The Money Files

Inspired by this blog post [link removed] about fun ways of doing day to day things, several bloggers have come together to run a competition to capture the best ideas for having more fun in project management. 

They need your ideas to for having more fun in project management. There are prizes on offer including

1. A copy of the Lazy Project Manager from Peter Taylor, @thelazypm
2. A free project management distance learnng course from @paralleprojecttraining
3. €10 from Jacques Dunselman, @pmflying

Submit your ideas here. [link removed]  The best idea will be judged in the best traditions of TV dance competition, as they say, by:

• The Public Vote (50%)
• Jury of @paralleprojecttraining, @pmflying and @thelazypm

The closing date is the end of December 2010 and the prizes will be awarded early in the new year.  Why is this relevant to The Money Files?  Well, it's always nice to have the opportunity for free things!

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Want a new job?  The growth areas for new jobs are outsourcing, business transformation programmes, shared services and offshoring, according to Wellingtone Project Management.

Vince Hines from Wellingtone Project Management summarises the state of the PM recruitment world every so often, and his latest update shows that people are still hiring staff for project work.  I’m not at all surprised by the outsourcing and offshoring comments – I spoke about the impact of the economic downturn and the increase we’d see in these types of projects at the APM conference in 2008.

Many large organizations kicked off business transformation efforts as a result of the recession, and they are now part way through their programmes.  If your organization is doing this, and you have the chance to get involved, Hines recommends that this would be a “good career move”.

He says:

Cost reduction and efficiency improvements are, perhaps not surprisingly, strong areas for project growth... Equally other areas of particular interest within the project management industry include:

• Recognising need to improve project selection & Portfolio Management
• Demand for improved resource management
• Drive to establishing / developing PMO capability to leverage benefits

However, Hines reports that confidence overall is reducing.  August was a busy month, but things are tailing off now as we get closer to the end of the year.  The total number of employers who have declared themselves out of the running for new hires through recruitment freezes has risen from 30% to 37%.  Hines thinks that we’ll see this level of cautiousness for quite some time.

So, in a climate where we’re seeing more people put the brakes on recruiting at all, how can you make yourself as hire-able as possible?  Companies have realised (finally!) that project selection is a key area in getting return on investment for their projects.  Pick the right projects, and you’ll get the benefits.  Pick any old project, and your company could spend a lot of money doing something that won’t really make that much difference.  Project managers and PMO staff who understand the business case process, can identify benefits and compare projects will be in demand. 

Hines also believes that companies want to manage their people more effectively.  Project managers who can people-manage as well as project manage will also be sought after.  Resource leveling and resource forecasting, combined with predicting how projects in the pipeline will change the demand for project and other staff in the future, are also key skills to highlight on your application.

Unsurprisingly, all this boils down to is that project managers who have kept up to date with the way in which the world has changed as a result of their not being lots of money to slosh around on failing projects, and who are highly skilled, personable, and able to help their businesses achieve the corporate objectives, will be targeted by recruiters.  If that sounds like you, good luck with your job hunting – there’s a job out there for you.  If it doesn’t sound like you, what are you going to do to improve your chances?

In this video Keith Richards explains Agile project management and DSDM. He talks about how Agile helps organisations save money, and he shares a random fact about Arctic Terns.

I looked at the first two steps of the procurement lifecycle: requirements and vendor selection, as explained by by Alex Sandercock of Turnstone at a recent womenintechnology event.

Today I’ll be looking at Step 3: Negotiating and contract.

A typical IT contract has 50-100 configurable clauses. That’s a lot to take in, especially if you aren’t used to dealing with procurement issues.  In some companies, procurement and managing suppliers is part of the job, but in others you may have a team of buyers or procurement experts to help. Either way, as you are close to the project’s requirements it is likely that you’ll get involved in drafting the contract.  Of those configurable clauses, you should consider negotiating about 20-50%.  

Of course, the exact amount of negotiation you want to do when the vendor presents you with the contract is entirely dependent on what the contract says.  It could be completely acceptable to you.  But the important thing to remember is that you don’t have to accept the contract at face value.  Don’t just focus on negotiating the costs and the legal aspects of the contract.  You can negotiate on everything.  After all, you are representing the company’s best interests.  What is right for the vendor is not necessarily right for your company.

These discussions with the vendor should include things around warranties, as you would hope that the contract would specify that software would be delivered substantially error free.  If that clause isn’t in there, add it.  Make sure you understand the warranties and how to invoke them.

Service credits are another thing to look out for.  What happens if the service is not up to scratch?  Say you buy a piece of cloud technology for your project and it is unavailable more often than not?  Your requirements would have specified up time, and hopefully that is what you get.  But if it isn’t, you need to ensure that you have some kind of ‘payback’. Service credits are payment for when service levels are not reached. They do not need to be substantial amounts of money.  Often service credits have to be authorised by the Finance Director, and that provides a level of visibility about the poor service that is being offered.  That alone can be enough to improve the service for the following month.

The contract should include information on liabilities as well. Alex’s recommendation was that the liability should be unlimited for personal injury or death and limited for direct loss.  

There will also probably be a standard clause on force majeure.  Read this one carefully – does it include an exclusion for strike action? With all the ongoing industrial disputes in the UK Alex recommended that this clause be crossed out.  Just draw a line through it and see what the vendor says.

Finally, consider what happens when you want to terminate the contract.  As with the rest of your project, where you are continually planning for closedown, think about how you are going to get out of this contract when the time comes.  What do you want from them on exit?  Specify the documents they will provide for you, service reports, any training you’ll need for internal or external staff, any transition support arrangements and so on.

The final 2 steps in the procurement lifecycle are:

• Service delivery and performance monitoring
• Renewal, retendering or exit.

These happen when the project has delivered the software and the contract and project deliverables have been handed over the operational team who are going to use them going forward.  The project structure no longer exists at the point that these lifecycle stages take place.  However, think about these when you hand over the project into the live environment, as all the relevant contract information and the history of the negotiations should be passed over to the operational team.
 

Last week I looked at four things that go wrong with negotiations with vendors when it comes to buying things for projects.  Today I want to look at the procurement lifecycle, as presented by Alex Sandercock of Turnstone at a recent womenintechnology event.

There are five steps in the procurement lifecycle:

1. Requirements
2. Vendor selection
3. Negotiation and contract
4. Service delivery and performance monitoring
5. Renewal, retendering or exit.

These aren’t all relevant to project managers, so let’s focus on the ones where you could have some input.  Today I’ll be looking briefly at requirements and then vendor selection, and next time I’ll cover Step 3: Negotiating and contract.

Requirements

Before you start building something you need to know what it is that you have to deliver, and that means developing a proper requirements specification.  One important thing to consider here is are you buying the intellectual property rights to custom-built software or changes to package software.  Also consider your requirements for delivery dates.  Alex shared a story about a piece of hardware that was specified, configured and delivered, but was unable to get through the door to the data centre where it was to be housed.  The team had forgotten to specify the requirement that it must be able to fit through the door.

You may have business analysts who prepare requirements documentation and a development team who prepare technical specifications documents.  These all input into the next step, which is choosing which vendor can work with you to deliver the best possible outcome to meet your requirements.

Vendor selection

Once you know what the business requirements are, you can start contacting suppliers to find out if they are able to provide you with suitable services.  This stage of the procurement lifecycle could simply involve contacting the company you normally use and asking them if they want to take on the job.  This is particularly the case if your company has preferred suppliers for certain things.  Other options are:

• Sending out a Request for Information (RFI, also called PQQ: pre-qualification questionnaire). This is used when you don’t know exactly what the solution is, and you want more information on available options to meet your needs.  This could go to one or multiple suppliers.
• Sending out a Request for Quotation (RFQ), Request for Proposal (RFP) or an Invitation to Tender (ITT).  These all broadly have the same outcome, which is getting the vendor to send you their proposal for meeting your needs, with costs.  Again, these could go to one or multiple suppliers.

Before sending out any documentation, be sure to send a confidentiality agreement.  The whole tendering process will involve sharing potentially business confidential information about your project, and you want to make sure that the vendors don’t share this with anyone else.

Once you have decided to send out a RFP, phrase it in such a way to make the questions and answers neatly form bits of the contract.  This means you won’t be reliant on the vendor’s standard contract, which will include clauses heavily biased in their favour.  We’ll look more at contracts next time.

If you can, keep the selection criteria to yourself.  In public sector tendering for projects in the UK you have to declare the selection criteria, but as far as possible Alex recommends not sharing these with the vendors if possible.  Why give them extra help?  

Vendors will ask questions during the tendering process, and to make it fair all the companies involved should get the same information.  That means that if one vendor asks a question, all vendors get to hear the same answer.  Alex’s recommendation was to pick a date for the receipt of all questions.  Then collate the questions and respond to them.  Only handle questions in writing.  This makes sure that everyone receives exactly the same information – email is a suitable medium for this.

Finally, if you are the person charged with doing this negotiation, make sure that the vendors only speak to you!  They might try to call your project sponsor, or someone else on the project team, or someone higher up the organisation.  Warn the project team and the relevant stakeholders that you are handling the tendering process and to make sure that they don’t inadvertently give one supplier an unfair advantage by providing additional information.

Next time I’ll be looking at Step 3 in the procurement lifecycle: Negotiating and contract.