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Definition: Procurement

Procurement is a process of acquisition of goods and services from an outside source in a cost effective manner that satisfies the need of acquirer in terms of quantity, quality, time and location. It’s important to keep costs low, otherwise procurement doesn’t serve purpose and may result in losses. Procurement process comprises of activities starting from the decision of purchase to the payment of bills and closing of contracts.

In firms, procurement processes are well defined in order to minimize possibility of fraud and increase competition. Procurement plan consists of following activities:

• Selection of appropriate contract approach depending upon goods or services to be procured

• Preparing requests for quotations and proposals

• Evaluation of quotations and proposals

• Awarding and signing of contracts

• Payment of contracts

• Closing of contracts

The time required for completion of each of above mentioned activities may take hours or weeks depending upon complexity of procurement. Time of each steps are also mentioned in the project schedule. The time taken in procurement cycle can also influence decision to procure from others or create goods or service in house. If the procurement process takes more time that can create project delays, special attention should be given to it.

The benefits of procurement are increase in profit, increase in performance and decrease in project cycle. In order to create better alignment between project team and contractors, it is required to build proper communication among them with proper conflict management.


Hence, this concludes the definition of Procurement along with its overview.

Browse the definition and meaning of more terms similar to Procurement. The Management Dictionary covers over 7000 business concepts from 6 categories. This definition and concept has been researched & authored by our Business Concepts Team members.

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