Inputs to procurements planning process

April 8, 2010
By

Introduction

There are a range of inputs you need to consider when planning procurement. These are, at a minimum, the scope baseline and the requirements document. These define the project requirements in a detailed manner. Teaming agreements, the risk register and the risk related contract decisions tend to cover your actions against risks. The project schedule, activity resource requirements and the cost performance baseline provide you with the time and cost parameters of the project and let you determine procurement actions to meet them. The other important inputs are the organization’s environmental factors that determine the context in which most decisions will be taken and the process assets represent the collective learning of the organization up to that point and determine many of the relevant formats of documentation and parameters of relevant decisions.

All the relevant Inputs

The procurement plan decides what exactly are to be procured, the approach to do that and identifying potential suppliers for the same. It also includes decisions regarding partitioning the project into what needs and must be done by the project team and what products or services need to be obtained from outside the boundaries of the organization. The complete set of processes related to procurement such as plan procurement, conduct procurement, administer procurement and close procurement are conducted to obtain these requirements for the project team at the right input points and at the right times, of course.

Typically contracts between the buyer and a seller would guide the procurement process. Since this is one tool that can ensure delivery of the product, result or a service to the buying organization at the right time and at the right level of quality, this needs to be formed carefully. The project teams would need to consult specialists and quite often one such specialist works with the project team as the buyer for the team’s needs. Multiple such contracts may be active at any time. If the item contracted is not an off the shelf item the seller may actually be conducting a project for delivering the contracted result. The buying organization then, becomes the most important stakeholder of that project and the selling organization has to exercise the project management exercise to deliver what’s required.

Finding, qualifying and then determining who could be a potential seller is a major part of the planning. One of the issues to be considered while setting up a relationship with a seller is to reach an agreement about who should be holding some licenses/permits etc required by regulatory authorities. Project schedules play an important part in determining when should each of the contracted products, services or results be available?

The Scope baseline by way of the scope statement, the WBS and the relevant WBS dictionary together define quite accurately what all are required to be done as part of the project activities. So it is easy to imagine why the planning process must start from here. The requirements documentation quite often include important details that can influence procurements decision. Legal, regulatory and safety requirements called out in the requirements documents will directly impact procurement plans. Security, performance guarantees/ insurance, licenses, permits, IPR and so on will give rise to many issues that need to be considered in your procurement plans.

A teaming arrangement may quite often be necessary to reduce risks related to the project and deliver the results with higher assurance. These arrangements may take different forms such as joint ventures, partnerships and so on. You then need teaming agreements that would guide the behavior of the teams involved in the arrangement. The risk register spells out the risks and the opportunities too. The procurement plan, then, like any other plan needs to be aware of these risks. The outcome of these considerations would be to lead you to risk related contract decisions that reduce the probability of such risks and mitigate the effects, if the risk event does happen.

Activity resource requirements specify the type of resource, people, equipment and location. Thus these need to be considered to determine what’s available and what’s not and lead you to procurement decisions. Project schedules and the activity cost estimates let you define the time of availability and the amount of funds you can apply to acquire the required resources.

A couple of other inputs you definitely need to consider provide the perspectives, the formats, documents, measurements, the thresholds to decisions, etc. These are two vital items; the enterprise, environmental factors and the organizational process assets. Factors in the environment that have an impact on procurement planning include marketplace conditions, availability of the products and services in the market, suppliers and their history of performance, typical terms & conditions that apply trying to procure such items and local conditions. The organizational process assets like always represent the total wisdom of the organization available at that moment and will influence the decisions related to procurement policies, guidelines, standards, etc. Management systems to be considered for procurement planning and selecting the contract type also are guided by what’s known collectively. The same set of earlier experience may guide the selection of a supplier from among a set of pre-qualified suppliers.

Popularity: 6% [?]

Tags: , ,

2 Responses to Inputs to procurements planning process

  1. mbaziira on June 23, 2010 at 10:00 am

    thankx for your information. it has been relative for my coursework assignment.

Leave a Reply

Your email address will not be published. Required fields are marked *