Considerations for Make or Buy Analysis

B.

A make or buy analysis is a process by which a project manager assesses whether to create a product or service in-house or purchase it from an external source. This analysis is an important step in project management, as it helps to determine the most cost-effective and efficient approach to completing a project. When performing a make or buy analysis, the project manager should consider several factors, including the following:

A. Organization type: The organization's type may affect its capacity and expertise in a given area. For example, a small company may not have the resources or expertise to manufacture a product in-house, while a larger company may have the necessary resources but may be subject to bureaucratic limitations. Therefore, the project manager should consider the organization's type when deciding whether to make or buy a product or service.

B. KPIs: KPIs (Key Performance Indicators) are metrics used to evaluate the success of a project. They may include metrics such as cost, quality, and timeliness. The project manager should consider the KPIs relevant to the project when deciding whether to make or buy a product or service. For example, if cost is a critical KPI for the project, the project manager may opt to buy a product or service from an external source rather than invest in creating it in-house.

C. Project charter: The project charter is a document that outlines the scope, objectives, and stakeholders of the project. The project manager should consider the project charter when deciding whether to make or buy a product or service. The project charter may provide guidance on whether the project team has the necessary skills and resources to create a product or service in-house or whether it would be more efficient to purchase it from an external source.

D. Trade secrets: Trade secrets refer to proprietary information that a company uses to maintain a competitive advantage. When performing a make or buy analysis, the project manager should consider the trade secrets involved in creating a product or service in-house. If the process of creating the product or service involves trade secrets, it may be more advantageous to purchase it from an external source rather than risk revealing proprietary information.

In summary, a project manager should consider several factors when performing a make or buy analysis, including the organization type, KPIs, project charter, and trade secrets. By considering these factors, the project manager can determine the most cost-effective and efficient approach to completing the project.