Procurement Plan

Introduction:

Nowadays, organisations are becoming increasing specialised and collectivised, requiring more sophisticated management of project, leading to the increasing significance of procurement. Procurement, referring to acquiring goods and/or services externally, is widely used in the government agencies. Other terms include purchasing, used in many private corporations, and outsourcing, used by information technology professionals (Schwalbe 2004). Its processes are shown in Figure 1. This essay will identify the concept of planning purchases and acquisitions, that is, planning procurement. Then it will discuss seven general purposes of a procurement plan. Finally, it will identify and analyse three key component of a procurement plan of the Boots Company.

Concept of Planning Purchases:

As the first step of project procurement management, purchases and acquisitions planning is regarded as the process of identifying which project needs are supposed to be satisfied by acquiring goods and services by the specific project team and which ones can be satisfied by acquiring goods and services externally. It involves deciding whether, what, how, how much and when to acquire goods and services (Project Management Institute 2004). In project procurement management, ‘goods’ includes materials and smaller equipment, while large equipment usually involves services of installation and commissioning (Ward 2008, Chapter 1).

After realising that its project needs some goods or services, the organisation documents the needs in the form of detailed requirements, and then it uses a Make-or-Buy Analysis to decide to make these products internally or to buy them externally. If the organisation determines to buy them externally, then a procurement management plan and a procurement statement of work are generated (Guth 2009).