The Discipline of Delivery · companion to Chapter 9
Vendor Management
The vendor lifecycle, the contract clauses that give you teeth, and the governance that most failures actually lack.
Vendor management mastery guide for software PMs
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What is vendor management?
The PM owns this — not just procurement
Vendor management is the end-to-end process of selecting, contracting, governing, and evaluating third-party suppliers who deliver software, services, or talent to your project. Procurement signs the contract — but the PM is responsible for everything that happens after it's signed. Most vendor failures aren't contract failures; they're governance failures.
Make vs buy
Before engaging any vendor, decide: is this capability core to your business? If yes, build. If not, buy. Factors: cost, time-to-market, IP sensitivity, long-term maintenance, team capacity.
Types of vendor
Software product vendors (Salesforce, AWS), system integrators (Accenture, Infosys), staff augmentation firms (contract devs), niche specialists (security, QA, data), managed service providers.
Staff aug vs managed service
Staff aug: vendor supplies people, you direct the work. Managed service: vendor owns the outcome, manages their own team. Managed service needs strong SLAs; staff aug needs strong PM oversight.
Fixed-price vs T&M
Fixed-price: budget certainty, penalises scope changes. T&M (Time & Materials): flexible, requires tight hour tracking. Hybrid: fixed phases + T&M for enhancements — most common in IT.
Key terms every PM must own
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Vendor lifecycle — all 7 phases
What the PM does at every stage
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Contract documents decoded
What each document is, when it's used, what to watch for
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Good vs bad vendor management language
✓ Say this
Vendor shall provide weekly status reports every Monday by 5pm IST
Payment is released within 10 days of written acceptance
Vendor must notify of key personnel changes 14 days in advance
All change requests must be submitted in writing before work begins
Deliverable review period: 10 business days from submission
✕ Never say this
Vendor will keep client informed on progress
Payment on satisfactory completion of work
Vendor will use experienced resources on the project
Changes will be handled on a case-by-case basis
Client will review deliverables in a reasonable timeframe
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Live vendor scorecard
Rate your vendor — auto-calculates overall score and grade
Overall vendor score
50
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KPIs, SLAs & escalation
What to measure, how to define it, what to do when breached
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Early warning signs of vendor trouble
0 / 7
correct
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Companion to Chapter 9 of The Discipline of Delivery by Siva Prasad. Read the chapter to understand why the discipline matters, then use this guide to practise the how.