Procurement Project Management:

Transcription

1 Procurement Project Management: Making a Difference Leo Gotlieb April Procurement Project Management Making a Difference 1

2 Procurement Project Management: The Challenge Salt Lake City Athens Turin Vancouver London Montreal Beijing Sochi Procurement Project Management Making a Difference 2

3 Procurement Project Management: The Challenge Salt Lake City times original budget Athens times original budget Turin times original budget Vancouver times original budget London times original budget Montreal times original budget Beijing 2008? but cost was $40B! Sochi 2014 $51 B and counting! Procurement Project Management Making a Difference 3

4 Common Factors in Large Project Failure Weak client/customer commitment Lack of clear scope and requirements Lack of skills and/or resources Unrealistic schedule. Unrealistic budget Poor communications Poor contracting/vendor working relationship Procurement Project Management Making a Difference 4

5 What was happening during the Procurement Phase? Common Factors in Large Project Failure Weak client/customer commitment Procurement Red Flags Was there a buy without buy-in? Was the procurement handed off to procurement professionals or was the business heavily involved at each stage deciding strategy, developing requirements and specifications, evaluating vendors and products, setting up and staffing the project team, negotiating? Procurement Project Management Making a Difference 5

6 What was happening during the Procurement Phase? Common Factors in Large Project Failure Weak client/customer commitment Lack of clear scope and requirements Procurement Red Flags Was there a buy without buy-in? Was the procurement handed off to procurement professionals or was the business heavily involved at each stage deciding strategy, developing requirements and specifications, evaluating vendors and products, setting up and staffing the project team, negotiating? Was there a flood of questions asking for explanations or more detail about requirements? Was there a wide variation in bids for example, in price, proposed schedules? Procurement Project Management Making a Difference 6

7 What was happening during the Procurement Phase? Common Factors in Large Project Failure Weak client/customer commitment Lack of clear scope and requirements Lack of skills and/or resources Procurement Red Flags Was there a buy without buy-in? Was the procurement handed off to procurement professionals or was the business heavily involved at each stage deciding strategy, developing requirements and specifications, evaluating vendors and products, setting up and staffing the project team, negotiating? Was there a flood of questions asking for explanations or more detail about requirements? Was there a wide variation in bids for example, in price, proposed schedules? Was the competition sufficiently open to attract a good choice of vendors? Were competitor capabilities evaluated in depth and cross-checked? Was the winner selected because of compatibility or familiarity, rather than competence Procurement Project Management Making a Difference 7

8 What was happening during the Procurement Phase? Common Factors in Large Project Failure Weak client/customer commitment Lack of clear scope and requirements Lack of skills and/or resources Unrealistic schedule. Procurement Red Flags Was there a buy without buy-in? Was the procurement handed off to procurement professionals or was the business heavily involved at each stage deciding strategy, developing requirements and specifications, evaluating vendors and products, setting up and staffing the project team, negotiating? Was there a flood of questions asking for explanations or more detail about requirements? Was there a wide variation in bids for example, in price, proposed schedules? Was the competition sufficiently open to attract a good choice of vendors? Were competitor capabilities evaluated in depth and cross-checked? Was the winner selected because of compatibility or familiarity, rather than competence Was the procurement rushed? Was it driven by a deadline rather than a plan? This kind of approach to timing often spills over into the project itself. Procurement Project Management Making a Difference 8

9 What was happening during the Procurement Phase? Common Factors in Large Project Failure Unrealistic budget Procurement Red Flags Was enough disclosed for bidders to properly assess the scope? Did the rating formula favour lowball bidders? Was the winning price a really good deal? Procurement Project Management Making a Difference 9

10 What was happening during the Procurement Phase? Common Factors in Large Project Failure Unrealistic budget Procurement Red Flags Was enough disclosed for bidders to properly assess the scope? Did the rating formula favour lowball bidders? Was the winning price a really good deal? Poor communications Was there good contact and cooperation among procurement stakeholders? Did information to and from prospective bidders flow freely and in sufficient detail and quantity to ensure informed bids? Procurement Project Management Making a Difference 10

11 What was happening during the Procurement Phase? Common Factors in Large Project Failure Unrealistic budget Procurement Red Flags Was enough disclosed for bidders to properly assess the scope? Did the rating formula favour lowball bidders? Was the winning price a really good deal? Poor communications Was there good contact and cooperation among procurement stakeholders? Did information to and from prospective bidders flow freely and in sufficient detail and quantity to ensure informed bids? Poor contracting/vendor working relationship Does the contract place a disproportionate amount of risk on the vendor, thereby creating incentives to default? Does it attempt to create uncertainty where none exists? Are there workable mechanisms for change control and dispute resolution? Procurement Project Management Making a Difference 11

12 Managing Procurement Projects is Different More virtual than real Not always predictable The procurement is only prologue (the real definition of success) The leverage is high but so is the inertia (take advantage of the time while you have it!) Procurement Project Management Making a Difference 12

13 Getting Started: Things to do right away Line up stakeholders Move from deadline to plan Start on the big decisions and constraints Procurement Project Management Making a Difference 13

14 Isn t Lining up Stakeholders Obvious? You might not know who they are They might not know who they are Cameo Appearances lead to The Iron Law of Government Procurement Project Management Making a Difference 14

15 How do you move from deadline to plan? Begin at the beginning ' ' and go on till you come to the end: then stop Procurement Project Management Making a Difference 15

16 How do you move from deadline to plan? Begin at the beginning,' the King said gravely, 'and go on till you come to the end: then stop (Lewis Carroll, Alice s Adventures in Wonderland) Procurement Project Management Making a Difference 16

17 What are the Big Decisions? Procurement Regime Request strategy Risk & Indemnification Intellectual property And any other show stoppers Procurement Project Management Making a Difference 17

18 Strategies: Things to think about How much do you know about what your are buying and who is selling it? Engaging the vendors Staying flexible Procurement Project Management Making a Difference 18

19 Strategies: Understanding the Market What are your sources? What will vendors tell you? What you won t find out? Procurement Project Management Making a Difference 19

20 Strategies: Engagement is Critical The vendor is not the enemy (repeat) How not to engage Open, transparent and fair works! Procurement Project Management Making a Difference 20

21 Openness: More than publishing on Merx TM or Biddingo TM Educate Consult Disclose, disclose, disclose Respond early and often Be accommodating Avoid autopilot Do a reasonableness check Encourage and Enable Competition Procurement Project Management Making a Difference 21

22 Transparency Is about accountability Is countercultural Is transformational Is a win-win Procurement Project Management Making a Difference 22

23 Fairness The third leg (rail?) of procurement policy Equitable is too narrow Is really about advantage Really flows from openness and transparency Procurement Project Management Making a Difference 23

24 Flexibility Is critical for risk reduction Is possible in Contract A but often a sell Is worth lobbying for Procurement Project Management Making a Difference 24

25 Avoiding Pitfalls Buying without buy-in Substituting hope for scope Mashup RFPs Procurement Project Management Making a Difference 25

26 Buying without Buy-in: Symptoms No decisions Slow on resources No calendar time No turnaround DIY Procurement Project Management Making a Difference 26

27 Substituting Hope for Scope We ll work it out in negotiations We ll work it out at the start of the project We don t have to define that the vendor will recommend best practices Procurement Project Management Making a Difference 27

28 Mashup RFPs Make the answer to the following questions What are we buying? How will it be priced? What do bidders have to be and do to get selected? What do bidders have to do if selected? What are we going to evaluate and how? What do bidders have to provide in response to this request? What are the rules of the RFP process? seem like a Where s Waldo puzzle. Procurement Project Management Making a Difference 28

29 A Final Message Shifting procurement from a policing activity to project approach is a significant transformation Fortunately the tolerance for bad or ineffective procurement is decreasing So be persistent you re changing a culture from no to yes the payoff is worth it. Procurement Project Management Making a Difference 29