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Sub-Contractors – Part of the Project Management Team?
By James Clements

During the development of Bids & Proposals and in the Planning phases of any Project you will undoubtedly be faced with decisions on the scope of work that will be undertaken in-house by your project management team and wider organization, and then, what scope of work will be outsourced to third party vendors and suppliers.

In its purest form, you will need to undertake make or buy decisions and this is a key project integration management process, particularly as you develop the roles, responsibilities and interfaces between your team, organization and the suppliers.

Conventional wisdom, whatever that is, tells us that everyone that interacts with and/or provides goods and services to a project, is part of the project management team in the broadest sense of the definition, but reality tells us there are varying levels of Project Team, like the layers of an onion.

Inside this broad ‘Team’ we usually have, at the core of the onion, the Project Management Team proper, comprised of the key project specific decision makers and manager’s and those assigned to the project on a full or near full time basis and who are usually co-located.

This is a traditional view of a project and project team, but we know that with outsourcing and globalization of distributed teams this is becoming less of a reality and this has caused me to think.

What if you decide to out source a large chunk of the project that you have traditionally undertaken yourselves?

What if that outsourced portion of the project scope, let’s use Engineering as an example, usually had one or more full time reps sitting in your core project management team.

So the question then arises:

Can these “outsiders” now part of your primary project management team, ever be or act like a traditional project team member(s), one staffed wholly by your organization in the past?

From my experience as both a Proposal and Project Manager, I have found the answer to that question is based on five primary constraints to achieving, as close as possible, integration of third parties into a project team:

  • Time & Trust
  • The amount to which you and your team allow

  • The amount to which they allow themselves

  • The amount to which your contract with them allows

  • The ‘thing’ the sub-contractor delivers

Let’s look at each of these in turn.

Time & Trust

When I first started as a Bid Manager, the group I worked for had not won a competitive tender in 5 years. Owning the only facility in the region to undertake certain aspects of the work they’d survived on being sole sourced for the work, which was significant, when the project required their facility, but when the client didn’t need it, they didn’t even get close to winning.

Charged with winning a competitive tender because we wanted a slice of this additional revenue, I set about looking at what work we were competitive with and what could be outsourced to be undertaken quicker, cheaper or shinier by third parties.

We won the tender, and I went on to project manage the work, but found that these contractors acted like they always did, my team acted like it always did, neither could accept a contractor sitting in a key project team seat.

We got through the project OK, but a key lesson learned, integrating sub-contractors to take over traditional organization roles takes time, trust and should be done incrementally, contract by contract.

Your Project Management Team

When you bring a third party into a team that has traditionally done everything in-house, someone in your organization is going to lose their job or be re-assigned, no one likes this, but like the example above, it was a choice between winning new work or not.

Your project team must be made ready for this change in advance of the project. This is where role clarity is a huge issue (see my post on Role Clarity) when such changes occur.

You need to:

  • Communicate the changes
  • Explain why the changes are occurring

  • Explain the benefit to the project

  • Explain the benefit to the business in the longer term

  • Clearly outline the boundaries between the team and the sub-contractor, preferably have the team involved in developing these

One of the key decisions you will need to make is the level and mechanism of project governance applied. Can the sub-contractor undertake the role in total, how do you check their deliverables, or do you need someone to manage them?

The Sub-Contractor

Just like your project management team, the sub-contractor team will always do what it has always done unless you take specific action to re-define, explain and facilitate the successful execution of their new role.

The discussion with sub-contractors outlining your requirement for a more deeply integrated role in the project management team needs to start before you even put an RFT/RFQ/ITT to them. No matter how much you explain in the tender documents that you foresee them taking a key role in the team, they will quote you like they always have as a sub-contractor and this will drive behaviors from that point forward.

While we always want to carry out competitive tendering for third party suppliers, when the decision is taken to integrate a third party into the team, consider sole sourcing to a long standing supplier who you consider is open to the concept and workshop the roles and responsibilities with them so they are in no doubt what you require.

Alternately if you still wish to maintain a competitive tendering process, hold a suppliers conference explaining tendering requirements, but down select quickly to work with the preferred sub-contractor.

Different roles require different approaches to estimating, if the sub-contractor has not made allowances for full time presence in the team, higher levels of visibility in cost and schedule reporting, this will be difficult to re-engineer during the project.

The Sub-Contract

If you issue a contract document that is the same as a traditional firm and fixed price sub-contract, you’ll drive the behaviours that go along with this style of contracting.

The contract has to support the actions and behaviors you expect from your organization and from the sub-contractors organization, because the first time an issue arises, everyone will revert to old ways and pull out the contract.

The contract needs to clearly outline the expected roles and responsibilities, facilitate collaborative resolution of issues and have clearly defined mechanisms for change.

The Product

I’ve seen embedding of sub-contrators into project teams done very successfully and the ‘thing’ they are delivering also has a bearing on the likely success of this strategy. The characteristics of products or services that lend themselves to this approach are:

  • Clear boundaries around their scope. In this context scope boundaries, as in role, is more important than scope definition.
  • They get the whole of the work/function/deliverable in their area of expertise. The financial rewards are better and splitting scope only leads to boundary issues.

  • Work scope needs to be significant to justify the effort.

  • Commodity or Standard products that are the way they are or as cheap as they are because the sub-contractor has a refined system, are best left as straight arms length procurements, modifying cooky cutter process causes price to increase.

To sum up, the process of replacing elements of your project team with third party suppliers is something we all need to consider and can be a very successful strategy.

Whether it can ever be as seamless and as straightforward as having the whole team staffed from within your organization is up for discussion, but certainly time, trust and familiarity help get it right.

Project leaders need to ensure both the organization, team and sub-contractor are made ready and the environment for success is provided in words as well as actions, for success to be realized.

James Clements, MBA, MPD has been managing, directing, winning projects and developing project management processes in diverse industries around the world for the past 20 years. You can contact James via his website here and you can read more from him on his blog.

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