Procurement refers to the aspects of project management
related to obtaining goods and services from outside companies. It does not
refer to other internal organizations within your own company. (For the purposes
of this discussion, purchasing and procurement are equivalent terms.)

While procurement is an area into which a project manager
will give input, in many, and perhaps most companies, it’s an area that the
project manager doesn’t own. The project manager usually does not have the
authority to enter into contracts on behalf of the company, and he is usually not
asked to administer the contracts once they’re in place. But it’s still an area
you need to know about.

The Project Management Body of Knowledge (PMBOK®) from the
project Management Institute (PMI)
describes six processes within the Project Procurement Management knowledge areas.

Plan purchases and acquisitions

This is the process of determining the items to purchase for
your project and when you need them. This is typically under the control of the
project manager, since the centralized Purchasing Department is not going to
know what each particular project team needs.

Plan
contracting

This is the process of creating requirements for all the
products and services your project team needs and it has to be performed by the
project management team. You also need to start identifying potential companies
that can supply the products and services.

Request seller responses

This is when you identify a list of vendors to consider and
receive information on their capabilities and prices through vendor proposals
and price quotes. You typically narrow down a long list of potential companies
to a short list of qualified companies. Although the project team may perform
much of the work associated with this process, it is typically a process that
is owned by Purchasing.

Select sellers

Selecting sellers is the process associated with actually
choosing the vendor that will provide the product or service. The project team
may make the final selection, but usually within an overall process that is
owned by the Purchasing Department. The Purchasing Department generally also signs
the final contracts. Most companies don’t want the project manager to enter
legal contractual relationships.

Contract administration

This is the process of managing the relationship with the
contracted company. The project manager will work on a day-to-day basis with
the vendor’s account manager.

Contract closure

This occurs if the contractual relationship existed only for
the life of the project. For instance, if the contract was in place to provide
raw materials for a particular project, then the contract will probably end
after the project is over. The project team will be involved with the
Purchasing Department to make sure all the contracted work was completed and to
gather feedback about the vendor relationship. 

The bottom line is that in most organizations the project
manager should understand the basics of procurement management, but it’s
usually a responsibility he or she shares with the Procurement Department. The
project manager should provide requirements to the procurement specialist to
make sure the correct vendor is chosen, and the procurement specialist in turn
provides guidance to the project manager on managing the vendor relationship
successfully.