The Money Files

It’s time for another instalment of What’s New In the PMBOK Guide®-- Sixth Edition. Following on from my look at the Plan Procurement Management process (which you can read here), and Conduct Procurements, we’ve reached the third of the Project Procurement Management Knowledge Area processes: Control Procurements.

The headlines are:

• The changes to this process mostly feel very… average.
• It seems to be a lot of aligning terminology
• But, there is one big change relating to closing procurements – more on that in a moment.

Now let’s take a deep dive into the process and see how the new version of the PMBOK Guide®-- Sixth Edition has evolved.

Control Procurements Process

This is the third process in the Knowledge Area. We’re in the Monitoring and Controlling process group (surprise, surprise).

Inputs

The changes all feel very cosmetic here – at least they do to me. Procurement Documents is out, to be replaced by Procurement Documentation. Work Performance Reports are out, but Project Documents are in, which would cover performance reports broadly, if you wanted to include them.

Project Documents would also cover:

• Lessons learned log
• Milestone list
• Quality reports
• Requirements documentation and the traceability matrix
• Stakeholder, assumption and risk registers
• And anything else your professional judgement feels should be included.

Finally, enterprise environmental factors and organisational process assets appear – almost as if they don’t want to be left out when they are in so many other places!

Enterprise environmental factors that relate to this process are things like marketplace conditions and your code of ethics that relate to how procurements should happen. You’ll use these factors to make better decisions about whether or not to step in and take action to keep a procurement agreement on track.

Organisational process assets are those things that relate to your company’s processes, and that can have an impact on how you work through those processes. The obvious one here is the procurement policy because that can influence how you progress, monitor and ultimately close down a procurement.

Tools and Techniques

The contract change control system no longer features, but expert judgement appears. Data analysis also features in this process as a technique, and it covers earned value analysis, trend analysis and performance reviews. These are all ways of assessing how the procurement is going, and they give you data that can help decide if you need to step in to do a bit more ‘controlling’ to keep the agreement on track.

Procurement performance reviews are no longer included (because these are covered by data analysis). Records management system has also been removed. I get that it’s a tool, but it’s not hugely useful here, at least not to the point where it has to be called out.

Inspection and audits are now split into two separate tools, whereas previously they were bunched together as ‘inspection and audits’. That takes the total T&T for the revised process to five.

I don’t have much else to say on this point – it all strikes me as pretty self-explanatory and also common sense.

Outputs

And…. Drumroll….

Here is where we have the major change to this process. Closed Procurements is now an output of Control Procurements.

Why is this a big deal? Well, in the PMBOK Guide®-- Fifth Edition, Close Procurements was a whole process in itself. That whole process has disappeared.

Honestly, this is a good thing. It reflects what we have all known for a long time: generally, project managers don’t have the authority to legally close down a contract. We don’t authorise the final payment. We don’t terminate a deal. We may be the catalyst for the payment or the termination, and we do have significant influence over how it happens, when it happens and who is involved, but ultimately, we don’t have the final say. That is the project sponsor’s responsibility, or perhaps someone high up in the finance department. Or perhaps a procurement or contracts specialist, or a lawyer. Basically, a whole host of people are better equipped to do this than we are as project managers.

That’s not to say that on some projects, the teams are so lean that project managers do have the authority to go ahead and do this. But even if you take the steps, it’s generally someone else who gives you the go ahead to do so, like the project sponsor.

The work to do the closing of contracts is now covered as part of Control Procurements, so if you are doing it yourself, you still have a few pointers in the book.

Procurement documentation updates is the only other change to the outputs list (so in total, we’ve added two to the list and taken none away).

Procurement documentation is a wide-ranging phrase that covers all kinds of things relating to your agreements, including:

• Approved and unapproved change requests
• Technical documentation
• Reports, warranties, paperwork to do with deliverables
• Financial records which could include purchase orders, invoices, bill of sales, payment records, receipts and so on
• The final reports from those inspections and audits carried out in this process, as mentioned in the Tools & Techniques
• Work schedules, timesheets for effort, plans
• And, as we’ve seen before, the guidance is non-exhaustive, so if your organisation uses some other kind of documentation for procurements, then by all means include it in your own list.

That brings us to the end of the Project Procurement Management Knowledge Area. There are just those 3 processes, and aside from the Close Procurements change, most of the other changes will not radically change how you go about doing your work.

Overall, I think the message to take away is to involve the experts in your business who have more experience in procurement than you. And if it is their job to do procurement full time, either as a contracts manager or a legal expert, then take advice, let them do what they are great at and you stay focused on getting the deliverables delivered.

If you’d like to see me summarise any other processes and the changes that the new PMBOK Guide® -- Sixth Edition has given us, then let me know in the comments below!

In this video I share a few ideas for how to get started with project communications when you don’t have much money to spend on getting fancy mugs printed with your team logo and all that. You can do some great work communicating about your project even if money to do comms is at a premium. You might not be able to take all these ideas instantly and apply them to your own project, but I hope they give you inspiration for finding similar ideas that will work in your environment.

It is possible to communicate far and wide, spreading the vision about your project, and do it all on a shoestring!

Read more about the ideas in the video here: http://www.projectmanagement.com/blog/The-Money-Files/7570/

Regular readers will know I’ve been breaking down what’s new in the PMBOK Guide®-- Sixth Edition, around Plan Procurement Management (you can read the first part here, and the summary of  Conduct Procurements here). But who is actually involved in contract management?

That’s a difficult question to answer precisely, because the exact structure of your organisation makes a difference to who takes part in the contract management process. You may have different teams involved, depending on the structure of your business, or you might have some of the teams below totally missing, so others step in to fill the roles.

So please consider this article as high level guidance, and not a prescriptive account of how you must run contract management in your organisation.

Let’s look at the 5 groups involved in managing project contracts.

1. Legal Team

Your legal team may be internal, or you may hire in outside legal experts if you don’t have the need for a full-time staff of lawyers.

This group is important because they are typically involved in:

• Creating contracts
• Contract review
• Approving contracts and getting them signed off.

They are also involved in making sure that any regulations and laws are complied with, and that the right laws are referenced in contract clauses etc. An example in the UK at the moment would be to make sure that all contracts are updated with reference to GDPR regulations, and references to the ‘old’ Data Protection Act 1998 are removed when the new regulations come into force in May 2018.

2. Contracts Manager

The contracts management function might be carried out by a single person (perhaps with a different job title, like Procurement Manager) or there may be a team responsible for contracts management. The role involves:

• Negotiating and drafting contracts
• Working with vendors to get the best contractual arrangement for both parties
• Organising and executing non-disclosure agreements

They will probably also get involved before the vendor is selected, doing the work (along with others) to evaluate different proposals to establish which supplier is the best to partner with.

The contracts management function also acts as the main point of contact for suppliers (often the supplier project manager) for contract queries. That could be the schedule for milestones, preparing purchase orders and invoices or issuing the paperwork that triggers a payment and so on.

As you’d imagine, any changes to the contract are also run past the person carrying out this role.

In my experience, I’ve done some of this: issuing notification to trigger a payment, dealing with contract changes, facilitating getting the right person to sign off and handling the interface with the legal team. But if you have someone in your organisation who can take this role on, and who can ‘run’ the contract for you, then get delegating! Use their expertise.

3. Procurement Team

Procurement is a function that’s broader than contracts management, although your contracts manager may sit within that department.

The procurement team is responsible for managing the whole procurement activity, from preparing bid documents to dealing with queries from suppliers. They are often the team who prepare the shortlist of vendors, or who cross-check vendors against the company’s approved seller criteria. If your selected vendor is not currently on the approved list, they will make sure that the company is added for future reference.

From the role description you can probably see that they need a really detailed knowledge of your project’s requirements. It’s best to get the procurement person who will be working on your procurements involved in the project as early as you can. Then they can fully understand what’s required and the kind of services or products that will be best for the project.

4. Vendor Manager

Vendor management is different from contract management, because it’s a broader role. I’ll go into the details of the differences in another article, but for now, just know that if you have a vendor management team, it’s hugely valuable to you as a project manager.

The vendor manager might be part of the procurement team, or there might be a vendor management office – this is a function that large companies who work with lots of vendors might have. Think oil and gas, or construction, where you have many subcontractors or different relationships with a variety of suppliers.

Vendor managers look at the whole relationship with a supplier. They can manage requirements across several projects, and ensure the relationship overall works well for everyone concerned.

5. Project Manager

And finally… the project manager! You have a role to play in project contract management, because you’re key in executing the contract i.e. getting the work done.

Your role is to make sure that the contract deliverables are delivered, and that risk management, scheduling and everything else related to managing the project happens as planned. You are key to working with all the different groups, bringing everyone together at the right time and representing your organisation to the vendor.

You’ll probably be the first to see any potential conflict or defects in what should be delivered, and that gives you a great advantage to be able to keep the contract and the vendor relationship on track.

Whether you have these roles I have mentioned as distinct departments, or whether you have to wear multiple hats when managing your contracts, it’s important to know how vendor relationships are set up on your project. Think about who you can bring in so that your project team includes reliable experts in contract management, as that focus will make sure your supplier engagements run smoothly.

What involvement have you had with contract management? Let us know in the comments below!

It’s time for another instalment of What’s New In the PMBOK Guide®-- Sixth Edition. Following on from my look at the Plan Procurement Management process (which you can read here), we’ve reached the second of the Project Procurement Management Knowledge Area processes: Conduct Procurements.

Here are the headlines: there are quite a few changes, once again focusing I feel on ensuring professional judgement is applied, and making it easier to tailor the process. Overall, we’re seeing a process that is less prescriptive and more flexible, which is, I think, a good thing.

Having said that, fundamentally the old and new processes are the same. You won’t need to radically treat procurement any differently now than you have been doing in the past. There’s a lot of good stuff in the process, and that’s still there.

It’s also worth noting that the guidance is very much to get experts involved in procurement. Unless you are in a tiny company, chances are that there is someone on the project team who has more experience in buying stuff than you do. If you have a procurement team, buying division, vendor management group or whatever they might be called – use them. It’s far better to draw on the expertise of people who know their way round a procurement bid document than have to learn this stuff from scratch yourself, especially when you might not have to use it again for some time.

Of course, if you are taking the PMI exams, you need to know the material in order to get through the test. I feel that knowing isn’t the same as being experienced in doing. So, always, always involve expert buyers where you have them. You’ll get a better deal and your will most likely be better protected in contract terms too.

OK, now those messages are out of the way, let’s dive into the process and see how the new version of the PMBOK Guide®-- Sixth Edition has evolved.

Conduct Procurements Process

This is the second process in the Knowledge Area. We’re in the Executing process group.

Inputs

There are some changes to the inputs for this process. The procurement management plan has dropped out – somewhat surprisingly – but is replaced with the broader “procurement documentation”. This means other procurement-specific document has also been removed, namely make or buy decisions, source selection critiera and the procurement statement of work.

The project management plan is a new input, along with enterprise environmental factors (because we can’t get enough of those!).

Tools and Techniques

This section is the perfect example of where the process is becoming more vague and yet more helpful at the same time.

Data analysis is a new T&T, replacing proposal evaluation techniques, independent estimates and analytical techniques. In fact, proposal analysis is called out as a data analysis tool that you should/could be considering for use on the project. All of these are ways of looking at data analysis, but instead of mandating particular ways of analysing the data, the new version of the guidance lets you pick and choose what would be most useful for you.

Interpersonal and team skills replaces procurement negotiations. This reflects that you may have to do negotiation, but overall you need more than just good negotiating skills to close a deal.

I think this is reflective of the fact that you, as the project manager, might not actually be doing the negotiation yourself in many cases. What you want instead is the interpersonal skills to be able to make sure the discussions happen, conflict is addressed, the right people do the right things and you all get to agreement.

Outputs

There isn’t much change to the outputs for this process.

Resource calendars have been removed. Perhaps it was decided that you didn’t really need to create a resource calendar for your supplier, now that you know who they are.

Organisational process assets are included. It’s almost as if the first edit was: Where have we forgotten to mention enterprise environmental factors and organisational process assets? Let’s go and drop those into all the remaining processes now.

You will get very familiar with these terms and what they mean as you go through the PMBOK Guide®-- Sixth Edition.

In the case of this particular process, the organisational process assets covered here are things that you would possibly need to update as a result of successfully securing the services of your vendor. These could include:

• Your company’s list of suitable, pre-qualified sellers (updated to add the one you just chose)
• Your company’s list of prospective sellers (updated to include the unsuccessful vendors you didn’t choose but who came a close second and may be worth talking to again for another project – or perhaps to remove one that you found was close to liquidation or something similar)
• Your company’s seller database (to record how the process went, your thoughts on the vendor presentations etc. Basically, lessons learned for procurement).

Next time I’ll look at what’s new in the Control Procurements process. There is one major change in this process that you don’t want to miss! I’ll tell you more next time.

What should you include in the cost management plan for your project? If you have a template from your PMO, then it’s best to start there. But if you are designing something from scratch, here are some helpful pointers for the different sections that you should be considering.

Here’s a handy print-out-and-keep guide to what you should be including in project cost management plans. For more details on what each item relates to, check out this article.

What do you think – do you like this kind of graphic? Is it useful or would you prefer more text-based descriptive articles? I’m curious to know what works best for you, so I can make sure I’m writing and creating things that best serve you, so drop a comment below! Thank you!