Project Management Institute

Redefining the supplier/vendor role for large, long-term government programs

After many IT program failures, government agencies take a hint from the construction industry: general contractors do it better.

Avon C. James

Since the dawn of the Information Age, government agencies have traditionally turned to systems integrators for implementation of large, complex programs, especially those involving sophisticated information technology. The rationale for this choice is that, since information technology comprises a large part of the system integrator's business, such companies offer the organic capabilities and resources to satisfy many of the government's requirements for system programming, applications analysis and development, and user training.

However, the trend toward using systems integrators as prime contractors appears to be waning because government agencies have experienced cost and performance results that, too often, are less than optimum. On the rise is a new method of engagement that places an objective general contractor in charge of managing large, complex programs. These very different approaches yield very different results.

Pitfalls of the Systems Integrator Approach

Too often, with the systems integrator approach, once the contract is awarded, team members initially involved in the selling and presentation process may suddenly become scarce. Systems integrators often remove subcontractors from the team while the work is in progress in order to bolster their profit margins. It's not uncommon for the prime contractor—the systems integrator—to end up doing most of the work, whether or not it's within their area of core competency.

If this scenario occurs when the systems integrator is deep into the process, the government agency (customer) may feel the investment has grown too great to risk changing contractors. That's the main reason—despite delays, budget overruns and performance problems—that programs are often allowed to continue even though they may be delivering a great deal less than was originally promised. In some cases, however, the program is canceled or downsized to fit original budget parameters.

The fact is, the U.S. Government has never had a successful long-term information technology program managed by a systems integrator that was brought in on-time and within budget—despite the intensity of due diligence exercised in the contractor selection process.

Interestingly, if you study the reports on programs that have gone down in flames, you will find that there is seldom a problem with the technology itself. Technological issues have relatively simple solutions. More often than not, the reason for failure is that the process was poorly managed. This is because program management is not typically a core competency of systems integrators, who tend to place more emphasis on the engineering side of the program than on the business side.

Advantages of the General Contractor Approach

Why does the general contractor approach work better? Take a look at the commercial sector, where this approach has worked extraordinarily well for many years. In the construction industry, for example, the general contractor doesn't lay the bricks, mix the mortar or erect the infrastructure. What he or she does do is assemble a team of subcontractors who specialize in performing these and other tasks. Each subcontractor does a particular job and does it well, under the management of the general contractor. The end result is an office building, shopping mall or airport that meets customer expectations.

Table 1. Point-to-Point Approach Comparison

Systems Integrator            vs. General Contractor
  • Technical focus
  • Lead is “Jack-of-all-Trades”
  • Manager protects implementor's interests
  • Risk increases for large, complex programs using only technical architecture approach
  • Most work “sole sourced” to lead contractor
  • Competitive edge ends at contract award
  • Management focus
  • Lead manages “world class” team
  • Objective manager
  • Risk mitigated using proven management architecture and process
  • Costs and quality driven by internal competition
  • Competitive edge through implementation

Today, government agencies increasingly recognize the value of applying the same principle to complex information technology programs, and some are already reaping the benefits.

Typically, government programs require a long-term commitment involving people, processes, technology and training. The role of the general contractor is to focus closely on the customer's needs and requirements, keeping each segment of the program on target and within specifications every step of the way.

When it comes to selecting the work team, you can rely on a good general contractor to select the finest suppliers of the appropriate technologies, then orchestrate blending these technologies into a practical solution that meets the original promise. As an advocate for the customer, the general contractor's job is to manage the entire process—identifying and controlling risk, monitoring costs, optimizing scheduling, verifying performance, training users and minimizing risk.

It's imperative, of course, to select a general contractor with great care. As team leader, the firm must demonstrate the commitment and objectivity to bring together a team of subs, suppliers and vendors uniquely suited to the specific program. An experienced general contractor involves the whole supply chain in customer communications to ensure a thorough understanding of the business objectives among all those providing products or services. He or she will also take the time and effort to match program requirements with “best of breed” core competencies in order to minimize risk and deliver the best solutions for the customer.

Some of the differences between the systems integrator and the general contractor approaches are outlined in Table 1.

One General Contractor's Methodology

At Robbins-Gioia, we define a general contractor as “an objective lead contractor with the organization and methodologies in place to manage a world-class team of subcontractors, concentrate on the performance drivers, focus on implementation, and deliver state-of-the-art solutions on time and within budget.”

As general contractor, we first establish a Master Planning Framework to ensure requirements, schedules, costs and performance objectives are planned and controlled. We do this because it provides the best possible basis for making informed decisions. It helps us identify problems earlier rather than later, gives us a solid base for making tradeoffs when needed, and provides a means for objective assessment of the program's progress.

We also involve as many subcontractors, suppliers and vendors as early in the process as possible, to try and test their capabilities and commitment. This crucial step limits our customer's risk exposure, while giving us optimum flexibility down the road to preserve superior performance, because we have a larger-than-average resource pool to call upon. And, as team leaders and keepers of the Master Planning Framework, the customer's business objectives can be kept in the forefront as we manage the process to meet these goals.

Key Criteria for Selecting a General Contractor

In seeking out a general contractor qualified to implement large, complex, technology-based programs, there are some guidelines that can help you make the right choice.

Experience. Look for a company with proven program management experience and a track record of successful implementations.

Process control expertise. The key ingredient that separates successful implementations from “also rans” is the contractor's ability to focus on the process rather than on specific technologies or tools.

Reputation. Ask candidates for references and check them thoroughly to determine the general contractor's business acumen, management skills, success record and adherence to timelines and budgets.

Team selection. Choosing the team of subcontractors, suppliers and vendors should not be self-serving, but should represent the best match to achieve customer objectives.

Applied ability, not capability. Many organizations have the “capability,” but do not demonstrate the customer orientation or commitment to apply the resources needed to achieve the desired outcome.

An open approach to customer interaction. Frank, open communication fosters trust and confidence and also helps keep expectations—on both sides—with-in the scope of reality.

Early involvement of subs, suppliers and vendors. Since all participants will play active roles in meeting customer requirements, all should be part of initial planning and ongoing communications.

Ability to think “outside the box.” With a traditional systems integrator, too often you get what they sell, with prescribed solutions limited to their product line, experience and comfort level. Look for a general contractor open enough to consider a broad spectrum of practical solutions.

Commitment to ethical and honest business practices. This guideline applies equally to all the general contractor's relationships, including customers, subcontractors, suppliers and vendors.

Greatest Value, Not Cheapest Price

There's no doubt that getting it right the first time is the most cost-effective way to implement any program, large or small. More and more government agencies today base contract awards on best value, not cheapest price. The benefits they're realizing as programs are implemented include enhanced productivity, best-of-breed skills, superior performance results and measurable financial returns.

Choosing a general contractor who keeps the customer's interests at heart throughout the term of the program is a powerful concept that ushers in a whole new method of engagement, based on value-added services, affordability and management accountability. By ensuring the success of government programs, the general contractor approach is rapidly becoming the way of the future. ▄

Avon C. James, Brig. Gen., USAF (Ret.), is director of strategic development for Robbins-Gioia, Inc. of Alexandria, Va. In the final assignment of his 32-year Air Force career, he had oversight responsibility for the AF data automation program.

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.

PM Network • April 1996



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