The media has a seemingly endless story when it comes to the development of Adani’s Carmichael coal mine project in Queensland. Originally touted to be the world’s largest coal mine project worth approximately $21 billion, it has drawn immense controversy about its planned economic benefits, financial viability, requests for government subsidies and loans, and its expected environmental impacts. To make the story more interesting, the project includes a variety of stakeholders, including opposing political parties at both state and federal levels, as well as an Indian based multinational that will be mining Australian resources at a time when the topic of nationalism is globally significant.
While you’ve probably seen a mix of articles from the media ’bashing’ one (or multiple) of these stakeholders about the endless negotiations and backroom ‘deal making’; as a company that works with some of the largest companies in Australia on their major contracts, we thought it would be worthwhile shining some light on some of the influences that might be extending the negotiation process. This article touches on three factors that will be impacting the progress of the Carmichael negotiations:
- Differences in cultural values, communication, and negotiation styles between Australia and India
- Size and complexity of the project
- Complex stakeholder environment
It’s rare for organisational structures and operating models to adequately communicate roles and responsibilities of business units and staff, including how they should collaboratively work together to deliver better outcomes for the business. This gap, and the subsequent silos formed and friction that occurs, is extremely evident in most Procurement and Operations relationships.
The expectations of Procurement (or Supply) Functions have transformed in previous years – once established as a purchasing office to provide rigour over company spend, they’re now required to move beyond simple process governance and demonstrate considerable value in all supply based decisions.
Does your Procurement Function have the capability to deliver on your expectations?
…Unfortunately, you may have the wrong people for the job.
If you’re asking “so what”?”, read through the examples of when ‘Procurement’s gone bad’, and think about what it would mean for you and your organisation if you made it onto this list.
We are often told to simplify our businesses; however, how we go about implementing this strategy can result in a new level of complexity and cost to your organisation. Read more
We all know that poor negotiation skills equals poor commercial outcomes. While we often do everything we can to deliver the best result for our business, we often fall short of the optimal result, as we rarely stop to think understand what the other party is thinking.
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Our experience has been that businesses are great at understanding where they have been but not always good at considering the future. Now, this doesn’t mean that you have to be a fortune teller but instead, readjust your gaze and ask “what if the past is not an indicator of the future?” Read more
The team at Acquire believe that Should-Cost Models are one of the most underutilised tools in getting the most from your supply arrangements. Whether it be used as a tool for negotiating a new service arrangement with a supplier, or as a way to validate that the price your organisation is paying for an existing arrangement is fair, having the skills and know how to develop a Should-Cost Model is extremely important where capacity and capability is often sourced from suppliers.
It’s become increasingly important to have the skills to analyse and visualise data to aid in business discussions. We know that the relationship needs to change between Procurement, IT, Finance, and Operations teams in the way they interact with each other to discuss the value and cost drivers of the business. Read more
Our clients often raise the same issues in regards to their major services arrangements.
Whether it be: Read more
Why, in 2016, are we still using paper documents and PowerPoint presentations when discussing products and services and their associated costs?
This is the question that I proposed to the team last week.
At Acquire, we have a favourite quote being “The future is out there, it just not evenly distributed” and with that in mind, we took on a challenge to see how we could use new technology to visualise and interact with contract and spend data. Read more
Have you ever wondered why your services contract is just not working properly? Why the incentives you put in the contract are not delivering the desired outcome? The reason is most likely due to an area of study called contract theory and this year, the Nobel Memorial Prize in Economic Science was awarded to the economists Hart and Holmström for the development of contract theory.
These prize-winning economists have provided valuable theoretical tools for understanding real-life contracts as well as potential pitfalls in contract design.
Is there something we can learn from this as contract owners and apply to services contracts? At Acquire, we think so.
Mining safety has come a long way in Australia and now is at a point where the safety cultures of some of the Australian miners are considered leading practice in the world. As mining operators continue to improve productivity and reduce their bottom line, mining services providers remain paramount for delivering business outcomes.
One common question we get from our operator clients is What should be done to ensure Safety is paramount in a Mining Service relationship? What are the roles of the supplier and the operator and what’s the best way to promote a safety culture when designing the mining services contract?
Last year, we were asked to help with a mining services contract which involved the production of over 3mtpa (Million Tons Per Annum) of product. The operation was based in regional Australia for one of the world’s largest mining companies.
Below is a brief overview of the problem and the 5 lessons that we learned.
Last week I was discussing fraud and corruption in business in Australia with a friend who works in Kordamentha’s Forensic division. I was staggered to find out that even in today’s world with systems with checks and balances, most businesses over $1B in revenue lose almost 10% of that amount ($100M) each year to theft. This “theft” includes fraudulent activities, corruption, and simple theft of goods. PWC’s Global Economic Crime Survey/ Australia Report identified Procurement Fraud in the top 5 of all economic crimes, with 30% of Australian respondents experiencing this type of fraud in the 24 months leading up to the survey, 7 % above the global average.
The team at Acquire Procurement Services recently attended the Harvard Law School Negotiation and Leadership Program in Boston, Massachusetts. Run by a consortium based at Harvard University, the program examined core decision-making challenges, analysed complex negotiation scenarios, and provided a range of competitive and cooperative negotiation strategies to be used in both private and public negotiation environments.
Acquire Procurement Services attended the global MINExpo 2016 (Sep 26-28), held once every four years in Las Vegas. The MINExpo featured 1,900 exhibitors from around the world showcasing cutting edge mining products and services and attracted over 44,000 attendees from 130 countries. The MINExpo also featured education sessions from world-leading experts on topics ranging from the commodity market outlook to best practice in various mining practices.
The team at Acquire Procurement Services attended the Harvard Law School Negotiation and Leadership Program in Boston, Massachusetts last month. Run by a consortium based in Harvard University, the programme was designed to accelerate participant’s negotiation and leadership capabilities. It examined core decision-making challenges, analysed complex negotiation scenarios, and provided a range of competitive and cooperative negotiation strategies to be used in both private and public negotiation environments. Read more
In this current economic climate, companies are leaving no stone unturned in their quest to reduce cost. But is the solution to saving millions contained within the folds of a paper toy designed for children?
Brisbane (Australia) based company, Acquire Procurement Services thinks so.