In this blog, we will explore the Plan Sourcing Strategy process, along with its associated inputs, tools and techniques, and outputs.

Plan Sourcing Strategy is the process of documenting how project work and deliverables will be sourced (internally or externally), deciding make‑or‑buy, defining source selection criteria, and shaping the sourcing/contract approach.

Whenever we study a process along with its inputs, tools, and techniques, a good strategy is to begin with its primary outputs. In this case, the main outputs of this process are the Insourcing or outsourcing decisions (make-or-buy decisions) and the Source selection criteria.

For now, let’s focus on what are the inputs required to produce these outputs.

First the project charter. The charter provides the high-level purpose, objectives, constraints, and success criteria that drive sourcing choices (e.g., time-to-market, budget, risk tolerance). It ensures sourcing decisions support the overall project objectives and constraints instead of being made purely on cost or convenience.

For Example – If the charter requires launch within six months, you may decide to outsource a critical module to a vendor with existing expertise instead of building capability in-house.

Next the Project Management plan components especially like the Scope Management plan, Quality management plan, Schedule management plan, financial management plan, Resource management plan, and the scope baseline.

These components define what must be delivered, by when, with what budget, and with what internal resources. Sourcing decisions must fit these boundaries.

They allow realistic evaluation of which work can be done internally and which should be outsourced, considering time, cost, and capability.

For example, The schedule shows a tight critical path and the financial plan limits headcount growth. You decide to outsource non-core testing to an external vendor to keep the critical path on track without hiring permanent staff.

Next the project Documents, especially like the requirements documentation, traceability matrix, quality metrics, resource requirements, team assignments, milestone list, risk register, and stakeholder register.

These documents provide detailed information about what needs to be delivered (requirements, quality targets), what resources are needed, key dates, risks, and stakeholder interests.

They help identify which work packages are suitable for external sourcing, what quality/service levels vendors must meet, and which risks/constraints must be managed in contracts.

Examples:

• Requirements documentation: shows you need a specialized AI component; since you lack that skill internally, you consider outsourcing that part.
• Risk register: shows high technology risk; you prefer a vendor with strong technical track record and include this criterion in source selection.

Next Enterprise Environmental Factors (EEFs) – EEFs include legal/regulatory constraints related to Vendor management and outsourcing, labor laws, and market conditions.

Organizational Process Assets (OPAs) – OPAs include procurement procedures, standard contracts, sourcing playbooks, past vendor performance data, and previous sourcing strategies.

OPAs speed up planning, reduce legal and commercial risk, and reuse lessons learned from previous sourcing decisions.

Now Let’s talk about the Tools and Techniques.

Make‑or‑Buy Analysis – You must decide whether to perform work internally or obtain it from external sources based on cost, capability, strategic importance, and risk.

Example – A make‑or‑buy analysis shows that developing an in-house reporting tool would cost more and take longer than licensing an off-the-shelf product. The strategy then is to buy the tool and focus internal effort on integration.

Next Market Research – You must understand the external marketplace: available suppliers, typical pricing models, capabilities, lead times, and innovations. It helps you see what’s realistically available, avoid unrealistic expectations, and leverage competitive options.

Make-or-Buy Analysis and Market Research are the two primary techniques used to determine whether work should be insourced or outsourced (i.e., make-or-buy decisions).

Next Source Selection Analysis – You need a structured way to decide how you will evaluate and choose among potential suppliers (e.g., lowest cost, best value, technical merit, past performance).

It ensures consistent, transparent, and objective evaluation of vendors, reducing bias and improving the chance of selecting a capable partner.

The output of this analysis is the source selection criteria, which are used to evaluate the proposals submitted by vendors. We will cover this topic in more detail later.

Next Expert Judgement and meetings – Specialists in procurement, legal, finance, and technical domains contribute insight on feasibility, risks, contract types, and market norms.

Next Document Analysis – You review existing internal documents (like vendor management and work outsourcing policies, contracts, previous sourcing strategies, lessons learned from the past projects related to vendor management, technical specs of the work you going to outsource) to identify constraints and proven practices.

Now, let’s talk about the outputs.

The primary output of this process is the Sourcing Strategy Plan, which consists of two key components:

• Make-or-Buy Decisions (insourcing vs. outsourcing)
• Source Selection Criteria

Make-or-buy decisions help determine whether it is more effective to outsource the work or perform it in-house. On the other hand, source selection criteria are used to evaluate proposals submitted by potential vendors against the statement of work. These criteria ensure that the evaluation process is fair, objective, and unbiased.

We will cover all related topics, including vendor selection and statement of work, in the upcoming lectures.

With that, we have completed this process. I hope you found this blog useful.