Plan Purchases and Acquisitions

PM Milestone Project Management Templates

PM Milestone 7000 Project Management Templates

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When identifying where to make build-or-buy decisions, this is the area where you have decided that the project needs are best served by acquiring products or services from outside the organization.

The key input is the Project Scope Statement. This will help you identify what elements of the project cannot be satisfied internally and what technical issues or risks may be resolved by the acquisition of external resources or products.

The key outputs are the Procurement Management Plan and the Contract Statement of Work. The Procurement Management plan outlines how all the procurement processes will work, from what kind of contract is used to the metrics utilized to evaluate the seller once the contract has been completed and everything in between. View it as a parallel project to your project with the same level of planning, scope definition (in this case it's called a Statement of Work or SOW), risks, schedule development, and so on that you would elaborate in your own project. The additional difference is the close coordination and identification of cross-functional dependencies needed between the

Figure 3.11

12.1 Plan Purchases and Acquistions

.1 Inputs

.1 Enterprise environmental factors

.2 Organizational process assets .3 Project scope statement .4 Work breakdown structure .5 WBS dictionary .6 Project management plan

• Risk register

• Risk-related contractual agreements

• Resource requirements

Project schedule

• Activity cost estimates

• Cost baseline

.2 Tools and Techniques .1 Make-or-buy analysis .2 Expert judgment .3 Contract types

.3 Outputs

.1 Procurement managemet plan

.2 Contract statement of work .3 Make-or-buy decisions .4 Requested changes

12.4 Select Sellers

.1 Inputs

.1 Organizational proces sassets .2 Procurement management plan .3 Evaluation criteria .4 Procurement document package .5 Proposals .6 Qualified sellers list .7 Project management plan

• Risk register

• Risk-related contractual agreements

.2 Tools and Techniques .1 Weighting system .2 Independent estimates .3 Screening system .4 Contract negotiation .5 Sellers rating systems .6 Expert judgment .7 Proposal evaluation techniques

3. Outputs

.1 Selected sellers .2 Contract

.3 Contract management plan .4 Resource availability .5 Procurement management plan (updates) .6 Requested changes

12.2 Plan Contracting

.1 Inputs

.1 Procurement management plan

.2 Contract statement of work .3 Make-or-buy decisions .4 Project management plan

• Risk register

• Risk -related contractual agreements

• Resource requirements

• Project schedule

• Activity cost estimate

• Cost baseline

.2 Tools and Techniques .1 Standard forms .2 Expert judgment

.3 Outputs

.1 Procurement documents .2 Evaluation criteria .3 Contract statement of work (updates)

12.5 Contract


.1 Inputs .1 Contract

.2 Contract management plan .3 Selected sellers .4 Performance reports .5 Approved changes requests .6 Work performance information

.2 Tools and Techniques .1 Contract change control system .2 Buyer-conducted performance review .3 Inspections and audits .4 Performance reporting .5 Payment system .6 Claims administration .7 Records management system .8 Information technology

.3 Outputs

.1 Contract documentation .2 Requested changes .3 Recommended corrective actions .4 Organizational process assets (updates) .5 Project management plan (updates)

• Procurement management plan

• Contract management plan

12.3 Request Seller Responses

.1 Inputs

.1 Organizational process assets .2 Procurement management plan

.3 Procurement documents

.2 Tools and Techniques .1 Bidder conferences .2 Advertising

.3 Develop qualified sellers list

.3 Outputs

.1 Qualified sellers list .2 Procurement document package .3 Proposals

12.6 Contract Closure

.1 Inputs

.1 Procurement management plan

.2 Contract management plan

.3 Contract documentation .4 Contract closure procedure

.2 Tools and Techniques .1 Procurement audits .2 Records management system

.3 Outputs

.1 Closed contracts .2 Organizational process assets (updates)

internal project work and the work performed by the vendor. That is something that needs to be watched and measured closely.

The primary tools and techniques are the Make-or-Buy Decisions and the various Contract Types. The make-or-buy decision can be tricky when it comes to software development, but a good heuristic to use is this: If you are not in the business of writing software, then you are better off buying what you need than attempting to build it in house. Not that it's not possible—it will simply cost you a lot more than you thought and will take a lot longer than you thought. Go with a company that has product out on the street for a number of years and that has a favorable track record of delivery, functionality, and quality that can be verified by its customers. If you have something proprietary, you need to develop in house, and don't have the technical skill sets in house to do the work, it will take time to acquire and develop those resources. If you have to go with a third party to develop your idea, make sure that appropriate nondisclose and noncompete elements are part of your contract with the vendor.

The various contract types from a high-level perspective are well enough defined in the PMBOK, so I won't rehash them here except to say that recently, almost all the contract types I've seen are Firm Fixed Price vehicles with the occasional T&M (Time and Materials) contract.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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