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Project Management National Conference 2011 PMI India

Satisfying the Customer beyond
Contractual Obligation: The
growing demand in Project
Management

Amalesh Porey, PMP

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Application of Select Tools of Psychology for Effective Project Management


Contents
1 Abstract:.............................................................................................................................4
2 Introduction: ......................................................................................................................4
3 Partnering with Customer / Establishing Common Goal: .................................................5
4 Exploiting past experience to anticipate the uncontrolled events: ....................................7
5 Understanding the objective of the Project: ......................................................................8
6 Controlling Budget: .........................................................................................................10
7 Team not to stretch beyond an acceptable limit: .............................................................11
8 Conclusion: ......................................................................................................................12
9 Author’s Profile:...............................................................................................................13

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1 Abstract:

It is a general tendency for customer not to spell out a lot of assumptions in the
document while writing a SoW (internal or external) or signing a contract with an
external vendor. Those assumptions become obvious expectation during the
project execution and the Project Manager and the team struggle to deliver the
customer expectation.

The obvious choice the project manager would have to adhere to the SoW or the
contract. This kind of approach not only makes the customer unhappy but also
acts as a hindrance to achieve the goal or objective of the project. It requires a
very careful decision by Project Manager to ensure that the project objective /
customer requirement is met and the project scope is also adhered without
leaving a wrong precedence.

Usually the solution involves a great deal of stakeholder management,
relationship establishment and a strong control of the project budget. A lot
is now expected from an effective project management practice to take control of
such situation. The customer expects them to be guided at every phase of the
project.

This paper is to discuss the various situations, challenges, learning in various
case studies described here.

2 Introduction:

I am starting the introduction with an interesting case study that happened in my
project management career.

Case Study I: Project scenario: The project was to transform the application
maintenance process from the conventional way to ITIL framework and also to
transition from the incumbent vendor to the new vendor for about 40 applications
including 2 ERP applications SAP and Ariba.

Challenge encountered: When a project was about to enter the final stage,
customer told the project manager that he could not ask the business users to
follow the ITIL methodology and raise ticket for every problem they encounter in
the system. This statement was enough to destroy the basic pillars of the new
process.

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Customer Expectation: At this moment the customer was expecting the project
team to make the system live and also to take care of the end user request to
work in the old ways.

Issue: Although the transition was successful, the customer and the project team
continued encountering non-cooperation from the end users. This also created
problem for the new vendor to manage and report the SLA adherence.

Resolution: The customer and the project manager jointly addressed the
problem by providing input to the users how the new process will benefit the
business. The new process was adopted by the end users in a phased manner
department by department.

Learning: The project management should have risen above the scope of the
work and understand with customer regarding how change management was
getting implemented. Deliverables from customer should have been part of
milestone review and the risk should have been highlighted early.

The above scenario is a classic example of customer expectation to take care of
certain things that are not written in the contract or SoW. Here the job of
changing end user mindset was the responsibility of customer, that was not very
successful and customer was expecting my team to help them post facto
situation, which was clearly not the way of working as per contract.

Such situation is very common today. More the organizations are relying on the
external organizations or expert project managers to run their projects, they are
also expected to anticipate the organization issues, address untold stories in the
requirement and deliver the project within the budget and schedule. Therefore, it
is very much necessary for the Project Managers to avoid such situation at first
place. We’ll discuss in this paper how different aspect of the Project
Management should be taken care to satisfy the customer beyond contractual
obligation.

This challenging objective can be achieved by various ways like partnering with
customer, exploiting the past experience to handle uncontrolled events,
understanding the bigger picture of the project and having a good control over
the budget.

3 Partnering with Customer / Establishing
Common Goal:

In order to make a successful delivery of a project, it is very important that the
Project Manager and his / her performing organization partners with the
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customer (internal or external). The experienced customer also understands the
same and offers this partnership and together they should establish a common
goal.

(Case Study II) Project scenario: Long time ago, I was working on a project to
implement a small ERP solution and stabilizing the post cut-over issues.

Challenge encountered: Although the implementation was successful enough,
a few problems in the system were blown out of proportion by the end users.

Customer expectation: The Senior Manager of the IT department called for a
meeting including her own staffs and the external consultant. She requested her
own employees and external organization to work as a team.

Resolution: Her decision and attitude helped to ease the pressure on the project
team. and invoked proactive solution from her team, even though they were not
experienced in that field at all. Finally all burning issues were closed within a
short period.

Learning: The sense of partnering helped to create a common goal here and
finally the goal was achieved.

In today’s economy most of the companies are relying on outsourcing either to
reduce cost or to leverage the technical know-how. In both the cases there is
practically nobody except the project team to drive the end-to-end project. If the
project team or the project manager has the sole objective to deliver the project
as per contract, then there is every possibility that the project objective is
established without a life within it. Because the customer really may not have the
expertise to think of every requirement, risks and issues before writing the SoW.
It is the project manager and his / her team who can think of them. I have spoken
about this in details later.

A partnering brings all parties together and evolves the integrated team that
knows the organization, stakeholders, requirement, and nuances of the type of
project undertaken, risks and issues. This team also has the commitment to
resolve unforeseen challenges together. This is the key to the common success.

This is something that is not written in any SoW or contract. If we agree that
partnership is required to bring the success, then the onus lies with the Project
Manager as he / she is seen as the leader for the project.

Establishing this kind of partnership and the authority of the project manager will
help the project manager to penetrate through the organizational dynamics to a

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decent extent so as to identify the risks well in advance. Once such control is in
place possibilities of untold requirements can be brought forward to customer or
sponsor at a very early stage of the game, sometimes even before the SoW /
contract is signed off. So, this is one way to avoid such situation.

4 Exploiting past experience to anticipate the
uncontrolled events:

(Case Study III) Project scenario: There was a requirement of implementing
“Contract Management” in SAP for a customer.

Challenges encountered: There was not a single SAP consultant available to
explain to the business users at a first place that how “Contract Management”
works in SAP. So, the project was limping through all the stages of the lifecycle
and all milestones were missed as per baseline dates. The project exceeded the
budget, created lot of dissatisfaction at organization leadership level.

Learning: Practically no resolution was provided to the issue. It could have been
resolved by bringing the right expertise in the team who could exploit the past
experience and advice the customer about the right design.

It is the responsibility of the Project Manager to bring managerial and technical
expertise to the team so that they can exploit their past experience to advice the
right thing to the customer. This is another way to avoid additional requirement
that becomes customer priority and never spelled out in the SoW / contract.

Here is an analogy. When I was completing the interior work of my house, I
outsourced the work to a vendor. One of the task was to install a chimney in my
kitchen. There was a provision of the Chimney outlet at a distant location. The
interior decorator advised me to close that outlet and open a new one. Because if
the exhaust has to travel that far and also in a winding path, the capability of the
Chimney will go down. Here the interior decorator went beyond her contractual
obligation and advised me the right thing that prevented any extra work and also
saved the cost at both my end as well as her end. She was able to advice me
simply from her past experience.

We the project managers always need to look at the customer’s final requirement
or understand what does he / she want to achieve rather than following the
intermediate paths mentioned in the SoW / contract. If required we’ll have to
convince customer to amend the SoW / contract in accordance with what he /
she wants to achieve at the end of the project.

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The first example (Case Study I) in the paper given on ITIL transformation project
could have been done better, if they would have brought up the need of a strong
organization orientation for the changes, project manager could have advised
customer to add a track in the Project plan to take care of the “Organization
Change Management” either externally or internally. Customer could take care of
the additional cost by reducing some less important activities or by convincing
senior management for a higher budget. Sooner we discover such caveats,
better we control the budget. This can be done when we successfully bring the
past experience on the table.

5 Understanding the objective of the Project:

I have already mentioned the need of this aspect in the previous section. We
need to sit back, pause a moment and think at every step about the final
objective of the project.

When a newborn baby feels sleepy, she starts crying and looks for comfort to
sleep. In fact the baby probably does not know what does her body needs. She
cries due to uneasiness in her body. Many parents like me initially try to provide
toys, food etc. to stop them crying. All goes in vain. The mom realizes the actual
need of the baby and finally the baby stops crying and go to sleep.

Just like the example of the baby, often the customer themselves do not realize
the final goal. Sometimes we the project managers would require sitting down
with the customer and deducing the objective and also make customer realize
the same. In the example of the installing Chimney in my kitchen, probably I was
not very conscious about effective exhaustion of the air. I was more interested
about clamping the Chimney above my stove top position and lay the pipe out
from Chimney to the outlet and that’s how I had written my order. Precisely I
would have written this in my contract if I were to write one like we do in the
industry.

The smart interior decorator and the mom were very much aware of the objective
and the customers (I and the baby in the respective cases) were very happy.
Otherwise in both the cases customer would have insisted on delivering the right
thing even though they are not clearly written in the SoW / Contact.

As I illustrated the examples above, the project manager should lead the project
team to focus on the final objective of the project. I am emphasizing on the whole
team to follow that because the final objective to be looked at from both
managerial and technical perspective. If the final objective is well understood, the
predecessor tasks to be undertaken can be chalked out by the project executing
team themselves. A gap analysis of the actual requirement and the work
package statement in the contract can be done based on the information
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available. The project executing team can always ask the customer about any
gap, how the customer is planning to take care. It has to be done at a very early
stage or as early as possible. The response from the customer may be a well
planned parallel track what they were already working upon or include the work
in the SoW for the project team to take care.

(Case Study IV) Project scenario: Let’s take a simple case study of a software
project to develop a CRM system for a customer. The SoW has the following
work package in-scope:

a) Gathering Requirement from business users

b) Designing the system

c) Building the system

d) Testing the system

e) Deploying and supporting the system for 6 months

Anything that is not mentioned above is out of scope.

Challenge encountered: As the team started working on the project and
planning, they came to know that one module of the new application will be used
by 5,000 users of the partners on the web-interface. All the users are spread
across the world and training all of them is essential in order for them to use the
software application effectively. Training of all these users are not part of the
original SoW. The project manager has the following options:

(i) Ignore this part as training these users are not part of the SoW

(ii) Develop an web based training tool for those users

(iii) Train a small number of users as Train the Trainers and customer
can send the trainers to different locations for training

Option (i) is a correct option as per SoW. However the objective of the project to
run the CRM system with no or minimal issues will get defeated. Even the people
may wonder what kind of application has been implemented as it doesn’t help
many of the customers.

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Customer will be definitely happy to pick up option (ii) and (iii) as it will meet the
final objective of the project.

Unless this due diligence would not have taken place, the problem could have
been detected during testing or after deployment. As a result either the project
timeline could have been delayed or the usage of the application after
deployment could have been poor causing disruption to the business and
marking project as failure even through everything would have been done as per
SoW / Contract.

Because of the early detection of the caveat customer got a chance to take their
decision and look at the budget. The reason for omitting this in SoW was obvious
– the customer was not so experienced or they did not have time to go through
the details of the requirement. This is the specific reason why customer expects
the project manager to go to the extra miles and help them beyond what is
written in the SoW / Contract.

I have continued this case study in the next section due to its relation with the
controlling of the budget.

6 Controlling Budget:

The project manager is supposed to help customer / sponsor controlling the
budget. If the performing organization is an external consulting company, then
project manager also need to ensure that the additional cost of the project is not
born by the consulting company. Project manager will also need to ensure that
the team gets compensated for the additional work because typically the team is
asked to work overtime in many cases when the workload increases beyond the
anticipation.

Continuation of Case Study IV: Customer expectation: The customer wants
to implement the project with minimum deviation from budget and schedule.

Resolution: Both option (ii) and (iii) involves additional cost. Let’s assume the
original cost of the project was budgeted as 1 Million USD. Now Option (ii) will
cost 150 K USD and Option (iii) will cost 300 K USD. Let’s assume customer
choose option (iii) due to the merit of the effectiveness of the training. Therefore
total budget goes to 1.3 Million USD.

Irrespective of the status of the approval of the additional budget, project
manager should think of reducing the budget here. Again this attitude goes
beyond the contractual obligation and, the client gets the value of the good
project management practice.

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In the above example, project manager can propose the following:

(a) Absolutely no reduction of cost as the budget originally was very tight, i.e.
final cost should be 1.3 Million USD.

(b) Propose a remote video coaching and thus saving 100 K USD on travel,
i.e. the final cost should be 1.2 Million USD.

(c) Propose to postpone a few nice to have report and functionalities in the
second phase. This would save 200 K USD, i.e. the final cost should be
1.1 Million USD.

(d) Propose both (b) and (c), thus keeping the budget at original 1 Million
USD.

Now, this may be the proposal to customer from project manager. The customer
also may come back with a proposal of 50-50 hit as we believed in partnership.
The request may be to provide train-the-trainer service without any additional
cost added to the invoice and the customer will have to take care of the rest of
the cost of travel and other cost.

Learning: Proper understanding of the project objective can identify the
additional activities that are not written on the SoW and the attitude to control the
budget can keep the additional cost low even if some new unplanned activities
are identified along the course of the project.

The essence of this section is to help customer / sponsor by being proactive to
think about different options, either by using the right tools and techniques to limit
the cost or being innovative to save the money. This is the best project
management practice.

Controlling budget does not necessarily mean keeping the cost at original cap. It
is all about stopping the cost escalation to a great extent and keeping it as low as
possible. I actually paid extra money for drilling the extra hole in the wall to set up
the chimney.

7 Team not to stretch beyond an acceptable
limit:

It is a tendency that both sponsor and the project manager look at the team to
stretch beyond the limit to keep the budget in control. This is wrong approach. It’s

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like using the credit card without making the payment. Working beyond the
contractual obligation does not mean the project team to provide free service.

Both project manager and the sponsor have to understand that there is a price
for premium service. It is the job of the project manager to help the sponsor to
keep the premium service under controlled budget. The sponsor should realize
the value for money. If there is really strong spend limit, the opportunities are to
be looked at to remove not so important work packages.

The project team is an asset and more we have fair deal with the team we’ll be
able to drive them towards the value added service beyond the contractual
obligation.

8 Conclusion:

The way I have given the example of my delightful experience of Chimney
installation, the customer should have similar kind of feeling at the end of the
project. If we want to see a professional success in the project management, it is
very much necessary that customer realizes the team’s effort and due diligence
to deliver the product or service beyond the contractual obligation.

The challenges may come in various forms. As we went through the case studies
and the discussion, we can say that we should be cognizance of the following:

i) An overall approach to the program management to understand the
external dependencies and raise the risk at right time and right forum
even if the responsibility is not written in the contract.

ii) Developing a partnership with all relevant stakeholders in customer
organization to understand various risks in the early stage of the project
and lead the partnership to mitigate the issues together.

iii) Ensuring to bring past experience in the project so that customer and
business stakeholders can be advised about the right approach of the
solution.

iv) Understanding always the bigger picture or the final goal of the
project so that the hidden requirements are also captured.

v) Controlling the budget to keep the cost deviation as low as possible.

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Customer will evaluate and realize the end result rather than measuring if every
task written in the SoW / contract was fulfilled. That is the ultimate success of a
project manager. Finally the customer wants to see the project objective met
within schedule and budget. The customer will get this result only by virtue of the
good project management practice as discussed in this paper that is all about
going beyond the contractual obligation.

9 Author’s Profile:

Amalesh Porey, PMP, is working with Cognizant Technology Solutions
as Consulting Manager-ERP. He has been working as Program Manager
and Project Manager capability to deliver SAP Projects in implementation,
transition and maintenance track for last 6 years. He has total 14 years of
work experience. In the past he was associated with Infosys
Technologies Limited and Larsen and Toubro Limited.

Amalesh_porey@yahoo.com;

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