Make-or-Buy Analysis

In the given situation to execute some part of the scope of the project the team need to decide is it worth to do it within the performing organization or need to outsource. Make-or-Buy Analysis technique helps in arriving the decision in such situation. The buy decision will be taken under the circumstances when the performing organization is not having the capability or they may be having the capability but the required resources are engaged in some other work and there is a constraint in the schedule. Again once we decide for buy decision need to find out is it purchase or lease or rental.

Sometimes the budget constraints also influence make-or-buy decisions. In either case we need to consider both direct and indirect costs. Also once we decide on buy decision the type of contracts need to be considered based on the risk sharing between the buyer and seller.

The Make-or-Buy Analysis results in Make-or-Bye Decisions.

Make-or-Buy Analysis technique is used under the process Plan Procurement Management.