Route 3 - Develop Strategy - Profiling the Commodity/Service - Shaping the Requirement
You should ensure that all research conducted is collated and reviewed as a whole. A poorly scoped and researched requirement can present major risks to the project. Records should be kept of any discussions with potential suppliers.
The following areas are key:
- Ensuring customer requirements are met and balanced with affordability;
- Challenging the end users’ requirement to ensure that an optimum combination of whole life costing and quality is achieved;
- Keeping your options open: avoiding the tendency to 'zero in' on particular options; allowing potential suppliers the freedom to suggest ways forward;
- Considering business models: looking at all the options for how the arrangement between customer and potential supplier might work e.g. organisationally, financially and in relation to risk management;
- Considering how the wider supply chain might affect the project;
- Considering whether requirements should be grouped in a specific way to reflect market structure, e.g. procuring computer hardware desktop/laptop separately from maintenance; breaking down a cleaning contract into geographical lots rather than procuring a single National contract. This should be reflected in your lotting strategy;
- Consider how relevant Fair Work practices are to the scope of requirements (including sub-contract requirements, where relevant) and ensure the inclusion of relevant criterion, see the Statutory Guidance on Addresssing Fair Work practices, including the Living Wage in Procurement. The practical tools - Fair Work commodity/service strategy - Checklist and Flowchart will help inform your decision.
- Incorporating sustainability requirements from the outset, e.g. building sustainability into the specification and use as a minimum a whole life costing approach;
- Considering the application of Life-cycle costing to include all costs associated with the acquisition, use, maintenance and end of life of any product, service or works together with any environmental costs that can be quantified in monetary terms from a non-discriminatory source;;
- Considering demand management: Reduce consumption, consolidate spend, improve specification; and
- Considering how demand fluctuations will be managed, forecast and how (if possible) it can be reduced. More extensive demand management guidance can be found on the Managing & Improving Performance station.
[For additional guidance for Care and Support Services see Benefits and Risks to People who use Services and Service Delivery.]
When considering the budget and anticipated contract value, an organisation may wish to consider:
the balance between small/short-term funding and larger/long-term funding;
whole-life costs, including set up, running and decommissioning costs;
the cost of meeting all regulatory requirements;
additional costs related to location (for example rurality);
the complexity of the service;
training and continuing development of staff;
potential costs of staff transfers under TUPE Regulations;
additional costs of inflation; and
any commitments to three-year funding cycles (or longer) where appropriate.
An organisation should also:
consider whether its own systems (for example, the operation of different administrative systems) and practices contribute to service providers’ costs and, if so, whether modifications can be made. Assess if, and how, a service needs to change in order to meet individual needs and intended outcomes and consider how it can be improved. It should also assess the need for service continuity.