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In one of projects, the customer is trying to include the vendor selection as part of the fixed cost project. While the scope of the fixed cost project clearly says to work with "an external system that provides xyz functionality", nowhere does it say that the project includes finding the said external system/vendor. [To be fair, it doesn't explicitly exclude it either.] In fact the scope document defines the draft API that would exist with this external system, and also states that the actual API may differ to some extent, and we are comfortable with that variability. But the process of finding this vendor/system is a subproject that is just as significant as the entire project itself.

Any suggestions on how typically this is worded and the scope can be refined/adjusted now? More than the cost of extra hours, we are concerned about the extra calendar time that it will take and will entirely push this project into red for us.

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I am reading into this that the scope of the project and the firm fixed price are already negotiated and sealed. I can see why your customer thinks that vendor selection is part of the price because it is a logical predecessor to working with an external system. Since my hindsight vision is perfect, this should have been part of your price or excluded out specifically. Lessons learned.

Contractually speaking and trying to keep your customer a customer, you have very little leverage. Hat in hand, try to get your customer back to the table and be honest about your oversight and that you need more money to get this work done. Hopefully, your customer is reasonable and will respond favorably. Else, you will need to tap into your reserves that you built in the price and get the with done. You need to accept the fact that this project might not be profitable.

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  • "this should have been part of your price or excluded out specifically. Lessons learned." Agreed, expensive, but yes.
    – Amrinder Arora
    Commented Dec 28, 2015 at 15:49
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You are right to be concerned about this. Vendor selection can be a significant drain on time and resources, so you need to either ensure that this is excluded from the scope, or that sufficient time is allowed to let the selection process run.

I would start by stating a number of assumptions within your documentation, including the assumption that the external vendor selection will be done outside the scope of the project, and that the external vendor selection will have been completed before your part of the project commences. Then state a dependency that the external vendor selection process has completed as a precursor to you starting those project tasks where this is relevant. Also state a condition in your document that says that any delay or cost caused by the selection process being incomplete will be a variation in the project, chargeable to your customer. Then get the customer to either sign off these assumptions / dependencies / variations.

If they won't then you have the opportunity to re-open negotiations to clarify the scope, and to sort out responsibilities for these elements.

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  • "Then state a dependency that the external vendor selection process has completed as a precursor to you starting those project tasks where this is relevant." Thanks, this is helpful.
    – Amrinder Arora
    Commented Dec 28, 2015 at 15:49

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