The Money Files

I’ve been managing projects for a long time, and I’ve had budget responsibility (at least for the tracking, if not the actual spending) since virtually the beginning. In this short video I summarise 3 things I wish I had known about project budgeting. These are the hard-won tips that I’m sharing so you don’t have to make the same mistakes or wonder the same things!

Read more here: http://www.projectmanagement.com/blog/The-Money-Files/7491/

Wondering how to manage your first project budget? This infographic I created has some simple tips.

You can read more about some of the ideas on this infographic in this article.

Earlier this month I wrote about the different roles involved in contract management. There are two key roles that play a part in managing project contracts: vendor management and contract management.

They sound similar, so what is the difference?

Let’s look at the key differences between these two areas, and then it’s clearer to see why project managers need to rely on both during contract negotiations and the ongoing relationships with suppliers.

Vendor managers work with suppliers with a focus on the business’ relationship with them over time. They are looking to get the best outcomes for the organisation out of the relationship with the supplier.

Contract managers focus on individual contracts. They understand the requirements, details and can work specifically with the supplier and the project team on the needs of a particular engagement.

In other words, contract managers take a more focused view of a relationship with a supplier, looking specifically at the needs of one contract (although in reality they are probably managing more than one at a time). Vendor managers look at the holistic relationship with the supplier, across multiple projects, multiple contracts and probably have different contact points within the supplier organisation.

Contract Management Roles

The differences become even clearer when you start to look at the different job functions within those two groups.

Contract managers look at:

• Individual contracts, starting at the moment the scope of a project is clear, or there’s the acknowledgement that some kind of resource needs to be procured.
• Terms and conditions relating to that specific procurement, including working with the rest of the wider project team to establish the best type of contract (fixed price etc) for the specific deal.
• Risk management related to this contract.
• How to get the best value out of this contract.

The contract management personnel in your business will be looking at the contract lifecycle, ensuring that the project’s needs are met from start to end, and that the contract wraps up neatly at the end when everything is complete on the project.

A key skill for contract managers is negotiation. They’ll be working on setting up the contracts and that can involve a lot of research, influencing and negotiating to secure an outcome that everyone is happy with. The relationship is formed at an early stage, and a positive experience of the negotiating and requirements stage is going to set up the culture of the relationship going forward. Skilled contract managers will know how to get the best deal while still making it a win win for everyone, and starting the contract off on the right foot.

Vendor Management Roles

Vendor managers take a longer-term, strategic look at contracts and the organisation’s relationship with suppliers over time. They look at:

• The business strategy for vendors and securing resources, such as managing the list of preferred suppliers. By focusing on specific, strategic vendors, your vendor management team could negotiate a better deal, such as using the same vendor to do the build and support of a new software tool.
• Ensuring relationships with vendors stay positive, and improve over time through good communication and support from both sides.
• Master services agreements. These are overarching, longer term contracts that set out the generic terms and conditions of working together. Then each individual specific work engagement will have another contract, but this can be shorter and easier to set up, as it doesn’t have to have all the terms and conditions in each time.
• Vendor performance metrics. These could vary depending on the vendor and the type of resource or service they offer you. You can see the value of having metrics measured across all the work the supplier is doing for you.
• Risk management at a vendor level – this could include regular checks on financial performance, for example, to identify vendors who may be at risk of letting you down. Knowing whether your vendors are under financial pressure can help you put mitigation plans in place. The recent issues with Carillion in the UK are an example of where a failing supplier has caused issues for projects.
• How to get the best value out of the relationship with the vendor overall, for example, by placing several contracts with a preferred supplier and benefitting from economies of scale.

Where These Teams Are Based

Every organisation is different, so I can’t specifically tell you where your vendor management or contract management teams might be based. But generally, if your organisation is typical, this is where you will find the teams.

Contract management roles (for you, as the buyer) are likely to be in the procurement division, or with the legal team. If you are in a vendor organisation, as a contractor, for example, then your contract managers may sit with the sales team, or in the legal team.

Vendor management experts could sit with procurement, or they may be in a different area of the business. In some organisations, you will find them with the strategic project office, supporting the delivery of project contracts across the business. In large organisations with plenty of supplier relationships, they might be in a separate, dedicated business unit like a supplier management team.

What does it look like in your organisation? 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), 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/