Many years ago I had the good fortune to be given a personal guided tour of the Jordan Grand Prix team factory at Silverstone. I was with two very good friends from Boston MA, Jari and Patrick Thompson. Patrick asked some really complex questions of our host which really opened the lid on some of the intricacies of getting a Formula One racing car from the drawing board to the grid. I wrote an article on our visit which was published in November 1996, amazingly it is still out there on the internet!
My reason for mentioning this visit is two-fold. My contact who arranged the visit has a book out and will be contributing an article in a future newsletter so watch out for that. Secondly it provides the hook for this article.
One of my strongest recollections of our visit was how the design process was driven by the component with the longest lead time, the time taken to manufacture what has been designed. It transpires that the Gearbox and transmission unit is the thing that takes longest to manufacture so it is the first element that is designed in fine detail when a new car is laid out for the coming season. All other elements of design and manufacture follow on from this key component. The team were aware of the item with the longest lead time and planned around this accordingly.
A common problem in projects is that we can sometimes be beholden unto others, suppliers and contractors, for deliverables with timescales that cannot be improved upon. Buying “off the shelf” is not always possible. If this is not evident at an early stage the discovery of this information late in the day can have a significant impact upon the project.
If you have ever watched the excellent Channel 4’s Grand Designs series you will have seen examples of where the “Project Manager” suddenly discovers that a key element of their project is on extended delivery and as such will delay progress. Knowing the lead time for elements of a design is crucial information to be aware of when it comes to achieving target completion dates in a project.
From my own experience in construction project management we used to produce plans identifying from the design team what information we wanted and when we wanted it. This could sometimes result in elements of the design being produced “out of sequence” compared to how the actual construction process was planned. Again this was all driven by an awareness of the lead time for various components that comprised the completed building. We were aware of this as a result of the procurement element which is a well-established discipline in construction project management.
Procurement is recognised as a discrete specialism within Project Management – the APM in the body of knowledge 5th edition defines procurement as:
“The process by which the resources (goods and services) required by a project are acquired. It includes the development of the procurement strategy, preparation of contracts, selection and acquisition of suppliers, and management of the contracts.”
In mature industries there will already be an established body of knowledge covering the procurement process and strategy along with intelligence on suitable suppliers and how to manage them contractually. There will also be an awareness of how long things take and an acceptance of this and incorporation of this intelligence and experience into the planning process.
For individuals or organisations new to the discipline of Project Management there can be an element of venturing into the unknown and not knowing vital information.
If you are going to be purchasing goods or services from 3rd party suppliers you will need to determine how long it will take them to provide their contribution to your project and how they will provide their deliverable. Do they supply only or supply and fit?
If you know roughly when their deliverable will be required for incorporation into the project being delivered you can then work backwards allowing sufficient time for the supplier to produce their deliverable.
In order for a supplier to produce a deliverable they will in turn need information from the project team, this can comprise design, performance and quality criteria and in some cases information informing how they will incorporate their deliverable into the project.
If what is being provided is a physical entity you may well need information from the supplier. How will it be delivered, what physical limitations or considerations are there? Will there need to be provision and assistance for the handling of the deliverable when it is delivered? Who is responsible for the deliverable? When does ownership transfer from supply to demand? Considering these questions at an early stage can allow for planning and avoid unexpected surprises late in the day.
Working back from the provision of information there needs to be an agreement in place, typically a contract that will set out the obligations on both parties. For complex undertakings contractual negotiations can themselves be lengthy so where possible it is a good idea to have formal terms defined and available in advance.
You should also be aware that suppliers or contractors have many masters and will not have the same commitment to your project as you do. They will invariably have other customers to keep happy and may not drop everything when you demand it. Therefore it is important to keep them aware of when you will need them in your project and to ensure that you have everything in place to allow them to provide their deliverable in as efficient and hassle free manner as possible.
If they have made and kept a commitment to attend your project and can then not make headway due to failure on your part them may go elsewhere and then be difficult to get back when you need them. If on the other hand you do provide them with an ideal working environment and the opportunity to deliver their input in an unhindered and efficient manner they will be well disposed towards you in any future dealings you may have.
If you are going to enter into a contract that presumes that you have identified a suitable partner to work with, this may be as a result of an established working relationship or more likely as a result of a competitive tender situation. If you are engaged in any kind of tender evaluation process what criteria are employed in the selection of a supplier or contractor? Whilst price is invariably a significant consideration it may not always be wise to opt for the lowest bid, “pay cheap, pay twice” is an all too familiar aphorism, previous performance and reputation should also be a deciding factor. If a quoted price is too good to be true invariably it will point to potential problems in the future.
Going to tender will require participants to be provided with sufficient information to provide a meaningful quotation and terms of business. Will you have sufficient information available at this point or are you intending to delegate generation of some of the information to the supplier themselves?
Who do you approach when going out to tender? You may be fortunate and have an established list of qualified or approved suppliers, in some cases the customer may well specify who should be considered as a potential supplier. If you don’t have a list of suitable candidates you will need to conduct some kind of beauty parade to determine whether or not they are suitable candidates to approach.
Creating a shortlist of potential suppliers will involve research, what is their track record like? Can you inspect examples of their work for other customers, are customers prepared to provide references? Do they have professional accreditation or membership of professional or trade bodies that operate rigorous selection criteria for membership? Obtaining bank references may also be appropriate, are they a viable business or are they teetering on the brink of financial oblivion?
Hopefully by now you can appreciate that procuring goods or services is a time consuming process and needs to be planned for as part of effective project management.