Scope Creation

"Get the scope wrong, and everything else falls apart." said every experienced procurement professional, ever.

In the world of procurement, few activities carry as much weight or risk as scope development. It’s the foundation of every tender, the blueprint for every contract, and the single greatest predictor of the engagement’s success or failure. Yet, time and again, scoping is treated as an afterthought, either non existent, rushed, vague, or copied from legacy contracts that may no longer be considered fit for purpose for the organisation.

In my view, should we (Procurement Professionals) want procurement to be seen as strategic and tactical, not just transactional or operational, scope development must be treated as a creative commercial design process, more so than just a specifically technical process. This will enable us to provide the Requester” with guidance in creating solid commercial foundations for engagements based off the deliverables, management processes and the organisations overall values and strategic objectives.

So, what Is Scope Development, really?

Scope development It’s about successfully formulating the expected results, managing expectations of all stakeholders, anticipating risk, and building a mutual understanding of the requirements that is clear enough for both Parties to successfully contract with.

A well-defined scope typically allows for:

• Reduced supplier confusion and disputes

• Minimised variation claims and cost overruns

• Alignment with budget, operational requirements and performance KPIs

• Strengthening of your ability to enforce effective accountability with all parties

• Implementing appropriate risk mitigation

The Symptoms of Poor Scope Development

Poor scope development is easily identified throughout a procurement process and usually include signs such as:

• An offer that includes goods or services you don’t want

• Offers that vary significantly in both methodology and price

• Contracts incurring significant variations

• Contract Managers managing problems rather than performance

Poor scoping isn't just poor practice, but it's also really expensive for the Requester.

A Strategic Approach to Scope Development

This is how I have approached scope development throughout my career, from Elite Educational Institutions to State Government, Emergency Services and Corporate Finance procurement functions:

The “Why” or “Purpose”

Start with “WHY” In my experience this approach typically allows you to understand the overarching objectives of the engagement. Too often, subject matter experts begin with a vague sense of the big picture but quickly dive into the technical details and lose sight of the broader purpose. This is one of the key areas where Procurement Professionals are able to provide immense value without really having to know the intricacies of the particular subject. The goal is to remind the subject matter experts of the big picture and ensure that their decisions on required deliverables are aligned with both their individual/departmental objectives as well as the objectives of the broader organisation. You can start off by asking:

• “What’s the problem that we are solving?”

• “Who’s impacted by this activity, and how?”

• “What is the risk of doing nothing?”

• “What is the risk if we were start implementation tomorrow? “

• “Do we already have services or systems or products that solve this problem which we could leverage or expand on?”

Involve Stakeholders Early

Identifying and engaging with all relevant stakeholders early in the scoping process is a crucial step in scope development as this will not only ensure a smooth transition processes once the services are undertaken or the product is received but also allows you to understand any indirect complexities or considerations that need to be allowed for in the scoping information. This could have significant impacts on the delivery or implementation of the goods or service resulting in significant unforeseen variations later on. Additionally, this will also contribute to determining whether the engagement is in fact aligned with the best interests of the broader organisation or whether solutions already exist within the organisation that could solve the same issue, resulting in significant cost savings. Important stakeholders to consider in scoping development include:

• End users

• Operational managers

• Finance & legal (especially for risk appetite and performance KPIs)

• IT if any API’s or other types of Integrations are possible.

Great scopes are often co-designed…

Map Out Deliverables and Expectations

Vague deliverable list won’t cut it. Often scope development requires an in depth understanding of how the engagement will be delivered. This could be focussed on financial or other types of risks, the role the particular engagement plays in a larger project (i.e. delivery of a Master Plan) or internal knowledge on how the organisation typically operates. This is where Procurement Professionals provide immense value, as they are constantly exposed to all areas of the business at any given time. This allows them to understand how other functions work within the business as well as how to navigate complexed governance or approval structures which would all be highly relevant in delivering a service, as all these things take time, and time is money. The knowledge and expertise a Procurement Professional provides to the scope at this stage often results in a significant reduction in potential variations surrounding complexed approval processes, managing revisions or edits, or simply getting critical sign offs that effect an engagements critical path. It is therefore important for Procurement Professionals to focus on the following items as minimum when building their knowledge of an organisation:

• Expected service levels or quality control measures the organisation expects from external parties

• Escalation pathways

• Non negotiables items such as Working with Children Checks (WWCC), on boarding processes or other compliance or regulatory matters

• Mandatory and Non-Mandatory Reporting requirements

• The staging and structure of the engagement to minimise financial or other risks

• Contract structures the organisation prefers operating within

Anticipate Variations Before They Happen

This typically includes clearly defining what is included and excluded from an engagement. Where exclusions may come into the engagement at a later time or if there are levels of uncertainty requiring the team to rely on the Respondents expertise, converting exclusions to “Optional” items within a scope is quite effective as it allows you to receive and negotiate competitive pricing by leveraging the whole engagement but not fully committing to the item at that specific point in time. It’s also highly effective in managing expectations around budgeting and should the optional item need to come into effect, indirectly provides you with a sound and detailed justification for facilitating a variation to the awarded scope.

How can TendeX Help You

The scoping tool within TendeX has been designed to support both procurement and non procurement professionals in developing clear, effective scopes of work. By accessing the link below, you’ll be guided through a strategic thought process that helps turn your ideas and requirements into a fit for purpose scope of work ready to issue to market.

Along the way, you’ll receive appropriate terminology, structure, and thought provoking prompts to ensure that your procurement activity is built on strong, practical, and commercially sound foundation.

RFx Development

Navigating RFx Development Pre-Qualifications, Qualitative Requirements, and Compliance Considerations

Developing a comprehensive Request for x (RFx) document is essential for securing the right vendors, ensuring compliance, and ultimately achieving the best value for your organisation. Whether you’re issuing a Request for Information (RFI), Request for Proposal (RFP), or Request for Tender (RFT), understanding how to approach the market with clarity and precision is paramount. This post will guide you through the key elements of RFx development, focusing on pre-qualifications, qualitative and compliance requirements, pricing schedules, modern slavery considerations and general rules of engagement or Request Terms and Conditions.

Pre-Qualifications Laying the Groundwork

Before you dive into the details of your RFx, it’s crucial to set the stage with pre-qualification requirements. These typically form part of the first stage of the RFx development process ensuring that only vendors capable of meeting your mandatory requirements are invited to submit full proposals. Pre-qualifications should be selected carefully as they could heavily impact the type, number and quality of the vendor that will respond to your Request, which could have substantial impacts on your ability to achieve value for money.  Pre qualifications usually focus on:

Financial Stability or Capacity

• Legal and Regulatory Compliance

• Modern Slavery

• Attendance to Mandatory site or initiation meetings

• Mandatory Licensing and Certifications

 The benefits of nominating pre qualifications ensures allows for a more targeted approach to your procurement activity ensuring offers are received and evaluated from organisations that sufficiently meet your standards. Should you receive offers from organisations who do not meet these requirements, preventing them from progressing to the evaluation stage of your process is easily justified and maintains the integrity of your procurement activity.

Price gets attention, but it's the Qualitative Requirements that defines worth

While pricing is an important consideration, it is the qualitative requirements that reveal the true value of what a vendor can offer. By establishing strategic and comprehensive qualitative criteria, you can better assess a vendor’s capability to meet both your organisation’s objectives as well as the specific needs of your project. This approach encourages all stakeholders to meaningfully consider delivery models, methodologies, and other key factors. It also helps surface hidden risks, unknown “unknowns” within the project and allows the exploration of more sustainable ways of delivering the project early in the process. This contributes to further aligning expectations across quality, suitability, and cost, ultimately ensuring that a more accurate picture is created of what it will truly take to deliver the activity effectively. The items that make up qualitative requirements often include:

• Methodologies

• Demonstrated Experience

• Organisational Capacity  

• Suitability of Proposed Services

• Timelines and Staging

• Product Specifications

• Risk Identification and Mitigation Strategies

• Reporting and Technology Capabilities

Meeting compliance requirements drives reliability

Within RFx development the compliance criteria often play the role of a second layer of assessment. It’s not as heavy handed as the Pre Qualifications yet can be leaned on to further assess the suitability of the vendor. This typically shouldn’t include certifications or licencing as in many instances these items are needed as a mandatory requirement to successfully deliver the activity and as such classifies it as a Pre Qualification. In my experience compliance criteria typically includes:

• Willingness to engage using the agreement issued as part of the RFx

• Flagging any Initial usually critical Departures to the agreement

• Declaring any Conflicts or Interests

• Declaring any criminal records or convictions

• Declaring if the vendor intends to subcontract certain portions of the services

• Willingness to undertake any training or adhere to any particular Policies and Procedures

• Declaring that the vendor holds all relevant insurances.

I usually think of compliance in the context of complying to our requirements rather than regulatory compliance which in most cases are mandatory legislative requirements which should be a considered as a Pre Qualification.

Financial transparency transforms potential into partnership

Pricing schedules are a critical component of your RFx document. Structuring effective pricing schedules will not only allow you to compare apples with apples but also allow you to see the pricing broken down into a manner that makes sense to you or your project. This could be due to multiple reasons including reducing your financial risk by splitting payments into the various stages, or pricing optional items that may come into the scope later on, or pricing for alternative cheaper options or brands of a specific product. The schedule may also allow you to get insight into hourly rates which can come in handy when predicting the costs of anticipated variations or areas of the project that may present a cost blow out risk due to lack of information or understanding.

Lastly, pricing schedules can also become a formal way of requesting discounts, and by detailing proposed payment schedules that align with the interests of your organisation or the project. Obviously, payment schedules will ultimately be governed by the Contract, however, it’s the perfect way to state your expectations of what you expect these schedules to be and allow you to leverage the award of the agreement to negotiate these concessions prior to entering into contract negotiations.

True progress is built on ethical and transparent practices

As organisations and governments globally focus on human rights and ethical sourcing, including modern slavery clauses in your RFx is a critical step. This is particularly relevant for industries with complex supply chains.

Ensure that your RFx:

• Requires vendors to submit a Modern Slavery Statement, disclosing their efforts to eliminate forced labor, child labor, and human trafficking.

• Includes clauses that hold suppliers accountable for ensuring that their subcontractors also comply with modern slavery laws.

• Requires vendors to provide evidence of the measures they are taking to combat modern slavery in their operations.

By taking this step, you not only comply with the law but also demonstrate your organisation’s commitment to ethical business practices.

Evaluating with purpose transforms choices into strategic decisions

An evaluation matrix is an essential tool for objectively comparing the offers you receive. It allows you to assess each submission against the various qualitative requirements outlined, ensuring decisions are based on the vendors ability to meet those criteria. This approach ensures that the chosen proposal effectively addresses how the vendor intends to deliver on the requirements outlined in the Request.

Your matrix should include:

• Criteria

• Weighting (for each qualitative requirement typically adding up to 100%)

• Scoring

• Evaluation Calculator

These tools allow for a more structured and transparent decision making process, ensuring fair, equitable and justifiable decisions are made.

Clarity in terms ensures stability and accountability

In my experience there are 2 critical terms that apply to formal procurement activities. These terms are:

• Terms of participating the Procurement Activity

• Contract Terms

Terms of participating in the Procurement Activity

The Terms of participating in the Procurement Activity set the stage for how both the issuing organisation and the vendors should interact during the procurement process. They ensure transparency, fairness, and clarity from the initial invitation through to the selection of the preferred vendor. It also works as a tool to maintain the integrity and consistency of information being issued to vendors ensuring all parties are provided with the same information ensuring consistency in the offers received.  It outlines the procedure in the event information in the RFx changes, or where further clarity is needed i.e. through the issuing of addendums and sets the ethical standards of the process for all parties. Lastly, it acts as a mechanism of managing expectations and decision making once the process reaches the evaluation stage. It clearly defines the how the decisions will be made and ensures all vendors have the same opportunity to put their best foot forward. Key elements that form these terms often include:

• Submission Guidelines

• Confidentiality and Non Disclosure

• Amendment and Clarification Procedures

• Dispute Resolution

• Ethical Standards

Contract Terms

The final section of an RFx should include the proposed contract terms. These terms outline the agreement that the issuing organisation intends to enter into. While typically generic, the inclusion of these terms allows vendors to understand the intended contract structure and the conditions the organisation expects. If vendors disagree with any critical aspects of the agreement or its structure, their submission should reflect these disagreements and provide reasons. This information will be considered as part of the organisation's evaluation process. Often the critical aspects to be reviewed by vendors at this stage of the process would be, (if applicable):

• Agreement Structure Suitability (i.e. Master Services Agreement, Professional Services Agreement, Terms of Trade, Minor Works Agreement etc)

• Payment Terms

• Indemnities and Liabilities

• Termination

• Liquidated Damages

• Warranties

• Exclusivity

How Can TendeX Help You

The RFx tool within TendeX has been designed to support both procurement and non procurement professionals in developing clear, effective RFx documentation. By accessing the link below, you’ll be guided through the development of a suitable RFx document that is ready to issue to market.

Along the way, you’ll receive appropriate terminology, structure, and thought provoking prompts to ensure that your Rfx document returns offers that are fit for purpose and highly suitable for you project and organisation.