The first principle of procurement – get your specification right!

All spending organisations, whether private, public, tertiary, charity, are experiencing a period of considerable economic and political uncertainty - that we all know too well. Now, ‘uncertainty’ can be a good thing, if it leads to positive outcomes, as we’ve said before. For example, in uncertain times we might expect all organisations to be a bit more cautious in their approach to purchasing and risk management. Indeed many procurement functions may be tasked with investigating more robust efficiency or cost-reduction programmes.

But - the first principle of procurement for all budget holders and buyers should continue to be outcome-based specifications. Regardless of the economic situation of the business or the region, understanding what you are buying, and why, remains critical. Which means having clear specifications so that what you get, is what you really want – and above all, need.

So we were, frankly, surprised by a story reported by Irish public broadcaster RTÉ last week.

A fast-track inquiry is being held into a spending controversy surrounding the purchase of a printer, to be reported to the Dáil’s Public Accounts Committee. Oireachtas (the legislature of Ireland) officials spent €808,000 on a state-of-the-art Komori printer. But upon arrival last December its dimensions (2.1 metres high and 1.9 metres wide) proved too big for the space it was allocated to and too big to fit through the doors to even get it there. What followed was a move to keep it in storage (the contract having already been signed so return not an option) at a cost of €2,000 a month, while structural works to the tune of €236,000 were undertaken to make the printer fit. That apparently involved ‘tearing down walls and embedding structural steel to give it the height clearance needed to operate,’ as we learned from the story in RTÉ.

The printer was eventually put in place in September this year. But, the story continues: there are now concerns over whether staff are able to operate the printer without training, and that that should have been considered before the printer was ready to be switched on. Said the chairman of the Dail's Public Accounts Committee (PAC) - “… if a higher level of supervision is required to operate the printer, then training should be provided.” So here we have a purchase made in 2018 that could be out of action until 2020. Said Sinn Féin TD and PAC member David Cullinane: "It is all too common for a lack of planning and foresight on behalf of Government departments to result in additional costs for the taxpayer.”

We don’t understand the details of how this came about – only that it is reported that the “Commission had come in under budget for the 2016 to 2018 funding cycle and, as it is unable to carry over a surplus, it made the decision to use funds to spend on Information and Communication Technology (ICT).”

There are some fundamentals to buying that should always be considered when buying a large item or service: what you are buying, why you are buying it, is it fit for purpose, does it align with the needs of the business and stakeholders, what are the business drivers for the purchase?

We get so tied up in technical specifications it’s sometimes easy to overlook the requirements external to the product itself, like, and in this case, are there skills available to even operate the item and is there room to accommodate it?

So in specification management, we need to think about:

  • A clear specification expressed in output or outcome terms
  • Avoiding "nice to haves" rather than essentials, don’t over specify
  • Challenging internal users and budget holders about their real requirements (demand management)
  • Harmonising specifications with the resource, skill and, in this case, space you have available

Specification management is a skill that procurement professionals really should be able to add to their CVs. Being good at it really requires building a close relationships with the internal end users, understanding business needs and having frank discussions about demand. Good communication skills therefore can be added to any procurement-related job spec.

In this story, the buyer probably did technically spec the product in the right way, and the supplier did deliver what was asked for. But some questions remain: for such a significant piece of equipment, would the supplier not want to scope the location and dimensions of the space it was purchased for? and insist that training is part of the purchase?  Was this complete lack of supplier engagement? Was it over-zealous OJEU-ticking requirements, without common sense discussions? Proper supplier/buyer engagement and specifying for outcomes are essential if we to avoid costly oversights!

 

 

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