Project Procurement Management:
As a project manager, you might want to include project procurement management. The term procurement means acquiring services and goods from an outside source. Many IT projects can incorporate the use of goods and services from outside the development team. Competition can occur between suppliers, as many IT departments have to decide between which vendors to use. To help decide which IT components to use for your projects, let's create a make-or-buy analysis that will help you determine if you should develop an IT component internally or outsource it using project procurement management.
Let's look at the aspects of buying an IT component that you have to consider:
Cost: When you consider outsourcing, suppliers can use the market scale that's only available to the customer rather than to the open public. Keeping labor costs domestic rather than international could also help you save costs. You also have to consider the longevity when using project procurement management. After the first initial investment, you have to consider any outgoing expenses and costs of ownership that may occur. Taking all of these things into account, it will allow your job as a project manager easier by making the most beneficial decision that is best for your team.
Time: Time is always a factor to consider when looking at any stage of the project. It's something you can still consider in project procurement management. As time passes, it can affect the market, which can also affect costs. Deadlines should also always be enforced, and considering IT components internally or externally may affect the timeline of the project itself.
Expertise: Whatever IT component you may consider, make sure it's aligned with the team's interest. It wouldn't make sense to obtain IT components, regardless if it came internally or externally, if your development doesn't know how to utilize it. It's a good rule to know the capabilities of your development, and by involving IT components, it will allow you to elevate your project development even further. Teams have the ability to access specific technologies and skills when using outside resources. During the planning for your project procurement, it will allow you to see the need stills and technologies required for your project.
Accountability: Although you can come up with a plan, it may not go as planned. That's why as a project manager, you need to make sure all policies and rules are followed. This also includes any contracts implemented when using IT components. Contracts also have the ability to clarify team responsibilities and increase focus on any project deliverables involved.
When you actually decide to conduct the make-or-buy analysis plan, here are some tips that you can remember that will ensure you are implementing project procurement management:
Establishing Criteria
Criteria is very important when implementing project procurement management. When you are conducting the analysis, make sure you establish any criteria you need the team and project to follow. Even for the IT components, consider the criteria that comes with implementing those components. When listing the differences between making the component and outsourcing it, keep in mind of the criteria that comes with it.
Risk Assessment
There will be notable differences when developing the IT component internally versus outsourcing for your project. Because of this, you need to consider any threats or risk that may come up when considering your options. Companies may have policies that exclude the use of specific IT components due to internal affairs. Cost and consumption may come into play that may affect the development of the project and any future setbacks. That's why it's critical to analyze any risks that may come up when trying to make the decision for your make-or-buy analysis plan.
Communication
As much as it can be high-lighted throughout project management, communication is key. Any decision that is made, it has to be communicated thoroughly. Even between the development team, stakeholders, and potential suppliers, being on the same page ensures that everything can go smoothly.
Statement of Work
The statement of work is a description of the work that is required for the procurement. You could also say it describes internal work as wells. It's a contract that can describe the scope statement for the project, describing in detail of the work required. This allow suppliers to display the required goods and services at a specific price. It can help you get a better idea of the buyer's intentions aka the development team's agenda/intentions.
*Example of a Sample Statement of Work
Conclusion
The make-or-buy decision can be a very important and make-it-or-break-it decision point for projects. It can be indeed stressful when trying to figure out what type of IT components you would want to implement into your project. However, by implementing key aspects of project procurement management into your analysis plan, it will allow you make the decision much easier.
Sources
Textbook: Information Technology Project Management 9th Edition by Kathy Schwalbe
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