Defence Estates: Putting bidders through their paces

This is, of course, an unlikely situation. Even if this is their first day in Iraq, those soldiers will have practised for months for

such events. They’ve been through trial runs to prepare themselves as far as possible for the real thing.

Defence Estates, the property arm of the Ministry of Defence, has brought its expertise in creating real-life scenarios into selecting long-term construction partners. This, combined with psychological know-how from ITS Consult, has resulted in a process where short-listed firms are thrown into lifelike situations with the client team – and then marked on their response. It’s called soft issues assessment.

Now it’s gaining popularity with government clients setting up long-term partnerships. The Olympic Delivery Authority adopted the technique for the selection of its delivery partner CLM. Other government organisations are also using the method outside construction: one department is procuring IT, and MoD is using it for weapons.

‘Construction is leading the way,’ says John Doyle, a director of ITS who heads up the consultancy’s collaboration, partnering and soft issues activity. ‘It started in construction and now it’s spreading.’

If soft issues immediately conjures up cuddles and fluffiness, think again. ‘It’s not about having a buddy you can have a drink with,’ says Mark Grant, who heads up the central prime contract for Defence Estates. ‘Partnering and soft issues does not mean you are letting things go. It means you are stopping things festering.

‘It’s having the confidence to say “Tony, you are wrong there, I cannot accept what you are saying” and knowing we can come out of the other side and carry on working together.’ The Tony he refers to is Tony Harden, Grant’s opposite at Carillion Enterprise, which won one of five prime contracts or exclusive frameworks for maintenance and small works.

A match in terms of approach is vital. If client and contractor tend to handle problems with confrontation rather than conflict resolution the outcome can lead to all-out warfare.

Defence Estates has long been seen as a leader in the sort of team-working suggested by Latham and Egan in their industry reports. Building Down Barriers, its project to move to prime contracting, took place in the late 1990s.

Under its overhaul of the way it managed the MoD’s estate, Defence Estates adopted a framework approach to construction and maintenance called prime contracts. It selects one partner to work with for a number of years, typically seven with an option to extend to 10. There are standalone prime contracts such as SLAM (to build new single living accommodation) and regional prime contracts (RPCs), such as the central one which Grant and Harden oversee.

The RPCs were a test bed for soft issues assessment, which Defence Estates began developing in 2001 with ITS. Before this it did have a soft issues bid evaluation tool. But that didn’t test how a team performs under pressure as the scenario-led process does.

Grant’s was the last of the five RPCs to be let, in November 2005, so by that time the method was well-developed. The scenarios and tasks within them were multi-faceted so that they could test a range of 10 skills which Defence Estates had identified as being vital for a partner . For the central RPD the soft issues assessment accounted for 21% of the overall scoring at tender.

The four short-listed contractors had to field two teams of people: managers and operational people, including suppliers. Each group had a one-day scenario to deal with.

In scenario one, the management team had to consider whether or not their RPC should take on the management of a property lying on the border with Scotland which has previously been part of the Scottish RPC. What starts as a straightforward exercise with the team looking at technical issues suddenly snowballs when part-way through the exercise they are ambushed by a call from a Scottish MP demanding to know what’s going on. It could happen…

In scenario two, the operational team had to handle a roof blowing off a hangar.

Each day is assessed by a combination of Defence Estate and ITS people, who must come together afterwards to work out their combined scores.

It’s difficult to prepare for such a test. Carillion-Enterprise selected the team members based on the Belbin wheel theory which sets out eight different types of role which should be represented in a team – such as leader, finisher, challenger.

Team members were nervous before the workshops, reports Harden, but afterwards unanimously said that they had enjoyed the experience. ‘The initial ice breaker exercise was invaluable in settling nerves,’ says Harden. ‘After that they behaved entirely in character at the event – it’s difficult to do otherwise as they were given lots of challenges over a protracted day.’

Getting people to behave in character is the goal. Bidders can prepare their people with team-building exercises, but no one will know what the scenarios will be. The two workshops also reveal whether the management and operational teams match culturally. If they don’t, there could be trouble down the line.

So how is the cultural fit? Things are looking good so far. Carillion-Enterprise has not issued any change orders to Defence Estates, there have been no formal letters and no disputes to go to the mediation board. ‘We have agreed joint values including “positive challenge” and “openness” and using these solves problems,’ explains Harden.

Soft assessments may be a great idea, but they are also costly. Even after ITS has worked out the model for assessments, the Defence Estates and its clients the armed forces whose buildings it looks after have a lot of work to do: setting up scenarios, two days of tests for four different bidders and the mediation of the assessments afterwards.

Grant’s advice to others looking to use such a tool is this: ‘Don’t underestimate the amount of work it requires to do the evaluation. But then don’t underestimate the value that it will give. The time to invest is at the start.’

But while a client like Defence Estates can direct considerable resources to such an exercise, does the organisation’s experience hold any lessons for smaller contracts?

Grant thinks hard about this question. Then offers the example of builders bidding for his kitchen extension. He asked them all to sit down with him and brainstorm ways they would do things differently to save him money. ‘The one that rolled his sleeves up and came up with some ideas was the one that got the job,’ says Grant.

There is one note of caution, however. Grant warns that there has to be a balance between hard and soft issues: ‘If you concentrate on one and take your eye off the other that is bad. At the moment I think we have probably got it right.’ cm