Let’s first consider the strong points of the current model. When a new requirement is identified, the current models generally allow us to quickly assess and classify a new requirement. This classification must, due to a need to reduce complexity, be very broad and generic. Once we have classified the requirement, we immediately know the process we will follow to deliver the desired outcome of procuring a good or service. This means we can tell our client that the following forms will need to be completed with this information, we will approach ‘x’ vendors using the ‘y’ method and the process should take ‘n’ days to complete. This is great for simplicity and predictability, but are we maximising the benefit an experienced procurement advisor can offer?
Let’s take a look at the most common classification methods used. Generally the first, and often the only, parameter used is value. “Oh, it’s over $500k, then we’ll need to take an open market approach and you’ll need to complete this very complex planning document and this enormous specification.” This is fine if you are about to buy a complex software solution, but what if you are just buying 10,000 start pickets at $55 apiece to put a temporary fence around a new work site? Will any value be added by doing extensive market research or filling in a complex specification template? Highly unlikely. Sure, some models of classification provide an assessment for risk in the process and/or requirement, but generally that simply provides a modifier rather than a completely new path, driving you to shift up or down a range of templates required to be completed. It is likely that the client may at that point lose all respect for anything further you may offer, because you just hid behind procedure rather than demonstrating capability in analysing a requirement and developing a procurement strategy that matches.
The latest buzz words in Queensland public sector procurement are “Principles based procurement”, I think this could well be the shift in paradigm that could drive the biggest shift in public sector procurement in decades, maybe ever. The basic premise is that the highly prescriptive State Purchasing Policy has been replaced by the principles based Queensland Procurement Policy. First of all, it now uses the right term for the strategic level of the policy, ‘procurement’, but that’s a side bonus. Primarily the new framework provides 6 very simple principles that must be adhered to in every procurement. Broadly speaking they are:
- We drive value for money
- We consolidate demand and buying power
- We demonstrate best practice in developing capability and engaging with our clients
- We advance the governments objectives
- We plan and consider our procurement’s carefully
- We procure with integrity
As simple as that.
While there are further fact sheets to support and expand upon each principle, they are in no way prescriptive. The beauty of this model is that if you review your planned procurement against these six principles, you will very quickly find that the old cookie cutter approach may not be providing the best outcomes. Consider our compendium example if we were to apply the old value based classification:
- I’m going to force the client to spend hours completing complex forms and carrying out detailed assessment of the market, increasing the internal cost of the procurement and delaying the project all without any significant gain likely to be produced. Hmm, I may not be achieving principle 1 and 4.
- I’ve simply followed the bouncing ball and applied a process flow based on a broad classification of the requirement. That may not qualify for a tick under principle 5.
- If we didn’t ask more questions and explore the real risks and requirements, then we have probably let principle 3 slip both on the opportunity to develop a better approach, to build our skills, and failing to really engage with our customer.
It really is that simple. If you can honestly give yourself a tick in all the principles with whatever approach you do select, then why would you need to follow a generalised cookie cutter approach?
Give this a go with a few of your current procurement processes. Did you follow a prescriptive process? Is it really working? Did you cheat and skip bits? if so why? Would a principles based approach make your processes more efficient and effective, or does it introduce risk?
In following blog’s, I’ll consider the challenges of implementing this principles based model and address the challenge of ensuring the skills of the procurement teams is sufficiently developed to ensure this approach does not introduce new risks. In the meantime, pop over to the forums and start or join in on a discussion around the models used in your organisation and whether they are working or not.