Consultants spend a disproportionate amount of time engaging in the bidding process, contracting, or settling disputes. The surprising fact is, if we spent 30% less time on these onerous tasks, we could double the research and training time available to our staff. Can you imagine the difference that would make to productivity and fee-earning potential? An ambitious target, surely?
As I recently stressed to the Public Administrations and Accounts Committee, the time spent on bidding and procurement is increasing, often as a result of commercial strategy development. This phase, including market sounding, is crucial to setting up the commercial environment to support success and involves determining the need for outcomes to be delivered by any potential procurement.
All of these decisions need careful consideration in order to develop a clear brief for the procurement exercise to deliver against. Project 13 sets out some existing best practice ideals, however it is not always appropriate to include these in each commercial engagement, and strategic conversations with the market will help to prepare both parties to enter a successful proportional procurement exercise.
In responding to the procurement process, businesses need to carefully consider how they utilise their bidding resource. In deciding what to bid for, businesses must balance the time needed and their confidence in awards/pipeline of work. If this is wrong, then it can undermine the client’s ability to attract the most suitable businesses to bid, benefitting no-one.
And, of course, this isn’t just about cost and time. Risk is also a consideration within the process of putting together contracts. For example, if there is no limit of liability in an appointment, then the consultant’s liability is unlimited. This exposes the consultant to liability in excess of its professional indemnity insurance cover which could result in the consultant/contractor going into liquidation and little or nothing being recoverable in the event of a claim.
Additionally, limited company directors have a duty to protect the company’s assets. Sometimes, this is serious enough to discourage bidders. This may also limit opportunities for SMEs to bid if they are unable to assume unreasonable risks. Consider the negative effect on the tenderer if risk-conscious firms are put off bidding - they are effectively selecting against themselves.
The approach should be more akin to that taken by an investor working in partnership, rather than seeking to fulfil a contract. This would enable clients to support a sustainable market, and incentivise risk mitigation, rather than its transfer down the supply chain, as well as avoiding unintended consequences such as accelerating the hardening of the professional indemnity insurance market.
In the short-term, ACE has launched a best practice guidance note to lead consultants through the procurement minefield and we’ll be offering market sounding to help all parties manage risk and achieve their aims. In the medium-term, we’ll work with the industry to drive change which rewards value-added, rather than work volume, leading to a long-term shift in the industry mindset through our Future of Consultancy campaign.
We can’t remain silent. We need to mitigate risk, and support clients to make informed decisions about their work, enabling both clients and consultants to better understand each other’s drivers and constraints in order to agree on a balanced route. ACE is bringing its members together to change the mindset of the sector and push best practice forward.
This article originally appeared in the July/August 2019 issue of Infrastructure Intelligence.