The Money Files

How much do you really know about that supplier you are thinking of using on your project? They’ve sent you a quote, and you’ve got a nice glossy presentation with photos of their account managers, but what’s it really going to be like?

In this video I share some of the things I’ve found important when starting a relationship with a new third party – in fact, before the relationship even gets going it’s important to ask these questions.

If you prefer to read, there’s an article here on what to check before you sign on the dotted line: What you need to know about your supplier.

If you’re a video kind of person, and you want to hear my personal experience, then click Play on the video below! Let me know in the comments under the video what else you consider when you are assessing what organisations to partner with for project delivery. I’m sure you’ve got some great stories too!

If outsourcing is a commercially viable option for you and you’ve made that leap, you still need to put some effort into making sure that the partnership is a positive experience both for your and your outsourcing partner.

The infographic below shows five focus areas for making sure your outsourcing relationship is a positive as possible.

The 5 areas are:

1. Make sure outsourcing is the right choice
2. Choose your partners carefully
3. Negotiate the right payment terms
4. Manage the relationship
5. Know when to break it off.

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?

Results of a new global study reveal the concerns, effectiveness and best practices in risk management by organisations that outsource projects. Of the 95 percent of organisations that buy, provide or both buy and provide outsourced services and functions, fewer than half are able to effectively manage risk of outsourced projects.  That’s a pretty poor show, and risk mitigation activities – while they have an associate cost – generally mean less expenditure when things go wrong.  Because you stop things from going wrong in the first place.  Are you following?  I hope so.

Outsourcing in itself is on the rise, as another opportunity to cut costs.  More and more project managers are getting involved with projects that deliver outsourced services, like moving payroll or the invoice processing function to companies that do those activities as their core business.

It’s not surprising that outsourcing projects are managed poorly and don’t reap the expected financial benefits: this study shows that only one-third of organisations always clearly articulate and define financial goals to outsourcing partners.  How are your business partners supposed to know what their tolerance boundaries are if you don’t tell them?

Project managers could put a greater focus on ensuring vendor performance and contract outcomes are clear and defined as part of the project initiation phase.  While you are at it, add risk management to the list – that seems to be a key differentiator among outsourcing partners.

"The ubiquity of project outsourcing creates opportunities for, and demands on, organisations to better develop and refine their outsourcing competencies," said J. LeRoy Ward, PMP, PgMP, Executive Vice President, Product Strategy and Management, ESI International. "The results of ESI's global survey indicate areas for greater performance, productivity and competitive advantages through better risk management."

Here are some other figures from the survey:

• 63% of respondents said that vendor delays were the biggest risk to outsourcing projects.
• 61% said contract scope was the biggest risk.
• 76% of companies go to the effort to evaluate the vendor’s technical ability and past performance – which means that 24% don’t bother (what are they evaluating these companies on then?).
• 65% of companies issue comprehensive, clearly articulated requests for proposals/requests for quotes/tenders that enable standardised responses for comparable analysis – which means 35% don’t, and have to muddle through answers that are difficult to compare.
• Only 50% of respondents thought that their outsourcing team members have appropriate project management experience and skills.
• 75% of organisations do not always clearly define requirements of outsourced projects, which serve as the foundation of successful project management.  No wonder these projects are unsuccessful – the outsourcing people have no idea what is expected of them!

Outsourcing can save money, but you have to do it right – and it seems from these figures that large numbers of companies are most definitely not doing it right.  If you don’t set clear requirements, choose the right partners and monitor the ongoing performance of the relationship then you won’t get out of it what you wanted.  Come to think of it, do you actually know what you want?  Get that bit clear before you even start thinking about going out to tender.