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TOPIC: Determine Budget & Procurements - Order of events

Determine Budget & Procurements - Order of events 1 year 2 months ago #22622

  • Luke H
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I'm a little confused over the order of events for determining the project budget, specifically in the event where the project may need to source sellers via Procurement processes.

From what I understand, the PMBOK outlines the process as follows:

- Estimate Costs are derived from Project Schedule and Resource Activity Estimates (but has no input from Procurement Management processes).
- Plan Procurement Management updates the Cost Estimates document as one of its outputs - (which is output in the Estimate Costs process).
- Determine Budget uses the Cost Estimates document as an input.

But because the Estimate Costs process has no input from Procurement process (initially), how is the PM supposed to determine the budget if the project requires third party input?

I feel like I'm missing something? :blink:

Determine Budget & Procurements - Order of events 1 year 2 months ago #22796

  • Devin
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PMBOK (pg. 409), "The procurement processes are presented as discrete processes with defined interfaces. In practice, procurement processes can be complex and can interact with each other and with processes in other Knowledge Areas in ways that cannot be completely detailed in the PMBOK® Guide. The processes described in this section are written from the viewpoint where goods or services are obtained from outside of the project."

Again, the PMBOK is not prescriptive (telling you what to do), but rather descriptive (describing a standard or best practice). That being said, the Procurement processes are not integrated into the estimation processes because they are all focused on planning, requesting, selecting and monitoring sellers. There is no reason that you could not go get an RFQ if you are going to buy (billions) of dollars worth of toilet paper. But for the exam the procurement processes are pretty standalone. The estimation processes uses "expert judgment" to estimate prices or previous projects (OPA) or commercial databases of cost information (EFF). With so much information available on the internet, rough pricing is easy to come by, at least good enough to make a budget.

BTW, nothing is written in stone in the PMBOK (pg. 577), "[Estimate Costs] is performed periodically throughout the project as needed.". So if the Procurement processes turn up costs that are wildly outside of our three-point estimations, we could revisit the costs and perhaps change the budget and baseline.

I hope this helps.
Last edit: by Devin.

Determine Budget & Procurements - Order of events 1 year 2 months ago #22830

  • Luke H
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Thanks Devin, I understand that the PMBOK is not prescriptive; it's a body of knowledge after all. But it does make me a bit nervous about the exam, because these appear to be grey areas.

I noticed the same with Resource Management where Resource Calendars are an input into Estimate Activity Resources in planning, while they're an output of Acquire Resources in execution. I understand why, since there's some overlap and requires some going back and forth to get to the end result. I understand that completely, but it just makes it difficult to know for sure you're answering the exam questions correctly due to the lack of clarity (especially when paired with some devilishly worded multiple choice questions).... I guess that's what the Exam SIM is for though!
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