Continuing the series where I explore some specific challenges per project type here I discuss the challenges of service providers’ projects.
If your organization is a service or product provider, other organizations engage it to deliver projects as per a signed Statement of Work (SOW). Your organization provides resources to deliver the agreed scope, and a Project Manager (PM) would likely be assigned to manage the delivery. In addition, your organization probably would have another group—Sales, Account Management, Business Development, etc.—that would be concerned with the success of each client engagement and with overall client satisfaction.
When managing a project for a Service Provider, PMs can face some special challenges that might hinder delivery and, in some cases, the success of the entire relationship with the client:
1. Lack of scope control and change management
2. Conflict between client satisfaction and project scope control
3. Subjective Project Performance KPIs
4. Unclear decision-making process
Lack of scope control and change management
The purpose of any SOW is to define in unambiguous language what will be delivered as part of the engagement and how the delivery will be managed. Ideally, it would also describe any change management procedures to be followed.
However, the language in the SOW may depend on the maturity of the delivery processes of the organization and what procedures a PM is required to follow. If there are no standards, everything is left to the discretion of the PM. They would need to establish and educate the client about what is in scope, what is out of scope, and what change management process will be followed. If the PM accepts new requests without any scope assessment, very soon all the contingency reserves will be burned, the project will go over budget, and the project would potentially become unprofitable.
Conflict between client satisfaction and project scope control
In situations when the relationship between PMs and Sales teams is not clearly defined, the client may find a way to pressure the PM to deliver more without a change order. While all the teams in the organization are responsible for client success, this undefined relationship may cause project teams to deliver more for less. If a PM is not able to provide sufficient evidence and arguments for why it is important to manage client requests via a change management process, this pressure might eventually derail the project and diminish the PM’s authority over the successful delivery—not only on a single project, but on all projects in the future.
Subjective Project Performance KPIs
In order to improve any process, it needs first to be measured and later compared with the target parameters. This is true for Project Performance Key Performance Indicators (KPIs). If KPIs are not clearly defined or look at only one aspect, like financial performance, they can drive undesired behavior and cause frustration not only within the organization, but also for external partners and clients.
For example, if the Project Management Office and executive leadership consider only financial indicators to gauge the client’s satisfaction and project success, they might endorse unnecessary padding on the estimates and adding contingencies to increase the revenue. Sometimes this might be okay, but in some cases, overpricing might lead to losing the clients. Similarly, if the PM’s performance is judged by the number of change orders signed and additional money received, this might drive PMs to create change requests even when it might be reasonable to provide some free services to increase customer satisfaction.
Conversely, a lack of quantitative and measurable KPIs will lead PMs to be fully dependent on leadership’s personal opinions and limit their ability to implement best practices.
Unclear decision-making process
If the service provider does not have a clear path for decision-making on client engagements, then facilitating decision-making may become an additional source of stress for a PM. While a PM would normally provide the initial information and recommendation for responding to client requests, ultimately it is up to the functional management to define the path for decision-making. Client satisfaction often depends on how fast responses to requests and changes are done, but this is often beyond the control of a PM. The PM might become a scapegoat for slow responses when it is really immature decision-making processes that are to blame.
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