In project management, project managers need to make strategic choices when it comes to procuring items from suppliers. The make-or-buy decisions are often items or source for external suppliers. If the decision of the project management team is to make the item, then the procurement plan then decides the processes and agreements that are necessary for making the item.
Make-or-buy decisions are conducted at the strategic level. There are different factors that influence the make-or-buy decision and these include the core abilities of the team or organization, the value delivered by the vendors meeting the needs of the buyer, risks that are associated with the meeting and the internal capability compared with the vendor community. Moreover, it is also influenced by the availability and production capacity of the supplier.
The make-or-buy decisions are very important because it allows project managers to implement the sourcing of the items that are needed to achieve the project goals. It affects the scheduling and the cost of the entire project.
This term is defined in the 5th edition of the PMBOK.