Pre-contract

The hidden cost of going to market too early

Most capital programmes that struggle after award were sent to market before they were ready. The cheapest fix is the one nobody schedules: stopping to ask whether you are.

There is a particular kind of programme trouble that looks, at first, like bad luck. The tenders come back higher than the budget. The winning contractor raises a flurry of early compensation events. The design keeps changing after award. The programme slips before it has really started. Each of these gets treated as a delivery problem, to be managed by the delivery team. In a surprising number of cases it is nothing of the sort. It is the predictable consequence of a decision made months earlier: the decision to go to market before the programme was ready.

The pressure to issue a tender is real and rarely about readiness. Funding has a deadline. A committee wants to see progress. A financial year is closing. An announcement has been made. So the procurement timetable becomes the master, and the question of whether the thing being procured is actually mature enough to price gets quietly skipped. The market is then asked to bid on something half-formed, and it does exactly what you would expect: it prices the risk, hedges the gaps, and waits to recover the rest through change once the contract is signed.

What "ready" actually means

Procurement readiness is not a feeling, and it is not the same as having a procurement timetable. It is a set of conditions that should hold before a programme is exposed to the market. None of them is exotic. All of them are routinely assumed rather than checked.

Is the design mature enough to price? Tendering against a design that is still moving guarantees that the price is a guess and the change account is already open. The market cannot price what is not yet decided, so it prices a version of it and reserves the right to revisit. The right level of design maturity varies with the contract strategy, an early-contractor-involvement model deliberately tenders an immature design, but the point is that the maturity and the strategy must match. A traditional lump-sum tendered against a concept design is a mismatch that delivery will spend the next two years paying for.

Is the scope stable? Distinct from design maturity is whether the requirement itself has settled. A scope still subject to stakeholder negotiation, undecided options, or "we'll firm that up later" is not ready to be fixed in a contract. Every unresolved question at tender becomes a variation after award, at a price set by a contractor who now holds the position.

Are the consents and land in place, or honestly programmed? Planning permission, environmental consents, land acquisition, wayleaves, utility diversions, third-party agreements. These sit outside the contractor's control but inside the programme's critical path. Going to market with major consents unresolved transfers a risk the contractor cannot manage and will therefore price heavily, defer, or claim against.

Are the risks understood and allocated? Readiness means knowing what the principal risks are, who is best placed to carry each, and having that allocation reflected in the contract and the price expectation. Programmes that go to market without that thinking done tend to discover their risks one dispute at a time.

Is the funding actually secure? A tender issued against funding that is indicative, conditional or still being assembled risks either an embarrassing pause between tender and award or an award the organisation cannot stand behind. The market notices, and good bidders price the uncertainty or decline to bid.

Is the organisation itself ready? The least examined question of all. Is there a client team capable of running the procurement and then the contract? Is the governance in place to make decisions at the pace the contract will demand? Is there a Senior Responsible Owner who can actually own it? A programme can be perfectly specified and still fail because the client side has not resourced itself to be a competent counterparty.

The market prices what it is given. Give it a half-formed programme and it will price a half-formed programme, and recover the rest later.

Why the cost stays hidden

The reason this failure mode persists is that its cost never appears as a line called "went to market too early." It shows up scattered and disguised, as a tender premium for risk, as a stack of early compensation events, as post-award design development, as a programme that never recovers its original dates, as a client team firefighting change instead of managing delivery. By the time those costs are visible, the decision that caused them is months in the past and nobody connects the two. The procurement looks like it succeeded, a contract was let, on time. The bill arrives later, and under a different heading.

There is also an institutional bias at work. Issuing the tender feels like progress; pausing to ask whether you are ready feels like delay. A team under pressure to show momentum will almost always choose the visible step over the prudent one. Which is precisely why the readiness question is rarely asked by the people closest to the programme, and why an independent check has disproportionate value: it gives the people under pressure permission to confront a question they already half-know the answer to.

The cheapest gate in the whole programme

A procurement readiness review is short, inexpensive, and sits at the single highest-leverage point in a capital programme, the moment before you commit the market. It works through the conditions above honestly, gives a clear verdict, and where the answer is "not yet," it says what specifically needs to be true before the tender goes out. Sometimes the verdict is "proceed." Often it is "proceed, but fix these three things first." Occasionally it is "stop", and that is the most valuable answer of all, because the cost of a short delay before market is trivial against the cost of a two-year dispute after it.

Going to market is the most irreversible step in the early life of a programme. Everything before it is cheap to change; everything after it is expensive. It is worth being sure, and it is worth having someone independent, who has no stake in the timetable, be the one to ask.