Project Managers need to have realistic assumptions regarding the length of time that any procurement activities they conduct will take, especially when preparing project management plans, budgets and time schedules for their projects, and work packages to be subcontracted. Have you ever faced difficulties with making realistic time predictions for the procurement process? Almost every project manager reading this article will have the same answer – yes!
The time required for a procurement activity should be reasonable when compared with the total project length. Within a project, all the main stakeholders – including project sponsors, upper-level management, and customers – should agree with this. But what does ‘reasonable’ mean in this context? The time required can basically be calculated in accordance with the following formula:
Time Required = Procurement Management Planning + Subcontractor Selection + Main Work + Acceptance at the end
If we can avoid the delays in each component of the formula, our realistic assumptions in the planning can work to keep us on track during the execution of our projects. These realistic assumptions have to take into account uncontrollable time wastage in the process. Using optimistic assumptions is only possible as long as you can control or influence the time spent on particular activities. Therefore, the subcontracting process needs more attention and has to be given sufficient time to solve time-consuming issues that can be met during the process.
Common issues that waste time
Some of the common issues that waste time occur as a result of the performance of subcontractors. These can be split as follows:
Prior to signing the contract:
- Subcontractors missing the proposal deadline and asking for an extension;
- Misunderstanding or underestimating the points in the Request For Proposal (RFP) document and submitting incomplete proposals;
- Gaps in the financial figures, the technical solutions and the schedules of proposals.
After signing the contract:
- Faulty production, deviations from the specification;
- Missing delivery deadlines;
- Asking for a price increase;
- Asking for termination of the contract.
Avoid these with better documentation
One of the main reasons behind time slippage before signing a contract is either the lack of or an incomplete RFP and other documentation like the Scope Of Work (SOW), Product Specification, etc. As part of the RFP, a SOW, which is very important for a subcontractor to be able to understand your project needs correctly, it should be prepared by the project management team under the supervision of the Project Manager (PM) in order to ensure that the work to be done under the subcontract is defined perfectly and broken down into specific details with defined deadlines.
The work that needs to be satisfied and delivered by the subcontractor has to be stated clearly in a product specification document that will be the main source for the design, preparation/production and acceptance of the work at the end of the contract.
These documents are needed to avoid wasting time before signing a contract. The first step that you, the PM, have to take is to allocate the appropriate required time for the planning and preparation of the documentation required for procurement activities.
Avoid through clear roles
To avoid issues that waste time after signing a contract, the selection of the subcontractor and contracting processes should be performed very carefully.
The PM is the key person in procurement activities, and she/he has to be at the core of the coordination and decision process.
The PM provides the following, which are the crucial drivers of the process:
- The Project Procurement Management Plan/Purchase Decisions;
- The Project Schedule;
Procurement Department Managers tend to lead the procurement processes that are crucial for PMs. While the procurement manager provides alternative candidate vendors, convenient templates and makes the required efforts to sign the contract, the PM is the only one affected by the results of the process during the execution of the project. The PM has to be sufficiently involved in the decision process to eliminate many of the time wasting issues after the contract is signed.
Eren Akdur, MBA, MSc., PMP, PMI-RMP, is the current Vice President for the PMI Turkey Chapter, a Program Manager at Roketsan Inc. and has more than 17 years of experience in project management for the defense industry. He is a part-time project management instructor for the MBA Program at Bilkent University, and also teaches fundamentals of project management to junior project managers. Eren writes about procurement management and contracts.