Procurement Process
Obtaining all the materials, services, and suppliers required to complete a project — end-to-end from identifying needs to closing out vendor relationships.
Explanation
Procurement includes sourcing vendors, getting quotes, selecting vendors, negotiating contracts, setting deadlines, evaluating performance, and ensuring payment.
The 5 steps
- Initiating — plan what help you need beyond current resources. Identify what’s sourced internally vs externally. Define requirements; remove unnecessary features to reduce costs.
- Selecting — decide what supplies you need and which vendors. Research and evaluate on reliability, quality, delivery performance. Interview, do site visits where possible.
- Contract writing — develop, review, sign. Review details, inclusions, exclusions. Use internal resources where possible to reduce vendor costs. Consult legal and compliance.
- Control — payments, logistics, quality, service agreement. Monitor performance, timelines, and payments. Regular check-ins; professional communication.
- Completing — measure procurement success, review vendor relationships and deliverables, document lessons learned.
Traditional vs Agile procurement
Traditional procurement management:
- Standard contracts with clear terms and deliverables
- PM may own end-to-end procurement
- Lengthy contract documentation
Agile procurement management:
- Collaborative with both project team and end supplier
- Emphasis on the relationship
- Project team plays a larger role in identifying what’s procured
- Living contract adapted as the project evolves
Key documents
| Phase | Document | Purpose |
|---|---|---|
| Initiation | NDA (Non-Disclosure Agreement) | Keeps confidential information inside the org — critical for proprietary tech or sensitive launches |
| Selecting | RFP (Request for Proposal) | Outlines project details to solicit vendor bids. Typically includes overview, goals, budget, deadlines, milestones, contact info |
| Contracting | SoW (Statement of Work) | Lists products/services the vendor will provide. Evolves during the project. Usually involves SMEs and legal. |
SoW typical contents
- Page headers (project name, creation date)
- Important stakeholders list
- Sponsor name
- Revisions table
- Purpose
- Product target audience
- Scope / major activities
- What the project does not include
- Deliverables
- Schedule overview / milestones
- Estimated hours for completion
- Estimated completion date
- Payment terms
Ethics in procurement
From the PMI Code of Ethics: the values are honesty, responsibility, respect, and fairness.
Potential ethical risks:
- Bribery or corruption — gifts, money, or kickbacks from vendors
- Sole-supplier sourcing — favoring a familiar vendor without fair competition
- State-owned entities — stricter legal/ethical compliance required
Ethical tests:
- Would the action cause shame?
- Could it create legal issues?
- Would the community or public be concerned?
- Are there negative consequences?
Application
Procurement planning happens during course-3-project-planning Phase 3, typically alongside budget planning. Track vendor performance with quarterly business reviews and performance trackers.
Connections
- course-3-project-planning
- change-management — contract changes feed into formal change control
- risk-management-process — vendor risk is a major source of project risk