Blog Marcel Blommestijn: Best Value Procurement in combination with Agile; win or lose?

Best Value ProcurementThe Best Value Procurement (BVP) method of procurement, and the Agile management way of running projects have already proved their worth in terms of improving collaboration, contracting and productivity. What plays an important role in both ways of thinking is the so-called value mindset. Both of these ways of thinking use similar techniques, such as a strong focus on the ultimate objectives of the project, the focus on people/organizations and their expertise, direct lines of communication with experts and the way of working to make progress and success transparent. At the same time, there appears to be a contradiction: where Agile promotes an iterative way of working, in which the customer and supplier work closely together, BVP rather takes the approach that the “expert supplier” is able to execute the project as a whole and plan it out in advance.

This was the basis for a knowledge session with the Dutch Association Best Value in the Netherlands. The central question in this respect was: Is it possible to use BVP as procurement system for a project that will be implemented using the Agile Scrum method?

The essence of BVP is that this method does not focus on the price, but on getting the best value. The philosophy behind this is that value is delivered when the supplier has the freedom to exploit his expertise to the full and is left to do what he does best. The client outlines “what” is required;  “how” this is achieved is up to the suppliers. Suppliers are free to decide which methods and solutions should be used to deliver the requested functionality. When selecting the suppliers, the emphasis is very much on the expertise that the supplier (the contractor) can show in relation to the project, and the responsibility that the supplier assumes for the project. With this approach, the “demands” of the client are directly “followed up” by the supplier, which takes the lead with the best resources and skills in his particular area.

The essence of Agile Scrum is the iterative method of working. Work is carried out in short iterations of a few weeks, also known as “sprints”. Each sprint ends with a working product. Within this way of thinking, there is a special role for a “product owner”. The product owner, together with the various stakeholders, creates a list of the functions required. This determines WHAT is produced. It is the duty of the product owner to ensure that the most important functions are implemented first. These then go on to the team. The team is responsible for achieving the required functionality. Each party is involved in the planning, identifying sticking points and dividing up the duties. In this respect, Scrum thinking assumes that the required know-how is available within the team itself. Each sprint is evaluated both by the team as a whole and with the product owner. This way of doing things invites feedback and creates openness within the team. Open teams tend to be more productive, as obstacles are discussed on a regular basis and resolved where possible.

The product owner must, at all times, be aware of what the team is doing, and must assess whether this meets his expectations and/or makes the right sort of contribution to his objectives at the end of a sprint. In that way, he can make adjustments during the lifetime of the project, so that the product delivered at the end of the process meets the requirements and what he had envisioned. The product owner can also play a pivotal role in a client/contractor relationship. A variety of scenarios are possible in this respect:

  1. The product owner role is taken on by the client. The supplier takes on the role of the team. The client exercises strict control on the products to be created and is responsible for achieving the business objectives.
  2. The supplier takes on the product owner and team roles. The supplier exercises strict control on the products to be created and is responsible for achieving the client’s business objectives. The Agile Scrum method is used to manage projects by breaking them up into smaller, iterative deliverables, giving the client a good idea of the ultimate result.
  3. The product owner role is a joint responsibility, shared by the client and the supplier. The supplier takes on the role of the team. The client and supplier both supply an expert, and the experts jointly determine the priority of the products to be delivered and they are jointly responsible for hitting the targets and objectives set by the client.

From the perspective of BVP, scenario B would appear to be the more obvious choice. Of course, this puts the supplier in the role of expert and leaves him free to interpret completion of the objectives however he pleases. From an Agile Scrum perspective, scenario A would appear to be the more obvious choice. After all, this gives the client the maximum control over the project to be realized and thus over the completion of the objectives.

Scenario C offers the opportunity of uniting the best aspects of both methods. It allows experts from both sides to work on the realization of the clients objectives. The supplier must take the lead, given that he has the experience of creating products. The client acts on the basis of knowledge of how the business works. On the other hand, scenario C could be a catalyst for tension in the relationship. Who is really responsible for achieving the client’s objectives? The knowledge session revealed that the solution to this must be sought in the governance and/or incentive mechanisms to which the client and contractor subscribe. The extent to which this can be achieved and/or is desirable, must be determined for each service subject to tender.

In actual fact, it could be said that there are various opportunities to create a hybrid form of the BVP and Agile Scrum ways of thinking. Depending on the service subject to tender, it is possible to determine which scenario is best suited. What matters in this respect is the question of which party can best be held accountable for achieving the objectives of the client. The optimum scenario for allocating the responsibilities will ultimately determine how both ways of thinking are actually combined.

Sourcing Best Value Procurement Agile