The Money Files

Appropriate Contracting is a term used by Michael Cavanagh in his book Second Order Project Management (Gower, 2012). He defines it as “the application of common sense to a commercial relationship”. In other words, it’s not really about money, but it is about making sure that the contracts you enter into with suppliers are fit for purpose and will help you achieve your objectives.

Consider a project where you buy software from a vendor. You go out to tender and you receive pitches from a number of companies. You choose the cheapest. The contract is tied up, with tight clauses around payment terms and schedules. You shake hands, everyone is pleased, and the project starts.

Six months in, you realise that the project scope needs a significant change in order to be able to accommodate the needs of the users. At the time of signing the contract with the software supplier, you hadn’t finished the requirements analysis and were not exactly sure how they would be using the project’s deliverables. Now you know, and you want to change the scope.

The vendor says no.

This is an example of inappropriate contracting – where the money side of things takes so much emphasis over a trusting, working relationship where both parties are working successfully together to achieve the end goal.

A trusting relationship does not mean that you don’t have a contract at all. Of course not. You should always enter a legally binding contract with suppliers on projects, as this gives you both additional protection should the worst happen. But as Cavanagh says in his book, “major contractual issues rarely occur between parties who have long experience in dealing with each other”. Trust is built up over a long time (and this goes for project managers with their teams too – in fact trust is one of the major attributes of a good project leader).

The better your relationship with the vendor, the more likely it is that you can work effectively together. This starts with the bid process. How the vendor operates at this point will give you an insight into what they will be like to work with when the real work starts.

So what is an appropriate contract?

Cavanagh says that an appropriate contract has the following attributes:

• It establishes consensus between both parties
• It establishes consent between both parties
• It provides clarity about the intent of the project/work and reduces ambiguity
• It defines and allocates roles and responsibilities relating to the work and performance
• It agrees how the parties will work together to create trust and confidence
• It documents any processes and principles related to managing success or failure.

For this last point, any processes can be included as a contract schedule.

“First and foremost,” writes Cavanagh, “the contract should be establishing a framework for success.” He says that in order to achieve this the contract should cover these four areas:

1.      Scope and goals (what the contract is about)

2.      Responsibilities

3.      Performance indicators

4.      Rights and remedies (what happens when things go wrong and what options both parties have if performance targets are not met).

Cavanagh says that the ‘meat’ of the contract is in the first three points, but project managers (when they are involved in negotiations) and legal teams spend a lot longer on negotiating point 4. This is counter-productive. If you skip over the scope and goals, who does what, and how success will be measured, you have every chance of needing those rights and remedies because it won’t be at all clear about what the vendor is supposed to actually do. “Rather than managing the risk,” Cavanagh says, “the contracting process itself becomes a source of risk.”

How appropriate are your contracts?

As a project manager, there’s one big problem on projects – you are right in the middle of it. You have tight deadlines, unforgiving stakeholders and detailed plans. It is very hard to lift yourself up out of this and see the bigger corporate picture – many project managers can’t do this at all.

You should try.

Being able to see the bigger picture puts your project in context. It helps you operate more effectively. It helps you see what is important to your project and business customers. It makes you a better member of the company, as well as a better project manager.

Here are 5 ways to ensure that you can see the big picture.

Go to internal networking events.

Every company has them. And if, for some reason, yours doesn’t, start one. Got to lunch and learn events. Go to afternoon briefings, or drinks after work, or corporate team building days. Don’t opt out of anything. You never know who you might meet, but more importantly, what you might learn about the company’s focus. You can use this to sharpen your project’s focus to deliver what is really important to the business.

Read the annual report.

Yes, it’s boring. But it is also a great source of information about how the company operates. How does your company make money? If you sell shoes, it’s pretty obvious, but many firms have more complex ways of bringing in the cash. How will your project contribute to this? Is there a strategic thread where your project fits (or is it clear that your project is now irrelevant to the new corporate strategy?).

Read the business pages.

Follow your industry. Not project management, but the industry your company operates in – IT, construction, engineering, retail etc. What’s happening there? What are your competitors up to? Set up a Google alert for the name of your company and your CEO. How does your project fit with what your CEO talks about in the media?

Join an industry body.

In the UK, BCS, The Chartered Institute for IT, represents the interests of the IT arena. It’s not the only IT industry body, but it actually doesn’t matter which one you join. The point is to have another way to find out what’s happening in the big wide world. Read their magazines. Go to their events. Join their LinkedIn discussion groups.

Ask questions.

If you don’t know what terms like ROI, IRR, BCR and payback period, ask (or watch my videos). Talk to your managers, customers and suppliers. What is important to them? How is your project helping?

Being able to see the bigger picture lifts you out of the detail and helps you operate in a project leadership role. How do you make sure that you know what’s going on outside of your project?

I was lucky enough to get to Wimbledon this year to watch the ladies’ semi-finals, and it was only once I had arrived at the All England Lawn Tennis Club that I realised it is also the venue for the Olympic tennis.

The UK hasn’t hosted Olympic tennis since 1908, but the preparations to transform the Club into an Olympic venue are already underway. It’s a project with a short timescale, given that the Wimbledon Championships have only just finished. It gives the grounds staff and the project team only 20 days to turn the place around.

The famous green backdrops and court surrounds will be replaced by the purple branding of the 2012 Games. The grounds team will install Olympic rings where they need to go, and there is a new podium being constructed on Centre Court, ready for the winners to receive their medals.

In the programme I took away from my day trip to the AELTC, there was a short interview with Eddie Seaward, Head Groundsman. “We will soak the courts, pre-germinate the seed, and wait to see what Mother Nature throws at us,” he says in it. Luckily, Centre Court now has a retractable roof, so even if it continues to rain as much as it has over the last couple of weeks, the tennis will still go on.

The feel of the venue will no doubt be very different. For the AELTC Championships, the players wear traditional white clothes. For the Olympics, they’ll be in their national team colours. They will only use 12 courts instead of the 19 used for the Championships. This might be because the Paralympics are scheduled after the Olympics, and the wheelchair tennis is not being held at Wimbledon. During the 2 weeks of the AELTC Championships, Wimbledon hosts wheelchair tennis as well.

I think the biggest change will be in the advertising, although I haven’t been to see the redecorated Wimbledon, and I won’t be going, so this is just speculation. The AELTC has no large advertising placards. There are no McDonalds or Starbucks concessions. The shops, restaurants and cafes on site are discrete and even the corporate hospitality marquees are barely branded. I have a feeling that it won’t be like that when the Olympics comes to town. Given the way branding has been managed elsewhere in London, I imagine that the venue will be full of posters and sponsors’ adverts.

I’ll have to watch the Olympic tennis on TV to find out if I’m right, and if the transformation project was a success.

Photo: Serena Williams playing on Ladies' Semi-Finals day on Wimbledon Centre Court. Photo copyright: Elizabeth Harrin

In this instalment of Ask the Experts, I talk to Neil Stolovitsky, Senior Solution Specialist with Genius Inside. We discuss the use of social media features in project management software and also top tips for using time recording for better productivity.

Neil, Genius Inside’s latest release includes ‘baked in’ social media tools. How can project managers encourage team members to use the social features, if they haven't used Facebook or other social media tools before?

Social media tools have become ever-present in the way today's information workers communicate both personally and professionally. We have been fortunate enough as a project and portfolio management software vendor to develop a very comprehensive and robust solution over the last 15 years. That being said, features and functions are only as good as their usage and ability to improve the way project stakeholders work.

One of the biggest roadblocks we hear from the PM community is that social media tools can introduce pollution to their project information and can be dangerous in their inherent application to share uncensored information that can be potentially hurtful to a project's progress.  In order for project managers to encourage their team members to adopt these tools they need to invest in a social media strategy that will work for their environment.  If the recommendation of the appropriate tools are set up and are in line with the way they currently work, people will jump on board.  The bottom line is, social media tools have to be positioned as a means to improve productivity and helping their team members in their every day work, and not just another piece of technology that will make their lives more difficult.

Your product has a ‘wall’ feature. How does this help project managers work more effectively?

We believe Genius Project's social media function Genius Live! will not only address the market's demand for these tools, but moreover will change the way project teams will communicate by allowing project information to pro-actively find its users, as oppose to the traditional usage of PPM tools where the user must dig through the system to take action and find strategic information.

The idea behind the Genius Live! project wall is to push information to all project stakeholders, as oppose to digging through the project management system to find the necessary information to take necessary actions and make strategic decisions. We find that project managers are constantly faced with the challenge of getting to important project information to improve their performance and those of their team members and the project as a whole. The project wall feature is designed to eliminate this reality in a user-friendly and familiar design accessible from any web-enabled device.  

Sifting through information quickly can certainly be a time-saver. Why is recording time on projects important?

It is no secret to the project management world that time is money. Recording time allows project managers and their stakeholders gauge where they stand against their plan.  In addition, it helps organizations assess the efficiency of their teams and their ability to hit milestones in a timely manner. Genius Project has fully integrated time sheet functionality that allows users to post time against both project and non-project activities, and allows for an optional workflow for time sheet approval and review by managers.

What's your top tip for getting people to record time?

The best way to get people to record time is to provide multiple options, such as centralized time sheet and time slip functions, to capture time data in a simple format. In organizations in which there may be resistance to submitting time sheets, providing users with their own workspace to access their assignments and a centralized time slip option for each task will simplify the process. The primary goal is to provide a single method and location to record time to achieve the best results in accurate time capture.

That sounds sensible. People can only record time against tasks that have been allocated to them. While we’re on the subject, what's your top tip for resource allocation?

The main strategy for effective resource allocation is to have the necessary visibility into resources schedules when planning project workloads. This is best achieved when managing a single resource pool across all projects that ensures the accuracy of information, and also having the ability to quickly see resource schedules across all activities when deciding to assign the work in project plans.  

Thanks, Neil!

About the expert

Neil has over 12 years of IT experience with end-user, consulting, and vendor organizations, along with extensive expertise in business development, software selection, and channel strategies. He has published numerous white papers and articles covering Enterprise Resource Planning (ERP) for service industries, Project Portfolio Management, Professional Services Automation, IT governance, and new product development to a global audience. Neil currently holds the position of Senior Solution Specialist with Genius Inside.