Prime numbers

A prime contractor often faces an enormous task when taking on aproject. Annie Gurton looks at the methods of these steely firms

Prime contracting is about project management and taking responsibility, but it is not necessarily the preserve of large vendors. There is an assumption that prime contractors are always the large firms that call in smaller specialists which are subcontracted according to their specific skills. But there is no reason why a reseller with good organisational and integration skills cannot reverse the roles and call in the big vendors as required.

Harvey Parr, business development director with the OSI Group, says many resellers that routinely provide systems integration services would be able to prime contract a project, even though customers are expecting the big-name vendors to take the lead. 'The principles of outsourcing and integration are basic and should be vigorously applied to a prime contracting situation. First, never lose control, and second, always test thoroughly before going live,' he says.

Parr points out that the customer should not lose control. 'Some clients think that by calling in an outside company and allowing it to put together the different elements, like the parts of a jigsaw, everything will be all right and there's someone else to sue if it all goes horribly wrong.

It's true up to a point, but who wants to sue. It's much better to avoid the scenario and get a solution that works the first time. That is achieved by keeping a firm hand on the tiller.'

Prime contractors have to accept that they have taken on the role of a Mr Fixit, says Tim Hall, marketing manager at Simmons Magee. 'Basically, resellers have to fulfil whatever role the customers have in mind and often call in a third party which can take care of the problem.'

Hall says that Simmons Magee works on both sides of the fence - as prime contractor and as subcontractor. Both scenarios have their advantages and disadvantages, he says.

'Being the prime contractor is a big responsibility, but if the organisation has the skills to complete the project management it is not difficult.

As the subcontracted party may mean you have less control and can get tarred with a broad brush if something goes wrong that is not your fault.' Hall says that Simmons Magee is focusing on offering a prime contractor service to its customers, which the company is able to do because it has strong in-house project management skills.

One of the problems Hall encounters is managing the change from the established way of working to the new way of working. 'If there is an incumbent, they have to be very open in order to brief the new contractor, and they are not always willing to take that approach.'

But simplicity is the key. We call our prime contracting division the plug-and-play services division because we keep things as simple as possible.'

A successful prime contractor has to break down the customer's requirements into modules and satisfy each one separately, says Hall. 'The prime contractor has to look at the project as a whole and consider different elements like product, service and skills. It needs to see what the customer has that can be used and what the prime contractor organisation can offer, and then must fill the gaps with other third parties.'

The danger of a prime contractor arrangement, in which one external third party takes responsibility for several others, is that the client tends to give up control and responsibility, says Ian Clarke, marketing manager at Datarange. 'I hate to steal a phrase from the politicians,' he says, 'but everybody involved in the project has to be a stakeholder if it is going to be a success.'

Clarke says that no one can absolve themselves of responsibility. If that's allowed to happen, gaps appear where parts of the project fall down.

The prime contractor should take the initiative for insisting there are regular meetings of all parties, including the client. 'The client may not want to be closely involved,' he says. 'The client often believes that is what the prime contractor is being paid for, but it can't just wash its hands of responsibility. It must remain informed and take ultimate responsibility.'

There is no doubt that many customers choose to allow big vendors such as IBM to prime contract a large implementation project because of their name and reputation, although many feel that that reputation has become tarnished in recent years.

Clarke says: 'The old maxim about not being fired for using

IBM still applies, but customers are better informed these days and know what they want.' Still, he says, some big vendors are guilty of seeking out big projects and securing them on the promise of having the skills available, and only then looking around to hire the necessary skills.

'IBM has recognised that it may have been guilty of that in the past and these days has the third parties on hand, already approved, to fulfil the contracts it wins,' says Clarke. But a company which is good at integration can easily move to taking over the prime contractor role, he adds.

'Sometimes we front the deal and IBM is a big player. The difference is that if there are several small companies working for a prime contractor their names may never be made known to the customer.

'But if IBM happens to be one of the players you can be sure the customer will know it, says Clarke. There is still an enormous amount of cachet association with the IBM name, whatever role they play in the project.'

Clarke says that being the sub-contracted third party working through a prime contractor can mean you are dependent on the largesse of others, both for work and for credit. That may not be acceptable.

'You can ask for the contract to include that your company name is credited with the element of work you are doing. But basically, if the prime contractor wants you to work anonymously you have a choice: you can agree to do it or not. Most firms want the work.'

There is much to be said for being the smaller player, adds Clarke. 'Your responsibilities are limited and contained within your area of expertise.

You are less dependent on others fulfilling their part of the deal.' If you are the prime contractor, he says, your reputation depends almost entirely on others doing what they say they are going to do.

The key to success, according to Clarke, is not biting off more than you can chew, whether you are the primary or secondary player in the contract.

'It is tempting to just say yes to everything the client asks you to do and worry about it later. But that is a shortsighted approach.

Unless you have recent experience that is very similar, you cannot be sure you will find the right skills to execute a contract until you come to do it. And of course there is a big skills shortage at the moment,' he says.

Parr cites the skill shortage as the main reason why prime contracting is growing as a concept. 'There was a time when an integrator, especially a large one like IBM, would bid for a contract and win it, confident that it had the skills in-house to see it through. These days it is becoming increasingly normal to use contract individuals and companies to fill the gaps.'

In fact, he says, one of the most useful things that a prime contractor needs is the ability to spot what skills are required and securing them.

'Sometimes it's a matter of looking within the client organisation for the right people and getting them to work together. There is sometimes a competitive element between third parties working on the same project.

The prime contractor has to be strong to manage the situation.'

The prime contractor also has to be able to ensure the quality of all the different parties working on a project. 'When the prime contractor is more concerned with keeping costs down the project can suffer,' says Parr. The concept of using a prime contractor to manage a group of specialists can create another problem of having the right skills when and where they are needed, and ensuring their quality.

Hall says resellers and integrators are becoming chameleons, changing their colour to suit each challenge. This is easier for systems integrators to do, he says, but volume resellers find it a harder challenge. 'Typically,' he says, 'the volume reseller is used to working direct with the customer and having a straightforward task to perform, usually supplying and installing hardware.

They are now taking on a wider part of the integration brief, and are working indirectly with the customer through the prime contractor. There is a shift in the relationship, which they may not be accustomed to, and it may require a flexibility that they have not had to demonstrate before.'

But everyone agrees that the rewards of a large contract help focus the mind. 'There are few large contracts that are underfunded,' says Parr, 'and they are often more lucrative than several smaller projects.' The rewards should be linked to goalposts and milestones and it is up to the prime contractor to make sure the markers are at the right point and are satisfactorily achieved.

'It is the responsibility of the prime contractor to take action if any of the subcontracted parties do not fulfil their part of the deal,' says Hall. 'That can be difficult for a small company to do if one of the subcontractors is IBM, for example.'

Gareth Firth, head of PA Consulting's project management practise, says there are basically four different competencies required to execute a successful project. 'There needs to be technical competency, the ability to understand the customer, management skills and people skills.'

Hall sees no reason why many resellers should not move into the position where prime contracting is their core business. 'If they have the right project management skills in-house and can manage the other players, chivvying them when necessary and keeping everything up to the mark, there is nothing to suggest that a small reseller firm should not be the prime contractor for a large project.'

Hall believes many resellers and integrators have been naive in the past, not seeing the opportunities. 'I would say that 90 per cent of customers are looking for a contractor to take responsibility for integrating the different skills and technologies. That is almost more important than the technology itself.'

Hall thinks that customers need educating, partly about what a prime contractor can do and also on how to manage the relationship. 'As systems get bigger, volumes of data get larger and the expectations of users increase, there is greater demand for external third parties to provide a wall-to-wall service of project management.

'Many resellers can do this, but are often afraid to put their hands up. They think it is only the big names and big consultancy houses that can prime contract. But that is a big mistake. There is plenty of business that resellers are missing out on because of lack of confidence and lack of education within the client.'