Clever Procurement- Caroline Boot and ‘Clever Buying’

In the past tender writing and procurement has often been a painful and expensive (and often pointless) exercise, but Caroline Boot’s ‘Clever Buying’ course is changing the procurement sector.
CAROLINE BOOT, from tender specialist company Plan A, explains.

MY FIRST DOZEN years in the business of writing tender responses revealed a large-scale problem: the traditional methods and tools used to select suppliers (often for projects worth many millions of taxpayer dollars) were not delivering value for money.

Confused priorities, recycled Requests for Tender (RFTs) with generic or irrelevant questions, variable and subjective opinions influencing evaluation teams – all made the procurement process difficult, not only for respondents, but also for evaluators.

The time and costs involved in responding to mountains of standard questions – which were largely unrelated to the specific project – created overheads that would ultimately be built into the costs of the projects bid for. On the client side, the time and costs of evaluating that material could be far out of proportion to the value for money being sought in the tender box.

Worse, neither the bidders nor the evaluators had confidence that the decisions being made were the right ones to effectively manage project-specific risks and provide opportunities to leverage value over the life of the assets. This situation was probably costing the country billions.

This is why I extended our services from simply helping bidders write good tender responses, to also helping procurers to sharpen their procurement tools and processes.

Doing our homework 

The first challenge in raising procurement skills was that government agencies were often entrenched in legacy processes with little direct motivation, nor clear mandate, for procurement professionals to increase their efficiency or their effectiveness.

Our first step was to tap into procurement managers’ minds. Over hundreds of coffees, conferences and consultations, I drilled deep into the challenges faced by tender evaluators. This involved reading voraciously, and attending and facilitating dozens of workshops with tender evaluators. I went to every available procurement course in this market and studied procurement models and tools used by the UK and US government agencies, the World Bank, the EU Procurement Rules, Asia Development Bank, FIDIC and more.

What did become obvious was that the processes used by the New Zealand Transport Agency (NZTA) were head and shoulders above others in the international procurement arena. The assumption that New Zealand practices were behind others, was clearly false – the transparency and effectiveness of procurement processes run for roading and transportation projects far surpassed any systems employed elsewhere.

Unexpected source of insight

We also learnt a lot from unexpected sectors such as education.

My postgraduate research in the early 1990s in the education sector covered ‘assessment and evaluation’ of student capabilities, and I discovered that the principles of assessing this ‘capability’ had many similarities to assessment of supplier capability to underpin procurement decisions.

Over many decades of qualification reforms around the world, education professionals had developed far more sophisticated and efficient tools and processes for evaluating capability than tender evaluators. Applying many of these capability assessment tools within tender preparation and evaluation was therefore logical.

Moreover, it could be done in a manner that aligned with international best practice in procurement, with the NZTA’s manuals and processes, and with our own government’s Rules of Sourcing and Principles of Procurement.

While applying all these ‘effective’ procurement methods would improve our procurement environment, I found, however, that making a material difference to practices at the tendering coalface was a different matter.

Get the right heads involved

Many tender evaluators back then had little, or no, involvement in planning the procurement or in preparing the RFT. They had no input into selecting and developing the methods, attribute weights, or questions used to make procurement decisions.

Instead, the job of putting RFT documents together was often relegated to administration staff who had little understanding of the project or its priorities. Unsurprisingly, many of the RFT documents did not reflect, or align, with broader procurement strategies, nor did they use tools that select on the basis of the critical success factors for any particular project.

The evaluators were shipped in when the bids were in the box. With the supplier selection method already set in stone (along with the attributes, weightings, and questions), the evaluators’ hands were effectively tied. The only way to mitigate the poor selection tools they were forced to use, was to introduce personal discretion.

This meant that tendering decisions were often wildly variable, depending on the perceptions of the evaluators on what was important at the time. Similar attributes for similar jobs could be marked high or low, depending on the personal views and priorities of the evaluation team. This was hugely frustrating and discouraging to bidders, plus it undermined the industry’s confidence in the fairness and value of the system. A change in priorities was urgently needed.

People learn by doing

I soon found that lecturing about better procurement made little difference to the quality of tendering, and it would need hands-on training in applying procurement tools and methods to improve tendering practices in general.

Importantly, I discovered that the NZTA’s requirement for tender evaluators on significant roading projects was the only material motivation for clients to up-skill in this area. And although the agency had a great manual and excellent processes, it did not (and, I was told, could not, under its mandate) offer ‘training’ in procurement.

There were very few courses available on tendering around, and I found what there was available delivered in a traditional style – PowerPoint slides, massive resource folders, occasional lecturer-led group discussion – but no meaningful activity to consolidate and practise the theory.

My previous 15 years as a secondary teacher taught me that people change their behaviour only by practising new ways of doing things and I now had a unique advantage – a host of ‘war stories’ and real examples gathered through working on tender responses at Plan A. This made ‘Clever Buying’ – the training for procurement managers – unique.

The tools of learning

It took many months to put together the first course. Fake tender responses needed to be written. Numerous scenarios needed to be developed, to give trainees a range of different contexts to practise their skills. Research was needed to nail down the salient factors of landmark legal cases and Auditor-General/Commerce Commission guidelines, to use as examples of what not to do.

A range of RFT documents was gathered to illustrate the worst and the best practices in the market. Different styles of scoring systems were developed in the context of real examples, with trainees using laptops and calculators to test the sensitivity of different weightings on the final tendering decision.

It was important that the course provided a logical blend of the main methodologies available – the NZTA’s procurement processes, Government Principles of Procurement and Rules of Sourcing, and a sprinkling of the best of internationally sourced methods. It also needed to provide a clear segue into assessment for the diploma-level qualification used by NZTA to qualify its tender evaluators.

People learn best by doing – not reading or listening to lectures. I wanted participants to try their hand at every important aspect of developing RFTs and evaluating responses over their two days of intensive activity.

Template workbooks, handouts and resource materials were created, ranging from group practice tender evaluation exercises, ethical scenarios, a tender debrief role play, scoring analysis and use of spreadsheets. Comparative material was developed to show how to work through analysis of project risks and opportunities to develop prequalification criteria, set and test attributes and weights, and develop targeted questions to differentiate the bidders.

Early feedback and success

The two-day Clever Buying course was launched late in 2011, and – with several hundred tender evaluators having completed the course, and scores having followed through to be assessed for their National Certificate – I feel the wheels of change are now turning in some areas.

The most satisfying thing is to see significant savings for both tenderers and evaluators when better planning tools are used. We’ve seen small councils reduce annual procurement budgets by hundreds of thousands of dollars simply by training their staff in these simple best practice methods. What’s more, the effort put into structured procurement planning pays off in spades, with faster, more accurate and defensible decisions from tender evaluation teams.

There’s been positive feedback from suppliers also, when they recognise the questions they are asked are carefully crafted to differentiate the bidders on the basis of ‘value for money’. Valuable time is no longer wasted in cutting and pasting generic answers to irrelevant cookie-cutter catch-all questions.

Bidders can now win a project from councils using best practice without having to cut their price to unsustainable levels (and then trying to claw back a profit through variations). They can apply their smarts to develop the optimal solution to provide the best value for money over the life of the asset. That’s worth having – not only for those high-performing suppliers, but also for the asset owners and the communities that use those assets.

However, there are still challenges between private sector operators and central government, which has yet to be persuaded of the value of this practical approach to training procurement staff.

Meeting of the minds

For the time being, though, the development of Clever Buying has allowed a ‘meeting of the minds’ for those who choose to engage. The objectives of both suppliers and clients in engaging in procurement processes – fairness, transparency, fitness for purpose, and cost-efficiency – are well on their way to being met.

 

*This article was originally published in Contractor magazine

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