Are there any procurement decisions more complex and costly than within military circles?
The UK Government this week suggested it’s considering deferring Britain’s £20bn ‘Trident’ nuclear submarine replacement project from 2014 to 2015, for both political and pecuniary ends. As a result of the significant local media coverage, I was alerted to their strategic acquisition process.
I immediately thought this must be a fundamentally flawed framework. My judgement influenced by frequent bad press that seems to afflict every single such project due to lengthy over-runs, spiralling costs, specification shortcomings and even eventual project obsolescence.
Still, the very fact that the approach has been so neatly documented throws a couple of intriguing sales tools our way.
Here’s how they describe ‘decision points‘.
The early stages of a project lifecycle contain two major decision points as defined in the Approvals and Scrutiny process – Initial Gate and Main Gate.
Sponsors and project teams are required to develop a Business Case at both of these stages justifying the project proceeding to the next stage. No manufacture or service contract can be signed prior to approval.
Initial Gate: the Early Decision Point
Initial Gate remains the first approval point in the lifecycle. Projects will return to the appropriate Approval Authority if agreed targets are breached.
Main Gate: the Key Decision Point
Main Gate is the major decision point at which the solution and ‘not to exceed figures’ are approved.
Main Gate approval:
- Remains the key investment decision point for Projects, where the risks to successful delivery are considered against the benefit of the proposed solution in meeting an endorsed Defence requirement. Risks can cover many aspects (for example, financial, technical, industrial [….])
- Sets targets against which the acquisition performance of the project is assessed. Targets are only established at Main Gate, when all the risks are sufficiently understood.
- Establishes defined trade boundaries for the project.
- Considers Whole Life Costs across all [risk aspects]. Crucially, it addresses the support solution as well as the equipment procurement.
- Requires assurance by the User (generally the Front Line Command) that the proposal can be integrated … with existing systems. This is needed to deliver an effective military capability from the In-Service Date.
The Approving Authorities will expect to see at the Decision Points that a wide range of Acquisition lifecycle strategies have been considered.
In the context of Trident, postponing the Main Gate decision until the next Parliament is one mechanism to delay “the point of no return when ministers sign contracts and start spending billions of pounds”.
I’ve spent nearly all of my career involved with products that seek to command a price premium in their marketplace. They’ve not always been the most expensive, yet they are far from the cheapest. A constant struggle is to justify this higher positioning, often in the face of relentless, uncaring commoditising buyer attitudes.
It got me wondering whether perhaps that it is towards the two extremes that a dearer purchase is more likely? The more vigilant a purchasing decision, the more deeply a buying investigation digs and the more it adheres to documented decision criteria, then is it also the more likely an ‘expensive’ solution can be considered? Similarly, can a quick, almost rash, decision, based more on emotion and urgency of need or pull of desire be more inclined to disregard price?
Whatever the reality of this, I feel certain that if you’ve a pricier hat in the ring, to introduce elements of this process to the buyer can only enhance your chances of ultimate success.
Imagine setting the buyer (and naturally then helping them with) the task of completing a full risk analysis, acquisition target documenting, whole life costs (including future upkeep) and existing system impact.
Pick the ones that are bound to set you apart and you’re well on to a winner.