Managing Vendors

In this chapter

• Understand why managing vendors is important to even first-time project managers
• Understand the key principles that lead to better vendor management
• Learn to avoid the common mistakes made on outsourced projects (they are not all due to the vendor)
• Review tips and techniques for both the client (buyer) and vendor (seller) organization and project manager
• Understand the key skills that have the greatest impact on managing vendor situations
• Learn contract fundamentals, and how different contract types impact your approach

As more and more organizations look to focus on their core competencies and reduce their fixed operating costs, while simultaneously attempt to execute more projects, it is very likely that your project, even your first one, will involve collaboration with other organizations.

While the specific process for establishing working relationships with other organizations depends largely on the industry you work in, many project managers lack considerable exposure to procurement and vendor management. Often, this is due to organizational structures and the common use of procurement specialists due to the legal and contractual nature of this activity.

For these reasons, I felt it was important to include this chapter, so you would be better prepared for whatever you face on your initial project assignment.

This chapter is not meant to be a comprehensive overview of procurement or vendor management, and I encourage you to study these areas further. Rather, this chapter intends to focus on the outsourcing of project work (as opposed to outsourcing entire departments or other operational work), and on the key fundamentals and frontline tips that will make the greatest difference in your ability to manage these project relationships and to avoid the mistakes made by both first time and experienced project managers.

Specifically, we will review what activities are actually included in vendor management, the core principles that should drive your work, and helpful advice for both the buyer and seller project manager. In addition, we'll touch on the important basics of contracts, including the impact certain types of contracts have on the project manager, and we will highlight the skills that make the greatest impact on your ability to effectively manage outsourced projects.