Once it is determined that the current organizational capabilities are not sufficient to execute and deliver a project successfully, organizations need to procure the required capabilities from the vendors. This process involves vendor selection including solicitation of information from vendors like their capabilities, references, cost etc, shortlisting of vendor(s) and having a contract with vendor(s) to provide the capabilities. During the process the symptoms which highlight risks can vary based on the specific capability being procured. We will look at some of the common risk symptoms not related to the capabilities being procured that can impact the project success.
- Not having a well defined procurement process and assigned responsibility
- Not clearly defining the scope of work to solicit response from vendors
- Not having a clearly defined vendor evaluation criteria
- Not vetting vendor capabilities thoroughly like not verifying references
are some of the key procurement process areas which can impact a project success and shouldn’t be overlooked.
During solicitation of information and shortlisting of vendors
- Vendors who are not contacting for clarifications
- Vendors contacting with trivial questions
- Vendors who are not able to provide references of past experience
- Vendors who are not able to show skilled resources committed to the project
- Vendors who are reluctant to let customers assess their capabilities
are some of the risk indicators that the vendor may not be capable to deliver the required scope of work.
Contract with a shortlisted vendor which is legal document is detrimental to project success. Given the legal nature of the document, there can be many things to be watched out for to reduce risks. The following are some of the items related to project delivery which should be given extra care when entering into a contract.
- Clearly defining the scope of work and deliverables
- Defining a process to be used for any change
- Defining the responsibilities without ambiguities
- Defining the time lines, dependencies and penalties
- Defining the deliverables, how they are measured and accepted
- Clear payment terms, conditions and cost
- Attaching payment to achievement of results
As always, it would be good to hear your experience with vendors and what to look out for during procurement to reduce project risk.