The Money Files

A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts. Written by Elizabeth Harrin from

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5 Steps of the Procurement Lifecycle [Video]

Categories: procurement

There are 5 steps in the procurement lifecycle:

  1. Requirements
  2. Vendor selection
  3. Negotiation and contracting
  4. Service delivery and performance monitoring
  5. Renewal/contract closure.

This video outlines the steps and talks specifically about the requirements and getting the procurement off to a good start by understanding what you need from the exercise.

Read more articles about procurement.

Posted on: April 24, 2019 09:00 AM | Permalink | Comments (8)

What’s New in Project Procurement Management (pt 3)

Categories: procurement

It’s time for another instalment of What’s New In the PMBOK Guide®-- Sixth Edition. Following on from my look at the Plan Procurement Management process (which you can read here), and Conduct Procurements, we’ve reached the third of the Project Procurement Management Knowledge Area processes: Control Procurements.

The headlines are:

  • The changes to this process mostly feel very… average.
  • It seems to be a lot of aligning terminology
  • But, there is one big change relating to closing procurements – more on that in a moment.

Now let’s take a deep dive into the process and see how the new version of the PMBOK Guide®-- Sixth Edition has evolved.

Control Procurements Process

This is the third process in the Knowledge Area. We’re in the Monitoring and Controlling process group (surprise, surprise).


The changes all feel very cosmetic here – at least they do to me. Procurement Documents is out, to be replaced by Procurement Documentation. Work Performance Reports are out, but Project Documents are in, which would cover performance reports broadly, if you wanted to include them.

Project Documents would also cover:

  • Lessons learned log
  • Milestone list
  • Quality reports
  • Requirements documentation and the traceability matrix
  • Stakeholder, assumption and risk registers
  • And anything else your professional judgement feels should be included.

Finally, enterprise environmental factors and organisational process assets appear – almost as if they don’t want to be left out when they are in so many other places!

Enterprise environmental factors that relate to this process are things like marketplace conditions and your code of ethics that relate to how procurements should happen. You’ll use these factors to make better decisions about whether or not to step in and take action to keep a procurement agreement on track.

Organisational process assets are those things that relate to your company’s processes, and that can have an impact on how you work through those processes. The obvious one here is the procurement policy because that can influence how you progress, monitor and ultimately close down a procurement.

Tools and Techniques

The contract change control system no longer features, but expert judgement appears. Data analysis also features in this process as a technique, and it covers earned value analysis, trend analysis and performance reviews. These are all ways of assessing how the procurement is going, and they give you data that can help decide if you need to step in to do a bit more ‘controlling’ to keep the agreement on track.

Procurement performance reviews are no longer included (because these are covered by data analysis). Records management system has also been removed. I get that it’s a tool, but it’s not hugely useful here, at least not to the point where it has to be called out.

Inspection and audits are now split into two separate tools, whereas previously they were bunched together as ‘inspection and audits’. That takes the total T&T for the revised process to five.

I don’t have much else to say on this point – it all strikes me as pretty self-explanatory and also common sense.


And…. Drumroll….

Here is where we have the major change to this process. Closed Procurements is now an output of Control Procurements.

Why is this a big deal? Well, in the PMBOK Guide®-- Fifth Edition, Close Procurements was a whole process in itself. That whole process has disappeared.

Honestly, this is a good thing. It reflects what we have all known for a long time: generally, project managers don’t have the authority to legally close down a contract. We don’t authorise the final payment. We don’t terminate a deal. We may be the catalyst for the payment or the termination, and we do have significant influence over how it happens, when it happens and who is involved, but ultimately, we don’t have the final say. That is the project sponsor’s responsibility, or perhaps someone high up in the finance department. Or perhaps a procurement or contracts specialist, or a lawyer. Basically, a whole host of people are better equipped to do this than we are as project managers.

That’s not to say that on some projects, the teams are so lean that project managers do have the authority to go ahead and do this. But even if you take the steps, it’s generally someone else who gives you the go ahead to do so, like the project sponsor.

The work to do the closing of contracts is now covered as part of Control Procurements, so if you are doing it yourself, you still have a few pointers in the book.

Procurement documentation updates is the only other change to the outputs list (so in total, we’ve added two to the list and taken none away).

Procurement documentation is a wide-ranging phrase that covers all kinds of things relating to your agreements, including:

  • Approved and unapproved change requests
  • Technical documentation
  • Reports, warranties, paperwork to do with deliverables
  • Financial records which could include purchase orders, invoices, bill of sales, payment records, receipts and so on
  • The final reports from those inspections and audits carried out in this process, as mentioned in the Tools & Techniques
  • Work schedules, timesheets for effort, plans
  • And, as we’ve seen before, the guidance is non-exhaustive, so if your organisation uses some other kind of documentation for procurements, then by all means include it in your own list.

That brings us to the end of the Project Procurement Management Knowledge Area. There are just those 3 processes, and aside from the Close Procurements change, most of the other changes will not radically change how you go about doing your work.

Overall, I think the message to take away is to involve the experts in your business who have more experience in procurement than you. And if it is their job to do procurement full time, either as a contracts manager or a legal expert, then take advice, let them do what they are great at and you stay focused on getting the deliverables delivered.

If you’d like to see me summarise any other processes and the changes that the new PMBOK Guide® -- Sixth Edition has given us, then let me know in the comments below!

Posted on: April 24, 2018 09:15 AM | Permalink | Comments (14)

What's New in Project Procurement Management (pt 2)

Categories: procurement

It’s time for another instalment of What’s New In the PMBOK Guide®-- Sixth Edition. Following on from my look at the Plan Procurement Management process (which you can read here), we’ve reached the second of the Project Procurement Management Knowledge Area processes: Conduct Procurements.

Here are the headlines: there are quite a few changes, once again focusing I feel on ensuring professional judgement is applied, and making it easier to tailor the process. Overall, we’re seeing a process that is less prescriptive and more flexible, which is, I think, a good thing.

Having said that, fundamentally the old and new processes are the same. You won’t need to radically treat procurement any differently now than you have been doing in the past. There’s a lot of good stuff in the process, and that’s still there.

It’s also worth noting that the guidance is very much to get experts involved in procurement. Unless you are in a tiny company, chances are that there is someone on the project team who has more experience in buying stuff than you do. If you have a procurement team, buying division, vendor management group or whatever they might be called – use them. It’s far better to draw on the expertise of people who know their way round a procurement bid document than have to learn this stuff from scratch yourself, especially when you might not have to use it again for some time.

Of course, if you are taking the PMI exams, you need to know the material in order to get through the test. I feel that knowing isn’t the same as being experienced in doing. So, always, always involve expert buyers where you have them. You’ll get a better deal and your will most likely be better protected in contract terms too.

OK, now those messages are out of the way, let’s dive into the process and see how the new version of the PMBOK Guide®-- Sixth Edition has evolved.

Conduct Procurements Process

This is the second process in the Knowledge Area. We’re in the Executing process group.


There are some changes to the inputs for this process. The procurement management plan has dropped out – somewhat surprisingly – but is replaced with the broader “procurement documentation”. This means other procurement-specific document has also been removed, namely make or buy decisions, source selection critiera and the procurement statement of work.

The project management plan is a new input, along with enterprise environmental factors (because we can’t get enough of those!).

Tools and Techniques

This section is the perfect example of where the process is becoming more vague and yet more helpful at the same time.

Data analysis is a new T&T, replacing proposal evaluation techniques, independent estimates and analytical techniques. In fact, proposal analysis is called out as a data analysis tool that you should/could be considering for use on the project. All of these are ways of looking at data analysis, but instead of mandating particular ways of analysing the data, the new version of the guidance lets you pick and choose what would be most useful for you.

Interpersonal and team skills replaces procurement negotiations. This reflects that you may have to do negotiation, but overall you need more than just good negotiating skills to close a deal.

I think this is reflective of the fact that you, as the project manager, might not actually be doing the negotiation yourself in many cases. What you want instead is the interpersonal skills to be able to make sure the discussions happen, conflict is addressed, the right people do the right things and you all get to agreement.


There isn’t much change to the outputs for this process.

Resource calendars have been removed. Perhaps it was decided that you didn’t really need to create a resource calendar for your supplier, now that you know who they are.

Organisational process assets are included. It’s almost as if the first edit was: Where have we forgotten to mention enterprise environmental factors and organisational process assets? Let’s go and drop those into all the remaining processes now.

You will get very familiar with these terms and what they mean as you go through the PMBOK Guide®-- Sixth Edition.

In the case of this particular process, the organisational process assets covered here are things that you would possibly need to update as a result of successfully securing the services of your vendor. These could include:

  • Your company’s list of suitable, pre-qualified sellers (updated to add the one you just chose)
  • Your company’s list of prospective sellers (updated to include the unsuccessful vendors you didn’t choose but who came a close second and may be worth talking to again for another project – or perhaps to remove one that you found was close to liquidation or something similar)
  • Your company’s seller database (to record how the process went, your thoughts on the vendor presentations etc. Basically, lessons learned for procurement).

Next time I’ll look at what’s new in the Control Procurements process. There is one major change in this process that you don’t want to miss! I’ll tell you more next time.


Posted on: March 27, 2018 09:00 AM | Permalink | Comments (6)

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

Categories: procurement

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.


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.


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.

Posted on: March 09, 2018 06:09 PM | Permalink | Comments (11)

5 Contract Terms You Should Know [Video]

Categories: contracts, procurement

In this video I share 5 contract terms that you should know. Remember, this isn't legal advice (and it's good to get some of that prior to any contract) but understanding common procurement terminology will help you manage your supplier relationships more effectively.


Posted on: October 16, 2017 12:00 AM | Permalink | Comments (11)

"Military justice is to justice what military music is to music."

- Groucho Marx