3 Ways To Procure Without Competition
Yes, there is such a thing! Not all project procurement processes have to be a struggle for who comes out top and a hugely competitive bidding event. Here are 3 project processes where there isn’t an element of competition.
1. Use a Preferred Supplier
You probably know this already but you might not have considered it as a non-competitive procurement approach.
If you have a preferred supplier, say, for photocopiers, then you are going to get your next photocopier from them. This goes for recruitment agencies sourcing your next project team members, to the company you have worked with for years who always supplies your widgets.
Where a preferred arrangement exists, company policy may actively prevent you from seeking out competition.
The risk here is that you don’t take the time to look at other vendors. Just because your preferred print supplier was competitive a year ago doesn’t make it competitive today. Business models are changing in plenty of sectors. I usually get all my printing from Moo.com but this month I changed to a local print shop as (strangely) they were more competitively priced for the leaflets I needed. They were even kind enough to ask me to check again, as they said they weren’t normally competitively priced with online printers. But in this case, being able to deal with a real human, having a turnaround in 24 hours and not paying for postage really swung it for me.
Also, don’t assume that your past good experience with a supplier is always going to reflect their future performance. As well as their business model and pricing changing, a key change in support or service personnel could mean that the good relationship you had previously isn’t there any longer.
2. Joint Venture
You might come across this on large projects or at a business venture or product level.
A joint venture is where you are contractually in a partnership-type arrangement with another party to work together to provide a service. There’s an agreement in place that requires you to give the work to a particular company (and they, in turn may give you something).
3. Sole-Source Procurement
I hadn’t heard of this until I read Henrique Mora’s PMP® Exam prep guide where he covers the procurement management processes extensively. It’s a good read if you are preparing for the exam (I read the version that’s current for the 5th Edition).
Sole-source procurement is where the buyer chooses to get a product that is only provided by a single provider. Say, for example, you need a particular kind of roofing tile that is only made by one manufacturer. You’d buy it from them.
You could say this is the same for the vast majority of software too. If you want to buy a particular software tool that you think is right for your business, you can only get it from the vendor. You can’t buy Microsoft Office from Adobe, for example. (This is a poor example because so many large software vendors have a network of resellers where you do have choice about where to get it from. But it holds true for the majority of small/medium sized project management tools like the ones I review.) In healthcare tech many software products are linked to modalities or medical equipment – you have to get the one that ‘matches’.
“The main risks of conducting a sole-source procurement,” Moura writes, “concern the supplier’s economic feasibility and market conditions.”
You can include escrow in your contract if that’s appropriate, or other legal measures as a way of mitigating this if you think it’s worth it.
Benefits of Non-Competitive Procurement
I love the idea of non-competitive procurement.
Not having to sit in endless vendor presentations while the sales people tell you all the features of the product that you know won’t work when you start to get your hands on it.
Not having to prepare detailed business cases and financial models for products that you aren’t recommending, just to prove that you aren’t recommending them for the right reasons.
There are plenty of benefits including being able to get on with the work of your project more quickly because your team isn’t tied up in knots doing procurement activities.
However, there are drawbacks as well, not least because there’s an assumption that you are getting the best/right deal for your business. You might be, but if you have a feeling that actually you aren’t, it is worth talking to your manager or the PMO to see if there is flexibility to ditch the normal arrangements and go out to tender for this particular piece of work.
I’ve written before about treating the company’s money as if it is your own, and if you wouldn’t go ahead with the non-competitive procurement if it was your cash, then you’re right to question your own instincts here too.
It has been a long time since I did AS Level Law aged 17, and I remember contract law being the less interesting part of the course. However, some of it is still relevant to my job today. For a contract to be legal, certain conditions have to be met. There are 5 conditions to fulfil before you can say that your contract can be legally entered into.
1. There must be an offer
There must be an offer and an acceptance. If I don’t offer you something, there is no contract. If you don’t accept it, there is no contract.
I can’t contract you to do something that you don’t want to do because you haven’t accepted my offer. You’re within your rights not to sign a contract with a supplier if the deal isn’t right for you. Just like you would stand your ground with those door-to-door sales people, you can stand your ground with a supplier on your project too.
There’s often back and forth at this point (as there should be) as you refine the offer into something that you can both live with.
2. There must be consideration
This means that something has to be exchanged. Your project suppliers offer you goods or services and you pay them money in exchange.
It doesn’t have to be money. You could give them goods or services back, or exposure to your client base or something else that you both agree to. But there has to be some give and take.
Again, there’s negotiation to be done here. Once you’ve agreed on the offer you might go back and forth on the consideration (the fee) that you are willing to pay, and how this will be structured: all in one go, payment phased over the life of the project and so on.
3. There must be legal capacity
I expect this varies from country to country, but the people entering into the contract must be legally able to enter into an agreement. I remember reading about a case where a toddler had accidentally purchased some expensive stuff online through random button pressing on a parent’s device (it happens) and the case concluded that the family didn’t have to pay as the toddler didn’t have the legal capacity to enter into a contract. I think they had to return the goods though – getting your child to purchase all your supplies is not a legal method of getting resources for your project for free! I’ve looked but I can’t find a citation for that case – if you know of one, let me know and I’ll update this article to reference it. I did find this one where a 3 year old bought a car on ebay, but the case didn’t go to court for contract law to be tested.
You may have capacity in law, but you may not have capacity in terms of your company’s due process. For example, perhaps only Directors can sign contracts above a certain value, or you can only enter into a contract in certain circumstances or with certain providers. While I’m not sure that would hold up in court, it would definitely get you into hot water at work, so make sure you check your company’s contract signing policy and get advice from your Legal team. That will avoid you entering into any deals and contracting the company in ways that they would prefer you didn’t.
4. There must be legal purpose
This simply means that the subject of the contract needs to comply with the law.
In other words, you can’t contract someone to steal for you. Or do anything else illegal. But you wouldn’t do that anyway, would you?
5. There must be intention
There must be the understanding on both sides that this agreement could be enforced by a court if it came to it. You must go into the contract understanding that it is legally binding and that you intend for it to be so. You aren’t signing up to something on a best endeavours basis, or without realising that it’s a legal document.
This is all broadly common sense, but it’s there to protect businesses and individuals.
I don’t know if these are the same conditions enshrined by your local laws, but for UK and US laws these seem to hold true. What’s the situation where you are? Drop a note in the comments to let us know!
Ask The Expert: Lauren Maffeo
Categories: cost management
It’s been a while since we’ve had an Ask The Expert column so I figured it was about time I reached out to some people and brought you some insights from others! I caught up with Lauren Maffeo, project management researcher at GetApp, recently and here’s what she had to say.
Lauren, what are the most surprising things you've uncovered in your recent research?
When I conducted research on the project management software market last year, I expected project managers to cite a diverse range of software that they use to manage projects. Instead, two in three respondents said that they use Microsoft Project (you can read more about that result here), despite the fact that three in four respondents worked in a small business.
I was also surprised that almost three in four project managers use between two and five total tools for project management - and five percent use more than 10 tools! These numbers suggest that today's most popular project management software tools support built-in workflows that don't match how today's project managers work.
Yes, I can totally see that from my own experience! Has any of your research uncovered areas where decision makers in project management could cut that down? It must be expensive to maintain so many tools.
The best way for project management leaders to save money and improve efficiency is to shop for project management software that integrates with the tools their project teams already use.
For example, let's say your cross-functional project team uses Salesforce for customer relationship management (CRM) and MailChimp for email marketing. If your project management software doesn't integrate with Salesforce and MailChimp, then you're paying for three separate tools and keeping project data in three separate locations. By contrast, if you switch to project management software that integrates with Salesforce and MailChimp, then all project team members can view project details within the same software and keep using the specialty tools of their choice.
Great tip, thank you. What other tips do you have for project managers wanting to make decisions about their tools? Where should they start?
Project managers should start by confirming how many tools they're currently using for project management. This can be everything from software to Google Sheets to Post-it notes. Then, they should shop for project management software that integrates with as many cloud-based products in their toolkit as possible.
They should also prioritize project management software with strong task management and collaboration features. Finally, project managers should shop for multi-tiered software that can scale as their project teams and business needs grow.
What do you think project managers should be aware of going into the remainder of this year?
Project managers should be aware of how crucial it is to prioritize "soft skills". Gartner research shows that the traditional PPM role won't exist by 2020. This is largely because the nature of IT projects is changing as businesses shift to digital. Since business leaders will be pressured to innovate more quickly, Agile project management will grow in value. So, project managers who can successfully lead project teams and persuade stakeholders will have more influence than ever before.
Wow, interesting. So tell us, what's the best thing about your job?
The best thing about my job is learning and sharing how technologies that seem abstract today (like blockchain) are already improving peoples' lives. It's also exciting to see the project management discipline gain so much respect. Not long ago, project management was largely limited to IT departments in large enterprises. Today, teams across industries from healthcare to digital media practice project management methods that range from Agile to Kanban. Project managers who can merge technical knowledge with strong soft skills are not just poised to lead successful projects - they have the chance to lead business strategy.
About Lauren: Lauren Maffeo covers trends in the project management, finance, and accounting software industries for GetApp, a Gartner company. She focuses her research on strategies and tools to help small and midsize businesses create unique value. Lauren previously covered technology trends for The Guardian and The Next Web.
|In this video I talk about the different types of project resources that you'll encounter on your project. 'Resources' isn't just an unfriendly way to talk about people!|
How do you track the performance of your project? Here are 5 ways that you can do it.
1. Fixed Formula
This is pretty easy. Assign a fixed percentage when the work starts. Then make it up to 100% by allocating the rest when the task finishes.
The Pareto principle is a good one to use if you don’t know how to split your task percentages. Assign 20% complete to the job when it starts, and the remaining 80% when your team member reports the work complete (because at that point it’s 100% complete).
It’s simple to work out but it’s not terribly accurate. It’s only good for small pieces of work and short tasks where it would be too difficult or not worth it to work out percent complete across a couple of days. It can also be used where the task is no longer than a week long. If you are updating your project plan once a week, and the task is no longer than a week long, the task is either started or finished so the 20/80 split (or 50/50 or whatever you think is appropriate) works out pretty well.
2. Weighted Milestones
When you’ve got plenty of milestones along the way, you can work out project performance by tracking how many you’ve hit.
In other words, you can pre-assign progress (percent complete) to certain milestones or parts of tasks. When you hit Milestone 1 you can say the project is 15% complete, at Milestone 2 it goes up to 20%, at Milestone 3 you’re 65% complete and so on. Until your final milestone at project completion where your project (or task) gets updated to be 100% complete.
This is also a way to split payments to vendors – many contracts have a schedule of payments linked to the achievement of key milestones. Your budget could be weighted in the same way as how you track performance.
3. Percentage Complete
We’ve talked about % complete already, but this version of it is just based on the project manager’s
This isn’t hugely accurate either – although it depends on the project manager. It takes experience to be able to pick a percentage out of the air and have it reflect reality. Generally, project management tools can help with this by playing back to you the % complete of your project schedule, so at least in that case you should have something underpinning the number you give.
4. Percentage Complete with Gates
This is similar to weighted milestones but instead of waiting to hit the ‘gate’ point, you can report any percentage complete up to the approved limit for that milestone.
For example, when you hit Milestone 1 you can say the project is 15% complete, as we saw above. With weighted milestones, until that point the project would be 0% complete. With gates, you can set a % complete every day if you like, working up to 15% at the point of hitting the gate (the target milestone date or achievement).
It’s like a blend of using your professional judgement but being constrained to not say you are too far ahead because you can only ever hit a certain percent complete through the nature of where you are on the project.
It sounds complicated to explain but this is my favourite approach for measuring project performance.
5. Level of Effort
Finally, you can track effort against the elapsed time. Alternatively, you can track against some other task or work package on the plan. For example, ‘Complete Testing Documentation’ might be linked to ‘Complete Testing’ and the two activities progress in parallel.
You’d track performance for ‘Complete Testing’ and then, as you know that testing documents are being updated as you go, apply the same % complete to ‘Complete Testing Documentation.’
Which one(s) of these do you use? And which do you avoid? Do you use these as standalone techniques or do they link to your Earned Value Management activities? Let us know in the comments below!