It is suggested that Whitehall wastes £70 million a year by struggling with complicated financial models to help officials decide on awarding contracts and grants.
A group of interested individuals and organisations – the FAST Standards Organisation – has produced guidelines on financial modelling which are said to be FAST – flexible, appropriate, structured and transparent.
The group is also now pleased that their work has “gone mainstream” as they comment on their LinkedIn page, with a good article on the BBC News website which summarises the issues raised by the FAST campaign: “Financial modelling: is the government wasting millions?” by Gavin Stamp, a BBC political reporter.
As well as there being interest in this approach within Whitehall, the news report also illustrates its use by Edinburgh City Council in appraising options for its Zero Waste projects, for example to improve support to residents to recycle more items. SOFTER PRACTICES
In addition to standarding the various spreadsheets to calculate discounted cash flow, net present value, and so on, it would also be useful to include an analysis of some of the ‘softer’, unwritten or tacit cultural aspects of financial modelling within procurement.
For example, there have been some workplaces where the tacit convention was to avoid awarding a contract to a bidder if the contract value was more than 10% of the bidder’s turnover. The reasons given were to avoid risks of instability and dependency.
However, the other risk is that smaller firms and social enterprises lose out to big name companies, despite instances where using the smaller, local organisation may bring far higher added value. Links:
http://www.fast-organisation.org
http://m.bbc.co.uk/news/uk-politics-21355200