When first looking at these processes you may think that close procurement and close project are synonyms to each other.
Also, on some PMP forums I saw people asking for clarification between these two processes because they have many things in common, and they were finding it difficult to distinguish them.
Therefore, to make this concept clear to you, I’m writing this blog post, and I hope after going through it you won’t have any doubt when differentiating these processes.
Okay, let’s get started.
Before we start discussing these processes in detail we should have a common understanding of these terms: procurement, phase, and project.
According to Wikipedia, procurement is the acquisition of goods, services or work from an outside external source.
Simply put, in procurement you subcontract a part of your project work to an external contractor. You do this for many reasons; for example, you are unable to do the job on your own, or it will be cost effective to outsource the job, etc.
According to the PMBOK Guide fourth edition, “Project phases are divisions within the project where extra control is needed to effectively manage the completion of a major deliverable.”
You can divide the project into phases for many reasons. The most important reason is that if the project is big and you want to manage it effectively, you divide the project into phases. You complete the first phase, then you go on to the next phase, and so on.
Although the project phases are completed in sequence, sometimes they can also overlap depending on the situation or requirements.
According to the PMBOK Guide fourth edition, “A project is a temporary endeavor undertaken to create a unique product, service, or result.”
In other words you can say that the nature of the project is temporary, and it is undertaken to produce an output.
Once the project objective is achieved, the project will be closed.
This was a short brief on procurement, phase and project; now let’s move on to the close procurement and close project processes.
Close Procurement Process
According to the PMBOK Guide fourth edition “Close procurement is the process of completing each project procurement. It supports the close project or phase process.”
Taking a closer look at the definition of close procurement shows that it is different from the close project or close phase process, and in fact it supports the close project or close phase process. The close procurement process is also known as the contract closure.
A procurement is said to be closed when the contract reaches its deadline and it ends, or when the contract is terminated without completing the work.
A project can have a single procurement contract or multiple contracts.
If the project has a single procurement contract, the close procurement process will be performed a single time.
However, if the project has multiple procurement contracts, the close procurement process will be performed multiple times for each procurement contract.
It is not necessary for a project to have a procurement contract. A project can be completed without any procurement contract, and in this case, there will be no close procurement process.
Close Project Process
According to the PMBOK Guide fourth edition, “Close project or phase is the process of finalizing all activities across all of the project management process groups to formally complete the project or phase.”
The definition clearly tells you that the close project or close phase is performed when the project or phase is finally completed and deliverables are accepted.
To complete the close project or close phase process, the close procurement process must have been completed; otherwise the project closure or the phase closure cannot happen. However, this is not the case for a close procurement process where project closure is not required to complete the close procurement process.
A Real World Example
Let’s say that you have a project to construct a school building.
You find that to complete the project efficiently, some work should be performed through the procurement contract, such as:
- Earth Excavation
- Electrical Work
- Carpentry Work
Before starting any construction activity, you need some excavation. Therefore you procure this job to a contractor and ask him to come and complete the job.
He comes and completes his job, you pay him for his job and close this procurement contract.
Afterwards, you construct the building.
Now you must install electrical systems in the building.
You have also procured this task. The contractor comes and does his part, and you release him by paying the agreed amount of money, and the contract is closed.
Afterwards, carpentry and painting works starts. These jobs are also procured; therefore, contractors come and after finishing their jobs, they take their payment and leave the site. These contracts are also closed.
The building is ready, so you call the client to come and inspect it. The client comes and verifies the scope with you, and once he is satisfied, he accepts the building, signs the acceptance letter and all pending payments are released. Once you get the payment, you update the lessons learned, release the team and resources, and finally you close the project.
So you have seen that in this project, the close procurement process is performed many times but the close project is performed only once, and that is at the end of the project.
Some Key Points
Please keep note of the following points:
- The close procurement process must happen before the close project or close phase process.
- The close procurement process can occur many time during the project life cycle, but the close project process will be performed only once; i.e. at the end of the project.
- In the close project or close phase processes, the client accepts the deliverables.
- The close procurement process may or may not occur but every project must go through the close project process even if it is terminated.
- In close procurement you close your deal with your contractor, and in close project your client closes the deal with you.
Note: Every project has five process groups that start with Initiating and end at Closing. Let’s talk about the Initiating and the Closing Process Group. Interestingly, these two process groups are comprised of only two processes, and that makes them the smallest groups in the group of five processes, and the percentage of questions from these two process groups in the PMP Examination is 21% (translating into 42 questions!!!).
The point is, with a little studying on these small process groups, you can answer approximately 42 questions in you PMP examination. So I suggest you pay special attention to these process group to score more in the exam.
The close procurement and close project processes may look similar to you however they are not. They are different and serve different purposes. The close procurement process belongs to the procurement knowledge area and the close project process belongs to the project integration management knowledge area. The output of the close project process is the final product, service or result. On the other hand, the output of the close procurement process is the closed procurement!
Here is where this blog post on close procurement and close project ends. If you have something to share, you can do so through the comments section.
This topic is also very important from a PMP exam point of view. You may find a few questions in your exam on this topic.