Tūranga, Christchurch Central Library, New Zealand

Tūranga, Christchurch Central Library, New Zealand

The NEC have published a good case study on the above project. We have copied it here.

  LOCATION: Cathedral Square, Christchurch, New Zealand VALUE: £48 million CONTRACTS USED: PSC, ECC Option A START-FINISH: 2016-2018 EMPLOYER: Christchurch City Council CONTRACTOR: Southbase Construction PROJECT MANAGER: Aecom Christchurch City Council in New Zealand has used NEC contracts to procure a new NZ$92…

View On WordPress

The Government's management of major projects inquiry

The Government’s management of major projects inquiry

[et_pb_section bb_built=”1″][et_pb_row][et_pb_column type=”4_4″][et_pb_text]

While no one would argue with the sentiment of this inquiry, one wonders why?

The NAO have so many reports that show why things have gone wrong. There are good well-documented comparators of projects. So simple desk research would answer most of the questions.

In my view, Government fails at the start of projects. If…

View On WordPress

Carillion. What can we learn?

Carillion. What can we learn?

[et_pb_section bb_built=”1″][et_pb_row][et_pb_column type=”4_4″][et_pb_text]

The Public Contracts Regulations 2015 requires governments main contractors to pay their contractors within 30 days of receipt of invoice and to ensure this provision is passed down the supply chain.

Yet in the Carillion case they were not paying subcontractors for over 120 days. So Carillion were in breach of their…

View On WordPress

The Future of Services Procurement in the NHS

The Future of Services Procurement in the NHS

In our last blog we talked of goods, now let’s look at services procurement. This is a different kettle of fish isn’t it? Not necessarily.

Procurement systems that talk to each other

In the next six months we will see the arrival of systems that enable procurement contracts to ‘converse’.  They will use event-driven data to manage contract performance.  For example, buyer and supplier systems…

View On WordPress

The future of Procurement in the NHS

NHS

We will continue the theme of our previous blog about the future of procurement and consider how this vision might apply to the NHS. Today we will look at procurement of goods, in subsequent articles we will consider services, exceptions and the advantages.

Lord Carter’s report into acute hospitals forecasts potential efficiency savings of around £5 billion through new technological…

View On WordPress

What does the future hold for Procurement?

I am no Madame Zuleika but indulge me for a moment as I set out my thoughts following three decades in the commercial field. For the majority of people working in Procurement, I think it is unlikely that they will be employed (in Procurement) in 10 years’ time.

Melodramatic? Maybe, but what makes me say this? Consider the technology that is already available and that which is envisaged in the next year alone and it is evident that it is going to bring wholesale change, not only to Procurement, but to the whole way in which we live.

For example, Amazon are about to open the first shop that recognises individuals from their phone as they enter, records their selections as they browse and charges their account (via the phone) for the cost of their purchases as they leave. That removes the need for checkout staff and enables automatic replenishment in the truest sense: the re-stocking order is transmitted, system to system, as the customer leaves the store. And will probably be delivered by drone or driverless truck not too soon afterwards.

In Procurement, we already have systems that produce contracts semi-automatically; within a year we will see the arrival of systems that link the suppliers’ and buyers’ systems together to enable automatic contract monitoring and recording. Deviations from contract (based on event-driven data) will be recorded automatically and flow through to invoicing adjustments as needed with no help from Commercial or Procurement personnel. Supplier systems will be quick to reduce prices in real time if they are not getting the volume of sales they require within given parameters on their portals.

Professor Richard Susskind is forecasting radical change in the legal profession through automation and artificial intelligence which will cause the removal of many lawyers as systems will take over much that they used to do for themselves.

I believe there will be an equivalent sea-change in Procurement. Procurement staff that do remain will become data-manipulators and interpreters, seeking ways in which to manage technology to deliver the best outcomes. They will do less negotiation (this will be done by the systems) and more approval of supplier compliance for entry to the supply platform, more performance measurement and more dispute resolution.

How should business prepare to cope with this change? Does it herald the arrival of a new industrial revolution where we see vast swathes of the workforce become redundant?

I shall set out a possible future for our favourite service, the NHS, in my next blog, using these ideas as a starting point.

If you wish to discuss please contact me.

If Britain decides to Brexit can the Civil Service cope?

The Civil Service has two years to work out the divorce settlement. This has nothing to do with going forward, trade etc. it is purely the separation. What rights will citizens have following the divorce? If the EU citizens in the UK have no rights will they stay? If they do not who will do their jobs? If the UK citizens abroad have no rights such as free medical care are they likely to return? How will the NHS and Local Government cope with approximately 2 million mainly elderly coming home to the UK and requiring treatment, social care etc? For example, what would happen in respect of the European Health Insurance Card? Would British citizens pay for the amendment of the systems in all the other 27 countries to keep a version of the EHIC card? Assume we were to say yes, if it is to be ready for the cut over then there is less than 12 months in which to achieve agreement, if one is to allow sufficient time to amend the systems, is this feasible? Based on my experience of Government programmes, I seriously doubt this deadline could be achieved. Mr Gove has said that he does not want us to be part of the single market. So no Norway solution for us. Ok, what does this mean? We will need to agree a separate trade deal with the EU on behalf of all its members and further individual agreements with all those countries having a trade deal with the EU. When we leave all the countries with trading agreements with the EU will no longer have agreements with the UK. OK we could negotiate in parallel, that should shorten the time? Unfortunately this is unlikely as the main parties America, India etc. have all said they will wait upon us agreeing an arrangement with Europe to discuss their arrangement with us. It is therefore highly likely we will revert to the World Trade Organisation rules and trade under those rules, which are not as favourable as our present rules. At the same time the UK may be breaking up. Scotland may seek independence. There is also the problem associated with the requirement for a Border between Eire and Northern Ireland, which could cause us issues there as well. This is without any of those other matters “Events, dear boy, events” that Harold Macmillan described so wonderfully. On balance if the Civil Service achieved most of this in ten years, I would be surprised. I do not think the UK Civil Service has the diplomats and the civil servants necessary to push through all the changes required in less time. Nor is it fair to expect them to. Would Parliament be able to keep up with the amount of legislation required? Parliament needs to unpick 40 years of legislation. At present it sits for about 150 days a year and I doubt, unless they start to sit for 210 days they have any hope of achieving the required task. So for eight years at least we can expect to trade under WTO rules. This is good for Government, as it will provide a lot of revenue from the tariffs we will be required to apply. Unfortunately, for business it will be not so good. Manufactures who import will need to pay those tariffs thus increasing their costs. To compete in their old markets these businesses may be forced to absorb the tariffs on their sales goods. Not good. These companies have a fiduciary duty to Shareholders which could mean they would relocate within Europe to avoid these costs and with assistance being made available for inward investment, it is highly likely Companies will go. Thus increasing unemployment and the requirement for benefit payments but with a smaller base for tax receipts. Can the British Civil Service cope? Of course it can, if given sufficient time and money but it looks like they will get neither.

Update – Britain decides exit, can the Civil Service cope?

Prior to the vote, I wrote a piece on the Civil Service coping with Brexit. http://www.wrekinconsulting.com/britain-decides-exit-can-civil-service-cope/ I argued, that the Civil Service could cope, but that to expect it all to be done and dusted in two years was not realistic. Since then, I have thought further about one of my lines from Harold Macmillan “Events, dear boy events.” It is events that are of most concern to me. It would seem fair to say the leave camp had no plan for the negotiations. Their idea of pushing back the notice of Article 50 and having informal talks has been shot down. They need to go back to first principles. What is in the scope of negotiation? What is our position on each issue? What are we prepared to trade on and for etc? Then plan for the negotiation. Create the review boards necessary to approve the approach of the people in the room. They will require a very good Project Management Office. I found it mind blowing that Boris could see no reason why Scotland should have a vote on leaving the UK. The will of the people is soverign, is it not? So we can expect a lot of political capital to be spent on that issue. NI looks as if it will also require a very delicate touch. Wales, having voted for exit now expects England to cough up the extra cash the EU will no longer be paying. How is this to be managed? The city is going to be a roller-coaster until some certainty is created. Likewise, industry will be reluctant to approve anything, other than essential expenditure, until there is more certainty. With certainty, they will be quick to adapt and I anticipate some are already doing so. While all of this is going on there needs to be the day to day Government enacted. Government has to deal with the shocks that come along such as Tata steel. Fix the health service etc. Oh! and cope with the Political parties seeking to destroy themselves. So I revise my conclusion, I hope the Civil Service can cope, but it will not surprise me if they do not. One thing, I know, it will not be for the want of trying.

What can Commercial Managers learn from the Great British Bake-Off?

First, I have no inside knowledge of the deal, my observations are from press coverage. It seems, Love Productions played a, short term, blinder. They used time positively in the negotiation, to convince Channel 4 that they had to move quickly. Channel 4 did, and in doing so increased the risk profile of the deal. It would be interesting to know who in Channel 4 signed off the risk register? Did it highlight the risk of  contracting with no guarantee as to the talent? Two presenters have indicated they informed Love Productions that they would not move. Did Love Productions make this known to Channel 4, or did they omit the fact and expect the buyer to do their own due diligence? Did Love Productions assume that they could throw money at the presenters and they would fall into line? If so they were sadly mistaken. The BBC were clear they could pay a certain amount and no more. Love Productions saw a bigger pay day with Channel 4 and followed the money. A reasonable approach and as I said they used time as a distinct negotiating advantage. Love Productions negotiators seem to have adopted a short-term scorched earth approach, in my view. The BBC commercial team will be wary of supporting a Love Production again. Why would you nurture and grow a show into a worldwide brand just to see the people you deal with sell it to the highest bidder? So if Love Productions are to continue with the BBC, they are likely to change out a number of Directors to convince the BBC that they have changed. I would also expect the BBC to require a number of guarantees. Nor, I suggest will Channel 4 be that keen to get into bed with a company that has shown them as poor negotiators. Convincing Channel 4 to buy a format with no guarantee of the talent and thereby magnifing the risks was a very good deal for Love Productions . We have seen, with Top Gear, how these shows rely upon the on-screen talent. So Love Productions in the short term, is more than fine. Love Productions longer term future is questionable, I would suggest. Now back to the BBC. Well done the BBC, you had a top limit and you stuck to it. Better still the BBC worked with the talent and has kept 75% of them. The BBC will develop other formats, at a lower cost, with a proven team and are likely to have success. I can see a format with Mary setting the challenge and Sue and Mel acting as motivators of competing teams to produce the best version and Mary judging them.  One week two WI’s competing the next two Fire Stations etc. Lots of human interest, different locations playing to the BBC strengths. So what we as Commercials learn is that Channel 4 let time be used as a weapon against them. They seem to have become too focused on doing the deal. This made them ignore price. Did they research what the BBC would offer and offer just above that? It would seem no, given the differences in price offered.   What cost and discount did they ask for in taking a programme with so much risk and no guarantees in place for the talent? It would seem none. Hence this seems to be an ego driven ‘do the deal’. As an organisation it would seem Channel 4  failed to have someone with enough authority to stop the deal and tell them “the King has no Clothes”. They built risk upon risk. First moving from the BBC to Channel 4, then not taking 75% of the talent. Then letting the BBC compete directly against them with the 75% of the talent they failed to secure and paying over double for the privilage. Good deal? This will be an interesting case study when all the facts are known. It seems to show typical business failures that one would hope organisations had learnt to avoid. Thank God they have not, otherwise I would not have a business. Mean while I will continue to enjoy the programme.

What does good look like?

The more time I spend doing procurements, the more I wish people would write a clear statement of what good would look like. A hundred different decisions are made, normally by committee, during a procurement and the vision moves, changes and often is lost. We would not allow such movement when building an extension to our own house so why do we allow it for a large commercial/public procurements? 

We spend more time arguing about liabilities then getting the buy in of suppliers to the vision and having them describe how they would deliver it. We then are surprised when large projects fail to deliver. 

If we want to see masters at work, we only need look at our children. If they want something, they make a plan on how to convince Mum/Dad of why their vision is the only one and that not to give in would be unreasonable. Normally they succeed.