The Money Files

Project managers have to get involved in the procurement process, and recently I went along to a womenintechnology event to hear Alex Sandercock from Turnstone speak about improving your skills in procurement.

50% of IT budgets are now spent with third party vendors, and project managers are often involved in setting up these arrangements.  The balance in the negotiations is uneven, though.  The vendor’s sales team just does selling: that’s what they are trained for, and that’s what they spent their time doing.  Project managers on the other hand – buyers of the services – don’t get any training in buying, and we don’t do it full time.  We’re at a disadvantage.

Here are Alex’s top procurement disasters:

• Assuming that negotiation can finish after the work actually starts
• Inadequate statement of work or requirements specification
• Acceptance of undocumented assurances from suppliers
• Focusing on speed instead of delivery and rushing the process

Let’s look at each of those.

Assuming that negotiation can finish after the work actually starts

Hands up, has this happened to you?  It’s certainly happened to me.  Work starts without a purchase order in place or a full understanding of the costs.  Then you try to query something with the vendor who comes back and says it is too late to be negotiating these small points and the time for discussion was before you said yes to starting the work.  Apart from cancelling the work completely – and you might find it difficult to wriggle out of the contract even then – there isn’t a lot you can do.

The lesson here is to make sure that you have a full understanding of what is going to be done and what it is going to cost.  Sign a contract only when you believe the negotiations are done.  Never sign a contract that isn’t completely negotiated!  And only issue purchase orders once you are clear what it is that the vendor will be doing.  

Negotiating once work starts puts you in a much weaker position, so if this looks likely to happen on your project, talk to your project sponsor to see how they can help speed things up.

Inadequate statement of work or requirements specification

Surprised?  I wasn’t, and I’m sure you’re not.  Don’t start work without knowing what it is that you are going to get.  Project requirements are important and having them in as much detail as possible ensures the best chance of actually getting what you want at the end of it.  Ideally, build in review points with the vendor to check that they have interpreted the requirements accurately.  And build in review points with the customer, so you can be sure that the project is still on track from their perspective too.

It’s not enough to only have high level requirements when you are committing a vendor to carry out work on the project.  You both need to know what it is that is being delivered.

Acceptance of undocumented assurances from suppliers

“We can do that,” the vendor project manager says to you as you get coffee together before a meeting.  “Leave it with me.”  That’s not good enough.  You pay these people to deliver what your project needs, and verbal assurances are not enough.  

Project team members change, both on your side and on the vendor’s side.  What happens if that person leaves?  What if they aren’t senior enough to be making that kind of commitment?  What if they think they are and then have to pretend they never said anything when they find out that actually their software can’t do whatever it is they promised?

Get it in writing. Always.

Focusing on speed instead of delivery and rushing the process

Speed to delivery is always important in projects.  We want to know when things will be done so we can tick off milestones on our project plans.  But sometimes quick is not good.  

Don’t rush the procurement process.  There’s pressure to get things done quickly, but talk to your project sponsor about the importance of getting these negotiations right.  Don’t be tempted to agree before you have had the opportunity to properly investigate all the contract details and you are happy with the outcome.

Next time I’ll be looking at the procurement lifecycle.
 

Pedro Serrador presented yesterday at PMI Global Congress North America on how to become a program manager.  There are many career advantages to program management – not least that program managers tend to earn more than project managers.  So if you want to move into program management, here are Pedro’s tips.

“A program manager adds more value than just project managers,” said Pedro.  He said there are eight principles to being a successful program manager, and shared these from Vincent J. Bilardo, Jr.:

• Establish a clear, compelling vision
• Secure sustained support from the top
• Exercise strong management and leadership
• Facilitate open communication
• Develop a strong organisation
• Manage risk
• Implement effective integration
• Create your own success

Moving to a program manager role requires you to deliver the goods, he said.  There might also be a case for upgrading your education, and learning from others.  Pedro also said that prospective program managers should put themselves in a position where they can lead and mentor others, and especially learn to delegate appropriately.  “Show that you are a leader, not just one of ten project managers in the group,” he added.  Look for the opportunities that arrive and take them.  Finally, act the role, he explained.  “If you want to become a program manager, act like a program manager. Start to structure things like programs.”  If you act like a program manager, your manager will see that you are capable of operating at that level.

“Often it is beneficial to move around,” he said, when he spoke about how to land that new program management job.  That could mean moving to a new initiative or to a new company.  He explained that outside CEO’s earn an average of 13% more than internal candidates.  However, they fail 34% of the time, compared with only 24% of internal candidates, so there is something to be said for sticking with what you know.  “Moving is riskier,” Pedro said.

Pedro had some tips for what to do when you get that first program, or you choose to structure your existing work as a program (even if you don’t yet have the title):

• Structure sub-projects properly
• Make your project managers run things how you would run them
• Don’t micro-manage
• Get strong business and executive level focus

Pedro also said that senior managers spend more time planning their own time.  “You help the projects managers get on the right track and then go on to something else,” he said.  Factor that into your daily schedule and take the time to plan your day (and your schedule in general).  It might seem like it takes a long time but it will be effective.

“A big part of your role is to let the stakeholders know the importance of your program and you need to be able to push to have obstacles removed,” he said.  His final piece of advice was to have a 30 second status summary in meetings in case the executive you are presenting to gets called away.  “Know to stop at yes,” he added.

“It was two years of effort and two years of struggle,” said Steve Wake, describing the work to bring the Earned Value Management certification to fruition yesterday.  Wake, the chief examiner for the EVM qualification, was speaking at Project Challenge.

“The best thing that a project manager can do for us is this – it’s status,” he said.  “It’s where we are and what we’ve done.  To ask a project manager to do more than that is quite a lot.”

Earned Value does ask us to do more than that.  Wake explained it as “a disciplined framework for managing work.”  His definition is:

“A project control procedure based on a structured approach to planning, cost collection and performance management. It facilitates the integration of project scope, time and cost objectives and the establishment of a baseline plan for performance measurement.”

Got it?

If not, never fear.  There is a new exam you can take to prove you understand the concepts of EVM.  “It keeps you out of harms way,” Wake said of the new qualification.  “You’ll understand the language and vernacular and when asked to do something you’ll have a grasp of the process.”  If that sounds basic, it’s because it is.  There is no Practitioner EVM qualification yet, but there is one in the works.

The Foundation exam, like the others from the APMG stable, is a multiple choice, entry level paper.  It’s 40 questions, 30 of which are knowing/comprehending questions and 10 of which are applying/analysing questions.  Questions are based on the EVM – APM Guidelines.  Candidates have one hour to sit the closed book exam and the pass mark is 65% - or 75% if you want to be an assessor.  Wake explained that when the pilot group took the exam all but one passed.  This has given them confidence that they have set the difficulty levels appropriately. 

There is a course that accompanies the exam, although it is not compulsory and you can enter yourself directly for the qualification itself.  The course objectives are:

• Define EV concepts
• Select and deploy EV formulae
• Describe EV processes
• Explain different levels of system review
• And of course, take and pass the exam.

“We have a problem with Earned Value in the UK,” Wake said.  “We all use it, those who say they do, but there’s no way to put a stamp on it.”  He hopes that this qualification is the stamp, and that it will help avoid differing understandings and applications of EV.  However, he was pragmatic about how much a qualification can really increase the abilities of project managers.  “If you are confident that the thing is working correctly it frees you from chasing data,” he said.  “Exams are good because they determine a standard and also because with this method they give you the chance to manage.  With a good method you make good people very good.  It won’t make bad people good, though.”

The EV qualification has been put together by APM’s Earned Value SIG, and they are now working on a paper to discussed EV and PRINCE2 alignment.  “They are a good overlay to each other,” Wake explained.  “There’s limited detail in PRINCE2 about how you measure progress.”  This paper will be presented to the Best Practice User Group mid-November and made available after that – watch this space for more on how the two fit together. 

Can software really help save money on projects?  Genius Inside's blog claims that it can improve productivity by a quarter.  That's an impressive claim, and I wanted to hear if that was really the case.  I spoke to Neil Stolovitsy, Senior Solution Specialist, at the company.

Neil, you say on your blog that project management software can improve lost productivity by 25%. How is that?

We arrived at this percentage from various conversations internally as well as feedback from our clients. We also have an ROI calculator which helps us demonstrate the value of project management software to prospects and clients.

The Golden Gate Bridge project that you talk about was brought in under budget and on time. Would software really have improved the outcome that much?

It is important to look at the project within its historical context where no automation of any kind was used. I believe the ability to automate many of the project management (PM) processes employed and the significant increased visibility provided by today's PM software reporting tools would have positively impacted the bottom line and improved the efficiency of the work achieved. So although the project was on time and under budget by the acceptable standards of the year 1916, its success was measured based on the available tools of the time. However, the participants could have achieved even greater success using 21st technology.

How do you feel project management software like Genius can help us save costs on projects?

Most project cost losses result from the inefficient use of time and lack of visibility of project progress and potentially disruptive issues. Genius Project provides a single view that can be accessed anywhere allowing the efficient capture of project details, the elimination of manual processes, and 360 degree visibility into project progress and potential bottlenecks. The Genius Project solution therefore ensures lean project management processes are in place at the start of a project, helps eliminate wasteful activities and allows for project leaders to quickly respond to potential problems that may lead to increased costs in projects.

What are your top tips for cutting costs on projects without compromising quality?

There are several best practices I’d recommend but the most important is to have a solid project governance and business process strategy in place at the outset. Project governance will ensure that project teams follow a proven path to success and will increase the productivity of team members on their assignments while maintaining the quality of the work. Project governance also allows for the development of repeatable processes that will save time and money for future projects. You also want to have a solid business process strategy that has been approved and vetted by all stakeholders at every point within the life cycle of the project. This ensures no stone that can impact the project timeline, budget and ultimate success and quality of the project is left unturned.

Thanks, Neil!

More about my interviewee:

Neil Stolovitsky has 10 years of IT experience with end-user, consulting, and vendor organizations, along with extensive expertise in business development, software selection, and channel strategies. Neil is a Senior Solution Specialist with Genius Inside and can be reached at [email protected]