Close Procurement vs Close Project

July 26, 2020
Fahad Usmani
Close Procurement vs Close Project c

This blog post is now obsolete as the close procurement process is absent from the 6th edition of the PMBOK Guide.

At first, you may think that the close procurement process and close project process are synonyms of each other. I have seen people asking for clarification on them in several PMP forums, because they have many things in common. It can be difficult for students of project management to distinguish the two.

This blog post is meant to clear up these concepts. After reading this, you won’t have any problem differentiating between these processes.

Before we start discussing in detail, let’s make sure we all understand the key terms: procurement, phase, and project.

Procurement

Procurement can be defined as the acquisition of goods, services or work an external source.

To put it simply, you subcontract a part of the project’s work to an external contractor. This is done for many reasons. For instance, if you are unable to do the job on your own or if it would be more cost effective to outsource.

Phase

According to the PMBOK Guide, fifth edition, “Project phase is a collection of logically related project activities that culminate in the completion of one or more deliverable.”

Projects are divided into phases for many reasons. The most important reason is project size. If you want to manage a large undertaking effectively, you have to divide it into phases and complete them in order, unless circumstances require phase overlap.

Project

According to the PMBOK Guide, fifth 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 nonpermanent, and it is undertaken to produce a certain output. Projects close when the objective is achieved.

Now let’s look at the close procurement and close project processes.

Close Procurement Process

In reference to the PMBOK Guide, fifth edition, “Close procurement is the process of completing each procurement.”

The close procurement process is also known as the contract closure. It supports the close project or close phase processes.

Procurement is said to be closed when the contract deadline is reached and ends, or when the contract is terminated.

A project can have a single procurement contract or multiple contracts.

The close procurement process will happen only once per procurement contract. However, if the project has multiple procurement contracts, the close procurement process will be performed multiple times because there are many contracts.

A project can be completed without any procurement contract, if it is not necessary for the project, there is no need for the close procurement process.

Close Project Process

According to the PMBOK Guide, fifth 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.”

This definition shows that the close project or close phase process 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 former cannot happen—however, it’s different for the close procurement process where the project does not have to be finished to complete the close procurement process.

A Real-World Example

Let’s assume in this scenario you have a project to construct a school building.

You find out that in order to complete the project efficiently, some work should be performed through a procurement contract, work such as:

  • Earth Excavation
  • Electrical Work
  • Carpentry Work
  • Painting

You need to do some excavation before starting any construction activities. Therefore, you have to procure this job from a contractor and negotiate with them.

The contractor completes the job, you pay them for the work and you close this procurement contract. Afterward, you construct the building.

Now you are at the stage where it is time to install electrical systems in the building. You also have procured this task. The contractor comes and does their part, and you release them by paying the agreed amount of money, and you close the contract.

Afterward, carpentry and painting work starts. You also have procured these jobs. Once these contractors complete their tasks, you make payment and then you close these contracts as well.

The building is ready, so you call the client to come and inspect it.  Once the client is satisfied, they accept the building, sign the acceptance letter, and all pending payments are released. Once you get the payment, you update the lessons learned, and release the team and resources. Finally, you close the project.

So, it’s evident in this example that the close procurement process is performed many times, but the close project is performed only once—at the end of the project.

Some Key Points

Please note the following:

  • The close procurement process must happen before the close project or close phase process.
  • The close procurement process may occur many times during the project’s life cycle, but the close project process will be performed only once 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 pass through the close project process even if it is terminated.
  • In close procurement, you close your deal with your contractor, and in the close project process your client closes the deal with you.

Note: Every project has five process groups that start with Initiating and end at Closing Process Group.  Interestingly, these two process groups are comprised of only two processes, and that makes them the smallest of the five processes. These two process groups make up 21% of the PMP examination.

With a little studying on these small process groups, you can answer approximately 42 questions on your PMP examination. I advise that you pay special attention to these process groups in order to score well on the exam.

Summary

The close procurement and close project processes may look similar to you. However, they are different and serve different purposes. The close procurement process belongs to the procurement knowledge area, and the close project process belongs to project integration management. 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 closed procurement.

If you would like to share your thoughts on this blog post you can do so through the comments section.

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Speak Your Mind

  • I would like get some clarification on the following:

    1) Do we negotiate or process payment/claim dispute under CONTROL Procurement (Claim administration) or CLOSE Procurement (Procurement Negotiation)?

    2) In Project we have validate scope for acceptance of deliverables. What about in Procurement, do we validate seller work/deliverables under CONTROL Procurement or CLOSE Procurement?

    Thanks.

    • 1) As per the PMBOK Guide, fifth edition, “The Close Procurements process also involves administrative activities such as finalizing open claims”.

      2) This is inspection and audit. As per the PMBOK Guide fifth edition, “Inspections and audits required by the buyer and supported by the seller, as specified in the procurement contract, can be conducted during execution of the project to verify compliance in the seller’s work processes or deliverables.” You do it in control procurements process.

  • Hi Fahad, would you please help to understand, Which of the following is the correct order of actions to take during the Closing processes?

    Get formal acceptance, write lessons learned, release the team, close the contract
    OR
    Get formal acceptance, close the contract, write lessons learned, release the team

  • Hi Fahad,

    I really appreciate this article, where it is exact to the point and solidified my comprehension on the flow in the Closing process group.

    I am glad that I found this article. Thank you.

    Raj.

  • Hello Fahad, Thank you for posting this information and discussion. Which Process Group includes Procurement Closure? It was stated that it is part of Validate Scope which is part of Process Group Monitoring and Controlling. But also noted above by Joseph is ….Close Procurement is a step under the Procurement Management process within the Execution Process Group. Please clarify which Process Group includes Procurement Closure?

  • Hi
    For the project management process “close project or phase &close procurement”, what are the key inputs and outputs for each process?

    Please assist

    • Hello Muchie,

      You can find details on these ITTO in the PMBOK Guide, due to copyright issues I can not provide you here.

  • Great article. I loved the details – Does anyone know if my assistant can obtain a sample WV DoR IT-141 copy to use ?

  • Hi Fahad,

    It will be great if can comment over the below question:

    Where do i get the final acceptance signed off for the complete deliverable/project.

    is it Output of Validate scope or Close project or phase

  • Close Procurement is a step under the Procurement Management process within the Execution Process Group. The similar process is not for the procurements, but for the CONTRACT (if there IS such a contract, i.e., with an outside customer) which goerns the activities of the entoire Project team

  • Hi Fahad:

    I am glad I found your blog. I didn’t really realize that project and procurement closure were not the same. I now understand that there will be one project and that a project can have multiple procurement closures.

    Thank you.

  • Hi Fahad,

    I have just started reading PMBOK and this is the second article of yours that I have read. Can I appreciate your efforts in explaining topics in such a simple language.

    Hats off and keep it up !

    • Yes you can appreciate me, like and share my articles.

      In fact this what keep me going forward.

      🙂

      Thanks for stopping by.

  • As per my understanding accepted deliverables from validate scope go in to close project and finally we have close project or service, why not close pocurement (including multiple contract cloaure) go as an input to close project phase to trigger the project closure?

    • Closing the procurement can happen at any stage and in any phase. Hence it is not a trigger to close the project. Phase or project can still continue. However before closing the project there should not be any open activity/task. Hence it is mandatory to close the procurements before closing the project however closing procurement does not require to trigger the phase/project closure. I think accepted deliverables can have the deliverables which are part of the procurement outputs. Hence not mentioned as separate input to close project or phase process.

  • Can you explain the order of events that happen in close projects.

    I see many questions in mock tests regarding the same. Some say closing the contract happens after releasing the team. Some say measure Customer satisfaction is the last step in closing. Some say it is the formal sign off.

    What is the order of the below actions :

    1. Sign off and final acceptance
    2.final Payments and complete cost records
    3. Update lessons learned
    4.update project records.
    5.Ensure all project management processes are complete.
    6.Index and Archive project records.
    7.Analyze the success of the project
    8.Evaluate customer satisfaction
    9.Hand off completed deliverables to operations, maintenance etc
    10. Release the team.

      • Hi Fahad,

        Rita’s process chart does not talk about Release team activity in phase/project closure. I think few of the team members (project management team) are still needed who can work on collecting final lessons learned or doing trend analysis etc. So it can be a last activity in project closure. However after releasing the team certain projects documentation needs to be updated and then archived hence Index and Archive project records can be considered as last activity. and this is in line with the last activity ‘Gather final lessons learned and update knowledge base’ mentioned in Rita’s process chart.

        However in one of the simulation test this answer was marked incorrect and the correct answer they mentioned was Solicit customer feedback. I am not sure if this is correct answer.

        Please share your views.

        • I don’t have Rita’s book so can not comment on it though I recommend you understand the chart given on page 61 in the PMBOK Guide fifth edition.

  • Hello Fahad,

    Could you please clarify what happens if a claim on the procurement cannot be settled by the parties and is finally the subject of a court procedure (which can be very long… up to several years).

    Let’s take an easy example: there is a claim between the seller and the buyer about the price to be paid but the work has been performed and delivered by the seller.

    Does it means that the buyer cannot close the procurement and therefore the project because of the claim? Or can he close it because the work has been delivered by the seller?

    Do the project and the procurement remain “open” during several years if there is appeal procedure etc. ?

    Many thanks for your clarifications

    • If the resolution cannot be solved through the arbitration, and it goes to court, you can not close procurement with the contractor.

      Although you can close the project with your client since the project is completed, case will remain open with you and your supplier.

      Also note that, since the court is involved in the dispute, it may stop whole proceeding or let you clear your deal with the client. It depends on case to case basis.

      • PMBOK page 387 says “Unresolved claims may be subject to litigation after closure. The contract terms and conditions can prescribe specific procedures for agreement closure”. This means the contract can be closed and the court procedure can continue.

        Please correct if this understanding is wrong.

  • Ref:
    KEY POINTS: Deliverables are accepted in Close Project.

    I came across a question explanation where it was stated;
    VERIFY SCOPE process accepts the deliverables. Not CLOSE PROJECT.

    Please clarify correctness of above KEY POINT.

  • My question is about obtaning formal acceptance of deliverables

    This is required in project or phase closing But is required in Procurement closing ? and when and how are acceptance of deliverables done in Procurement closing.

    Thank You

    • If you have any procurement contract in the project and this contract is completed, you’ll closed this contract and accept the deliverable but you project will continue to proceed.

  • Dear Mr. Fahad,

    The main performing organization (main contractor) , wants to close their contract with the client, in which processes it will happen? whether in Close procurement or Close project

    Kindly explain this…..

    regards,

    Jayanth

    • If the main contractor has the whole project and wants to close contract, he must go through the close project process.

      However, if the main contractor is having a part of the project then also he must go through the close project process but the client will go through the close procurement because the project is still on.

      In any case, the contractor has to go through the close project, because for him everything is closed.

      • I think since it says main contractor means there are other contractors who are still engaged. This would imply that it is a case of close procurement and not close project because other contractors may still be working on the project.

  • Thanks for clarifying Adiministrative Closure..I’ve seen the term in several practice exams and was concerned that I missed something.

    • Administrative Closure and Close Project or Close Phase are the same.

      (The PMBOK Guide Page-100, first paragraph, Article 4.6).

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