Tailoring Prince2 to answer a public tender : managing the End of the Project

After managing the middle of the project, it is time for BIT Project Board to close the project initiated to manage the bid for one winner, one catalogue tender.   Do  they decide to bid or not?

The process performed in the last sprint is very similar to the one described in managing the Middle of the Project (Fig 1).

Fig 1- The last sprint

Fig 1- The last sprint

The main difference, of course, is that at the end of the last sprint the Project Board must decide if to bid (or not).

The updated business case.

The most important document used in the decision is  the updated business case.   Two financial estimations are important:
1) The estimated margin of the project (EBT);
2) The ROI of the project.

The estimated margin of the Project, (EBT), is obtained by the consolidation of the different scenarios (Fig 2) and then applying the usual Monte Carlo Simulation.

Fig 2 - Consolidation of Scenarios

Fig 2 – Consolidation of Scenarios

Fig 3  reports the probability distribution of the EBT.

Fig 3 - Prob.Dist. EBT

Fig 3 – Prob.Dist. EBT

For Finance, it is also important to have an estimation of the margin (and the Break Even Point) for the 4 working years of the tender as reported in Fig 4.
This analysis requires an extra effort (I mean, a further elaboration of the scenarios, additional hypothesis, etc.)  from the bid manager and the teams  (that’s why the results of the estimation of the EBT is not 100% identical to the result of Fig 3).

Fig 4 - BEP and EBT by Year

Fig 4 – BEP and EBT by Year

Strategic consideration (balanced scorecard).

The business cases would not justify, by itself, the “go” to the bid.
However,  BIT doesn’t base its strategical decision to bid  only on financial estimations; BIT uses a Balanced Scorecard to take a decision for such a kind of project; for this reason, the two owners of the Company have been invited to participate to the final decision of the Project Board.
This tender has indeed the potential to allow BIT to reach his strategical target to growth in the public tender.
The partner vendor of BIT took a considerable risk to bid only with BIT.  An eventual deny of BIT to present the offer (or to present an offer with a too high margin) would be devastating for future relationships between BIT and the vendor.
Finally, the two most important partner banks of BIT are favorable to sustain BIT in this project.

Lesson Learned.

To distill experience is not only important to prepare future bid; it is vital in order to plan  the change in the QMS in case of awarding.
As showed in Fig 5, as to the award date,  the contractor has about 3 months to integrate the different scenarios in the QMS (in order to execute the first requests) and about 9 months of “grace period ” (delay of time in which penalties are not applied).

Fig 5 - Expected time line for change mangement of this tender.

Fig 5 – Expected time line for change mangement of this tender.

To allow a quick transition, in case the bid has been aswered,  the BPO requires that the owner of each scenario takes his time to underline the components (if any) that requires:
1) New resources (human or material);
2) New training;
3) New kind of reporting;
4) New provisioning channels.
For example, Fig. 6 reports the service scenario components.

Fig 6 - Service Scenario Components

Fig 6 – Service Scenario Components

It is a  financial strategic objective of BIT to develop a balanced scorecard for a tender like this one before the final bid decision. However, BIT learnt that it is not possible to develop it within the about 20 working available days. Nerveless, the BPO insisted that the Project Board presents it (after the bid decision) in order to consider the project ended.
He reminded that cascading the  balanced scorecard downward to a (big) tender level is the best way to  strategically align the target of the bid to the target of the Company and identify the biggest strategic gaps. In case of awarding, as shown in Fig 5, the time available to execute the change plan is only few months and a tool like the balanced scorecard  is useful to communicate the strategy implemented in the bid to all stakeholders involved in the change.  Finally, it give an important contribution to identify the key measures to monitor the change.
This is the  balanced scorecard for DCCS lot 1 prepared by BITfor this tender.

 

 

 

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