Running head: THE IMPORTANCE OF PROCURMENT IN THE PROJECT MANAGEMENT PROCESS 1

The Importance of Procurement in the Project Management Process

William Taylor Pittman
PJM400-1 Project Procurement and Contract Management
Colorado State University Global Campus
Professor Clara Spenny
May 16, 2014











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The Importance of Procurement in the Project Management Process
Introduction
Procurement and the project management process are entwined with one another.
Procurement can affect project success and vice versa. Procurement is an important and integral part of
any organization, sometimes contributing up to sixty percent of cost. Procurement also has its
associated risks and consequences for making poor decisions. This brings up the idea of completely
eliminating the procurement process, effectively removing bureaucratic processes involved with the
sourcing of goods, ultimately reducing costs. If complete elimination of procurement occurs it can seem
necessary to replace it with alternative organizational activities in order to accommodate for complex or
unique product descriptions.
Elimination of procurement
Procurement, although essential to most modern organization, can be seen to have negative
impacts on organizational profitability and finished product quality. Poor quality data accumulate for
product specification can also cause difficulties in controlling costs of production, reducing productivity
and affecting finished product delivery. With this in mind, let us explore the idea of completely
eliminating procurement. In doing so, procurement costs will be eliminated as well as the pit falls of
procurement. However, new challenges with sourcing products and service will become apparent
With the elimination of procurement, the tasks of allocating products and services will be
referred to the originator of the need. If a company has a strong vision statement providing moral,
support and motivation, the responsibilities of product allocation may be fulfilled. This can be achieved
by engagement of the originator with the supplier. Engagement will help ensure the envisioned
products are allocated and also provide supplier support in specification, design, delivery, and other
aspects related.
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Although, companies may get by with the individualization of allocating products, however,
when specifications, delivery parameter etc. become complicated, it can become difficult to manage the
allocation of good and services effectively. Companies also have a greater risk of purchases not aligning
with strategic goals when the purchasing decision is made by the originator
Replacement of procurement by alternate organizational activities
In large, departmentalized organizations, cross functionality with regards to acquisition of good
or services is almost impossible without some sort of procurement system. Also, when companies are
ordering large amounts of product or service, procurement can help create cost efficient in allocation.
In order for procurement to be effectively replaced, a true/genuine relationship with suppliers is
necessary. Many times the suppliers will help with the allocation of data, specification, and delivery
schedules. Relying more on outside sources to help achieve the correct thing at the right time in the
right place significantly reduces the burden of some procurement processes.
Consequences and risks in project management process when procurement is poorly executed
To further argue the case for the move from procurement, there exists two risks with the
execution of procurement: issues regarding human rights, and its longevity in alignment with company
visions, goals, and strategy.
Particularly when acquisitioning a service, many things must be considered in order to receive
the desired serve in an appropriate way, both appropriate with regard to human right, and appropriate
in regards to company procedure/policy. Companies, large and small, must always consider human right
enforced by law. The non-consideration of the right inherit to potential employees can tarnish a
businesss reputation and results in fines and fees because of its unlawful nature.
The implementation of a procurement plant, in itself, is another risk to consider. When
implementing a procurement plan, large amounts of resources are used in its development, resulting in
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an associated investment. If, at some point down the road, the procurement plant does not align with
company strategy, a new procurement plan must be made to suite. Procurement plans have an
intended length of life, and if this is not achieve, more costs associated with the development of a
procurement plan will accrue.
Conclusion
Procurement will remain an important part of the business environment. Although, alternatives
may exists, relying on suppliers may prove too risky. In my opinion, to maintain effectiveness,
procurement should not be eliminated.