The Importance of Project Procurement

by Steven Symes; Updated September 26, 2017

Project management will at some points require project procurement, which involves the organization obtaining goods or services from third parties in order to complete a specific project. Procuring these goods or services provides several advantages over producing them inside the organization, helping to keep project costs down while still achieving the company's desired objectives.

External Resources

Project procurement does not deal with taking inventory of the resources already available within the organization. Instead, project procurement involves finding and obtaining the necessary resources, whether they are goods or services, which exist outside of the organization that are needed to successfully complete a project.

Outsourcing

While the term has become notorious to some, outsourcing is one tool of project procurement. An organization simply may not have the manpower to complete a project on time, meaning a sudden increase in workers is needed. Rather than going through the process of hiring and training new workers, an organization will outsource the work to a third party. The original organization can use the outsourced help for as long as needed, providing flexibility. The organization also does not have to incur the costs associated with hiring and firing employees as project demands change.

Expert Skills

Project procurement will allow an organization to bring in help from sources that have more skill in specialized areas. It may not be practical for a business to hire a group of structural engineers, for example, especially if the skills of the engineers are needed only on an occasional basis. Project procurement allows the organization to utilize specialized skills from other organizations or professionals as needed to complete a project. The outsourced help may also have technology that is not practical for the original organization to own, but which is necessary to complete a special project. These outsourced organizations can afford to have the technology and specialized professionals by contracting out with numerous organizations in need of their services.

Maintaining Focus

Maintaining an organization’s focus, or the ideals set forth in the organization’s mission statement as well as the strategic objectives formulated from the mission statement, will ensure that the organization moves forward with purpose. To maintain this focus, an organization may need to purchase goods or services from outside sources rather than produce the goods or services themselves. For example, an automotive manufacturer will purchase tires from a tire manufacturer rather than make their own line of tires, focusing instead on the production of the vehicles.