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Working in a consortium
A consortium allows 2 or more businesses to combine their capabilities when developing and delivering a tender. The primary driver of a consortium approach is that it allows for greater economies of scale, efficiency and effectiveness. A consortium can be made up of delivery partners from different industry sectors and this offers a great source of competitive advantage.
What are the advantages of working in a consortium?
- A consortium lets its partners share relevant skills, experience and expertise in such a way that every business complements each another (i.e. in terms of the tender roles and responsibility, and in relation to service delivery).
- Being in the consortium will give you the opportunity to access partner experiences or competencies that you might not have, and which you cannot afford to 'buy in' just to secure the contract.
- Other business partners will have unique selling points (USPs) that you do not have. They may have the capability to deliver in other geographical areas or may have access to data that can give the tender submission a competitive advantage over other submissions.
- Sharing your expertise and capabilities, via the consortium, can increase your chances of success at tender evaluation.
- Business partners can share development costs, which can reduce overheads and the amount of resources required of each business.
- Risk can be spread across business partners.
What are the disadvantages of working in a consortium?
- You might find that some contractors are not open to engaging in this type of collaboration to secure a specific tender. This means that a lot more effort will be required at tendering stage to identify potential collaborators and explain why collaborating this way will help to win the tender.
- It takes time to develop a consortium. Where time is an issue, a hastily developed consortium may not be effective and may cause problems for the parent businesses.
- To ensure consistency and quality, a consortium will usually require more resource-intensive management while developing the tender and delivering the contract.
- It is likely that legal advice would be needed to ensure that the structure of the consortium or partnership is 'fit for purpose'.
- If one partner fails to deliver then your reputation may also suffer in terms of future tendering. You may also be liable, depending on what partnership arrangements are in place. If you are the lead partner then you may be responsible for 100% of the liabilities.
Questions for consortium partners
- Does each of the collaboration partners have compatible working cultures or similar business values?
- As part of developing the consortium have you set aside enough time to work through problems or issues?
- Have you reviewed your practices and discussed how things will work (i.e. if you win the contract)?
- Do you have to submit 'fit-for-purpose' documentation for all the partners? Are there any difficulties related to documentation (i.e. audited accounts, trading track record, business processes)?
- What contingency plans are in place for dealing with staff changes during the contract?
- What legal structure is your consortium going to take?
- How will you manage disagreements in the consortium? What are the governance arrangements of the consortium?
- How will you manage or allocate responsibilities/liabilities?
- Who owns the intellectual property rights?
- What are the implications if you end up in competition for other tenders?
- What processes are in place for shared learning?