For most of my career, I have served in financial service organizations. As a project and program manager and PMO director, I’ve had the responsibility of procuring the necessary products and services from sellers. In other words, I was a buyer.
I recently left the corporate world to develop my LLC where I provide consulting services and teach courses to help project managers prepare for their PMP and PMI-RMP exams. Now, I am a seller.
Whether you are or a buyer or seller, good communication and doing what you say is critical to success. What can we do to get everyone on the same page and for the buyer and seller has a mutually beneficial relationship? Allow me to offer three recommendations.
1. Define the Buyer/Seller Relationship
First, healthy buyer/seller relationships require clarity in the roles and responsibilities. Think about a project that requires third-party professional services. Perhaps you need an outside team to develop a new software application.
A bribe is seen as a charm by the one who gives it; they think success will come at every turn. Proverbs 17:8
Last week, Harry and I were running, and he told me about his procurement risk blog series. Since I am a fraud prevention guy, we began discussing the risk of vendor kickbacks to those with the power to purchase.
I have seen vendors provide free liquor, women, trips, cars, boats, and cash–all to guarantee their bid acceptance. One such case provided “hundreds of competitively-bid contracts to favored vendors in exchange for gratuities” including “hot tub parties with strippers.”
If vendors know your employees’ weaknesses, they can exploit them. And if they do, significant harm lies before you. The Association of Certified Fraud Examiners’ fraud survey showed that 35% of the cases were corruption-related with a median loss of $200,000.
Discover the Power of Project Procurement Management
As we initiate our projects, we may find that our organization lacks the skills and knowledge to create the project deliverables and meet the project objectives. In other cases, we may need products outside of our organization. Project managers use procurement management to secure these needed products and services.
The Project Management Body of Knowledge (PMBOK) says that Project Procurement Management “includes the processes necessary to purchase or acquire products, services, or results needed from outside the project team.” Our ability to find and procure the right resources at the right time will enhance our chance for success.
Project Procurement Management
1. Develop a Procurement Management Plan
So, how can we improve our project procurements? Start by developing a Procurement Management Plan. The plan describes your approach to acquiring the necessary products and services from outside organizations. This plan may include things such as:
I have had the privilege of managing two PMOs, both composed of several project managers. It was always interesting to watch—the best project managers were the ones who had a habit of identifying risks, both threats and opportunities. And these individuals did not perform the risk identification just once at the beginning of their projects. Rather, they had a habit of reevaluating their projects with an eye toward new risks.
Wise project managers know that there are unknown risks lurking in every corner. Each new phase of a project brings uncertainty, some significant, some not. Furthermore, as new stakeholders enter the scene, new interests and concerns can cause our projects to get off track.
If you’ve been burned by risks recently, let’s talk about what you can do to improve your chance for future success.
Do you live in fear of not getting results in your projects? Risk management is such an effective vehicle for climbing the tallest mountain or swimming the deepest sea. However, the risk management pitfalls are many, rendering us completely ineffective in our attempt to fulfill our dreams.
I fear that many project managers live by the letter of the law and may fail to gain the true benefits of risk management. These individuals are too concerned with checking boxes and making the risk management processes overly complex. Let’s look at some common mistakes and how to overcome them.
1. Thou shalt not make risk management complicated.
Every project is different. Wise project managers tailor their risk management plan to each project. Pick only the necessary inputs and tools and techniques. And speak in a manner that your sponsor, project team, and stakeholders understand. If you wish to introduce new terms (e.g., risk attitude, risk tolerance, Monte Carlo), be sure to define them.
Project managers may make risk decisions without much thought. How is this possible? Well, after managing projects for years, you know the drill. You simply know how to respond to the most common risks.
Every year, my family takes a trip to the beach for fun and relaxation. I’ve gone to the same beach my entire life. We do a lot of the same things each year—walk on the beach, swim, grill out, crab, and fish.
With each of these activities, I do things to manage risks and frankly, I rarely think about it (because I’ve done it for so long). Allow me to share a few examples.
Threat Response Strategies
1. Accept risks
Sometimes I fish from the shore. Actually, I wade out into the water about waist deep. More than once, I’ve caught a shark. I’ve had crabs bite my toes. And I’ve been stung by jellyfish. But every year, I wade into the water and fish again. That is to say, I accept the risks.
Some portfolio, program, and project managers make a big fuss over risk management. And others use lots of acronyms and big words to impress people. But at the end of the day, all that really matters is getting results.
For eighteen years, I worked for a property and casualty insurance company. Each year, our senior management team would meet with a credit rating agency to share our goals, strategies, and progress. The presentation included what we were doing for enterprise risk management.
One year, the rating analyst said that insurance companies can talk a good game. They have a risk management plan. They regularly identify, analyze, and respond to risks. And yet, some of these companies were floundering.
Then the analyst said, “All that really matters is that you are getting results.”
Project managers can be guilty of talking a good game too. We have a risk management plan. We perform all the risk management processes, but for some reason, we may fail to get the desired results.
So, let’s review the risk management processes, things within each process that may lead to lackluster results, and what we can do about each.
How do you communicate risks? Some project managers rarely mention risks; others bore people to tears with too much information.
Ninety percent of a project manager’s job is communication. And one of the most important things to communicate is your risks. Where is the uncertainty greatest and what are you and the team doing about it?
The communication process can be challenging. Stakeholders expect one thing and get something completely different. How can we communicate risks more effectively?
Are you feeling stuck? If so, let’s talk about getting unstuck and moving again.
With all that we have to do, we can’t afford to stay in one place too long. Somehow, we must keep things moving forward. Otherwise, there will be consequences—missed deadlines, unhappy stakeholders, demoralized team members, and ultimately adverse impacts to the company’s bottom line.
So, why do project managers get stuck in the first place? There are several reasons. First, it’s analysis paralysis. We get stuck in over-analyzing (or over-thinking) things such as requirements. Second, it’s fear. We are afraid that we will make a mistake. Third, it’s perfectionism—the refusal to accept any standard short of perfection. We mean well, but this mindset is a toxic trap that hinders our progress as we seek the approval of others. Fourth, it’s poor decision making. The project team has identified multiple options for solving the problem, but can’t seem to pick one.