Read: Reducing Complexity in Procurement Management
Importance of Project Procurement Management Plan
A proper project procurement management plan in place ensures seamless functioning during the project. Here are some key reasons why it is important to have a project procurement management plan:
Increased Stakeholder Satisfaction
With the procurement plan in place for a project, the managers can drive better stakeholder satisfaction scores.
With a procurement plan in place for a project, the team can work with tangible objectives. This helps in attaining success with a plan in place.
With a predetermined plan in place, the outcome would likely be profitable for all stakeholders involved. As managers have a better time planning, implementing, and measuring, the roadmap helps improve the overall success of the project.
The project procurement management plan helps reduce the risk involved in the overall work of the organization and the specific project. As managers can procure goods for the project with a pre-decided plan, the risk involved in many parts of the activities is handled beforehand.
With a project procurement management plan, increased transparency is maintained. All stakeholders are aware of the planned activities. At the same time, project managers can share regular progress achieved.
A project procurement management plan enables you to have better negotiation power with the suppliers and vendors. As there is improved visibility about the next steps and involved risks, the procurement project manager can use this information to their advantage and negotiate better rates.
Project procurement management is becoming an increasingly important component for the success of any project in the organization. As there are multiple steps involved in project procurement, it is better to rely on modern procurement software solutions that can make use of technologies like artificial intelligence and machine learning for effective procurement during a project.
Such a solution can act as a single source for all procurement requirements of the project. At the same time, procurement managers can make use of automation and analytics to drive savings and make decisions that can increase profitability and operational efficiency.