What's New in Project Procurement Management (pt 1)

 

I got so many positive comments about the summary guide to what’s new in Project Cost Management that I shared recently, that I thought I would do it again for another Knowledge Area.

This time, it’s the turn of procurement – another budget and financial management aspect of project management that has had an update in the PMBOK Guide®-- Sixth Edition.

As the date for the launch of the new exam is this month, a quick review of Project Procurement Management will be relevant for anyone who started studying for their PMP® or CAPM® but who hasn’t yet managed to take the exam.

Plus, it’s just generally interesting, if you are interested in things like this – like I am! I enjoy seeing how the discipline of project management is evolving over time and the procurement area has seen some significant updates.

As before, I have to thank the authors of a free pdf including Asad Naveed, Varun Anand and others, for their comprehensive guide to what is new in the latest version. I have my own electronic version and I’ve been scouring that too, but their 130-page guidance document is helpful for showcasing the headlines of where things have changed.

So, without further ado, let’s dive into how procurement management is different now.

Plan Procurement Management Process

The first process in this knowledge area is Plan Procurement Management. We are, of course, in the planning process group.

It feels like quite a lot is different, but I don’t think the changes are substantive. Let me explain what I mean.

Inputs

The inputs have changed around a lot. Requirements documentation, activity resource requirements, the schedule, cost estimates, the risk register and the stakeholder register are out.

In come the project charter, the generic “business documents” and project documents.

There is some sense to this. It speaks to what feels like more of a desire for project managers to make their own judgements, which is reflected throughout the PMBOK Guide®-- Sixth Edition. For example, project documents can include:

• Requirements documentation
• Risk register
• Stakeholder register
• Resource requirements

And so on.

The charter includes statements about finances, as you may have consideration given in that document to the total budget, or even information about possible suppliers. 

Tools and Techniques

The make or buy decision analysis has gone! So has market research, which I always thought was quite a helpful inclusion.

However, the nice and vague “data analysis” has been included, along with data gathering, and market research could justifiably fit in here.

The other new T&T is source selection analysis. This sounds a lot more complicated than it actually is. All it means is you plan for how you are going to select your vendors. The analysis part is looking at the options available to you and making the choice about which selection approach to use. For example:

• You can choose the cheapest
• You could base your decision on quality
• You could look at a range of technical criterial
• You could go with a preferred/mandated supplier so it doesn’t much matter what they cost or how good they are

Or a mixture, or something else.

Outputs

The new version has 10 outputs! We have some new ones: procurement strategy, bid documents, independent cost estimates and organisational process asset updates (those OPAs get everywhere, and have to be updated).

Where, in other areas, it feels like there is some streamlining and introduction of generic terms, here the “procurement documents” output has been dropped in favour of the more specific strategy document.

I can see why – this is the planning process, so the output should be something that is basically your plan for procurement. The strategy gives you that. It can cover how you are going to procure, the kind of deals you are prepared to go into, preferences for contract types and so on.

Bid documents might not be necessary for all projects (in fact, much of procurement management might not be relevant for your project – it depends on what, if anything, you are buying). Bid documents is a summary term for the paperwork you need to generate so that suppliers know what it is you want to buy from them. In other words, the Request for Information, Request for Quote or Request for Proposal.

I like that the update includes independent cost estimates, although I have never worked on a project that has used these. Basically someone skilled in this area tells you what the work should cost, so that you can benchmark the vendor proposals when they come in. Very sensible!

Next time I’ll look at what’s new in the Conduct Procurements process. A quick teaser: your new procurement strategy, produced as part of this process, is not directly an input! You’ll have to wait for the next instalment to see how that’s reflected in the process.