Adopting the most effective sourcing methods for your project can help you ensure successful completion. You have to identify the most critical pressures facing your project and use procurement strategies to reduce risk. Sourcing method advantages include reduced costs, shorter delivery times and excellent project functionality, but each method also has disadvantages. Your choice of sourcing method for important project segments must take the advantages and disadvantages into account to improve project performance in critical areas.

Developing Your Strategy

Successful projects are completed on time and work as intended, with costs coming in according to the budget. Depending on the project, some aspects of success are more important than others, and some might be more difficult to achieve. For example, if the most important thing is for your project to fulfill its intended function, focus on sources that have proven experience with your kind of project even if it takes longer and costs more. If your project is already running over budget, focus on sourcing methods that reduce costs.

Evaluating Internal Sources

Sourcing products and services from within the company gives you more insight into costs and progress but lacks the cost pressure of competitive bidding. As a result, you have more control but usually end up paying more. Internal sourcing is an attractive option when your specifications are vague or you expect major changes in the scope of supply. External sources tend to use such uncertainty and changes to raise prices and delay deliveries. An internal source is more transparent and is more likely to have some of the same goals as you do.

Considering Competitive Bidding

Competitive bidding delivers the lowest prices, but the price pressures can result in lower quality and delays as your supplier cuts costs. Standard products and services for which the specifications are well-established are the most suitable for competitive bids. If you have to develop a custom system for your project, more-flexible sourcing methods let you adjust the scope of supply as the details of your requirements become clear.

Using Agents

When parts of your project are complex and require expertise you don't have, using an agent or consultant can help with sourcing. The agent has the knowledge to evaluate possible competitors for competency, write a detailed specification setting out your requirements and evaluate bids or negotiate contracts. The main disadvantage is cost, with the fee usually determined as a percentage of the final contract value.

Negotiating Partnerships

When you have preferred suppliers, either because you can rely on their quality or because they have a unique specialty, a negotiated contract is often the most appropriate sourcing method. Your goal is to negotiate an agreement in which the supplier takes on some of the risk in return for incentives or benefits for superior performance. The costs in such partnerships are usually higher than for competitive bids, but your partner will support your project goals.