Acquiring Materials, Supplies, and Equipment - Project Management

Now that you know the tasks required to complete the deliverables for your project, you're ready to fill out your supplies list. As we discussed in the resources section earlier, you can't really know all the materials and supplies you're going to need for the project without having first defined the tasks. If one of your tasks involves calibrating some machinery, for example, how will you know what kind of equipment you'll need to perform the calibrations until you've defined the tasks?

Defining the materials and supplies, along with the human resources we've already outlined, will help you estimate the costs of the project and determine a budget. After defining the materials list, you'll also be able to decide where the resources will come from—will you buy them, lease them, or contract them? First though, there are some questions you should ask.

Questions to Ask

Pull out your copy of the WBS. This is the first place you're going to look to start compiling your materials list. The tasks defined on the WBS dictate the kinds of materials, supplies, and equipment you're going to need for the project. Let's go back to our example project at the beginning of this chapter. You're heading up the development and implementation of a new software program for the field representatives for an insurance company. Some of your WBS tasks include "Define program requirements," "Determine languages and platform," and "Design programming modules."

Starting with these requirements, we can begin to ask some questions: What kind of hardware will we need in order to write the programming code? What kind of hardware will we need in order to test the programs? Should we use the equipment the field reps use? If so, what kind of equipment do they have? Are they, or should they be, upgrading the field equipment prior to implementation of the new programs? What software is needed to assist with design, coding, and testing?

Don't forget to also explore questions regarding facilities, new technologies, and services you might need. Since this particular project involves wireless communications, ask questions such as these: Does the company already subscribe to a wireless satellite communication provider? Do they have the means to supply their own services?

What about facilities? Does the project team work at the same location? If not, do you need a common meeting place to kick off the project and meet on a periodic basis? Should the team work at the same location? If so, what types of resources are needed to make that happen?

Spend some time brainstorming with your team and some of the key stake-holders to determine the resource needs of the project. And as you've probably already guessed, you'll want to document these needs. You can construct a simple document like the example shown below, noting the amount of resources you're going to need, whether the resource is available or must be procured, and so on.

You could consider adding another column to this template that identifies potential vendors or suppliers. In this example, all of the resources listed are going to be procured from a vendor, so listing possible vendors or contractors on this table would make sense. Modify this template to suit your project needs, and file a copy in the project notebook for future reference.

Make or Buy

This question won't always apply to your projects, but it could apply to certain aspects of your project. The question is, should we make or buy the products or services needed for the project?

Make-or-buy decisions involve determining whether it's more cost-effective for the organization to make or buy the products or services of the project. This decision can be made at the individual resource level, or for an entire deliverable, or even for the project itself. Some projects are too cost-prohibitive for the organization to take on internally, and it makes the most economic sense to outsource the project. Make-or-buy decisions regarding the entire project usually happen back at the Initiation phase of the project.

There are several things to consider regarding make-or-buy decisions. Obviously, the biggest factor is cost. You should take into account the costs to produce the product or service—goods, materials, equipment, facilities, employee salaries—as well as the indirect costs. Indirect costs include such things as training costs, management costs, administrative overhead, and ongoing maintenance. Compile all the costs associated with producing the product or service before you compare it to the cost to outsource it or buy it. Ongoing maintenance and change-order costs are costs that are often overlooked in make-or-buy decisions, so be sure to include those in your analysis.

Tip:Cost is not the only consideration in make-or-buy decisions. Skills, training, capacity issues, and availability are some of the other things that should be examined before a decision is made.

Other things you should consider that aren't necessarily driven by cost alone are issues like capacity—can the organization take on a product of this magnitude? What about the skill level of the folks who'll work on the product or service? Do they require extensive training, or can they produce the product or service without much forethought? Consider things like process controls and trade secrets. If you can't divulge the secret ingredients of the magic formula, you probably can't outsource the production of the magic formula to a vendor. Also consider the availability of your staff and the existing workload. If your staff is buried in a backlog of top-priority projects, it isn't likely that they can take on the production of a new product or service at this time, so buying the products or services needed might be the most beneficial solution.

The goal of this process is to decide whether making or buying the products or services of the project is the most cost-effective and efficient for the organization. Remember, this can involve only one product or deliverable or the entire project. When it is necessary to procure goods and services, you'll want to prepare a procurement plan.

Procurement Plan

Some organizations have departments that handle the procurement process and have long lists of established policies regarding purchasing goods and services. They may have lists of vendors for you to choose from, or they may require an extensive bidding process to take place (depending on what you're buying). And, depending on the amount you're spending, there may be certain procedures in place that require multiple signatures and/or multiple reviews of the requests. Other organizations may have simple guidelines regarding their purchasing policies. These might include signing authority limits that depend on your title or function in the organization.

As the project manager, it's important for you to know and understand the procurement process for your organization. If there are extensive rules to follow and you miss crossing a T somewhere along the way, the holdup could cost you time on the project schedule and potentially money as well.

procurement plan

Describes the resources or services to be purchased from an outside vendor.

No matter what your procurement policies might be, you'll want to create a procurement plan for the items you're purchasing for your project. The procurement plan can be as simple as listing the service or resources needed, the quantity, the price, and the vendor who'll be supplying the services in a spreadsheet format similar to the graphic shown previously. Or, the plan can be very detailed, including deliverables, requirements, dates, and so on.

statement of work (SOW)

A document used in the procurement process to detail the work of the project and used by the vendor to assess whether they should bid for the contract.

The statement of work (SOW) could be prepared in conjunction with the procurement plan or in place of the procurement plan if you're purchasing all your goods and services from one vendor. Remember that the scope statement we talked about in Chapter , "Defining the Project Goals," can also be used as the SOW. The scope statement is usually used for the SOW when you're outsourcing the entire project.

Resource Plan

Resources include people, equipment, supplies, and software—anything that's required to complete the work of the project. We've now defined all the resources of the project including the skills assessment, skills definition by task, staff assignments, and physical resources needed for the project.

resource plan

Describes all the resources needed for the project, including human resources and goods and materials.

All of this information collectively is known as the resource plan. As stated, the resource plan covers all the resources you need for the project. You should devote a section of the project notebook to the resource plan. I would include the procurement plan as a subset of the resource plan. You're probably beginning to see how the project notebook is going to help you in the future. When you're assigned to a new project that's similar in scope to a project you've already completed, you'll be able to use the information you filed in the project notebook as a reference for the new project. Why reinvent the wheel? You can use the resource plan from this project to help you document a resource plan for the new project. At the very least, reviewing this information will trigger questions or ideas for the project plans on the new project.

The resource plan might include purchasing some or all of your products or services from an external party, which may require the use of a contract. We'll wrap up this chapter with a discussion of the contracting process.

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