Friday, 13 November 2015

Some Points to Consider for Writing an RFP (for e-Gov Projects)

(The article is written with respect to RFPs floated for e-Gov (e-Governance) projects by different governments in India; however, some of the points may be generic in nature and may be relevant in general)

The requested proposal in RFP (Request for Proposal) for e-Governance (e-Gov) projects (floated by different governments) are usually turn-key projects intended to improve governance. These projects are generally related to provisioning of delivery of services, automation of internal processes, enhancement of available IT Infrastructure (product or services) or development of MIS (Management Information System intended to enhance decision making). Usually, e-Gov projects are executed under Contractual PPP (Public Private Partnership) on BOOT (Build, Own, Operate and Transfer) model. Mostly, preferred model for selection of vendor through RFP is QCBS (Quality and Cost Based Selection).

Preparation of RFP is very important in tender management process for e-Gov projects. This is so, not only because RFP becomes basis for selection of best possible bidder to do the job (project(s)) but also because whatever is scoped in final RFP (the one released after pre-bid meetings including addendum to the one floated for the first time) usually becomes part of contract (after selection of successful bidder) with either no change or with a minimal changes. Technically this approach is reasonable and this may also be legally appropriate.

However, it is practically difficult to scope a project (with precision in terms of time-budget-quality) at the time of RFP preparation to executable precision. If an attempt is made to accommodate all the practicalities of execution in RFP, probably too much flexibility will need to be incorporated to scope and estimates (of the project) through introducing possible conditions (with corresponding controls) to be applied under future circumstances. This will make RFP complicated for clear understanding by responders and at the same time may induce greater risk of ambiguity for evaluators.

In this regards, it is mention worthy that many RFP experts suggest that when designing government projects, they find difficulty in developing thorough understanding (of the project dynamics) to minutest detail, which is usually required for conceiving large projects. Probably this is so, because of the complexity induced by diversity and volume government projects usually cater to. Things become much more challenging, when it comes to e-Governance projects, which involves fundamental change in way of doing things.

Further, it may be noted that contract is designed to remain static and therefore clauses are purposefully drafted to remain well defined to the best possible precision. But, it turns out, that neither projects (that too, complex projects with big budgets) remain static in nature (during execution) nor can corresponding estimates be expected to remain static throughout the life-cycle of the project. It is noteworthy that quite often Progressive Elaboration, reveals unprecedented circumstances before the project management. To respond to these situations, in the best interest of the project, project management has to resort to scope management. With contractual obligations closely tied to the scope of the project, corresponding contract management also needs to be carried out. Making changes to a contract (in which any government is a party) is very difficult and time taking. Also, vendors show resistance to changes in contract, especially when the changes in contract impact their financials in negative way (reduced contract amount).

Similarly, another related aspect is that contract insists on divided accountability (based on respective scope of contracting agencies – usually successful bidder and the organization, which floats the tender) but to meet the objectives of the project it is important for all the contracting parties to assume shared accountability and put joint efforts.

Thus, putting significant part of project details (taken from RFP) in contract would need flexible contract management to accommodate changing dynamics of any project. Project managers are (professionally) groomed to work strictly in the interest of the project they are undertaking and they are trained to be flexible in decision making (even if, this means taking deviations from contractual obligations). But, organizations (implementing the project) are more comfortable to see progress of project work in interest of contractual obligations (strict adherence to contractual obligations) and have huge resistance to initiate process to change the contract. Even though (as discussed above), these two interests (that of Project Managers and Organizations) seldom align (with expected precision) in practice, all the stakeholders want to see the final objectives of the project met within budget, well in time and with expected quality and most importantly without changing the contract (without taking into account how far the situation on ground has drifted away from what was conceived). This illustrates the dilemma of a project manager on one hand and on the other hand this is considered as one of the possible reasons e-Gov projects do not succeed to expected levels (when operating in usual working environment). Further, in a way, this also throws some light on success of the e-Gov projects, which are related to issues placed at the center of political spectrum in the state. For such projects, the criticality of outcome of the project prompts for quick and flexible decision making in the interest of project with reasonable justifications supporting the decisions. Therefore, in such projects, the project management is more empowered to act in the interest of the project (either at a permissible deviation from strict contractual obligations with suitable justifications in larger interest of the project or by getting contract changed according to needs of project).

In a nutshell, above discussions suggest that drafting an RFP could be one of the critical aspects to consider for success of e-Gov projects. Nevertheless, it is a big challenge to write an RFP that is flexible (with respect to assumptions), accommodative (with respect to changing project dynamics), precise (with respect to outcome), aligned (with respect to scope/objectives) and requires minimal monitoring and control throughout the life cycle of the project (as it is observed that mostly governments do not have human resource with appropriate skills required to enforce strict monitoring and control of technology intensive projects (like e-Governance)). The other challenge during execution of project (in accordance with RFP), is convincing the leadership of contracting parties to show flexibility towards contract management.   

With this discussions on RFP, contract management and project management, I will like to jot down some of the points, I feel are important to consider, when drafting RFP for e-Gov projects:-

1.      Link the Big Six for Clarity and for Coherence but with suitable provisions to accommodate Change Management

Mapping the following six critical aspects (of RFP) with adequate precision articulates the RFP to the prospective bidders with clarity required to strategize the best possible response:-  
Objective ßàScope ßà Deliverable ßà Acceptance ßà Payment ßà Penalty

Objective(s) – Drawing clear objective(s) with precise description of problem(s) is of prime importance. Elaborating expectation(s) and exception(s) from solution(s) helps design of Scope for RFP designer and at the same time helps respondents with design of A & M (approach & methodology). Abstract objectives may be avoided to the best possible extent.
Scope – Scope must be cleanly linked with objective(s) such that any alteration in objective(s) should make it possible to clearly alter scope (accordingly). Scope usually may not be altered in most cases, however a provision for logical scope management may turn out to be helpful.
In government projects, at times, the time gap between conceptualization and execution of project is quite big. Therefore, in some cases, it turns out that when project execution starts, some part of the objectives of the project is already met by some other related project either of the same department or some other department. In similar cases, objective or scope need to undergo changes to avoid duplication of work (and avoid unfruitful expenditure).

Deliverable(s) – Adequate number of deliverables should be clearly defined. Detailed description of features of every deliverable must be listed. Attempt should be made to map each and every deliverable to clause(s) in scope.

Acceptance Criteria for Deliverables – This is a complex aspect. Acceptance Criteria (whether confirming to end user expectations or the use cases or to technical specifications or to agreed service norms or other quality parameters related to product or services rendered) must take into account Cost, Time and Quality triad in some way. Assuming a reasonable approach towards accepting the deliverables with deviations on the above mentioned triad (with suitable justification) is at times found to be in larger interest of project. Charting out a suitable metrics for accommodating different types of deviations with no or with calculated impact on objectives of the project could be helpful.

Payment Terms – Payments are done against deliverables and penalty is imposed on amount to be payed (based on acceptance assessment of deliverables on acceptance criteria). Therefore, payment terms must be synchronized with corresponding deliverables on one hand and with penalty clauses on the other hand. If a vendor could get the payment on the day the deliverables are accepted (after suitable deductions of penalty – if any), this will close the part of project delivered for all parties.
In turn-key projects, a due consideration to capex (capital expenditure) and to opex (operational expenditure) from the point of view of vendor(s) could be considered. Significant part of capex is related to purchase of equipment (hardware). Making upfront payment for such purchases (of equipment) immediately after delivery, testing and installation could make the tender look lucrative for vendor community (resulting in increased interest in the tender). Therefore, where ever possible, higher percentage of payments could be considered to be made at earliest against capex.
Whenever deemed appropriate a suitable consideration to time value of money could be helpful. This could include provision to pay interest to vendor(s) against payment for services, in case of any procedural delay in making payment (to vendor) by the office taking services from vendor(s).   

Penalty Clauses – Penalty are assumed to work as a deterrent for vendor to abide with certain contractual terms of critical importance to the project. The idea of penalty also assumes that the all the possible ways things can go wrong in a project is attributed to avoidable mistakes committed by any vendor. This very assumption does not hold true most of the time. More so, for large projects with either prominent service components or projects dealing with the latest technologies. e-Gov projects usually have both characteristics, they have prominent service components and are technology intensive in nature. In my opinion, whether implemented or exempted, provisions of penalty seldom serves the purpose of being a deterrent or a supplementing factor to effective monitoring and control mechanism. It fails as a deterrent because mostly vendors (through their expertise and experience) are able to make out when do they have chances to fail in penalty clause(s) and therefore, they include penalty as a cost in the financials (financial section of RFP). Imposition of penalty are retrospective in nature and therefore cannot supplement monitoring and control during execution of project. Therefore, very judicious use of penalty should be considered and must be closely synchronized with payment terms for ease of operation.
2.      Maintain Flexibility in Estimates and Provisions – Estimates are based on assumptions. It could be helpful to mention the important assumptions with estimates of critical importance for giving implementers some flexibility to get the estimates revised, when the assumed conditions fail to hold true in due course of time. This is true for financial estimates as well as non-financial estimates.

Many times in implementation of e-Governance projects in developing countries, the technical specifications recommended in RFP (like – electronic interface devices (mobile phones, tablets), application servers, hardware equipment) are outdated (or are no more in supply in market) by the time project starts getting executed. Therefore, wherever possible, putting different types of standards (any equipment must comply with) in RFP instead of specification may make negotiation with vendors easier for making changes to proposed equipment.

Similarly, it may be good to have provisions for re-negotiation with vendors. The possible trigger for re-negotiation could be calculated deviations from assumptions critical to the project. Some experts believe that one of the reasons for PPP (Public Private Partnership) Failures in India is not initiating renegotiation on contracted terms pf partnership

3.      Draft a suitable Responsibility Matrix for stakeholders participating in execution – Once tender is awarded to a successful bidder, it (successful bidder) represents the implementing agency (vendor) for the project. But, it should be understood that for an external agency to do the job as critical as implementation of e-Governance project (which involves multi-level and multi-dimension co-ordination) is not possible unless all the stakeholders (internal and external) extend required support to the vendor. Therefore, vendor management team (of the office, which floats tender) must be well aware about the complexities of shared responsibilities (inter-weaving the dynamics of project) and must be adequately empowered to drive different stakeholders in the interest of the project. Leadership of vendor management team should ensure that their office owns the project and the vendor are one of the partners in the project.

A signed off responsibility matrix by the highest authority of the office of vendor management team can be helpful in making different stakeholders (including the vendor) more accountable towards their respective responsibilities towards the project.     

4.      Synchronize with varying Execution Speeds and Procedural Compulsions pertaining to various participating organizations - Extra care must be taken when defining timelines for deliverables (or activities) having dependencies on more than one organization. Mostly, different organizations have different work culture, different approach to projects and more importantly different priorities for a particular project in question. Thus, realistic execution velocity of projects requires accommodative approach for varying execution capabilities of various participating organizations.

5.      Try to make M & A (Methodology and Approach) a test of understanding of the project (by prospective Bidders) – M & A should be the one of the most critical aspect for bidders to show their understanding about the project, their domain expertise and their grip on required tools, technologies and methodologies.

Significant weightage must be given to a bidder for developing an in depth understanding of the environment and circumstances on which the project is going to operate, calculations related to risks and possible mitigation plans, understanding of project dynamics and stakeholder management.

Special attention must be given to maturity of tried and tested methodologies of the bidders and their ability of alter (customize) these methodologies in the context of the project they are bidding for. Similarly, extra effort put by the bidders for suggesting different alternatives or some innovative ways of doing things must be appropriately rewarded through bonus points.

But, all these evaluations must be through objective means (with minimal subjectivity in assessment) to the best possible extent. This may take a lot of time and multiple rounds of discussions with different stakeholders by the tender committee, but the effort may worth taking for truly executing the QCBS model of procurement.

It may be noted that M & A tests differentiation in the products and services of the prospective bidders for best suitability. Unless M & A is able to capture and express these differentiations through suitable variance in technical points given to the bidders, truly capable bidder may not get properly screened through the QCBS approach.   

6.      Choose Professional Skills or Choose Organizational Capabilities – In human resource intensive projects (projects requiring skilled workforce), usually, there are points (towards technical evaluation score) for deployment of suitable professionals. However, in my opinion, RFP writers should be very clear on whether they want to buy Professional Skills to be harnessed by project management team of the organization (which floats the RFP) or they want to buy services of a company for promised value addition as per its brand.

Companies train their employees to utilize the intellectual capital (accumulated by these companies) through internal organizational process to deliver the promised product and services. So, if the project need organizational capabilities (demonstrated through services and products) from vendor, leaving the decision to select profile of resources to be deployed on project on vendors could be a better idea.

7.      Measureable Metric System for Monitoring & Control – Service Level Criteria (or any other Monitoring and Control mechanism) must be well defined and must be easily measured against a sensitive and representative indices. Optimal service level criteria, which make clear business sense in respect to the project, should be chosen.

8.      Simple Pre-Qualification Criteria – Pre-qualification criteria is a yardstick to allow companies to compete for any tender.  This means, though the qualification criteria must be specific and unambiguous, yet they must ensure a fair competition.

Many times relatively small players (may be SMEs (Small and Medium Enterprise) ) with equally good capability (with respect to requirements of the project) do not qualify in Pre-Qualification phase (of tendering process) due to criteria chosen for Pre-Qualification relating to past performances like (say) criteria related to company turnover or past experience of similar work. Therefore, so far as the prevalent practices/guidelines permit, every attempt should be made to accommodate every company capable to perform and willing to participate.
9.      Detailed Cost Calculations – The financials section requesting cost from bidders must be a very detailed, unambiguous and easy to understand for the bidders. Taxation for products and services must be cleanly outlined. Special considerations must be taken for components like transportation cost, mobilization cost, logistics cost, cost of office space (work-station) and administrative costs.

Thrust of financials in RFP must be towards value for money rather than bias towards lowest cost. Establishing value for money could be a very difficult task. It is believed that QCBS to some extent helps in ensuring value for money.

Many times some of the bidders, who are very keen to win projects go for aggressive bidding on financials. Such attempts may dilute the considerations for quality in the QCBS. Many experts believe that there should be some provisions to weed out such overtly aggressive bidders. In some of the countries (like UK), there are provisions for Tender Committee to request explanation for abnormally low tenders. And in such cases, if the Tender Committee finds that the evidence supplied does not satisfactorily explain the low price, they have right to reject the bid.



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