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International Prince2 User Forum :: View topic - PRINCE2 in Supplier Environments
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PRINCE2 in Supplier Environments

 
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Who motivates PRINCE2 usage in the UK?
Customers
12%
 12%  [ 1 ]
Suppliers
37%
 37%  [ 3 ]
Both
12%
 12%  [ 1 ]
Industry standard
37%
 37%  [ 3 ]
Total Votes : 8

Author Message
GregT
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Joined: Apr 05, 2006
Posts: 8
Location: United States

PostPosted: Thu Aug 17, 2006 7:06 am    Post subject: PRINCE2 in Supplier Environments Reply with quote

Hi,

PRINCE2 manages projects in stages. The Project Board authorizes (and pays for) the next stage at or near completion of the current stage. This clearly works well in environments where customers and suppliers work for the same company.

On the other hand, in cases where the supplier is a third party vendor, sales persons like to sell large, long-term deals. For example, outsourcing firms like ACS, Perot, and EDS typically sell multi-year outsourcing deals.

It seems to me PRINCE2 works opposite to how vendors like to do business. I am concerned about this as an impediment to vendor adoption of PRINCE2 in the United States.

How are UK-based vendors dealing with this aspect of PRINCE2? For example, are vendors still able to sell large, multi-year development projects?

What happens to the contract when the customer's business case changes and the project no longer makes sense?

Do suppliers have to sell their efforts on a T&M basis?

Do vendors just have to live with this, because the clients specify PRINCE2 in the RFP?

Greg
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Dallas, TX
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AndyMurray
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Joined: Apr 13, 2006
Posts: 17
Location: UK

PostPosted: Fri Aug 18, 2006 2:52 am    Post subject: Interesting poll Greg Reply with quote

Hi Greg

I found your poll very interesting.

I've been a user of PRINCE2 since it was launched in October 1996. The reason my (then) company adopted PRINCE2 was because it was only ?50 for the manual and it was cheaper than writing our own. It was a naive view point because we then spent 3 months tailoring it to suit our organisation.

The company I worked for became an Acredited Training Organisation (one of the first few) and our customer base was surprisingly 50/50 between public and private sector.

The public sector guys were doing it because it was a government standard, but the private sector were doing it for 2 reasons. The first being similar to my own and the second was because their public sector customers were using it. We often had people registering for the course saying they wanted to know "what all this PID stuff is that my customer keeps referring to"

I believe there were two significant moments in PRINCE2's history which resulted in its market dominance.

The first was Sir Ian McCartney's report "Successful IT: Modernising Government In Action" which addressed by public sector IT projects go wrong - nearly all of the recommendations are addressed by PRINCE2.

The second was the introduction of the Comprehensive Performance Assessment (CPAs) by the Audit Commission. The audit commission assesses every local authority in England and rates them Poor, Weak, Fair, Good or Excellent. The rating influences how much central government funding they get, which in turn influences the council tax they need to levy and the quality of service they are able to provide, which in turn influences re-election prospects. Nearly all of the CPA reports I have seen recommend improving project management capability as a foundation for implementing improvement initiatives. This created a land-rush of requests for PRINCE2 training and PRINCE2 handbooks for local authorities. The downstream effect is that it is not just suppliers to central givernment but suppliers to local authorities who now want to use PRINCE2 so they can better interact with their customers.

Now PRINCE2 has a critical mass, I believe that many organisation are using it becase it has become an industry standard (it is harder to find a PM without a P2 certificate than one with it!), which is what I voted for on your poll.

A quick question, what prompted the poll?

Regards
Andy
Registered PRINCE2 Consultant

[Note: Edited by Admin to remove links please]
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AndyMurray
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Joined: Apr 13, 2006
Posts: 17
Location: UK

PostPosted: Fri Aug 18, 2006 3:26 am    Post subject: Re: PRINCE2 in Supplier Environments Reply with quote

Hi Greg

Didn't see your narrative when I originally answered your poll.

My views inserted.

GregT wrote:
Hi,

PRINCE2 manages projects in stages. The Project Board authorizes (and pays for) the next stage at or near completion of the current stage. This clearly works well in environments where customers and suppliers work for the same company.

On the other hand, in cases where the supplier is a third party vendor, sales persons like to sell large, long-term deals. For example, outsourcing firms like ACS, Perot, and EDS typically sell multi-year outsourcing deals.

It seems to me PRINCE2 works opposite to how vendors like to do business. I am concerned about this as an impediment to vendor adoption of PRINCE2 in the United States.

How are UK-based vendors dealing with this aspect of PRINCE2? For example, are vendors still able to sell large, multi-year development projects?


I have helped organisations such as Sun Microsystems adopt PRINCE2 as a supplier organisation, so have some experience here.

I've tried to set up joint project boards where the Senior Supplier is a representative of an external supplier organisation. This ONLY works if the supplier is responsible for the scope of the whole project, i.e. as a prime contractor. Where there are items that the customer is responsible for, or where the customer is contracting with a 3rd party this becomes very difficult. Interestingly it is exactly these sorts of issues that have blighted the construction of the new Wembley Stadium here in London.

The alternative is that you acknowledge that you have different projects. As the supplier your project is to deliver the goods and services as contracted in order to help/enable your client to meet their objectives. BUT, the business case for YOUR project is to ensure you make the required profit, in time, and set your organisation up for repeat or referral business. If there are multiple suppliers there will be a set of (potentially competing) business cases.

I recommend the supplier's project board comprises:

- Senior User The Sales Person
- Project Executive The Manager who reports the numbers
- Senior Supplier The Manager providing the resource/expertise

The Px and Ss may infact be the same person.

The reason I recommend the Sales Person is because they represent the customer's interest within your organisation.

For the customer project board, I recommend that the Ss is the person who is responsible for overseeing the contract execution (could be a purchasing manager, for example).

Remember that a project board may comprise multiple Senior Suppliers, so there might be a different person for each major supplier.

Where a high degree of co-operation is required I recommend setting up a Supplier Forum chaired by the customer's Ss. The Px for each of the supplier organisations should attend (since you want decision makers).

If you mail me (via website) I'll send you some information which may help.

GregT wrote:
What happens to the contract when the customer's business case changes and the project no longer makes sense?

Do suppliers have to sell their efforts on a T&M basis?


Change is inevitable or highly likely on most projects. So I see management stages as a good thing. To ensure that the contract and the project remain aligned there needs to be a mechanism for change control. Some changes will not need a change to contract (i.e. can be done within tolerance) and some can't. It means that you need a heirarchy of decision making which is what PRINCE2 provides with its management levels.

On a practical front, this is where Product Based Planning and work-packages are helpful. A work-package describes how a supplier will deliver one or more products. The Products for the current stage should be defined in detail and signed-off as part of the stage approval. Therefore Purchase Orders can be aligned to the work-packages for the current stage. The contract covers the entire project (and afterward if there are support requirements) but needs to describe how the supplier will refine quotes for future work-packages. Tolerances are set at Work-package, Stage and Project levels, so an exception should still be raised in the current stage if the supplier is forecasting the project tolerance will be exceeded in the next!

Since there is more certainty for the current stage there should be less need to change POs and invoices. This is good for both customer and supplier financial forecasting.

Product Breakdown Structures are really good for scoping. I always start with the entire project from the customer's view point and then use it as a basis for discussion as to who will be reponsible for which products.

Answering your last point, if the customer's business case no longer makes sense, they should cancel the project. Therefore the contract should cover this possibility and include early termination provisions (other than for default or breach)

I hope that helps.

If you are on skype, feel free to ping me for a chat. I'm listed as andy_murray.

Regards
Andy
Registered PRINCE2 Consultant

[Note: Edited by Admin to remove links please]
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Outperform - Bids, Projects, Programmes - The Accredited Consulting Organisation
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PaulAtkin
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Joined: Jan 29, 2005
Posts: 9
Location: Edinburgh, UK

PostPosted: Sat Aug 19, 2006 12:13 am    Post subject: Reply with quote

Hi Greg,

I voted for Both.

My first experience with PRINCE2 was with a supplier organisation. They liked it because they could use it as evidence of quality to potential customers and, once they had won the bid, could mange the customer to their standards.

It is also Customer driven here in the UK, particularly in the public sector. From this point of view a customer can control and audit suppliers against a known standard.

Back to suppliers; I don't think good suppliers have anything to fear from payment on delivery (for example; of products or at the end of stages). They will be confident in their abilities and PRINCE2 devotes a lot of effort, up front, to defining what the products and stages will actually be composed of. This is where the PRINCE2 Product Based Planning Technique and Planning process are really useful.

One technical point: PRINCE2 says nothing about when to make payments. It might be reasonable to pay on stages but PRINCE2 does not require it. PRINCE2 will happily work with whatever techniques are suitable for your contract, company or country.

Regards

Paul Atkin
PRINCE2 Approved Trainer
Advantage Learning Ltd
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