Procurement Management - 7 Steps To Developing A Procurement Management Plan

by Elina D

Procurement Management

Procurement involves coordinating with suppliers to acquire (or lease) goods or services for the project. By definition, these relationships are contractual, and as with anything in project management, the process begins with planning and incorporating the plan into a statement of work.

Procurement Management Plan, Procurement Management

Procurement Management Plan

Procurement Management Plan

The first thing that a procurement management plan does is to detail the procurements needed for the project. Expectations for these project procurements should be identified, specific schedules, and budgets.

A Procurement Management Plan is a document that identifies how an organization will conduct or manage its purchasing (i.e., procurement) process. Unlike the statement of work (SOW), which details any specific requirements, technical and otherwise, of the contractors, this document deals with the management of those contractors or vendors and their role in supporting the project's overall strategy. This document specifies the supplier identification process, keying in on specific points that should be considered during the selection process.
Because there are contracts involved, there is typically a bidding process when various providers bid for the project. Determining the right contractor is not simply a matter of price, rather a review of the price/value relationship. The bid document becomes one of the documents to be retained. It will be referred to determine whether a provider adheres to their promises regarding materials, schedules, and budget.

Procurement Management Plan Excel,Procurement Management Plan,  project procurement management

Components of Procurement Management Plan

The components of Procurement Management Plans typically include:

  • Definition of roles and responsibilities.
  • Schedules.
  • Estimates.
  • Vendor qualifications.
  • Risk management assessment.
  • Legal review.
  • Definition of the payment process.
  • Assumptions and constraints for the project.

Mega Bundle

    Before we explore how these functions work together, it is important to define the following elements:

    • Scope.
    • Project scope statement.
    • Assets.
    • Procurement policies and documents.
    • Procedures.
    • Guidelines.
    • Management systems.
    • Seller database.
    • Contractual relationships (fixed price, firmly fixed price, fixed price incentive fee, cost reimbursable, cost plus fixed fee, cost plus incentive fees, etc.)
    • Requirements.
    • Potential risk management issues.
    • Costs.
    • Constraints.
    • Scheduling and performance reporting.
    • Lead times.
    • Multiple suppliers.
    • Contingencies and their impact on incentives.

    Roles And Responsibilities

    Project Procurement Management, Project Procurement Management Template

    Project Procurement Management

    Properly done, project procurement management provides key functions that ensure the project management process runs smoothly. These functions include:

    • Budgetary oversight by project managers who are responsible for ensuring that the project meets key markers.
    • Technical management of contractors to ensure that they achieve the goals and requirements spelled out by the statement of work.
    • Contract review and documentation to ensure that the contract provisions are detailed properly.
    • Legal review of contracts and other documents by attorneys to ensure that all aspects of the process are executed properly.

    Because aspects of these roles may overlap, it is imperative that the project procurement management plan delineates the authorities and boundaries for each of the involved parties. In the event of a disagreement, the procurement manager will be responsible for facilitating the review to establish a consensus so that the plan is sound and approved by key constituents.

    What Makes A Project Procurement Plan Effective

    The four processes of Project Procurement Management include planning, selection, administering, and closing. Because Project Procurement Management Plans support the overall Project Management Plan, it falls into a grid that, when organized, looks something like this:



    Control / Administer


    Defining Roles and Responsibilities

    Develop Project Procurement Plan

    Direct and Manage Vendors

    Monitor and Control Project Work

    Perform integrated Change Control

    Close Project or Phase


    Plan Scope 

    Define Contingencies

    Secure Commitments from Vendors

    Review Activity Cost Estimate

    Deliverables Status

    Change Log

    Vendor control plans

    Plan Schedule Define Activities

    Estimate Resources

    Develop Schedule

    Control Schedule


    Estimate Costs

    Define Budget

    Control Cost

    Pre-qualifying vendors

    Plan Human Resource Management

    Acquire Project Team

    Develop Project Team

    Manage Project Team

    Risk Management

    Plan Risk Management

    Identify Risks

    Perform Qualitative Risk analysis

    Control Risks

    Reviewing legal matters

    Consider legal implications

    Obtain legal review

    Finalize contracts

    Manage Communication

    Control Communication

    Defining the payment process

    Stipulate payment plans and activities that drive alterations



    Complete final review

    Specifying assumptions and constraints for the project

    Define project specifics

    Review decisions against assumptions


    Procurement Project Process, Project Procurement Management

    Procurement Management

    Project Procurement Management can be further explained in terms of inputs, tools, and techniques, and outputs based on the stage.


    Tools / Techniques



    Project charter
    Statement of Work

    Expert judgment

    Project plan
    Work breakdown structure


    Work performance  information


    Project Management Information System (PMIS)

    Project document updates
    Budget updates

    Control / Administer

    Work performance information


    Project Management Information System (PMIS)

    Work performance report
    Project plan updates
    Budget updates


    Project charter
    Statement of Work

    Budget documents


    Project Management Information System (PMIS)

    Closing summary



    Why Does Having A Procurement Management Plan Matter?

    Having a procurement management plan gives an organization key insights into an essential aspect of project planning. Stakeholders must be involved in both the bid development and review processes as the procurement management plan informs other aspects of the project plan.

    Using the project procurement management plan, the project manager can effectively monitor the procuring process. When the project is executed, the actual procurement can be compared against the procurement plan to evaluate. If there are discrepancies, then the procurements can be adjusted.

    Through the planning process, organizations ensure that they maintain control over the project costs and insight into resources' effectiveness. The Procurement Management Plan becomes a template that a project team can utilize for future projects.

    Procurement Management Stages

    Though projects differ in many areas, all aspects may be categorized into four common stages: planning, execution, monitoring, and closing.
    During Planning, clear goals are defined, and aspects such as costs, resources, and the timetable are reviewed with consideration to the project as a whole. Accountability plans are also created to help keep the project on track.
    Execution is when the work gets done. Some of the elements that go into this phase include:

    • Developing the team
    • Assigning resources
    • Executing against plans
    • Scheduling
    • Status meetings

    When the project's procurement is completed, time will be spent closing this aspect of the project. A review of activities will drive future improvements.

    Procurement Management Planning

    7 steps of Project Procurement Planning Process

    Project Procurement Management Planning Process

    The 7 key steps of the strategic project procurement management planning process include:

    • Conducting the needs analysis.
    • Assessing the supplier's market.
    • Compiling supplier information.
    • Defining the sourcing/procurement strategy.
    • Implementing the strategy.
    • Negotiating with suppliers and selecting the winning bid.

    Improve Project Procurement Management Planning With Techno-PM Project Management

    Effective procurement management keeps projects on budget. Leveraging data visualization tools can be handy to ensure success in the project procurement management process.

    Mega Bundle