Category Archives: When to Collaborate

How To Manipulate Business Cases


There is a very old story about an accounting student who, before graduation, must sit an examination in front of the board of accountants.  The student has performed brilliantly in their exam so far and is asked a final question by the chief examiner, “what is two plus two?” The accounting student immediately responds with the correct answer, “what do you want it to be?”. 

The architects of business cases and cost benefit analyses (or benefit cost analyses) often apply the same philosophy.  That is, they will provide an answer to their customer, sponsor, or supervisor that is a fantasy, simply so that they can give their customer what they want. This phenomenon is rife in the public sector where businesses cases regularly overstate benefits, ignore key risks and dis-benefits, disregard credible competing options, cherry pick data, and adopt creative discounting methods to get the desirable answer as opposed the correct answer. In this blog, we explore techniques to manipulate business cases and economic analyses to get the answer we want.


When presenting options to customers, management consultants around the world are familiar with the strategy of providing only three options. The first option is the cheap and nasty alternative that provides negligible value (sometimes labelled the ‘do nothing’ scenario). This option is immediately rejected. The second option is hideously expensive and has an implementation timeframe of decades. This option will also face immediate rejection.  The third option, of course, is the option that the customer or sponsors want selected.  This is why framing the business case is so important.  For example, if the public sector outcome is to improve traffic congestion, cater for urban sprawl, or improve access to amenities for citizens then there is a plethora of potential solutions, not just one megaproject.  Nonetheless, the solution space is often constrained to a single popularist option, or more cynically, the option that creates jobs in marginal electorates. If the sponsor or responsible minister has a specific solution in mind for political or ideological grounds, then we need to accept that the answer has already been selected. This answer may be very far away from the best answer, nonetheless we can craft business cases to justify this answer by simply framing the business case to a subset of solutions that exclude all other credible options. This is especially important if those other options have higher benefit cost ratios or higher net present values.  This is relatively easy to achieve by simply not mentioning the other competing options, claim that these other options are inconsistent with government policy, or any other contrived excuse.  This will allow you to justify the selection of almost any course of action you want.

Cherry Picking

In some circumstances you may be forced to explore competing options that could jeopardise the selection of your preferred solution. This is where cherry picking provides opportunities to manipulate the process.  Every business case incorporates assumptions about future states, risks, issues, and opportunities. The key is to select information from datasets that increase the benefit cost ratio for your desired option and decrease it for all competing options.  For example, if your preferred option creates substantial future benefits with reduced carbon pollution then it is imperative that you select a social cost of carbon at the upper extreme using the Intergovernmental Panel on Climate Change (IPCC) price of $1,472 per tonne of Carbon as illustrated in Table 1 below. Conversely, if your preferred option is carbon emissions intensive, then you should select the lowest figure, such as the current market price of carbon.[1]

Table 1 Carbon Values under IPCC Calculations (2010 prices).[2]

‘When manipulating business cases, it is vital to cherry pick data to bolster your preferred option.’

Opportunities exist to cherry pick data in many other areas of your economic analysis such as travel time savings, cost of lives saved, construction disruption costs etc.  This provides almost limitless opportunities to get the answer you want. 

Discount Rate Manipulation

If you are fortunate enough to be in a jurisdiction where treasury does not specify a discount rate to be used in your economic analysis, then opportunities abound to exploit the numbers to get the answer you want. To illustrate, consider a project that will generate economic benefits of $100 million per annum over a thirty year period. The following two discount rates yield very different present values:

Option 1.  3% discount rate – Present Value = $1.96 Billion

Option 2.  7% discount rate – Present Value = $1.24 Billion

If your desired project has benefits that span decades, then you should aim to use the lowest discount rate that is plausible.  Conversely, if you have costs or disbenefits that eventuate into the far future, then you should select the highest discount rate you can get away with.  If you are forced to use a discount rate provided by treasury, then there is always an option to use nominal prices and ‘accidently’ use a real discount rate. This will overstate the benefits of your economic analysis considerably. With luck, such errors will not be detected until after your project is approved and considerable costs have been expended.

Artificial Credibility

Large, complex projects involve high risks and significant uncertainty. Business cases for such projects will be fuzzy to say the least.  Despite these limitations, we should aim to create the impression that the business case is highly credible, robust, and precise.  Augustine’s, 35th law embodies this approach:  

“The weaker the data available upon which to base one’s conclusion, the greater the precision which should be quoted in order to give the data authenticity.”[3]

Consequently, we should present data to as many significant figures as possible and avoid any reference to confidence levels.  Large complex projects typically have cost and schedule probability distributions that resemble beta distributions with very long tails (large positive skewness). This means that the 90th percentile cost and schedule estimates will be substantially greater than the expected 50th percentile values. Such figures will terrify those accountable for funding such projects and therefore the worst case estimates should be omitted from our business case. 

Wider Economic Effects

Wider economic effects are very difficult to estimate and should not normally be included in benefit cost ratios.  Nonetheless, some jurisdictions do allow the inclusion of wider economic effects as part of an ‘adjusted benefit cost ratio.’[4] This allows us to manipulate our business cases further. Make sure your wider economic impact assessment overstates the benefits and ensure that no wider economic dis-benefits are included. Broadening the scope for the economic analysis also provides opportunities to bolster your business case, especially when it comes to jobs creation opportunities. Where an economy is operating at full employment, job creation claims in business cases are often bogus.  A project that engages thousands of employees means that those resources cannot be used elsewhere. [5] In other words, your project is merely moving jobs from one area to another with no net benefit.  Do not be dissuaded from such logic; however, as politicians salivate at the prospect of spruiking their economic credentials and their perceived ability to create jobs. Make sure your business case has job creation front and centre even though such claims are spurious.


If your best efforts to ‘cook the books’ and manipulate the numbers to get a benefit cost ratio greater than one does not eventuate, then all is not lost.  Simply add the costs and benefits of your project to a related project which has a high benefit cost ratio. By blending multiple project costs and benefits within a portfolio, you can manipulate the numbers so that in aggregate a programme or portfolio of several projects has a combined benefit cost ratio greater than one. Whilst this appears to be an outrageous approach that no sensible person would pursue, this is precisely what the Australian Capital Territory Government did in their Stage 2A light rail business case.[6]  Despite this individual project having a benefit cost ratio of only 0.6, the project was blended with the previously completed stage to create the illusion of a positive net present value. Audaciously, the government presented the benefit cost ratio (BCR) of this single project as 1.2.  As observed in a subsequent audit report for this business case, such an approach is misleading:

‘blended BCR is novel; no example of blending the result of a past investment with a future investment is known’ ‘[this approach] has no relevance to the [Light Rail Stage 2a] investment decision because the Stage 1 costs are ‘sunk’, i.e. cannot be recovered.’[7]

With luck, your business case may not be scrutinised by auditors and blending your benefit cost ratio with another project may go unnoticed. 

Transparency, Scrutiny and How to Avoid It

Flyvbjerg and Bester advocate for independent auditing of cost benefit forecasts.[8] Some jurisdictions recommend business cases be made publicly available.[9] Having your business case critiqued could undo all the hard work you put into fudging the numbers and you should therefore do everything imaginable to avoid such scrutiny.  This can be achieved by contaminating your business case with as much commercially sensitive material as possible (ideally in every figure and paragraph). This will mean that any redacted version of your business case is meaningless and cannot be effectively verified if it is made publicly available.  This may not thwart independent auditors but will hopefully slow down the review process until it is too late.


The techniques available to manipulate business cases are many and varied.  We can cherry pick data, include serious errors of omission, and make many assumptions that allow us to justify almost any course of action. Those readers with a moral compass would not stoop to such skulduggery, rather you will use the strategies identified in this blog to recognise where business cases are being manipulated and hopefully put an end to such activities.  Bogus business cases result in billions of taxpayers’ dollars wasted and lost opportunities. This situation should not be tolerated

Though we have focussed on public sector business cases, there is also ample opportunity to cook the books in the private sector, especially with taxation treatment. This brings us back to Hitchhikers Guide to the Galaxy canon, wherein Disaster Area’s chief research accountant’s thesis, General and Special Theories of Tax Returns, it is shown that, “the whole fabric of the space-time continuum is not merely curved, it is in fact totally bent.[10]


[2] Adapted from IPCC (2018) figure 2.26 – Dominique Bureau,  Alain Quinet,  and Katheline Schubert “Benefit-Cost Analysis for Climate Action” Journal of Benefit-Cost Analysis Vol 12 issue 3,  26 November 2021.

[3] N. Augustine Augustine’s Laws (1986).

[4] See e.g UK Department of Transport ‘TAG UNIT A2.1 Wider Economic Impacts Appraisal’ (2019)

[5] Queensland Government “Cost Benefit Analysis Guide – Business Case Development Framework” (2021) p 17.

[6]  ACT Government- Major Projects Canberra ‘City to Woden Light Rail: Stage 2a City to Commonwealth Park Business Case’  (2019) p 123

[7] Auditor General’s Report CANBERRA LIGHT RAIL STAGE 2A: ECONOMIC ANALYSIS REPORT NO. 8 /2021, p37

[8] Flyvbjerg, Bent and Dirk W. Bester, “The Cost-Benefit Fallacy: Why Cost-Benefit Analysis Is Broken and How to Fix It,” Journal of Benefit-Cost Analysis, October 2021, pp. 1-25.

[9] Infrastructure Australia ‘Delivering Outcomes – A roadmap to improve infrastructure industry productivity and innovation’ (May 2022) [Recommendation 4.1.1.] p14

[10] Douglas Adams, The Restaurant at the End of the Universe (1980).

Early Supplier Engagement

“When you talk, you are only repeating what you already know. But if you listen, you may learn something new.”- 14th Dalai Llama.

Group Collection by Justin Blake (Creative Commons)


In the procurement lifecycle many organisations engage with their suppliers to seek information on the supplier’s ability to deliver and at what cost.  This is normally achieved with the release of a request for tender or request for quote.  Such strategies may be suitable where the customer has a very clear idea of what is needed, what market conditions are like, and where procurement risks are modest. When we move to more complex and riskier procurement activities, early supplier engagement is vital. This month’s blog explores why we need to engage early with industry and how to do so.

Smart Buyer Perspectives

A ‘smart buyer’ recognises that they will not always have all the answers. Vann’s framework explores the following questions that should always be asked from a smart buyer:

  • Why buy,
  • What to buy,
  • When is it needed,
  • How much should we pay,
  • How to buy,
  • Who to buy from, and
  • What was bought?[1]

Even for the most mature organisations with substantial internal capability and capacity, these critical questions cannot be effectively answered without engaging with the market.  At what stage though should we engage with industry? The Canadian Government Smart Buyer Procurement framework lists early engagement as one of their four essential pillars or procurement and recognises that early engagement ‘should begin as early as the needs identification stage.’[2] A smart buyer recognises that early engagement can reap benefits but what are these benefits?

Benefits of Early Engagement

Early engagement offers immense opportunities to explore the art of possible, ensure expectations are realistic, motivate[3] and prepare suppliers, and ensure business cases are credible.  The following list (though not exhaustive) explores these themes:

  1. Reduce asymmetry of Information.  Customers are not omnipotent and do not have a complete understanding of what the market can or cannot provide.  Early engagement allows for industry to inform requirements, identify opportunities, and validate critical assumptions.
  2. Promote realistic expectations. Optimism bias is rife in complex projects.[4] Unless we engage early with our suppliers then our initial business cases will be devoid of realistic cost, schedule and performance estimates.
  3. Reduce Bid Preparation Effort.  Transactional approaches to procurement often involve the release of a request for tender (typically the week before Christmas) that invariable comes as a complete surprise to industry.  Early engagement allows industry to inform the customer, prepare and respond faster to the RFT, and with more credibility.
  4. Reduced negotiation effort. Where contract requirements and conditions are developed unilaterally, with no industry engagement, expect negotiations to be protracted and adversarial.  Ensuring industry can provide feedback on requirements and commercial terms will take a substantial amount of pain out of negotiations.

Pursuing early engagement with industry also sets the tone of the future relationship. In such circumstances, the customer is highlighting that they value industry input, are seeking reciprocity, and are focused on delivering value rather than seeking the lowest price.  This is far more likely to promote the collaborative behaviours we need for successful delivery.

Strategies for Early Engagement

The Canadian government offers some useful examples of early engagement, including:

  1. Requests For information (RFIs);
  2. industry days;
  3. informal discussions;
  4. online questionnaires;
  5. online collaboration tools;
  6. focus groups; and
  7. one-on-one supplier consultations.[5]

More resource intensive and interactive strategies include:

  1. Design Competitions,
  2. Exploring and trading off requirements through Cost as an Independent Variable (CAIV),
  3. Funding rapid prototypes, and
  4. Engaging in collaborative project definition studies

These latter approaches normally require engagement with industry through some form of contract prior to entry into a head contract once requirements, budgets and schedules have been set. There are no limitations on who can be engaged here and funding multiple suppliers in a competitive early development phase may be valid.  

We are not limited to just selecting one of the above strategies.  We can choose more than one to help us converge on a solution. We need to remind ourselves that the solution is not just based on requirements but also the, “terms and conditions, pricing structure, performance metrics, evaluation criteria, and contract administration matters”. [6]  For example, we may exploit design competitions, CAIV, and rapid prototypes to define requirements, then use one-on-one discussions, questionnaires and industry days to refine commercial terms. 

Challenges with Early Engagement

Early engagement can introduce probity risks, resource challenges, and competition risks.  Probity risks arise where we are dealing with multiple suppliers and there is a great risk of ‘bid contamination’.  Similarly, customers need to be wary of adopting proprietary solutions that can hinder future competition.  Resource challenges arise as funds need to be available very early in the procurement lifecycle. The UK Government makes this point clear, “with early engagement though comes the requirement for early investment.”[7] There must be a compelling argument for engaging resources early in a program.  Competition issues may arise where we need to focus our efforts on a small cadre of suppliers rather than every participant in the market.  Where we are investing in rapid prototypes, CAIV approaches, or project definition studies a decision must be made as to who will be invited to participate. This will likely involve selection on ‘non-price’ criteria which opens the selection process up to criticism. 


Early engagement will pay substantial dividends if managed correctly.  Suppliers are far more likely to have a thorough understanding of business practices, technologies, and market trends in their core business when compared to customers.  Early engagement allows for early adoption of innovative solutions and value creation.  Developing a suite of contracts, commercial models, specifications, and requirements in isolation to your strategic suppliers will only erode value.

[1] Vann ‘Institutional Dimensions of the Government’s “Smart Buyer” Problem: Pillars, Carriers, and Organizational Structure in Federal Acquisition Management’ (2011).

[2] Canadian Government, Public Services and Procurement Canada ‘Smart Procurement’

[3] UK Defence Procurement Policy Research paper 03/78 (2003).

[4] Bent Flyvbjerg, Nils Bruzelius, and Werner Rothengatter “Megaprojects and Risk: An Anatomy of Ambition” (2003).

[5] Canadian Government Opcit.

[6] Cohee, et al ‘Early Supplier Integration in the US Defense Industry’ Journal of Defense Analytics and Logistics Vol. 3 No. 1, (2019).

[7] Gansler et al ‘UMD FINAL Report LMCO An Analysis of Through-Life Support – Capability Management at the UK’s Ministry of Defense’ June 2012.

Collaboration? What’s in it for me? (Part 2)

In the previous article I described the benefits and the challenges of being collaborative including the effect of Collaborative Overload described by Rob Cross, Reb Rebele and Adam Grant in their 2016 HBR Article Collaborative Overload.  The question is what do we do about it?

Unfortunately, in the unusual times we live in require all of us to be more collaborative through familiar and established means (e.g. phone calls and emails) to newer means (e.g. videoconferencing such as  Zoom, WebEx, Microsoft Teams, etc. and collaboration tools such as Google G Suite, Slack, Atlassian Jira, Microsoft SharePoint/Teams, etc.).  While many of us collaborate in order to achieve the outcomes expected of us, this is underpinned by the fear of “I have so much of my own work to do but what if I don’t collaborate?”.  With global unemployment leaving entire market sectors and economies in ruin is now really the time to be seen as “uncollaborative” and “not a team player”?  With many working from home and increased availability for ‘catching-up’ increases the likelihood and severity of collaborative overload.  So what is the solution?

As with many things it is about balance.  Balancing the need of the individual to complete their own work (their output) with the collective need to collaborate to achieve the organisational outcome.  It is about setting both individual and collective objectives.  In a previous article (see Inputs, Outputs and Outcomes – Part 1 and Part 2) I discussed the differences between being individually accountability for an output while being collectively responsible for an (enterprise) outcome as one method for distinguishing between these two perspectives.  Here “Enterprise” refers to the collection of organisations and individuals that are collectively responsible for delivering the enterprise outcome.  The enterprise may be tightly defined and managed through commercial documentation, or loosely organised through an unwritten understanding of individual roles and responsibilities in delivering the enterprise outcome.

Just as important as setting and reporting on individual and collective performance is organisations and managers publicly encouraging, rewarding and celebrating those who achieve this balance.  

As way of a sporting example, Article VI(E)(10)(a) of the Collective Bargaining Agree (CBA) between the United States Major Baseball League (MBL) and the player’s union outlines 6 factors that may be considered in making a determination of the player’s value as follows:

  1. the player’s “contribution to his Club (including but not limited to his overall performance, special qualities of leadership and public appeal)” in the preceding season (often called the platform year);
  2. the player’s “career contribution”;
  3. the player’s past compensation;
  4. the salaries of comparable players;
  5. any “physical or mental defects” of the player; and
  6. the Club’s recent performance, which can include “[l]eague standing and attendance as an indication of public acceptance.”

As you can see value here is a balance of individual (player) and collective (Club) performance and over the longer term recognising there may be short-term ups and downs.

Unfortunately, for many organisations, this is rarely the case.

So my suggestion for those wanting to incentivise collaboration is to encourage, reward and celebrate those who achieve this balance by assessing value as both individual and collective contributions. By highlighting both requirements we are making it clear that individual success is not enough; rather success is defined as a combination of both individual and collective success.

To finish my story I started with, the person from my former company was fortunately very collaborative.  He not only succeeded personally but helped others in the company succeed regardless of location or position resulting in a “champion team”; and who doesn’t want to be a part of that!

When to Use Collaborative Contracts

In this blog we will explore when we should, and should not, pursue collaborative contracts.  We must remind ourselves that collaborative contracts are not binary structures involving either zero collaboration at one of the spectrum, versus an incorporated joint venture or alliance at the other end.  Collaboration can take many forms and is a scalable concept that must be tailored to the activity at hand.


“Virtually all of the collaborative projects out-performed most defence projects” – UK NAO Good Governance ‘Measuring Success Through Collaborative Working Relationships’ (2006).

Firstly, we only pursue collaborative relationships where the benefits outweigh the costs.  That is, we have a motive for collaboration.  Cost and benefits though need to be considered in as broad as terms as possible and not just in terms of contract price.  Collaborative benefits may include:

  • improved prospects for repeat business
  • continuous improvement and innovation opportunities
  • increased likelihood for supplier participation
  • enhanced satisfaction for all employees
  • improved flexibility
  • less time wasted on disputes and issues management

Similarly, we also need to explore the ‘hidden costs’ associated with collaboration, which may include:

  • increased time and effort in tender evaluation and tender development
  • increased efforts in relationship monitoring and cultural alignment
  • supplier lock-in
  • increased likelihood of opportunistic behaviours.[1]

In summary, we first need to craft a robust business case when considering collaborative endeavours and ensure this business case is continually evaluated.


Where collaboration is able to realise superior benefits,  then we should explore whether we have the means to engage in collaborative ventures.  We should ask ourselves if we have the right culture, appetite to risk, and internal capabilities to realise collaborative benefits.  The United Kingdom National Audit Office offers the following ‘gold standard’ for enabling positive working relationships. 

UK National Audit Office Gold Standard for Sustaining the right Cultural Environment[2]

The Australian Department of Defence Capability Acquisition Sustainment Group, in their Collaborative Contracting Better Practice Guide, also provides guidance to help ‘buy-side’ organisations gain insight into their ability to pursue collaborative outcomes through the use of a contract maturity model, which asks the following questions:

  1. Suppliers favour your organisation because it “always keeps its promises”, treats suppliers fairly, promotes trust, and minimises the cost of doing business.
  2. Both parties openly discuss “interests and desired outcomes” throughout the procurement lifecycle commensurate with the strategic importance of the relationship.
  3. Each contracting party understands the other’s goals and how to help achieve and quantify them
  4. The contract is viewed as a tool to plan and track business relationships
  5. Procurement practitioners are viewed as valued facilitators and integrators of stakeholder interests

Asking yourself, ‘do I have the capacity and capability to achieve these gold standard or contract maturity model outcomes’ will help you understand whether collaboration is the right step for your organisation.  If the answer is no, then leaders can take remedial action. Future blogs in this series will explore strategies to shift organisation capabilities and culture to better enable collaborative outcomes.


With the means and motive for collaboration established we now explore whether the right opportunities exist for collaboration.  The opportunities for collaboration will be driven by the commercial model, geography, and market power of buyers and suppliers.  Collaboration will only work where both buyers and suppliers are committed.  Opportunities for collaboration may be limited in the following circumstances:

  • A transactional environment where buyers and suppliers operate on a ‘take it or leave it basis’.
  • Inflexible governance arrangements exist (especially in the public sector) which inhibit the full range of relational outcomes. This is especially the case where compulsory competitive tendering rules are too onerous.
  • Key leaders and managers are unavailable to support collaborative outcomes.
  • Pre-existing and inflexible contract structures prevent the full range of collaboration outcomes. An example of this would be ‘government to government’ contracts such as Foreign Military Sales.

Even where some of these adverse features exist, there still may be opportunities to engage in some level of collaboration. 

When not to use collaborative contracts

Collaborative contracts should never be used where an organisation lacks the means to effectively implement them.  This may stem from an inappropriate organisational culture or lack of commercial maturity.  If an organisation is mostly ‘transactionally’ based, where disputes and issues are normally resolved by resorting to ‘lawyers at twenty paces’, then that organisation will be unlikely to engage in effective collaborative relationships. 

As we previously discussed, we therefore need to ask ourselves some very hard questions about our internal capabilities and the means to engage in collaborative ventures.  This could involve benchmarking the commercial maturity of the organisation through tools such as the International Association of Contract and Commercial Management  (IACCM) Capability Maturity Model or undertake a collaborative contract skills assessment under Supplier Relationship Management processes.  Organisations may also rely on performance scorecards to benchmark their relationships and skills in collaboration.

There is also an overwhelming temptation to pursue collaborative contracts to mask systemic failures in an organisation. When facing failure, the allure of collaboration may be seen as a quick fix.  Simply sticking a partnering charter on an existing contract and hoping for the best will unlikely create value.  Positive relationships and collaboration are necessary but not sufficient for success. That is, organisations must still make sure they address the key hygiene factors before they attempt collaborative contracts. This includes ensuring the following are addressed:

  • A clear and shared organisational vision
  • Leadership commitment
  • robust commercial skills
  • A mature Project Management framework

The evidence is clear that collaboration can deliver fantastic benefits both between and within organisations.  We need to ensure we implement collaborative contracts for the right reasons and understand what barriers exist to successful implementation. Future blogs will explore collaborative contract case studies of where things have gone well and where things have failed.

[1] Hikan Hakansson and Ivan Snehota, ‘The burden of relationships or who’s next?’, (11th IMP Conference Proceedings, Manchester, 7-9 September 1995), 522-36.

[2] UK NAO “Driving the Successful Delivery of Major Defence Projects: Effective Project Control is a Key Factor in Successful Projects” HC 30 Session 2005-2006 p7.