Anticlue

Plan Contracting Process

Plan Contracting provides the time and place to craft the documents needed to support the Request Seller Response process and Select Sellers process. The Plan Contracting process provides the documents which enable requesting seller bids and determining which sellers to move forward with through the contracting phase.

As with most process, there are input needed to assure all necessary information is in place for a decision to be made. The inputs to Plan Contracting are:

• Procurement Management Plan - The Procurement Management Plan details how the procurement process will be managed. It covers all aspects from procurement documentation to contract closure. As a part of plan contracting, check out the components which detail contracting requirements, what type of information is to be shared with a seller, and what is the process for managing the contracts. Also take a long look for any pre-approved sellers, and what type of contracts which can be utilized.


• Contract Statement of Work (SOW) - The Contract Statement of Work (SOW) provides a very detailed description regarding the product, service, or result to be delivered under contract. Honestly in my experience, spend a lot of time here gathering the requirements and needs. Run it by all members of the decision making team to assure everything is captured before using it. The Contract Statement of Work should deadlines and product specifications. In addition it should have any service requirements, quality information, performance data and anything else relevant. Performance data is key, this has bitten me before with several of our purchased customized solutions.


• Make-or-buy Decisions - The make-or-buy decisions are a documented decision list of the items to be purchased and those items to be produced by the project team. The make-or-buy decisions are reviewed as the basis for knowing what will be contracted to external sellers.


• Project Management Plan – The Project Management Plan should be reviewed with a focus on scheduled delivery dates as the procurement documentation should be in line with those dates. Additionally check out the risk register for risk related contractual agreements. The risk related contractual agreements detail agreements for insurance, services, or other items which list each parties responsibility.

The Plan Contracting process is a review of what is to be purchased and acquired, and how to create the information for potential sellers to assure all requirements have been met.
Hopefully your organization has a standard process for preparing this documentation. If not quickly establish one. There are two tools and techniques used in the plan contracting process.

• Standard Forms - Organizations often create standard forms for use when choosing and working with sellers to ensure that documentation is consistent and meets organizational requirements. Standard forms can include:
  
  
  • Standard contracts – One common tactic my last employer used was having a master service agreement and all procured services as an addendum to that core contract.
  
  
  • Standardized descriptions of items to be acquired
  
  
  • Nondisclosure Agreements
  
  
  • Checklists for evaluation of proposals or bids
  
  
  • Templates for each required element of the procurement documentation.


• Expert Judgment – Expert Judgment should be used to verify and validate that the most informative information is provided to the seller. Have different experts can check for the correct use of technical jargon, legal issues, or areas where best practice or industry standards could be used.

Using standard forms and expert judgment allows project managers to have a systematic approach for developing information for sellers. Quality documentation goes a long way towards assuring the organization gets what it wants when it needs it.

After the completion of plan contracting, one should be able to provide potential sellers with the information they need to bid, tender, quote, or make proposals, use agreed-on criteria to assess the bids, tenders, quotes, and proposals supplied by potential sellers, and ensure that the work specified or requested accurately represents the needs required. This information is commonly found in the outputs of plan contracting.

• Procurement Documents - Procurement documents are used to seek bids, tenders, quotations, or proposals from prospective sellers. Procurement documents are prepared in accordance with the buyer's organizational requirements and usually include a description of how the seller should respond, the relevant Contract Statement of Work, and any contractual requirements. The documents should be comprehensive enough to allow sellers to provide a clear proposal or a quotation, but also provide flexibility for sellers to suggest new or adapted approaches where appropriate.


• Evaluation Criteria - Evaluation criteria are developed to rate or score proposals. Notice, this is done before any proposals are received. The criteria will be both objective and subjective. The criteria are often included within the procurement documents to allow sellers to ensure that they provide all of the information required by the buyer to make a decision. Some common evaluation criteria examples are:
  
  
  • Understanding of the need – How well does the seller address the contract statement of work?
  
  
  • Overall or life-cycle cost – Purchase plus operating cost
  
  
  • Technical Capability – The seller is expected to have or acquire the needed technical skills and knowledge
  
  
  • Production capacity and interest – The seller has the capacity to meet potential future requirements.
  
  
  • Business size and type
  
  
  • References
  
  
  • Intellectual Property Rights
  
  
  • Proprietary rights


• Contract Statement of Work (Updates) - The Contract Statement of Work describes the product or service to be acquired in enough detail to allow prospective sellers to determine if they are capable of providing it. During the Plan Contracting process, expert judgment and other considerations made during the development of documentation can result in modifications being made.

Comparing PM methodologies

An interesting high level comparison of PM methodologies can be found here.

Customer Satisfaction with IT

One of the most illusive goals of my career has been to be a part of a team which values customer satisfaction and loyalty. Often being a part of an IT department, I’d sit in meetings with the customer wondering. If we were the competitive choice, would this customer department still choose to work with us. Was the department held captivated by our team work, cheerfulness, and empathy? Or is the department held a captive audience by the fact all IT requests can only be serviced by our department, and the customer has no other options? I’d watch and listen to our customer and technicians interactions and discussions. I’d wonder with whom the customer department compared us?

For instance, once in a meeting with our patient billing department directors and VPs, I sat flabbergasted as the top technicians explained a simple report was incorrect due to the fact that the requirements were not clearly written our request form by the customer. The technician became indignant and negative. The customer became quiet and unresponsive. Together, we had an impasse to work through. Afterwards, I talked with our technician, explaining a simple conversation with the customer beforehand to elicit requirements would be a better tactic for next time. Understanding the business need is a crucial part of this process.

Often after many meetings like the above, I’d come to the conclusion, that we as an IT department needed to measure and prioritize customer satisfaction as one of our key deliverables. I’d imagine giving surveys asking the following (borrowing from the press ganey and gallup ratings)

How well the IT department staff worked together
Overall cheerfulness of the IT department
How well the IT department anticipates your needs
IT’s response to concerns/complaints made
Amount of attention paid to your business needs
The level of empathy displayed by IT staff
IT staff clearly explained procedures and solutions in non-technical jargon
How well IT managers kept you informed
Efforts to include you in decisions about your solution
IT Staff’s attitude toward your requests
Skill of the IT department
IT Staff advised you if there were going to be delays
IT responded promptly to outages and problems.
IT responded in a reasonable about of time
IT staff sensitivity to the inconvenience of unavailable systems

The truth of the matter is that IT Management spends most of their efforts in project delivery. The data measured surrounds project delivery. The customer, however subjectively judges the overall experience with the department. Not just if the project was delivered on time and within budget. The customer’s perception creates the reality and subjectivity cannot measured in the same manner as project delivery. Perceptions and outcomes are important critical success factors but each has a different impact.

Let’s talk about the phrase “I can’t”

The amount of negativity that is expressed in this phrase when constantly uttered is amazing to me. I’ve seen individuals utter this phrase whenever asked to do something new. It is an avoidance to me and a depressing validation to themselves. Individuals constantly expressing “I can’t” become tagged and labeled with a negative attitude.

To relate a story, I know of a bright, passionate employee. She can learn anything she focuses upon. However, after working for several decades, that which is new in information technology is threatening to her. As a techie, she vigorously avoids any assignment that is out of her comfort area. She now has herself in a cycle. It is a cycle of negativity. When a new challenge occurs, the first words and predominate thought is I can’t. It is self-full filling, and becomes I can’t. I can’t because of this issue, or this reason. Eventually the opportunity goes elsewhere only for her to take refuge in the comfort zone. Eventually the comfort zone will go away or be retired. As will this position, she fulfills. “I can’t” has basically eclipsed her creativity, innovation and eventually career.

So a word to the wise, think a little and check yourself. “I can’t” shouldn’t always be the first response. If it is, there is a problem within yourself, which needs to be resolved.

Managing Conflict

As one climbs the professional tree it is important to gain an understanding of when conflict is necessary. Like everything else too much positive or negative conflict can have repercussions.

The concept of positive conflict evolves around Social Darwinism. The strong survive, but the weak do not. In a work environment this concept can result in encouraging strong employees to prevail over the weaker ones. This concept leads to a behavior pattern where employees vigorously argue the point to have the idea adopted by rejecting all other ideas. Another resulting behavior pattern is the intense micromanaging of staff. The micromanagement results from a general belief that to get anything accomplished, people must be continually prodded by managers. Finally in this environment with too much positive conflict, teams never work. The fiercely competitive drive that is developed and nurtured obliterates all collaborative activities – unless it is a survivor scenario where two parties have an agreement against one party. Obviously in this environment, synergy and compromise are not recognized, and people begin to behave according to expectations. It can result in employees not feeling valued and a high turn over rate.

At the other extreme there is the negative perspective of conflict. With this perspective even the passionate discussion about a problem or other minor dispute is viewed as dysfunctional. Conflict is viewed as a waste of time, seemingly inefficient. Conflict is seen as stressful, one cannot add a point of view without having to justify it. Finally with these two behavior patterns, individuals just bunker down and become overly defensive. They just survive like an ostrich does in a defensive situation.

Obviously, too much positive conflict will result with some individuals having a negative view on conflict. Also too much of a negative perspective within an organization will result in a couple of pockets of positive conflict. Therefore a balance is needed to break the cycle. An organization needs conflict to function. However conflict needs to be managed. In one situation conflict may have a very positive affect, however in another it should just not be used. Differences should be expressed and then harness the good from the differences instead of just suppressing the differences. Encouraging and managing conflict in a productive manner stimulates innovations and improves moral for everyone. The result is a high performing team.

Conflict, at the right level, is a healthy and energizing force in an organization. But it must be managed carefully to ensure that it works creatively, and not destructively.

Plan Purchases and Acquisitions Process

The Plan Purchases and Acquisition process provides a pattern which can be used to determine which needs are better met by using an outside organization versus the project team. Common inputs to this decision is when the result is needed and how best to obtain the result.

As with all processes, there are inputs to the Plan Purchases and Acquisitions Process. These inputs provide the foundation for determining what, when, and how to purchase. These input are:

• Enterprise Environmental Factors – Enterprise environmental factors concerning mark conditions. What products, services, and results are available in the marketplace? Where can you obtain them? Are there terms and conditions which are applicable? Is there a legal or purchasing department? Or is that the project teams responsibility?


• Organizational Process Assets – Organizational process assets depicts whether formal or informal policies and procedures exist for dealing with procurement within the organization. Some common types of organizational process assets are, all requisitions for purchase orders must be signed by the CIO. All purchase requisitions above $2000 must be initialed by all EVPs. All vendors must have been in business for a period of at least 3 years.


• Project Scope Statement – Project Scope Statement details the projects boundaries, requirements, constraints, and assumptions. Check out the constraints in the project scope statement to see if there are any required delivery dates or need for skilled resources.


• Work Breakdown Structure – The Work Breakdown structure illustrates how each work package’s interdependencies.


• WBS Dictionary – The WBS Dictionary details the work needed to complete each WBS package. Check out the contract info and quality needs when reviewing for the planning and acquisition process.


• Project Management Plan – The project management plan is the plan for managing the project. With the plan purchases and acquisition process check out the following items:
  
  
  • Risk Register
  
  
  • Risk-related contractual agreements
  
  
  • Activity resource requirements
  
  
  • Project Schedule
  
  
  • Activity Cost Estimates
  
  
  • Cost Baseline
  
  

When it is obvious that there may be a need to buy products, services, or results, one should be able to articulate what is needed, when, and all other concerns. Some common tools and techniques used to help articulate what is needed, when, and how are:

• Make-or-buy Decisions - Make-or-buy analysis involves comparing the relative benefits of in-house versus out-sourcing production of a given product, service, or result. Common considers are if the skill set in house is capable of delivering the product or service and if the same quality or a higher standard can be obtained from outside.


• Expert Judgment - Expert judgment brings in specialized advice, such as technical, legal, or market knowledge, to inform buying decisions. Sometimes using experts can bring about new approaches which simply were not considered without the expertise or experience of being one that has already been there done that.


• Contract Types - Contract Types are the types of contracts available for use. Different contracts are used for different purposes and intents. Generally there are three main categories:
  
  
  • Fixed-price or lump-sum contracts – Generally involves a total price for a wel-defined product. Fixed-price contracts may include incentives for early delivery. Buying shrink wrapped software is commonly a fixed price contract.
  
  
  • Cost-reimbursable contracts – Generally involves payment to the vendor for actual cost plus a fee for profit. Actual costs comprise direct and indirect cost of making the product or providing the service. There are three common types of cost-reimbursable contracts.
    
    
    • Cost-Plus-Fee (CPF) or Cost-Plus-Percentage of Cost (CPPC) – In this type, the seller is reimburse for the allowable costs and receives a percentage of the costs as a fee.
    
    
    • Cost-Plus-Fixed-Fee (CPFF) – For this type, the vendor is reimbursed for allowable costs and receives a fixed fee. The fee normally doesn’t change unless scope changes allocate a new fee.
    
    
    • Cost-Plus-Incentive-Fee (CPIF) – Cost-Plus-Incentive reimburse the seller for allowable costs and allocates a predetermined fee, as an incentive for achieving certain performance objectives.
    
    
  
  
  • Time and Material contracts – T&M contracts are a hybrid combination of cost-reimbursable and fix price contracts. A common indicator is their open-ended nature. The full value of the agreement and the exact quantity of items to be delivered are not defined at the time of contract award.
  
  

When purchasing solutions, it is important to assure that the best choice for the organization has been chosen and it is what was required. These tools and techniques offer a way to assure needs are defined and met. The outputs to the Plan Purchases and Acquisitions process are:

• Procurement Management Plan – The procurement management plan explains how procurement will be managed from inception to closing. Commonly the procurement management plan details the types of contracts to be used, who is accountable for estimates, the guidelines for the build or buy decision. What are the common lead times and how best to handle them? Finally what is the form and format of the statement of work?


• Contract Statement of Work (SOW) - The contract statement of work explains the items being purchased with enough detail and clarifications for everyone to be in agreement with what is being purchased. The contract statement of work should have a clear concise description of the services needed and operational support.


• Make-or-buy Decisions – Make or buy decisions are pretty self explanatory as to the purpose. However, it is good to have a document with a list of the justification for the decision and responsible party.


• Requested Changes – Requested changes to the plan should be placed into the integrated change control process.

Project Procurement Management Processes

Project Procurement Management involves engaging in a systematic process to purchase or acquire the needed products, services, or results from an outside source which will perform the work. Procure Management encompasses contract management and control processes necessary to administer contracts or purchase orders. It also includes processes which assist in administering a contract to assure the buyer/seller relationships are properly managed. The procurement management processes are:

• Plan Purchases and Acquisitions – Plan Purchases and Acquisitions process involves ascertaining what is needed, and when it is needed. Then how to assure you have what you need when you need it. (Novel concept!) This is completed as a part of the planning process group.


• Plan Contracting – The Plan Contracting process involves documenting the products, services, and results requirements and identifies potential sellers. Plan Contracting is commonly first engaged in the planning process group.


• Request Seller Responses – Request Seller Responses process obtains information, quotations, bids, offers, or proposals from sellers as appropriate. This is a part of the executing process group


• Select Sellers – The Select Sellers process is where the offers are reviewed, and a chosen vendor rises to the top of the Analytical Hierarchy Process. Commonly negotiations are started in written form. This is commonly a part of the executing process group.


• Contract Administration - The Contract Administration Process manages all aspects of the contract and the relationship between the buyer and the seller including managing seller performance and changes, providing a basis for future work, and managing the relationship with the project’s buyer. This is a part of the monitoring and controlling process grouping.


• Contract Closure - The Contract Closure Process assures completion and settling terms of any contracts including resolving any open items and closing each contract.

Each Procurement Management process results in a specific deliverable which is used as the foundations for the subsequent process. Combined the procurement management processes provide a best practice pattern for managing contracts and vendor relationships on a project.