HKSM

A documented approach for obtaining needed goods and services from external providers, including make-or-buy decisions, sourcing methods, and contract strategies. It aligns procurement choices with scope, risk, budget, and schedule so the team can engage the market effectively and compliantly.

Key Points

• Formal output of planning that directs how external suppliers will be identified, selected, contracted, and managed.
• Sets decision rules for competition level, contract types, evaluation criteria, and approval gates.
• Incorporates market intelligence, risk considerations, and compliance requirements to shape the approach.
• Guides creation of RFIs, RFPs, RFQs, and negotiation plans, but is not the contract or the statement of work.
• Living document under change control; scaled to project size and complexity.

Purpose

Provide a clear, governed path to engage the supplier market, maximize value, and reduce delivery risk.

• Align procurement choices with business objectives, constraints, and risk appetite.
• Enable consistent, transparent supplier evaluation and award decisions.
• Ensure compliance with legal, regulatory, security, and organizational policies.
• Protect delivery timelines and budgets through fit-for-purpose contracting strategies.

How to Create

• Collect inputs: scope and requirements, budget and schedule constraints, risk register, stakeholder needs, lessons learned, organizational policies, and market research results.
• Perform make-or-buy, total cost of ownership, and should-cost analyses to determine what to source and at what depth.
• Define sourcing approach: single vs. multi-source, competitive vs. sole-source, use of RFI/RFP/RFQ, and supplier prequalification strategy.
• Select contract strategies for each package: fixed-price, time-and-materials, cost-reimbursable, incentives, service levels, and key commercial terms.
• Set evaluation model: mandatory criteria, weighted scoring, due diligence steps, demonstrations, site visits, and reference checks.
• Address risks and constraints: delivery risks, vendor lock-in, data residency, IP, cybersecurity, export controls, and contingency plans.
• Plan governance: roles and responsibilities, decision rights, approval checkpoints, and documentation requirements.
• Outline negotiation strategy: priorities, trade-offs, fallback positions, and authority limits.
• Define performance management: KPIs, SLAs, acceptance criteria, reporting cadence, and escalation paths.
• Establish timelines: sourcing milestones, procurement lead times, and alignment with project schedule.
• Draft transition and exit strategies: onboarding, knowledge transfer, and termination/exit criteria.
• Review with procurement, legal, finance, and key stakeholders; finalize and baseline under configuration control.

How to Use

• Drive the content and timing of RFIs/RFPs/RFQs and supplier outreach activities.
• Apply the predefined evaluation matrix to score proposals and document award decisions.
• Guide negotiations and contract drafting within approved boundaries and risk posture.
• Coordinate procurement milestones with project schedule to avoid critical path delays.
• Monitor supplier performance using agreed KPIs and SLAs, and trigger escalations when thresholds are breached.
• Support change control for scope, budget, or risk shifts that affect sourcing choices.
• Demonstrate compliance and audit readiness through traceable criteria and approvals.

Ownership & Update Cadence

• Primary owner: Procurement or Sourcing Lead in partnership with the Project Manager.
• Key reviewers/approvers: Sponsor, Legal, Finance, Security/Compliance, and Technical Leads.
• Update at phase gates, before market release of RFPs, after receipt of proposals, and post-award to reflect final contracting decisions.
• Revise upon significant risk, scope, budget, or market condition changes; maintain version control in the project repository.

Example

A cloud migration project segments sourcing into three packages: landing zone setup, data migration tooling, and managed services. The plan opts for competitive multi-source RFPs for tooling and managed services, and a fixed-price work package for the landing zone.

• Contract strategies: FP for landing zone, T&M with not-to-exceed for migration, and managed services with outcome-based SLAs.
• Evaluation criteria: 40% technical fit, 30% cost of ownership, 20% security/compliance, 10% references and delivery capacity.
• Governance: two-stage approval (shortlist gate and award gate) with Legal and Security sign-offs.
• Risks and mitigations: vendor lock-in reduced via portability clauses and documented exit plan.
• Timeline: RFP release in week 6, demos in week 10, award by week 12 to meet pilot cutover in week 20.

PMP Example Question

During planning, the team is uncertain whether to use fixed-price or time-and-materials and which criteria will decide the supplier award. Which document should they consult or update?

1. Sourcing strategy plan.
2. Procurement statement of work.
3. Risk register.
4. Stakeholder engagement plan.

Correct Answer: A — Sourcing strategy plan.

Explanation: It defines contract strategies and evaluation criteria. The statement of work describes the deliverables, while the risk register and stakeholder plan do not set procurement decision rules.