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 from 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 deliverables.”

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.