As a project manager preparing for the PMP exam, you need to understand the Conduct Procurements Process. This crucial process is part of the Project Procurement Management knowledge area and Execution process group.
It involves obtaining seller responses, selecting a seller, and awarding a contract. Mastering this process allows you to effectively acquire necessary products, services, or results from external sources.
This article will provide an overview of the Conduct Procurements Process, including its inputs, tools and techniques, and outputs. You’ll also get tips to help you tackle Procurement questions on the PMP exam.
Project Procurement Management
Project Procurement Management encompasses the processes required to purchase or acquire products, services, or results needed for the project externally.
When managing projects, you are not expected to produce everything for the project internally. You will likely need to procure certain goods, services, equipment, or results from outside vendors and suppliers.
Procurement Management allows you to obtain the best value for project expenditures. It involves planning what needs to be procured, determining whether to procure or make the items, conducting procurements to select suitable vendors, managing the contracts, and closing procurements.
Effective Procurement Management requires cross-functional coordination with Finance, Legal, Purchasing, and other parts of the organization. As Project Manager, you lead the procurement activities while collaborating with these groups to ensure successful outcomes.
Procurement Management Processes
Understanding the Procurement Management processes, their inputs, tools, techniques, and outputs is key to succeeding on Procurement questions on the PMP exam. Let’s look at these processes next.
According to the PMBOK Guide 6th Edition, there are three Procurement Management processes you need to know:
- Plan Procurement Management: This process involves identifying what needs to be purchased or acquired for the project and when.
- Conduct Procurements: This process covers obtaining seller responses, selecting sellers, and awarding contracts.
- Control Procurements: This process involves managing relationships with vendors, monitoring contract performance, and making changes and corrections to contracts.
It is the role of the Project Manager to lead the team through these processes to acquire the necessary products, services, and results from vendors. Understanding how these processes fit together is key to managing project procurements effectively.
Conduct Procurements Process
The Conduct Procurements process involves obtaining seller responses, selecting a seller, and awarding a contract.
In your role as project manager, you will oversee and lead this process while collaborating with Procurement, Legal, and other groups. You’ll initiate communication with sellers by issuing a procurement document like an RFI, RFQ, RFP, or IFB. Interested sellers will respond with proposals, bids, or quotations.
Your next task is to evaluate the potential sellers to select the best fit for your project. This involves assessing the proposals against criteria like cost, time, quality, and risk. Your team may use evaluation techniques like weighting systems, independent estimates, screening systems, and mathematical models to score proposals.
Once you’ve selected a suitable seller, it’s time to formally award the contract. This requires negotiating final terms and conditions and obtaining approvals before signing the agreement.
Mastering this process enables you to obtain the necessary goods, services, and results for your project from qualified vendors.
Conduct Procurements Process Inputs
Several key inputs feed into the Conduct Procurements process including:
- Procurement Management Plan: This plan guides how you will conduct procurements and includes things like types of contracts to use, standard documents, and who is responsible for activities.
- Procurement Documents: These include documents like RFPs, RFQs, RFIs, and IFBs which you use to solicit proposals, bids, or quotations from sellers.
- Seller Proposals: The responses you receive from potential sellers with information on how they can meet your procurement needs. This includes details on schedule, cost, approach, and more.
- Source Selection Criteria: Criteria you will use to evaluate and select a seller, such as technical capability, cost, business capacity, quality control, and management approach.
- Make-or-buy Analysis: Provides guidance on which project items should be procured versus done internally.
- Change Control Procedures: These are processes you must follow to make changes to procurements and contracts.
- Risk Register: The Risk Register is used to identify and analyze risks introduced by procurements and sellers.
- Requirements Documentation: Details what the procured product or service must do or have.
- Teaming Agreements: Agreements to partner with other organizations on procurements when needed.
Conduct Procurements Process Tools and Techniques
There are several useful tools and techniques you can leverage during the Conduct Procurements process:
- Bidder Conference: Hold a meeting with prospective sellers to clarify requirements and answer questions before proposals are submitted.
- Proposal Evaluation Techniques: Use techniques like weighting systems, independent estimates, screening systems, and mathematical models to score proposals objectively.
- Expert Judgment: Consult experts in things like law, technical solutions, or procurement to help assess potential sellers.
- Advertising: Use advertising to increase awareness of a procurement opportunity and encourage more potential bidders.
- Analytical Techniques: Analyze procurement data like cost, schedules, risks, and performance to pick the best seller.
- Procurement Negotiations: Negotiate with sellers on requirements, terms and conditions, and pricing to reach a final agreement.
- Industry Groups: Leverage industry groups and associations to identify qualified sellers.
Applying the right tools at the right time allows you to conduct an objective, unbiased procurement and select the best seller. These tools help strengthen your negotiations, build consensus, and minimize risks.
Conduct Procurements Process Outputs
Successfully completing the Conduct Procurements process generates several key outputs:
- Selected Sellers: The sellers you’ve chosen to provide the procured product or service.
- Agreements: The legal agreements signed with the selected sellers that detail the terms and conditions of the procurement.
- Resource Calendars: Any resource calendars the sellers provide that impact scheduling.
- Change Requests: Any change requests that result from the procurement decisions and agreements.
- Project Management Plan Updates: Any changes to the project management plan, such as the schedule, cost, or quality baselines.
- Project Documents Updates: Updates to documents like the requirements traceability matrix, risk register, lessons learned register, and stakeholder register.
- Organizational Process Assets Updates: Changes to process assets like the qualified seller list, lessons learned documentation, and historical information.
Reviewing these outputs ensures you have fully captured all outcomes from the procurement process. Important changes may have been made to the project objectives, schedules, costs, or risks. Documents and processes may need to reflect new sellers.
Tracking these outputs prevents gaps that can undermine your project’s success. For example, without updating the schedule you risk missing critical seller deliverables. And failure to update the risk register could overlook emerging procurement risks.
Careful management of these outputs enables seamless integration of procured products and services into your project.
Conduct Procurements PMP Exam Tips
To master Conduct Procurements questions on the PMP exam:
- Know the process inputs, tools, techniques, and outputs cold. Inputs like procurement docs and seller proposals feed the process while outputs like agreements must be managed.
- Be able to describe the steps of obtaining seller responses, selecting a seller, and awarding a contract. Understand evaluation criteria and techniques for picking sellers.
- Recognize how changes in procurements impact the project management plan and documents. Updates are vital outputs.
- Understand the relationship between Conduct Procurements and processes like Plan Procurement Management. The prior process sets up tools this process leverages.
- Review sample exam questions on techniques like bidder conferences, weighting systems, and procurement negotiations. These popular tools often appear on the exam.
- Don’t just know the process steps, but how to actually apply them. The PMP exam tests your ability to manage procurements effectively.
With these tips, you’ll be well-equipped to tackle procurement situations presented on the exam. Mastering both the theory and practical application of Conduct Procurements will pay dividends in your PMP preparation.
Final Thoughts
The Conduct Procurements process is essential for acquiring goods and services needed for your project.
By mastering the steps for obtaining seller responses, evaluating proposals, selecting sellers, and awarding contracts, you can aptly procure products and results. Understanding the inputs, tools, and outputs will enable you to manage procurements with confidence.
Use the PMP exam tips to reinforce your knowledge of this process. With preparation, you can tackle any procurement scenario presented in the exam.
