PRINCE2 helps make supplier cheating futile

Colleagues in a supplier warehouse

In this blog, Alexei Kuvshinnikov, accredited PRINCE2® 6th edition trainer with 20+ years of international project management experience, explains how PRINCE2 maintains the business and supplier project interests in harmony.

A PRINCE2 project aims to produce an output – a project product. The actual production takes place in the managing product delivery process. It is achieved through a sequence of work packages authorized by the project manager and executed by team managers. And team managers in many cases belong to the project´s supplier side.

Say you operate a company that wants to put up an office building and lease space in it. It´s a technically complicated venture that requires specialist expertise – after all, you are challenging the nature. I mean, the force of gravity and materials´ resistance. No wonder then that the construction industry has a large number of specialized sectors that respond to the complexity of current designs. So, to actually put up your building you´ll need to contract a number of suppliers.

And user and supplier as key project stakeholders have different interests. The user´s business case will focus on getting a building and receive revenue from leasing it. A supplier will have a different business case focusing on delivering the work packages involved in erecting a building at a profit.

The very existence of two business cases can lead to a conflict. Suppliers can be easily tempted to cheat by inflating their costs or saving on quality to lower them. But with PRINCE2, the ultimate aim is to safeguard the user. PRINCE2 incorporates a number of procedures that effectively make supplier cheating futile.

Take quality management. The responsibility for ensuring that a configuration item fully meets the defined quality lies with the team manager (supplier). This creates a powerful safeguard against any kind of manipulation.

For a start, a work package will include a cost tolerance that the team manager cannot exceed without an approval from the project manager. Moreover, in the context of product approval every deliverable will be checked against the quality criteria by external reviewers. If it is not fit for purpose, there is no way it will go undetected. The team manager will have to correct the discovered deviations from the quality criteria blowing a whole in the supplier´s business case. A combination of the inevitability of discovery and the severity of inescapable penalties makes any kind of messing with the quality criteria pointless.

Another potential loophole could be created by requests for change (RFC). A team manager can ask to change a product´s quality criteria after having accepted the work package with its product description. Adjustments made to quality criteria can result in cost savings for the supplier. But before the change authority approves an RFC, it will be checked by external reviewers. The change authority will have a change budget at its disposal to cover the costs of such reviews. Once again, any attempt at getting an unfair advantage will inevitably be detected and stopped.

At the directing level of management, the senior supplier is accountable for ensuring that the project product meets the acceptance criteria. It would be disastrous for the senior supplier if the senior user refused to accept the project product and sent it back. It is thus in the senior supplier´s best interests to ensure that all configuration items that go into the project product fully meet their respective quality criteria and are fit fur purpose.

As a method, PRINCE2 is very much geared towards promoting communication and cooperation and it also protects supplier interests through project assurance. PRINCE2 is not about arm-twisting. It is about finding common ground to make the project a success for all principal project interests.

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