Procurement Management Plan: Meaning and 06 Main Components

Procurement Management Plan: Meaning and 06 Main Components

The procurement management plan can be considered as a part of the project management plan. The procurement management plan is the plan that is necessary to purchase or acquire the products or services that are necessary during the project and how the business is planning to acquire the necessary products and services.

A procurement management plan can be considered as the purchase framework for a specific project. It works as a guide for managing the procurement process of the project such as goods, supplies, and services throughout the life of the project. This plan gets updated when there is a procurement needs change.

The plan for procurement management helps the project team to identify the items that need to be procured, the contracts used as support for the project, the process of approving the contracts, and the criteria of decision making throughout the project lifetime. When used in a proper manner, a procurement management plan helps the business to reduce the overall procurement costs and helps to maintain a smooth run of business activities.

For any business project, procurement holds special importance. It is important for business organizations to effectively manage the procurement process rather than just handling the procurement activities. When managed properly, the procurement plan of the business creates financial benefits, saves time, and increases compliance of the business.

A well-implemented procurement management plan should fulfill the below requirements.

– All the expected and estimated procurements throughout the lifetime  of the project

– A procurement schedule that explains the timelines to carry out each step of the procurement process up to contract award and fulfillment of demands

– Required external assistance and outsourcing requirements for the purpose of completing the identified procurement needs

 – Ability to compare and analyze the estimated procurement process with the actual performance and take necessary actions to keep the actual procurement activities aligned with the plan

– Enhance the transparency and predictability of the process

– Allow space to make necessary changes to the procurement process based on the project changes decided by the project team

Components of a Procurement Management Plan

– Procurement process

This section contains an overview of the relevant process requirements to manage the procurement needs identified in the project. The procurement process includes several steps.

               – initiating the procurement request

               – develop the procurement requirements of the project

               – request for approval

               – obtaining purchasing authority

               – review proposals/ bids available

               – manage and close the contract

– Roles and responsibilities relevant to the procurement process

This section should include the various roles and responsibilities involved with the procurement process. The roles such as the authorization to request outside resources, approval of requests, purchasing activities, and record maintaining should be included in this section.

– Identification of procurement needs

This section should include a detailed description of the material, products, or services needs for the project that are necessary to procure from outside. Each identified item should have a valid justification statement with an explanation as to why the item should be purchased from outside. It also should have an analysis of whether there is a possibility of sourcing the item inside the business organization.

This section checks the ability to minimize the costs involved with purchases by avoiding unnecessary purchases.

– Timing

 This section will include the timeframe that the resources are needed for the project and the timeframe the purchases should be completed in order to have the resources available for the project without a delay. This will provide a detailed explanation about making the resources available on time without creating additional expenses.

– The process of change reviews and approvals

This section will include the process of how the changes should be done to the procurement process and the approval process that needs to follow to make sure that the changes are valid, understood, and approved by the authorized party.

– Vendor Processes

This section will include the processes that the vendors have to follow for timesheet approval, processing invoices, negotiating contracts, and scope change requests.

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