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Procurement is the process obtaining goods and services from an outside organization by contract agreement that defines the duration, statement of work and budget (Zuberi.) According to Kerzner the PMBOK (6th ed. 12.1.5 EEF) states there are four procurement processes.
Plan – define the statement of work to develop a procurement plan. It identifies the project’s specific requirements and constructs the contractor selection criteria. It also creates the WBS framework and determine timeline benchmarks and project budget estimations.
Conduct- Reviews the plan requirements including the necessity of vendor sourcing. Once an agreement is made then a solicitate package advertised. Provides the opportunity for vendors to bid on the set required needs.
Administer – Acceptance of bids, negotiation and selection of vendor.
Close – Complete the legal agreement contracts.
These processes may be Kerzner’s own theories because there is no 12.1.5 in the PMBOK 6th ed. What the PMBOK does state that there are three procurement processes:
Plan – Create the Procurement plan, create a procurement strategy, bid documents, SOW etc.
Conduct – Advertise proposal, review offers, select vendor and negotiate agreement etc.…
Control – Close procurement, evaluate work performance, update procurement plan update project management plan etc.
My experience as an IT Project Manager is considered more of a lifecycle of continuous phases. There are always multiple projects concurrently being managed by myself and my colleagues. I work daily with offshore outsources vendors for the redundant and routine work that they provide. I believe my employer use to use a piece work pricing but the offshore began to manipulate the work, so they were receiving paid twice for the piece of work completed, so now my employer has a fixed price contract agreement. There may be some incentive bonus based on productivity. On the PM side we are direct hires and we manage the project and the offshore vendors are our (back office) assistants. Our incentive is a yearly bonus based on annual profits, an occasional team outing, catered food and unlimited overtime because there is more work than my department can handle. It’s nice to get 4 weeks’ vacation but my department is too busy to be able to take time off for vacation and even if you do take a few days off you still end up having to work. There is a procurement department that handles domestic and interactional contract agreements.
“The objective of the conduct procurements process is to negotiate a contract type and price that will result in reasonable contractor risk and provide the contractor with the greatest incentive for efficient and economic performance (Kerzner.)
Allen, M., Herring, K., Moody, J., & Williams, C. (2015). Project procurement: Impact of contract incentives and penalties. International Journal of Global Business, 8(2), 1–26.
Kerzner, H. (n.d.). Project Management: A systems approach to planning scheduling and controlling (12th ed.) Retrieved from https://bookshelf.vitalsource.com. Hoboken, NJ:Wiley
Project Management Institute. Guide to the Project Management Body of Knowledge (PMBOK® Guide) — Sixth Edition and Agile Practice Guide. Newtown Square. PA. 2017.Chapter 12, “Project Procurement Management,” pages 459–481
Zuberi, S. H. (1987). Contract/Procurement Management. PM Network, 1(3), 41–44.
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