ISO 25102:2020 Clause 4.2.3 Customer and supplier perspective

Projects can be undertaken from two perspectives:
a) customer or sponsoring organization: the organization owns the requirements and can either undertake the work or contract some or all the work to a supplier organization;
b) supplier or contractor organization: the organization provides, as a core basis or part of the business, a service or product to other organizations.
EXAMPLE 1 Examples of a service or product delivered by a supplier or contractor, as a project for revenue, can include the construction of roads, airports, railways and information technology systems.
In most cases, the supplier’s project scope is a portion of the customer’s project scope. Each party to a contract should look after its organizational interests in the project and have its justification for undertaking the project. The customer–supplier relationship can be confusing as, for some projects, this relationship can be both inter-organizational and intra-organizational. In such cases, the supplier’s role is carried out in part by an outside contractor or supplier for a customer that is from another department or section within the same organization.
EXAMPLE 2 An organization’s information technology department can undertake a software upgrade using contracted resources or partners for the manufacturing department. In these situations, supplier–customer roles can be multidimensional.
The parties to the contract should determine:

• how project governance should operate on both sides of, and across, a contractual boundary.
• the structure of the organization’s project management team .
• the appropriate people to be involved in the project.
• working practices to be adopted in relation to the project life cycle, as necessary for delivery.

The customer perspective and supplier perspective refer to how the project is viewed and managed from the standpoint of the customer/client and the supplier/contractor, respectively. Understanding both perspectives is crucial for successful project execution and delivery. Here’s an overview of each:

1. Customer Perspective:
   • Initiation and Requirements:
     • Initiation: From the customer’s perspective, a project begins with the identification of a need or opportunity. The customer initiates the project to address a specific goal or problem.
     • Requirements: Customers define the project requirements, specifying what they expect to be delivered by the end of the project. Clear communication and understanding of these requirements are essential.
   • Expectations and Quality:
     • Expectations: Customers have expectations regarding the project outcomes, timeline, and budget. Managing and aligning these expectations with the project plan is crucial for customer satisfaction.
     • Quality: Customers often have quality standards that the project deliverables must meet. Ensuring that the final product or service aligns with these standards is a key customer-centric consideration.
   • Communication and Feedback:
     • Communication: Regular and effective communication is important to keep the customer informed about project progress, issues, and changes.
     • Feedback: Customers provide feedback throughout the project life cycle, especially during key milestones or reviews. Addressing feedback helps ensure that the project aligns with their expectations.
   • Acceptance and Closure:
     • Acceptance: The customer plays a crucial role in accepting or approving project deliverables. This is often done through formal acceptance processes or sign-offs.
     • Closure: From the customer perspective, project closure involves confirming that the project objectives have been met and that the deliverables align with the initial requirements.
2. Supplier Perspective:
   • Bid and Contract:
     • Bid: Suppliers engage in bidding processes to win projects. This involves submitting proposals, cost estimates, and demonstrating their capability to meet the customer’s requirements.
     • Contract: Once awarded the project, the supplier and customer enter into a contract that outlines the terms, conditions, scope, and expectations.
   • Execution and Delivery:
     • Execution: Suppliers are responsible for executing the project according to the agreed-upon plan. This includes managing resources, schedules, and budgets.
     • Delivery: Suppliers must deliver the agreed-upon products or services on time and within the specified quality standards.
   • Risk Management and Issue Resolution:
     • Risk Management: Suppliers identify and manage risks that may impact project delivery, including factors that may arise from their own operations.
     • Issue Resolution: Suppliers address issues promptly, keeping the customer informed about challenges and proposing solutions.
   • Invoicing and Payment:
     • Invoicing: Suppliers submit invoices based on the agreed-upon payment milestones outlined in the contract.
     • Payment: Customers make payments to suppliers based on the terms specified in the contract, often tied to project milestones.

Understanding and effectively managing both perspectives are essential for project success. A well-balanced relationship between the customer and supplier contributes to successful project outcomes and positive long-term partnerships. Effective communication, collaboration, and mutual understanding of each other’s expectations are key elements in managing these perspectives.

Projects can be undertaken from two perspectives: customer or sponsoring organization; and supplier or contractor organization

Projects typically involve two main perspectives: the customer (or sponsoring organization) and the supplier (or contractor) organization. Both perspectives are essential and play distinct roles in the successful execution of a project. In practice, the success of a project often depends on how well these two perspectives are integrated and managed. Projects benefit from a balanced and mutually beneficial relationship between the customer and the supplier. Each perspective brings unique strengths to the table, and their effective collaboration is what ultimately leads to project success.The effectiveness of a project depends on the collaboration, communication, and alignment of interests between the customer and the supplier.

• Customer Perspective Importance:
  • Initiation and Funding: The customer is crucial for initiating the project by identifying needs and providing financial resources.
  • Oversight and Control: The customer’s oversight ensures the project aligns with organizational objectives, and their control helps in decision-making.
  • Acceptance and Benefits Realization: Customers ensure the project meets expectations and works toward realizing the anticipated benefits.
• Supplier Perspective Importance:
  • Proposal and Execution: Suppliers bring expertise and resources to execute the project according to the customer’s requirements.
  • Risk Management and Issue Resolution: Suppliers manage risks associated with project execution and promptly address issues to keep the project on track.
  • Delivery and Invoicing: Suppliers are responsible for delivering the agreed-upon products or services and submitting invoices for payment.

Key Considerations:

1. Collaboration: Effective collaboration between the customer and the supplier is critical. Clear communication, mutual understanding, and a collaborative mindset contribute to project success.
2. Alignment of Objectives: Both parties must align their objectives to ensure that the project meets the customer’s needs and expectations while allowing the supplier to deliver value.
3. Communication: Open and transparent communication is key. Regular updates, feedback, and discussions between the customer and supplier help in addressing issues promptly.
4. Contractual Agreements: Well-defined contracts that outline roles, responsibilities, expectations, and deliverables contribute to a smoother project execution.

Customer or sponsoring organization is the organization owns the requirements and can either undertake the work or contract some or all the work to a supplier organization.

The customer or sponsoring organization is the entity that initiates the project, owns the requirements, and has the authority to undertake the work internally or choose to contract it out to a supplier organization. Let’s break down the key points:

1. Initiation and Ownership: The customer or sponsoring organization identifies a need, opportunity, or goal that necessitates a project. They own the project requirements and define the scope, objectives, and desired outcomes.
2. Decision to Undertake or Outsource: The customer organization has the option to undertake the project work using its internal resources or to contract some or all of the work to external supplier organizations. This decision is often influenced by factors such as expertise, resource availability, cost considerations, and the complexity of the project.
3. Contracting Work to Supplier Organizations: If the decision is made to contract out the work, the customer organization engages with supplier organizations through a bidding or proposal process. Contracts are established to formalize the relationship, outlining the terms, conditions, deliverables, and other relevant details.
4. Oversight and Control: The customer organization provides oversight to ensure that the project aligns with organizational goals and objectives. They retain control over major decisions, scope changes, and project direction.
5. Acceptance and Benefits Realization: The customer organization is responsible for accepting the final deliverables and ensuring that they meet the specified requirements. The organization aims to realize the anticipated benefits outlined in the project’s business case or objectives.

This dynamic illustrates the customer’s central role in shaping the project and deciding how the work will be executed. The flexibility to choose between undertaking the work internally and contracting it out provides the customer organization with strategic options to best achieve its goals. Effective collaboration and communication between the customer organization and the selected supplier organizations are crucial for project success.

Supplier or contractor organization is the organization provides, as a core basis or part of the business, a service or product to other organizations.

A supplier or contractor organization is an entity that operates by providing services or products as a core part of its business to other organizations. Let’s break down the key points:

1. Core Business Offering: A supplier or contractor organization’s primary business model revolves around offering specific services or products to meet the needs of other organizations.
2. Service or Product Provision: The organization specializes in delivering a particular service or product, and this offering is typically designed to cater to the requirements of its clients or customers.
3. External Engagement: Supplier organizations engage externally with various entities, such as businesses, government agencies, or non-profit organizations, to provide their specialized services or products.
4. Contracts and Agreements: Supplier organizations enter into contracts or agreements with their clients, specifying the terms, conditions, deliverables, and other relevant details of the services or products to be provided.
5. Operational Expertise: These organizations often possess expertise in their domain, leveraging their skills, knowledge, and resources to deliver high-quality services or products to their clients.
6. Client Satisfaction: The success of a supplier organization is often measured by client satisfaction, the ability to meet contractual obligations, and the delivery of value to the clients.
7. Diversified Client Base: Supplier organizations may serve a diverse client base across different industries or sectors, depending on the nature of their offerings.
8. Risk Management and Issue Resolution: Supplier organizations are responsible for managing risks associated with service or product delivery and addressing issues that may arise during the course of a project or engagement.

A supplier or contractor organization plays a pivotal role in the broader business ecosystem by providing specialized services or products to meet the needs of its clients. The relationship between the customer organization (that initiates a project) and the supplier organization is crucial for successful project outcomes, and effective communication and collaboration are key elements in this dynamic.

In most cases, the supplier’s project scope is a portion of the customer’s project scope.

That’s a common scenario in many projects, especially when a customer engages with a supplier or contractor to provide specific goods or services. The supplier’s project scope is often a defined portion of the overall project scope outlined by the customer. This approach allows organizations to leverage external expertise or resources for specific aspects of a project while maintaining control and oversight over the entire project. It also facilitates a more efficient and cost-effective execution of projects by allocating tasks to specialized suppliers who can deliver specific components with expertise and efficiency.Here are some key points to understand this relationship:

1. Customer’s Overall Project Scope: The customer, as the initiator of the project, outlines the overall project scope, including the goals, objectives, and the complete set of deliverables they aim to achieve.
2. Segmentation of Work: Within the customer’s project scope, specific tasks, activities, or components may be identified as suitable for outsourcing or contracting to a supplier. This segmentation is based on factors such as expertise, resource availability, or specialized capabilities.
3. Supplier’s Project Scope: The supplier’s project scope is defined within the parameters set by the customer. It includes the specific tasks or deliverables that the supplier is responsible for, often outlined in a contractual agreement or statement of work.
4. Collaboration and Integration: The supplier’s work is integrated into the broader project, and there is a need for close collaboration between the customer and the supplier to ensure alignment and consistency with the overall project objectives.
5. Clear Communication: Clear communication is crucial to delineate the boundaries of the supplier’s scope and to establish how it aligns with the customer’s larger project. This includes defining interfaces and dependencies between the different scopes.
6. Project Management Coordination: Project managers on both sides, i.e., the customer and the supplier, work together to coordinate and manage the interfaces, dependencies, and timelines associated with the supplier’s scope within the larger project.
7. Deliverable Integration: The supplier’s deliverables are integrated into the overall project, ensuring that they contribute effectively to achieving the customer’s project objectives.
8. Quality Assurance: The customer often maintains quality control and assurance over the entire project, including the work delivered by the supplier. This ensures that all components meet the necessary standards.

Each party to a contract should look after its organizational interests in the project and have its justification for undertaking the project.

When entering into a contract, each party—whether it’s the customer or the supplier/contractor—has a responsibility to protect and advance its organizational interests. A well-structured contract and a collaborative approach, where each party looks after its organizational interests, contribute to the success of the project. This involves a balance between protecting one’s interests and fostering a positive and mutually beneficial working relationship throughout the project lifecycle. Here’s an elaboration on this idea:

1. Customer’s Organizational Interests:
   • Justification for the Project: The customer initiates a project to address a specific need, capitalize on an opportunity, or achieve strategic objectives. The project aligns with the customer’s overall organizational goals and mission.
   • Return on Investment (ROI): The customer seeks a positive return on investment, expecting that the benefits derived from the project will outweigh the costs incurred.
   • Organizational Growth: Projects are often undertaken to facilitate organizational growth, improve efficiency, enhance competitiveness, or enter new markets.
2. Supplier/Contractor’s Organizational Interests:
   • Business Opportunities: Suppliers or contractors see projects as business opportunities that align with their expertise, capabilities, and core offerings. Winning and successfully completing projects contribute to their business growth.
   • Financial Considerations: Suppliers aim for financial viability and profitability in delivering contracted services or products. Contractual terms, pricing, and payment schedules are crucial aspects.
   • Reputation and Client Relationships: Successfully delivering projects enhances the reputation of the supplier. Building strong client relationships fosters repeat business and positive word-of-mouth referrals.
3. Mitigating Risks: Both parties have a vested interest in identifying and mitigating risks that could impact the successful completion of the project. This includes financial risks, timeline risks, and risks related to quality and scope.
4. Clear Agreements: The contract serves as a legal document that outlines the terms, conditions, responsibilities, and deliverables. Both parties should ensure that the contract is clear and comprehensive, protecting their respective interests.
5. Collaboration and Transparency: Open and effective communication between the customer and the supplier is crucial. Transparency about expectations, challenges, and changes ensures that both parties are well-informed and can address issues promptly.
6. Measuring Success: The success of the project is measured against predefined metrics and objectives. Both parties should be aligned on how success will be evaluated and what constitutes a satisfactory outcome.
7. Adapting to Changes: Organizational interests may evolve during the course of the project. Both parties should be flexible and willing to adapt to changes, with due consideration for the impact on the overall project goals.

The customer–supplier relationship can be confusing as, for some projects, this relationship can be both inter-organizational and intra-organizational.

The customer–supplier relationship can manifest in both inter-organizational and intra-organizational contexts. Understanding these dynamics helps organizations navigate the complexities of customer–supplier relationships, whether they occur between separate entities or different departments within the same organization. Effective management of these relationships is crucial for achieving project success and organizational goals.Let’s explore each of these dimensions:

1. Inter-organizational Customer–Supplier Relationship:
   • Definition: In an inter-organizational context, the customer and the supplier are separate, distinct entities or organizations. They may have independent structures, goals, and operations.
   • Examples: This could involve a company (customer) contracting services or products from an external vendor or supplier. For instance, a manufacturing company might engage a logistics firm for transportation services.
2. Intra-organizational Customer–Supplier Relationship:
   • Definition: In an intra-organizational context, the customer and the supplier roles are maintained, but both entities exist within the same overarching organization. This could occur in large enterprises with diverse business units or departments.
   • Examples: Consider a scenario where the marketing department (customer) requests graphic design services from the in-house design team (supplier) within the same company. Here, the roles are still customer and supplier, but they operate within the same organization.

Key Considerations:

• Interdependence: In both scenarios, there is a level of interdependence. The success of the customer’s goals is linked to the supplier’s ability to deliver quality products or services, regardless of whether they are separate organizations or different units within the same organization.
• Contractual Relationships: Both inter-organizational and intra-organizational customer–supplier relationships often involve the establishment of contracts or agreements that define expectations, deliverables, timelines, and other terms.
• Communication and Collaboration: Effective communication and collaboration are essential in ensuring that the customer’s needs are met by the supplier. This is true whether they are distinct organizations or units within the same organization.
• Resource Allocation: The allocation of resources, whether financial, human, or other, is a consideration in both types of relationships. This includes considerations about budgeting, staffing, and other resources required to fulfill the customer’s requirements.
• Performance Measurement: Measuring the performance of the supplier in meeting customer expectations is a common factor in both scenarios. Metrics and key performance indicators may be established to assess the success of the relationship.
• Organizational Alignment: In both cases, there is a need for alignment between the customer’s objectives and the supplier’s capabilities. Understanding organizational goals and ensuring that they are complementary contributes to a successful relationship.

The customer–supplier relationship can indeed be complex and, at times, challenging to navigate. Several factors contribute to the potential confusion in such relationships. Here are some reasons why this dynamic can be intricate:

1. Customer Goals vs. Supplier Goals: The customer and the supplier may have different overarching objectives. While the customer aims to meet specific project goals or organizational needs, the supplier may be focused on delivering services or products profitably.
2. Communication Gaps: Miscommunication or lack of clear communication can lead to misaligned expectations between the customer and the supplier. Different interpretations of project requirements or deliverables can create confusion.
3. Changing Requirements: As project dynamics evolve, the customer’s requirements may change. The supplier might find it challenging to adapt to these changes, leading to confusion about scope, timelines, and resource allocations.
4. Unclear Contracts: If the contractual agreement lacks clarity, ambiguity can arise regarding roles, responsibilities, deliverables, and other terms. This can lead to disputes or misunderstandings during the project.
5. Language and Cultural Differences: In international business relationships, language barriers and cultural differences can complicate communication and lead to misunderstandings.
6. Power Imbalances: Depending on the nature of the customer–supplier relationship, power imbalances can occur. A dominant customer or supplier might impose terms that the other party finds challenging.
7. Turnover: Changes in leadership or key personnel on either side can disrupt established communication channels and working relationships, causing confusion.
8. Budget Constraints: Customers might have tight budgets, leading to pressure on suppliers to cut costs. This can affect the quality of deliverables and strain the relationship.
9. External Market Conditions: Economic uncertainties, market fluctuations, or unforeseen external factors can impact the financial stability and operational capacity of both customers and suppliers.
10. Hidden Agendas: If there’s a lack of transparency between the customer and the supplier, suspicions about hidden agendas or motives can contribute to confusion.

Mitigating Confusion:

1. Clear Communication: Establish open channels of communication, clarify expectations, and ensure that both parties understand the project’s goals and requirements.
2. Comprehensive Contracts: Draft contracts with clear and comprehensive terms, including detailed specifications, timelines, and deliverables. Regularly review and update contracts as needed.
3. Collaborative Project Management: Foster a collaborative project management approach where both parties work together to address challenges, changes, and uncertainties.
4. Regular Review Meetings: Schedule regular review meetings to discuss project progress, address concerns, and ensure alignment between the customer’s expectations and the supplier’s capabilities.
5. Risk Management: Implement a robust risk management plan to identify, assess, and mitigate potential risks that could lead to confusion or project disruptions.

By addressing these factors and implementing effective communication and management strategies, organizations can navigate the complexities of customer–supplier relationships more successfully, minimizing confusion and fostering positive collaborations.

In such cases, the supplier’s role is carried out in part by an outside contractor or supplier for a customer that is from another department or section within the same organization.

In situations where the supplier’s role is partially fulfilled by an outside contractor or supplier for a customer from another department or section within the same organization, this scenario represents an intra-organizational customer–supplier relationship. Here are some key aspects of such a setup:

1. Internal Customer and Supplier Roles: The customer and supplier roles are maintained, even though they exist within the same organization. For example, one department (acting as a customer) seeks services or products from another department or an external contractor (acting as a supplier).
2. Project or Service Requests: The internal customer department initiates a project or service request, outlining its specific needs, requirements, and objectives. This request is directed toward an internal or external supplier.
3. Contractual Arrangements: There may be formal contractual arrangements or agreements, similar to those in external customer–supplier relationships. These agreements define the terms, conditions, deliverables, and expectations between the internal customer and supplier.
4. Resource Allocation and Billing: Resource allocations, including budgeting and staffing, are considerations in this relationship. Billing or cost allocation mechanisms may be established to ensure proper financial accounting for services or products rendered.
5. Communication and Collaboration: Effective communication and collaboration are crucial. Clear channels of communication help ensure that the internal customer’s needs are understood, and the internal or external supplier can deliver the required services or products.
6. Quality Assurance: Quality assurance and performance measurement are maintained. The internal customer department expects the same level of quality and adherence to standards from the internal or external supplier as it would from an external contractor.
7. Project Management Coordination: Project managers from both the customer and supplier sides collaborate to coordinate activities, manage timelines, and ensure that the internal project or service request is delivered successfully.
8. Budgeting and Financial Considerations: Both the customer and supplier departments need to manage their budgets effectively. Financial considerations, including cost estimates, billing, and financial reporting, may be integral to the relationship.
9. Flexibility and Adaptability: As with external customer–supplier relationships, internal relationships should be adaptable to changes in project scope, requirements, or organizational priorities.
10. Conflict Resolution: Mechanisms for resolving conflicts or disputes should be in place. Clear escalation paths and dispute resolution procedures can help address issues that may arise during the course of the internal project.

This intra-organizational customer–supplier relationship allows different sections or departments within the same organization to leverage each other’s expertise and resources efficiently. Effective management of these relationships is essential for promoting collaboration, ensuring project success, and maximizing the organization’s overall efficiency and effectiveness.

In these situations, supplier–customer roles can be multidimensional.

In intra-organizational scenarios where the supplier–customer roles are fulfilled within the same organization, the roles can indeed be multidimensional. This complexity arises from the interplay of various factors within the organizational structure.Understanding and effectively managing these multidimensional supplier–customer relationships within an organization require a strategic approach, effective communication, and a culture that encourages collaboration across departments. Clear governance structures, defined processes, and a focus on overall organizational success are essential components in navigating the complexities of these roles. Here’s a breakdown of how supplier–customer roles can be multidimensional in such situations:

1. Internal Supplier and Customer Relationships: Within a single organization, different departments or units often play both supplier and customer roles simultaneously. For instance, a marketing department might act as a customer when seeking services from the IT department (internal supplier), and vice versa.
2. Cross-Functional Collaboration: Multidimensional roles involve cross-functional collaboration. Departments with different specialties or functions collaborate to meet the needs of one another, creating a network of internal customer–supplier relationships.
3. Project-Based Relationships: Supplier–customer roles can shift based on project requirements. A department may act as a supplier for one project, providing expertise or resources, and as a customer in another project, seeking support or services from a different department.
4. Resource Sharing: Departments may share resources, skills, or knowledge across the organization. For instance, a research and development department might act as a supplier of innovative ideas to various customer departments seeking new concepts for products or services.
5. Service Centers and Shared Services: Organizations may establish internal service centers or shared services that act as suppliers to various internal customers. These service centers provide centralized support such as human resources, finance, or IT services to other departments.
6. Cost Allocation and Internal Billing: Multidimensional roles often involve internal cost allocation and billing mechanisms. Departments may allocate costs for shared resources or services, and internal billing may occur to track and manage these financial transactions.
7. Matrix Organizational Structures: Organizations with matrix structures amplify the multidimensional nature of supplier–customer roles. Employees may report both to functional managers (specialist roles) and project managers (project-based roles), leading to complex relationships.
8. Knowledge Transfer and Learning: Multidimensional roles provide opportunities for knowledge transfer. Supplier departments share expertise with customer departments, fostering a culture of learning and collaboration within the organization.
9. Strategic Alignment: The multidimensional nature of roles requires strategic alignment across departments. Clear communication and understanding of organizational goals ensure that supplier–customer relationships contribute to broader organizational objectives.
10. Performance Metrics: Departments involved in multidimensional roles may be evaluated based on performance metrics as both suppliers and customers. Metrics may include project delivery timelines, resource utilization, customer satisfaction, and more.

The parties to the contract should determine how project governance should operate on both sides of, and across, a contractual boundary.

Defining how project governance should operate is a crucial aspect of contract management, especially when there is a contractual boundary between parties. Project governance outlines the structure, processes, and decision-making mechanisms that guide how a project is managed and controlled. When parties to a contract collaborate on project governance, it helps ensure that both sides have a shared understanding of expectations, responsibilities, and the overall management framework. By jointly determining how project governance should operate, parties can foster a collaborative and effective working relationship. This proactive approach helps prevent misunderstandings, promotes accountability, and contributes to the overall success of the project. It also sets the foundation for a positive long-term partnership between the contracting parties.Here are key considerations in determining how project governance should operate across a contractual boundary:

1. Governance Structure: Clearly define the governance structure, including roles and responsibilities on both sides of the contractual boundary. Specify key decision-makers, project managers, and any relevant committees or boards.
2. Communication Protocols: Establish effective communication protocols. Define how information will be shared, the frequency of updates, and the channels through which communication will take place. Ensure transparency to foster a collaborative environment.
3. Project Reporting: Determine the reporting mechanisms for project progress, issues, and risks. Specify the format and frequency of project reports. This helps in keeping both parties well-informed and aligned on project status.
4. Decision-Making Processes: Clearly articulate decision-making processes. Define which decisions require joint approval, which can be made independently by each party, and how disputes or disagreements will be resolved.
5. Change Management: Establish a change management process. Outline how changes to the project scope, schedule, or other elements will be proposed, evaluated, and approved. Include mechanisms for addressing changes in contractual terms.
6. Risk Management: Define the approach to risk management. Identify how risks will be assessed, monitored, and mitigated. Clearly state each party’s responsibilities in managing and responding to project risks.
7. Performance Metrics: Determine key performance indicators (KPIs) and metrics that will be used to assess project success. Align these metrics with the overall objectives outlined in the contract. Regularly review and evaluate performance against these metrics.
8. Contractual Compliance: Ensure that project governance aligns with the contractual terms and conditions. This includes compliance with contractual milestones, deliverables, and any specific requirements outlined in the agreement.
9. Issue Resolution Mechanism: Establish a clear mechanism for issue resolution. Define how issues and disputes will be escalated, addressed, and resolved. This helps prevent minor disagreements from escalating into major conflicts.
10. Contract Management: Develop robust contract management processes. Outline how changes to the contract, renewals, or extensions will be managed. Clearly define the responsibilities of each party in maintaining the contractual relationship.
11. Continuous Improvement: Foster a culture of continuous improvement. Encourage feedback and lessons learned from both parties. Use this information to refine project governance processes for future collaborations.

The parties to the contract should determine the structure of the organization’s project management team .

Determining the structure of the organization’s project management team is a critical aspect of project governance, especially when parties are engaged in a contractual relationship. The project management team structure defines the roles, responsibilities, and reporting lines within the team. Collaboratively establishing this structure ensures that both parties are aligned on how the project will be managed. By collaboratively determining the structure of the project management team, the parties to the contract can promote effective communication, streamline decision-making processes, and enhance the overall management and coordination of the project. This proactive approach contributes to the success of the project and the maintenance of a positive working relationship between the contracting parties.Here are key considerations when determining the structure of the project management team:

1. Roles and Responsibilities: Clearly define the roles and responsibilities of each team member. This includes project managers, team leads, subject matter experts, and any other key positions. Ensure that responsibilities align with the project objectives and contractual requirements.
2. Reporting Lines: Establish reporting lines within the project management team. Determine who reports to whom, both within each organization and across the contractual boundary. This clarity helps streamline communication and decision-making.
3. Project Manager Selection: Decide how the project manager will be selected. In some cases, each party may have its own project manager responsible for internal coordination. Alternatively, a joint project manager may be appointed to represent both parties.
4. Collaborative Decision-Making: Specify how decision-making will be handled within the project management team. Determine whether decisions require consensus, joint approval, or if there’s a designated decision-maker for specific aspects of the project.
5. Cross-Functional Teams: Consider the need for cross-functional teams that involve members with diverse skills and expertise. This is particularly relevant if the project requires input from various disciplines or departments.
6. Communication Protocols: Establish communication protocols within the project management team. Define how information will be shared, the frequency of updates, and the preferred channels of communication.
7. Integration with Organizational Structures: Align the project management team structure with the organizational structures of both parties. Ensure that the team’s composition complements the strengths and capabilities of each organization.
8. Resource Allocation: Determine how resources will be allocated within the project management team. This includes human resources, budgetary considerations, and access to any shared resources.
9. Project Governance Team: Consider the establishment of a project governance team that includes key stakeholders from both parties. This team may have a strategic oversight role and be responsible for addressing high-level project issues.
10. Change Management Team: If changes to the project scope or requirements are anticipated, establish a change management team with representation from both parties. This team can assess proposed changes and recommend adjustments as needed.
11. Knowledge Transfer: If applicable, include mechanisms for knowledge transfer within the team. This is important for ensuring that expertise and insights are shared across team members from different organizational backgrounds.
12. Conflict Resolution Mechanism: Clearly define a mechanism for resolving conflicts within the project management team. Establish procedures for escalating issues and resolving disputes in a timely and effective manner.

The parties to the contract should determine the appropriate people to be involved in the project.

Determining the appropriate people to be involved in the project is a crucial step in project governance, particularly in a contractual relationship. Identifying the right individuals and stakeholders ensures that the project benefits from diverse skills, expertise, and perspectives. By collaboratively determining the appropriate people to be involved in the project, the parties can establish a well-rounded and capable team. This proactive approach contributes to effective communication, enhances decision-making processes, and supports the successful execution of the project.Here are key considerations when determining the people to be involved in the project:

1. Stakeholder Identification: Collaboratively identify all relevant stakeholders from both parties involved in the contract. This includes individuals directly involved in project execution, decision-makers, and those affected by the project outcomes.
2. Project Sponsorship: Determine who will serve as the project sponsor(s) from both the customer and supplier sides. Project sponsors play a crucial role in providing high-level support, advocating for the project, and ensuring alignment with organizational goals.
3. Project Management Team: Define the composition of the project management team. Identify project managers, team leads, subject matter experts, and any other key roles. Ensure that the team structure facilitates effective collaboration between the customer and supplier.
4. Cross-Functional Representation: Ensure cross-functional representation within the project team. Include individuals with diverse skills and expertise relevant to the project’s scope. This may involve members from different departments or disciplines within each organization.
5. Decision-Makers: Clearly identify decision-makers on both sides of the contractual boundary. Specify who has the authority to make decisions related to project scope, changes, and other critical aspects. Establish decision-making protocols.
6. Communication Liaisons: Appoint communication liaisons or coordinators responsible for facilitating communication between the customer and supplier. This helps in maintaining clear and open lines of communication throughout the project.
7. Subject Matter Experts: Identify and involve subject matter experts (SMEs) who possess specialized knowledge relevant to the project. SMEs contribute insights, guidance, and technical expertise to ensure the project’s success.
8. Change Management Team: If changes to the project scope are anticipated, establish a change management team with representatives from both parties. This team can assess proposed changes and evaluate their impact on project objectives.
9. Quality Assurance and Testing: Determine the individuals responsible for quality assurance and testing. This includes roles related to ensuring the quality and functionality of deliverables, as well as compliance with contractual requirements.
10. User Representatives: If the project involves the development of products or services for end-users, include user representatives who can provide insights into user needs and expectations.
11. Legal and Contractual Experts: Engage legal and contractual experts who can provide guidance on legal aspects, contractual obligations, and compliance issues. These individuals play a critical role in ensuring that the project aligns with legal requirements.
12. Project Governance Team: Establish a project governance team consisting of representatives from both parties. This team may have oversight responsibilities, monitor project progress, and address high-level issues.
13. Knowledge Transfer Facilitators: If applicable, designate individuals responsible for facilitating knowledge transfer within the project team. This helps ensure that expertise and insights are effectively shared across team members.
14. Risk Management Team: Form a risk management team with representatives from both parties. This team assesses, monitors, and mitigates risks throughout the project lifecycle.
15. Training and Onboarding Coordinators: If the project involves new technologies or processes, designate individuals responsible for training and onboarding team members. This ensures that the team is equipped to work effectively.

The parties to the contract should determine working practices to be adopted in relation to the project life cycle, as necessary for delivery.

Determining the working practices for the project life cycle is a critical aspect of project governance in a contractual relationship. The working practices define how the project will be executed, monitored, and controlled throughout its life cycle. By collaboratively determining working practices for the project life cycle, the parties involved can ensure a common understanding of how the project will be executed and controlled. This proactive approach supports effective collaboration, minimizes misunderstandings, and contributes to the overall success of the project.Here are key considerations when determining working practices for the project life cycle:

1. Project Initiation: Clearly define the processes and activities for project initiation. This includes the identification of project objectives, scope, stakeholders, and the establishment of project governance structures.
2. Project Planning: Specify the approach to project planning. Determine how the project scope will be defined, how tasks will be scheduled, and how resources will be allocated. Define the planning methodologies and tools to be used.
3. Roles and Responsibilities: Clearly outline the roles and responsibilities of team members, stakeholders, and decision-makers at each stage of the project life cycle. Define who is accountable for what and establish reporting lines.
4. Communication Protocols: Establish communication protocols for the entire project life cycle. Define how information will be shared, the frequency of updates, and the preferred channels of communication. Ensure transparency and accessibility.
5. Risk Management: Define the approach to risk management. Specify how risks will be identified, assessed, monitored, and mitigated throughout the project. Establish a risk management plan that guides decision-making.
6. Change Management: Determine how changes to the project scope, requirements, or other aspects will be managed. Establish a change management process that includes the identification, evaluation, and approval of changes.
7. Project Execution: Clearly outline the processes and practices for project execution. This includes how tasks will be performed, how progress will be monitored, and how issues will be addressed in real-time.
8. Quality Assurance: Establish quality assurance practices. Define how the quality of deliverables will be ensured, including processes for testing, validation, and adherence to quality standards.
9. Monitoring and Reporting: Specify the mechanisms for monitoring project progress and generating reports. Define the key performance indicators (KPIs) that will be tracked and establish the frequency and format of project reports.
10. Decision-Making Processes: Clearly articulate decision-making processes. Define which decisions require approval from specific stakeholders, the criteria for decision-making, and the escalation path for unresolved issues.
11. Project Reviews and Audits: Determine the frequency and process for project reviews and audits. Establish when and how project performance, deliverables, and processes will be reviewed to ensure alignment with project objectives.
12. Closure and Handover: Define the processes for project closure and handover. Specify how project completion will be verified, how documentation will be archived, and how knowledge transfer will occur.
13. Collaboration Tools and Technologies: Identify the collaboration tools and technologies to be used throughout the project life cycle. This may include project management software, communication platforms, and other collaborative tools.
14. Performance Metrics: Establish performance metrics to measure the success of the project. Define the criteria for success and ensure that metrics align with the overall objectives outlined in the contract.
15. Continuous Improvement: Foster a culture of continuous improvement. Encourage feedback from team members and stakeholders, and use lessons learned to refine working practices for future projects.