The project management technique of deciding whether certain work should be performed in-house or whether it should be purchased is called Make-or-Buy Analysis. Make-or-Buy Analysis is listed as a technique for the fourth edition PMBOK®’s Plan Procurements process.
A project manager may have a Procurement Management Plan for the project that offers guidance in making these decisions. There are many considerations to take into account when deciding whether or not to purchase, and these considerations will vary across organizations and projects, and over time. Seller’s price will typically be a key consideration. Whether there is currently the level of in-house expertise for the work that needs to be done and the time project team members have available are also important to consider. An example Make-or-Buy Analysis question is: should you mow your own lawn or hire a lawn service company to do it? You may consider whether you currently own a mower, how much time you have to devote to lawn mowing, if allergies or other health issues would make mowing difficult for you, and how much you’re willing to pay a lawn service. The decisions on whether to make or buy something are called Make-or-Buy Decisions. These Make-or-Buy Decisions are an output to the PMBOK®’s Plan Procurements process and then used as an input to the Conduct Procurements process.
Olu Olufowobi
February 3, 2012
Thank you very much for the explanation and example given as regards Make-or-Buy Analysis. But I was expecting another example to indicate in monetary terms which way to go. For instance, the PM needs to prove to top management that it will make economic sense to lease rather than purchase an equipment, he needs to make use of figures so as to convince the management. What do you think? Thanks.