“Procurement is often involved in buying the ‘what’ very efficiently – but they’re missing the point if they’re not engaged in the ‘why.'” - Andrew Quincey
If we can’t agree on what value is, how are we going to deliver it?
In this episode of Art of Supply, I interview Andrew Quincey. Andrew has worked in both the private and public sectors, and he works with the Leeds University Business School in the U.K.
In December, Andrew published an article in the Journal of Public Procurement, “Achieving Value for Money Equilibrium.” In it, he discusses the need for equilibrium between effectiveness, efficiency, and economy, and the incentive we have to get it right: substantially better outcomes.
Accountability or Abdication
In Andrew’s experience, value is often handled the same way as quality and safety.
“Organizations talk about quality, and then what happens is they appoint a quality manager, and then it becomes their accountability, rather than quality is down to everyone. And it's the same with safety,” he pointed out.
“I feel a bit what's happened is that value is sort of headed towards the procurement space and therefore, ‘oh, it's down to procurement to get value for the company.’ But it's not. It's down to everybody to be involved in the value chain. And therefore, I think the narrative has become skewed because of that towards achieving an efficient outcome.”
By assigning procurement primary responsibility for delivering value, organizations get more of what procurement is best at: efficiency. There is certainly value in efficiency, as there is effectiveness and economy, but it does not equal value on its own. To take that one step further, objectives focused on driving and capturing efficiency may offer a disincentive to consider the bigger picture, which is where value thrives.
That is why Andrew challenged the traditional ‘value for money’ narrative in his article. In order to include effectiveness, procurement and the business need to understand why something is being done, or why resources are being committed, just as much as how much they will cost.
Driving Outcomes Beyond the Margins
In Andrew’s terms, efficiency is doing something well, and economy is buying something well. If effectiveness, which captures the ‘why,’ is allowed to follow downstream from the other two, it has almost no chance of impacting the eventual outcomes. He proposes that effectiveness should come first so that the reason for making decisions and taking steps is always focused on why something is being done.
“Why am I doing something? If you don't do that efficiently, you spend a load of money, more money than you need, getting what you want,” Andrew explained. “If you spend more time on efficiency, you might get something cheap, but it doesn't deliver what you want. And often if you talk to politicians, and particularly in public procurement, the challenge you get is: ‘I gave you all this money, and I didn't get what I want.’ That's because everyone is focused on the efficiency outcome of it, and not the effectiveness, or I spent too much money getting what I wanted, and surely it shouldn't have cost this much.”
Although we’re talking in terms of order of operations, there also has to be an equilibrium between the three dynamics. Reaching a point where that is carried out in a procurement project will take a change in mindset. This starts with a healthy skepticism towards the usual process of solidifying requirements and specifications.
“They used to have a term [in the automotive industry] which is ‘when you build it, when you translate the business requirements into the specification, you lock in 70 to 80% of the cost,’” Andrew said. “Therefore, if you take 5% out of that, you're only playing at the margins, you're not playing at the big changes that you could make to cost by engaging in the ‘why’ - exactly to your point.”
When we apply these principles to public procurement, the opportunity to go beyond the margins isn’t just about financial responsibility or even efficiency; it translates very quickly into massive amounts of value created for the public good.
Achieving ‘value for money equilibrium’ is not about adding another layer of analysis or complexity to procurement; it is about shifting where and how we engage. When procurement is brought into the conversation early enough to shape the ‘why,’ not just execute the ‘what,’ it unlocks the full potential of the value chain.
That requires organizations to stop treating value as a handoff to procurement and instead embrace it as a shared responsibility. Only then can effectiveness, efficiency, and economy reach equilibrium, delivering not just lower costs, but outcomes that truly meet the needs of the people they were intended to serve.