First procurement themed issue of Public Money and Management

The latest issue of Public Money and Management has just been published on line with the hard copy due mid February - it is a procurement themed issue. Not only is it the first in the history of the Journal but it is truly international with contributions from The UK, The Netherlands, Brazil, Ireland and Australia.

There are some really useful articles in the issue which provide surprising findings from previously unpublished research. If you would like to read a free copy of my editorial which provides insights into the articles covered - the first 50 can access a free copy at this link

The impact of belief in value for money

Today's Times includes an interesting report on how perception of a more expensive product influences outcome. The report is based on research published in the American Journal 'Neurology'. In an experiment a group of twelve Parkinson's disease sufferers were given two placebos and told one was more expensive - they were told one cost $110 and the other $1,500. Remarkably those given the perceived to be more expensive placebo actually had a 28% improvement in motor skills compared with those on the same placebo yet perceived to be less expensive!

The researchers think the 'expectation of reward response' may have had an impact on the outcome - interestingly eight of the twelve particiants said that they had greater expectations from the more expensive (placebo) drug.

How often do we hear specifiers refer to evidence of better performance from in a procurement process - could that evidence be based on 'expectation of reward response' or rose tinted spectacles?

t would be interesting to know the impact on an evaluation if evaluation panels were given pricing information which implied higher quality?

Of course it would be unethical and unacheivavble within the Regulations, but what would be the perception of users if they were told a public sector organisation had opted to provide a more expensive solution based on citizen preferences?

A contradiction in make/buy theory

Most of us would agree that, when carrying out an options appraisal as part of the make/buy decision, the theory says retain in-house strategic services which are critical to delivery of the core business. That theory seems to have been turned on its head with the water service to the west of Northern Ireland, where last night almost 8,000 properties were without water. Many have not had water for days and had to resort to melting snow and fetching water from rivers in a scene more akin to third world services.

The problem all revolves around work-to-rule as part of a decision to change the pension rights of NI Water employees (at some stage I may discuss my abhorrence at trying to change pension rights which employees signed up to many years previously). However, some repair work is the responsibility of NI Water employees, while other work is governed by a PPI arrangement with treatment plants contracted out. If there's a problem with the 'contracted out' (buy) treatment plant, the staff responsible for repairs are the contractors as opposed to NI Water and the work is completed. However, where the fault relates to the remit of NI Water staff, i.e. 'make', it is subject to the work-to-rule and that's where the water service has collapsed.

This is a remarkable exception to the theory of make/buy where the in-house delivery is adversely affecting core services as opposed to the 'buy' service!