Project Management OfficeVendor/Contractor Relationships

OPS450Ken Hogan

Vendor/Contractor RelationshipsVendors and contractors bring specialized skill, knowledge, and

capability to technical project work, as well as provide products/services that support of projects through established contracts/agreements.

PMO Vendor/Contractor Relationship Management Responsibility

The PMO provides oversight of vendor/contractor performance management to maximize their value on projects and optimize their use within the PM environment.

• Identify/qualify vendors/contractors who add value to project efforts.

• Develop guidance for managing vendor/contractor participation on projects.

• Develop guidance for managing vendor/contractor contracts within the relevant organization.

Project Office Basic PMO Standard PMO Advanced PMO Center of Excellence

Manages vendor/contractor project participation

Introduces vendor/contractor management

Monitors vendor/contractor business/relationship information

Develops vendor/contractor management guidance

Manages customer relationships across project duration

Identifies/qualifies vendors/contractors

Develops vendor/contractor responsibilities

Monitors vendor/contractor performance

Manages vendor/contractor relationships

Establishes preferred vendor/contractor programs

Develops vendor/contractor partnerships

Evaluates vendor/contractor performance

Analyzes vendor/contractor business value

Examines vendor/contractor participation and effectiveness across industries

Vendor/Contractor Relationship Activities Across the PMO Continuum

Vendor/Contractor Relationship Activities across the PMO Continuum

The PMO establishes processes to qualify vendor/contractor candidates, make them a project resource, and manage their performance.

• Project Office – Direct responsibility for managing vendor/contractor project performance using established guidance for oversight actions.

• Mid-range PMO – Develops processes to acquire/manage vendor/contractor participation on projects, prescribe vendor/contractor roles/responsibilities, prepare guidance for project managers to oversee vendors/contractors, and examine opportunities for closer vendor/contractor relationships that offer distinct business advantages.

• Center of Excellence – Examines/analyzes business results of vendor/contractor participation.

Vendor/Contractor Relationship Function Model

Manage Vendor/Contractor Relationships

• Identify Vendor/Contractor Needs

• Manage Vendor/Contractor Information

• Prescribe Vendor/Contractor Participation

Manage Vendor/Contractor Acquisition

• Identify/Qualify Vendors/Contractors

• Solicit Vendor/Contractor Proposals

• Prepare Vendor/Contractor Contracts

Manage Vendor/Contractor Performance

• Administer Vendor/Contractor Contracts

• Monitor Vendor/Contractor Performance

Manage Vendor/Contractor Relationships

Identify Vendor/Contractor NeedsThe PMO collaborates with project managers to determine the

vendor/contractor support needed within the PM environment.

• Vendor/contractor partnerships – A formal business relationship to facilitate the mutual pursuit and achievement of common business objectives.

• Vendor/contractor affiliations – A formal business relationship to enable pre-qualified vendors/contractors to be identified and positioned for use on projects relative to the appropriateness of their products/services.

• Project-specific relationships – A formal business relationship established to obtain vendor/contractor participation on one or more specific projects.

• Service provider relationships – A formal/informal business relationship for a pre-qualified service provider with available services for projects.

• Supplier relationships – A business relationship for providers of products, supplies, and equipment needed for projects.

• Food service and meal providers.

Manage Vendor/Contractor InformationThe PMO initiates the acquisition/management of

vendor/contractor information as a basis for establishing preferred vendor/contractor relationships.

• Vendor/contractor presence – Vendors/contractors that exist in the market place and their contributing capabilities for projects efforts.

• Vendor/contractor qualification.

• Vendor/contractor performance.

• Vendor/contractor business profile.

• Vendor/contractor relationship history.

• Vendor/contractor business fit.

Prescribe Vendor/Contractor ParticipationThe PMO establishes processes for how to use vendors/contractors on projects

within the PM environment.

• Vendor/contractor sourcing responsibility – Determines if it is a clearinghouse for vendor/contractor acquisition or just as a vendor/contractor information resource.

• Vendor/contractor oversight responsibility - Determine PMO involvement in managing vendor/contractor participation.

• Vendor/contractor project affiliation – Determines the approach to vendor/contractor management on projects relative to the type of vendor/contractor.

• Vendor/contractor PM responsibility – Establishes common activities/expectations for vendor/contractor participation in PM activities.

• Vendor/contractor technical performance responsibility – Establishes guidance for vendor/contractor use of acceptable technical performance standards and technical competency requirements to apply to vendor/contractor efforts within the PM environment.

• Vendor/contractor business management responsibility – Establishes guidance for vendor/contractor business activity management.

Manage Vendor/Contractor Acquisition

Identify/Qualify Vendors/ContractorsThe PMO establishes processes to identify and qualify vendors/contractors according to

established business relationships.

• Identify vendor/contractor requirements.

• Perform make-or-buy analysis.

• Qualify vendors and contractors.

• Technical capability.

• Staff experience.

• Familiarity with vendor/contractor products/services.

• Vendor/contractor familiarity with the organization.

• Geographic location and coverage.

• Previous similar jobs completed.

• Financial stability and bonding capacity.

• Determine pricing arrangements.

• Develop independent cost estimates.

• Create vendor/contractor plan.

Solicit Vendor/Contractor ProposalsThe PMO establishes guidance for preparing vendor/contractor solicitation , manage their distribution, and review responses

toward selecting a qualified vendor/contractor.

• Prepare internal requisition material.

• Determine type of solicitation.

• Prepare solicitation.

• Scope of work.

• Technical requirements.

• Schedule.

• Proposal format requirements.

• Terms and conditions.

• Subcontract type.

• Evaluation criteria.

• Specify optional proposal actions.

• Distribute the solicitation and manage vendor/contractor responses.

• Evaluate vendor/contractor responses.

• Conduct vendor/contractor negotiations.

• Select vendor/contractor.

• Debriefing.

Prepare Vendor/Contractor ContractsThe PMO establishes processes to prepare

vendor/contractor contracts in the relevant organization.

• Verify contract documents.

• Obtain vendor/contractor contract approvals.

• Book the contract.

• Transfer vendor/contractor responsibility to project managers.

Manage Vendor/Contractor Performance

Administer Vendor/Contractor ContractsThe PMO administers vendor/contractor contracts to ensure the fulfillment of the contractual

obligations by all parties.

• Verify vendor/contractor contract booking.

• Organize vendor/contractor contract files.

• Establish procedures for contract claims and dispute resolution.

• Establish procedures to solve issues/problems.

• Establish communication guidance.

• Monitor vendor/contractor performance.

• Manage vendor/contractor relations.

• Conduct meetings with vendor/contractor representatives.

• Manage vendor/contractor contract changes.

• Monitor vendor/contractor contract compliance.

• Manage acceptance of vendor/contractor deliverables.

• Manage vendor/contractor payments. Following are several types of payments.

• Review and close out vendor/contractor contract.

• Manage vendor/contractor resource departures.

• Prepare a post-project vendor/contractor performance report.

Monitor Vendor/Contractor PerformanceThe PMO facilitates project manager oversight for vendor/contractor

performance management.

• Price variation analysis.

• Deliverable performance analysis.

• Contract add-on/extension analysis – Identifies particular vendors/contractors having a recurring needs to request/negotiate work extensions.

• Billing practices analysis.

• Management retention analysis.

• Customer satisfaction analysis.

• Project manager oversight analysis.

• Business/investment posture.