Shift In Procurement Strategy Is Driving Value For Money

A shift to relationship-based contracting in procurement strategy can unlock innovation and better value for money in the procurement and delivery of major capital works and other projects, according to HKA Partner Anthony Kelly.

Complex projects bring many inherent risks, which contractors price into their bids. Under a traditional tendering process, they base prices on their cautious interpretation of client specifications and assumptions, inflating costs, he explained.

By contrast, the collaborative model HKA has championed and implemented, allows the client side and shortlisted bidders to work together effectively and find smarter ways to programme and deliver projects, Anthony said.

As a former senior manager in several Tier 1 contractors, Anthony draws on insights gained from both sides. “I’m a strong believer that we have to demonstrate value for money and make a difference for our clients,” he said.

Anthony cited the interactive dialogue process used to select Sydney Water’s delivery partner for its major capital works procurement programme, where he was the Transaction Manager.

As part of the procurement, HKA’s team devised realistic role-play scenarios and facilitated workshops to find the shortlisted participant best fitted to securing Sydney Water’s priorities for the programme.

“Interactive dialogue makes a massive difference if both parties embrace the process and enter the sessions respecting each other’s positions while striving ultimately to achieve the client’s desired outcomes,” Anthony explained.

Properly managed, the process results in a contract based on informed positions, not assumptions, de-risking the pricing, programme and final product. But, he stressed, this requires an in-depth understanding of the client’s organisation and culture, as well as solid project experience in this and other sectors.

Such was HKA’s success, Sydney Water commissioned the company to adapt its interactive dialogue process for a major IT rollout.

A first for an IT project in Australia, this involved running 80 workshops over a seven-week programme, resulting in the timely appointment of a partner under a highly innovative incentivised contract model.

However, every client and procurement is different, Anthony emphasised. “We don’t see transaction management as running a process – like turning a wheel – issuing documents, receiving and scoring them, awarding the contract.” Transaction strategies should be custom-made.

Anthony also warned that in a buoyant market, with a raft of major capital projects in procurement underway, there could be a tendency for clients to compromise when seeking service providers.

“It’s not right, whether you’re spending taxpayers’ or shareholders’ money, to settle for standardised offerings and set solutions. Consultants, like other contractors, need to show their clear advantage and value for money.”

HKA uses a methodical process to demonstrate how value is added, as well as a proven track record of developing innovative processes shown to work. “Our role is to make a tangible difference in client outcomes – whether that’s by delivering projects or transactions early, under budget or with better quality.”

This required a special mindset and clever people with a blend of skills, willing to challenge clients and themselves, he stressed.

“We achieve better outcomes by challenging clients and assumptions. Our advisors are not simply ‘yes men and women’. We believe in finding new ways to demonstrate and deliver value in all our advisory services.”

HKA employs talented individuals from different countries and disciplines with disparate skills – highly creative management consultants, analytical claims specialists, and pragmatic procurement advisors. They also have the opportunity to switch between the company’s Advisory, Consulting and Expert service teams.

“The common thread is that our people want to make a difference for clients and in their own careers. And they share our values by being agile, collaborative and passionate,” Anthony added. “This creates the challenging yet collaborative environment that enthuses people and spurs them to achieve the better outcomes our clients deserve.”

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