Managing a project can often feel like putting together a complex puzzle. A successful project means fitting each piece perfectly to reveal the final picture. But to do so, you first must ensure that every component is acquired on time and within budget.
Some of the puzzle pieces are external resources. In project management, we call this procurement.
From vendor selection to securing timely delivery, the procurement process can face various challenges — such as delays, quality issues, and cost overruns — if not approached carefully.
So what if you could transform this demanding yet critical aspect of your project into a streamlined and cost-effective process? Join us as we delve into how to achieve exactly that!
Table of Contents
What is project procurement management?
Procurement management in project management is the process of obtaining services and goods from external sources to meet the needs of a project. The term covers all procurement stages:
- Planning — defining procurement needs, budget, and strategy,
- Executing — finding vendors, negotiating contracts, and acquiring services or goods,
- Controlling — monitoring the procurement process to ensure quality, and
- Closing — finalizing contracts and completing payments.
Whether you need to purchase or rent external resources, the aim is typically to keep the cost as low as possible — without compromising the quality of the resources.
Therefore, you should approach procurement strategically and systematically if you want to enjoy benefits such as:
- Cost savings,
- Reduced risk,
- Better supplier relationships, and
- Guaranteed adherence to legal requirements.
Your 5-step guide to optimized project procurement management
Though it might have caused you headaches in the past, it’s possible to optimize your project procurement management. Here’s how to do it in just 5 steps.
1. Define needs, budget, and timeline
The first step is planning procurement tasks.
To begin with, simply create a list of goods and services required for the project. Here are some examples:
- Raw materials,
- Furniture,
- IT hardware and electronics,
- Vehicles,
- Consulting services,
- Employee training programs, etc.
Note down any specifications and quality requirements that could narrow down your search for providers later on. Additionally, make sure to involve relevant stakeholders in the planning of procurement activities so that everyone is aligned in terms of needs and expectations.
Cost estimation is another significant aspect. You need to allocate funds for procurement as precisely as possible to avoid surpassing the limit and affecting the overall project budget.
Consider direct costs (e.g., purchase price, shipping, legal fees) and indirect costs (e.g., storage, maintenance). Then, with your project timeline in mind, determine deadlines within the project procurement management plan.
Remember — order processing and shipping sometimes may require additional time, so anticipate such risks and establish ways to mitigate them.
2. Specify vendor selection criteria and launch a call
Once you know exactly what you need, it’s time to settle on the supplier selection criteria.
There are several points to establish here, primarily:
- Technical specifications,
- Expertise and experience,
- Budget constraints,
- Quality standards,
- Legal compliance, and
- Warranties and maintenance services.
You then need to launch a call for vendors interested in providing the requested products or services.
This is commonly done through an Invitation to Bid (ITB) — a document asking vendors to submit their best price for delivering exactly what’s described. Typically, the main aim is to select the lowest-cost provider that checks as many boxes as possible.
Companies can also launch a Request for Proposal (RFP), a more extensive document asking vendors to suggest solutions, methodologies, and pricing structures. This is used when you’re looking for innovative solutions or when the requirements are not fully defined.
Whichever you go for, clear and well-structured selection criteria and ITB/RFP documents guarantee a transparent project procurement management process that aligns with the goals and project scope.
3. Review bids and select a provider
When you close the bid call, you first need to confirm that each bid meets the mandatory requirements (e.g., appropriate submission format and complete information).
Then, evaluate the offers against the previously specified criteria. Make sure to:
- Assess the quality of the proposed goods or services,
- Analyze the pricing with the budget and other bids in mind, and
- Look into the bidder’s previous performance on similar projects.
Ensuring compliance with regulatory, legal, and ethical standards is also a must. This way, you’ll have no doubts about the provider’s financial health and potential conflicts of interest when you conduct procurements.
We suggest a balanced evaluation by taking both quantitative and qualitative factors into account.
And remember — it’s also perfectly fine to first narrow down the selection and ask those vendors for additional information. For instance, you could:
- Invite the shortlisted providers for presentations or interviews,
- Make site visits to assess their operations and facilities (if applicable), and
- Negotiate the terms and conditions of the potential collaboration in more detail.
By filtering out less qualified options, you minimize the risk of choosing an inadequate provider and avoid decision fatigue. Plus, you achieve higher quality and reliability.
Upon reviewing the final scores, inform the selected supplier and prepare the contract.
Don’t forget to also notify unsuccessful bidders (and provide feedback if requested).
4. Monitor the provider’s performance
You must control procurements to guarantee that the process delivers value in line with your organizational goals.
Some of the elements regarding the supplier’s performance you can track include:
- Accuracy of delivery,
- Defect rates,
- Adherence to budget,
- Communication quality, and more.
Visualizing some of this data could prove helpful. For example, specialized Gantt chart software can provide you with a visual representation of the project schedule, task overlaps, resources, and more.
In fact, Gantt charts are a game-changer for anyone daunted by complex projects since the bird eye’s view offers a simplified yet broad perspective.
Open communication with the supplier will also encourage them to report potential issues so that you can collaborate on solutions.
This can be done through regular performance review meetings, periodic site visits (if relevant), and formal feedback mechanisms, such as questionnaires collecting input from internal stakeholders and end-users concerning the supplier’s performance.
All of this leads to benefits such as:
- Early identification and enhanced mitigation of project risks,
- Improved cost control,
- Reduced delays,
- Clear documentation, and
- Long-term improvement in procurement practices.
Using centralized project management software is helpful in all the stages of project procurement management, but it’s especially the case here since such PM tools foster transparency, efficient document management, and easy budget tracking.
5. Close the procurement process
Closing procurement activities is the final step, allowing you to check if contract requirements are met and if there are any remaining administrative tasks.
This primarily means that all goods and services ordered from the supplier have been delivered according to the deal.
Don’t forget to collect all the invoices and make certain that all the payments have been processed. Apart from financial records, ensure that other procurement-related documents are complete and archived as specified by your organizational policies and legal standards.
When you close procurements, it’s also useful to review the process with your team and capture lessons learned. This will provide insights to refine procurement practices and encourage continuous organizational learning.
Finally, besides the core project team, you should inform all relevant stakeholders that the procurement is officially closed. The easiest way to do this is to prepare and distribute a final procurement report to summarize the performance and outcomes.
If you’re satisfied with how the entire process went, it can be beneficial to work with the same vendor again in the future. However, though established trust and reliability are a huge factor, you’ll still need to evaluate the vendor’s performance and stay aware of market conditions.
The project manager’s role in procurement
During procurement, a project manager needs to actively participate in the entire process to ensure alignment with project goals by:
- Planning the procurement strategy, vendor selection criteria, and timelines,
- Ensuring the vendor selection process follows established criteria,
- Monitoring the execution of contracts, and
- Serving as a liaison between vendors and the project team.
This applies even when some of the procurement points involve task delegation to team members or when there’s a separate procurement team/department.
When the latter is the case, the project manager’s role shifts more toward oversight and coordination, focusing on the impact of procurement on the project’s success, while the procurement team or manager focuses specifically on optimizing procurement activities.
Whatever the system within your company, the best thing you can do is rely on centralized team collaboration software, which allows for:
- Transparent communication,
- Team synchronization,
- Easy progress tracking,
- Accountability in execution, and
- Centralized documentation.
Manage project procurement effectively with Plaky
Now that you know how to handle project procurement, all that’s left to do is choose the right tool to facilitate the process. Luckily, everything we covered is, in fact, available on a single powerful and affordable platform — Plaky.
Our software is ideal for everything that project procurement management includes and more since:
- Plaky is a centralized platform, allowing better accessibility,
- You can create to-dos, set deadlines, assign team members, and organize work,
- It provides real-time updates within tasks and keeps a history of all changes, and
- Users can leave comments and @mention team members for enhanced collaboration.
Navigating Plaky is also a breeze thanks to its neat design — and key functionalities, such as the search bar, board filters, and the Favorite Board feature. Any manager’s role means managing multiple projects simultaneously, so features like these:
- Save time and
- Make work less overwhelming.
Additionally, Plaky prioritizes customizability. Unlimited spaces and boards, different kinds of custom fields, a selection of colors for labels and item groups, light and dark theme options — use all of this to arrange the workspace however you and your team like it!
That said, for those of you who like quick setups and pre-formatted layouts, we have Plaky’s adaptable project management templates — marketing, HR, sales, and many more options are available to accommodate various teams and industries!
Interested in trying all this out? Sign up for Plaky right now and enjoy the smoothest project management procurement process!
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