The two instruments of procurement planning and procurement management planning seem to speak to the same thing, when in actual fact they are different.
By NYASHA CHIZU
Procurement planning is the aggregation of procurement requirements that include various goods, works and services. This aggregation is meant to feed into the financial budget to enable planning of resources within the applicable constraints.
It is a plan that covers a specific period of time and can be an annual or bi-annual plan, depending with the nature of the requirements and organisational planning horizon. A procurement plan is a live process that is meant to adapt to changing business circumstances.
Both the procurement plan and procurement management planning are part of the overall project management planning instruments. The procurement plan will then provide a bird’s eye view of the overall projects in the organisation.
These projects could be capital or operational and the procurement plan will aggregate the requirements. There are organisations where the materials required for capital projects are also the same as operational requirements. In such cases, the procurement plan will simply aggregate all the requirements as one line item. This is the point when procurement management planning comes into play, clearly exposing the difference.
Procurement management planning decides on how the procurement shall be undertaken during the project, including the approach that will be adopted to co-ordinate and manage suppliers on the project.
In another sense, procurement management planning can also be referred to as “individual procurement plan”. It derives from the procurement plan describing how each procurement process would be undertaken.
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A procurement management plan would then define the procurement process, roles and responsibilities of officers, the identified procurement needs for that project, as well as the scheduling or timing of the requirements and lastly, it describes the approval processes.
Procurement management plan describes the procurement process. Most systems in both the public and private sector define the procurement systems using thresholds.
There are different procurement methods for different procurement thresholds bringing the distinction between buying, purchasing and procurement.
Lower value requirements are satisfied using buying methods mostly identified technically as competitive quotation method or shopping.
Medium value requirements would be satisfied through purchasing, a process of obtaining suppliers and services after paying money or other considerations.
Procurement is when there is some strategic consideration of the requirements and the goods and services can be acquired before payment of consideration.
Review of the procurement process does not only consider value since some low value requirements are not standard to the effect that buying techniques would not be in a position to satisfy the requirements. The process further defines who in the organisation initiates the request, who develops specifications and who approves the request.
In procurement management planning, specifications extend from mere technical specifications to timing and consideration of other constraints. Considerations of the purchasing authority, bid or proposal review, contract management responsibility, contract closure requirements and the procurement flowchart is part of procurement management planning.
The section on roles and responsibilities in procurement management planning describes the various roles on the project that has some connection to procurement. It describes the personnel within the organisation that can request resources from outside, who approves the request and any secondary approval that might be necessary.
There is further consideration from the procurement plan during procurement management planning on whether the requirements are available externally or can only be sourced externally. This portion normally includes a justification when the requirements will be sourced from outside where they can be provided internally.
Timing is important in procurement management planning. This section describes the timeframes when the resources would be required.
In view of the anticipated procurement process time, the start of a procurement process should be right to allow the formalities to be concluded in time for the project delivery deadline.
Finally, the management plan describes how changes can be made on procurement documents to ensure such changes are valid, understood and approved appropriately.
Procurement management planning and procurement plan are complimentary and are very important project management tools that require some certain skills to perform to perfection.
lNyasha Chizu is a Fellow of the Chartered Institute of Procurement and Supply writing in his personal capacity. Feedback: [email protected] Skype: nyasha.chizu
