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How Vendors Can End Up Costing More Than Your Project

Bad vendors are every project manager’s worst nightmare. They slow things down. They don’t necessarily do things right. And ultimately, they can end up costing more than the project itself. Needless to say, vendors keep project managers up at night. Yet they don’t have to. Competent vendor management is the key.

Vendor management can be handled in-house by the project management team. It can also be outsourced to a company like the Janiko Group. The advantage of outsourcing is freeing up the management team to concentrate solely on the project at hand. They can leave the distractions that come with vendor management to the service provider.

Bidding Jobs Incorrectly

Headaches involving vendors usually start early on. They start when projects are not bid correctly. How does this happen? Incorrect bidding is the result of a combination of things, not the least of which is a poor budget analysis. Project managers don’t know what they have to work with so they don’t know how much they can spend on each part of the job.

Things are further complicated when bids do not require all the necessary information. A thorough bid forces vendors to address everything from scheduling to how they propose to complete the work. To bid a job properly, the person responsible for soliciting bids has to ask the right questions.

Failing to Vet Bidders

The next stage of creating vendor problems is failing to properly vet bidders. Proper vendor management requires that every bidder be scrutinized in detail, ensuring that the eventual winner can be trusted to live up to expectations. A failure to vet bidders equates to a failure to accept the best possible bid.

Incorrect bidding and failing to vet sets the stage for spending a lot more than the budget calls for. It sets the stage for cost overruns, budget creep, scope creep, etc.

Not Holding Vendors Accountable

Project management teams that do not properly solicit bids and vet bidders tend to not be so good at holding their vendors accountable. They bring the vendors on board and let them do their thing. Without following up on a daily basis, there is no way to know what they are doing. And if that’s the case, costs start going up in a hurry.

Project managers and coordinators do not have to be micromanagers. They don’t have to dictate every little detail of what a vendor does. But they do have to follow up daily. They do have to pay attention. They do have to hold vendors accountable to their bids and the contracts they agreed to.

Not Analyzing the Budget

The final nail in the coffin is not continually analyzing the budget as a project evolves. Keep in mind that vendors affect the budget as they do what they do. Ongoing budget analysis raises red flags when even the smallest cost overruns occur. It alerts project managers and coordinators to poor quality work that has to be repeated by vendors who don’t get it right the first time.

Vendor management doesn’t begin and end with bid solicitation. It is actually a comprehensive discipline that manages vendors from the moment jobs are first put out to bid until the final analysis of the project is complete. Along the way, vendors are held accountable.

Failing to manage vendors properly can lead to them costing more than the original project. You spend more on their bids. You spend more on cost overruns caused by poor quality work and the lack of attention to the budget. It is not a good situation for any project manager to be in.

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