Procurement Requirement Determination

What Is Procurement Requirement Determination?

The first step in the public procurement process is to identify and clearly define requirements. All procurement requirements begin with the perception of a need. How that need is defined, and how thoroughly it is analyzed, will determine the quality of everything that follows: the procurement strategy, the solicitation documents, the evaluation, and ultimately the contract.

Starting with the Perceived Need

A perceived need does not immediately translate into a procurement requirement. Consider a need to cross a body of water. That need could be satisfied by constructing a bridge, establishing a ferry service, or developing other transportation solutions. Before any procurement can begin, the need must be analyzed to determine the most appropriate and cost-effective solution, taking into account the current situation, forecasted future demand, and availability of funds.

This analysis might include a feasibility study, a comparative cost-benefit analysis of available options, or an assessment of whether the need can be satisfied using existing in-house capacity before considering outsourcing. Not all needs are as complex as this example; requirements for routine goods and services also warrant analysis, even if the process is less elaborate. The principle is the same: define the need clearly before defining the requirement.

Conducting a Requirements Analysis

Once the need is established, a structured requirements analysis should be undertaken. This should address:

• Whether the requirement can be satisfied in-house or must be contracted out
• The development of an initial budget estimate
• An assessment of the market and available supply options
• The most appropriate procurement method for the requirement
• An estimate of the procurement lead-time based on that method

The make-or-buy decision, whether to deliver in-house or procure externally, is a formal decision point at this stage and should be documented, not assumed.

The Study Team

The team responsible for requirements analysis should be multidisciplinary, drawing on the technical, financial, legal, and operational expertise relevant to the requirement. End users should be included; they are best placed to articulate the operational need and the standards the solution must meet. The composition of the team should reflect the complexity of the requirement; a straightforward goods procurement requires a simpler process than a major infrastructure project.

The Role of Procurement Practitioners

At the requirements definition stage, the procurement practitioner’s primary contribution is to advise on the most appropriate procurement method for the identified requirement and to estimate the corresponding procurement lead-time. This lead-time is critical to implementation planning; it determines when procurement must begin in order for the requirement to be satisfied on time. Procurement practitioners should also advise on any regulatory or procedural requirements that will need to be met during the procurement process.

Output of the Requirements Definition Stage

At the conclusion of the requirements definition stage, the following should be in place:

• A clear statement of the requirement, expressed as terms of reference for services, technical specifications for goods, or a statement of work or bill of quantities for civil works
• An initial budget estimate
• A confirmed procurement lead-time aligned to the implementation schedule

This requirements definition exercise is essential not only for new procurement requirements and project initiation but also for requirements arising from the maintenance of existing operations. Skipping or shortcutting this stage is one of the most common causes of procurement failure.