Question

4a)  A fellow project manager has approached you for advice to manage risk in the procurement of IT services without a well -defined specification. According to the fellow project manager, he and his team does not want to entertain any risk, hence his decision in choosing a Fixed Price Contract. Are there any inherent risks in the selected contract type? Critically evaluate the situation and bring out all the inherent risks you foresee.

4b) How can organizations use weighted scoring model to evaluate proposals as part of seller selection?

4c) Provide two suggestions for ensuring adequate change control on projects that involve outside contracts.

Answer 1

4a) Fixed price contract projects are riskier as compared to other projects.

• This is because the cost of the project will not be subjected to any modifications.
• There can be subsequent costs during the work process.
• If the work is properly managed and alterations can be processed as part of contract modifications, it will go well.

In the given scenario, the project managers don’t want to entertain any risk. IT service procurement, however, is not devoid of risk factors. Especially in this case when the price contract is fixed, there are many risks that can surface.

There are three major risks in this situation:

1. If the scope of the services and work along with the production of deliverables takes more time and effort, the client would have already paid the fixed cost. The additional cost would be on the service provider.

2. Due to the higher costs, the provider may compromise the quality of the products.

3. There will be no performing of out of scope activities that are essential for the quality and risk mitigation.

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4b) Weighted scoring model:

Such models work by assigning varying number of weights to different criteria. Based on each criterion the seller is assigned some score. The score is multiplied with the weights. The resulted weighted scores by all projects in each criteria category are summed up and the result is used to select the seller.

Use of such models to evaluate proposals while selecting sellers:

Request for proposal sheet is designed with all the criteria and weights. Sometimes sellers are also made known the subjects they will be judged on.

• Weights are assigned to the categories on the sheet as per their importance in each project. For example, in some projects, experience with enterprises is important and other types of peripherals used are important.
• Selection committees are formed and member of each committee is given proposal sheet.
• The members are asked to rate based on the individual judgment of a specific seller.
• Once all the sellers have scored the responses on the sheets, the weighted scores are averaged together and the final score is made.
• Whichever seller scores the highest is picked for that specific project.

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4c) Change control is considered a formal activity. Even if the project is a success, change is something that can't be resisted. Change control deals with project scope, policies, controls, budget, time, etc.

2 suggestions to ensure change control for outside contracts projects:

1. Documentation:

The change control process should be documented. Documented change requests are beneficial to help in actual change. It should be easily explainable so that every team member understand the requirement for it.

• It should outline in a precise and clear statement why there is a need for change.
• The contracts get affected if the request is not considered in a given time.
• It should be in a reasonable time.
• It should be clear what has been expected and the due date for it.
• It helps the team in analyzing and get the perfect picture with more details.

2. Evaluation:

Once the documentation is complete, it is essential to evaluate the request. The process of evaluation can be simple or complex. It should be done with the whole team. This will give all the members the opportunity to ask questions.

• It will make the decision-making process quicker.
• A formal presentation can be used while the review process.
• Afterward, a meeting should be conducted to understand the impact of the review.
• It will help in understanding the feasibility and expectations.
• The team should also offer their feedback in this regard.
• This will help in creating options and recommendations.