Vendor failures are responsible for a disproportionate share of project delays and cost overruns. In most cases, the failure was predictable from the contract structure, the governance model, or the absence of performance tracking. Effective vendor management starts before the contract is signed.
- Vendor scope must be as explicit in the contract as project scope — ambiguity benefits vendors, not clients
- Define acceptance criteria before work starts — not when you are trying to reject a deliverable
- Performance tracking with documented escalation paths is the mechanism that creates vendor accountability
- When a vendor is underperforming, document early and formally — silence reads as acceptance
Contract-level governance
Before engagement begins: defined scope with explicit in and out of scope boundaries, deliverable acceptance criteria with clear ownership, payment tied to milestones not calendar dates, performance standards with measurable SLAs, and an escalation path for performance failures. Contracts without these elements transfer risk to the client.
Ongoing performance tracking
Run a vendor performance review at each project milestone: deliverable completion against schedule, defect rate, responsiveness to change requests, and adherence to SLAs. Document it. When a vendor underperforms, the paper trail determines whether you have leverage.
Managing vendor disputes
Scope disputes are resolved with the contract. Performance disputes are resolved with documented performance records. Informal email threads and verbal agreements are not evidence. Always confirm vendor agreements in writing, even informally via email: "As we discussed on today's call, you are committing to..."
Recovering from vendor failure
When a vendor fails to deliver: document the failure formally in writing, reference the contract obligations, initiate the dispute resolution process defined in the contract, and assess whether the relationship can be salvaged or whether you need to source an alternative. Do not absorb vendor failures into your schedule without documentation — it sets a precedent.
Frequently asked questions
Document it immediately in writing. Reference the contractual delivery date. Request a formal recovery plan with revised milestones. Escalate to your contract manager if the vendor does not respond within the defined SLA window.
Procurement owns the contract. The PM owns delivery performance. Both need to be involved when vendor performance affects project outcomes.
Vague acceptance criteria. When "done" is undefined, vendors and clients almost always disagree about whether deliverables are acceptable.
Request Vendor Management in Project Delivery
Answer a few quick questions. We will recommend the right engagement and follow up within one business day.
Ready to put this into practice?
PMOstart provides consulting, fractional PMO leadership, templates, and tools to help you apply what you just read.