The Procurement Lifecycle on a Project

On most projects, a large share of the budget is spent through contracts. The project team does not build everything itself. It buys equipment, materials, design work, construction, software and services. Procurement is the process that turns a need into a working contract, and contract management is the process that turns that contract into delivered work.

In this course you work at an advanced level. You are expected to design a procurement approach, judge the risk in it, and defend your choices to a sponsor, an auditor or a supplier. That starts with a clear view of the whole lifecycle, because a weak decision at one stage is usually paid for at a later one.

Why the lifecycle view matters

Many problems that appear during delivery were created much earlier. A dispute about scope in month eighteen often began with a vague specification in month two. A supplier who cannot cope with the work was often selected by an evaluation model that rewarded a low price and nothing else. When you can see the whole chain, you can place controls at the point where they are cheapest.

How the stages depend on each other

Each stage produces an input for the next. The strategy decides which contract type is possible. The specification decides what can be evaluated. The evaluation decides which supplier you live with for the next two years. The contract decides which tools you have when things go wrong.

Two features make the lifecycle harder in projects than in routine buying:

• It is time-bound. The project has a fixed end date and a programme. Procurement time comes out of the same programme as design and construction.
• It is often unique. The package may never be bought again in the same form, so there is no history of prices and no supplier who has done exactly this work for you before.