Contractor/Vendor Selection: Bridging The Communication Gap

Susan Peterson, M.B.A., PMP 2008,
Copyright Susan Peterson, All Rights Reserved

In the continuing series on outsourcing project work this month’s column addresses the challenges related to selecting those individuals and/or organizations that will provide the expertise needed for specific activities. All too often this process is filled with “communication disconnects” in documenting what is needed from contractors/vendors. Whether one uses requests for proposal (RFPs), requests for information (RFIs), or other types of vendor solicitation documents, clear definition is critical. I have participated in the election process in multiple roles including leading the selection process, writing solicitation documents for clients, and responding to client proposals. The following areas are primary considerations to effectively facilitate the project vendor selection and subsequently the contracting process.

Be specific -- even if it hurts.
There is no substitute for clarity in specifying what activities need to be performed. Too often project leaders feel that there is not enough time to fully document requirements or specifications. They also may feel that providing detailed documentation means that there will be no room for negotiation if there are changes during the project. Sometimes, there are situations when many of the details regarding a project work need are unknown. In any case, providing more clear definition is better than merely documenting the are minimum requirements. In those instances where little is known, the solicitation document can state the situation and request that the respondents provide their best solutions. Otherwise, the vendors will be forced to respond vaguely or to guess (often incorrectly) about what was intended.

The project manager should also include a template for responses in order to obtain usable information that is comparable across all responses. For example, a cost template should be provided so that the breakout of costs can be readily compared among vendors. Vendors have a variety of costs that may or may not be included in an hourly rate, so the project manager needs to know what is covered in order to avoid surprises later. Also, it may appear to speed the review of responses by including a number of expertise or capability questions that can be answered "yes" or "no". However few respondents will answer "no", knowing full well that a ”no” response can be the basis for rejection while there is “always a way” to provide the “yes”.

“How ‘good’ is ‘good’”?
In order to avoid nasty confrontations during the course of the project that are always counter-productive, the solicitation should include tangible definitions of quality and performance. These definitions should correlate not only with the final deliverables but also with appropriately scheduled interim deliverables. If the potential respondents have not performed project work for the organization in the recent past, these interim deliverables may be scheduled more frequently. Acceptance criteria should also be clearly defined. For example, there are numerous “horror stories" about the disasters caused by the interpretation of "The
software has been fully tested”.

It never gets any better than the “courtship”
One would assume that potential contractors/vendors would present their best possible images to project managers during the selection process. However, I have seen solicitation responses that consisted of photocopied pages stapled together in no apparent sequence. Conversely, I have also seen responses that ere nothing but “color-coordinated glitz". While few relationships are perfect, the project manager needs to assess the overall caliber of a contractor/vendor's response in order to better predict the quality of the future relationship.

Contractors/vendors are human beings.
I once heard about a company that circulated many solicitations but that never awarded any contracts. This company took all of the responses and used the information to conduct the work in-house. It is expensive for contractors and vendors to respond to project solicitations. These costs are not recoverable. Project managers need to be prudent in soliciting responses to proposals. Once the contract has been finalized, all respondents should be notified. While a contractor/vendor may not be suitable for one project, it may be a “good fit” for other projects.

As with all successful relationships, effectively working with outside project personnel requires good upfront research, objective review, and ongoing management. Next month’s column concludes the outsourcing series with best practices to manage contractors/vendors in a project environment.

Susan Peterson, M.B.A., PMP, is a consultant who manages diverse programs and projects in both the private and public sectors for individual organizations and consortia. She also conducts enterprise assessments of project portfolio management practices. An overview of her program and project specialties is available at http://www.pmi-sd.org/Consultants. She teaches the Project Management Simulation capstone course in the University of California, San Diego, Project Management Certificate program and is a member of the curriculum committee. She can be contacted at susanada@aol.com.