Thought Leaders: A.T. Kearney's Stephen Easton - the problem with capital programmes

Thought Leaders is a series of regular posts from experts from across industries and regions, looking at the issues procurement faces today. In this post A.T. Kearney partner Stephen Easton asks whether procurement is doing enough to engage on IT and capital programmes in general.

It was interesting last week to see the NHS National Programme for IT described as "one of the great procurement disasters of all time” by commentators in the press last week. This prompted me to think more broadly about the problems of managing capital programmes of all types.

Government programmes tend to have a very high profile when they are perceived to go wrong. But, it is not only government that faces challenges of budget overruns and delays. Some recent research we did across the private sector, for example, shows that 66% of capital projects go over budget and 38% are behind schedule. The National Programme for IT has many counterparts for company.

Still, to describe the issue as a “procurement” failure feels unfair doesn’t it? Many of the problems are not in the purview of what we might call traditional procurement. In-flight scope creep, design changes and inaccurate cost estimation are surely the responsibility of project managers not procurement managers.

But, is procurement really doing enough in this area to insist on key commercial disciplines? For example is procurement:

• Pushing back enough on project managers to insist on specifications being agreed in advance of selecting suppliers, rather than “rushing to get the supplier in”?
• Doing enough to insist on the separation of the contracts for design and build phases of projects to avoid supplier conflicts of interest?
• Managing supplier relationships sufficiently on a cross project basis to incentivize them to behave strategically rather than tactically?

I also question whether too much is sometimes being left in the hands of the technical specialists of IT, quantity surveying and other business functions.

I’d welcome some answers.

Stephen is a partner of A.T. Kearney Management Consultants. He has consulted widely to clients in the private and public sectors across a range of procurement topics both in the UK and internationally over the past decade.