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?
Project procurement management is the process of obtaining goods and services from external sources to meet the needs of a project. The term covers all procurement stages:
- Planning,
- Executing,
- Controlling, and
- Closing.
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.
For this reason, you should approach procurement strategically and systematically.
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 procurement activities.
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
Controlling procurement implementation is essential to guarantee that the process delivers value in line with your organizational goals.
Here are several elements regarding the supplier’s performance you can track:
- 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 project timelines, deadlines, 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.
It’s also useful to review the procurement 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.
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 a breeze not only thanks to its neat design but also 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!
Interested in trying all this out? Sign up for Plaky right now and enjoy the smoothest project management procurement process!
And if you need more support and want to save money, check out the CAKE.com Bundle, which adds our business messaging app Pumble and our time-tracking tool Clockify into the offer.
