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Who’s in Charge: Obtaining Third Party Services and What Questions to Ask for Success

In my early years as a project manager (PM) for IBM, I worked on several assignments where third party vendor or sub-contractors (usually with a specialized skill to perform) were brought in to work on my project. It always seemed like the lines were blurry on who oversaw them. Looking back, I gave them less attention/visibility than my own project members, which was a rookie mistake on my part and a lesson to be learned. Vendors and sub-contractors assigned to any project need to know who is in charge and should be tracked with the same weekly meeting regularity and concentration as fellow team members. Not paying too much attention to them can threaten the overall success of a project due to poor planning and follow-through.

To a certain degree, I fault the principal (the IBMer who managed the client’s account) for not informing me on what was going on with these third-parties when I came aboard to manage the project. The principal was a busy person with many accounts to manage and spending a good amount of time in meetings. Regardless, there should been more of a focus on the agreements made with the vendors and sub-contractors. As I said, there were lessons to be learned! Looking back on this experience, I wish I would have asked the following questions.

Ten Questions to Ask

  • Can I see the Statement of Work (SOW) for each third-party vendor? This includes the work to be performed, when the work is due, and how the work will be measured for acceptance.
  • Can I see the negotiated contract? This should include monetary incentives and penalties. The SOW should be a major part of the contract.
  • Will the third-party be working on-site with the development team? If not, what is their proximity to client’s location? If they are located hundreds or thousands of miles away, it will make communications more challenging due to time zone differences etc. Be sure the added time and costs of working with a long-distance third-party are considered.
  • Why was this third-party selected? Leverage their expertise and don’t use them for work that could be done in-house.
  • Have you worked with this third-party before? If yes, how did it work out? Considering what worked and what didn’t in the past will set you up for work flow success now and in the future.
  • Can I see the activities to be performed and who owns them? Delineating responsibility and closely managing who is accountable for which tasks is important.
  • Can I see the start and end dates for each activity? Don’t forget to discuss and clearly communicate deadlines.
  • Does your third-party vendor have a quality control system in place? You’ll want to push for a scenario where the quality of their efforts is largely predictable.
  • How will your sub-contractors respond to problems discovered by others during testing? If they are underperforming, is there a contingency plan to fix the problem or replace them? Remember that replacing a third-party can be a slow and tiresome task, and valuable time is lost that could affect the outcome of the project. Obviously, the principal and the client’s legal counsel or someone from procurement will have to be involved in creating a new contract and closing out the old one. As a project manager, you’ll want to support the process ensuing this happens as expeditiously as possible (so the least amount of damage comes to the project).
  • Are there assumptions or other duties expected beyond the project plan? Unspoken expectations can sneak up on you. It’s important to tease this out from the start.

 

Summary

Remember what I said in the beginning? It’s worth repeating that vendors and sub-contractors assigned to a project need to know who is in charge. The PM should track their work with the same regularity and concentration as is applied to fellow team members. At the end of every project, get input from all parties and document the lessons learned. Consider the improvements that could be made to improve future processes of hiring and working with third-party vendors.

One additional lesson I learned is that when a vendor is selected because they provide the lowest bid, you most often end up in a lose-lose situation. There is an adage about vendors that have the lowest bid: Bid it low, and watch it grow! Sometimes a vendor will shave too much money off their proposal price (hoping to make up this shortfall with change orders) or too many days from a project timeline to secure a job. This is a risky and unrealistic strategy, which eventually guarantees a loss of reputation and future business.

When working with third-parties, always be protective of your intellectual property (IP) like proprietary software/tools, so that you don’t lose your competitive position. This could include the processing of sensitive information and technologies that could be a risk to the security of your organization.

If the project finishes before the contract dictates and/or ends on a successful note, be sure to thank everyone for doing a good job. You never know, you could end up working with the same people on future projects. It’s always a good idea to maintain a good relationship.

 

Written by Ronald Smith

Ronald Smith has over four decades of experience as Senior PM/Program Manager. He retired from IBM having written four books and over four dozen articles (for example, PMI’s PM Network magazine and MPUG) on project management, and the systems development life cycle (SDLC). He’s been a member of PMI since 1998 and evaluates articles submitted to PMI’s Knowledge Shelf Library for potential publication.
 From 2011 – 2017, Ronald had been an Adjunct Professor for a Master of Science in Technology and taught PM courses at the University of Houston’s College of Technology. Teaching from his own book, Project Management Tools and Techniques – A Practical Guide, Ronald offers a perspective on project management that reflects his many years of experience. Lastly in the Houston area, he has started up two Toastmasters clubs and does voluntary work at various food banks. 

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