Effective Procurement Strategies: Taking the First Step

Starting the process to deliver a new building can feel daunting. There are many aspects to consider. How should the process be organized? What is the first step? And what is needed from me as the project Sponsor to ensure a successful outcome? Examining highly successful procurements can provide us answers to these questions and a ready-made path to follow.

The Howard County Circuit Courthouse Public-Private Partnership is one such procurement. This award-winning project offers a wealth of lessons learned and best practices that can be applied to any major procurement effort – both public and private. Successful procurements are the result of careful organization and deliberate actions by the project Sponsor. So how did Howard County set themselves up for success and what principles guided their planning efforts?

A strong project team lays the foundation for a successful procurement. The first step Howard County took was to realize they did not have sufficient resources and expertise in house to effectively realize their project. Their solution was to assemble a project advisory team to support the procurement planning effort. This project team included technical, financial, and legal experts with the experience to effectively conceptualize the project and all the possible ways it could be realized, as well as help set up and manage a successful procurement. Think of a capable project team – made up of both internal staff and outside advisors – as the foundation for a successful procurement.

A well-defined project reduces risk to potential proposers. With a capable project team in place, the work of properly defining the project can begin. All successful projects begin with a carefully considered definition, goal, and program. This is the time to engage stakeholders and ensure the purpose of the project is clearly defined. Any information that will be needed by the proposers about the proposed site and supporting technical information and studies should be gathered. Being ready to provide clear and timely direction to proposers will reduce risk and ensure an orderly procurement.

The project goals and Sponsor’s objectives should determine the delivery method. Just as your project is uniquely tailored to the needs of the future occupants, the delivery method should also be tailored to the needs of the Sponsor (owner). The best project delivery method will effectively mitigate the financial challenges and restrictions confronting the Sponsor. A value for money analysis is often needed to determine the procurement and delivery strategy best able to realize the goals of the project at the lowest possible cost over the expected life of the facility.

Assign risk to the party most capable of controlling the risk. Effective risk management begins with assigning risk to the party most capable of managing or mitigating the risk in question. This important planning process begins with a risk assessment workshop and the creation of a risk register for tracking known project risks. This process allows development of proper contingency and allowance values for the project. It also begins the process of assigning risk in the project contracts. Cost effective and successful projects do not assign risk to the private sector that the private sector cannot control. Each project has a unique risk profile and finding the most efficient allocation of risk is critical to a successful procurement and project outcome.

Build confidence in the private industry that the project will proceed. Signaling your intentions to potential partners and creating confidence that your project will proceed are critical to attracting the right firms to deliver your project. This begins with laying the political and institutional groundwork for the project to proceed. Governing Body resolution of support for the project and delivery method, in addition to necessary funding or bond authorizations, are critical for creating confidence in the marketplace. A strong project champion leading the procurement with the required decision-making authority is needed to demonstrate commitment to the project. Lastly, the procurement should be completed within an election cycle or Board term, if at all possible, to ensure consistent leadership though out the procurement process.

Edgemoor Infrastructure & Real Estate has experience not only as the successful proposer and Developer of the Howard County Circuit Courthouse Public-Private Partnership, but also as a Client Advisor organizing procurements for institutions such as Virginia Tech and other confidential private sector clients. Our experience either as a Client Advisor, or a turnkey development partner has given us the insight and experience needed to effectively organize and launch critical projects no matter which delivery method is chosen. Properly preparing a major procurement, like the Howard County Circuit Courthouse described here, can set your project on the path to success.

Additional Reading

Click here to read a detailed case study on the Howard County Circuit Courthouse procurement.

While the above discussion focuses on procurements for projects with relatively well defined scopes that enable proposers to provide cost certainty in their proposals, there are more progressive procurement models that often make sense for projects with less defined scopes or need a development partner even earlier in the process. Click here to read Edgemoor's article explaining some of the benefits of the more progressive procurement model.