Procurement Management and Claims

In this podcast, Ricardo talks about the relationship between suppliers and customers, the process of procurement management and claims. He explains that often the claim generates a discomfort between the parties and that the best way to avoid this problem is to plan the project in the best possible way, defining in detail the scope and trying to document all the changes during the project.

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Episode transcript

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Hello everybody welcome to the five minutes PM. Podcast Today like to talk about the relationship between the supplier and the client basic the Procurement process. And also all the disputes around this. The PLE is around this. It's very common that during the longterm project, so a capital project, usually the supplier requires new payments for scope changes or for a timelines are for new timelines or for external problems come in from external risks to increase his value on the contract.

And I'd like to discuss this because I see this in two different ways. The first thing we need to understand about this kind of dispute is that why this happened first, this happened because of two basic things. The first one scope changes the client doesn't know what does the real scope of the project and the supplier put a price in something that he or she doesn't know.

So the scope is the base of everything. So do all that I need to build here. I suppose that I will spend X, Y, or Z Tom's of iron, and then it's different in the real. And then I want to receive more for that and the client wants to pay less. So this makes basically hold the dispute. The second reason is the risk. This is a much more challenging area because risk is something that we do not know completely.

And some of the risks we can almost avoid, but most of them, we can only meet to a gait. We cannot reduce to zero let's suppose I need to do a foundation. And I'm expecting that the soil is a good, good enough to do a base for you. And then when I go to the field and I see that the soil is not good, good enough to do that, then I need to spend maybe three, four, five, five, times more to build the foundation.

Then I will start claiming a value for that and how to avoid this, how to avoid this. So I'd like to give you some tips on that first take care of the scope, loose time, preparing this scope. It's not bureaucratic news time. Lou Stan, I think draught your WBS, rethink detail. A lot of people don't want to detail enough.

So let the tail, let's spend more time doing this because this time is cheap. Comparing with that time, managing the crisis in the future. Second, try to plan to make a risk management plan, to plan your risk. Try to do that. Invite your supplier, to help you to do that, to create a collaborative form of fork and the truth. And one in the third one, we work together. If you, you asked for a commitment of everybody during the planning phase, you we'll reduce this kind of a problem.

You prepare people So ask the supplier. Do you see any potential? You show risk that can damage what you are doing. Let's work on that. Let's work on this on the paper before we go to the field, because in the field, everything is much more expensive. It's much more hard to deal with it. And after this, you need to understand Ben, that relationship is also a very important, also a very important, there is a symbiotic relationship between the supply and the client.

And we are, you are in the plea when you are in that very hard to speak. You forget this. Usually one part once, sorry for the, the way I'm saying, but I want to kill the other part. And this is the, this is really the worst thing that can happen when you have this kind of dispute. Why? Because you relationship it's everything, the client, the client needs, or the supplier and the supplier needs the client.

So they need to understand that the problem is not with people. The problem we is with the process, let's remember we were an early age when we had to talking about getting to yes, the negotiation books. We need to be easily people and focus on the problem. So do that, that this kind of problem, that much your relationship with the auto part, try to work collaboratively. For sure. It's not easy because there is a difference, the view between the client and the supplier, but we need to work together because in the future, for sure, this kind of dispute will damage both sides, the sides.

So we need to understand this. And one thing that is very important, make a preventive prevention is project management. After the dispute, after a judicial dispute, Jude's involved. If there is no relationship anymore in the business crisis management, and for sure bros at Management cost, nothing compare with a crisis management.

I hope you enjoyed this, but I think about this before you start a dispute and let's make project management happen and not crisis management happen. I hope you enjoyed this podcast. See you next week with another five minutes BM Podcast.

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