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Procurement Planning and the Procurement Plan: Why are they Important?

Jorge Lynch 18 Comments

Procurement planning is the process of deciding what to buy, when and from what source. During the procurement planning process the procurement method is assigned and the expectations for fulfillment of procurement requirements determined.

Procurement Planning is important because:

1.  It helps to decide what to buy, when and from what sources.

2.  It allows planners to determine if expectations are realistic; particularly the expectations of the requesting entities, which usually expect their requirements met on short notice and over a shorter period than the application of the corresponding procurement method allows.

3.  It is an opportunity for all stakeholders involved in the processes to meet in order to discuss particular procurement requirements. These stakeholders could be the requesting entity, end users, procurement department, technical experts, and even vendors to give relevant inputs on specific requirements.

4.  It permits the creation of a procurement strategy for procuring each requirement that will be included in the procurement plan. Such strategy includes a market survey and determining the applicable procurement method given the requirement and the circumstances.

5.  Planners can estimate the time required to complete the procurement process and award contract for each requirement libido-portugal.com/. This is valuable information as it serves to confirm if the requirement can be fulfilled within the period expected, or required, by the requesting entity.

6.  The need for technical expertise to develop technical specifications and/or scope of work for certain requirements can be assessed, especially where in-house technical capacity is not available or is non-existent.

7.  Planners can assess feasibility of combining or dividing procurement requirements into different contract packages.

The Procurement Plan is the product of the procurement planning process. It can be developed for a particular requirement, a specific project, or for a number of requirements for one or many entities in the public or private sectors.

The Procurement Plan is important because:

1.  It lists all requirements expected to be procured over a period of time.

2.  From it the procurement schedule is developed, which establishes the timelines for carrying out each step in the procurement process up to contract award and the fulfillment of the requirement.

3.  It allows for the consolidation of similar requirements under one contract or the division of a requirement into several contract packages for economies of scale.

4.  From the number of requirements on the procurement plan, the procuring entity can determine beforehand any need for additional staffing, including external assistance for the purpose of completing all procurement requirements listed on the procurement plan.

5.  It allows for the monitoring of the procuring process to determine how actual performance compares with planned activities, and thus to alert the pertinent departments and adjust the procurement plan accordingly.

6.  It enhances the transparency and predictability of the procurement process.

How about you, any other reason why procurement planning and the procurement plan are important?

Leave a comment.

Filed Under: Procurement Planning

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Reader Interactions

Comments

  1. kamure i.isaac says

    May 28, 2013 at 1:17 am

    scarcity of resources needs proper timming for allocations of resources for user department ,logistical difficulties and clearance both locally and internationally markets.

    Reply
    • Jorge Lynch says

      July 19, 2013 at 9:49 am

      Well said, couldn’t agree more…

      Reply
      • Corne says

        January 29, 2016 at 5:10 pm

        The better you plan , the less time you spent on implementing.

        Reply
        • Jorge Lynch says

          February 18, 2016 at 9:00 pm

          Agree…

          Reply
  2. H.G ABBAS says

    May 31, 2013 at 6:18 pm

    What is the different between Procurement Plan and a Work Plan?

    Reply
    • Jorge Lynch says

      July 19, 2013 at 9:54 am

      From my understanding, the work plan comes before the procurement plan and, for project procurement, it is done by the project implementation unit. In project procurement, the procurement plan is prepared from requirements identified on the work plan, but not all requirements on the work plan are listed on the procurement plan.

      Reply
      • Elias says

        July 30, 2013 at 2:31 pm

        Jorge, you are right the work plan will guide you to the procurement plan, because the work plan will tell you the nature of the activity you are going to do. it means once you develop your work plan, the work plan will tell you what goods and services required, when it requires, how much quantity the work required and how and from where (source identification, means of transport etc.), and when the goods/service are required.

        Reply
        • Jorge Lynch says

          August 5, 2013 at 2:16 pm

          Thanks you, Elias. Yes, the workplan comes before and is the basis for the procurement plan, but it’s especially so under project procurement.

          Reply
  3. LS says

    July 23, 2013 at 1:12 pm

    Thank you! Really helpful for interview prep!

    Reply
    • Jorge Lynch says

      August 5, 2013 at 2:27 pm

      Interesting point. Never thought of it. Thanks.

      Reply
  4. Mirren says

    June 16, 2015 at 9:14 pm

    You make some really interesting points re procurement here, Jorge especially for those ‘doing’ category management. One further reason why procurement planning is important is so that a process can be designed, learnt and embedded in a category team which allows management to see a consistent approach to purchasing from each and every buyer. This isn’t to stifle creativity or produce robots (suppliers don’t want this either) but to ensure efficiency and timeliness in decision making by CPO’s. Do you agree?

    Reply
    • Jorge Lynch says

      June 27, 2015 at 11:21 pm

      I agree. Consistency is very important. In fact, one of the reasons why procurement planning and scheduling doesn’t work well is due to failure to have a proper system in place and to consistently apply it.

      Reply
      • Phillip Modiriyat says

        July 14, 2015 at 10:33 pm

        Hello Jorge. Looking through your responses and others, you all know your stuff and I was wondering if you or anyone could help me with my research as I am training to be a planner in my first year and what I need to do is produce a programme for one of my test papers, what I want to do is produce a two-stage tender programme that includes all items for procurement from the beginning of stage one through stage 2 until commencement on site, can anyone help me with the items that are required and what order to place them in?

        Reply
        • Jorge Lynch says

          August 1, 2015 at 2:14 pm

          Hello Phillip,

          The following link might be helpful: https://procurementclassroom.mystagingwebsite.com/?s=two-stage

          All the best…

          Reply
  5. Augusto Isabel says

    August 1, 2015 at 7:55 pm

    The Procurement Plan comes after the work plan. In other words, the work plans is what determines whether the activity to be implemented needs items to be procured. Items to be procured can be services or goods.
    Regards,
    Augusto Isabel

    Reply
    • Jorge Lynch says

      August 8, 2015 at 10:31 pm

      I agree in principle…

      Reply
  6. bernard muhuri says

    December 8, 2015 at 7:10 pm

    In my own understanding, the work plan outlines the plan by which the company plans to complete a quality project within a given amount of time and in compliance with a set budget and comes before a procurement plan since procurement plan tends to describe the products and services that you will obtain from external suppliers.

    Reply
    • Jorge Lynch says

      December 12, 2015 at 8:32 pm

      Bernard,

      I couldn’t agree more.

      Thanks for contributing…

      Reply

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