Pages

Friday 11 February 2011

When outsourcing costs more,is bad value and when the RFQ or RFP is too inflexible is Selling ever Buying's " keeper"?

Most stories of commercial poor practice that hit the news focus on bad behaviour on the Selling side. These stories should be told of course but excessive media coverage does taint the reputation of the majority of those in the profession who try to do a good job for their customer, for their companies and for themselves.

Stories abound about pensions miss-selling, preying loan sharks in the current recession or stories churned out on BBC TV's "Watchdog" or Radio 4 " You and Yours" stereotyping dodgy double glazing selling or mobile phone contract scams abound.

But before we in Selling get any sense of vindictive satisfaction in reading a story for once of Buyers 'getting a good kicking' we should remember the customer in the M25 extension fiasco is the nation.

You would think that if a commercial project was running to time , was under budget and one that will complete its critical deadline of national importance ( London 2012 Games) that all would be well and good.

Indeed as a set of metrics it might suggest good buying and good selling had taken place.

Yet in the report published 8th February 2011, the Public Accounts Committee have cited, “poor cost estimation” and a lack of “robust information” as key flaws in the handling of the project, describing it as “poor value for money for the taxpayer”.

The case in question is the massive construction project to widen London’s M25 orbital road between junctions 16-23. The Buyer in this case-( the Highways Agency) has been heavily criticised by the Public accounts committee of the UK Parliament.

On BBC Radio 4’s Today programme chair of the committee Labour MP Margaret Hodge said


“They have got it completely wrong.”



She derided the 30-year, £3.4bn private finance contract for widening the M25 and said the mishandling had cost the taxpayer as much as an extra £1bn.

She urged ministers to renegotiate the contract, whose management costs she said were "far too high" following "appallingly bad estimations" produced by consultants employed by the Department of Transport.

Margaret Hodge said "The taxpayers have been the main loser. Road users have had to tolerate constant traffic jams, and the only beneficiaries have really been consultants and advisers."
"The public accounts committee had been "shocked" to learn that £80m was spent on consultants to advise the department on "how to build a road".

This report from Parliament follows the National Audit Office (NAO) report of last year on the project

"Lessons to be learnt" has been the PR soundbite from the criticised buyers but there will ramifications of course for those Selling to the public sector from hereon. The NAO recommended the following for the Buyer in this case - The Highways Agency:-

1. The agency was criticised for being too slow to investigate potentially cheaper alternatives, such as allowing traffic to use the hard shoulder.

2. The NAO study said: “The agency should have adopted a more agile approach to procurement, recognising the potential for making savings using an alternative method of relieving congestion: hard shoulder running.”



3. It estimates this could have saved between £400 million and £1.1 billion. It said slow progress on testing hard shoulder running and the agency’s commitment to widening the motorway limited its options and provided less value for money.
4. An 18-month delay in preparing and finalising the procurement work to widen the road meant the contract was let in May 2009, at the height of the credit crisis. This increased the cost of the deal by almost a quarter to £3.4 billion.
5. The report also described “shortcomings in its cost estimation process”. The Highways Agency’s cost estimates were 27-43 % higher than the bids it received. The NAO recommended the agency investigate the reasons for the difference.


Outsourcing is not always the answer it seems.


The NAO also called on the agency to develop its in-house skills in procurement and contract management because it is “over-reliant” on consultants.
“The agency has not reviewed the total costs of its procurement to identify lessons for future projects,” said the NAO.



“The agency continues to rely on advisers for contract management support and documentation about the procurement."
“The agency’s reliance on advisers has built up over time and in part reflects insufficient commercial and technical skills within the agency.”

The Highways Agency spent £80 million (7.5 per cent of the capital value) on advice and support from external organisations, including £45 million on technical advice, during the course of the procurement for the road widening.

Caveat emptor "Let the buyer beware" one might think . It is the Buyer's lookout but there is always Caveat venditor "let the seller beware" to consider.

Should Selling take responsibility for the product and be discouraged from selling products or services ( including consultancy) that are unreasonable or unsuitable ?

The dilemma here was for those suppliers who wanted to suggest the cheaper hard shoulder option. Their suggestion would probably have run the risk of being rejected because such a suggestion may not have kept within the strictures of the terms and conditions of the request for proposal RFP.

The Buyers Views of Salespeople Survey has also identified additional changes in Purchasing practice. 15% of the sample had increased their outsourcing. But as we see from the M25 extension case this may not mean best value.
Click for free executive summary of the Buyers Views of salespeople research study
Readers might also find the increase in purchasers' consideration of sustainability issues, local sourcing and changes in the number of suppliers used interesting

39 comments:

  1. This comment has been removed by a blog administrator.

    ReplyDelete
  2. The Exkash smart exchanger, will definitely understand your requirment, accessing the exkash means that you are 100% secure and safe. Our system is fully automated and honest, you simply pay your E-curreny and get money transferred to your bank account directly. we welcome customers around the world.

    For More please click here:

    Bitcoins to Bank Account

    ReplyDelete
  3. “hpthermalcamera.com/product/ “ As one of the leading manufacturers for long distance thermal imaging camera and infared laser night vision camera. Hope-Wish alwaysing focusing on customer’s requirements, providing professional services and high-tech cameras to protect national security and social stability.
    We manufacture mainly three kinds of products which include thermal imaging camera, IR laser camera a

    ReplyDelete
  4. " social media agency " my company uses fuel as our social media agency digital arm, they have been fantastic to work with. They do social media at a very high level and have brought us a ton of engagement

    ReplyDelete
  5. Just look for yourself how quickly you can insure your own drone and how easy the completion of a drone insurance actually works! Browse now purely and get professional manner!
    For more Drone Insurance

    Schauen Sie einfach selbst, wie schnell Sie Ihre eigene Drohne versichern lassen können und wie einfach der Abschluss einer Drohnen Versicherung tatsächlich funktioniert! Klicken Sie sich jetzt rein und sichern Sie sich professionell ab!
    voor meer Drohnen Versicherung

    ReplyDelete
  6. " Work life balance " Improve your work life balance and exceed your career development goals.

    ReplyDelete
  7. " Free Online Pokies " Visit Play Pokies Australia for the best free and real money pokies and casino games. Aussies will love the free access to 66+ Aristocrat Pokies to enjoy on smartphones and mobile devices. Play the best pokies in the Heart of Vegas without leaving home with Play Pokies Online Australia - the top rated site for free and real money pokies.

    ReplyDelete
  8. I love good and healthy food. Particularly important to me is the low time expenditure and that my Rez epte cheap and delicious. Very very unique stylish and great look eye styleis,Nail, Nail palish etc so please click here.
    Food and Stylish beauty

    ReplyDelete
  9. Durham Martial Artist Helps Local Children Build Self-Confidence And Strong Character.Martial Arts is a tool used to build confidence, discipline, respect, appreciation, focus, and much more! This is exactly what Luc Trudell of InnerActive Martial Arts sets out to do in his daily life.
    Need this so click here
    Community ON BuzzFeed

    ReplyDelete
  10. This comment has been removed by the author.

    ReplyDelete
  11. Cystic acne treatmentAre you looking for the best acne treatment for blackheads, whiteheads, and cystic acne, then go to this website to see a product that will help you get the clear and beautiful skin you deserve

    ReplyDelete

  12. amazing !!! good work. keep it up.
    find best heavy duty shredder from here.

    ReplyDelete
  13. Thanks for sharing this fruitful information with your visitors
    see more..

    ReplyDelete
  14. Thanks for sharing your thought with us!
    please see this

    ReplyDelete
  15. maybe you have to enter some more info but not bad. Nice work
    Keep improving it.
    Click Here

    ReplyDelete
  16. its nice to be here.keep posting such content
    click here

    ReplyDelete
  17. its nice to be here.keep posting such content
    click here

    ReplyDelete
  18. You are amazing as always. the value you put in the your blogs in really appreciateable
    Click here

    ReplyDelete

  19. You are amazing as always. the value you put in the your blogs in really appreciateable
    Click here

    ReplyDelete
  20. https://www.blogger.com/comment.g?blogID=3472274659761512865&postID=7408744096238826279&page=1&token=1544512099303

    ReplyDelete
  21. What a great platform that for such nice information.
    visit website

    ReplyDelete
  22. its nice to be here.keep posting such content
    click here

    ReplyDelete
  23. good work! nice to see this beautiful work. must visit

    ReplyDelete
  24. Thanks for every other informative blog. The place
    else may just I am getting that kind of information written in such a perfect way.
    check more information

    ReplyDelete
  25. This would be great for everyone! for more update. Click here for APk

    ReplyDelete
  26. I truly delighted in perusing your article. I discovered this as an instructive and fascinating post, so I think it is extremely helpful and learned. I might want to thank you for the exertion you have made in composing this article
    please check this link

    ReplyDelete
  27. I read a article under the same title some time ago, but this articles quality is much, much better. How you do this..Buy Audio Accessories Online in Saudi Arabia

    ReplyDelete
  28. Your blog content include lots of stuff as well as very good endeavors, my partner and i compulsorily giving this kind of to my own close friends. We have been providing online essay assessment service provider, these are subsequent almost all of learners.
    Please visit here

    ReplyDelete


  29. backlit keyboard The backlight keyboards are particularly important for better use of your PC during the night. This is due to the way they have backlight keys to realize superior perceptibility.

    ReplyDelete
  30. Recovery Treatment Programs Substance Abuse Addiction Are you in need of an Addiction Treatment Program? Choosing a Drug Rehab ,Alcohol Rehab or any Addiction Treatment program does not have to be a difficult task.

    ReplyDelete
  31. Interesting one, i saw your article in google, very interesting to read.I have seen this blog,its really nice to read and has more informative information.

    Drohnen Versicherung

    ReplyDelete