“Trust, but verify” – a phrase made popular by President Ronald Reagan in describing his strategy for dealing with the Soviet Union during the cold war, should also advise project managers in their relationships with vendors and subcontractors.
As a project manager, you may not have been involved in the decision to use a vendor or subcontractor on your project. The decision to contract may be made for cost, technical, or political reasons – often above your pay grade. I hope that you had input into the requirements and evaluation of contenders and you will certainly be expected to manage them and assure their contribution to the project once it is underway.
How to Evaluate Vendors and Contractors
This is not a one-size fits all list of suggestions — circumstances vary. Best case, you know the contractor already. Alternatively, you have the opportunity to travel to the contractor’s office and talk with the potential contributors personally. Least desirable option from your perspective — you have to work with the organization assigned by senior management.
Assuming a middle of the road situation where you:
- Help generate the vendor or subcontract requirements and statement of work
- Evaluate technical portions of proposals from potential vendors
- Visit and interview the finalists
Here are some suggestions:
- Talk to potential contributors, not just business development or marketing people
- Do your homework about the organization through informal channels with peers who may have worked with them
- Ask questions about the organization’s recruitment and training (because they may need to hire new people for your contract)
- Ask for and check references – especially if your organization’s client has any history with the vendor
- Tell them as much as you can about your project objectives, constraints, and expectations of them. Listen to their response and questions and compare them with the attitude, understanding and interest you would like to see.
- Make your recommendations based on past performance and demonstrated capability.
If you want some suggestions on assessing capabilities – particularly if your organization is e-sourcing –check out the best practices capability suggestions from ITSqc. (ITSqc, LLC is a spin-off from Carnegie Mellon University that includes a multidisciplinary group of researchers and practitioners. They have developed a service provider’s evaluation process that carries the pedigree of the Carnegie-Mellon software institute.)
How to Manage Vendors and Contractors
For guidance on process, I encourage you to review Chapter 12 of the PMBOK on Project Procurement Management. The PMBOK walks you through several process areas including planning, conducting, administering, and closing out procurements. Detailed discussion on types of contracts, change processes, required documentation, and risk management may not be entertaining reading, but the suggestions are worth noting.
Less formal than PMBOK, here are additional suggestions on working effectively with vendors and contractors:
- Communicate, communicate, communicate. I talked about this in greater detail Managing a Remote Team
- Manage risks, don’t react to problems — Is Project Management a Risky Business?
- Read the contract
- Be specific and use many examples, especially when talking about concepts of operations and user interface look-and-feel
- Spend more time in planning and monitoring than you would for project employees
Please share your experience and advice with fellow project managers – we are all in this together!
Fear No Project Blog - Focusing on the Management Side of Projects 
May 29, 2010 at 4:43 pm
With 17 years to Project Management experience I agree with your recommendations. The only thing I would add is that it is very important to ensure the person that joins the project fits into the team. Some people might have great skills but they don’t fit into the team they’re supposed to work with. For a successful team it is important to make sure that everyone buys into the culture and values of the team.
May 30, 2010 at 10:14 am
Enjoyed this article. The tip to check references reminds me of how eager some organizations are to outsource work without knowing well the service provider. Another article suggested to evaluate service providers the way you would a prospective employee: check their portfolio of work and hire someone based on experience AND cost to get the best value. Thanks again!
June 2, 2010 at 2:31 pm
I agree with the Hercules Consulting project managers. I have seen many times companies hire someone because he or she meets the basic requirements for getting the job done. But they overlook that he or she needs to fit in the current team and interact with others in order to complete a project.
June 4, 2010 at 4:42 am
Really like the phrase “Trust, but verify”. Also agree with the comments made, a good fit makes a huge difference. Good teams will deliver with bad processes, bad teams won’t deliver no matter how good the processes
Denis
June 9, 2010 at 2:33 pm
Hi,
All great advice, that I’ve actually used this week already with a team of outsourcers I’m working with, and sent to another colleague working with another team.
Wondering what do you think about the tools (I’ll avoid shameless self-promoting if you please) that exist out there to help you work with outsource help?
June 16, 2010 at 4:00 am
Working with subcontractors, in comparison to working with in-house team, is always a tricky thing. Decision about subcontracting is usually taken somewhere higher in the pecking order and PM only deals with situation they face.
Anyway when you are involved in a process of deciding whether to go with subcontracting at all or which subcontractor to choose you may want to consider all the pros and cons of subcontracting. You can avoid much pain if you spend some time up-front.