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    LRH Financial Procutrement Contracts

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    You are a project manager in the human resources department for a global investment management firm, LRH Financial. You are currently updating your benefits administration to an external company; this is expected to be a minimum 5-year operational commitment. As part of this move, you are revising your benefits options, updating the employees on the changes, revamping the intranet to include self-service benefits administration, and redeploying about 20 human resources benefits staff to new positions with the human resources department. The vendor that will be taking over benefits administration operations has not yet been chosen. Due to a lack of resources in the information technology department, a vendor will be used to update the intranet and train employees on the new self-service functionality. It is not yet clear how the redeployment of the benefits staff will be completed. In the past, this type of activity has been handled by a boutique management consulting company.

    You just met with your boss, Pat, the Vice President of Human Resources. Pat emphasized that you will have responsibility for all the contracting, negotiating, and vendor management activities. You will need to work closely with purchasing and accounts payable as you complete these activities.

    Question 1
    You told the communication vendor about the conflict and the delay in the project. The vendor is very concerned that it will be penalized according to its contract because it will be unable to meet the dates specified and the graphics are not available. The vendor asked you to sit down with it for a few hours in the next day or two to reschedule the dates and deliverables. The vendor will then craft a revised statement of work (SOW) for you to sign and resubmit to the legal and purchasing departments. The vendor has said it will not do any further work until the new statement of work is in place (but the vendor has not cancelled any of the upcoming working sessions).

    You are hoping the situation with the intranet vendor will be resolved without any impact to the project schedule, eliminating the need to make changes to any vendor's statement of work. If all goes well, it will take about three weeks to get the changes made, approved by legal, approved by the vendor, and implemented by purchasing. It will require a significant amount of time from you, as well. Even if you can make the time in your own schedule, you know that it will be very difficult to get time from legal to work on the communication vendor's issue because legal is busy with the intranet vendor situation. You also know that this vendor had bad experiences working with LRH before. This vendor was threatened with penalties because it missed deadlines. The delays were caused by mismanagement on LRH's side, not by the vendor. To resolve the conflict, the vendor had to forfeit a significant amount of fees. You know that is why the vendor has said the things it has said.

    Prepare an e-mail to the vendor describing how you will move ahead with the contract and what actions you would like them to take next. Discuss your reaction to the vendor's past litigation experience, and decide what you will do to avoid a similar situation.

    Question 2
    You were able to resolve the photograph issue and move on with the communication pieces of the project. You breathe a sigh of relief and start thinking about what you would do differently. What steps could you take to avoid this or a similar situation in the future?

    Question 3
    The project is not over yet, but the work of the vendor responsible for the human resources benefits staff redeployment is complete. You are meeting with Pat tomorrow afternoon and will discuss the close out activities that need to take place. Prepare for the meeting by creating your meeting notes. Be sure to identify in detail:

    the approvals needed to consider the vendor "complete"
    the activities needed to close-out the contract
    the topics of discussion for the final conversation with the vendor

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    Solution Preview

    1. I will reassure the communications vendor that he will not be penalized for the delay that occurs because of the fault of LRH Financial
    2. Changing the SOW is not practical because it means changing the specific duties of the vendor.
    3. The SOW prescribes the specifications, standards and the duties of the contractor and these have not changed.
    4. The specific safeguard that needs to be taken relates to the fines that might be imposed for the graphics that are not ready.
    5. The changes that the circumstances have created relate only to the scheduling and a new schedule acceptable to both LRH Financial and the vendor can be worked out.
    1. The vendor should give a changed schedule that he can accommodate.
    2. The vendor should write a note to LRH Financial specifying the reasons for the impending delays.
    3. The vendor should mention the reasons why he holds LRH Financial responsible for the delay. He should also describe the delays that have been caused by the graphics episode.
    4. The vendor should inform LRH Financial in the note that he has offered to rework the SOW.
    5. The vendor should mention that he should not be penalized for no fault of his.
    6. The vendor should inform LRH Financial that he will give priority to the execution of the contract but requires a written ...

    Solution Summary

    This solution talks about the global investment management firm. It then discusses contracting, negotiating and vendor management activities. This solution is 935 words.