Managing vendors is fundamental to a PM’s role, so what are the essential ingredients for an effective and successful collaboration?

A day-to-day requirement for most project management roles is the ability to effectively manage vendors that are required for successful delivery of an organisation’s projects. It’s an expected core project management skill and while most experienced PMs have had to manage a vendor relationship, it doesn’t always mean that it has been done successfully.

Vendor management is nuanced and challenging at the best of times for project managers. Often caught between the competing agendas of the business and the vendor, PMs must navigate the needs of the project’s outcomes against those agendas and it is often the relationship with the vendor that determines whether the project succeeds or fails.

So what are the core fundamentals that a project manager should keep front of mind when managing vendors?

Are the Drivers of the Business and the Vendor Aligned?

Project managers need to understand the drivers for both the business and the vendor. This provides critical context for the project manager when they establish the vendor relationship and for ongoing management of the vendor.

Understanding what drives each player in the project will enable the project manager to better zero in on the behaviours or each party and it is those insights that prove invaluable when developing strategies to manage the relationship.

For example, there may be an immediate disconnect where one party favours costs over quality. That context is important for the project manager to understand because the more aligned the vendor and the business are, the greater likelihood that the vendor relationship will be a harmonious one.

Wherever Possible, Make the Relationship a Win-Win

Simple to write, hard to achieve, but as with any relationship, a critical motivator for all parties is the genuine chance of success.

A relationship that is lopsided, biassed or unequal in some regard (either toward the business or the vendor) in that the final outcome cannot deliver a win for both parties, will not only be a difficult relationship to manage but may not deliver the final project outcomes.

Ensureup frontt that the relationship is established so that there is a genuine chance for success – whatever the measure – for both parties to achieve their goals. A lopsided agreement may initially look good on paper, especially if it is your favour, but it may count against you in the end with an unmotivated or even hostile vendor to manage into the future.

Take Time to Build the Relationship

The best vendor relationships are ones whereby there is a high degree of collaboration. Good collaboration comes through building familiarity between parties and this does not happen overnight.

So take the time to get to know the vendor, visit their premises or co-locate some personnel and take an interest in their business. After all they will potentially be supporting parts of your business for many years to come; it is better to get to know them now and use these insights to enhance the vendor management skills during the life of the project.

Start with a Proof of Concept

Embarking on a project with new vendors means you won’t truly know their capacity or culture until the engagement starts and you’re working with the team. Testimonials and glossy brochures only go so far in providing insight into the ‘how’ of their delivery.

A good place to start with new vendors is to consider a Proof of Concept (POC). POCs allow both parties to size each other up and form a relationship without the pressure of a sizable deliverable. A POC can also take the pressure off the initial relationship and allow time for each party to learn how to work together before embarking on a longer-term engagement.

When Disputes Arise: Shall We go to Court?

Preferably, no. Whilst contracts are important, they should not be the first port of call in the management of a vendor relationship, particularly when something is in dispute.

As in any relationship, everything is open to interpretation and their lawyers are likely telling them the same thing (at considerable cost as well).

Make enforcement of a contract by the courts a last resort; instead use whatever means at your disposal as a project manager to keep both parties engaged and focused on a harmonious approach to resolving issues. Encourage both parties to focus on compromise if it is for the greater good of the project.

There is usually only one winner when legal action is taken – and it’s more often than not the legal fraternity.

Focus on the Fundamentals – Always

Good vendor relationships are vital to success, and while the list above is not exhaustive, it does seek to address the core fundamentals.

As outsourcing, digital disruption and cloud services continue to rise, managing the nuances of each vendor relationship becomes even more critical to the business. The principles of good vendor management should be kept front of mind whenever a project requires vendors to be part of delivering a successful project.

As project specialists, we develop fit-for-purpose strategy.  Contact us here to find out more about how we work with your teams or call 02 9098 6300.

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Quay Consulting is a professional services business specialising in the project landscape, transforming strategy into fit-for-purpose delivery. Meet our team ...