Estimated reading time: 5 minutes
Introduction
The successful execution of any project relies heavily on an effective procurement delivery schedule, a comprehensive plan that outlines the timelines and milestones for the acquisition of goods or services. In navigating the complexities of procurement, various objectives need to be addressed to ensure the project’s success. This article delves into the three primary objectives associated with a procurement delivery schedule: Deadline, Good Partner and Honest Promise. Each objective caters to distinct project scenarios, emphasising the importance of meeting defined timelines, selecting reliable partners and evaluating the credibility of early promises. Let’s explore these objectives in more detail.
Three types of objectives
There are projects that have a deadline that you need to meet and projects where you don’t know what it’s going to be. It’s a high volatility, low information environment that you’re going to have to work through with all that ambiguity with a partner. Or you want that honest promise where earlier is better, but only if you believe it. We need to test both the believability and the earliness of a schedule.
1. Deadline
First is the deadline, this is the scenario where there’s a defined deadline that can’t move. An example of this might be building a stadium for the Olympics, the Olympics are happening on that date, there’s no room for a stadium to be delivered beyond that. Or maybe you’re building a new hospital or there is a piece of equipment that is sunsetting or going out of service or no longer going to be supported. So, what is the approach we’re going to take here? Well, you tell all the bidders, they must meet that deadline and they tell you how they’re going to achieve that deadline. What we’re going to assess is how believable is the plan that they propose, we’re going to use confidence or risk-based assessment. Contractually, you want to consider whether you can include punitive measures like liquidated damages or holdbacks, what we find that is usually more effective are positive contract implications like performance bonuses for achieving the deadline date. There’re some other things we can do in the evaluation process, you’ll identify some risks as even the bidder you pick may not be the very best, they may be good enough. But there’ll be some risks that you identify, you can include those when you move into program development to include some of those mitigations.
2. Good Partner
Now moving on to the next scenario where we’re looking for a good partner. In a good partner, we don’t know what the deadline is going to be, it is a high ambiguity, low information context. Often these are things like long-term in-service support programs. For example, we don’t know how often we’re going to be flying these planes so we can’t hold them to a deadline or we’re building the infrastructure for them to house the tanks and we don’t know when that’s going to be done. Or it might be a developmental program, or a design then build type activity where we don’t even know what we’re building but we want to select a bidder who’s going to be good at planning what we’re doing. So, what does that look like? We’re going to tell them the nature of the planning problem. They’re going to tell us how they’re going to conduct planning and replanning into the future, this isn’t a one-shot deal. They’re going to have to continually update and re-baseline the schedule and we’re probably going to give them a sample question of what we think we know now as a test case for knowing if they’re good at scheduling. We’re going to give them a qualitative assessment of their abilities, they’re going to tell us what kind of tools and people they use. There are some proxy evaluation techniques that you can use for this, but I would generally avoid those and stick with a qualitative assessment. Be careful with the use of fixed prices because you don’t know what you’re going to get and you’ll either over or underpay. In this scenario, you may be looking for more of a cost plus or a gain pain sharing as you develop it. Consider cost reimbursable incentive frameworks or if it a long-term ISS program, you may start off as cost plus and then shift to a fixed pricing once you get into more of a knowable steady state.
3. Honest Promise
The third scenario is the honest promise. This is where we want early delivery, but only if we can believe it. This might be for a new ship or a new hospital, but if you ask for that, all the bidders are just going to tell you we can do it tomorrow, but you don’t necessarily believe them. We want to create some tension on both sides of this, how we evaluate is looking at not just their promise but also the credibility of that promise. In this scenario, we’re going to using a hybrid scoring technique when they say they can achieve that milestone and we’re going to multiply that against a confidence assessment. It should also mention that their promise or their proposed schedule does become contractually binding even if we don’t believe them. That threat also helps ensure that you don’t get low credibility proposals.
Conclusion
The objectives of a procurement delivery schedule are diverse and tailored to the specific context of each project. Whether facing a fixed deadline, seeking a reliable long-term partner, or navigating the delicate balance of early delivery and credibility, the procurement process requires careful consideration and strategic planning. Recognising the unique challenges posed by each scenario, such as the inflexibility of fixed deadlines or the ambiguity of long-term partnerships, underscores the need for a nuanced approach in evaluation and contractual frameworks. As organisations embark on procurement endeavours, they must navigate the intricacies of believability, partnership quality and credible promises to ensure successful project outcomes. By leveraging appropriate assessment techniques and contractual measures, stakeholders can foster effective collaboration, mitigate risks and ultimately achieve procurement success in a variety of project environments.
So, what about the evidence that the bidders should provide, how we will evaluate the bidders and what are the characteristics that we should look for to define what “good” looks like for each of these 3 types of objectives. To find out, watch our free webinar recording, “Smarter Procurement: Mitigating Schedule & Delivery Risk to Save Time and Money” for the full explanation.
