The importance of good contract administration

With ever increasing levels of outsourcing excellent contract administration is a key component of an organizations purchasing function that can add substantial cost savings over competitors.

Contract administration describes the process for ensuring that all the party's performance and execution of the agreed contract terms are met according to the defined requirements. This involves sitting down and discussing with the vendors and explaining what is expected beforehand and that there will be several monitoring and milestone reviews throughout the contract phases. Also, the contractor will be measured by some means such as EVM or budget analysis to evaluate their performance.

Good contract administration also involves risk monitoring and control activities to assess the varying risk events and mitigate any adverse effects. Project changes also will affect the vendors so a change management process will be executed alongside the contract. Finally, performance related to cost and schedule conformity will be rated during the contract life and milestone reviews will take place to ensure that the contract is progressing satisfactorily.

Some best practices to consider is to employ a standardized contract administration methodology with specially trained experienced staff. Also the utilization of cross-functional teams to measure contractor performance is recommended. Additionally, a formal integrated change control process and a standardized performance measurement process should be a part of contract administration.

Risk management

Risk management is important because risk exists in every area of our lives and something must be done to address risk. Some types of general risks include uncertain financial markets, project failures, legal liabilities, credit risk, accidents, and natural disasters to name a few.

Risk is especially present when new elements are introduced such as a new IT project that will alter how things have been done before. Some risks involved in projects are market, financial, technology, people and process risks. All these changes represent new risks to the organization and must be managed alongside the project implementation. Risk management is the process to recognize the inherent risks and utilize practices that will help mitigate the risks by increasing certainty and minimizing the unknown, managing the change process more effectively, using resources better, and improving the overall management of the project which creates a better working environment.


By effectively managing risk, organizations can avoid potentially costly product failures that may be embarrassing and harmful. The strategies to manage risk mentioned in the text include transferring the risk to another party such as through an insurance policy, avoiding the risk altogether, reducing the negative effect of the risk through outsourcing a riskier element to a third-party specialist, and accepting the consequences of risk. Often not doing anything is a risk that may be too big to take.



The international standard board, ISO, defines risk management in the following way:

Risk management should create value.
Risk management should be an integral part of organizational processes.
Risk management should be part of decision making.
Risk management should explicitly address uncertainty.
Risk management should be systematic and structured.
Risk management should be based on the best available information.
Risk management should be tailored.
Risk management should take into account human factors.
Risk management should be transparent and inclusive.
Risk management should be dynamic, iterative and responsive to change.
Risk management should be capable of continual improvement and enhancement

Quality Assurance

QA is absolutely necessary for companies and organizations to take very seriously. Everyone expects some baseline of quality, even in low-cost products. There is no more luxury of allowing poor quality products or services to hit the market. The intense competition will take advantage of the weakness and quickly fill the gap with better products. Many talk a good quality line, but are unable to implement a culture of quality such as Toyota and Hyundai have done. GM has talked about quality for 30+ years but have not caught up to their rivals and based on their current troubles are unlikely to bridge the quality gap. Also, once a company has a reputation for weak quality it is very difficult to overcome that perception.

The text mentions QA departments within an organization whose sole purpose is to check and test for quality, but I think truly that the quality responsibility must be placed into the hands of each and every employee in the organization. Everyone must be able to address quality problems at the source and not wait until the issues make their way to the QA team. Quality must be everyone's responsibility and not just shifted to a QA department.

Should there even be a QA department is a question that was posed during my Operations class over the summer. The argument was that a QA team effectively absolves the other employees of the quality responsibility by shifting the QA analysis and decisions to the QA department. Not that there shouldn't be benchmarking, quality audits, or statistical analysis done by a specific team, but ultimately the responsibility for the overall quality must be at the highest priority for the management all the way down to the line staff. Only this way will the culture of the organization be truly quality focused in practice and not just in slogans.

Introduction to Systems Thinking by Daniel Aronson

My article summary is on Introduction to Systems Thinking by Daniel Aronson. In this article he outlines some of the key concepts that defines systems thinking such as seeing the "big picture", looking at recurring problems differently, considering the consequences of actions, and analysing problems where solutions are evasive and complex. The goal of systems thinking is to ultimately view problems and solutions in the totality of the whole system not just the individual part.

The traditional way to solve problems is break them down into constituent parts and work from that level, but the systems approach is to take into account the system as a whole and study the complex interactions between the parts of the system. For an example Aronson uses the problem of insect damage to a crop. The standard way to solve this type of problem is to find out what will reduce to insects to the level that will ensure the crop's integrity will be protected. The typical approach is to apply a pesticide to kill the insects and then the crops will be safe. However, this is not the system approach.

The systems way of thinking is to analyse this problem from many more facets. Other factors that need to be considered are the short-term and long -term orientation of this system, what purpose does the invader insect currently serve that will be eliminated after the pesticide application, and the historical effects that may occur such as soil damage and water pollution. Aronson further elaborates this scenario by examining what has often happened in practice; the main effect of eliminating the problem insect is only a short lived solution because the insects that were previously controlled have grown into another problem that needs to be addressed. By looking at this problem through an integrated long-term manner this costly and potentially damaging action could have been addressed correctly the first-time by truly considering the whole system that would be affected by the specific action.

IT projects also can benefit from the system approach. Often solutions are offered through many differing perspectives, but tend to be biased toward the views, experience and culture to such a degree that the solution itself does not really address the entire problem and the organization in which it will be deployed, but only a small and narrow slice that is seen by the proposer.

The complexity of systems today make the systems approach ideal for project management as was discussed in the textbook in chapter two. Aronson proposes system thinking as a method to manage this complexity and address the type of one-dimensional thinking that has plagued organizations in the past. He states that an effectively implemented approach of system thinking can elevate our thinking when we begin the problem analysis.

I believe that systems thinking is needed to address many of the complex problems that we face today. Too often a quick political solution is proposed and is implemented without total systems consideration. For example, in Illinois the smoking ban was implemented without much forethought. Questions such as who will enforce the ban, how will businesses be affected, is the timing correct, how will tax revenue be impacted, who will gain or lose from this ban, were not addressed in the beginning and many resources such as police, health, and court systems have had to try to address some of the oversights of the law as written. Many other types of shortsighted decisions could have be avoided with a systems thinking approach.

Article URL:
http://www.thinking.net/Systems_Thinking/Intro_to_ST/intro_to_st.html

Why do you think schedule issues often cause the most conflicts on projects?

Part of the reason are the different attitudes and work styles that exist towards schedules as stated in the text. Schedules may be viewed differently in other cultures as well and Project managers must be aware of these concerns. Sometimes the original schedule was not realistically thought out and was too aggressive. Time goals should be s.m.a.r.t. along with the rest of the project goals. Also, milestones can be used so that the project has points to assess the progress and help determine where the project is in relation to the schedule goals.

Another reason is that time continues to move forward no matter what is being done to manage it. Careful consideration must be exercised to keep this perspective in mind during the time management process. Project contingencies will arise in the development of complex systems and these will need to be addressed. Often though the Project manager has not planned for the unexpected events on some level and may misuse resources to address "Murphy" as Goldratt states. But project managers must be aware that unplanned events will happen at some point and there should be a plan in place to deal with the problems.

Also, people tend to build in too much safety time into their task completion estimates, but fail to utilize this allotted time and succumb to student syndrome, which basically means waiting until the last minute to begin the task and rushing through it quickly. This misuse of the available time causes projects to fall behind because too much false safety is consuming the time resource that was never utilized on the project.

Finally, scheduling is an imprecise process and involves many people issues which adds to greater uncertainty. PM's are not sure of all of the variables that may affect the schedule. The scope of the project must be clearly defined and a detailed Work Breakdown Structure must be organized so a realistic work schedule can be assembled.

IT project management

Do you think organizations should develop their own information technology project management methodologies? Why? Why can't they just follow a book or already developed methodology?



Yes at some level. I believe many organizations must design and develop their own ITPMM to align the project management processes and activities support the unique capabilities and strategy that each organization possesses. However, there exists a general set of core methodologies and standards in the PMBOK guide in which the organization can utilize as a foundation for developing customized project management methods that specifically address the needs of the organization. The level of customization needs varies between organizations. No two organizations are exactly alike and they use different methods to accomplish goals, so GM can use ITPMM designed by Toyota but ultimately the methodologies will need to be customized at some level to GM's specific needs, processes and capabilities. Rational Unified Process (RUP) from IBM is a process product that tries to address these needs by integrating project management best practices with customizable processes.

Systems view of a project and project management

What does it mean to take a systems view of a project? How does taking a systems view of a project apply to project management?


To view a project with a systems perspective is to see the whole internal and external operational landscape in which the project will be functioning. An example of a system is the cardiovascular process of the human body. To only see the heart and arteries without considering the interdependent support mechanisms that the heart system needs to function fails to consider the implications that any changes to the heart system will also cause variations, potentially fatal, in the interdependent systems of the body that rely on the heart. The reverse is also true.

Similarly, to develop and implement a project without considering the holistic view of the organization, the systems approach, will likely fail to bring the proposed benefits to the organization because the complete, possibly unintended impact of the project has not been fully considered on the entire system. Also, the project may actually hinder the organizational goals and cause real losses. For example, to develop a advertising project for a single product without considering the impact the campaign may have on other product lines within the company, whether or not the price is in conformity with the market position, cannibalization of exiting products, image of the company, and other similar issues must be addressed during the planning and design phase of the project.

Often, projects are designed myopically due to organizational arrangement and culture within a company, such as business units, departments, competitive aspects, and/or geographic regions. Great care must be taken to include the overall goals and perspectives of the organization to ensure the project displays goal congruence and the end result adds value to the whole organization.

What is the role of the project manager?

What is the role of the project manager? Why is leadership so important for project managers?

The role of the project manager is one of leadership and to oversee planning, scope, personnel, budget, safety, execution and implementation of the project in an effective and efficient manner to deliver the project on time and within budget and scope. Managing these constraints is the primary objective to project management.

For example when I was part of a 30 million dollar store construction project the project manager was there to provide leadership and vision and to inform the execution team what was to be expected during the project. He provided daily briefing to the progress of the project in relation to the expected completion time of the entire project. When an area of the project was encountering difficulties or delays, he would provide extra support to ensure that the area would not fall behind. The project was managed without the safety (Goldratt) built-in to projects and with and awareness of the student syndrome phenomenon.

The manager would also constantly be updating the whole team on our successes as well as the problem areas throughout the duration of the project. Based on our progress through the timeline, we would adjust our schedules to work longer days in order to stay on time. We had to aggressively monitor out teams progress and be aware of the next possible constraint and make contingent plans to work around the constraint. The leadership provided was not afraid to make difficult and unpopular decisions to keep the project on track.

Keeping all the employees focused was another critical success factor. Daily goals were presented and the team would meet at the end of the day to follow through on our progress. In the end we finished two days early and under budget. Without the leadership provided this project would have easily fell behind due to the many delays encountered.

In summery, the role of the project manager is keeping the team focused on the constraints of scope, time and budget and executing the plan with strong leadership and organization.