PM Foundations – Managing Supplier Performance
By Steve Hart
How you work with and manage a supplier on your project is directly related to the type of products and services you are purchasing from the supplier. These products and services may be resources performing specific services/roles, purchase of tangible off-the-shelf products (i.e., infrastructure, software licenses), or built to order products (e.g., custom software applications). In general, the larger and more complex the purchase, the more time and effort you will invest in the supplier management plan. In addition, the greater the dependence of the project’s success is on the supplier the more focused you will be on building a good working relationship with the supplier. In these cases, your goal is to transition from a pure customer-supplier relationship to a true partnership, where both parties have something to gain from the successful project outcomes.
Supplier Management Approach
Again, the supplier management approach will vary based upon the types of products and services purchased for the project. Read the Complete Article
Four Keys to Successful Project Vendor Management
By Bruce Harpham
Purchasing goods and services is a key activity in many projects. In large projects where vendors provide complex services and high value goods, successful relationships with vendors make or break the project’s success. If twenty five percent of your project budget or tasks are performed by a vendor, then you need to adopt a relationship management approach.
What Is Your Vendor Management Experience?
Approaches to vendor relationship management vary depending on the organization. Some large organizations have long term contracts with firms such as IBM and Microsoft. In that context, one often sees full time contract relationship managers on staff. If your organization has relationship managers, seek out their advice on managing vendors as you start work on your project. They may have templates, checklists and other organizational process assets you can use to manage the relationship.
What if your organization has no meaningful experience with vendor management or complex contracts? Read the Complete Article
How to Get Clarity in Your Procurement Specifications
By Stephen C Carter
A procurement specification is an essential document when going to market with a new tender. It is a statement of what you, the buyer, wants from the purchase in terms of the attributes the product or service must have. Equally, it is an essential document for the supplier as they use the specification to ensure that they have understood your requirements, can deliver to the standards you have set and can also price their bid so that they make a fair profit.
If your specification is to achieve all of this, it is vital that the specification is clear and unambiguous. Here is an example of what I mean.
Suppose your specification contains the statement “We need to improve the quality of our services”. You might think this is a reasonable and clear statement. Here are seven questions that show that it is not. Read the Complete Article
8 Traps to Avoid When Making Procurement Decisions
By Stephen C Carter
Bad decisions can often be traced back to the way decisions were made. The alternative were not clearly defined; the right information was not collected; the costs and benefits were not accurately weighed.
But sometimes the fault lies not in the decision making process but in the mind of the decision maker. In fact, the way our brains work can sabotage the choices we make.
An article by American academics (“Hammond, Ralph & Raiffa: The Hidden Traps in Decision Making,” Harvard Business Review, January 2006) identifies eight psychological traps that are particularly likely to affect the way in which we make decisions. Here they are:-
Read the Complete Article
- The anchoring trap leads us to give undue weight to the first information we receive.
The status quo trap biases us towards maintaining the current situation even in the face of evidence of better solutions.
RFPs: Really Frightful Process
By Elen Bahr
Folks, we have an industry-wide epidemic and its called the RFP. Formally known as Request for Proposal, I put the RFP into its own category: Really Frightful Process. In fact, I don’t respond to them any more. Sure, I’d like to increase my client base, but the time and effort needed to respond to an RFP is often inefficient and not helpful to the client or the vendor. I’ve heard this from many agencies and consultants. We prefer to make personal connections where a dialog will replace paperwork and where we can get to know the potential client as much as they’d like to get to know us.
If the intention of an RFP is to find a strong partner for your project, put more time into getting to know each other and less time into drafting a long document.
Before you begin an RFP process, consider that you may not need one. Read the Complete Article
Make or Buy: The Blacksmith and the Toothpick
By Dave Gordon
Under a spreading chestnut tree, the village blacksmith and I stand talking after lunch. “Man, that was great! I’ve never had forge-roasted corn before – say, do you have a toothpick?”
Smitty grinned. “Glad you liked it. I’ve got some scrap metal here, and the forge is still hot; give me a minute and I’ll make you one.”
I did a double-take. “I don’t think a steel toothpick would be good for my teeth. Do you have a wooden one?”
Smitty rubbed his jaw. “I can make a small dowel jig, to shape a chunk of wood into a toothpick. It should be ready in time for dinner.”
I shook my head. “No, I just want a simple toothpick. Don’t you have any toothpicks in your kitchen? They sell ’em at Safeway for $1.29 a box.”
Smitty jeered, “Why the Hell would I buy toothpicks, when they’re so easy to make?”
“Birds fly, fish swim, and even during sharp downturns in housing, builders keep building.” – Tom LaRocque, The Denver Post, 2008
The Make or Buy Decision
The make or buy decision is an economic analysis, comparing different product life cycles and their financial implications. Read the Complete Article
Project Management – Conducting Procurements
By Jason Rich, Northwest University
Conducting procurements is where you sign on the dotted line. By now you should have sent out your request of information, proposals and quotes, and are now ready to choose a supplier or vendor. Often times a bidder’s conference may be needed. A bidder’s conference is a meeting with all of the qualified bidders’ to clarify requirements and let the bidders’ ask any questions that they may have before they submit their bids. From there all the bids will be complied and evaluated by you and your team. The evaluation process can be more formal or less so depending on the significance of the procurement. Often the bids or proposals are weighed against specific criteria that have been set by you and the team ahead of time. Once you pick a winner the contract is awarded. Sometimes there may be a formal appeal process that a losing bidder may initiate, this is uncommon in the private sector but may be in place when dealing with government contracts. Read the Complete Article
Successfully Managing Contracts
By Keith Mathis – PM Expert Live
Whether you’re finding a new company to service the copy machine in the office or finding a contractor to finish your basement at home, there are times when we all have to deal with procuring someone to do something for us that we can’t or don’t have time to do. There are many names for a contract (agreement, understanding, purchase order), but they all have the same function, a mutually binding agreement that obligates the seller to provide something of value and obligates the buyer to provide monetary or other valuable compensation. Of all the documents that we deal with in a given project, contracts are usually more thoroughly reviewed because of their legal nature. That is why it is so important to understand how to carefully select and manage a contract.
When contemplating whether or not to hire someone to do a job, first you must determine if you can do it yourself, also known as the Make-or-Buy Analysis. Read the Complete Article
The Sixth Essential in Project Management: Suppliers
By Russell Whitworth
This article is part of a series. You can find the previous article here.
When I have reviewed projects in the past, “supplier problem” is the most common reason I hear for projects running into difficulty. To some extent, this might be a convenient excuse: it is easy to blame something or someone outwith the project rather than admit failure within the project team. But the PM doesn’t get off the hook that easily, as there are techniques that will improve the chances of project success.
It is really difficult to generalize, as each project situation is different with respect to suppliers. Suppliers range from internal suppliers (such as a test team, office facilities, or HR) through to major sub-contractors supplying multi-millions of equipment and services.
Often, the internal suppliers are the hardest to manage. The problem is lack of accountability to the project manager. Read the Complete Article
Planning Procurements in Project Management
By Jeremy Siegel
The process of planning procurements involves determining the project’s need for materials or services found outside of the organization and documenting those procurements determined to be required. The scope baseline, requirements documentation, and risk register are key inputs for the process. Different tools used include make-or-buy analysis, contract types, and expert judgment. Make-or-buy analysis weighs the pros and cons of making a deliverable internally or buying it externally. Factors such as cost, risk, time, and legal implications should be considered.
The type of contract that governs the procured work should also be decided upon in the planning for procurements phase. Different contracts are appropriate for different situations. For example, if a project’s scope is clearly defined, the buyer might prefer to pay the vendor a fixed price for the work performed because the requirements are known and the cost to the buyer will not increase. Read the Complete Article