The 5 Phases of the Vendor Selection Process
By Keith Mathis – PM Expert Live
Let’s face it. No matter how hard we try or how much we want it, we can’t do it all. Regardless of the size of your organization, you will eventually come across at least one aspect (usually several) that is not feasible or cost effective to do for yourself. Whether it is buying paper, printer ink, food, or a new MRI machine, you will sooner or later find that you must go in search of a vendor.
Hiring a vendor has several advantages. It can reduce operational costs, enhance working conditions, improve responsiveness, and save significant money.
While outsourcing to a vendor may be necessary, there are also times when it is not wise to do so.
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- If you and the potential vendor do not have the same goals.
- If you feel like you must micromanage the entire project and process.
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
Project Management – Close Procurements
By Simona Belindean, Northwest University
All things – good or bad – must come to an end. And as we now understand, even the project must come to an end, and deliver according to scope by a specific date and within an approved budget. But in the process of finalizing the project, contracts must also be completed, and as such, deliverables must be verified and accepted according to contractual stipulations. This final phase, known as “Close Procurements,” confirms for both buyer and seller that the contract was executed, and final, legal closure can take place.
In the process of closing out procurements, inputs that a project manager has for verification of completion and delivery to project scope is the project management plan, and any procurement documentation that provides a description of the work performed.
During the course of a contract, the project manager must also verify that the contracted work is being completed to agreed upon specifications. Read the Complete Article
Seven Contract Management Tips You Need to Know
By Michael L Young
To successfully manage contracts for a government agency requires that you are able to:
- Develop suitable arrangements for managing the contract, including establishing risk management and communication strategies
Monitor the contractor’s performance against the contract and deal with issues such as contract variations and disputes
Complete the contract, review the contractor’s performance and prepare a contract review or audit report that can be used in future evaluations.
This is all text book stuff but I have developed seven tips you need to know to facilitate this process and become a successful contract manager:
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- Relationships are everything
Maintaining good relationships with suppliers is vital to the successful completion of any project. You need to try to work as partners with suppliers to get the job done for the benefit of the project. Once a contract gets into dispute, no-one ends up winning and the project almost always suffers as a result.
Sales Process Meets Project Management
By Mike Cunningham
The essential characteristic of most sales situations is that the supplier is keen to sell and is in competition situation with other vendors. Conversely, the customer has a choice of vendor and is seeking the best capability on the most favorable terms. All the time the sales team will be under pressure to offer the best price and delivery time. The vendor is keen to win the business and not do anything to put that at risk. Equally the customer is keen to secure the best deal. In this situation there may be negotiated changes in pricing, and undocumented promises and assumptions that introduce delivery risk and latent issues. For example:
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- During commercial negotiations project pricing may be reduced without clear and fully justified reductions in scope.
- The timeline is invalidated due to changes in scope, budget or start date.
- Risks are overlooked and not sufficiently reflected in contingency
- Risks are not all understood by vendor management nor customer management.
Contractor/Vendor Selection: Bridging The Communication Gap (#3 in the series Outsourcing From a Project Manager’s Perspective)
By Susan Peterson
In the continuing series on outsourcing project work this month’s column addresses the challenges related to selecting those individuals and/or organizations that will provide the expertise needed for specific activities. All too often this process is filled with “communication disconnects” in documenting what is needed from contractors/vendors. Whether one uses requests for proposal (RFPs), requests for information (RFIs), or other types of vendor solicitation documents, clear definition is critical. I have participated in the election process in multiple roles including leading the selection process, writing solicitation documents for clients, and responding to client proposals. The following areas are primary considerations to effectively facilitate the project vendor selection and subsequently the contracting process.
Be specific — even if it hurts.
There is no substitute for clarity in specifying what activities need to be performed. Read the Complete Article
Procurement Management in Project Management – Taking Out a Contract (#4 in the series Procurement Management in Project Management)
By Joseph Phillips
Contracts override everything: promises, email, secret handshakes. As long as they don’t include illegal activities, contracts are backed by the U.S. legal system. A contract is what makes the deal a deal.
To get to the contracting activities, you need to create the procurement documents. The initial document is usually the statement of work (SOW), which describes the thing or service you want to buy. The SOW is provided to the vendor with an invitation to bid (IFB), which you probably also know as a request for quote (RFQ). The IFB and the RFQ are basically the same thing and are focused just on price, not ideas.
A request for proposal wants a price, but also suggestions and ideas on how the project work should be done. Proposals are more than just costs—they’re a bit of consulting from the vendor. Read the Complete Article
What is Closing Process Group
By Sivaraj Dhanasekaran
We will start with simple term first, Closing process group means, offically closing the project by getting the formal approval, acceptance from the project sponsor and stakeholders. Secure and store all documents related to the project. Document the lessons learned, issues and store for future referrals. And it states that the project is ready to move to next phase which is usally the operational phase.
PMBOK 3 definition
Closing brings a formal, orderly end to the project phase or to the project itself. Once the project objectives have been met, the Closing process group starts, it is an important processes that collects all the project information and stored for future reference. Contract closeout occurs in this process group, and formal acceptance and approval are obtained from project stakeholders.
The objectives of the Closing Project domain are as follows:
- Obtain Final Acceptance for the Project
- Obtain Financial, Legal, and Administrative Closure
- Release Project Resources
- Identify, Document, and Communicate Lessons Learned
- Create and Distribute Final Project Report
- Archive and Retain Project Records
- Measure Customer Satisfaction
Knowledge Areas & Processes
Dhanasekaran, Sivaraj is a certified PMP and works as a Senior Project Manager in one of the leading MNC banks in Singapore. Read the Complete Article
Evolution of the Owner’s Role in Program Management – Activity: Procurement (#12 in the series Evolution of the Owner’s Role in Program Management)
By Robert Prieto
Traditional Owner Role:
Owner’s procurement responsibilities encompass development of contract packages, applicable terms and conditions, advertising and conduct of solicitation processes, bid evaluation, negotiation and issuance of contracts. Contract change processes typically require additional procurement support in the evaluation of contractor requests for financial or other contract modifications.
Owner Role Under Program Management:
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- Owner’s procurement responsibilities will be limited to development of very select, major contract packages. Owner will work with Program Manager to develop standard program terms and conditions.
- Owner would approve procurements over threshold values with other procurement authority traditionally delegated to the Program Manager. Direct procurement by the Program Manager on his own commercial paper and with the Program Manager’s standard terms and conditions augmented by special provisions Owner may require may be utilized as part of transitioning the majority of procurement efforts to the Program Manager.