One of the key competencies that leaders and managers in government organisations require is commercial acumen.  This has been the subject of many blogs I have written in the past through our BRS blog as well as through our easygovernment blog: What would you do if this was your business? The criteria critical for great decision making & Commercial acumen training – it just makes dollars and sense.

One of the common questions I get asked is: how do I assess my level of commercial acumen as a government leader?  Where am I currently at and what do I need to do to improve my commercial acumen?  I have put down some points below to question and assist with assessing this for you or others in your government organisation that deal extensively with service providers:

  • I am aware of my consultant, contractor and other service providers business models and commercial practices
  • I have worked in the private sector as a contractor or service provider and understand their commercial practices
  • I understand where my service providers incorporate risk into their pricing when preparing tender submissions
  • I allocate and transfer risk appropriately between my government organisation and our service providers
  • I structure conditions of contract to reflect openness and transparency in my service providers costing’s right from the start of a procurement practice
  • I understand how to manage variations with my service providers in an open and transparent manner
  • I am confident to commercially negotiate with my service providers pre and post a tender
  • I don’t always evaluate tenders based on lowest price but rather based on what is going to drive value for money over the whole of life of the project
  • I understand the difference between being cost sensitive, budget-sensitive and value for money driven
  • I feel that I am receiving value for money from my service providers
  • We are clear on what value for money means for our government organisation and what this means for our service providers
  • I am able to manage scope creep with my service providers in a fair and transparent manner
  • I understand the difference between risk management and risk allocation when dealing with service providers
  • I understand how to transfer risk when appropriate to my service providers to achieve value for money
  • I allocate costs between my government organisation and my service providers in a way that drives a more competitive price
  • I understand different procurement models for major projects and large contracts and how to apply them when appropriate
  • I understand large project procurement practices and the criteria used in order to effectively apply them to different scenarios
  • I am clear on role clarity on my projects between my organisation and my service providers
  • We report regularly on value for money on our projects and deliver on it
  • We undertake lessons learnt on our projects with our service providers and apply the learnings back on to future projects

If you can’t answer most of these points above in the affirmative, then commercial acumen is a skill you must learn and develop.  I believe that this one skill will become more important for government leaders in the future as the level of scrutiny from the community and stakeholders for government organisations to deliver value for money outcomes continues to increase.

 To support this point, a recent UK study of Local Government asked which skill was going to be critical in managing their council in 2020. The results from this question can be seen in the following graph:

Commercial stats

[Source]

More information:
The easygovernment coaching program now has brand new modules in commercial acumen and major project procurement that include tools, templates, articles, blogs and more. Training courses on commercial acumen can also be run in conjunction with membership of easygovernment that explore the key concepts and practices that are explored in the points above.

We are also providing a free webinar in December taking you through how your service providers operate commercially, their business models, and how to use the right commercial qualifiers and assumptions, risk allocation and procurement models to to deliver better outcomes.  We will also outline why commercial acumen is a must have for any government leader. That’s all we can tell you for now – stay tuned!

Please feel free to register your interest by emailing us here or calling us on +61 8 8215 0332.