Case Study One The Promise – The Hidden
Contract
Providence Consulting Group
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Case Study One
The
Promise –
The Hidden
Contract
Traditional corporate decision making is hierarchical and social where ‘social contracts’
between people, as a subliminal promise, tend to be binding. This promise tends to
override better practice management disciplines and judgment because it is personal.
However, based on lessons learnt, reluctance to challenge or to accept challenges to a
promise appears to be the pivotal reason behind many sub-optimal project outcomes.
It is the quality of decisions made in delivering the promise that underpin the success of
any project, procurement or otherwise. Strategic managers understand the value of
evidence-based decision making to improve the quality of decisions, yet poor decisions are
continually made - some with significant implications to society, government and
industry.
Most projects are commenced with enthusiasm, hard work, and good intent; and deliver
outcomes. These outcomes are often sub-optimal, lessons learnt suggest, because
procurement projects systemically commit to decisions too soon. Little validation
supports the usual ‘can do’ attitude and achievability of promises made up front, and
advice from imbalanced project teams result in skewed strategies (e.g. projects are
continually skewed towards the achievement of ‘aggressive schedules’ that have not been
validated by a balanced team of subject matter experts). As a consequence, little time is
available to set the project up for success by establishing integrative processes and
procedures, which leads to ‘stove-piped’ procurement strategies and requirements’
development. Project overheads are also underestimated because they don’t fit the
timeline (i.e. time required for managing committees and stakeholders, reviews and report
writing, etc), and important evidenced-based steps in the Procurement Decision Life
Cycle are bypassed in hast (see figure below).
From a better practice perspective, complex procurement, change or business
improvement projects ought to be an iterative based process supported by good project
management. Evidence based project management methodologies like PRINCE2 and
PMBoK are important iterative tools that implicitly mitigate poor decisions but, because
of other imperatives, project teams appear to circumvent these methodologies thereby
reducing the quality of insight designed to support decision making.
For example, complex procurement projects require insight over a broad range of tasks
(i.e. technical requirements, benchmarking, transition, probity, etc), but the lower level
detail supporting many of these tasks is not developed, if at all, until it is too late. This
means that the achievability of promises have not been validated, and important tasks
such as tender response questions, transition strategies, statements of work, and
evaluations are commonly rushed - leading to evaluation difficulties and sub-optimal
outcomes.
Case Study One
The
Promise –
The Hidden
Contract
Another way to look at the importance of evidenced-based decision making is through
the Procurement Decision Life Cycle itself, which forms part of the iterative procurement
process (see Figure on last page ). The phases of this Cycle represent a path of increased
evidence from which to refine decisions as the project progresses. However, lessons learnt
suggest that many projects jump from Strategic Thinking, or halfway through Strategic
Direction, straight into Implementation. This suggests that many projects are mainly
being implemented on strategic level knowledge only, meaning that original project
boundaries based on minimal validation remain “set in stone”.
Even when original boundaries are known to be high risk, in the first instance, decision
makers are not commonly approached or accept change until the project is seriously
‘stressed’ – because of the promise. Most projects then try to retro-fit information
requirements passed over previously to ‘salvage’ agreed outcomes, leading to schedule
delays anyway. Sub-elements and the level of detail within procurement phases need to be
tailored for each project on a case by case basis, of course, but the cycle itself generally
holds true. Otherwise how can decision makers understand, for example, the real tradeoffs when pursuing and sticking to “aggressive schedules”? The bottom line is that
decisions and commitments (promises) are being made on information that has not been
validated because of an incomplete Procurement Decision Life Cycle, where better
practice suggests that successful procurement is essentially reliant on iterative decision
making.
This suggests that the promise needs to be iterative, whereby commitments are modified
to accommodate insight gained. In other words, avoid making promises until adequately
informed, manage expectations on the basis that procurement is an iterative process (i.e.
this includes cost, requirement, price and schedule), use evidential information to improve
decision making, and don’t let the social contract lead to sub-optimal solutions.
Mitigation techniques include establishing iterative decision making cultures backed up
by due process and promoting a culture of timely communication between project teams
and decision makers to explore boundary changes rather than pressing on regardless and /
or being forced to make changes when it is too late to fully recover.
Even if PRINCE2 and PMBoK were applied and tailored for each project, although
inferred in respective processes, they don’t really describe the importance of the ‘social
contract’ with regard to decision making. If we accept that promises are generally made
too soon because commitment achievability has not been adequately validated, then we
need to review the language and behaviours of expectation management.
Case Study One
The
Promise –
The Hidden
Contract
The other key is to understand when a decision is made within a Procurement Decision
Life Cycle and when to ‘go firm’ on this decision (i.e. have context, insight, knowledge
gaps and risks been adequately addressed?). Each project is different, but the cycle needs
to be followed. It’s just the level and breadth of detail that changes between projects.
In summary, many decisions are made too soon and this issue is compounded by the
circumvention of Project Management Processes and formal decision lifecycles, such as
the Procurement Decision Life Cycle example cited in this discussion paper. The pivotal
issue is that project teams are committed to delivering on the decision and are reluctant to
seek change, when they know it is required, because of the hidden contract – the promise.
The bottom line is that expectations need to be managed realistically from the start –
upwards, downwards and laterally.
For better management of complex procurement, change and business improvement
projects acknowledge and accept that the procurement process is an iterative evidencebased process best supported by good project management, understand that integration is
a discipline in itself; change the decision making language and behaviours to better align
with the iterative and evidential based nature of the process; provide finer granularity of
the promise (i.e. Provisional, Firming and Firm Decisions); and have a better
understanding of decision making within the context of formal decision making cycles.
Case Study One
The
Promise –
The Hidden
Contract
Generate Options
Making Choices
Identify possibilities in
Business Case, including
procurement
• Procurement options chosen
• Procurement strategy written
• Project Manager appointed
• Determine high level governance
Deliver BAU
• Handover
• Operations
• Contract Management
• Validation
Establish Process
• Write project management plan
• Establish Project and processes
Deliver Outcomes
• Write RFT
• Evaluate RFT
• Negotiate Contract
• Transition / Organisational Change