Projects many times need services or products from the 3rd parties to fulfill the needs. 3rd parties mean external to the Project, either other department with in the organization / company or completely outside of the company. Here we are talking about external vendor who is providing services to the Project. And we need to assume those vendor services are not resource augmentation.
Just like Project life cycle Procurement management has its own lifecycle. We plan, execute and properly close the services or product acquisition. Most of the Procurement time will fall under Planning Process group as Execution is done by the vendor. Monitoring is required to control costs and changes.
Following table shows 6 processes of this knowledge area and groups they belong to
| 5 Process Groups | Initiation | Planning | Execution | Monitoring & Control | Closing |
Processes | | -Plan Purchases and acquisitions -Plan Contracting | -Request Seller Responses -Select Sellers |
-Contract Administration
| -Contract Closure |
In Procurement 3 objects are very important. In short they are SBC. (Seller – Buyer – Contract.)
Seller is the person or contracting company who sells products or services for the project. In general terms staff augmentation will also fall in this category. Here PMI doesn’t deal that case for the project. PMI in this particular chapter treats seller as any 3rd party who provides products or services from outside of the organizations
Buyer: Is you, the project manager who purchases the services from Seller. Unless and otherwise it is asked the exam’s perspective is testing you the project manager. So in this particular case you will become buyer, so all exam questions are on buyer perspective only.
Contract: need not to say, a legal document which is a connecting point between Buyer and Seller. Both have to abide by that. You can add any required clauses to the contract but following are important. To remember those use “CCOLA”
Capacity: The authorities those will be provided to Seller to do the work.
Consideration: Clauses those will be considered by the Buyer
Offer: Is provided to make a contract or deal.
Legal Purpose: Jurisdiction and legal bondage.
Acceptance: The time limit that the buyer has to make an agreement.
Lets discuss all 6 processes of this knowledge aera. Click on respective numbers below to see those processes one after other: