According to the PMBOK, both the buyer and the seller should monitor on another, ensuring each “meet
their contractual obligations and that their own legal rights are protected” (PMI, 2013, p. 380). There are several
tools a buyer can use to monitor the seller during this process. These include contract change control System,
procurement performance reviews, inspections/audits, performance reporting and claims administration.
Of these, the one I have the most personal experience with is the procurement performance review. One
aspect of my job is the development and production of technical manuals for systems. During the development of
these, there are several important review points built into the contract. These are typically set at the 35%, the 50%,
the 75% and the 100% points of the project, allowing the buyer an opportunity to review and comment on the
project. These phases are used to reduce the risk to the buyer (Horine, 2012, p. 250). If we are going in a direction
that differs from the buyer’s vision, we can correct course. These milestones are all written in the initial contract,
developed by the customer to measure performance (Ferraro, 2012, p. 64).
Contract closeout is “the process of verifying that all administrative matters are concluded on a contract
that is otherwise physically complete” (Kerzner, 2009, p. 842). As part of the closure process, it is important to
conduct a seller performance evaluation. “This is a written record of the seller’s performance against the
contract. It will include performance against schedule, requirements, work quality, etc.” (Projex Academy,
2018). Ideally, the evaluations should be standardized to ensure level evaluation between vendors. This should
include both negative and positive evaluations and provided as soon as possible to the contractor for comment
It is important to realize that “the motivation behind incentives is to align the seller’s objectives with the
buyer’s objectives” (Horine, 2012, p. 249). In my opinion, the use of incentives is for more effective than penalties
to ensure this alignment takes place. Although the fear of punishment can be a motivational factor, it does not
motivate as well as the promise of reward.
Research shows that in order for someone to reap a reward in life, they must actively strive and work
towards that reward. Conversely, for someone to avoid a punishment or a pitfall, they simply have to stay the
planned course (Sharot, 2017). This same principle can be applied to a seller. If the seller wants an incentive to
complete the project early, they must assume the risk by putting more people on the project and potentially
increasing their own costs. If their proposal was properly prepared, the “stay the course” would complete the project
in the required timeline and not earlier.
Ferraro, J. (2012). Project management for non-project managers. New York, NY: AMACOM.
Horine, G. (2012). Absolute beginners guide to project management. Indianapolis, IN: Que.
PMI. (2013). The Guide to the Project Management Body of Knowledge (5th ed.). Newtown Square, PA: Project
Management Institute, Inc.
Projex Academy. (2018). Control Procurements – project management actions. Retrieved from PMP Primer:
Sharot, T. (2017, Sep 26). What Motivates Employees More: Rewards or Punishments? Retrieved from Harvard
Bussiness Review: https://hbr.org/2017/09/what-motivates-employees-more-rewards-or-punishments
Purchase answer to see full