Develop a Procurement Plan

PROCUREMENT MANAGEMENT includes:rncontract administration and managementrnchange control necessary to administer contracts or purchase ordersrnadministering contracts issued by the buyerrnadministering contractual obligations placed on the project team by contract PROCUREMENT MANAGEMENT involves the processes of:rnplanning procurementsrnconducting procurementsrnadministering procurementsrnclosing procurements A CONTRACT is a mutually binding agreement, purchase order, or subcontract that obligates the seller to provide the specified product, service, or result and obligates the buyer to pay for it. It is a legal relationship subject to remedy in the courts, and reflects the simplicity or complexity of the deliverables. rnTHE PURPOSE OF THE CONTRACT REVIEW AND APPROVAL PROCESS is to ensure the language describes products, services, and results that will satisfy the identified project need. PMP exam content includes the concept of contrac review, and users preparing to take the test and using PMP Exam Prep should be comfortable with this topic. ACTIVELY MANAGING THE CONTRACT LIFE CYCLE and specific terms and conditions language within the contract helps avoid, or mitigates, some identified project risks. Project procurement management operates within the buyer-seller relationship. Usually, but not always, the "buyer" is within the project team, and the "seller" is external to the project team. This is an important concept and should be thoroughly understood in terms of project management processes. Depending on the application, a seller may be a: rncontractorrnsubcontractor rnvendorrnservice providerrnsupplier Depending on the buyer's position in the project acquisition cycle, the buyer may be a: rnclientrncustomerrnprime contractor rncontractorrnacquiring organization rngovernment agencyrnservice requestorrnpurchaser rnTHE PLAN PROCUREMENTS PROCESS documents the purchasing decisions for the project, including specifying the approach for procurement and identifying potential sellers. THE PLAN PROCUREMENTS PROCESS includes reviewing make-or-buy decision risks, as well as the type of contract planned in order to mitigate risks and transferring them to the seller. It also includes consideration of potential sellers. THE PLAN PROCUREMENTS PROCESS determines:rnwhat to purchase or acquirernwhen to purchase itrnhow it will be purchased If the buyer wants to exercise some degree of influence or control over contracting decisions, they should consider who is responsible for relevant permits and professional licenses required by legislation, regulation, or organizational project execution policies. INPUTS TO THE PLAN PROCUREMENTS PROCESS include:rnrequirements documentationrnscope baselinernteaming agreementsrnactivity resource requirementsrnthe project scope baselinernactivity resource estimating and cost estimatesrncost performance baselinernproject schedulernrisk register and risk related contract informationrnorganizational process assetsrnenterprise environmental factors