What makes the difference between a straightforward procurement or purchase and a complex one?
Consider a procurement as an envelope but bear with me, there’s more than four sides! I’m not quite talking about the usual PCT envelope, but an envelope constructed of many moving or ‘wobbly’ parts.
Any procurement is a composition of things that enable you to define the procurement ‘envelope’ such as:
- Specification
- Budget
- Market information (pricing, competition and capabilities)
- Contract terms
- Quantities required
- Risks
and there’s probably more.
This is why buying a pen is relatively easy. You know it’s costing a couple of quid, you’re fairly confident in the specification and that there’s loads of competition with a rough idea of the difference between a Bic and Mont Blanc or a Parker. You know you only need one for work and so your risk is pretty low.
Compare that to buying a new software package to enable a government policy which was announced yesterday. What do you have?
Maybe you have a budget, you don’t have a spec, you don’t know what the market can do, you’re not sure how long you need it for etc etc. By comparison to the pen you bought from WH Smith that morning for work, you know very little which enables you to proceed.
Not a huge surprise, we all have to start somewhere. But here’s the kicker, some of these things are interdependent.
How much will it cost? Depends what the spec is.
What is the required budget? Depends how long we need it for?
So what is the spec? Depends what we can afford really, don’t want to gold plate it.
And here is where I’ve found a number of teams in my career. Caught in a knot of these questions.
What is the solution? Stop the moving parts – one by one.
Start building the spec. Start with something output based but get it down on paper. Give the market something to consider and engage with.
Don’t hesitate, get an RFI out into the market. What can it provide? What capabilities are out there? Does our spec make sense and is it deliverable?
Start cost modelling. Get the best cost information together that you can and build a logical budget.
Do your risk analysis. Don’t sit worrying about it, get the risks out in the open and work the mitigations.
Better information might not get you certainty, but it will get you much closer and with an effective procurement process (use the cycle!) you can get to a place where you can conduct a viable procurement with a firm envelope.
You’ll still have some wobbly bits but that’s where your skill and experience comes in. The fewer wobbly sides, the greater your chance of success.
Kevin Smith
Managing Director
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