Welcome to the Everyday PM Podcast, the podcast where we
discuss project management principles for your everyday
life. My name is Anne Campia.
I am the host and founder of The Everyday PM.
I am also a lifelong project manager and a lifelong learner.
And I'm so excited to have you here as well as our special
guest today, Ajay Bargrove, who is coming to us from actually, I
don't know where you are situated.
Can you can you let us know where you are located right now?
Yes, I'm in Toronto. Wonderful.
So today we are going to deep dive into the real world
challenges and solutions that make project management work.
In particular, we are going to explore one of the most
critical, yet often overlooked as overlooked aspects of project
management when it comes to procurement.
So Ajay, as our guest, I want to welcome you as well as let the
audience know that you are the author of one of the my favorite
books that I typically instruct with as part of my project
procurement class. So you are the author of a
textbook that I use quite heavily as part of my courses
within my project management courses that I teach for unit,
the University of California Riverside, as well as just an
expert in this subject matter. So I'm so excited to welcome you
to the podcast today. And for those who have not met
you or do not know of your background, can you give us a
brief introduction? Yep, thanks.
First of all, thanks for having me on this podcast and this is
I've gone through all your previous podcast and all of them
are so good. I really got to my introduction.
I would like to keep it sweet short like when spend like 2
decades of working experience in procurement, supply chain.
Fortunately, I have been touched by all the sectors, service, oil
and gas majority is like EPCEPCM and yeah, some experience with
the public company in the beginning of my career and that
made me where I am today. I'm a married guy and I have two
three children and they keep teaching me more about the
procurement and project management and I always treat
them my client and they are always tough to deal with.
That's wonderful. Well, welcome and and thank you
for sharing a little bit about yourself as well as
professionally and personally. So we, we want to dive into this
concept of project procurement because one of the things that
makes this book special is its practical approach, which is why
I like to utilize it with my students.
Because when you hear the term project procurement, that can
feel a little bit daunting. You know, project managers may
or not may not necessarily understand the concept of
procurement and what their involvement is.
So let's start with the basics. So in your book, you emphasize
that procurement isn't just about buying things, it's a
strategic function. So can you break down for our
listeners what project procurement really means?
Yeah. So when I was doing my PMP exam
in two 2012 and then 2013, I passed it out.
So I happened to be working at that stage.
I just want to touch a little bit of background so that people
can understand. And I was already working in
five years within the procurement and coming straight
out of the engineering college and now managing A procurement
department. It's it was a public utility and
it was making into the private sector.
So there you have set of regulations, right?
You have complete encyclopedia how you should be working, what
you are supposed to do in certain scenarios.
That's very much easy thing, right?
You just go and check the regulations you have and act
accordingly. Whether you like those
encyclopedias or not, that's a separate question.
So why why I started this book in 16 is with my experience and
when I was starting my career I was struggling to get the proper
knowledge on the procurement. There is a lot written on the
project management philosophy. All it was chapter I think
chapter 12 on the PMBOK 4th edition when I did my BMP.
So very, very fine things were written, very crisp things and
it was not detailed. Over the years, I realize it's a
strategic function. It's not like transactional like
it's not like just you know, issuing the purchase or getting
your material done. It's not like you do your
groceries. It requires a lot of other
things which you need to take care.
It's a risk management function. It's you're not only trying to
buy the material, but you are trying to deliver to your client
and you know, make him feel happy for the requirement he ask
for not even giving them the gold plated things, but not
giving them some inferior quality products also.
And you don't want to be like delayed on the schedules, right?
And when it comes to project, we all know the iron triangle we
have it's like scoop time and cost.
So you don't want to delay anything.
If you if you delay on or you change any lever on the iron
triangle, everything is affected.
Sure. Sure.
And one of the things that I appreciate is it really opens up
the world of project management to your point, it's mentioned,
but there hasn't been real material to make it, like I said
earlier, practical and or something that a concept that
project managers can really grasp as part of their role.
And so as you started to incorporate more of the
procurement acumen into your own practice as a project manager,
can you tell us a little bit about what gap you were trying
to fill when you wrote this particular book?
So my intention when I was writing this book was to fill up
the gap, right? How if I am acting as a buyer or
the project procurement manager, So what should be going into my
mind? I should be concentrating on the
schedule, I should be focusing on cost or I should try to bring
the best value to the client or to the project.
So those were the things which were going on mine.
And apart from that, you have set of compliances with you
which you need to take care when it comes to procurement.
It's, it's a trading of coal, right?
You get your hands dirty, somebody can always point finger
on you. It's, it's, it's the easiest
thing in the world to point a finger on the procurement.
If anything goes delayed and you know, something goes wrong, oh,
it's your supplier, it's procurement.
So how would you deliver within the iron triangle controlling
all the parameters? Not exactly.
You know, it's, it's not like a corporate purchasing where you
you can delay, right. It's coming for the for some
utilization. It's not a very complex item
whenever you're doing a project, it's unique all the time.
Yeah. Yeah.
So it's not like a defined requirement all over again,
right. So maybe you are buying the same
sub, same, same transformer, but it's with maybe the different
specifications maybe getting manufactured for the very first
time. But I mean, that is why, you
know, it's, it's very, very niche area where we need to
spend more time. It's not just buying, it's not
just buying, it's not just about the cost.
It's about all of the factors, schedule a relationship with the
vendor, keeping your stakeholders informed, keeping
them aligned, keeping them on all the same page, right?
So, and it's, it's like it's teared, right?
It's there are many layers on it.
So which I was trying to, you know, uncover when I was writing
this book. And the the biggest task or the
difficulty I had is like, how should I process this
information in the easiest, simplest form so that if
somebody is reading for the first time, he should, you know,
make some idea. OK, this is the first step.
OK, let's OK, supply selection. What comes before, oh, purchase
equation. But why purchase equation?
Because there was some demand. So I tried to, you know, it's
all that goes in circle, supply management in circle, right?
But then that was the thing when I was writing those book, that
part of the book. And that is the most difficult
thing also to, to make readers aware how they should understand
the book and the flow with the with the chapter it flows.
Still, I know some of the readers might not might not have
found it, you know, some might say why not?
Income terms come before financial evaluation because
that is dependent on your company, dependent on the Bay
you are doing project procurement.
Right, right. And you wanna tailor it to your
needs, right. And I I will commend you because
you question whether the book is effective in doing so.
And I can attest to it is because the yes.
And I'm, I'm just gonna share a quick anecdote before I get into
our next question for you, which is as part of our course, I
couple that with the concept of quality and how procurement and
quality kind of go hand in hand. And one of the things that I'm
proud to say that comes out of discussions about the material
you provide for my course is that within your book, because
it's practical, I hear the students and their anecdotes
about how they've been utilizing the text to then influence what
they do in their day-to-day jobs.
And so one of the examples that I'll give is we had a really
nice active conversation with my students about acquiring certain
materials. And in this case, it was
somebody that was working to build a automotive and one of
the pieces of materials they talked about was, you know, we
had a choice in the procurement process to go with a vendor that
would supply us with a piece of that material that would come a
little bit faster. It was a little less expensive.
However, you know, for our company's objectives, one of the
things we promote is we we provide high quality products.
And so it was a very active conversation with a group about
what are some of the choices you have to make as part of
procurement in your vendor selection process to ensure that
the materials you're procuring are also to the standards of
what the company is expecting. And so they were able to apply a
lot of what you said within your textbook and then put that
against a real world example, which I was very, very proud of
them for being able to do that. And it did spur this active
conversation around how procurement can directly affect
something like the quality of what it is that you're trying to
procure and how you have as a project manager have influence
and decisions to make or help influence the group to make a
decision around what is most important for you, right?
Is it the quality of the material?
Is it the cost? Is it the time?
So to your point, procurement is intertwined in all of that in
which a project manager is looking at.
So that gets me to my question for you, which is from what
you've seen in your experience, what are some of the most common
procurement mistakes that you might see a project managers
making? And I know I provided one
example of how my students have discussed it, but do you have a
example that you are willing to share with us?
So I think the biggest pitfall I saw when it comes to project
procurement is like in the beginning of the project, you
got your order from the client and now project manager is all
excited. I'll get things done quickly.
I'll get my specification done by the engineering, you know,
make run to do place all the orders quickly, right?
And then, you know, present it to client O all that is a place.
Now everything is coming in 16 weeks, 20 weeks or 4 weeks.
Now we can plan the construction side of it.
The the important thing the project manager is missing is
it's not about, you know, pushing some papers to the
vendor and placing order. Sure.
And and that is the biggest pitfall and they pay the price.
All the years I've seen, it's not just one project I've seen
I've done multiple projects with multiple companies in different
sectors and that is the biggest pitfall I saw that and it's a
knowledge gap. All the project manager might be
intelligent, he knew it already, but then they are running behind
the skill in the beginning and the moment you know what, it'll
start coming. They realize, Oh, I, I should
have waited for a little bit long and then you know from my
specification and requirements and they start paying the price
later. And towards the end of the
cycle, when your project is about to be completed, they have
to pay through the news and they're they're really going mad
about the cost controlling. They are not so aware they,
they, they are, although they have the knowledge, but they
were not aware that this is, this is going to happen just to
make your client feel good. In the beginning, you are
creating a lot of mess once the things start coming in And that
is why I said it in the beginning that it's a very
strategic function, very niche. You need to think about those
things. So you don't want to do root
cause analysis and lesson learnt in every material you bought but
you should be, you know we are buying commodities like
something related to copper, steel or something and those are
the prices which are fluctuating.
They have their own lead times. So you need to understand when
to buy, how much to buy and if you don't have to buy, why you
do not have to buy right now. You can wait some time, right.
But I have not seen a single project manager who has said to
me, Hey, AJ, I want you to buy 1234 and then leave in between
line item. You don't have to buy right now
because I see this will, you know, this will kill us on the
costing if you buy the field prices or something structural
steel or say anything related to copper and that will shoot up
your overall, you know, screw up the budgets.
Yeah. So that is something where I
would say that the biggest pitfall I saw, yeah, even though
project managers are aware that they might be screwed up on the
cost, but I've not seen a single one who has, you know, came and
negotiated all. You don't buy everything right
now. So that's the biggest footfall.
And another one I would say is the misunderstanding of the
misconceptions, especially the new buyers or new government
engineers who are starting their career just after the college is
like they think, oh, I did not see the purchase requisition.
I need not to act. Yeah.
So that is the biggest pitfall for the buyers.
I mentioned project manager but got to just start with the
project manager. So, but the procurement has to
act much before that the moment project is being bugged or you
are bidding for some client, OK, some project you have not
received it. But if your companies allows you
guys have man hours and you have such a process where you can
integrate yourself when you are bidding actually not during the
execution that makes life easier for everyone.
Project manager, client procurement.
So that's the second thing. I mean the misconception about
purchasing stats with the purchase.
Yeah. So those are the biggest one I
saw and there there are many things which you can discuss,
but these are the biggest one I would say.
Because, yeah, yeah, absolutely. And then I think intertwined in
there, as you're talking about procurement being strategic over
transactional, is this concept of introducing, at least the way
I teach it to my PMS, the soft skills that are involved in
procurement too, right, Because there is this aspect of vendor
relationship management. That comes along with.
Yeah. So you touched on that a little
bit. So I wanna go a little bit
deeper into that. So one of the things that really
stood out to me in your book is this emphasis on relationship
management with your vendors and your suppliers.
A lot of my junior project managers within my classes still
question how they're involved and even that process.
But I like to emphasize to them, this seems, while it seems to go
beyond traditional contract, you know, management or project
management, there's still that aspect when you trace it back to
those critical relationships that you have to build and
maintain as part of your project.
So can you talk a little bit about why you thought it was
important to emphasize that as part of procurement?
Yes. And and you test very important
perspective or very pertinent point, right.
If we are buying the procurement is also not just about managing
your risk, but it's about managing people, right.
It's a people management function.
And I used to challenge my human resources guys.
Sometime, you know, we are also doing, you know, people
management, not just out to my manager sometime I'm also
managing people. And you used to say, oh, you are
managing becoming. No, I'm managing people.
It's a relationship, right? Yeah, and and if you vomit out
or others other words, which other priority is not going to
like you need to think 10 times before opening up your mouth.
Yeah, because some people say, OK, I'm very open,
straightforward kind of person. I will go ahead and tell the
vendor this is not the great thing you did.
You need to decide what is the right time to communicate.
You don't want to relay all the messages today.
So and that is why your relationship with the vendor is
very important. You don't want to kill the
relationship just trying pointing a finger.
Oh, because you delayed and now my project is screwed up.
I have to pay the penalties to the client and I'm going to
blacklist you from the next time.
Obviously, you're trying to kill the whole relationship.
You need to be empathetic. And these are capital projects.
These are the project which evolve all the time, right?
So we have to be empathetic and then flexible during the
execution of the project specifically.
Yeah. Yeah, absolutely.
Yeah. So that's the biggest thing and
that is why I if if you have seen that I've written long term
contracts right over the years. If you are executing the same
kind of projects, right, you get to meet the same kind of same
set of suppliers. Most of the time.
If it is, if you newly, if you got new project and you are not
executing completely new thing, you going to see the same set of
people. It's not just for today, it's
for tomorrow and it's for future.
So he should not be spoiling the relationship, not with the
vendor, not with client. Also there are ways to
communicate. Get your things done easily with
being polite, being empathetic and being considering yourself
some time in the shoes of supplier.
OK, this might have happened to me.
The cultural boundaries or the tariff boundaries like we have
been hearing a lot, much on the tariff from the states recently
that has clogged deliveries on the ports.
But that is something beyond the control of supplier.
So we need to be a little empathetic, understand the
situation, OK, It's not him, it's some trade conflicts
ongoing. And you need to communicate same
way to your client. Try to bring everyone on the
same page, try to find a solution instead of pointing a
finger. So it's the key of whole
procurement. If you have the best contract,
you have best compliances, but you have the bitter relationship
with the vendor, your project gonna fail 200%.
Absolutely. Absolutely.
Really beautifully said. Yeah.
And that alone, that component alone of the way that you
describe it in your book always resonates with every cohort that
I teach. Is they something?
It's not that they forget that there's this aspect of utilizing
soft skills and the empathy that you're saying and building those
relationships. But maybe it's you do such a
good job of connecting the dots between again, why procurement
is so a strategic management over transactional, but also in
what you just described the longevity of the relationships.
These are stakeholders like anybody else, even people that
you would be working with internally.
And so the best that you can do that as a project manager, and I
think that's very effective in the way that you paint the
picture for my students is that's right.
Even though they're external, maybe suppliers or vendors, they
still very much are a part of the project just like anybody
else. That is, that would be a part of
your internal project team. And then that starts to click,
and then it starts to become a really, really fun concept for
them to grasp. Yeah, they, they're a part of
your project the very first day. So you have a kick off meeting.
So even before that they you should have a relationship.
If I'm talking to five different bidders and the order is not
finalized, I should not be biased about one or other bidder
and thinking, OK, this is going to get the order, let's forget
about others, consider them there on the project until you
decide, OK. Or even if I have had situations
where in some of the projects we have awarded A vendor a bit big
based on price, based on best judgments, but something
happened not to our set with them.
Some things happens, right? And then they said, oh, we are
very sorry, we cannot execute. Yeah, we have gone into
financial classes or something, right?
So then you should be able to go back to option #2 the best
options you had, right? You don't want to go start from
the scratch and you know, create all the documents now are issued
to the market, start working again.
No, you don't want to do that, right?
So keeping your relationship clean, I suite is the best thing
if you are in procurement, right.
And everywhere I'm not in procurement in general, project
manager is also keeping, they understand this right, that you
don't want to spoil that relation with the client because
he's important. Yeah.
So it's just the meter of the project manager maintains with
the client, maintains with the supplier.
It's a great way to put it. I want to pick your brain about
something outside of relationships and just because
it's so relevant in the in the environment that we're currently
in. So I don't know even know if
you've thought about this, Ajay, in terms of how do you see AI
impacting procurement processes, Have you thought about that yet
in terms it's a little bit of a curveball here?
Yeah, yeah. No, no, it's talk of the town
and it's not that we can. It's just like, you know, when
people were talking 1980s of supercomputer computers are
coming to the market and man, humans will be jobless.
They don't have anything to work because it, it has, you know,
very great processing powers and this and that they can calculate
and snip. It's, it's something like that,
right. So the only challenge is for
people like us who are already spending two decades in the
market is to gear up themselves, right?
AI is going to be the next revolution.
And I know the companies has already started.
Obviously if one company is investing efforts in say
bringing AI system to their company just to reduce the cost
because they want to be competitive compared to their
competitors, obviously the competition has to gear up
themselves. It's not about snatching jobs
from the mankind and giving it to the computer to process.
No, it's not like that. We need to learn.
We need to grow ourself into AI, and it's not difficult.
People have been talking about ChatGPT perplexity cloud.
There's so many chat bots, is it?
But these are very, very nascent, or I would say at a
very young stage. And this is going to change in
say, another two to three years. I see that people are still
using those things are like Google, right?
Just correcting things on grammar, writing emails, but
that is nothing. That's just the beginning.
AI is if I see procurement is gonna give you scorecard for the
supplies, you don't have to because that is the area where
any company wants to evaluate their supplies, how they
performed in say last project, how they have been on the
relationship. Yeah.
How many claims they sent to us or how many claims we have to
send to them or how much market they are controlling those
things right now buyers are doing themselves, they get
information collected and say, OK, I think A is better than B
because they have a better market share.
They have been doing same. If I talk about my company or my
area, they are like 60% controlling the market share.
They are getting 60% of the projects we are awarding to the
market. Those kind of things you can get
like this yeah. Tell me which supplier for which
component say for I keep saying transformer, give me power
transformer 50 MW and in considering my last three
projects and tell me which one is the best suppliers we had and
you'll get information like this.
You don't have to spend time right that will make you more
efficient to save your own time. Obviously we don't need like
4050 sixty people to manage the procurement of a capital
project. You might need 5 or 10.
But then if you don't give up or the buyers or the young supply
chain folks don't want to learn yet, I'm sorry to say that they
have to be thinking about doing something with the hand and
something, some skilled building or something else they can do.
But if you want to do something in procurement, you need to
learn all those tools. AI is going to be beautiful.
I'm telling you, you don't have to do the financial evaluation
of the supplier. You check the financial health,
right? If just like banks, right?
They check, OK, what is your credit score and how much you
are earning, how long you have been into this job.
They asked all those core kind of questions.
Similarly, you evaluate your suppliers on the financials, you
check their OK, give me your financial statements for the
last three years or give me DNB ratings and then you make
decision, right? Those details are gonna be easy.
Yeah, very, very quick. Yes.
And you just have to apply, OK? Now I have everything.
I don't have to waste like 2 weeks in collecting, gathering
this information, processing, analyzing and making final
decision. I have this information right
away, Yeah. Yeah.
You save a lot of time so we need to get up our self as a
procurement or supply chain guys.
That is what I feel about AI. Yeah.
And I believe you because I see you as the expert here.
And I think I think in everything that you said, AI is
only going to further emphasize what you've been trying to
promote this whole conversation, which is seeing procurement as a
strategic function of a project manager.
So thank you for appeasing me and looking into the future.
So my final question to you, in terms of folks that want to get
a little bit more practical with procurement and for someone
listening to the podcast who wants to improve their
procurement processes tomorrow, what are some of the top
actionable steps that they should take in order to do so?
So just be covered AI Start learning about AI.
Yeah, so that's the first thing. There are a lot of lot many
things. There are hell lot of courses
coming up from all the Rapido universities.
Even I think University of California Riverside must have
one and it I believe I saw one is available.
Yes, that's the first thing you should be getting accustomed
with the technology, right, So you don't feel lagged behind.
The second important thing is like since the data availability
or analysis would be so easier. So if you want to improve your
supply chain or your procurement cycle, you should be looking OK,
what are the long lead items? That's first thing you should
see any procurement is, is everything is not critical on
the project, right? It's like Pareto like 8020
rules. So only 20% of the item which
going to hamper your project schedule.
You don't want to buy at the end, you don't buy it want to
buy at the beginning so that items are lost or materials are
lost in the site. But you need to think about and
I, I, I can say there is very good textable label classic
metrics is available where you can, you know, divide your
supply chain, what is important, what is critical, what is
miscellaneous and then you make your decisions accordingly.
Focus on the very important items, see their schedule, what
are the supplies available for those particular items in the
market and how they have performed.
So you can gather that information even if you're not
doing any procurement right now. And if you're starting, say
fresh procurement department within the company, start
building your data and then try to analyse later.
So, so you need to divide a supply chain which items to
focus. We don't have the time of whole
world and you know go and do a six Sigma thing and you know do
all the run charts and this and that we don't have that
bandwidth of the time on our side yeah that too when AI is
picking up so consider looking into your supply chain how you
can make process lean right. You should not.
OK, I need to collect 20 signatures before I issue the
purchase order. No, and I had been having very
difficulty with my procurement heads in the past when I started
my career. Why I have to collect 10
signature before I issue the purchase order?
Yeah. And then they're laughing, oh, I
need to collect project engineer signature because he certifies
what we are buying is correct. OK, got it.
Fair enough. OK, so why procurement leader
signing? Because he's checking the work
of package engineer and then OK, understood.
So why project manager is signing?
Because project manager knows when the requirement is
required, right? Right.
They have like radical kind of things.
So I think we need to make our processes leaner, right?
So think about opportunity to make your government agile, how
you can make your decisions. We don't have time, although we
have all the digital tools available.
You can send for signatures in in like this.
Imagine a project manager sitting with the construction
manager and fighting for some material outside some incident
and you are waiting for his signature to get the purchase
order release for a critical item which is already on the
critical path. And then and people start
blaming coming. Oh why you have not called me?
Because there was no signal you were busy.
Things happen, you know we all are human and then you delayed
whole week and then supply came back, oh, my price is expired, I
cannot access or address your requirement right now.
Early quarterly time is now bigger because my production got
busy, they got another order from the client, some other
client. So you need to think about those
things how you can improve, right.
And those are we should be looking and I know people spent
very less time on those things. Yeah, nobody talks about these
things. So they say, OK, if this project
happened, client is OK now, OK, let's talk about new project.
We need to go back, look into the lessons learned and where we
did good things. We should record that as well.
We should not only be talking about negative things happened
on the project, but obviously we need to see how we could have
done better. Yeah, yeah, absolutely,
absolutely. Well, our time is up already.
I mean, this was absolutely fascinating.
The time has gone by so fast. I think our audience as well as
my students, I can't wait for them to listen to this episode.
It's gonna add tremendous value in terms of just understanding
procurement alongside the strategic advantage it will be
for a project manager to really understand the concept.
So AJ, for those that want to continue the conversation with
you, where can they find you online?
Also, we've mentioned your book multiple times, so if you want
to go ahead and plug that, we can do that too.
Yeah, So they can connect me over to LinkedIn and my LinkedIn
is his name is very specific. You do not find another guy.
I don't know why, but in the whole world, my surname is
little unique and it's you can say just find my profile there,
send me a message request and I would be happy to connect.
Otherwise my e-mail ID is also mentioned on the LinkedIn
banner. They can send me an e-mail if
they have specific question. I try to help them the best way
possible and it's it's a mutual learning always.
That is my, my, my kind of things.
I feel we learn from each other, right?
It's not like there are students and I know, OK, I've been 20
years in the I might some I might something hear something
new, different, right. And then I really will be happy
to hear such kind of questions, which are tough and be in a
challenge mode. OK, now solve this.
Tell me how would you operate? I might say right or wrong way,
but at least that will help me as well as I'm a I'm a student
for my life. So that is that's my feeling.
Well, thank you for being open to continuing the conversation
with our audience. I encourage everyone to reach
out to you. Also pick up the book if you're
able to, project procurement and if folks want to continue the
conversation. I will leave the relevant links
to everything that AJ described as ways to contact him.
And you guys can follow me on LinkedIn as well.
I'll leave that link as well as subscribe to the podcast.
Give us your comments and feedback on this episode and
listen to some of the other episodes as well.
So that will do it for AJ and I on this installment of the
Everyday PM Podcast. We hope you enjoyed our
conversation and until next time, take care.