Part 31: Knowledge Areas: Project Procurement Management

//Part 31: Knowledge Areas: Project Procurement Management
Part 31: Knowledge Areas: Project Procurement Management2022-08-21T04:00:45+00:00

Part 31: Knowledge Areas: Project Procurement Management

Project Procurement Management

  • Processes to purchase or acquire products, services, or results
    • Includes the contract management and change control processes to develop and administer contracts or purchase orders
    • Involves agreements, contracts, and legal documents between a buyer and a seller


  • CONTRACT = a mutually binding agreement that obligates the seller to provide something of value in exchange for monetary or other compensation
    • A contract can also be called an agreement, understanding, subcontract, SLA, MOA, or purchase order
    • Organizations document policies and procedures that define procurement rules and authority
    • Contracts are subject to more review than other project documents because they are legally binding on the organization
    • A contract should clearly state the results expected from the seller
    • Contracts are reviewed to ensure that the language describes products, services, or results that the project needs
    • A contract can transfer some project risks to the seller
    • A contract can force the buyer to accept risks for areas that are beyond the control of the seller
    • In a complex project, multiple contracts and subcontracts may be managed simultaneously
    • The seller may be called a contractor, subcontractor, vendor, service provider, or supplier
    • The buyer may be called a client, customer, prime contractor, contractor, acquiring organization, service requestor, or purchaser
    • In the contract life cycle, a seller may first be a bidder, then a selected source, and then a contracted supplier
    • When the goods being purchased are not just common (“off-the-shelf”) products, the seller will manage the work as a project
      • The buyer becomes a stakeholder in the seller’s project
      • The seller’s Project Management Team will handle all project management processes
      • Terms and conditions of the contract are inputs to the seller’s management processes
      • The contract can contain inputs or limit the project team’s options
    • There are many online tools for managing contracts, identifying sellers, and handling procurements
    • A long-term relationship between a buyer and a seller may be managed by a Master Services Agreement, where both sides share risk and rewards.  Additional specific work can be covered by a supplement to the agreement.
    • Large construction projects/International Projects
      • Use Building Information Model software to manage their projects
      • Contractors and clients work together to obtain discounts for large quantities of purchases
      • Lead times of one to two years for some components are common and affect the project schedule.  Contracts for these components may be in place before the entire project has been planned.
      • Secondary supply-chain sources may be identified in case the primary sources are unable to deliver.
      • In an international project, you may be required to purchase some of the materials from local vendors.
      • Construction projects are monitored by web cams, such as EarthCam.  This allows the stakeholders to view the project’s progress online.
      • In the procurement process, a project may try the products from several candidate sellers before awarding a contract to one of them.  Each seller will be paid for his product, even if not awarded the full contract.
    • Contracts are very important in the PMP exam, and we will cover them in more detail