Project Manager’s Role in Sub Contractor or Vendor Management
Role of Project Manager at the start of each phase: Sub-contracted work and the delivery of specific components often relate to specific phases of the project. At the start of each phase, check the relevant components and contracts are in place and will meet your impending needs.
The detailed planning for the phase may be impacted by the specific choices you have made. Ensure that the plan reflects the final decisions about purchased components, sub-contractors, and contracts.
External sub-contractors need to be mobilized in much the same way as the internal project staff:
- Make sure they are lined up to arrive as required
- Provide appropriate briefings and induction
- Make sure they feel part of the team and share your enthusiasm for success.
Where external components are being delivered, make sure your internal resources are prepared to receive them in a timely manner.
During the project: During the project, the team needs to monitor the compliance of vendors and sub-contractors. They must ensure the goods or services supplied are acceptable. This needs to feed into the controls in the procurement process. Where sub-contracted project personnel are involved, conduct a regular review of performance and compliance. With supplied items, conduct the appropriate degree of testing and check that they meet the agreed specifications.
Changes in the project’s needs are inevitable. The Project Manager will often need to negotiate changes when the organization requires new or changed deliverables from the vendor. This may be the situation the vendor has been hoping for. They might make up for a low initial bid price by charging large amounts for changes to the specified deliverables at a time when you have little alternative but to agree. Hopefully, you will have anticipated this and agreed appropriate terms and charges in the original contract.
Throughout the project, you should maintain a good working relationship with your suppliers and sub-contractors. Your success will depend on their continuing co-operation. A vendor or sub-contractor will expect to be paid in accordance with the agreement. Ensure that they are paid promptly, provided they have performed in accordance with the agreement.
In almost all relationships, there will be disputes & wrangles. The Project Manager should have developed a good relationship with the management of major suppliers so that problems can be settled rapidly without becoming contractual disputes. There is a natural tension between you, the customer, wishing to get the most benefit from the deal and the supplier who will wish to maximize profits. Normally you can agree a reasonable compromise before calling the lawyers.
Some relationships deteriorate into a “cash-back” mentality. The parties focus on faults and contractual compensation payments instead of the well-being of the business solution. Ideally, all parties should make the success of the solution their top priority.
If the dispute does need to be escalated, you would normally look to your senior management raising the issue with the senior management of the vendor. Most vendors will have an escalation process – try to accelerate your priority in it. Only as a last resort should you threaten a legal dispute. It usually costs far more than it is worth, can cause huge delays, may lead to the withdrawal of key elements of your solution, and may lead to sour relationships during subsequent operation and enhancements of the system.
There may sometimes be a problem identifying who is to blame for a problem. Where several parties and components are involved, it is common to find each vendor points the blame at the others.
At the end of a phase: The project’s quality management processes should ensure that sub-contracted work and deliverables meet the agreed standards. These controls should be tied into the contractual payment terms.
The contract should have defined the procedures and terms for any remedial work that is required in the event of non-compliance.
Provided the deliverables are accepted, ensure the vendor is paid promptly, and, where appropriate, thanked for their contribution.
At the end of the project: At the end of the project, you need to finalize the relationship with your sub-contractors:
- Inform the supplier about the people who will represent your organization once the project team is demobilized – e.g. the operational management, support, and technical contacts.
- Make sure all final deliverables have been completed acceptably.
- Make sure any on-going support, maintenance and warranties are in place.
- Make any final payments.
- Communicate that the project has finished.
In many cases, you might have completed the project and started live operations but still have a list of minor problems or concerns that need to be addressed. You might agree to retain some of the final payment pending full satisfaction.
You may agree to provide customer references for a vendor or sub-contractor. Many suppliers will wish to publicize their success, publicly naming your organization and describing your project. They might wish to publish quotes from named individuals. They might seek permission for you to be contacted if other prospective customers want to speak to previous clients. In general, it is useful to maintain good mutual relationships with your suppliers, but be sure anything you agree is in line with your organization’s policies. You do not have to co-operate if you feel it is inappropriate. Be careful not to give any opinions, advice, endorsements or information that might make you or your organization legally liable for damages should it proves to be false. If you say a sub-contractor was good – someone who relied on that opinion and found them to be bad could sue you. If you say a sub-contractor was bad – the sub-contractor for damage could sue you to their business. Stick to the facts!