Project Management Institute

Communications planning in a vendor project environment

Abstract

For large projects executed by a vendor, project communications can get particularly difficult. A project may be a subcontract to the customer through a prime contractor, the vendor may have a sales or support organization outside of the company's legal entity, and the vendor may have ongoing warranty and support responsibility with the enduser, even though there are two or more degrees of separation from the end-user during the project.

Introduction

Faced with continued cost challenges, many of the companies in the refining and chemical processing businesses are continuing to operate their facilities—and their central engineering groups—with much smaller staffing levels than had been maintained historically. However, the need for continued process improvements and incremental production increases has continued.

Many vendor organizations have added or significantly increased the project execution staffing to address the increased project scope. Whereas previously a vendor might provide a project team consisting of a consultant and a field service technician, today's vendor project team may include process engineering personnel, detailed installation design teams, construction teams, customer software interface design teams, and project management teams.

In addition to the project execution teams, the vendor project team also brings the support (and the baggage) of a product sales teams, product marketing, research and development, warranty support teams, and others. To further complicate the project, many projects are executed by a prime contractor where the vendor project team must be integrated into the overall project plan. Understanding the stakeholders on these projects can be the key to a successful project communications plan.

Identifying Stakeholders in a Vendor Project

The End-User Project Team

This is the group that will ultimately own and use your product. In a typical process industry facility, four groups typically are stakeholders in the project, although there may be more. Operations, maintenance, engineering, and procurement are all stakeholders and will evaluate the project success on a different basis.

Operations

Operations will evaluate the project success based on how well the product works in their environment. This is the stakeholder that most people identify. The user that you work with may not be called operations; it will be the group that uses the product after installation.

This group may not be as concerned with traditional project management metrics. The primary focus will be on whether the product and project will meet the business needs after installation and start-up.

Management

The management team will want to know that they are getting the return on their investment. This group has provided the funding for the project. It is crucial to the long-term relationship between the vendor and the end-user that the end-user management team know the project status. As part of the vendor organization, the project manager may not have access to this group or know who comprises this group. The project manager should consult with account managers and executive sales team members to understand who ultimately approved funding for the project.

Maintenance

After installation and start-up of the project, some group within the end-user organization will be responsible for keeping the product running. For a software product, this might be the IT organization. Traditional manufacturing organizations will have a dedicated maintenance department. In either case, these users will require product information and will want to provide input regarding ease of upgrades, spare parts, installation standards, and product documentation.

Engineering

Engineering is usually the group responsible for the project execution for the end-user. The project manager may be in this group. This group will be most concerned with scope, schedule, and cost, and they will likely be the final arbiters of whether the project met the requirements in the specification.

Depending on the nature of the product and project, these functions may reside in a different department. However, the focus will remain the same.

Procurement

One of the primary goals of the procurement group after the contract has been awarded is to verify that the project deliverables are delivered according to the schedule and quality requirements of the contract. This stakeholder may also be the one that approves invoices.

Others

Depending on the vendor market segment and the nature of the end-user, the project may have other stakeholders. Stakeholders may include members of the safety, quality, compliance, environmental, or other departments. Project managers should consult with account managers for assistance with identification of additional stakeholders.

The General Contractor Project Team

The first item to note is that the customer is not always the end-user. Many projects are executed through a general contractor who has responsibility for integrating the vendor subprojects into the main projects along with supporting activities such as engineering, procurement, and construction.

General Contractor

The general contractor for the project has overall responsibility for scope, cost, and schedule, including that of each of the vendors and subcontractors. If your project is contracted through a general contractor and not with the enduser, the general contractor will be the focal point of all communications.

Working with a general contractor instead of an end-user can create special challenges. The end-user may request (or demand) additional features or other changes during the project. The project team needs to be aware that these changes must be approved by the general contractor prior to commencement of work on any change. The project team's primary focus when working with a general contractor must be meeting the scope, cost, and schedule requirements defined by the contract.

The general contractor will have little interest in making changes or adding features to a project, or “up-selling” of the product offering by the vendor. Up-selling can be done working with a general contractor; however, the project manager from the vendor company must finesse these upgrades using the sales team and other resources. He must be careful to be aware of the political landscape between the contractor and the end-user and not create or contribute to existing tensions on the project.

Other Vendors and Subcontractors

In short, most of the other vendors and subcontractors on the project want only one thing from your project team— information. Other vendors need to know the interface points of your project with theirs. Depending on the type of product that each of you are providing, your project may include activities that are predecessors for other vendors' activities, or other vendors may have project activities that are predecessors to your activities. Sometimes all that is required is agreement on the interface between systems—that is, network connections, piping details, or electrical connections.

The Vendor Project Team

Management

Your company is in business to make money. As a project manager, your primary goal within a vendor organization is to protect the company's assets. Two of the biggest assets are the company's money and the company's future source of money, the customer.

Project costs and customer satisfaction are two of the areas in which the vendor company management will be most interested. Depending on the company culture and operating practices, there may be others: resource utilization, additional sales on the project, product performance, etc.

The project manager needs to understand the company's business goals. If these goals are not published, the project manager should push the management team to share these with the project team.

Functional Managers

The people on your project team are not yours. Given that most project teams follow a matrix project organization model, the resources on your project team are directly managed by a department functional manager.

These managers will want to know the following:

  • How many resources are required?
  • How long will these resources be required?
  • What are the skills needed to execute this work?
  • Are specific individuals needed?
  • Are nonpersonnel resources required, such as test equipment, lab space, etc.?

One of the most valuable interactions that the project manager can have with the resource manager is a review of the performance of the resources on a project. In a matrix organization, the resource manager must evaluate the performance and skills of the resources. The project manager will often be in a position to provide valuable feedback to the functional manager.

Sales Organization

How is the sales organization a stakeholder on the project? First of all, the best sales tool is a well-executed project. Even though you may have just started a project, your sales team is planning their next sale. The success of their next sale to a customer is often heavily dependent on your last project. Keep in mind that your project may be your account manager's meal ticket.

The sales team can also be a great resource for your project team. The project manager should use the sales team to help establish pricing for change orders, assist in the sale of proposed project changes, and to serve as an independent sounding board for potential project issues. In many cases, the sales representative may be the person most familiar with customer or end-user personnel and may be the person most trusted by the customer.

The sales organization will also need data from the project team regarding the performance of the project. In some organizations, the sales team is responsible for generating proposals and determining initial cost budgets for the projects. Was the estimate for this project too high or too low? Which areas require a better estimating model? By feeding actual performance data back to the sales and proposal teams, estimating models can be tuned and made more accurate for future projects.

Product Marketing

Your company's product marketing group will want information regarding the product performance and the product's suitability and acceptance. They will use this information to determine possible improvements and upgrades, sales and pricing strategy, and the future direction of the product line.

Industry Marketing

The vendor company may also have an industry marketing group. This group provides direction as to how the product should be sold within a specific industry. The manufacturer of control valves may sell to refining, oil, and gas production, pulp and paper, power generation, and pharmaceutical industries. Information regarding the suitability and unique application of products in an industry is extremely valuable information for a vendor company.

Research and Development

Project managers in a vendor organization may not be responsible for the performance of the product that was sold, but they are generally the closest person in the organization to the end-user when the product is first used. Project managers have the ability to pass vital information back to the product development teams.

Timely information directed back into the vendor organization can prevent a product “hiccup” from becoming perceived by the end user as a product failure.

Warranty and Support Services

The ongoing support and success of your product is just as important the initial success of your product. The project team will disband after completion of the project, but the vendor company will still have responsibility for ongoing support services for the product.

Project Team

The project manager cannot overlook communications with his project team. With all of the focus on identifying the stakeholders both inside and outside of the company, the project manager must remember that communications with the project team is vital to the success of the project.

A vendor company's project team needs the same information as any other project team. Great project team communications begin with a complete work breakdown structure. The odds of meeting scope, cost, and schedule goals are greatly increased when the project teams know what these goals are.

With all of the emphasis on communications in a project, the project manager must also be wary of going too far and providing too much to the project team. While a well-meaning project manager may be trying to keep the project team informed, too much information, particularly e-mail, can become noise to the project team. The project manager should act as a filter so that the project team has the right information.

Project Organization w/o General Contractor

Figure 1: Project Organization w/o General Contractor

Project Organization with a General Contractor

Figure 2: Project Organization with a General Contractor

Preparing an Effective Communication Plan for a Vendor Project

Preparing the Plan

Contractual Obligations

The first item to consider when preparing the communications plan is contractually defined communications. Contracts may include regular reports regarding schedule and cost. Contract clauses may be in place defining the time frame for which change requests may be requested.

Prior to establishing the communications plan, the project manager must have determined all contractual requirements.

External Communications

After all contractual communications have been determined, the project manager should determine what other communications should take place in order to strengthen the account. A project manager in a vendor organization has two obligations to his company: manage the organization's money and manage the organization's source of money, the customer. It is of limited benefit if the project manager executes a project in a manner where profit targets are met or exceeded if the customer or end-user has been alienated and the account relationship has been damaged.

Given this, the project and account teams must identify key stakeholders and decision makers and verify that the communications plan includes the appropriate interactions.

Internal Communications

Every project should be an opportunity for a vendor to demonstrate their value in the marketplace. The project manager has a responsibility to communicate useful information to the right persons in the vendor organization, even those not directly a part of the project team.

Knowing the business goals of the company and knowing the stakeholders outside of the immediate project team are key to developing a successful internal plan.

Project Team Meetings

A project manager in a vendor organization will be more effective if he understands the technical aspects of the product and the business results that it brings to the customer. During project team meeting, issues may surface that would not otherwise be known.

The project manager needs to determine what sort of project meetings should be planned. A small project may have weekly or biweekly team meetings involving the entire project team. Large projects may require multiple types of project team meetings. As always, the project manager will look to balance communication and productivity.

Drafting and Publishing the Plan

One method that can be used for finalizing the communications plan is to create a communications matrix. One side of the matrix shows all of the potential project stakeholders, both internal and external. The other side of the matrix is a list of items to be communicated on the project. When creating the matrix, it may be useful to indicate the format of the communications, the frequency of the communications, the owner of the item, and whether the communication item is a contractual obligation.

If possible, review the communications matrix with your project team and as many stakeholders as possible. Depending on the nature of the project, it may be advisable to issue two communications plans, one for internal use and one for customer use.

Implementing the Plan

Implementation of the plan should be straightforward after the effort has been made to understand the stakeholders and their measurement of success for a project. For projects that span a longer time period, the project manager needs to re-evaluate the communications plan regularly and revise the plan as required.

Summary

The project communications plan for a vendor project can be complicated. However, with proper stakeholder identification, the communication plan can provide valuable information to the vendor organization and can build confidence with the customer.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2009, Wade C. Stewart, PE, PMP
Originally published as a part of 2009 PMI Global Congress Proceedings – Orlando, Florida

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