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Home > Commercial customer/supplier environment: case of a large engineering organization

Commercial customer/supplier environment: case of a large engineering organization



Tailoring PRINCE2 for individual projects is mainly the outcome of Initiating a Project. During Initiation, the first project Stage, the project management approach is consolidated and described in the Project Initiation Document. In a commercial context like the civil engineering industry there are two possible scenarios related to this process. Either the customer conducts IP or the supplier, who as main contractor may be responsible for the project management of the entire project. In case of the former, application of PRINCE2 – which implies tailoring the method to suit the project environment, depends on customer demand and supplier flexibility. In case of the latter, the supplier plays a greater role in adopting project management best practices. In this article two projects from a large civil engineering company are presented to illustrate these two scenarios based on lifecycle models.


PRINCE2 implies a customer/supplier environment. The customer specifies a desired result and the supplier provides resources and skills to deliver that result (OGC, 2009, pp. 224). In a commercial customer/supplier environment, specific considerations may apply to various elements of PRINCE2. According to official guidance, the main consideration is to recognize that there are at least ‘two sets of’. For example, in a commercial context there are at least two Business Cases – one for the customer and one for the supplier.

Civil engineering projects are a typical example of a commercial context. Such projects involve three key stakeholders: 1) owner-operating firms that contract their requirements to 2) engineering firms, who in turn, subcontract services to 3) contractors. One may refer to engineering firms as the main contractor. Accordingly, an engineering project can be viewed from three perspectives related to each stakeholder. Following, a distinction can be made between the project as a whole and the project of the main contractor. Depending on the requirements (i.e. scope of the assignment), the main contractor may become involved in one or more Stages of the engineering project.

The interfaces of customer and supplier project are illustrated with two lifecycle models of two projects with company X, a large engineering company, as the main contractor. The first project (Project A) is a large station project. The second project (Project B) is a renovation project at a large industrial client. See figures 1 and 2 below for the corresponding lifecycle models. Project Stages are represented by bars, either green or grey depending on the scope of the supplier project. Technical phases are depicted by horizontal arrows. Decision moments are vertical dotted lines. According to PRINCE2, technical phases are not bound to decision moments. However, in practice Stages and technical phases often coincide.

Overview of Project A

Figure 1: Overview of Project A

It follows from Figure 1 that company X was not involved in all Stages of this engineering project. The supplier project started with Initial Design as the requirements (both functional and technical) were already defined. Furthermore, the standard lifecycle model was modified based on two changes. First, the Initial Design Stage was split into ‘Layout plan’ and ‘Initial Design’. Second, there was overlap between Final Design and Specification as the result of a ‘Design & Construct’ (D&C) contract. Specification was partly outsourced to a contractor.

Overview of Project B

Figure 2: Overview of Project B

In contrast to Project A, company X was involved with the initiative (i.e. idea) behind Project B. So the supplier project actually started before the renovation project was initiated. Preceding the initiation, company X provided advice and performed a feasibility study. Hence, the lifecycle model includes elements of the ‘product lifecycle’ (in addition to the generic Stages of the project lifecycle). In Figure 2, this Pre-phase corresponds to ‘Starting Up a Project’ (SU) of the customer.

For the purpose of this article, the most important difference between Project A and B is the role of company X in the Initiation Stage of the customer project. In a PRINCE2 project, the corresponding process is ‘Initiating a Project’ (IP). The outcome of this process is a ‘Project Initiation Document’ (PID) which provides a foundation for the project. Based on the PID it should be clear to all parties what the project goals are, how they will be achieved, and who takes what responsibility (Onna & Koning, 2002). The PID has major implications for project processes, including project management. 

In case of Project A, company X played no role at all in the Initiation Stage. The management processes were, to a large extent, determined by the customer and formally captured in an umbrella agreement. In case of Project B, company X supported the pre-phase and was involved in Project Initiation. Consequently, company X influenced the project management approach, which was selected during this Stage.

These two projects show that tailoring or application of PRINCE2 in a commercial environment (partly) depends on whether the main supplier is involved in Initiating a Project. If yes, then this involvement provides an opportunity to apply project management best practices based on a standard such as PRINCE2. Especially when project management is considered, and marketed accordingly, as a core competence of the main contractor. If not, then the supplier may adopt the customer’s approach, which in practice is often the case.

It is interesting to note that some customers, like in Project A, already apply PRINCE2. So the adoption of PRINCE2 as a standard for project management is driven by the market (customer). The challenge for (civil) engineering organizations is to apply and tailor PRINCE2 for those projects where both customer and supplier are concerned with Project Initiation, and where the customer is more reliant on project management capability of the supplier (e.g. the customer may lack knowledge about PRINCE2). In order to ensure that such projects are based on best practices, it is necessary that PRINCE2 has been successfully embedded in the supplier organization.


OGC. (2009). Managing Successful Projects with PRINCE2.Norwich: The Stationary Office.

Onna, M., & Koning, A. (2002). De kleine Prince 2, gids voor projectmanagement. Den Haag: Ten Hagen Stam Uitgevers.