Some thoughts about the importance of planning procurement management in projects
By Bolívar Solórzano, MSCE, MSM, PMP
Professor of the Project Procurement Management course in the Master in Project Management Program at the University for International Cooperation.
Let’s imagine a situation that, for many of us, may be quite familiar.
We are driving our car down the street, we have some spare time, we see a supermarket in a very convenient location, and we suddenly remember that we have to buy «something» (notice that this is just a vague memory of what constitutes our need …). Thus, we decide to go into the supermarket and use those spare minutes for purchasing that «something».
We enter the establishment, armed with a shopping cart in which quite possibly there is plenty of space for much more than the «something» that we had to buy and, immediately, we begin to be seduced by the masterful work of merchandising experts. Each shelf is full of products that are strategically placed to throw subtle (or not so subtle) messages that encourage us to buy them.
When that space of time we had available is next to completion, we are near the exit points of this consumption induction system with a pretty full shopping cart which, once we empty its contents onto the moving band of the cash register, it gives us the impression of being much bigger on the inside than on the outside.
We arrive at our home, feeling very proud of our «procurement management» because we made a purchase of substantial volume in a small space of time. When we realize more clearly what really was that «something» we thought we remembered we needed, it turns out that none of the things we purchased could be identified, not even remotely, with that «something» and, conversely, much of the stuff we brought home was substantially away from having some resemblance to that «something».
So it happened that we used resources (time, money, effort, etc.) in a procurement management adventure that, in essence, was not effective for satisfying the real need that motivated its undertaking.
Even though we are caricaturizing the image of a scene with which many of us are possibly familiar with, this same image may partly reflect the reality of what procurements look like in some projects that have failed to make a proper planning of procurement management.
Why is it important to properly plan procurement management of the project?
First of all, it should be clear for us that lack of planning leaves open more opportunities to have surprises and unexpected results, as pictured by the situation we just described. On the other hand, good planning helps us chart a course for doing things with greater probability for success, as it includes the anticipation of problems and solutions. While no plan is perfect, any plan is better than no plan.
Good procurement management is a key success factor in projects, and it must be assigned an appropriate planning process, according to the particular situation of the project we are dealing with.
According to the concepts and best practices promoted by the Project Management Institute, to plan procurement management for the project is the process of documenting project purchasing decisions, specifying the approach and identifying potential suppliers.
Thus, we must determine if external support is needed and, if so, we should plan what to buy, how to buy it, how much quantity and of what quality or characteristics is what we should buy, and when to do it, in addition to how we will formalize the agreements we may reach with potential suppliers of our requirements.
This planning process identifies those project needs which can be met better, or that must necessarily be met, by acquiring products, services, or results outside the project organization, as opposed to the needs of the project that can be resolved by the project team.
When the project obtains products, services, and results required for the development of the project, from outside the executing organization, the processes from Plan Procurement Management to Close Procurements are performed for each of the items to be procured. Thus, the Procurement Management Plan allows us to define how the next three procurement processes (Conduct-Control-Close) will be managed.
Therefore, just as it should be obvious that the lack of proper planning leaves open more opportunities to have surprises and unexpected results, it should also be clear for us that a good Procurement Management Plan will allow us to identify items for which acquisition outside the project is necessary or desirable, and will help us establish a «roadmap» to guide us during the contracting, execution and acceptance of such items, as well as for managing the associated risks, all of which will contribute to the overall success of the project.