Value for money

A version of this article was first published in The Parliamentary Review which is a guide to best practice for industry and is co chaired by Lord Pickles and Lord Blunkett.

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Achieving outstanding value for money cuts across every part of operations, from procurement to HR and everything in between. The optimal use of every resource at our disposal to achieve strategic goals is fundamental to success.

Whether you’re in the public sector, lowering your costs and creating better citizen outcomes, or in the private sector, maximising returns – however defined – value for money (VFM) is our common goal.

I’m not just referring to cash; “money” is a catch-all proxy to include hard-to-quantify resources like attention of senior management or capacity of an organisation to change.

So, how can we get more VFM?

I’m passionate about VFM because rare resources are needlessly squandered every day. At a macro level, it saps our economy. In our own organisations, it’s a drag on what we can achieve.

Let’s explore some of the factors that cause transformations to deliver better or worse VFM.

Quality of client strategy

For transformations that actually make it over the line, “quality of client strategy” is usually by far the greatest determinant of VFM.

Being correct in the underlying belief that “if we do this, we’ll get that” is critical. All roads lead back to here. We should test and prove or disprove that hypothesis as early as we can.

Early and sustained delivery of the most important benefits

With complex projects, it’s common that the requirements contain elements that don’t strictly lead to the quantified benefits. Rather, those elements are “obviously good things to do”.

In our experience, it’s often far from obvious those elements bring a measurable gain. The bigger a project is, the more likely it is to fail. We believe the best approach is to ruthlessly cut everything that doesn’t directly influence the quantified benefits.

Often, we can go even further and phase work so that the biggest benefits are delivered much earlier. Those early benefits can often change the situation such that later phases are removed altogether or reduced in scope.

If it’s important to deliver the benefits early, it’s also critical that we can keep delivering them. We measure sustainability in many ways:

• If the solution is dependent on a small number of engineers with rare legacy experience, then it’s not sustainable.
• If the solution is of such poor quality that “business as usual” maintenance takes too long, then it’s not sustainable.
• If your supplier owns the intellectual property and can hold you to ransom, then it’s not sustainable.
• If your supplier is “loss leading” the implementation and planning to generate profit in changes and support, then it’s not sustainable.

Of course, there are many more pitfalls on the journey towards sustainable delivery of value. Take time to consider what they are in your world.

Abandoned projects

Transformations are expensive. Those that deliver no value because they’re cancelled before completion are embarrassing and a waste.

If there’s one thing more wasteful than abandoned projects, it’s projects that should be killed but are kept alive for misguided reasons. If it’s going to fail, then we must make it fail as quickly as we can by doing the hardest things first.

The same problem exists at the feature level: the development of systems, processes and training for functions that will never or hardly ever be used is wasteful. Get the proposed solution in front of our real users as quickly as we can and use what they say to kill or cure.

Rework

It really hurts to go over the same ground twice but we can’t minimise rework to zero.

Sometimes, our users won’t react in the way we anticipate and situations won’t be understood correctly by our stakeholders. However, when we delay showing our progress, surprise our users with big changes and fail to keep all our stakeholders engaged, the amount of avoidable rework grows.

We must be careful what we ask for and reward. Sometimes misguided helpers move heaven and Earth to deliver it in the most inappropriate way.

Mankind’s endeavours are littered with examples of complex reward systems that led to unintended consequences. Some are so obvious, such as paying developers on the number of lines of code created, and we can avoid them easily. Others are so subtle, they can only be seen after a long period when the damage is irreversibly done.

Keep all engagements as simple as possible, but no simpler, and check regularly to be certain they’re working correctly.

Communication and collaboration

When many stakeholders need to play a part in a transformation, it’s critically important that everyone understands where we are, where we’re going, what needs to happen next and, above all else, why.

When things go wrong, which they will, it’s essential that all our stakeholders work effectively together on the new plan.

Day rates

If everything else is equal, it’s always best to pick the cheapest option.

However, when we wish to create value by introducing new systems, processes and cultural changes, our work becomes enormously complex.

The path to riches we imagine at the start looks very different from the long and winding road we actually take. The partners who will stand by our side, shoulder to shoulder, and then keep step through the highs and lows aren’t a commodity to be chosen on a day rate.

If we take our time and dig deeper during partner selection, then we maximise our chances of success

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If you’d like to discuss your own transformation (whether it’s in flight or yet to get off the ground) and let us try and help increase your own value for money, please give us a call.