“To be truly successful, the Defence Analytics Institute or DAI has to take the program beyond itself to deliver results” – Andy Akrouche
Editor’s Note: Defence spending is a hot topic lately on both sides of the Atlantic, as government’s are challenging Defence Departments to do a better job in terms of procurement. In this special article for FrontLine Defence Magazine, I provide my perspective on the Canadian Government’s efforts to better manage Defence spending through the formation of the new Defence Analytics Institute.
How to make Outsourcing and PPP Relationships Work Webinar Series Launched on Udemy by Andy Akrouche
In response to the steadily increasing number of requests I am receiving from senior managers of both public and private sector organizations regarding the Relational Model of Outsourcing and Public-Private Relationships, I have created an on-line webinar series.
Utilizing a frank, conversational style format, the 4-Part video series on “bridging the gap between expectations and successful outcomes” will provide senior managers with an executive level briefing on how to make complex Outsourcing, FutureSourcing™ or PPP initiatives successful.
In this series, in which I talk with host Jon Hansen, I focus on providing answers to the following five most frequently asked questions:
- Why do Outsourcing and Public-Private Partnerships fail to meet expectations, and more specifically what are the fundamental issues?
- What is a relationship based approach and how can it solve many of the root problems?
- How can you introduce effective consumer protection constructs and create the conditions for sustainability?
- How can you use procurement framework and industrial policy to create a strategic supply chain and economic value beyond the project bubble?
- How can you establish and operationalize a relationship charter representative of all stakeholder interests and goals?
Available on the Udemy platform I invite you, as well as others who are contemplating any form of strategic procurements including Outsourcing, FutureSoucring™ or Public-Private Partnerships, to view the series. My ultimate goal is to provide you with the insights that will help to guide you towards achieving improved outcomes with lower risk.
Up until the 28th of April I am pleased to offer you a 50% discount off the regular course price. Simply enter Coupon Code COMP503W where indicated using the following link; https://www.udemy.com/outsourcing-and-ppp-relationships/
The Groundswell Effect and the Emergence of the Public-Private Partnership Relational Model by Jon Hansen
News of the Joint Venture Agreement between SRS and the Commonwealth Association for Infrastructure Development has not gone unnoticed . . .
Originally posted on Procurement Insights:
In his book Microtrends: The Small Forces Behind Tomorrow’s Big Changes, Mark Penn argues that the biggest trends in America are the Microtrends, the smaller trends that go unnoticed or ignored.
If you think about it for a moment, you will see that Penn is right on the money. After all, how many of us thought that from its somewhat humble bulletin board beginnings, that the Internet would become the catalyst for global social and economic change?
This is perhaps one of the main reasons why I started this blog back in May 2007. At the time, I wanted to provide a lens on the silent, groundswell shifts that would ultimately envelop the industry and redefine the way we do business. Generally speaking, and based on the growth we have seen in readership, it would appear that we have been successful in identifying emerging trends and players.
View original 361 more words
“Recent failures, bailouts, and excessive costs show that the risk analyses and value-for-money accounting used to justify P3s are clearly flawed and cover up the true costs and risks for the public.”
Such as the one from which the above excerpt has been taken, there are no shortages of articles and papers relating to the unrealized expectations of what were once promising PPP initiatives. The question is why do PPPs consistently underperform?
An April 2012 report titled “Public Private Partnerships in India: Lessons from Experiences” goes a long ways towards identifying at least in part, some of the key problem areas that have caused so many programs to run off the rails. While this report points to many of the issues requiring solutions, it unfortunately fails to offer a real systematic framework for fixing them. The issues to which I am referring include a “static” transactional orientation, how variability of demand and expected changes are viewed and managed, risk/reward allocation, and the effective utilization of PPP procurement as a vehicle to create sustainable economic value above and beyond project bubble.
With UK government taking a hard look at PFI and introducing PF2 as a measure to improve the performance of traditional PPPs, where the public sector partner(s) take an active role and ownership of the “business”, the gap between the promise of P3s and their outcomes may become slightly narrower. However, until a truly holistic adaptive framework is introduced, we will continue to struggle to gain the necessary traction to achieve the hoped for outcomes.
So what is a holistic adaptive PPP framework?
An adaptive PPP, or as I sometimes refer to it as a relational PPP (in keeping with the relational terminology), is a relationship-based Public-Private partnership framework where the focus of the PPP management process is on two integrated dimensions:
a) Establishing the baseline business arrangement from which we will begin a continuous alignment process. This dimension includes all of the usual management, technical and financial planning activities, but without the burden of having to predict the unforeseeable in terms of variability of Demand and PESTL environment; and
b) The establishment of a Relationship Charter within which contractual elements and metrics such as deliverables, timelines, financial obligations, service level quality and performance are jointly managed.
For those who have already read my book Relationships First (eBook ,Hard Copy, and have attended my seminars and training programs, you know that the SRS Relational Contracting Methodology provides a detailed roadmap for managing the process and development of baseline arrangement referenced in point “a”, as well as how to properly structure and operationalize the Relationship Charter.
Consisting of three constructs, the Relationship Charter will also provide the framework that is needed to operationalize the new UK approach to PPPs.
The SRS Relationship Charter consists of:
a. Shared relationship mission and purpose;
b. Joint Governance Framework;
c. Open book financial management offering transparency and accountability in managing public funds.
With the added layers of transparency, openness and objectivity required for public procurements, the SRS Relational Contracting Model becomes an essential enabler and a natural platform to launch and implement successful Public-Private Relationships.
This is due to the fact that the SRS relational model provides the necessary checks and insight mechanisms to ensure the selection of the right strategic partner. In referring to the right strategic partner, I am of course talking about one that can deliver to meet today’s needs, but is also strategically capable of adapting to changing circumstances to jointly manage the delivery of improved outcomes.
When news broke earlier this month that there were major changes being implemented regarding Defence spending in Canada, no one was really surprised. Change as they say was inevitable.
The question is what does it really mean?
Over the next week I will be posting several articles that will provide what I believe will be an unprecedented look at why these changes happened and even more importantly, what we can expect in terms of both immediate as well as long-term outcomes.
In the meantime, and in referencing PWGSC Minister Diane Finley’s comment regarding the need to engage Canadian businesses in the defence spending process, the following video excerpt from my Relationships First webinar series explains the why and how of an effective Industrial Regional Benefit policy.
I was recently asked a question regarding Futuresourcing™ in terms of developing an effective contract governance model. Specifically, what is the best way to structure a contract to ensure that the desired results are achieved when neither the buyer nor the supplier have had any previous experience with the required task.
My answer was simple . . . Futuresourcing™ is an inherent part of all contract relationships in that history is not a sufficient indicator of future success, nor can you anticipate all future events or try to manage them within the framework of a static contract. In short, regardless of whether or not one is dealing with the delivery of a known product or service or looking to source an entirely new deliverable, relying on a contract to ensure an intended outcome will not work.
Rather than merely providing a critique of existing contracting protocol without offering a viable alternative, I wrote the book Relationships First: The New Relationship Paradigm in Contracting as a means of introducing the Relational Contracting Model.
For those of you who have already read the book you know that within its pages is a practical guide – supplemented by corresponding case studies – for structuring a relationship-centric model that has over the past 20 years, consistently delivered the expected outcome for clients in both the public and private sectors.
In February, we will be extending this knowledge transfer through our new interactive Relationships First webinar series on Udemy.
With more than 2 hours of quality, high impact content, I will personally take you through my new introductory course that will provide you with the basic framework for establishing a truly relational contract.
As part of our series launch, Udemy will be providing one-time special discount pricing, so you will definitely want to take advantage of their exciting offer.
In the meantime, take a few minutes to watch the following video to learn more about the new Webinar and the SRS Relational Model.
The Relational Divide: Why CGI HealthCare.gov experience reflects more about the contracting process than the company itself by Andy Akrouche
I read with interest the January 14th Wall Street Journal article “Accenture to Take Over Fixing HealthCare.gov Website” by Stephanie Armour, in which it was announced that CGI’s contract with the Federal U.S. Government would not be renewed.
Even though the loss of the contract was small in terms of CGI’s overall revenue, what likely stings the most is the perception that blame for the highly publicized challenges with the new website was the sole responsibility of the Montreal-based consulting firm.
But does this conclusion reflect the true story?
One of the biggest lessons I have learned over the years, is that when faced with the opportunity to enter into a true partnership based on a shared mission and purpose there really is no other alternative. You must choose to collaborate. Unfortunately and as repeatedly demonstrated by so many initiatives in both the public and private sector, collaboration is an afterthought when it comes to the contracting process.
In the following excerpt from Relationships First: The New Relationship Paradigm in Contracting, I talk about why initiatives – and more specifically relationships – such as the one involving the HealthCare.gov website go off the rails:
Why Do the Majority of Outsourcing Initiatives Fail?
Despite industry’s best efforts to modernize and professionalize sourcing practices, project management and service delivery methods, 70% of significant business relationships or large projects do not meet their objectives.
This is because organizations in both the public and private sector continue to rely on outsourcing partners who provide services based on a static requirement that is established at a specific point in time. Relationships that are structured around this approach inevitably fail because a ‘single transaction’ approach does not allow for the natural evolution of needs and stakeholder capabilities.
These issues are further exacerbated by ‘futuresourcing’ which takes place when new service requirement capabilities are introduced in the absence of client or vendor experience.
Even with the promise of significant up-front reductions in operating costs, vendor responses to ‘futuresourcing’ bid requests are speculative and often tied to a ‘let’s win the business first and worry about making it work afterwards’ mindset.
As discussed in Section I, the failed relationship between the U.S. Navy and EDS demonstrates the folly of this approach. Yet it continues to be the norm in the industry.
In order to reverse this trend, we must change our mindset around contracting and contract governance. We have to think in terms of being ‘relational’.
In my book I go into great detail in terms of what it means to be relational. For the purposes of this post I will say that without a relational framework collaboration is a virtual impossibility. And this is where the challenges with the creation and launch of the HealthCare.gov website likely originate.
The fact is that this was an extremely complex undertaking, which meant that traditional contract governance models would prove to be ineffective in creating the kind of collaborative framework that would have been necessary to address the website challenges in a timely and cost effective manner.
The real question going forward is simply this . . . has Accenture been set-up for success or failure? If the same engagement process that was used to originally create the relationship with CGI was also used to select Accenture, how can we expect a different outcome? This of course is the real story behind the headlines.
Over the coming weeks and months we will likely learn the answer – at least in part – to this last question.
Ministry of Defence privatization plans: Setting up stakeholders for failure or success? by Andy Akrouche
We are all familiar with quotes such as “Insanity is doing the same thing over and over again but expecting different results.”
Even though the announcement that the Ministry of Defence’s plans to privatize its troubled procurement process would be scrapped has been anticipated for the past couple of weeks, when news of the initiative’s demise had finally materialized it was nonetheless noteworthy. Especially with its detractors whose refrain “I told you so,” could be heard clear across the Atlantic.
While I am not one to echo those same sentiments, it should probably come as no surprise to anyone, especially those who have attended my seminars or read my book, that I am all for outsourcing. However, I am also a strong believer that the public sector cannot simply outsource its responsibility and accountability for the delivery of a service it is legally mandated to deliver. Nor do I believe that it can successfully transfer and wash their hands of the associated risks of its duties to a private entity.
Within this context, the outsourcing of these complex business processes to the private sector can work if they are structured as a partnership, and in a manner that maximizes shared insight and learning on an ongoing basis. This is especially true when it comes to establishing the criteria by which success will be measured and modified both now and throughout the life of the relationship.
Unfortunately, and as experience has shown us time and again, said partnerships cannot be borne out of a strategy that is designed around a transactional mindset that is myopically focused on circumstances in the here and now only.
Nowhere is this precept more critical than it is when an organization attempts to outsource the purchasing process.
Procurement affects the whole operation. It is the place where if you apply a change in one area, it will almost certainly have to varying degrees, a dramatic impact on all areas of the organization. As a result, you have to be extremely careful not to misconstrue your objectives and misinterpret the corresponding results.
For example, realizing a lower cost on a particular product is not tantamount to realizing an improved collective or enterprise-wide outcome. In fact, it could mean arriving at a worse outcome for the very same stakeholders you are attempting to satisfy. After all, a gain in one area should not be achieved at the expense of another area of the program.
This is another key point, in that a “disconnect” of this nature – particularly when it extends to include an external partner – will ultimately come back to hurt the entire program and nullify the anticipated benefit. I call this the unintended consequence factor.
In the case of MoD, the desire to address the known challenges with the procurement process is laudable. However, and by relying on the same broken procurement regime to both analyze and source the new arrangement in the hope that it will deliver a different result, is where the program went wrong.
A new more adaptive approach is needed, that takes into account not only the factors that are known today as well as identifying any unknowns through a proper industry analysis, but maintains a relational ability to recognize and respond to future changes.
What do I mean by a relational ability? Quite simply, it means that all stakeholders are a party to both the understanding and establishment of the collective goals and outcomes of the relationship. The only way to accomplish this is through an effective engagement mechanism that focuses on the selection of partners based on strategic fit. Specifically, you must select those partners who are able to work with you to deliver your known set of deliverables and, are also strategically positioned to work with you to manage the known unknown variables that will invariably crop up up down the road.
I completely agree that MoD should retain advisors that can help them innovative/renovate their process. But they need to properly source the relationships that are necessary to fix the present procurement function within the government, instead of simply outsourcing their problems and a set of arbitrary objectives that will likely set their third-party partner up for failure rather than success.
In short, they have to build their capability and capacity to source relationships as opposed to transactions or deals.
Ubiquitous Progression: How the SRS Relational Model is becoming an Industry Standard by Andy Akrouche
I have to admit that I was happy to see that my numerous discussions with IACCM has made an impression on them to the point that they would talk about the core elements of the SRS relational model that we developed and implemented over the past 20 years in their recent “Contract Management Success: The Secret Sauce” webinar.
While this does not surprise me in that other associations and industry pundits are talking about the importance of my Relational approach to contract management – including the creation of a Relationship Charter – with increasing frequency, it is nonetheless a humbling experience. The fact is that this paradigm shift to which I had referred in my new book “Relationships First: The New Paradigm in Contract Management,” is long overdue.
All this being said I never expected that similar to Kleenex, which has become the ubiquitous term used for all tissues regardless of make, my terminology and the principles that define the SRS Relational Model would itself become a defining reference point in terms of the evolution of contract management.
However, there is a cautionary element that must be considered relative to the momentum surrounding the use of Relational terminology. Specifically, talking the talk and walking the talk are two very different things.
As we have learned about the long on promise short on results sentiments relating to the “win-win” negotiating approach, simply recognizing the key elements of a model is not the same as actually being able to successfully implement it. Over the past 20 years, and as outlined in great detail in my book, myself and my team have successfully implemented the Relational model in both the public and private sectors.
Our vision is to make the Relational Model the de facto standard for complex procurements and strategic initiatives including outsourcing and Public-Private Partnerships. Sourcing and managing relationships is fundamentally different than sourcing and managing contracts, deals or transactions. Based on our extensive experience and expertise, we help our clients to make the transition to a relationship based contracting model, by way of a full suite of proven advisory services. This includes capacity building (in class and online training) and knowledge transfer services to help them to establish and manage high performing relationships.
Once again, it is fantastic that the industry as a whole is working to reverse the high rate of complex contract management failures by adopting the SRS relational contracting model constructs. Going forward, I see such tremendous potential for organizations to finally address the value erosion to which Tim referred in the IACCM webinar through the use of the SRS Relational model. In this context the coming months and years should prove to be very exciting, and for me personally fulfilling.