Procurement means buying. If someone buys something for the project work, then he becomes the buyer and that company which sell will become the sellers.
Generally many organizations have a separate department for procurement. Most of the Project managers have limited knowledge about the procurement part. But In the case of a PMI certified professionals are be aware of this problem and By being aware of the procurement processes, Project Managers can help procurement department to procure the right item for the project. Procurement knowledge also helps in managing the supplier or the seller.
For buying something from the seller as a buyer, you need to sign an agreement. These agreements are generally in the form of a document that has terms and conditions for buying for example, the agreement include the details about what item are purchased and what is the overall cost of those items, warranty details of that item. Also in addition to this the PM should also have the understanding of how is the contract department are organized in a company.
Key Terms in Procurement Management are:
Request for Quotation (RFQ)
Request for Proposal (RFP)
Request for Information (RFI)
Request for Bids (RFB)
Project Procurement Management includes 4 Processes:
Plan Procurement: Document project purchasing decisions, specify the approach and identify potential sellers.
Conduct Procurement: Obtain seller response and select seller and award contract.
Administer Procurement: Manage procurement relationship, monitor contract performance, and make changes and correction as needed.
Close Procurement: Complete each project procurement.