Planning a Software Development Project? You need to read this!

August 22, 2017

What can you do to ensure your software development projects are successful and avoid costly redesigns.

Part One in the Series: Software Development Guide for Business Leader.

When you do as much custom development as we do, we hear a lot about future-proofing in development. The average expected lifetime of software that our customers expect is between 5 and 7 years. When a system is designed to last that long, a considerable amount of effort should be invested into planning. For a business that plans on developing a custom application, it’s important to future-proof your project to avoid costly application redesigns and to improve application longevity. Future-proof through planning, honest reviews of your in-house skills and capabilities, striking a balance of in-house support and outsourced development, and by avoiding proprietary tools and frameworks.

Future-Proofing Checklist

What is the life expectancy of your final product?
Have you assigned a Project Manager?
Have you set realistic project goals, budgets and timelines?
Have you done an assessment of your in-house resources?
Does the project rely on proprietary tools?
Have you assigned a Project Manager?
Is your outsourced partner large enough
Do you have a software update plan?

The key issues this post addresses include:

How to avoid painting your development project into a corner by using proprietary frameworks and tools.
How to be in control of your application development, regardless of your in-house development skills.
How to ensure long-term support for your application when resources fail, are replaced or become incapacitated.
How to handle post development support and why it is crucially important – The work continues even after initial development is complete.
How to create the ideal mix of outsourcing and internal support.

Future-Proofing a Project During the Planning Process

Future-proofing your project starts just after it’s been envisioned and is typically the domain of the Project Manager (PM). The PM will use planning tools and methods and determine what is best for the business and the project long before any development occurs. PM techniques and processes help avoid uncomfortable situations where developers are vying for the work based on their skills and capabilities.

The PM uses tools and processes along with their knowledge of organizational assets and history, resource capabilities and strengths, and weighs this information to determine the right mix of in-house work and outsourcing.

Without thinking about future-proofing during the planning process you may end up with a short-lived web-application with higher than expected costs to the business. This is why dedicated pre-development planning is so crucially important.

Avoiding Costly Application Redesigns

Your company can avoid costly application redesigns and redevelopments if you critically review internal resources at the beginning of the project and if you avoid, as much as possible, the use of proprietary technology.

Also, an effective way to prevent costly redesigns is to:

Use Project Management techniques and tools, (use a Project Manager).
Complete project scope and business requirements documentation at the beginning of the project.
Have sufficient budget to do the project right the first time.
Setting a realistic timeframe and make sure not to cut corners.

The Importance of Assessing In-house Skills and Capabilities

An evaluation of your in-house capabilities is critical to the success of your business and crucial to your application development’s longevity. Your PM should execute a Capabilities Matrix to understand where your organization’s weaknesses are. A great place to start is the TOGAF Architecture Skills Framework for processes and layouts of an IT Capabilities Matrix.

Be honest about the real capabilities of your organization. Do you have the capacity, knowledge, and resources in place to make this project a success? An honest assessment will help avoid any problems and mitigate risks in the future.

Avoiding Proprietary Tools and Frameworks

To effectively future-proof your development project, PM’s and development leaders should avoid proprietary tools and frameworks sourced from new, or untested sources. The terms, “open source,” “free,” or even low cost, should be approached with extreme caution and diligence during the evaluation and selection processes.

You can achieve some amazing designs and benefits through these programs but never be lenient about accepting unproven technology or partners; especially during the planning phase of your project.

The long-term viability of using development resources from smaller organizations must be evaluated and weighted against other factors. Smaller, less experienced teams may be exciting to work with, but their stability in the long-term may trigger a redesign in the short-term.

When in doubt, go for tried and true solutions, tools and frameworks. You’ll have an easier time finding resources in the IT community to help you and you’ll all but eliminate the risks associated with partnering with an immature organization.

It’s not always as exciting, but it will be significantly less risky, and if something does go wrong, you have more contingency options available.

Keeping Custom Applications Up-to-date

Developing a custom application may incur a significant up-front cost, but the work doesn’t stop when the app goes live. There are ongoing costs and time investments that must be made to maximize the life of your new tools. Just like the operating system on your computer, your application will require upgrades over its useful lifetime.

You will need upgrades on databases, frameworks, tools and operating systems and there will be new features, additions, and business opportunities too.

No matter the cause, it is important to factor the cost of keeping your new application up-to-date in your annual budgeting of time and dollars.

Outsourcing Application Development and Support

Outsourcing is the ultimate future-proofing of your development projects.

When a development project has internal support for infrastructure and project management but uses external resources for the development then greater levels of success can be achieved.

Some of the benefits of outsourcing that I’ve seen include higher levels of technical expertise, excellent project management, and time management to name a few. Others can include tighter budgets, less scope creep and avoidance of the long-term cost of people.

Conclusion

If you plan on developing a custom application, be sure to future-proof it and avoid costly application redesigns while improving its shelf-life.

Future-proof it by using a project manager and project management tools and techniques.

Plan on updates. If secondary systems require updates, they may also need you to update your custom applications. Plan and budget for updates, then perform them; doing so will improve application longevity.

Assess the skills of your in-house team, (if you intend to develop in-house) and use an assessment framework to get the best result. An honest evaluation of resources and skills will help you avoid important operational tools using old thinking and skillsets.

Outsource; the costs associated with in-house development teams are more than dollars. While it is true that your team will know the business better and can react quicker; it’s also true that they will cost you more, get outmoded and limit development to their capabilities and skillsets. Outsourced agencies often have a broader, more modern approach to development.

On your next project try a hybrid approach by deploying an internal PM to oversee and coordinate the project, and an external development team to apply the latest techniques and programming tools.

About CoreSolutions

The CoreSolutions team of experts, including developers, systems analysts and project managers, build web and mobile applications using the latest technology and tools and will assist you through all phases of the project including brainstorming, requirements planning and project management.

Connect with CoreSolutions today to start your project with a free estimate.

Clearing Obstacles to Successful Projects: The Importance of Disclosure in Creating Tender Documents

August 21, 2017

North Pacific Roadbuilders Ltd. v Aecom Canada Ltd, 2013 SKQB 148

The duty to provide accurate information to contractors is of paramount importance, as the verdict in this case from Saskatchewan’s Court of Queen’s Bench demonstrates. Failing to do so, whether deliberately or negligently, can cost defendants thousands of dollars and delay important projects. In this case, the plaintiff successfully argued that the defendant failed to provide accurate information, and that relying on the information provided was entirely reasonable for them to have done.

The plaintiff, North Pacific Roadbuilders Ltd. (“North Pacific”), is a company incorporated in British Columbia and owned by Ronald Burek, who had also incorporated a company called Prairie Roadbuilders Ltd. (“Prairie”) in Alberta. North Pacific, which had been created in order to allow Mr. Burek to bid on projects outside of Alberta, relied on Prairie to supply it with roadbuilding machines. North Pacific had done considerable work in British Columbia, but prior to the events detailed in this case had not worked in Saskatchewan. For its first project in the province, North Pacific successfully bid on a road construction tender issued by Cameco Corporation. The bid had been submitted jointly with Tron Power, a northern Saskatchewan contractor, since Cameco had a policy requiring a certain number of northern personnel on any of its contracts and since Tron Power did not have sufficient machinery to perform the contract themselves. Further, roadbuilding was not Tron Power’s area of expertise.

The road North Pacific was supposed to construct was a 57-kilometre ore haul road between Cameco Corporation’s mine and mill at Key Lake and a new mine at McArthur River. The specifications and technical information in the tender documents were prepared by UMA Engineering Ltd. (“UMA”), which was later acquired by the engineering firm AECOM Canada Ltd. Once UMA had become involved in the project, Cameco gave it three reports on the area’s terrain; the reports had been prepared by a firm of engineers (J.D. Mollard and Associates Limited; “Mollard”) specializing in air photogrammetry – that is, making measurements of terrains based on photographs taken from above. The route UMA eventually chose for the road was an approximate of the one the engineering firm had originally chosen.

North Pacific alleged that UMA misrepresented – deliberately and/or negligently – the conditions of the terrain on which the road was supposed to be built, and that these misrepresentations caused them to lose over six thousand dollars. The defendant, UMA, denied that they misrepresented anything, and further denied both that the plaintiff had relied on the soil information in those documents and that the terrain conditions had caused North Pacific’s losses. UMA also alleged, in the alternative, that the plaintiff was contributorily negligent.

In order to determine if the tender documents issued by UMA had accurately represented the terrain, the judge examined the documents alongside the reports from Mollard. The judge also examined the reports UMA had made for Cameco in order for Cameco to get regulatory approval for the project, prior to issuing a request for bids. The judge found, among other facts, that:
• UMA’s reports to Cameco included mentions of boulders in the soil and other soil conditions that were not included in the tender documents;
• UMA’s reports to Cameco also included different terrain mapping information that was not made known to bidders;
• The tender documents did not make it known to the bidders that Mollard’s reports were available for inspection, as Mollard had strongly recommended;
• UMA prepared all of the drawings and technical specifications included in the tender documents;
• UMA had included descriptions of sample soil that stated they contained only sand, despite the sample testholes having actually also contained a certain percentage of rock;
• UMA did not include a description of the Standard Test Procedure it used for testing soil in the tender documents;
• UMA did not note that samples contained cobbles or boulders when they did;

For these and other reasons – including a short visit to the site by Mr. Burek, where he was told that the conditions he saw then would continue throughout the road-construction site – the equipment brought to the site by North Pacific was based on an expectation of primarily sandy soil. Because of delays due to equipment being damaged by boulders, and later needing to demobilize equipment for the winter and then remobilize, Cameco did not accept the road as complete until August 20, 1998; Cameco had intended to use the road as a winter road in December 1997.

A week before the road was accepted as complete, Mr. Burek spoke to a Cameco representative by telephone and let him know that the extra rock North Pacific had encountered – a quantity of which had not been included in the tender documents – had caused delays and damage in the amount of approximately $2 million in additional costs. Mr. Burek was advised to make a written claim to UMA. He did so in a letter dated November 10, 1998; UMA responded and denied the claim.

In order to assess the reasonableness of the claim, along with whether North Pacific had reasonably relied on the information given by UMA in the tender documents, the judge considered testimony from Mr. Burek, from an employee of Prairie (Mr. Burek’s Albertan company), George Mollard (of the engineering firm Mollard), an expert engineer with experience in northern Saskatchewan in both the public and private sectors, UMA’s engineer in charge of the project, UMA’s supervising engineer on the haul road, a junior design engineer employed by UMA, a heavy equipment operator familiar with the region who had been employed by North Pacific for part of the project, a Cameco engineer with expertise in soil mechanics, an engineer employed by neither party but with expertise in preparing bids, and an engineer with expertise in tendering contracts who had worked for the province for many years. Thus the judge examined a considerable amount of evidence in determining the claim.

In order to assess if UMA had negligently misrepresented information to North Pacific, the judge first examined previous case law to determine that UMA did owe a duty of care to bidders to provide accurate information that was not misleading in any way. The judge further determined, based on assessing technical and testimonial evidence, that some – but not all – of the information UMA had provided in the tender documents was in fact misleading, either expressly or by omission. The judge also found that many of Mr. Burek’s assumptions regarding the soil were unreasonable, which is why not all of the information UMA provided was found to be misleading: that is, it would only have been misleading had Mr. Burek’s assumptions based on them been entirely reasonable.

Three further points were made out, thus leading the judge to hold that the misrepresentation was negligent. First, the judge held that, based on evidence, UMA had fallen below the standard of care it owed bidders by failing to disclose the Mollard terrain mapping. Second, the judge found that it was reasonable for the plaintiff to have relied on the information UMA provided that did not disclose an increase in rock further north along the planned route and made no mention of extensive boulders. Third, the judge accepted the evidence that North Pacific incurred costs over and above what it anticipated because of relying on the information. Thus the plaintiff was found to be entitled to damages. While the plaintiff did also allege deliberate misrepresentation, or deceit, the judge did not find this based on evidence.

UMA had claimed that should they be found negligent, the plaintiff should be found to have contributed to that negligence by failing to make its own inquiries into additional geological information. The judge held that North Pacific was not so negligent, in part because none of the bidders had made these types of inquiries, indicating that all assumed they had been supplied with all available terrain information.

North Pacific claimed nearly $5 million in damages. In assessing the plaintiff’s and defendant’s arguments regarding damages, the judge was unable to determine what a correct bid would have been, due to insufficient evidence. However, the judge did note that Mr. Burek had twice – first verbally, to Cameco, and second in writing, to UMA – stated his damages to be $2 million. Thus the judge awarded North Pacific $2 million.

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case. For any particular legal problem, seek advice directly from your lawyer or in-house counsel. All dates, contact information and website addresses were current at the time of original publication.

National Education Consulting Inc.
Phone: (250) 370-0041 Toll Free: (888) 990-7267
[email protected]

Is it a good idea to add a “this RFx is non-binding” clause in our RFx template?

August 8, 2017

Is it a good idea to add a “this RFx is non-binding” clause in our RFx template?

by Lise Patry, ba sc (chem eng), llb, icd.d, Patry Law

Owners seeking shelter from the legal risks associated with Contract A are increasingly including a clause reading: “this RFx is non-binding and therefore does not create Contract A” into documents that otherwise have the elements of a binding RFx.

Is this a good idea? It certainly seems to be. At common law, no freestanding duty of fairness is owed to bidders in a non-binding RFx process. Seems like a no brainer – if you want to avoid Contract A, just make the RFx non-binding!

How to design a non-binding RFx

Although this strategy makes sense in many cases, keep in mind that whether an RFx is binding or non-binding is matter of substance and not form. Courts will look at a variety of factors to determine whether the parties intended to enter into a binding contract – Contract A – by the submission of a proposal. A statement that “no Contract A is created,” while important, is just one of the many factors courts examine.

The most comprehensive summary of factors courts consider when determining whether the parties intended the process to be binding is from the trial level decision Tercon Contractors v. BC 2006 BCSC 499, and presented as the following list in Topsail Shipping Company Limited v. Marine Atlantic 2013 NLTD 163 (upheld on appeal):

The irrevocability of bids or proposals submitted;
The formality of the process;
Whether bids or proposals are solicited from selected parties;
Whether the identity of bidders or proponents is confidential;
Whether there is a deadline for the submission of bids or proposals;
Whether a security deposit is required;
Whether bid or proposal selection or evaluation criteria are specified;
Whether there is a right to reject proposals;
Whether there was a statement that this was not a tender call;
Whether the work or service for which proposals are submitted will definitely proceed;
Whether compliance with specifications was a condition of bids or proposals;
Whether there is a duty to award contract ‘B’;
Whether contract ‘B’ had specific conditions not open to negotiation.

Generally, the more formality there is in the process, the more it points to an intention to conduct a binding RFx. As we saw in the case of Topsail, even if many of the above criteria point to a non-binding process, courts will often strain to conclude a process was legally binding in order to hold an owner accountable for unfair conduct. Therefore, to successfully avoid Contract A, owners are advised to design a process that is clearly non-binding having regard to all of the above factors.

Can a “this RFx is Non-Binding” statement, on its own, effectively negate Contract A?

When determining whether an RFx is binding, courts will strive to respect the parties’ intention and will look at the express and implied terms of the RFx in the context of the above list of factors. The insertion of a “this is a non-binding RFx and no Contract A is created” clause, as highlighted above, will help support an argument that the RFx was intended to be non-binding, but is not in itself determinative. As we have seen with privilege and disclaimer clauses, even in the face of clear RFx provisions protecting the owner, courts may refuse to enforce the clauses when to do so would compromise the integrity of the tendering process. Since a non-binding RFx provision is really just another type of disclaimer clause, judges will likely subject them to the same judicial scrutiny and uncertainty, particularly if it’s the only factor pointing to a non-binding process.

Owners seeking to protect themselves by using a ‘non-binding RFx’ clause in an otherwise binding RFx should therefore not derive too much comfort from the protection it can offer as courts may, under certain circumstances, refuse to enforce it.

A good idea but not a perfect solution

Given the above, is it a good idea to include a “this RFx is non-binding” in your standard RFx document to avoid Contract A duties? In our view, yes. Like liability disclaimers and privilege clauses, these provisions could provide strategic leverage in negotiations with disgruntled bidders and may be legally enforceable under certain circumstances. In deciding to use these clauses, however, owners should be aware that, while they may be a good idea, if put to the test in court they may not act as a perfect solution to the Contract A problem.

Rather than simply inserting a ‘non-binding’ clause in your standard RFx template, a more effective approach is to work with your legal and other advisors to create a template that is specifically and thoroughly designed to be non-binding with regard to all of the above factors. You can then decide when and how that instrument is to be used, keeping in mind that in some cases Contract A might be the most efficient way to proceed.

Lise Patry, an instructor with NECI, is a lawyer and former business executive with a strong background in technology and more than 20 years of business and legal experience in the public and private sectors. As principal of Patry Law, in addition to general law, she offers virtual counsel services and specialized expertise in contracts, licensing, government procurement and corporate governance. She can be reached in Ottawa at (613) 730-5959 or [email protected].

National Education Consulting Inc.

Phone: (250) 370-0041 Toll Free: (888) 990-7267

[email protected]

Canada Free Trade Agreement Implications

August 3, 2017

FREQUENTLY ASKED QUESTIONS

CFTA Implications

by Lise Patry, B.A.Sc., LLB, ICD.D

Will the Canadian Free Trade Agreement that came into effect July 1 impact my ability to engage with GPOs?

Thanks for this interesting question. It will come as good news to many that in fact the CFTA provisions clarify rules around the use of buying groups

Under the AIT, we only see a reference to buying groups in the Annexes applicable to Crown corporations and MASH sector entities. Covered entities wishing to purchase through buying groups must ensure the activities of the buying groups are carried out in a “manner consistent with this Annex”.

In the CFTA, the buying group provisions apply to all covered entities and additional rules have been added. Covered entities purchasing through buying groups:

no longer have to ensure the procurement is consistent with the CFTA if they have little or no control over the procurement process; and
must publish a notice of participation with the buying group at least annually on their tendering website. The notice must direct potential suppliers to the buying group tender notices website if it is different than the tendering website used by the covered entity.

National Education Consulting Inc.

Phone: (250) 370-0041 Toll Free: (888) 990-7267

[email protected]

BC AGLG Flags Management of Vendor Performance

July 27, 2017

The Auditor General for Local Government in BC has published a series of booklets designed to help improve government performance and complement its performance audit reports. Although specifically targeted to local government in BC, these booklets provide a wealth of information, templates and suggestions that can help guide any Canadian public sector organization.

In a January 2016 publication the AGLG highlights vendor performance management as one of three topics to improve achieving value for money in operational procurement. It discusses key elements of a vendor performance management framework, best practices in managing vendor performance and includes a number of templates that can be adapted for use by any organization. The full document can be accessed at https://www.aglg.ca/app/uploads/sites/26/2017/04/Perspectives-T1-T1-PDF.pdf.

This important report complements PSPP 203 – Managing and Evaluating Contract Performance – and augments many of the examples and templates we cover in that course. As an organization that works with public sector right across the country, we see repeated examples of major procurement and contract mishaps related to incomplete or inadequate vendor performance evaluation. Users and business clients become frustrated when the procurement department ‘continues to engage the poor performers’. Yet the procurement department is not provided with enough (or any) information about performance issues to solve this problem. Outstanding vendors see the less than stellar performers continue to be awarded contracts, so they are de-motivated to keep up their own performance standards. All contract performance then slips to the lowest common denominator, further frustrating the users and eroding value for money from government spending. And as we know, terminating a contractor without adequate performance documentation can lead to expensive and protracted lawsuits, unwanted publicity and consumption of valuable resources that could best be directed elsewhere.

If any of this is starting to sound familiar, you or your staff may want to join us online, starting June 26, for a cross-country cohort in <PSPP 203>. (link to 203 reg for june 26 session) Spanning four weeks, this course takes approximately 3 hours of time per week, and delves into many detailed examples, illustrations and best practices related to this important aspect of the procurement and contract management cycle. The analogy that we often use is that if the RFX process is the ‘wedding’, then the contract management process is the ‘marriage’ – that’s where the hard work really takes place! Determining how performance will be measured and managed must be thought about in the planning stage, carefully described in the RFX and resulting contract, and then implemented as contract performance unfolds.

Pump Procurement Prompts Protest – You Be the Judge

July 18, 2017

On March 15, 2015, PWGS issued a solicitation for multiple frigate pumps on behalf of the Department of National Defence, with a closing date of May 15, 2015. Springcrest Inc. submitted its bid by the deadline and was informed in August that the bid was responsive, but that PWGS had decided to cancel the solicitation and re-issue it with modifications.

On May 17, 2016, PWGS again issued a solicitation on behalf of the DND for the pumps, and included a modification requiring that the pumps be shock tested prior to bid submissions. The original deadline was set for June 27, but was eventually amended to September 30, 2016. On May 26, Springcrest submitted an objection to PWGS asking that the modified requirement be removed, since it was impossible for any manufacturer to meet that requirement. Upon the next extension of the deadline, that requirement was not removed.

In July, Springcrest then asked PWGS if the original equipment manufacturer (“OEM”) was also required to provide certification of shock testing on its pumps. Four days later, the PWGS issued an amendment to the solicitation stating that if the OEM offered a motor different from the original pump, then the OEM must provide shock testing certification; if the motor was the same, the OEM did not have to meet this requirement.

On that same day, Springcrest made a formal complaint to the CITT on two issues: (1) the terms of the RFP were biased in favour of the original equipment manufacturer; and (2) the timing of events in the solicitation process made it impossible for suppliers of equivalent products to meet the process’ requirements. Specifically, there was insufficient time given to bidders to obtain a shock testing certification, meaning that only OEM suppliers with prior certification could apply. Springcrest further submitted that standard industry practice is to perform a shock test on the first pump a manufacturer produces, meaning that it would take a manufacturer approximately a year to be in a position to provide this certificate. When Springcrest filed its complaint, there were only 62 days between bid issuance and the deadline.

Springcrest further argued that if OEM suppliers were not required to provide shock testing certification, the terms of the solicitation were discriminatory as they precluded, in effect, non-OEM suppliers from bidding. The requirement, according to Springcrest, was also contrary to industry standard and previous DND practice: generally, shock testing is done after contracts are awarded rather than before a bid deadline date. Springcrest also submitted that no pumps were currently available that could meet the specification, as the manufacturer of the motors used in the original pump assemblies was no longer in business, and that no company currently owns the rights to make them.

PWGS submitted that requiring shock testing certification at bid closing was not discriminatory because it was part of the government’s legitimate operation. Further, the pumps were urgently needed by the DND in order to service the Halifax class frigates of the Royal Canadian Navy, which does not currently have sufficient working spare pumps in order to fill their demand. Thus the certification was required in order to procure pumps without further delay, as allowing bidders to get the certification after would delay the Navy getting the pumps by several months. PWGS also submitted that generally governments do require this certification at bid closing, despite what Springcrest had submitted. PWGS did submit evidence agreeing with Springcrest’s assertion that it could take a company a year to get shock testing certification.

This agreement was governed by the Agreement on Internal Trade (AIT) and by the Canadian International Trade Tribunal Procurement Inquiry Regulations (Regulations). The Tribunal also consulted Article 1007 of NAFTA and Article X of the AGP, which provide that technical specifications should not be drafted in certain prescribed ways that favour a particular supplier or suppliers. Do you think Springcrest’s complaints are valid? If yes, what remedy would you grant, with reference to subsection 30.15(3) of the CITT Act?

Answer

In Springcrest Inc v Department of PWGSC PR-2016-021 the CITT ruled the complaint was valid, recommended that the DPWGS cancel the existing solicitation and issue a new one, and awarded Springcrest its costs.

First, the Tribunal considered whether Springcrest’s assertion that the amended solicitation was discriminatory, and accepted that the DND had legitimate operational requirements leading to them seeking the pumps without further delay, such as that caused by shock testing certification. Moreover, Springcrest’s evidence did not indicate that PWGS deliberately sought to be discriminatory in excluding suppliers of equivalent products, or of favouring the OEM supplier. Rather, the evidence suggests this was inadvertent. Thus the CITT ruled that this ground of complaint was invalid.

The Tribunal next considered Springcrest’s second complaint, which was that the timing of the events in the process made it impossible for non–OEM suppliers to meet the amended bid’s requirements. Both parties agreed that it could take up to a year to manufacture pumps and have them be shock tested. Thus the CITT found that the timing did have the effect of discriminating against non–OEM manufacturers and that PWGS should have allowed for more time, in the interests of fair competition. Accordingly, this ground of complaint was found to be valid.

Springcrest requested a remedy either of amending the solicitation to remove the shock testing certification requirement, or of re-issuing the solicitation without that requirement. Since the bid period had closed by the time of the CITT ruling, Springcrest’s first suggestion for a remedy was not feasible. The CITT thus ruled that PWGS must cancel the existing solicitation and issue a new one which either removes the contested requirement or allow suppliers sufficient time to provide shock testing certificates before bid closing. Springcrest was also awarded its costs.

National Education Consulting Inc.

Phone: (250) 370-0041 Toll Free: (888) 990-7267

[email protected]

COURSE CALENDAR

Leadership in Supply Chain

July 4, 2017

Leadership in Supply Chain

by Larry Berglund, SCMP, MBA, FSCMA

Presentations Plus Training & Consulting Inc.

Ideas are easy. Implementing them is the challenge.

Leadership in organizational structures is fleeting. Leaders take on the tough tasks and provide a vision and direction for attaining their goals. Managers follow the plan and try to insert efficiencies along the way. In supply chain management we often use the term “leading practices” when in actuality, we are referring to common practices across a sector.

When one organization continues to issue competitive bidding process for services, following the practices of its peers, we consider this to be following a leading practice. When another organization is first in its sector to adopt a vested outsourcing strategy, we are observing leadership in action

Leaders are not satisfied with the status quo. The need to drive innovation is inherent in every leader and thus every industry. Followers value leadership because while they can perceive when something needs to change, they tend not to accept the professional and personal risks associated with driving that change.

Change is perhaps the only true constant – but leaders must articulate a vision before real change can happen. Such a vision does not necessarily come from a brief and illuminating epiphany, but more often from leaders’ abilities to perceive that which is beyond the noise in the market or the confusion in the messages. Leaders instead appreciate nuances during the discovery and presentation of new ideas while accepting a reasonable level of risk. Leaders are also not too humble to draw from successful ideas of others and give credit where due.

What makes a person a leader? First, it is their self-conviction in knowing what needs to be done and their commitment to following that goal. They realize when it is beyond their personal resources to reach their goals without the commitment of others. A leader is less concerned with the how of change, allowing for their followers to utilize their own ideas and energy for carrying out that change. A leader is more focused on the why of change.

Leaders paint the picture of the future and have their audience – their followers – understand how their roles can complement the vision. This aspirational aspect of leadership is concurrent with the inspirational communications within the organization and to its external stakeholders.

Leaders need to create the buy-in. Without followers’ commitment to the vision, success is doubtful or compromised. Buy-in requires credibility, a focus on common interests, shared passions, resilience and an emotional connection created by the leader. People need affirmation that a leader is authentic before they will hear the new message. Leaders anticipate both a certain level of resistance and the occurrence of conflicts. They need to listen to concerns and adequately address them in their action plans. A guiding strategy requires an approach in accord with the organization’s values. Changes in behaviour indicating a stronger alignment with the leader’s vision can provide evidence that the buy-in is taking place.

In supply chains, we see these changes in behaviour when leading practices – such as adopting total cost of ownership – replace pursuing the lowest cost; when public organizations utilize the buying power in procurement to positively affect social and economic development; when targets are set to ensure diversity across supply chains; when we see inclusive opportunities for people who face employment barriers; and when value for money exceeds arbitrary budget limits and considers benefits to the community as a whole. That is leadership. Leadership begins when we start to think outside the books.

Larry has been in the supply chain management field as an author, manager, business trainer, academia, and consultant for many years. Larry has worked in both the private and public sectors. Recently he has been co-facilitating NECI eSeminars, classroom sessions, and online modules. His new book, Good Planets are Hard to Buy is now available on Amazon.com

National Education Consulting Inc.

Phone: (250) 370-0041 Toll Free: (888) 990-7267

[email protected]

Building Trust in the Absence of Integrity

June 20, 2017

Building Trust in the Absence of Integrity

by Gordon White, theconflictjourney.com

I wish to introduce both a general definition of trust I have formulated and the general idea of trusting before looking at some of its variations:

trust (def): a belief in a positive attribute(s) of someone else, and a willingness to rely on that belief although the belief is not fully verifiable

Trust flows out of relationship with others. As we come to know people and have experienced their integrity in various situations, we come to rely on that integrity and therefore trust them. But, what if trust has been lost?

A closer examination of what we rely on may enable us to both better understand trust and begin to rebuild trust when it is lost. We tend to assume that confidence in someone’s integrity is required for trust, but this may not be the case to the degree we assume. It is not only integrity that we may rely on. In any particular situation we might rely as much on one of the following qualities:

competence
consideration
caring
predictability
vulnerability

Below I devote a short paragraph to each of these five qualities, attempting to show that they may allow us to build trust when we are unable to rely fully upon someone else’s integrity.

Trust in a bookkeeper, carpenter, or medical specialist is likely to largely be a reliance on competence and skill more than integrity of personhood. As long as a professional does his or her work for us in a satisfactory manner, we may not be overly concerned about his or her conduct in other areas of life or even how he or she is viewed by peers. In the Speed of Trust, Stephen M. R. Covey highlights the importance of competence as a basis of trust.

Suppose you know that your boss is sometimes dishonest and lacks integrity in other ways. It may be enough for you to know that he or she shows consideration for you and will consult with you over decisions. You can trust that you will be considered even when you don’t think he or she has much overall integrity.

On the other hand, you may have a sibling you find to be inconsiderate (the opposite of the boss). However, at a more fundamental level, you may know through acts of affection that you are loved by this sibling. You know that he or she cares about you and would not intentionally set out to hurt you. You can rely on caring but not on consideration (in the form of forethought or action infused with wisdom).

In Getting Together, Fisher and Brown presented a version of trust that divides trust into predictability and caring. They point out that in the Cold War, the USA and USSR, although not caring about the well-being of the other, had a form of trust based on predictability. As long as each remained predictable to the other, the tension between them remained in balance. Unpredictable behaviour provoked alarm. Legal settlements and less formal agreements often create some predictability over future behaviours. In an antagonistic relationship, if we have assurances about how each of us will predictably behave, we can then set out on a road to building deeper forms of trust.

In the Five Dysfunctions of Team, Patrick Lencioni has promoted vulnerability-based trust as essential on high-performing teams. One key behaviour is the willingness to be open about one’s weaknesses and errors, and to bring them into team conversation so they can be addressed and compensated for. Another needed practice is the willingness to engage in conflict over proposals with the willingness to consider other viewpoints. Being vulnerable with others is an important avenue to building trust.

There are at least three benefits that come from examining what we rely on in a relationship where trust is an important factor:

Firstly, if trust has been broken, we may be able to find one of these five qualities in the other person at a time when we think he or she is lacking in integrity. If we can rely on one of those qualities, we can begin to rebuild trust.

Secondly, if we know what quality we are relying upon, we may be able to find ways of increasing mutual trust, for example, by demonstrating greater predictability or competence to each other.

Thirdly, if we discover that we are relying largely on a quality other than integrity, it indicates that we may not have much evidence of integrity (because we didn’t need to experience integrity in order to trust). In this case we should not be surprised when we encounter lack of integrity. And, in some situations, we should probably be prepared for lack of integrity to show itself.

Gordon White is the principal of Gordon White Consulting in Victoria, B.C. He is a mediator and organizational development consultant who offers team development programs and negotiation training in one- and three-day formats. He also teaches a course in Conflict Analysis and Management at Royal Roads University. Gordon is currently creating an online conflict management course for large organizations. He blogs regularly at theconflictjourney.com. You can follow him on Twitter @valueconflict, and reach him at [email protected] or (250) 389-6231. This post, which originally appeared at The Conflict Journey on March 11, 2016, has been edited for style and is used by permission.

National Education Consulting Inc.

Phone: (250) 370-0041 Toll Free: (888) 990-7267

[email protected]

Living Wage Policies in the Supply Chain: It’s Not a Zero-Sum Game

June 15, 2017

Living Wage Policies in the Supply Chain: It’s Not a Zero-Sum Game

by Larry Berglund, SCMP, MBA, FSCMA

Presentations Plus Training & Consulting Inc.

“If we pay contractors who work for our municipality a living wage, it will cost the taxpayers more money.” This is an urban myth.

What is a living wage?

According to the Canadian Living Wage Framework (CLWF), the hourly living wage rate is based on the cost at which a household can meet its expenses once government transfers have been added and government deductions from wages and taxes have been deducted.

A living wage is defined using several criteria including:

A healthy family of two adults and two children
One child in full-time daycare; one in before- and after-school care
The hours worked between the two parents is 35–40 hours per week
One parent taking evening courses to improve their employment opportunities
Groceries
Rent
Transit passes

A living wage excludes:

Credit card, loan, or other debt obligations
Retirement savings
Owning a home
Saving for the children’s future education
Cost of elder care

AND excludes:

Any costs “beyond the minimal required for recreational, entertainment or holidays”
Any costs “beyond the minimal for emergency or hard times”

Canadian municipalities that have introduced the living wage policy having varying rates according to the cost of living in the various locales.

Table 1

Sample Living Wage Rates by Province and Capital City – per CLWF 2017

Province	General Minimum Hourly Wage	Hourly Living Wage by Capital City
Alberta	$13.60	$17.36
BC	$11.85	$20.01
Manitoba	$11.00	$14.07
Ontario	$11.40	$18.52
Nova Scotia	$10.85	$19.17

There are approximately 65 Living Wage Communities in Canada – and growing. There are hundreds of private sector employers which participate in living wage programs. Why?

It makes good business sense to do so. It’s argued that raising any wage rate increases production costs and the price of selling those goods must therefore increase and your competitors will eat your lunch: higher wages lead to layoffs. But the research shows otherwise. UBC economics professor David Green says that while the latter may apply to teenagers working part time, once you get over the 20-year old age limit employment isn’t really affected. The higher wages contribute to employee job satisfaction and provide those workers with greater economic stability. Every employer faces an affordability factor; however, higher wages do support staff attraction and retention. This leads to lowering the costs associated with hiring and training.

Families receiving a living wage stay within their communities and support local products and services through the redistribution of revenues. These individuals also see an improvement in their self-esteem and in general health – less sick time and medical visits – which in turn saves social costs. Living wage earners, while still considered as lower-income earners, spend more of their increase on essential needs when they receive a higher wage. All the evidence shows that minimum wages, certainly in urban areas, do not meet the cost of living.

Innovation within a living wage business philosophy also considers access to professional development courses, access to in-training staff, or no-cost services for community partners. These ideas can be quantified into a living wage calculation.

Living wage organizations:

The City of New Westminster was the first city to implement a living wage policy for its contractors. In 2011, the city enacted an ordinance for all its contractors to be paid a living wage rate. The living wage criteria is a part of their competitive bid process and is closely monitored for compliance. Living wage rates are adjusted where a contractor is paying some form of economic benefits to its employees. Living wage rates are adjusted annually.

Vancity credit union reviewed its contracts with approximately 1200 contractors across 45 industry sectors. They targeted strategic annual contracts over $250,000 and contracts that typically involved lower wage earners where contracts had lower annual spending thresholds. The latter included personnel agencies, janitorial services, catering, and security services. The financial cost to the bottom line for Vancity to implement its living wage policy was about 1% of its budget. Vancity is one of Canada’s largest living wage employers.

City of Vancouver

In 2017, the City of Vancouver implemented its Living Wage policy aimed at contracts $250,000 per year for ongoing service requirements. The minimum number of hours for these contracts is 120 hours per year per contract. Social enterprises are exempt from their living wage policy.

Living wage criticisms:

Living wage programs are not without their detractors. It is relatively easy to assess the difference in out-of-pocket costs between free market hourly rates, minimum wage, and living wage rates. It appears that the taxpayers – or members of a financial cooperative, for example – are absorbing the difference and do not enjoy a corresponding benefit.

Arguably from a total cost of ownership perspective, it may be more difficult to measure the social benefits between these three wage rates. Putting a cost to building a strong community is as difficult as placing a price tag on improved performance, better employee morale, improved customer service, improved health rates, increased self-esteem, reduced rates of absenteeism, increased staff retention rates, or increased support for local goods and services.

Bottom line – building a healthy and wealthy community is being done by private and public sector organizations through the living wage programs across Canada.

Thanks to Maya Maute, SCMP, Director, Procurement & Contract Management, Vancity credit union for her contributions to this article.

National Education Consulting Inc.

Phone: (250) 370-0041 Toll Free: (888) 990-7267

[email protected]

Governments Making a Difference: Social Impact Investing

May 29, 2017

From simply involving disadvantaged populations to help with aspects of service and program delivery to the public, to the complex, interrelated obligations of Social Impact Bonds, the concept of social impact investing is gaining considerable traction in Canada and globally. In this article, we will focus on the latter, often referred to as “SIBs.”

What Are Social Impact Bonds?

Usually a three-way agreement among government, private investors, and service providers, SIBs strive to provide a stable source of non-government funding so that (typically) not-for-profit agencies are able to deliver programs designed to help create a positive social impact. With financial return to the investors based on achievement of clear and measurable social outcomes over a specified period of time, SIBs and other forms of social financing drive specific results that are beneficial to society as a whole, without the traditional reliance on government funding.

Illustration: Sweet Dreams – New Home for Single Mothers

Objective: Sweet Dreams is a supported-living home for at-risk single mothers in Saskatoon. When single mothers receive housing and other support, they are more attached to their children and less likely to have them go into care. This in turn reduces the costs to government of ongoing support for the children, and ultimately strengthens the fabric of society.

Under the program, at-risk mothers are provided with affordable housing and support while they complete their education, secure employment, or participate in pre-employment activities such as life skills training and parenting classes. The ultimate goal is to help these families transition back into the community, and the specific measurement is the number of families leaving the supported accommodation and staying together for more than six months without re-entering care.

Funding Model: Under the Social Impact Bond agreement between the government of Saskatchewan, Conexus Credit Union, Wally and Colleen Mah, and EGADZ (the service provider for Saskatoon’s Downtown Youth Centre), the service provider receives $1 million from the private investors to achieve the specific social outcome set by the government – in this case, to keep children out of foster care.

Outcome Measurement: Critical to the success of SIBs, return on investment to the investors hinges on the achievement of specific and measureable social impact results to be achieved by the service provider over a specific period of time. In the case of Sweet Dreams, the success of the social outcome will be measured by an independent assessor at the end of the second, fourth and fifth years of the agreement.

This latter aspect of these arrangements is the trickiest, due to the causality issue. Governments across the country and around the world still struggle to measure social outcomes in a precise and defensible manner. And even if the social outcome is achieved, to what degree is that attributable to the program delivered by the SIB agency, and to what degree is it due to outside factors? If the outcome is not achieved within the specified period of time, then the government doesn’t pay out the return to investors. This, in itself, is a major shift for government, given the political overlay.

It is critical to have the right planning, the right parties, and the right expertise when contemplating complex arrangements such as SIBs. Deloitte LLP was the financial advisor on the Sweet Dreams agreement.

SIBs in Other Jurisdictions

It is still early days for SIBs in Canada, although they have been implemented in other jurisdictions such as the UK with varying degrees of success for many years. A quick Google search will uncover different SIBs, such as agreements designed to reduce the reoffending rates of short-sentence offenders, reduce the number of young people entering Pupil Referral Units in the UK, and many more related to returning children from government care to their families, or preventing government placement altogether.

Some Differences between Alternative Service Delivery (ASD) and Social Impact Investing

ASD tends to result in contracts with a single provider, while SIBs tend to fund a portfolio of interventions.
With ASD, the service providers may have trouble accessing working capital and startup funding. With SIBs, the service-provider costs are covered by investors up front.
With ASD, the government usually only pays for success, while the risk and associated costs of unsuccessful interventions are typically borne by the service provider. With SIBs, the risk is borne by the third-party investors.
The ASD contract typically sets a threshold for success, and payment is either made or not made depending on whether the threshold is reached. SIBs generally involve outcome payments that are proportionate to the success.

National Education Consulting Inc.

Phone: (250) 370-0041 Toll Free: (888) 990-7267

[email protected]

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