Forward Commitment Procurement Know How Programme Part 2

1. Forward Commitment Procurement Know How Programme Part 2 Identification KHP 2: Identification Phase These materials remain the property of BIS. They constitute part of a ‘learning by doing’ programme and are unsuitable for stand alone use. They must not be used or passed to other individuals or organisations without the express and written permission of BIS

2. Forward Commitment Procurement Know How Programme Part 2 Part 2: Identification phase • By the end of this module you will have identified an FCP project. Activities and resources • Work through the PowerPoint slides • Complete and submit the review and feedback sheets • Complete the project activities • Coaching and project support

3. FCP Know How Programme KHP 2 Contents This section of the programme will cover: • Recognising unmet needs. • Designing and using an unmet needs framework. • Identifying unmet needs with sub-contractors and developers. • Identifying FCP projects. • By the end of this section you will understand what is involved in designing and implementing an unmet needs process and identifying an FCP project. • The key points is intended to provide you with some ideas about how you might go about identifying unmet needs and identifying an FCP project. • While you are going through the slides begin to develop your ideas on the type of activities that will be involved given the nature and culture of your organisation and your role and responsibilities. • Also think about any barriers or issues that you might encounter.

4. FCP Process Overview • Forward - Commitment - Procurement: all the words are significant: • Success of your FCP projectwill involve: • changes in the way procurement is planned and implemented; • strengthening links between policy / operations and procurement; • being a demanding and credible customer ; • actively creating the market conditions needed to deliver a solution; • tenacious project management. FORWARD Anticipate future needs and let the market know what, when and how much COMMITMENT Demonstrate a genuine intention to purchase a solution PROCUREMENT Procure a way that supports the supply chain deliver and buy the solution when it becomes available

5. Implement procurement strategy Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Procurement strategy and specification Purchase goods or services Market sounding review Market sounding Market consultation FCP Process OverviewThis part of the KHP programme focuses on the first phase of the FCP process Outcomes Identification Market Engagement Procurement Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? FCP Process Stage 1 FCP Process Stage 1 FCPProcessStage 2 FCPProcessStage 3

6. The identification stage can be broken down into three: identifying the issue, need or problem; establishing if FCP is a suitable mechanism to address it; clarifying the requirement in outcome terms. Although this sounds straight forward, it can actually be quite tricky and can take time to get it right. Your task as a project manager is to engage colleagues and key stakeholders, draw out the information and intelligence you need to uncover issues, problems, unmet and future needs and work out what the actual requirement is in outcome terms, and assess which requirements can be addressed by FCP. Although the three stages of the process are a logical progression, as project manager you will need to think about all three of the stage as a whole rather that as a series of steps. Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement Establish outcome based requirement FCP ProcessIdentification stage overview Identification Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Recognise problems and unmet needs Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? Could FCP help deliver a solution? FCP Process Stage 1 FCP Process Stage 1

7. Identification phase The identification phase is in some ways the most difficult part of the FCP process, for a number of reasons, including: • FCP is for most an unknown quantity; • thinking about unmet needs is often an unfamiliar process; • we tend to be more geared to identifying solutions rather than focussing on the defining the need; • it can be difficult to think in terms of unmet needs when you can’t imagine a solution; • the processes, relationships and structures may not be in place; • it requires the engagement of others in the organisation; • it may not be a priority for other people in the organisation; • it can be difficult for people to think ahead when they are under pressure to deliver today; • the drivers or incentives may not exist for individuals to step outside business as usual; • change and new processes are not always welcome; • working across departments can be difficult; • there may be a disconnect between policy objectives and procurement activity; • can you think of any others, perhaps specific to your situation?

8. Identification phase The most appropriate way forward for the identification phase will be different in different organisations, but it always involves the three aspects already outlined: • help people to recognise and identify unmet needs, • they need to be genuine needs that the organisation needs to meet; • and ones that current solutions cannot meet for whatever reason; • establish which unmet needs could be addressed by FCP, • and express the requirement in outcome terms. What is involved? • The detail of how you achieve this will depend on the nature and culture of the organisation, your role and the timeframes involved. The rest of the slides include some ideas to stimulate your thinking – remember to jot ideas down as you work though the slides, specifically think about: • what do you need to do to get from your current position to having an FCP project agreed and approved?

9. Identification phase From the point of view of the project manager, the identification phase needs to be thought of as a process rather than a series of discrete steps. It is a process that involves: • engaging with colleagues to • communicate what FCP is about, what it entails, and what it can offer • understand and draw out unmet needs (what do we need?) and their drivers (why do we need them?) • gathering the information and intelligence you need in order to understand which of these unmet needs are potential FCP projects • unpacking the issues and identifying the underlying requirement in outcome terms • assessing the relative strengths and weaknesses of potential FCP projects • securing leadership commitment and backing for a specific FCP project

10. Identification phase FCP is a procurement tool to deliver policy objectives. FCP projects use procurement as a tool to deliver policy objectives so it is vital that both policy and procurement staff are involved and engaged at an early stage: • i.e. if you are leading this from a policy angle, you will need to ensure you bring the procurement team on board at an early stage; • if you are leading this from a procurement angle, you will need to bring the policy leads on board as soon as possible. In some situations the problem or issue that needs addressing will be obvious or easily identified and the process may be relatively straightforward. In other cases there will be barriers to overcome and perhaps issues will emerge that may go beyond the scope of your role and responsibilities and need referring to your line manager.

11. Identifying unmet needsWhy is it tricky? • As mentioned before, identifying unmet needs is not always easy. • In some organisations there are processes in place that anticipate future needs e.g. strategic reviews. • There are however rarely operational processes in place to systematically identify unmet needs and then tackle them. • Where unmet needs are identified it is often late in the day, by which time they are often urgent problems that need an immediate solution; this means they are usually addressed by ‘more of the same’ as there is no time for innovation, more often than not leading to a sub-optimal solution. • There is a tendency to set ‘safe’ policies and targets and limit ambitions to what we know is deliverable as this can seem less risky; this tends to stifle innovation. • Another difficulty is that rather than focussing on needs and requirements as outcomes, there is people feel they have to know what the solution will be; again leaving little room for innovation.

12. Identifying unmet needs “Frequently policy is produced on the basis of currently available technologies and lacks ambition. Worse, desirable goals may not even be articulated because the policy maker does not appreciate the potential of innovation and investment to produce cheaper, better options. FCP will help ensure that policy is informed by the possibilities of innovation – not constrained by the limitation of conventional methods”. David Golding, Technology Strategy Board • We have been in the habitat of being limited by options available, rather than trying to do something about them. • For this to change the public sector needs to become a more effective supply chain manager for the common good.

13. context, priorities, roles and responsibilities, strategic pains, needs, policies, projects, plans, contracts, builds, refurbish, developments ambitions, targets, legislation, etc… Overview of the FCP Identification Process Engagement of colleagues Inform about FCP Enrol in process Unmet needs framework Unmet needs process Maintain engagement and develop discussion on OBS requirement Continuing information and intelligence gathering Are unmet needs FCP compatible? Continuing information and intelligence gathering Refine OBS Procurement, leadership, drivers,time,necessity, genuine unmet need, budgets, enthusiasm, volunteers, resources, staff commitment etc… Assess relative strengths and weaknesses Prioritise and present for decision Establish project team Existing knowledge and information? Unmet need Potential FCP project There may be some known unmet needs & ideas for FCP projects Unmet needs and requirements emerge via meetings, workshops etc and potential FCP projects begin to be identified Unmet needs that are not FCP compatible fall away, new information identifies new potential projects FCP project and project team identified

14. Identification PhaseIdentifying unmet needs using an unmet needs framework • There is no right or wrong way to identify unmet needs, and different approaches will suit different organisations, and will also reflect your role and individual style and way or working. • An unmet needs framework is one method that has been used successfully to identify and initiate FCP projects. • It gets the process underway by providing a systematic and structured approach to the identification of unmet needs and the associated procurement opportunities, and also helps to engage others in the organisation. • An unmet needs framework is useful and may mirror similar exercises you have undertaken in your organisation. • The critical difference is that, linked to FCP, the process can be undertaken in the knowledge that you have a practical means to resolve the issues or problems and take the opportunities presented – it is not just ‘pie in the sky’ thinking that leads no where. • This helps to motivate and engage people and direct them towards unmet needs that can be met through changes in procurement approach.

15. A Borough Council planning team had several meetings about the major redevelopment schemes for the town. At an early stage a commitment was made to take the opportunity to incorporate a low carbon energy supply. This was brought up at subsequent meetings, the commitment confirmed, thoughts of commissioning a consultants report mooted, but no action was taken. Through links to a FCP Peer Group, the Energy Manager and the Senior Planning Officer recognised that FCP offered a way to empower the team to take hold of this commitment and make it a reality. The FCP project has provided a process for the joint planning, policy and procurement team to work together proactively to resolve this unmet need. Example: A Borough Council “We were already committed to a new approach to energy supply and energy efficiency as a core deliverable of the Town Centre Development programme. What was missing was a way to take this forward. FCP provides both the focus and process we needed to bring together a policy and procurement team to work together in a practical and proactive way to deliver our ambitions for a low to zero carbon energy solution” Energy Manager of the Borough Council

16. Identification PhaseIdentifying unmet needs using an unmet needs framework The following slides show an example unmet needs framework that was developed for use in a local government organisation as a way to drive the sustainability and environmental protection agendas. This example unmet needs framework is divided into four sections. The first three sections involve looking at unmet needs from three different angles. We will look at these first: • Policies, regulations and targets • what do we need to deliver? • by when? • how are we doing? • Uncovering unmet needs • where do we have problems that need solutions? • where are the gaps in our ability to deliver? • Vision • ambitions, trends, etc. • what would you like to see in the future?

17. Example unmet needs framework 1. Policies, targets, objectives etc. can provide a useful focus as they make clear what the organisation needs to deliver, by when. Keep in mind that these may be based on “currently available technologies and lack ambition” and that “desirable goals may not be articulated because the policy maker does not appreciate the potential of innovation and investment to produce cheaper, better options”

18. Example unmet needs framework 2. Uncovering unmet needs - three areas are suggested for focus in this example framework: • strategic pains • impact • future needs

19. Example unmet needs framework 2. Uncovering unmet needs - three areas are suggested for focus in this example framework: • strategic pains • impact • future needs

20. Example unmet needs framework • Uncovering unmet needs - three areas are suggested for focus in this example framework: • strategic pains • impact • future needs

21. Example unmet needs framework 3. Vision: ambitions and trends, future positioning: In this example the framework focused on stimulating ambitious thinking and asked people to consider what they would really like to achieve and to identify ideas or technologies that inspired them. This section is also an opportunity to reflect future positioning, social trends, long term plans etc. not captured elsewhere.

22. Once developed, there are different ways an unmet needs framework can be used: e.g. To structure one on one meetings. Informal chats. Survey of staff (e.g. by email and telephone). Focus groups (e.g. via existing issue based groups e.g. sustainability, carbon reduction). Senior management workshops (e.g. an annual event). Stakeholder meetings (e.g. included on the agenda of partnership committees). Departmental meetings (e.g. a regular agenda item). How much time you have, the culture of the organisation, your role in the organisation are factors that will influence the approach you take. Identification Phase Using an unmet needs framework

23. Example Identifying unmet needs using an unmet needs framework A local Council’s sustainability group initiated an unmet needs identification process that involved: • The Deputy CEO inviting a cross section of staff to participate • The unmet needs framework, together with background and explanatory information, was emailed to those that accepted the invitation • Participants were asked to set time aside to work though the framework and to discuss it with their colleagues ahead of a telephone or face to face interview with the project lead • The interviews typically lasted 30 minutes (some lasted over an hour) and the project lead filled in the framework based on the feedback Some examples of the unmet needs identified by staff can be found on the next slide • Typically people identify a combination of problems that they were aware of, gaps in their ability to deliver, and it uncovered perceptions about what was needed • The project lead reported that they often found it hard to keep people focused on the need, rather than the solution Are any of these unmet needs the same or similar to ones that you think may be present in your organisation ?

24. Examples of unmet needs uncovered

25. Like any framework, an unmet needs framework is a tool and can only take you so far. It’s value is that it provides you with a structure to organise your thoughts and draw out the information and intelligence you need from colleagues in order to identify unmet needs, and potential FCP projects. It also gives an opportunity to introduce new ways of thinking, focussing on needs and requirements rather than solutions and products; and an opportunity for staff to focus beyond yesterday’s and today’s problems; and a way to engage colleagues and interest them in possibilities and introduce FCP as a means to address the issues raised. The majority of people enjoy the opportunity to think about the bigger picture and discuss issues that concern them. In many cases they adopt unmet needs thinking as part of their normal activities, for example: including unmet needs as an item for discussion at Departmental meetings; or as part of annual reviews. Identification PhaseIdentifying unmet needs using an unmet needs framework

26. Unmet needs processes need leadership engagement and endorsement. They are not an end in themselves. They require engagement and enrolment of others in the organisation. They are a way of gathering information and intelligence needed to identify where FCP can help deliver a solution. They can be formal, or informal – or both. They require follow though and communication of outcomes. They should be enjoyable, stimulating and not too time consuming. Some people may find them uncomfortable or threatening. The way they are handled and received will depend on the to a large extent on the culture of your organisation. Ideally, unmet needs thinking evolves from being a novel, one off process to becoming part of every day thinking, and integrated into the organisations planning process. Identification PhaseIdentifying unmet needs using an unmet needs framework

27. Identification PhaseFrom unmet need to FCP project Being aware of problems that need solutions and knowing your unmet needs is one thing. Deciding to do something about them is another question. The value of FCP is that it provides a focus to identify unmet needs and future needs and most importantly provides a practical means to do something about them. Or at least some of them – FCP is not a panacea and not all the unmet needs will be a suitable subject for an FCP approach. “Now we have a process that can deal with unmet needs and do something about them, we have found that we are more willing to identify them in the first place. FCP has given us the confidence to tackle our sustainability targets in a positive and proactive way. We are hoping to get a second FCP project underway in the next couple of months looking at a better, cheaper, more sustainable waste solution for the hospital.” Steph Holmes, Head of Procurement, Rotherham NHS Foundation Trust

28. Identification PhaseWhen is an unmet need a potential FCP Project? • If not all unmet needs can be addressed though FCP, how do you identify those that can? • At the same that you are gathering information and insights into unmet needs, you can begin to draw out information and intelligence that will tell you which are viable FCP projects. • To be a viable FCP project, first and foremost there must be a genuine needthat needs a solution and agenuine intention to procurea solution • normally this means that there needs to be a budget in place, or process to get a budget approved, but not always… • for example if it could involve saving money and be self funding e.g. energy efficiency measures could be financed through energy savings • or funding may be available on the basis of the project e.g. via The Carbon Trust, Salix, WRAP, special initiatives and other sources • Secondly there must be commitmentand leadership from the organisation • an FCP project must be necessary, a priorityandhave leadership backing. • Thirdly, there must becommitment and enthusiasmfrom the department and staff involved • (only work with volunteers)

29. Identification PhaseFrom unmet need to FCP project • As you begin to engage with colleagues and discuss unmet needs ask your self the following questions and find ways to draw out the information: • Is it a genuine unmet need that needs a solution? • what is the underlying requirement (e.g. do you need renewable energy, or do you want low carbon energy?) • are there drivers and incentives in place for the individual budget holder to need to act and place value on the delivery of a solution? • Is there a procurement opportunity and budget? • is there an identified and agreed procurement budget – or can one be found? • Is there sufficient time to allow for market stimulation and supply chain innovation? • When is the solution needed – or a decision needed; • is there enough lead time; • is there a contract renewal date to work to – extensions? • leadership and staff commitment? • is there leadership backing to address the unmet need? • Are the staff committed and enthusiastic? • Remember necessity and a procurement opportunity is a winning combination for an FCP project.

30. Example unmet needs framework This brings us to the final section of the example unmet needs framework. Part 4: Opportunities and priorities. This has two aspects: • What are the major projects and investments planned or contracts up for renewal. • Matching the unmet needs you have uncovered with these procurement opportunities and budgets.

31. Identification PhaseTaking opportunities • The Rotherham NHS Foundation Trust ‘ultra efficient lighting’ FCP project is a good example of an FCP project that made the most of a procurement opportunity – a major refurbishment programme of all the Hospitals wards over 8 years. • The driver for the focus on a step change in energy efficiency are the NHS carbon reduction targets; in the new NHS market the drivers for the step change in the patient experience are both NHS policy and commercial considerations. • In may cases however, opportunities such as this are lost. • There are many examples of developments setting ambitions targets but failing to deliver, • In part this can be attributed to a failure of supply chain management to bring new solutions to the market (as FCP aims to do) and also a failure of project management for example to ensure unfamiliar specified products are installed by a contractor. • More fundamentally however, it is because there is a missing link between the ambitions on the one hand, set by the customer, and the ability of the market to deliver the necessary goods and services (for all the reasons we have discussed previously). • FCP bridges this gap.

32. In some cases you may be working with contractors and developers, for example in regeneration projects, housing developments etc. In these cases, the public sector body is usually not the ultimate procurer for the products and services – so can FCP still be used? Yes it can….. where the public sector has control and influence on the developer (e.g. related to planning) and development choices they make, and where the developer is sympathetic and on board. The FCP approach can be adapted and used to help the developer or contractors meet policy, planning or other requirements in a cost effective and timely way. Identification Phase Identifying unmet needs with contractors and developers Getting the contractors on board: example A project introduced FCP into discussions with potential developers from the beginning and included a requirement for the developer to work with the project team to use of FCP to deliver innovative solutions in the protocol for the selected developers.

33. Identification PhaseIdentifying unmet needs with contractors and developers • Example approach to identifying unmet needs when working with a developer or contractor: • First, be clear on your ambitions: what do you really want this development to deliver (not what you think you can get)? • know what you want • look beyond minimum standards / existing policy • think about future proofing • involve stakeholders • what really matters to you? • what issues will motivate the development stakeholders to innovate? • prompts in the example unmet needs framework will help stimulate your thinking

34. Identification PhaseIdentifying unmet needs with contractors and developers • Second, review the ambitions with the developer and identify: • which ambitions are seen as deliverable and • which are perceived as difficult, risky, impossible, costly, or not practical. • The latter are areas where FCP could help to bridge the gap between what you want and what the developer believes is deliverable (and desirable). • At this stage it is important not to focus on the barriers. • Focus on your ambitions, what you want to deliver. • The barriers will be addressed as you work though the FCP process.

35. Identification PhaseFrom Unmet needs to FCP Project • Once you have a list of potential FCP projects you need to assess their relative strengths and weakness and prioritise them Recap: • FCP works best…. where there is: • a high level of leadership and staff commitment • full integration of the project in the organisation • a genuine unmet need • that current technology, products or commercial models cannot deliver • and / or cannot be delivered affordably • don’t innovate unless you have to……… • a credible procurement opportunity exists – or can be created • with a reasonable lead time • of sufficient scale to stimulate the delivery of a solution • presented in a way that shows a genuine commitment to procuring a solution • the ability to make a forward commitment of sufficient strength to generate the required market pull • potential for replication and aggregation of demand within the organisation, region, and with other public sector bodies • routes to the wider public sector market

36. Identification PhaseFrom Unmet Needs to Outcomes • It is useful for communication and information gathering purposes to have a simple OBS drafted at the unmet needs stage to facilitate conversations with colleagues and get across what FCP has the potential to deliver and help explore ideas. • This in itself can help to bring into focus those unmet needs that are now really suited to an FCP approach (e.g. they don’t involve a procurement). • Once you have a list of potential FCP projects you can revisit the draft OBS and work it up further in discussions with colleagues. Recap from KHP 1C • Unpack and articulate the requirement in terms of the outcome(s) you need to deliver – not the technological means of delivering it • Outcome:a description of the requirement in output or outcome terms, concentrating on what is required rather than how it is to be delivered Definition: “An Output (or Outcome) Based Specification (OBS) focuses on the desired outputs of a service in business terms, rather than a detailed technical specification of how the service is to be provided; this allows providers scope to propose innovative solutions that might not have occurred to the procurement team”.

37. RecapExamples: unmet needs in outcome terms • A London Borough has identified a requirement for: • A cost effective, on site waste management solution for non recyclable waste, suitable for use in high rise flats and council housing in a densely populated urban environment, that eliminates the requirement for waste collection, involves minimal management and is environmentally benign. • A Hospital has identified a requirement for ‘Future Wards Lighting’ delivering: • a step change in patient experience i.e. creating a pleasant healing environment with patients being in control of bed zone lighting levels and ambience and provide the lighting necessary to perform clinical and nursing tasks, and incorporating measures to reduce the risk of hospital acquired infections. • a demonstrable step change in energy efficiency with progressive improvements in energy efficiency and operational performance over the life of the project.

38. Identification PhaseCommunication and feedback • The final stage of the identification phase is to feedback outcomes and next steps to those that participated. • This helps to maintain a credibility in the process and engagement of colleagues. • Feedback might be formal or informal but usually gives feedback on: • a summary of the process that has been followed and why; • the unmet needs identified; • which will be taken forward as FCP projects and in what timeframe; • how the other unmet needs will be addressed or information used. • Is there anything else that you think would be helpful to communicate?

39. Identification PhaseSummary • Unmet needs are the starting point for an FCP project. • Drawing out unmet needs can be tricky for a variety of reasons but having a process to tackle them (i.e. FCP) helps to bring them into focus. • Unmet needs often arise as a result of policies, regulations, targets, political commitments etc., particularly those where failure is not an option. • They also arise from opportunities such as new buildings, refurbishment programmes. • An unmet needs process provides a systematic approach to uncovering and clarifying genuine unmet needs and engages others in the organisation in addressing issues, thinking beyond ‘business as usual’, offering a way to create solutions where they don’t exist. • It is an iterative rather than linear process and involves drawing out the information you need to identify and assess the viability of a potential FCP project. • Unmet needs processes can be formal or informal to suit the nature and the culture of the organisation, your role of the organisation, and the time you have available. Continued….

40. Identification PhaseSummary • Unmet needs once identified need to then be ‘unpacked’ to uncover the underlying requirement. • These requirements are expressed as outcomes and are technology neutral. • These unmet needs must be genuine and there must be significant drivers and organisational commitment to finding a solution (not ‘it would be good if we could’, rather ‘we must’). • Not all unmet needs can be addressed through FCP. • Most importantly there needs to be a procurement involved and (usually) this needs to have a budget attached, sufficient demand pull (not a one off purchase) and there must be enough lead time. • Recipe for FCP success: • a procurement • necessity, and value placed on a solution • leadership commitment • staff commitment and enthusiasm • sufficient time • demand pull i.e. replicability