BIT Project Board closed the starting up stage of the one winner, one catalogue tender with the authorization to the project manager to start the Initiation stage.
In this post it is described how the BPO has tailored the 4 Activities of this stage and the relative management product: the Project Initiation Documentation.

Like in the starting up stage, the priority of the BPO is to avoid any loss of time.
As well, it is not allowed to have a cost for external consultants higher than 5% of the declared value of the tender.
The project manager shall present the Project Initiation Documentation within 7 working days since the authorizing initiation of the Project Board; escalation to the Quality Assurance is possible (for example when the time allowed to present the bid is longer than 30 working days).

The four activities of the initiation Stage.

Fig 1 describes – in Business Process Model and Notation (BPMN) – the typical 4 activities of the Initiation stage (that are executed in parallel).

– Composition of the Project Board. 
The BPO imposes a standard composition of the Project Board in the starting up stage; however, this composition might be not the ideal to perform then initiation stage (and the eventual following phases).
For this specific bid,  the Project Board decided to include the Vendor as a Senior Supply (the back-to-back agreement between the Vendor and BIT helped a lot to reach this decision)  and the quality manager of BIT as Senior User (because of the strict SLA of the tender).

– The Risk Management Strategy.
The balanced scorecard of BIT specifies that the average gross margin of the tender (if won) should be >= 12% and that the liquidate damages are <0.5% of order inflow.
By consequence,  the BPO has tailored the initiation phase in order to manage the risk that these two requirements are not matched.
The Evaluation scenarios are the operative tools to implement this strategy.
In practice, the BPO has prepared (with the help of the financial team) a set of  evaluation template scenarios  that the Project Manager has to fill based on the input of the Teams and  in consensus with the Project Board. Of course, it is a duty of the BPO to support the Project manager to customize the template in relation of each tender.
The management must express its knowledge using a worse, expected and best scenario.  Then the project manager performs a monte carlo simulation to calculate the risk related to each specific scenario.
For example,  this is   Scenario to Calculate the Catalogue Margin .
In this scenario the account manager (Senior User) must express his knowledge on the expected quantity. Then (with the support of the Vendor) he must express the expected sales price of each category and the expected margin.  With these information, the project manager can lunch a monte carlo simulation (to correctly read this scenario and to perform the simulation, you need to install SIMULAR).
Among the interesting results of the simulation:
– expected margin = 10.06 %
– 95%  Confidence Level  that the margin is   between  9 %  and 11.15%  (Fig 2)

 

 

 

 

 

 

 

 

This means that, based on the current knowledge of the management, we are confident that if we should execute 10.000 time this contract about 9.500 times we will get a margin between 9% and 11.15%.   Based on the same data, the best forecast that we could do for the 10.001 execution will be a margin of 10.06%.

This scenario, together with all others, will refine the business cases.  It is also the Risk Registry as it stores the value of risk. In the scenario are also reported the assumption used to build the scenario itself.
A second, powerful, tool to manage the risks and opportunities is represented by the bid questions.  To ask (or not) a bid question can have a strategical impact; for this reason, the bid questions are elaborated by the Project Board and the Executive must approve the release. Actually, a bid question can eliminate (or reduce) the risk linked to an assumption but in the same time it can open opportunities to the competition as the log of the  bid questions and the relative bid answers is made available by the tenderee to all participants of the tender.  The bid answers are reported (by competence) in the Evaluation Scenarios.

– The Quality Management Strategy
The BPO tailored a very simple quality management strategy; the project manager must create a check list of the mandatory documents required in the tender. In this specific tender, his task was made easy as the tender itself provided a check list.

– The Configuration Management Strategy.
Also in this case the tailoring of the BPO is very simple.  The Configuration items that must be tracked are the scenarios that are used to build the business case and the bid offer. All these documents are stored in an archive in the intranet as soon as a new version is available.  The date of creation/modification of the document is the times stamp of each version.  All these documents are reviewed (and if needed changed) during the weekly meeting of the project board by the project manager.

– The Communication Management Strategy
Once a week the project board must meet (physically and/or virtually). The day of the week is agreed at the end of the initiation stage.
The agenda of the meeting is quite rigid:
– Answers from the Tenderee on Bid questions ;
– Review of the scenarios; eventual risks and opportunities identified by the project manager during the week and reported in each scenario.
– Eventual new bid questions.
– Decision  to proceed in the bid or not. The executive has the faculty to stop the project even againts the opinion of the other members of the board.

Team Composition and Evaluation of Template Scenarios.
This is probably the most important activity of this phase. The Project manager meets the operative teams and their managers as defined by the BPO in the Start Up phase. Based on the related scenario, they evaluate together the amount of workload necessary to fill the scenario during the (eventual) execution of the bid phase; they execute also a first quantification of the Scenario.
The manager must then confirm (or not, and in this case an escalation process toward the Project Board is started by the project manager) to allocate the necessary resources for the bid phase to execute the work.

 The Project Initiation Documentation.

In addition to the Project Brief prepared in the start-up, the following documents are added during this phase.
The Business Case is still very similar in its content to the Outline Business Case presented in the Start Up phase.  The only difference is the presence of a probability evaluation of the margin (based on the first evaluation of the different Scenario performed by the Teams).
The Project Plan is not needed as the project products are defined in the start-up phase.  The stages are already defined by the BPO; they consists of a fix time of one week (the period is defined as a “Sprint” by the BPO).
The Project Control is still defined in one week by the BPO (so at the end of each Sprint).
Finally, all different Evaluation’s Scenarios complete the Project Initiation  Document.

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To know more:
Tailoring Prince2 to answer a public tender: managing the Middle of the Project.