Make-or-Buy Analysis

Posted on April 15, 2009 by

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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.