Thursday, December 31, 2009

WTO Bidding Process Considered Harmful

I've long believed that the WTO bidding process for IT projects is an expensive, wasteful process. By its very nature, it forces a waterfall process, which the CHAOS and other studies (despite their shortcomings) have shown produce a consistent 60 to 70% failure rate.

Of course it is mandated by law, so everyone has no choice but to play along. But at what cost? Finally, this issue is getting some attention. Today, documented the many shortcomings of the WTO Process (here is a translation from Google):
  1. The losers invest at least as much effort in bidding for the project as the project is worth. WTO projects are a net loss for the economy.
  2. Companies involved in preparing the RFP are not allowed to bid - all the context information is lost, so quality is lowered and the costs increase.
  3. Government agencies can and do write the RFP so that only one supplier actually has a real chance of winning the project.
  4. The process is vulnerable to price-dumping which a low price dominates other considerations (e.g. quality).
To this discussion, I would add: the WTO Process values features over business value.

 In the Spring of 2008, I led a proposal effort in response to an RFP from a Swiss Government Agency (who shall remain nameless). The Christmas season was very important to the revenue of this agency. Our proposal offered the advantage that they would have a working (though incomplete) system in time for Christmas of 2008 instead of 2009 which would let them generate ROI a year earlier. The response: "Our decision criteria do not require operation this year, so your advantage, while interesting, is not something which can affect our decision." AFAIK, their 'Hoflieferant' (established supplier) got the contract.

Is there a better way? Yes I think so. I have written about how an agile bidding process might work. What we need is an agency who wants to look for a better way. We could define and try out an agile bidding process. Any one interested? Drop me a line...