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12 - PROJECT PROCUREMENT MANAGEMENT

12.1.2 Plan Procurement Management: tools and techniques

12.1.2.1 Make-or-Buy Analysis

A make-or-buy analysis is a general management technique used to determine whether particular work can
best be accomplished by the project team or should be purchased from outside sources. Sometimes a capability
may exist within the project organization, but may be committed to working on other projects, in which case, the
project may need to source such effort from outside the organization in order to meet its schedule commitments.

Budget constraints may influence make-or-buy decisions. If a buy decision is to be made, then a further decision
of whether to purchase or lease is also made. A make-or-buy analysis should consider all related costs—both
direct costs as well as indirect support costs. For example, the buy-side of the analysis includes both the actual
out-of-pocket costs to purchase the product, as well as the indirect costs of supporting the purchasing process and
purchased item.

Available contract types are also considered during the buy analysis. The risk sharing between the buyer
and seller determines the suitable contract types, while the specific contract terms and conditions formalize the
degree of risk being assumed by the buyer and seller. Some jurisdictions have other types of contracts defined, for
example, contract types based on the obligations of the seller—not the customer—and the contract parties have 12
the obligation to identify the appropriate type of contract as soon as the applicable law has been agreed upon.

12.1.2.2 Expert Judgment

Expert judgment is often used to assess the inputs to and outputs from this process. Expert purchasing judgment
can also be used to develop or modify the criteria that will be used to evaluate seller proposals. Expert legal
judgment may involve the services of legal staff to assist with unique procurement issues, terms, and conditions.
Such judgment, including business and technical expertise, can be applied to both the technical details of the
acquired products, services, or results and to various aspects of the procurement management processes.

12.1.2.3 Market research

Market research includes examination of industry and specific vendor capabilities. Procurement teams may
leverage information gained at conferences, online reviews and a variety of sources to identify market capabilities.
The team may also refine particular procurement objectives to leverage maturing technologies while balancing
risks associated with the breadth of vendors who can provide the materials or services desired.

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©2013 Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK Guide) – Fifth Edition 365

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