Contracts and Contractors

For some projects the bulk of the work will be carried out by contractors and in this situation, success depends on how well those contractors are selected and managed. In this situation, the Project Manager becomes the Sponsor of the contractors' project.

When contracting service, there are three elements to be considered:

The Service to be contracted out.
Attitudes to Contractors
A process for Contracting

1. The Service to be contracted out.

It is absolutely vital that the Project Manager invests time becoming clear about what they want the contractor to do. It really does need to be defined carefully. If this is unclear, then the outcome is almost certainly problems on all sides. Lack of delivery, extra costs, and time and effort wasted unnecessarily.

2. Attitudes to Contractors

Attitudes of contract managers varies. Some focus entirely on a competitive tendering approach, others lean towards a "partnering" approach. As with most things in life, the balance needs to be somewhere between.

The Project Manager does need to ensure that selection of a contractor is carried out on an open and equitable basis with due regard for ensuring good use of public funds. However, when the contact is given the Project Manager is dependent on the performance of the contractor and needs to have someone that they feel that they can trust and work well with. At that stage, like it or not, they become partners.

When a project manger is selecting and dealing with contractors, it is them worth trying to understand the contractors motivations and the world they inhabit:

They have other clients, all of whom believe that their own projects are absolutely vital and should have priority
They usually just want a "fair deal"
They are often professionals with a pride in their skills
What they really do not want is a lot of hassle and disagreements. They just want to get on with the job.
They want the project to be a success and for you to be delighted with what they have done
They want their reputation enhanced so that they can get referrals or repeat business (which is where most of their new work comes from)
What they want from clients is someone who is fair, organised, committed, and straight.

Remember, John Ruskin who in 1850 wrote the following wise words:

There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper. The people who consider price only are this man’s lawful prey.
It is unwise to pay too much, but it’s Worse to pay too little. When you pay too much, you lose a little money, that’s all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing what it was brought to do.
The common law of business balance prohibits paying a little and getting a lot, it can’t be done. If you deal with the lowest bidder it is well to add something for the risk run, and if you do that you will have enough to pay for something better.

3. A Process for Contracting

Step 1 Define the Service to be contracted

It can really save both the Project Manager and the contractor and enormous amount of time later if this is done well. On the other hand, if done badly it can waste enormous time and effort.

Step 2 Go to Tender

If possible avoid a public tender process - it tales a lot of effort and invariably slows the project down
Tenders over a certain size need to be advertised in the European Community Journal (OJEC) which unfortunately can add three months to the process.
If your tender is likely to attract a lot of interest, it might be sensible to first advertise for "Expression of Interest". In this, a brief outline of the contract is advertised and contractors are asked to write a short application to be asked to tender for the work. Usually they are asked to complete a short form describing experience in the field.
They next stage would be to send those shortlisted and "Invitation to Tender" with a fuller description of the work to be contracted. It is important to be specific and coherent about the work to be contracted, and it is sensible to include a specification of the contents and general layout of the tenders to be submitted. ITTs always include a time and date for the tenders to be returned, a contact name for further details, and some organisations also specify the criteria against which tenders will be judged.

Step 3 Vendor Selection

The tenders will arrive by a certain date and will often then be judged by a group of people - probably including one person with form contract skills.
The best way of making a selection is to use a "rating and ranking" process. In this, a set of weighted criteria are established before the tenders are opened (e.g. track record 80 points, price 50 points, etc.) and each member of the group reads each tender and scores them for the various criteria. It is a recognised equitable process, is efficient, and does result in a balanced decision.

Step 4 Post Award of Contract

Having selected a contractor, a contact needs to be drawn-up. This is the Project Manager's last opportunity to influence the formal relationship with the contractor. It is important to think ahead and to try to get arrangements in place to enable a good working relationship. Aspects such as project reporting and review meetings should be included here.
Ensure that it includes a requirement that the contractor produces a Project Scoping Report along the lines outlined in this manual.
After "Award of Contract", the Project Manager and the contractor need now to develop a real working relationship.

Step 5 Monitoring Progress

The reality is that few contracts progress without some difficulties. The mechanisms for monitoring progress should be built-into the contract.