If you’re an SME struggling to break into public sector procurement or are new to procurement and need some help getting your foot in the door for success , this post is for you.
Many SMEs think that they’re limited to small or low-value contracts because they don’t have the resources to manage big projects. That may be true if they are determined to go solo, but there are plenty of opportunities to reach for the sky if you collaborate with other suppliers using collaborative tools.
There are two options:
- SMEs can work as subcontractors for larger business enterprises, rounding out their available services to provide the whole package.
- They can form a consortium with other SMEs, pooling resources and expertise to meet large contracts.
The question is: How to find reliable partners who complement your products or services. Let’s look.
Introduction to Collaborative Contracting
A collaborative contracting model is built on cooperation, trust, and mutual benefit among all parties involved. This collaborative approach encourages open communication and shared decision-making, leading to better project outcomes and smoother project delivery.
A key benefit of collaborative contracting is its focus on continuous improvement and risk management. By working together, suppliers can identify potential challenges early, share risks more equitably, and develop solutions that benefit everyone.
By adopting a collaborative contracting model, businesses can achieve greater efficiency, reduce delays, and deliver projects that meet or exceed client expectations. Ultimately, the benefits of collaborative contracting make it an attractive option for organisations looking to improve integrated project delivery.
How to Identify Complementary Partners
Take a close look at your business offerings. What are your strengths? Where does most of your value lie?
What’s missing? Which services or products would fill the gap?
Now you must research the market and look for companies that meet your requirements. These are businesses that provide related products or services that add to your overall value and provide additional resources to make bidding on medium to large contracts worthwhile.
You should also consider your certifications and accreditations. You might lack some essential requirements if you’re still new to public procurement, for example, Cyber Essentials, the minimum data security certification the government requires before it will work with suppliers.
Look for partners with ISO certifications, like ISO 9001 for Quality Management Systems. If you’ve got anything to do with construction, find partners with SSIP assessment, which reduces health and safety assessment duplication.
That’s great and all, but where can you find these wonderful partners?
Some eTendering or contract alerts platforms, like Supply2Gov and Constructionline have search functions that enable you to find businesses that match your criteria. These platforms also streamline the processes of identifying and connecting with potential partners for development , making your search more efficient.
Structuring Your Collaborative Contracting Partnership
Choosing the right contract model is essential for establishing a successful collaborative arrangement, as it sets the foundation for how parties will work together, share risks, and achieve project objectives. In large-scale projects, multi-party contracts and collaborative working are increasingly common, enabling multiple stakeholders to align their interests and optimise outcomes through shared responsibilities and proactive problem-solving.
There are two primary structures for collaboration.
1) Consortium Agreement
A consortium agreement is when interested parties join forces to submit a joint tender response. They’re most commonly used for construction projects, but really, they can come in handy in a variety of situations.
Consortium agreements clearly specify each party’s roles and responsibilities. They’re designed for parties to share expertise, resources, risk, and promote cooperation throughout the project. Successful consortium agreements require careful attention to various aspects such as governance, communication, and performance measurement.
2) Joint Venture Company
There are several types of joint ventures. The most common is a Special Purpose Vehicle (SPV), which is a separate legal entity apart from all stakeholders. This is great because it limits their liability if things go pear-shaped, especially in complex projects.
Joint venture models have been developed to address the complexities of large projects.
By combining the strengths and expertise of multiple organisations, joint ventures can drive innovation and deliver improved project outcomes.
Roles and Governance
A clear governance structure is essential for effective collaborative contracting, as it defines roles, responsibilities, and decision-making processes, ensuring that all parties can work together efficiently.
One of the best tools to manage your collaboration agreement is a RACI chart (responsibility assignment matrix). Collaborative projects are often led by experienced facilitators who help guide the process and ensure effective stakeholder engagement. A RACI chart contains four categories that detail the roles within the agreement. The categories are:
- Responsible
- Accountable
- Consulted
- Informed
It clearly shows what is expected from who, so there is no confusion, duplication, or omission. Key performance indicators are also used in collaborative agreements to monitor and manage project performance, aligning objectives and supporting successful outcomes.
Having a designated leader to lead the collaboration is crucial to ensure alignment among all parties and to maintain momentum throughout the project.
Steering Committee
A steering committee comprises management-level stakeholders who oversee a project. It makes critical business decisions without waiting for the board to get involved (if there is a board). The committee’s aims include budget management, risk assessment and mitigation, and conflict resolution. It also ensures the project progresses as expected. The committee plays a key role in maintaining effective communication and collaboration among all parties throughout the project.
The steering committee is also responsible for addressing challenges as they arise to keep the project on track.
Craft a Unified Bid
Developing a bid for a consortium or joint venture is very different to a bid for a single supplier. Here are some tips to help you with the typical requirements.
1) Single point of contact
Appoint one person to be the primary point of contact. The person contracting authorities communicate with if they have any clarifying questions or want to check details or discuss value/potential risk. This helps establish a relationship and keeps communication consistent.
2) Collated credentials
This can be tricky, especially if the tender documents include word counts, because you have to condense each party’s credentials into a limited space. This includes case studies, certifications, qualifications, and accreditations. In this case, it’s probably a good idea to hire a professional bid writer with experience in consortium bids.
3) Integrated pricing
This is another tricky area because parties have different costs, risks, and profit margins. It’s also another area where you might want to consult a financial professional with experience in public sector procurement, to ensure fairness and accuracy.
Well-designed incentives and clear risk and reward mechanisms can help align the interests of all parties in the pricing model, encouraging cooperation and shared benefits.
4) Combined compliance
Each party must be compliant with all regulations and legal requirements, but it can be messy conveying that in a bid. In the context of collaborative contracting, ensuring compliance is especially important because multiple parties must collectively meet regulatory requirements and demonstrate unified adherence while working towards shared goals. It helps to create a joint “Consortium Certifications” table to ensure all stakeholders and their proof of compliance are included.
Next Steps and Practical Tips to Improve Project Outcomes
Mapping your partners shows you potential beneficial connections. Start by identifying businesses that complement your services or products and determine their potential to fill gaps in your business offerings, for example, necessary resources to grab opportunities you’d otherwise let pass you by.
Standard Industrial Classification (SIC) codes can be handy to find potential partners based on their technical or core activities, including economic activity. It’s maintained by the Office for National Statistics (ONS) so it’s always current and accurate.
Get legal advice on things like legal responsibilities and liabilities so you’re covered if the partnership goes pear-shaped or the project becomes a cash sink. Consider a shared Risk Register that, among other things, defines the steps to take if any partner falls short of their goals or KPIs.
You can also download our “Consortium Agreement Checklist” and “Unified Pricing Spreadsheet.” Register on our contract alerts platform and set up your search to find medium to large contracts perfect for you and your collaborators. Through effective collaboration, significant results can be achieved, ensuring that all parties benefit and project goals are met compared to traditional contracts.