What happens to procurement and its relationship with the su

What happens to procurement and its relationship with the supply based when the need for budgeted cost management interferes with communication, relationships, and other outside market pressures?

Solution

Procurement as a process requires communicating and maintaining a relationship with sellers.

Budgeted cost management impacts the procurement process. In a fixed price contract or fixed price procurement process where the total cost is fixed there is high predictability of cost and so the interference with communications and relationships is quite low. When the predictability of cost is low, it makes the environment uncertain and the procurement managers interferes and puts extra checks and controls on the communication and relationships just to adhere to the budget. Predicatability is low in case of time and materials cost reimbursable projects. These projects or procurement contracts are smaller in nature with high degree of uncertainity.