Logistics News: Who is really in Charge of Project Management for your Materials Handling System in Distribution?

It varies from company to company, but in many of the large material handling system providers, this is the case.  It started a decade or so ago when many of the large system projects, especially in the conveyor/sortation system area, were led at the vendors by engineering-oriented PMs, who often neglected the business side of the project, leading to results that may have been good for the buyer, but not for the provider’s profitability on the job.

As a result, many of the vendors started to move the role of PM over to a more business-oriented PM, whose primary responsibility is to keep the project on a solid financial path for the vendor. While part of this interest intersects with the buyer’s interest, such as keeping the project on schedule, in reality, the PM in this case really has little operational or implementation authority, and may know very little about the specifics of your system or its deployment.

I have found that very few buyers understand this structure when they initiate a project or select a provider.

One way to deal with this is to define roles and responsibilities as a part of the Sales Agreement. This is essential to set and manage expectations and is a "must do" for MHE system buyers.

For instance, if the PM has no budget or expense approval authority, then note that up front, along with a process for expense approval. That way, if problems do arise later, everyone knows who has the right level of authority to resolve them.

An example of the type of financial decision I am talking about would be quickly being able to authorize a minor equipment change or modification in the field and keep the project on schedule. If the PM doesn’t have the authority, who is it that REALLY is in control of the project? Someone that you have already met and is visible on your project, or someone tucked away at HQ?

My direct experience is that making this type of decision could actually require approval from the VP of Engineering at the vendor, involve input from sales, and at smaller companies such as systems integrators, require approval of the company president.

To avoid these pitfalls, you need to use the leverage of the contracting process to force the vendor to clearly identify who has responsibility and authority for actions that impact on the project, such as:

• Contract administration, i.e., ensuring that the “engineered” system is in accordance with the sales agreement
• Who is the backup contact if your PM is not available – if your PM is not dedicated to your project, then try to limit the number of other project assignments
• Documenting and providing minutes of project meetings
• Providing and maintaining the Project Gant Chart
• Identifying, tracking, managing, and resolving project issues
• Coordination and interface with vendor sub-contractors
• Coordination and interface with other major contractors (building, WMS, racking, etc.)
• Equipment/system design changes - brought about by vendor engineering refinements
• Buyer requested changes/improvements
• Change Order approval
• Implementation plan and schedule changes
• Expense approval – who has what authority, at what cost limits?

This does not mean that the PM physically does all of the above, or must have power/authority over all of the related disciplines, but he/she must make sure they get done. If the PM does not have the authority, it is important that you, as the buyer, know who does, and what process is needed to gain action.

Clarity itself is important and just asking these questions and forcing the process to occur will likely result in a more favorable contract for the buyer. But this process should be good for the vendor as well, as it may result in cleaning up loose ends and getting a more total project than if they were not challenged on these details. And it should reduce frustration on both sides during the course of the project in the end.

Play Active Role in Project Manager Selection

In the MHE world, the buyer typically does not find out who the PM is until after the contract is signed, and don’t really get a chance to vet the candidates to ensure they get a good one.

One way around this is to insist that the prospective PM participates in the sales presentation meeting, where you can ask specific project related questions. This is good for several reasons:

First - because it establishes (forces) PM “buy-in & ownership” at an early stage.  Being somewhat involved upfront with defining, estimating, and proposing the project means that the PM understands, and is in agreement with, the overall objectives, scope, risk, approach, budget, schedule, etc.

Second - it allows the PM to define or refine the specific project management procedures that will be used to manage your project.

Finally - it provides an opportunity for you to “interview” the prospective PM.  If you’re not satisfied, this is your chance to say so.

By taking a proactive approach to the project management of your project from the beginning, asking probing questions, and insisting that all of the required PM procedures are in place, you will greatly improve your chances of project success.

Agree or disgree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.