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.