HKSM

A procurement management plan describes how the project will acquire, manage, and close out goods and services from external suppliers. It defines strategies, roles, procedures, and controls across the procurement life cycle to align with governance and delivery approach.

Key Points

• Component of the project management plan that guides planning, conducting, administering, and closing procurements.
• Integrates with scope, schedule, cost, risk, quality, legal, and governance processes.
• Tailored for predictive, agile, or hybrid delivery and appropriate contract types (fixed-price, cost-reimbursable, time and materials).
• Defines make-or-buy approach, sourcing strategy, bid documents, and evaluation methods.
• Specifies contract administration, performance metrics, change control, claims, and closure steps.
• Clarifies roles, authority, approvals, and compliance with ethical, legal, and organizational policies.

Purpose

• Provide a clear, consistent approach for external purchasing and supplier management.
• Align procurement decisions with project objectives, constraints, and enterprise policies.
• Reduce risk through defined evaluation criteria, contract terms, and performance controls.
• Enable efficient coordination among project, legal, finance, and procurement functions.
• Support transparency and fairness in supplier selection and contract administration.

Typical Sections

• Procurement objectives and success criteria.
• Make-or-buy analysis and justification.
• Sourcing strategy and market approach (open, qualified, single-source).
• Contract types and risk allocation guidelines.
• Roles and responsibilities, authority limits, and approvals.
• Procurement schedule and key milestones.
• Supplier selection criteria and evaluation method (e.g., weighted scoring, negotiations).
• Bid documents to be used (RFI, RFP, RFQ) and templates.
• Performance metrics, KPIs, and reporting cadence.
• Contract change control, claims, and dispute resolution process.
• Compliance, legal, regulatory, and ethical standards.
• Communications, stakeholder engagement, and confidentiality handling.
• Financial controls: budgets, funding approvals, and payment terms.
• Contract closure and lessons learned capture.

How to Create

• Review project charter, scope, schedule, budget, and risk register to identify procurement needs.
• Engage key stakeholders (procurement, legal, finance, security, quality) to align on policies and constraints.
• Perform make-or-buy analysis and document rationale for external sourcing.
• Select contract types and risk allocation aligned to uncertainty and market conditions.
• Define sourcing strategy, evaluation criteria, and decision-making methods.
• Develop bid documents and specify required supplier deliverables and compliance needs.
• Establish roles, authority levels, approval gates, and communication protocols.
• Plan contract administration: performance measures, reporting, change control, and issue escalation.
• Integrate procurement activities into the schedule and cost baselines.
• Tailor for delivery approach (predictive, agile, hybrid) and obtain formal approval.

How to Use

• Guide creation and release of RFIs/RFPs/RFQs and supplier communications.
• Apply the defined evaluation method to shortlist and select suppliers.
• Use negotiation approach and approval limits to finalize contracts.
• Administer contracts using agreed KPIs, reports, and meeting cadence.
• Control changes, address claims, and manage risks per the plan.
• Coordinate with schedule, cost, and risk processes for integrated control.
• Execute contract closure and capture lessons learned for organizational assets.

Maintenance Cadence

• Baseline at planning, then review at major phase gates or procurement milestones.
• Update when scope, schedule, budget, risk profile, or market conditions change.
• Revise upon legal/regulatory updates, policy changes, or audit findings.
• Amend after significant supplier performance issues, claims, or contract amendments.
• Maintain version control and communicate changes to all affected stakeholders.

Example

Excerpt from a procurement management plan for a mid-size project:

• Make-or-Buy: Outsource specialized testing due to lack of in-house tools; in-house for routine QA.
• Sourcing Strategy: Open RFP to prequalified vendors; two-stage evaluation (technical then commercial).
• Contract Type: Fixed-price with incentives tied to milestone acceptance and defect density thresholds.
• Evaluation Criteria: Technical fit 40%, past performance 25%, cost 25%, transition plan 10%.
• Administration: Monthly performance reviews, dashboard of KPIs, formal change requests via PMO tool.
• Approvals: Procurement to issue RFP; legal to review terms; PM authorized up to USD 100,000.
• Closure: Final acceptance checklist, knowledge transfer, warranty start, and lessons learned entry.

PMP Example Question

While planning a project, the team expects volatile requirements and needs rapid vendor collaboration. Which element should the project manager emphasize in the procurement management plan to best support this context?

1. Use of firm fixed-price contracts with detailed specifications upfront.
2. A sourcing approach that enables iterative deliveries and flexible change control.
3. Single-source selection to reduce procurement cycle time.
4. Strict no-change policy once the contract is signed.

Correct Answer: B — A sourcing approach that enables iterative deliveries and flexible change control.

Explanation: In a volatile environment, the plan should support agile or hybrid procurement with iterative delivery, collaboration, and adaptable change mechanisms rather than rigid fixed-price terms.