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PROJECT PROCUREMENT MANAGEMENT

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PROJECT PROCUREMENT MANAGEMENT. Member: Dinh Thi Binh Hoang Thi Lan Chung Hoang Thi Thanh Nhan Nguyen Van Manh. Main points. Procurement Planning What Went Right ? Procurement Planning Tools and Techniques. Procurement Planning.

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  1. PROJECT PROCUREMENT MANAGEMENT Member: DinhThiBinh Hoang ThiLan Chung Hoang ThiThanhNhan Nguyen Van Manh

  2. Main points • Procurement Planning • What Went Right? • Procurement Planning Tools and Techniques

  3. Procurement Planning • Procurement planning involves identifying which project needs can be best met by using products or services outside the organization. It includes deciding • whether to procure • how to procure • what to procure • how much to procure • when to procure IT Project Management, Third Edition Chapter 12

  4. What Went Right? • Several organizations, such as The Boots Company PLC in England, outsourced their IT services to save money compared with running the systems themselves • Carefully planning procurement can also save millions of dollars, as the U.S. Air Force did by using a flexible pricing strategy for a large office automation project IT Project Management, Third Edition Chapter 12

  5. Procurement Planning Tools and Techniques • Make-or-buy analysis: determining whether a particular product or service should be made or performed inside the organization or purchased from someone else. Often involves financial analysis • Experts, both internal and external, can provide valuable inputs in procurement decisions IT Project Management, Third Edition Chapter 12

  6. Make-or Buy Example • Assume you can lease an item you need for a project for $150/day. To purchase the item, the investment cost is $1,000, and the daily cost would be another $50/day. • How long will it take for the lease cost to be the same as the purchase cost? • If you need the item for 12 days, should you lease it or purchase it? IT Project Management, Third Edition Chapter 12

  7. Make-or Buy Solution • Set up an equation so the “make” is equal to the “buy” • In this example, use the following equation. Let d be the number of days to use the item. $150d = $1,000 + $50d • Solve for d as follows: • Subtract $50d from the right side of the equation to get $100d = $1,000 • Divide both sides of the equation by $100 d = 10 days • The lease cost is the same as the purchase cost at 10 days • If you need the item for 12 days, it would be more economical to purchase it IT Project Management, Third Edition Chapter 12