Project management planning is made up of many parts. There’s the schedule, the stakeholder matrix, the managing of resources. Speaking of the latter, there’s the matter of how you’re going to procure resources that require vendors of goods and services. That’s procurement management.
The procurement plan is part of the overall project management plan. Over the life cycle of a project there are likely to be many points where it will intersect with vendors. This process needs to be managed. To manage these relationships and keep the flow of those goods and services moving without interruption requires a procurement management plan.
If it seems like we’re going too fast, it’s because we are. The act of procurement, its management and planning are all deeply embedded in the methodology of project management. Let’s slow down and take a moment to unpack these terms.
What Is a Procurement Plan?
A procurement plan, also known as a procurement management plan, is a document that outlines the process of finding and selecting vendors for goods or services required by an organization. It serves as a blueprint for the entire project procurement process, detailing how products or services will be acquired and how vendors will be managed during a project.
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Procurement Plan Example
Use this free Procurement Plan Example for Word to manage your projects better.
The primary goals of a procurement plan are to increase efficiency, effectiveness and transparency of the procurement process. It also justifies the need for external suppliers and describes the steps for identifying and selecting vendors. Finally, the procurement plan outline contract types, delivery schedules and performance metrics.
When to Make a Procurement Plan
A procurement plan should be made at the initiation phase of a project or before the start of any procurement activities. Typically, it is developed during the project planning phase to outline the procurement process and ensure that everything needed for the project is acquired on time and within budget. Here are key times to create a procurement plan.
- At the Start of a Project: Before executing any procurement activities, having a procurement plan helps identify what goods, services, or works need to be acquired, the timing, and the procurement method.
- When Budgeting for a Project: Having a procurement plan helps ensure that the costs of the procurement are included in the overall project budget.
- When Scaling Up or Expanding: If you’re expanding a project or business and need additional resources, a procurement plan helps you strategically manage increased needs.
- When Introducing New Suppliers or Contracts: A procurement plan helps establish a clear process for introducing new suppliers, contractors, or partnerships, ensuring alignment with project goals.
- When Contracting With Vendors: If you’re negotiating long-term contracts or one-time purchases, it’s important to have a procurement plan that ensures consistency, compliance, and strategic sourcing.
- For Risk Management: It helps identify procurement risks and prepares mitigation strategies, ensuring smooth delivery of the required materials or services.
- Before Project Execution: Before any procurement activities are launched, the plan must be in place to ensure you’re procuring the right materials and services at the right time.
Overall, a procurement plan is best developed early in the process to guide purchasing decisions and ensure successful project completion. However, a procurement plan is only one of many tools that project managers need to oversee procurement and manage the costs related to project resources. The best tool to manage these and other areas or projects is a project management software like ProjectManager.
ProjectManager is an award-winning project management solution equipped with multiple project management views to plan, schedule and track projects from start to finish. Gantt charts, project dashboards, timesheets, workload management charts and many other features designed to schedule work, allocate resources, make budgets and track costs, which greatly helps with project procurement management.
For example, our Gantt chart schedules tasks, resources and costs to make sure the right resources are delivered to the right team members at the right time. But you can also link all four types of task dependencies to help avoid delays and cost overruns. Quickly find the critical path by just filtering the Gantt chart. Now it’s clear which are the essential tasks and which have slack. Once the procurement plan is done, set a baseline to track variance in real time. Get started with ProjectManager today for free.
Who Makes the Procurement Plan?
A procurement plan is typically made by the procurement team, project managers or supply chain managers, depending on the organization’s structure and the complexity of the procurement needs. The key stakeholders involved in creating a procurement plan include the following.
- Procurement Officer/Manager: Responsible for overseeing the entire procurement process, ensuring compliance with policies and managing supplier relationships.
- Project Manager: Ensures that procurement aligns with project timelines, budget and deliverables.
- Finance Team: Helps in budgeting, cost analysis and ensuring financial approvals for procurement activities.
- Department Heads/End Users: Those who need the goods or services provide input on specifications and quality requirements.
- Legal and Compliance Teams: Ensures that procurement follows legal and regulatory requirements, including contracts and supplier agreements.
- Supply Chain or Logistics Team: Assists in managing the delivery, transportation, and inventory aspects of procurement.
- Executive Management (For Large Projects): Provides strategic direction, approvals and ensures procurement aligns with organizational goals.
The procurement plan is usually developed collaboratively, with the procurement manager leading the process while gathering input from various stakeholders to ensure smooth execution.
Procurement Plan Example
To better understand how a procurement plan would work in a real-life situation, we’ve explored an example for a construction project. Below is a simplified version of a procurement plan for XYZ Construction.
What Should Be Included in a Procurement Plan?
A procurement plan is a strategic document used to guide the acquisition of goods, services or works required for a project. It outlines the process, methodologies and goals of procurement to ensure timely, cost-effective and quality purchases. Here’s what should be included in a procurement plan.
Procurement Objectives
The procurement objectives define the goals of the procurement process, such as securing the required resources on time, within budget and according to quality standards. These objectives help align procurement with the overall project or organizational goals.
Scope of Procurement
The scope of procurement outlines what will be procured, including the types of goods, services or works. It details the specifications, quantities and the expected deliverables, ensuring a clear understanding of what is to be acquired.
Procurement Methodology
The procurement methodology describes the approach to acquiring goods and services, such as competitive bidding, direct purchasing or sole sourcing. It ensures the process is fair, transparent, and meets organizational standards and legal requirements.
Supplier Selection Criteria
Supplier selection criteria set the standards for evaluating potential suppliers or vendors. It may include factors like cost, quality, experience, delivery time and reputation. This ensures that the best-suited suppliers are chosen based on predefined requirements.
Cost Estimates and Budget
Cost estimates and budget provide an overview of the expected costs for the procurement process. This includes estimating the cost of materials, labor and overheads, helping to ensure procurement stays within the allocated budget.
Procurement Schedule
A procurement schedule outlines the timeline for the procurement process, including key milestones such as issuing tenders, receiving bids and finalizing contracts. It ensures that procurement activities are completed on time, keeping the project on track.
Risk Management Plan
The risk management plan identifies potential risks in the procurement process (such as supplier delays or cost overruns) and outlines strategies to mitigate them. This helps ensure smooth procurement and prevents disruptions.
Roles and Responsibilities
Roles and responsibilities define who is responsible for each aspect of the procurement process. It ensures clear accountability, coordination, and communication between stakeholders involved in procurement, such as project managers, procurement officers and legal teams.
Contract Management Plan
The contract management plan details how contracts will be managed, monitored, and enforced throughout the procurement process. This includes performance evaluations, dispute resolution processes and ensuring that suppliers meet contractual obligations.
Project Budget Template
This free project budget template allows you to estimate all the costs related to resources such as labor, equipment and any capital assets that you might need to procure for your organization. Making a budget is an important of a procurement plan as it defines clear limits for spending.
We’ve created over 100 project management templates for Excel, Word and Google Sheets that can help with all areas of project management and can be used in conjunction with this project budget template to manage the procurement activities of an organization.
How ProjectManager Helps Manage a Procurement Plan
Project procurement management can be overwhelming when project management teams don’t have the right tools to plan and monitor the procurement process. Fortunately, there are solutions like ProjectManager. ProjectManager is an online project management software that can make that process easy and effective. ProjectManager helps with executing your procurement plan with its kanban boards, Gantt charts, dashboards and other project management features.
Manage Resources to Keep Teams Productive
Part of any procurement plan is managing resources, human and nonhuman. Those can be scheduled on the Gantt chart. Resource allocation for one or multiple projects, can be quickly and easily found on the color-coded workload chart. See who is overallocated or underutilized and balance the whole team’s workload without leaving the page. There’s also a team page that can be customized for a daily or weekly overview of the team’s activities. See everyone’s priority, progress and more. Changing the team’s tasks can be done right on that page. Keep teams working at capacity and stick to the procurement plan without risking burnout.
Monitor Resources in Real Time
To ensure that resources are there when needed and following the procurement plan, project managers need to track and control the project. For a high-level overview of one or multiple projects, toggle over to the real-time project or portfolio dashboards. Its easy-to-read graphs and charts monitor key project metrics, including workload. For a more detailed look at resources, make a workload report with just a keystroke. There are many other reports, including project or portfolio status, timesheets, variance, etc., which can be filtered to zero in on specific data points or created with more general information to keep stakeholders informed. Even timesheets help by seeing labor costs in real time.
They say, “Don’t put all your eggs in one basket.” But in project management software you want to have all your tools in one place. ProjectManager keeps you organized, so you can work better.
ProjectManager is online project management software that helps control procurement throughout the project phases. Workload and resource management features keep track of supplies and calculate planned versus actual costs. ProjectManager assists project managers with planning, monitoring and reporting projects. Team members get a collaborative platform to work together more productively. Try it today with this free 30-day trial.
