The Money Files

When you are preparing to select a new supplier for your project you want to make sure that they are a good fit for you and your organisation. As well as the cost management aspects of getting a quote and setting up a procurement process to select a vendor, there are some other things to consider when you are making your final choice. These should all be part of your selection criteria – don’t forget that as well as technical requirements for your project you’re also ‘interviewing’ them to gain some confidence that they are actually going to work well with your existing project team.

So what do you need to know about your project supplier? Here are some things to consider.

Solvency

Solvency is important because you want to work with a business that is credible and stable. It’s not fun to be in a situation where you are halfway through a project and you find out that your supplier is on the verge of bankruptcy. Ask your finance or legal team to carry out their standard background checks on the businesses that you are considering working with (they should have access to the information to do this, although they might outsource the checks to a third party).

You’ll get back information about how the company has performed financially and whether or not it is considered a going concern. If you are at all bothered by the results, talk to the supplier. Some things could be explained away but if not, this simple solvency check will help you avoid a lot of problems in the future.

Size of business

How big is the company? It’s a very different experience working with a major multi-national to working with a small design studio that could essentially be one person working from their kitchen. That’s not to say that you shouldn’t engage small and independent firms, but be aware if you are doing so.

Taking on a big contract is also a risk for a small firm. If you decide not to continue to use them (say, after the project has finished) then they will lose a large deal and could potentially struggle. If you do need them for some kind of ongoing support then make this clear.

With a big company you could find the opposite: your project is so small in the grand scheme of things that you don’t get the customer service you expect because they don’t prioritise your problems.

Estimation techniques

Find out how they have prepared their estimates. There should be a list of assumptions somewhere in the proposal document. These should explicitly say if the proposal includes taxes and expenses. Some vendors will also expect per diems for their staff. This is a flat rate to cover the cost of working away from home or on a client site, and is supposed to be used to cover things like lunches, laundry, phone calls and so on. It’s paid directly to the staff member so it is different from expenses and often it’s explicitly excluded from a quoted price.

How do I know? I’ve been caught out with those before.

Working hours

The working hours are particularly relevant if you are working with international partners. They will have different national holidays to you so it’s worth finding out when they are. You can also write into your contract that you expect them to be available on all workings days in your country. Personally I think this is a bit mean and it’s nicer to be able to work around their availability rather than make them skip their local holidays, although I have seen it done.

You might also want to check what hours they are going to be available. While no one would expect the team in New Zealand to stay up all night in case someone calls, it is worth discussing what would happen if there was an urgent problem during your working hours and the overseas office was closed.

Staffing and experience

Talk to them about who is going to be allocated to your project. You’ll want confidence that the consultants they put forward have the relevant experience to be able to complete the work. Everyone, of course, needs to start somewhere and you may find that you also get less experienced contractors allocated to your account. That’s fine, as long as you know they are being adequately supported by more experienced colleagues. You’re paying for someone to do the job and provide expertise in a field that your own company doesn’t have. You’re not paying for someone to learn on the job.

While you are at it, get references of where they have delivered similar projects for other clients. They should be able to evidence the fact that they are experts in this area because that is what you are engaging them for. If they haven’t got a lot of experience in your sector but you still want to use them, talk to them about you can help them build their knowledge quickly.

What else do you consider when selecting and securing a third party to work on your projects? Let us know in the comments.

I was really sorry to read in PMI Today that Wilhelm Kross had passed away. He was kind enough to let me interview him only last year and I was impressed by the depth of his knowledge. His desire to improve things in project management came through really strongly and he was an active member of PMI as well.

He was a well-known and well-respected figure in project management and I know he'll be deeply missed.

You can read my interviews about risk management with him here and here.

Projects often require out of hours work. That means someone staying late or working over the weekend (or in other non-normal working time) to complete project tasks. It happens in many industries: in IT for example you can’t always make changes to systems during working hours as it stops the production system, so someone has to make those changes at night when the office is closed – and if they can’t be automated then it really does mean someone staying up to press a button.

I haven’t come across many project team members who are willing to work unsociable hours, unless they are getting paid a lot to do so. Therefore you have to handle the requirement for out of hours work sensitively as it does normally mean someone giving up their social and family time to do project work. Here are some guidelines for managing project tasks that have to happen out of hours.

Is it planned?

First, consider if the project task is planned. That could include:

• Software installations or upgrades
• Building work
• Hardware upgrades like PC replacements or other kit
• Networking and telephony project work

I’m sure you can think of other things relevant to your industries and projects that involve out of hours tasks.

If out of hours work can be planned, then it can be managed.

Provide lots of notice. The more notice people have, the easier it is for them to rearrange their other activities and tasks around this. No one likes to be told that they have to work out of hours at short notice (more on this later). Keep reminding them that the out of hours work is coming up and checking that it is still on their radar.

Arrange who is required. When work is out of hours it can be hard to call in a colleague if you have forgotten something. You can’t just dial up your mate at 3am and ask them to do something. So make sure you have lined up the right resources from the outset. This could involve you or a project team leader, the resource in question, technical or IT staff and someone from the vendor.

Check access. If you are going to site, make sure they remember you are coming and haven’t locked up. If you need access to a secure area, check that someone is available to let you in.

Check the facilities. Do they need to take their own food with them? The canteen on site closing at six isn’t going to be a problem for the normal staff, but if your project team goes on shift then and is planning to work through the night, make sure they’ve got the facilities to at least make themselves a cup of tea. If necessary, turn up yourself with cake – I have done this and it was really appreciated, even though I contributed very little to the actual project tasks in hand.

Arrange overtime payments. Let the individuals know how they will be compensated for working out of hours so there are no surprises. This could be overtime at time and a half or double time, or time off in lieu.

Is it an emergency?

Sometimes project work has to happen as a matter of urgency. Sometimes stuff happens that creates problems that have to be fixed immediately (like a technical failure in the middle of a training course) and that might mean calling someone in when they are supposed to be on leave or asking someone on a Friday afternoon to stay late and work all weekend. Because most project disasters happen on a Friday at 4pm, don’t they?

This type of out of hours work should be managed through your project issue management process.

Organise channels of communication. Make sure that the individuals know who to talk to and who they need to report to when the problem is fixed.

Appoint an issue owner. If you aren’t going to be managing this issue through to resolution, make sure you appoint someone else. Let everyone know who is the main point of contact for decisions, whether that is you or a colleague.

Deal with the problem. Do the work. Get the project back on track. Then fill in the issue log with the resolution and do any other project reporting that you have to and update your project plan.

Recognise the effort. Again, if you have had staff work out of hours in order to resolve a problem, look at how this can be rewarded and recognised. If you can, pay overtime for the hours worked. If you can’t, time off in lieu is normally at your discretion. Say thank you – they got you out of a hole.

Out of hours work is part of managing many projects and you can keep your team on side while you ask them to work unsociable hours for practically nothing. Keep cheerful, keep them cheerful and explain the benefits of the project over and over again. And above all, be grateful. Very few people have ‘must work overtime for project manager’ in their contract so recognise their commitment and thank them for their contribution to a successful project.

A bridge is a way of displaying financial information in visual format. You might also know it is as a waterfall chart, or ‘the one with the flying bricks that looks like something from Mario’. It’s just a way of showing how an initial position has been affected by subsequent changes, so you can see why that would be useful for a company’s financial position. It can show changes that are positive and changes that are negative, and ends up with the new cumulative position as you can see in this diagram.

This picture shows a completely made up scenario, but I think it illustrates a point. In September, the starting position for this department was $75,000. This could represent value, profit or anything else. Then there were some things that changed. These are illustrated by the small floating boxes: the first change that happened was a positive improvement of $16,000. Then there were some other criteria, inputs and changes that also increased the situation positively.

Now we come to the black boxes. These on my chart represent money out, so let’s say this department spent $2,000 on some new software licences and $1,000 on a big party for everyone. This has had an impact on the net position so if my maths is right, the closing position on the graph, the situation in October, is now $100,000.

Great. But how is this relevant to projects?

Typically this type of bridge is used to represent financial information and you have financial information on your project, don’t you? I think it is a great way to present the impact of changes on your project budget to stakeholders. It’s useful because it’s a good visual representation of how you got from there to here and where the money went.

So you could use it to show the financial changes on your project, but there is nothing to stop you using the same layout to display other sorts of changes. Take this version, for example.

This shows you the situation in September in terms of project days. There are 150 days allocated to this project. Then there are a number of changes put forward. The green boxes show what would happen if you add those changes – the number of days spent on the project goes up (it’s not rocket science really). There are also some changes that save you time on the project. Let’s say that the big one, the 20 day time saving, is because the project sponsor has decided that the overseas office isn’t going to be included in this initiative after all, so there is no need to train those team members and you can save a whole lot of time. Another little change knocks 3 days off your project total.

If all these changes are approved, your project will now take 152 days.

When you are looking at individual changes at the change board, some stakeholders might find it hard to keep approving changes that add time. Two changes that add 10 days each? That’s huge. But when they see all the changes on the table that month laid out like this they can see that approving them all only adds 2 days to the project overall. That’s a very different story.

Of course, you might not want all those changes approved – there might be some stupid suggestions in there or functionality that would be better pushed off to a Phase 2. But using this bridge diagram gives you a new way to present the same data to stakeholders and help them decide on the impact overall.