Question

Reducing project risk with procurements

Answer 1

Project risks can be significantly reduced with procurements. Procurement refers to the process of planning, managing, and executing the purchases of goods and services that are required by a company in the course of its operations and business. When the process of procurement is handled in a systematic and optimal manner then the associated project risks are effectively and considerably mitigated. A company has to plan its procurement wisely and has to look at different aspects associated with procurement like payment scheduling options, different procurement contract types, different procurement approaches and the most feasible approach. Proper analysis should be done whether to use vendors or partners, and whether to build or buy.

Relationship with outside vendors and suppliers has to be created in such a way that the procurement management process is optimized and maximum gains are accrued while minimizing all possible risks. Once the scope baseline for a project is outlined through WBS and project scope statement a risk register should be prepared so as to gain an understanding of risks uncovered till date. Next cost baselines are estimated for a project and all these planning and optimization leads to mitigation of project risks.