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What are the Differences between Client and Contractor...

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Paul Naybour Discussion started by Paul Naybour 3 years ago

I have spent a few days developing a course outline for a design contractor who delivers complex engineering projects. This got me thinking about the fit between the APM Body of Knowledge and PRINCE2 and the challenge of running a project in a contracting organization. The APM Body and Knowledge and PRINCE2 are primarily written from the perspective of a client organisation. Many of the techniques, such as estimating and risk management, translate well between the client and the supplier. However some areas need to be viewed from a different perspective for contracting organisaions. The main differences are

Project Life Cycle vs Contracting Life Cycle

For the client project life cycle follows a well described path from concept through to handover to the users. For the contractor life is a little different, the first part of the project follows a sales pipeline, from marketing to opportunity identification, through bidding and contract award. Only at this point do the two lifecycles join for project delivery and implementation. The client is very much in control of when the contractor is involved in the project. Traditionally they complete the concept and definition phases without any contractor involvement and involve the contractor during the implementation phases of the project. Some clients work toward early contractor engagement with with a preferred or a number of preferred bidders. 

Business Case vs Bid / No Bid Decision

The business case is a document prepared for the client to justify the funding for the project. It considers the costs, benefits and risk of a number of options and presents the case for the preferred option. The equivalent document for a contractor is the bid / no bid documents. In principle it fulfills the same purpose of the business case and justifies the benefits and the cost of preparing the bid. However in structure the document is very different, it looks at the chances of winning the contract, competitors strengths and weakness and he customer hot spot. 

User Management vs Contract Management

In the APM approach to projects the user has a very important in defining the project needs and requirements. The project manager and sponsor have an active role in managing the expectations for the user. For a supplier the contract is the most important definition of the requirements. The contractors main aim is the meet the requirements in the contract. Where these to not align with the needs of the user this can cause pressure for change and variations to the contract. 

Change Control vs Variations

The APM take about change control approved by the sponsor, these typically relate to changes in scope or timescales. Contractors are more interested in variations to the contract and the impact these will have on profitability.

Cost Benefit vs Profit

The biggest area of difference is between the commercial objective of the client and the contractor. The client is trying the maximise the business case for the project. This means minimising the costs and maximising the benefits. The contractor is trying to maximise the profits from the contractor. There are two way of doing this. One increasing the price to the client, normally though change control or two by delivering the project in a more cost effective way. The cost of deliver can be reduced by either cutting the quality of delivery or by finding innovative ways to deliver in a much more cost effective way.

What are the other differences between delivering projects as a client or a contractor? 

 

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