Purchasing Services: The Pitfalls, Part II

PurchTips edition #154


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How Can You Mitigate Services Procurement Risks?

One reason that services procurement can be more challenging than goods procurement is that performance levels for services are often determined by one key person on the supplier's team. Be it a software implementation project manager, a consultant, an equipment installer, or any other type of service personnel, that one person's success can determine the success of the service procurement.

When deciding between service suppliers, learn about the key person for each supplier. Here are six questions to ask service suppliers' management. I prefer to ask these in person because it's too easy to make up fake answers with the lag time allowed for written responses.

  1. What are the key person's qualifications? This information can help you develop a measurable comparison between suppliers.
  2. How long has the key person been employed there? To get this information, I like to see a copy of the key person's resume/CV. If the person hasn't been there long or has a pattern of leaving a job after a consistent interval, you may be able to assess the risk of the person leaving the supplier during your project.
  3. What other projects is the key person working on? This question can help you assess the risk of the key person being distracted from your project, which could lead to unacceptable performance.
  4. What could happen to make one of those projects become a higher priority for the key person than our project? Knowing the risks, challenge suppliers to give you the confidence that those risks will not occur.
  5. If the key person was to leave the company or be unexpectedly out of the office for a long period of time, who would be his or her backup? If the supplier only has one person capable of performing for you, there is a heightened level of risk for this procurement.
  6. How do the backup person's qualifications compare to those of the key person? Having a backup is great, but if the backup is not qualified, you can be facing just as much risk as if there was no backup.

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