Buy Table Sourcing: Make-or-Buy Decision and Sourcing Strategy Plan

PMBOK v8 Definition

The Plan Sourcing Strategy process determines whether work or deliverables can be better accomplished using internal sources or should be purchased from outside sources. This process belongs to the Procurement Management knowledge area and establishes a clear framework for acquiring project deliverables, defining what to acquire, how to acquire it, and when to acquire it. The sourcing strategy plan is a component of the project management plan that describes which elements of the project will be insourced, outsourced, or both.

Why It Matters for the Exam

The make-or-buy decision and sourcing strategy appear frequently in PMI exam questions testing your ability to determine when external procurement is appropriate versus using internal resources. Expect scenario-based questions where you must identify which factors drive the sourcing decision, and questions that test your understanding of what belongs in the sourcing strategy plan versus other procurement documents.

Key Points to Remember (for the exam)

• Main Process: Plan Sourcing Strategy (Procurement Management)
• Main Output: Sourcing strategy plan (component of the project management plan)
• Core Decision: Make-or-buy decision – determines internal vs. external sourcing
• Key Factors to Consider (Table 2-3): Scope, time, cost, quality, resources, risk, finances, project value, schedule, source performance, and risk exposure
• Source Selection Criteria: Cost, technical capability, past performance, financial stability, compliance with requirements, alignment with organizational values or sustainability goals
• Common Confusion: The sourcing strategy plan is NOT the same as the procurement management plan – it specifically addresses insource/outsource decisions and rationale
• Contract Type Decision: Contracts selected must be consistent with the selected sourcing approach

Typical PMI Exam Example

A project manager is planning a new software development project. The team has strong internal capabilities for core business logic but lacks expertise in payment gateway integration. The project manager must decide whether to build the payment module internally or purchase it from an external vendor. What should the project manager consider first?

Answer: The make-or-buy decision, evaluating factors such as cost, technical capability, risk, and schedule impact as outlined in the sourcing strategy.

PMI Exam Traps

• Trap: Thinking the sourcing strategy plan only applies to external procurement

• Reality: It describes which elements will be insourced, outsourced, or BOTH

• Trap: Confusing the sourcing strategy plan with the procurement management plan

• Reality: The sourcing strategy plan is a COMPONENT of the project management plan, focused specifically on insource/outsource decisions

• Trap: Assuming make-or-buy is a one-time decision

• Reality: The sourcing strategy should be revisited regularly to ensure it reflects current team capabilities and project needs

• Trap: Thinking only cost matters in make-or-buy decisions

• Reality: Multiple factors must be considered: value, schedule, risk, finances, source performance, and complexity

Important PMI Connections

Quick Review Questions

1. What are the three key questions the Plan Sourcing Strategy process answers about project deliverables?

2. A project has strong internal capabilities but tight schedule constraints. Should the project manager automatically insource all work? Why or why not?

3. What document describes which elements of the project will be insourced, outsourced, or both?

4. Name four factors from the PMBOK v8 that should be considered in the make-or-buy decision.

5. Who should participate in the Plan Sourcing Strategy process, and where should these responsibilities be documented?

PMBOK v8 Reference

Section 2.1.6.3 – Plan Sourcing Strategy (Procurement Management)
Table 2-3 – Make-or-Buy Decision Factors
Figure 2-5 – Plan Sourcing Strategy Inputs, Tools and Techniques, and Outputs