Posted on October 15, 2013 · Posted in Management, Project Management, Workflow

When project managers are assigned or take on a new project, it can be a lot of work to determine all the specifications, components, and which portions of the project will be outsourced to other suppliers. A very popular project management technique for organizing the project scope is the Work Breakdown Structure, or commonly referred to as WBS. This helps project managers organize the different specifications, components, and ensures that project procurement is carried out efficiently.

So where does a project manager begin when creating a WBS? He or she should begin by analyzing project scope, analyzing specifications, risk, and putting together a proper project procurement plan. An effective WBS will also give the project manager the opportunity to identify areas of the project where a “purchase” may need to be made. This basically means the project manager acts as the “buyer” and purchases services, products, or supplies from other suppliers in order to get the project done. Often times a project manager chooses to “buy” when cost, time, and resources are factors.

However, prior to outsourcing or purchasing services with other suppliers, a project manager needs to draft statements of work, which outline the particular project specifications and instructions. From there, a project manager can generate the procurement documents for suppliers. These could include teaming arrangements and contracts, purchase orders or other type agreement that exist between both parties on a particular job.

Contract types also vary in complexity. For example, there are high-risk contracts, minor or low-risk contracts, and “off-the-shelf” contracts, or commonly known as COTS (Commercial-Off-The-Shelf) products. Contract complexity varies depending on project and industry, of course. High-risk and high-priority contracts are meant for projects that involve heavy construction, creating or designing new software, outsourcing IT services, or the development of a new factory, commercial center, or airplane. Minor, low-risk contracts are for projects that involve the purchase of software, vehicles or aircraft. Finally, COTS contracts are more routine. They involve purchases of office supplies, computers and other machinery or raw materials.

Once the WBS has been organized and drafted based on the project scope, work statements have also been drafted and issued, project procurement documents have been drawn up, and contracts have been issued—based on complexity of the project—then the bidding phase of procurement begins. Before suppliers begin to bid for a particular project or long-term account with an organization, it may be helpful for the project manager to design a supplier chart to keep track of all the bids received. Project managers can assign weights and scores as they see fit or how they deem appropriate. This will help manage bids to choose the right supplier.

All in all, the project procurement process from start to finish is an important process. It involves a lot of coordination, analyzing, and calculating project components in order to determine the “make” and “buy” decisions of a project and then coordinating each “make” or “buy” decision, which basically means which project components will be managed and produced in-house and which will be “outsourced”.

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