Tag: Risk Management

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7 Secret Things You Didn’t Know About Successful Procurement Teams

Some senior members of staff see procurement expenses as a necessary evil and overlook any efficiency improvement methods for this sector. This is not an uncommon way of thinking, as procurement and the supply chain is a massive part of any company’s costs and can total up to 70% of an organisation’s total spend.

These managers are missing out on effective changes that can shift procurement to a significant supplier of growth and profit for any business.

Follow these 7 steps to improve your procurement team.

1.         Embrace Change

It’s so important for procurement managers to embrace and invest in technology changes currently taking place in the industry.

Managers should hold a full assessment of deficiencies in their processors and search for technology that meets the needs of the business, rather than fitting the business around new technology. For example, if you are having trouble with historic and retrospective analysis, invest in predictive analytics.

2.         Consider Outsourcing

Outsourcing may not be an avenue you have ever considered in regards to procurement, even though it happens all the time with HR and IT departments. Even so, many procurement managers are still apprehensive to apply it to their supply chain.

Outsourcing certain aspects of procurement can be a way of improving existing systems and processors rather than a cost reduction measure. It can also allow your business to access highly skilled procurement experts when it would be counter-productive to hire someone internally. These individuals are often very focused on delivering results, and if you plan outsourcing correctly, the increase in productivity will outweigh the costs of outsourcing.

If a procurement manager feels like there are areas in the business where costs can be cut, it might be worth bringing in a consultant. There are also outsourcing services that offer expert domain knowledge and vendor contact opportunities.

3.     Ensure Your Supply Chain Is Properly Staffed

The efficiency of a supply chain is very much dependent on the quality of its staff. As a procurement manager, it’s important to ensure that the supply chain is staffed with highly skilled individuals, and that these staff have regular access to education and training.

Procurement professionals will be tasked with a wide variety of roles, including:

  • Planning delivery timetables
  • Ensuring stores have enough stock
  • Overseeing the arrival of shipments

When hiring employees, it’s important to ensure they have skills such as communication, attention to detail and teamwork. They must also be willing to learn and improve throughout their career.

4.     Create Risk Management Policies

One of the key ways of making a procurement team more efficient is to prepare for the unexpected. Procurement managers should establish proper levels of control to manage risk and ensure that all these policies are periodically reviewed. These risk management fail safes should include:

  • The financial impact a risk might have
  • The likelihood to the risk occurring
  • A priority list for managing risks

All staff members should be aware of these risks, and the processes in place if the risks occur.   For example, if a major supplier goes out of business, your staff should be aware that there is a process for contacting secondary suppliers so you are never left without stock.

5.     Establish Relationships with Key Suppliers

Staff who deal with suppliers on a daily basis need to have brilliant relationship building skills. Procurement employees need to work closely with suppliers to try and keep communication consistent and amicable, even if issues arise at either end.

Suppliers can help procurement teams reach their performance goals, and they are often very knowledgeable, with expertise to share about their products. Procurement teams can learn a lot from them, like the audience, seasonality and key selling points of products; it’s worth working on these relationships.

6.     Stick to Ambitious but Manageable Targets

If a team has a tough but not unattainable goal to work towards they can prioritise, measure and focus on their tasks with a clear end in mind. This helps staff members feel more motivated and gives meaning to their work.

There will also be a sense of achievement when the targets are met, bringing your team closer together and improving teamwork.

7. Efficiency Is Attainable

The creation of a brilliant supply chain depends on your company’s understanding of procurement, along with the procurement team’s estimation of the total costs associated with each supplier and their contacts.

With help from technology, outsourcing, a great team and strong relationship building skills, your procurement team should improve its efficiency and business impact.

 

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How Technology Has Changed Procurement in the Last 10 Years

How technology has changed procurement in the last 10 years

Over the past decade business procurement has experienced rapid technological upheaval that, in the main, has made life easier for everyone involved.

The first ever Global Procurement Technology Summit was held in March 2016. It shows the emphasis procurement is now putting on understanding and utilising new technologies, and that it’s clearly a huge talking point for professionals across the world.

Looking in greater detail: which technology has been responsible and what has the effect been on procurement and buying professionals?

1. More informed decisions are being made

The digitalisation of procurement processes and integration of data-sharing across buyer behaviour, ratings and history of purchases over extended periods of time, has made for smarter and more informed decisions.

Despite the greater insight into decision-making, a study of US procurement professionals still revealed accurate forecasting to be the biggest challenge, something that’s possibly down to the rise in budget responsibilities over the last ten years.

The Coupa ‘Top 5: Constants and Change in Cloud Procurement’ report revealed that in 2003, budgets were reported as an average of $31m, compared to $100m in 2013.

2. Response times have drastically reduced

Procurement solutions are now quicker and easier than ever thanks to new marketplace technologies.

Buyers can take advantage of online purchasing possibilities, using websites like Amazon to source, purchase and arrange delivery of items.

The speed of procurement reflects the new speed in which consumerism moves ’’ the integration of digital mediums with online shopping has made the process of deliberation through to transaction much easier, a trend which has been reflected in the world of procurement.

3. Integration has brought its own problems

Technological integration has created many positives for procurement, but it’s also created challenges.

Millennials will make up 40% of the workforce by 2020, which is great for improving current procurement solutions as younger generations have higher expectations for technology and are early adapters.

However, the average age of procurement professionals in the UK is currently 44 – much older than the next generation of workers, who fully understand the capabilities of technology, and who will be easier to train and able to work with increased speed and accuracy.

The gap will close in the coming years, but procurement faces a struggle as older workers need to ensure their skills are relevant to the changing world around them.

Additionally, Hays’ ‘Procurement Salary Guide’ revealed that demand for procurement professionals has increased at all levels within the public sector, pushing salaries up. This demand is the result of a squeeze on public finances and attempts to cut costs following the slowdown in the economy.

4, Technology and the future of procurement

To conclude, technology is clearly a powerful enabler that’s here to stay. Plenty of companies are now seeing the importance of procurement technology as a means to improve their bottom lines, which was reflected in the inaugural Global Procurement Technology Summit earlier this year.

Integration of contract management, risk management and supplier lifecycle systems through investment in improved systems with added capabilities, has ensured more accurate sourcing is possible and due to the skills involved in running these systems, has driven salaries up.

Sophia Chapman is a guest contributor from Portfolio Procurement, expert recruiters in the compensation, benefit and reward sector.

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65% of Mega-projects Fail

There’s a reason why  Mega-projects are simply called “Mega-projects.” Extremely large in scale with significant impacts on communities, environment and budgets, mega-projects attract a lot of public attention and often cost more than 1 billion. Because of its grandiose, a successful mega-project requires a lot of planning, responsibility and work. Likewise, the magnificence of such projects also creates a large margin for failure.

Mega-projects Come with Big Expectations. But a Project’s Success Is Often in the Eye of the Beholder

Despite their socio-economic significance mega-projects – delivering airports, railways, power plants, Olympic parks and other long-lived assets – have a reputation for failure. It is thought that  over optimism, over complexity, poor execution, and weakness in organizational design and capabilities are  the most common root causes of megaproject failure.

Blinded by enthusiasm for the project, individuals and organizations involved with mega-projects often miscalculate the complexity of the project. When a mega-project is pitched, its common for costs and timelines to be underestimated while the benefits of the project are overestimated. According Danish economist Bent Flyvbjerg, its not unusual for project managers who are competing for funding to massage the data until it is deemed affordable. After all, revealing the real costs up front would make a project unappealing, he said. As a result, these projects are destined  for failure.

For example, building new railways spanning multiple countries could prove to be disastrous if plans are overly complex and over-optimized. Such a large-scale project involves national and local governments, various environmental and health standards, a wide range of skills and wages, private contractors, suppliers and consumers; therefore, one issue could put an end to the project. Such was the case when two countries spent nearly a decade working out diplomatic considerations while building a hydroelectric dam.

Complications and complexities of mega-projects must be considered thoroughly before launch. One way to review the ins and outs of a project is through reference-class forecasting. This process forces decision makers to look at past cases that might reflect similar outcomes to their proposed mega-project.

Poor execution is also a cause for failure in mega-projects. Due to the overoptimism and overcomplexity of a project, it’s easy for project managers and decision makers to cut corners trying to maintain cost assumptions and protect profit margins. Project execution is then overwhelmed by problems such as incomplete design, unclear scope, and mathematical errors in risk assessment and scheduling.

Researchers at McKinsey studied 48 struggling mega-projects and found that in 73 percent of the cases, poor execution was responsible for cost and time overruns. The other 27 percent ran into issues with politics such as new governments and laws.

Low productivity is another aspect of poor execution. Even though trends show that manufacturing has nearly doubled its productivity in the last 20 years, construction productivity remains flat and in some instances has even declined. However, wages continue to increase with inflation, leading to higher costs for the same results.

According to McKinsey studies, efficiency in delivering infrastructure can reduce total costs by 15 percent. Efficiency gains in areas like approval, engineering, procurement and construction can lead to as much as 25 percent of savings on new projects without compromising quality outcomes. This proves that planning before execution is worth its weight in gold.

We Tend to Exaggerate the Importance of Contracting Approach to Project Success or Failure

Finally, weaknesses in organizational design and capabilities results in failed megaprojects. For example, organizational setups can have multiple layers and in some cases the project director falls four or five levels below the top leadership. This can lead to problems as the top tier of the organizational chain (for example, subcontractors, contractors and construction managers) tend to focus on more work and more money while the lower levels of the chain (for example, owner’s representative and project sponsors) are focused on delivery schedules and budgets.

Likewise, a lack of capabilities proves to be an issue. Because of the large-scaled, complex nature of mega-projects, there is a steep learning curve involved and the skills needed are scarce. All the problems of megaprojects are compounded by the speed at which projects are started. When starting from scratch, mega-projects may create organizations of thousands of people within 12 months. This scale of work is comparable to the significant operational and managerial challenge a new start-up might face.

In the end, it seems that if organizations take the time to thoroughly prepare and plan for their mega-projects, problems like overcomplexity and overoptimism, poor execution, and weaknesses in organizational design and capabilities could be avoided. After all, mega=projects are too large and too expensive to rush into.

 

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How To Deliver On The Promise of MegaProjects

Due to the large scale and outlook attached to them, mega-projects have a large opportunity for failure. Typically, the failure begins at the outset of the project, whether that be due to poor justification for the project, misalignment among stakeholders, insufficient planning, or inability to find and use appropriate capabilities.

Underestimated costs and overestimated benefits often offset the baseline for assessing overall project performance. This is why it is important for organizations to first establish social and economic priorities before even considering what projects will answer their needs. Once social and economic priorities are established, only then can a project be considered. Selecting projects must be fact-based and transparent in order to ensure accountability with stakeholders and the public.

Successful Megaprojects Must Have Robust Risk-analysis or Risk-management Protocols

It’s also important to maintain adequate controls. Successful megaprojects must have robust risk-analysis or risk-management protocols and provide timely reports on progress relative to budgets and deadlines. Typically, progress is measured on the basis of cash flow, which is less than ideal as data could be out of date and payments to contractors do not correlate construction progress. Instead, project managers should deliver real-time data to measure activity in the field. For example, cubic meters of concrete poured relative to work plans and budgets.

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Overall, improving project performance requires better planning and preparation in three areas: doing engineering and risk analysis before construction, streamlining permitting and land acquisition, and building a project team with the appropriate mix of abilities.

Project developers and sponsors should put more focus into pre-planning such as engineering and risk analysis before the construction phase. Unfortunately, most organizations and sponsors are reluctant to spend a significant amount of money on early-stage planning because they often lack the necessary funds, they are eager to break ground and they worry the design will be modified after construction is underway, making up-front designs pointless.

However, it’s proven that if developers spend three to five percent of capital cost on early-stage engineering and design, results are far better in terms of delivering the project on-time and on-budget. This is because through the design process, challenges will be addressed and resolved before they occur during the construction phase, saving both time and money.

It’s not unusual for permits and approvals to take longer than the building of a megaproject. However, if developers look to streamline permitting and land acquisition, that would significantly improve project performance. Best practices in issuing permits involve prioritizing projects, defining clear roles and responsibilities and establishing deadlines.

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In England and Wales, developers applied these approaches to cut the time needed to approve power-industry infrastructure from 12 months to only nine months. On average, timelines for approval spanned four years throughout the rest of Europe. Likewise, the state of Virginia’s plan to widen Interstate 495 in 2012 was able to cut costs and save hundreds of homes thanks to land acquisition planning by a private design company.

Investors and Owners Must Take an Active Role in Creating the Project Team

When it’s all said and done, projects cannot deliver the best possible return on investment without a well-resourced and qualified network of project managers, advisers and controllers. Investors and owners must take an active role in creating the project team.

It’s not enough to have a vague overview of what the project might look like in the end. Instead, it’s necessary to review risks and costs and draft a detailed, practical approach to tackle various issues. An experienced project manager cannot do it all alone. The project team must include individuals with the appropriate skills, such as legal and technical expertise, contract management, project reporting, stakeholder management, and government and community relations among others.

Failure to Properly Plan for These Projects Could Have a Negative Impact on Society

While mega-projects are important in filling economic and social needs, failure to properly plan for these projects could have a negative impact on society.  Take  Centro Financiero Confinanzas (Venezuela), the eighth tallest building in Latin America at 45 stories, located in the financial district of Venezuela’s capital, Caracas for example.

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To those unaware of its history, the Centro Financiero Confinanzas is actually home to over 700 families, a “vertical slum” that is a truly fascinating example of reappropriation of space in an urban environment. An ironic symbol of financial failure that was intended to represent the unstoppable march of Venezuela’s booming economy.

It’s much more than an unbuilt building, bridge or tunnel, failed mega-projects are a blow to the economic growth and social improvements of communities around the world.

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Top 10 Project Management Myths Debunked

Since the dawn of time, mankind has used myths to make sense of the uncertainty that surrounds us.  In the early 1990s  a lot of  people believed that project management was the best kept secret in business.  However,  because project management was not  seen as a  prevailing profession at that time, it suffered from a lack of awareness  which was  in a sense, a double edged sword. Those who were knowledgeable in the practice of project management became extreamly valuable to organisations and pioneers for  the profession.

These early adopters were able to convince organisations that project management practitioners were needed.  Myths around project management began to form in the business community  and as the role of the  project manager was unclear, questions were raised as to what project management was  and what it could offer organisations.

The definition of the word myth is a “widely held, but false belief or idea.” Here, we’re going to examine 10 of the most pervasive PM myths that have emerged.

Myth #1 – Contingency pool is  redundant  

This is one of the most ‘mythical’ myths that has plagued the industry  for a long time. Coupled  with the tendency to presume that ‘real work’ is tantamount to implementation or building something concrete and you have the perfect recipe for project disaster.  The thought pattern behind this approach typically originates from budget constraints and/or having unrealistic expectations. As we all know, or should know, the unexpected happens quite regularly. An effective contingency plan is important as it aims to protect that which has value (e.g., data), prevent or minimise disruption (e.g., product lifecycle), and provide post-event feedback for analysis (e.g., how did we fare? did we allocate funds correctly?).

Myth #2 – Project Management software is too expensive

If your idea of project management software involves purchasing servers, and purchasing a software application from a major vendor for a small practice with 10  practitioners  then, yes, it  is too expensive. If, however, you have gone cloud and elected to use a powerful web-based project management solution (such as Smartsheet), then you are likely to save thousands of pounds while reaping the benefits of a pay-as-you-go price structure. The present, and future, lie in cloud solutions that provide equal, or superior, functionality at a fraction of the cost.

Myth #3 – Project Management methodologies will slow us down

Project  managers  have  a reputation of using  process-intensive  methodologies  that favour ideology over pragmatism. In some instances this may, indeed, be the case when  there is a mismatch between a specific project management approach and the organisation’s acutall needs (e.g., a process-driven method, such as PRINCE2, may not be appropriate for a slightly chaotic environment that favours an adaptive approach, such as Scrum). So, in sum, put down the paint roller (“Project Management isn’t for us!”) and take out your fine-bristled brush (“The Critical-Chain method may not be our cup of tea, but Agile on the other hand”¦”).

Myth #4 – Facts and figures are more important than feelings and perceptions

While facts are very important, projects are often derailed and sabotaged because of false perceptions.  The PM must pay attention to both fact and fiction to navigate through turbulent  organisational change.

Myth #5 – Project managers need to be detail oriented and not strategic in nature

While it is of the utmost importance for the project manager to understand how to read the details of the project, they must also understand how the project supports organisational objectives.  Having a strategic perspective adds great value to the skill-set of the project manager.

Myth #6  Rely on the experts in everything that you do

It is true, we do need to rely on the experts but our trust can not be a blind faith.  The job of the project managers in this area is twofold.  First we must extract information and second we must verify that the information is accurate.  A good example of this is asking a planner  to provide an estimate on the effort required to perform a task.  In some instances team members forget to include tasks which ultimately results in a faulty estimate.

Myth #7  All the battles have to be fought and won so that we can succeed

Project managers sometimes make the assumption that they need to stand firm to get the job done, however, coming to compromise  on a particular issue is often a better course of action  in order to  win the war.

Myth #8 Project Managers  can wear multiple hats  

Wearing different hats can be extremely confusing.  This is especially true if the project manager is asked to be a business analyst or technical expert on top of serving in their PM role.  They end up doing  both roles with mediocrity.  When we “wear two hats” we essentially tell ourselves that both hats fit on one head at the same time. However, what happens if the demands of two roles conflict  and what assurances do we have that we’re managing the inherent conflict of multiple roles  and the  risks the  roles introduce? Sadly, multiple roles become more common as we move up the management hierarchy in an organisation, and that’s exactly where potential conflicts of interest can do the most harm.

Myth #9  Once the risk register is created, it’s full speed ahead

Risk management provides a forward-looking radar. We can use it to scan the uncertain future to reveal things that could affect us, giving us sufficient time to prepare in advance. We can develop contingency plans even for so-called uncontrollable risks, and be ready to deal with likely threats or significant opportunities.  Too often, it’s not until a catastrophic event occurs and significantly impacts project progress that ongoing risk reviews are conducted.

Myth #10 Project managers can not be effective in their role unless they have specific technical expertise in the given field that the project falls  within

You don’t need to be an engineer to manage a construction project or a IT  technician to manage a software development project.  All you need is a  fundamental  understanding with strong PM skills to manage  the team.  Experience in the field helps but does not guarantee success.

Project management is challenging enough without the myths. The profession has come a long way since the 1990s and some of these myths are fading. However, we still see remnants of them in one form or another.  Great projects cut through false assumptions and confusion, allowing their teams to make smart decisions based on reality.

These are just 10 project management myths, what are yours?  

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29 Awesome Quotes on Risk Management

29 Awesome Quotes on Risk Management
  1. If you treat risk management as a part-time job, you might soon find yourself looking for one ’- Deloitte white paper (Putting Risk in the Comfort Zone)
  2. I have learned that nothing is certain except for the need to have strong risk management, a lot of cash, the willingness to invest even when the future is unclear, and great people ’- Jeffrey R. Immelt
  3. Thoughtfully assessing and addressing enterprise risk and placing a high value on corporate transparency can protect the one thing we cannot afford to lose trust ’- Dale E. Jones, vice chairman and partner with Heidrick & Struggles
  4. We have no future because our present is to volatile. Will only have risk management ’- William Gibson
  5. Risk management is a culture, not a cult. It only works if everyone lives it, not if its practiced by a few high priests ’- Tom Wilson
  6. I think the rise of quantitative econometrics and a highly mathematical approach to risk management was the obverse of a decline in interest in financial history ’- Niall Ferguson
  7. There is no doubt that Formula 1 has the best risk management of any sport and any industry in the world ’- Jackie Stewart
  8. Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates ’- Ben Bernanke
  9. If you don’t invest in risk management, it doesnt matter what business you’re in, it’s a risky business ’- Goldman Sachs president Gary Cohn
  10. Adventure without risk is Disneyland ’- Douglas Coupland
  11. Risk and time are opposite sides of the same coin, for if there were no tomorrow there would be no risk. Time transforms risk, and the nature of risk is shaped by the time horizon: the future is the playing field ’- Peter Bernstein, Against the Gods
  12. As population susceptibilities are better understood, we will be in a better position than we are in today to make informed decisions about risk management ’- Samuel Wilson
  13. Take calculated risks. That is quite different from being rash ’- General George Patton
  14. All courses of action are risky, so prudence is not in avoiding danger, but calculating risk and acting decisively ’- Niccolo Machiavelli
  15. Total enterprise risk management is critical, but implementing it is both expensive and easier said than done. Even the most sophisticated financial institutions are still basically silo risk managers ’- Danny Klinefelter, Professor and Extension Economist with Texas AgriLife Extension, Texas A&M University
  16. Playing it safe is the riskiest choice we can ever make ’- Sarah Ban
  17. The question of whether or to what extent human activities are causing global warming is not a matter of ideology, let alone of belief. The issue is simply one of risk management ’- Malcolm Turnbull
  18. Business people need to understand the psychology of risk more than the mathematics of risk  ’- Paul Gibbons,
  19. Risk comes from not knowing what your doing ’-Warren Buffett
  20. You have to take risks. You will only understand the miracle of life fully when we allow the unexpected to happen ’- Paulo Coelho
  21. Risk is a function of how poorly a strategy will perform if the ‘wrong’ scenario occurs ’- Michael Porter, Competitive Advantage
  22. Risk management should be an enterprisewide exercise and engrained in the business culture of the organisation ’- OSFI Superintendent Julie Dickson, June 1, 2011 (courtesy Ethidex)
  23. Risk is our business ’- Oswald Grübel, CEO at UBS
  24. When our leaders accept the status quo, we run the risk of disaster ’- Max Bazerman from “Predictable Surprises”
  25. The concept of ‘inherent risk’ is impossible to measure or even define. The idea of looking at risk absent all hard controls, soft controls, or mitigations, provides little or no useful information in most cases ’- Todd Perkins (from Journal of Applied Corporate Finance – volume 19 number 4)
  26. It’s important to take risks but it’s idiotic to take them blindly ’- Terry Levine
  27. Fail to identify the strategic risks and you fail as a business, no matter how well you manage your operational and project risks ’- Keith Baxter
  28. Business as usual is business at risk ’- Deloitte white paper
  29. Risk management is the identification, assessment, and prioritisation of risks ’- Wikipedia
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Project Manager or Scapegoat?

You Need to Stop Pointing That Finger

Big Project Failures Claim Their Victims in Spectacular Fashion

You’ve just been assigned a high visibility failing project  and  you’re working round-the-clock to get the work to the client on time, despite the fact that the job bears barely any resemblance to the project  you initially discussed. The  scope keeps creeping, the risk  and issue alerts are coming in thick and fast, the project is already  two months  past the original deadline, the clients are getting antsy even though they’re yet to provide you with various key pieces of information in order to baseline the project.  Is this your chance to shine  and showcase your skills?

If You Don’t Know Where You’re Going, You Will Probably End up Somewhere Else – Laurence J. Peter

If you manage to turn the project around and the project is successful, you will attract many fathers. However, if the project fails, you will probibly be  offered up as the  sacrificial lamb (scapegoat),  there is absolutely no way around it.  A  high percentage of projects fail to deliver useful results, that’s a  fact.

Project managers are  regularly blamed for schedule delays and cost overruns for projects they inherit by no fault of there own, however, in most cases, the fault for such issues rarely lies with just one person.

Sufficient data has been gathered to indicate that blockers such as unsupportive  management, senior sponsorship or low  resource availability are as much to blame for project failure as ineffective stakeholder management or poor communication.

Capture  all decisions

The only way to protect yourself is to ensure that you capture all decisions made in the project. In most cases  many of these decisions  will have been made by people above you. While you can influence decisions made by people under you. Get into the  habit  of building a dashboard early in the project and updating it each week with actuals.  Also consider using a  standard repeatable technique to analyse the health of your project.

Constrained resources

If you are in a project where resources are constrained, clearly outline the resources that you require to deliver the project in terms of time, scope, budget, risk  and  quality. If resources are pulled from your project, clearly articulate the affect of that in delivery terms and measure that to time delayed or cost added.

Risk and issues register

Operate  a strong risk and issue register,  ensure  it is both visible  and assessable so  your team can  actively participate in updating it.

Stop  the project

Always remember, cancelling the project is not always a failure. There can be many reasons why the project may no longer be desirable now. If you have done your job well, you can be really successful by ensuring a project does not continue to meander along, wasting time and money when there is no possibility of completing the project.

Organisational change management

Unfortunately, the same can’t be said when there are organisation change management issues.   While there are a  few project managers who feel their jurisdiction ends at the triple constraint, most now  understand the need to achieve the expected benefits from their projects.

So when is it fair to blame a project manager for poor implementation of a  project’s deliverables,  this is assuming that they were employed at the beginning of the project?

  1. If they didn’t perform good  stakeholder analysis during the project initiation stage as well as at regular intervals.
  2. If they turned a blind eye and deaf ear to factors that could impact value achievement
  3. If they didn’t insist on a clear communication strategy and progressive information sharing with relevant  stakeholder groups.
  4. If they didn’t engage influencers from key stakeholder groups throughout the project lifecycle.
  5. If the organisation management deliverables were not built into the project’s scope definition and work breakdown structure.

Assuming the project manager was appointed at the start of the project and had undertaken  all of the above, what are invalid reasons to blame the project manager  if the project failed?

  1. A lack of timely resource availability or commitment by the organisation
  2. Directives to the project manager to not engage certain stakeholder communities
  3. Ignorance by senior sponsors to management risks raised by the project team
  4. A management decision  that is too bitter a pill to swallow in spite of how much it has been sugar coated

Have any comments or stories that could help to expand this article?

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4 Lies about Procurement You Probably Believe

The world of Procurement is seemingly full of impassioned people absolutely certain about what procurement is all about. Like other great lies, many of these half-truths and misleading ideas sound agreeable to the ears and come packaged as good advice from influential people.

How many of these popular lies have you fallen victim to?

1. Procurement should have a seat at the C-table

It’s not so much an outright lie as an irritating half-truth – but the damage comes with what Procurement people do with it. The thought behind this is well-intended: Procurement people should be able to speak the language of senior executives as easily as they can talk about FIDIC or demand forecasting. Terms such as EBITDA, ROIC, and economic profit should be part of their everyday parlance. Procurement issues are often the least understood by the board and the CEO and must be explained in their language.

What on earth could be wrong with that?   Nothing – if the Procurement people have full cognisance of their own tools and language – and can be persuasive to senior people of the value of Procurement.  

Now, that’s where we have, what is kindly referred to, as a skills gap.

In reality, for Procurement with no reputation (outside of that pesky metric of cost) and few business-aligned projects to call upon, it can be incredibly hard to try and catch senior people’s ear – never mind a C-seat (see what I did there?).

2. You must carry out a competitive tender to obtain value for money

I’m trying to distance myself from the public sector here (noting I did co-author the CIPS book on contracting in the public sector) but even in the private sector there’s a desperate need to get three quotes.  

Why three quotes?  

Not five, not 11?   ‘Cos the rules say three; that’s why.  

And the rules of Procurement policy and procedures, well, they can’t be broken because the CFO or the head of internal audit (all very commercial animals?) will be down on Procurement like a ton of bricks.  

When the three quotes are received the following conversation occurs – the highest price is rejected – ‘they’re ripping us off’ followed by – and I love this one about the lowest price quotation – ‘the price is too low, they must have got the specification wrong’ – and the contract is awarded to the middle-priced one”¦.surely there’s a better way to deliver value for money?  

Perhaps starting with actually defining it!

3. Procurement is the only source of governance for 3rd party spend

Being the only source would suggest a 100%, right?  

I’d be amazed – and delighted – if Procurement governed half of all the 3rd party spend.   Words such as ‘influencing’ are sometimes bandied about to shore up this lie. What a surprise that sales people are either trained, or very quickly learn ways, to actually bypass Procurement when selling.

And the reason?

Obviously marketing, IT, auditors fees, construction/property, recruitment (I could go on) is completely different, say the senior people in those departments – echoing the views of the oh so helpful sales people.   And Procurement just never gets near, as they can’t articulate (deliver?) the value they can add.  

I await the avalanche of people commenting on this telling me I’m wrong.   Please be assured you are exceptional in Procurement.    

4. Procurement welcome innovation and strategic relationships and anything other than lower price

Few businesses view Procurement as a strategic process. Most often, Procurement staff report to the CFO. This astonishing trend indicates that Procurement is still viewed as a financial / accounting activity and not an operational strategic activity that directly impacts the bottom line.

Suppliers; if you have an innovative product or service, recognise that Procurement’s ‘raison d’être’ is to deliver cost savings.   That’s what they are measured on, that’s what the research with CPOs and the C-suite say is the #1 priority.   There’s oodles of other priorities such as local sourcing, sustainability, innovation, partnering, risk management – I could go on and on and on.   But that’s the one they get measured on. Think that through, next time you’re pitching.    

The take-away

Perspectives on Procurement need to change, mature and grow up.  Lies like these need to be re-evaluated and abandoned. Procurement needs to change the way they engage and manage suppliers and their internal stakeholders; ‘adding value’ (a dreadful phrase!) means so much more than asking for a discount.

Stephen Ashcroft BEng MSc MCIPS (speaking here, very much in a personal capacity!) is Associate Director, Procurement and Commercial Advisory at AECOM, a Fortune 500 company. He’s a procurement learner stuck in the body of a procurement veteran, and with over 20 years’ experience still sees the glass as half full. Working with leading organisations across diverse industry sectors, Steve helps clients reimagine procurement to drive improved performance. A recognised advisor, speaker, lecturer, and author; the ever-hopeful Kopite shares his bright-eyed/world-weary views on Twitter @ThinkProcure, LinkedIn and his blog.

 

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