Why do RAID logs harm negotiations? And how can RADIO improve them?

 

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Let me first define what RAID logs are.

 
They are Risks Assumptions Issues and Dependencies logs
 

Where did they come from?

 
From the experience of competitive tendering introduced in the Local Government Act’s of 1988 and 1992. Supplying organizations realised they were taking on many risks that they had no previous experience with. The services had not been fully documented. Thus, RAID logs arrived. They have become part of Prince 2 and Agile project methodologies.
 

How are they used?

 
They often mitigate against a successful negotiation. We all understand the concept of a win-win negotiation or growing the pie. RAID logs go against this concept. Commercial managers; lawyers; project managers; finance managers; spend their time trying to minimise the risks. These individuals all seek to set up clear boundaries in any proposal or contract. In doing so they reduce the pie. They seek to find clear ways of charging extra by narrowly defining the work. Such individuals spend their time excluding risks from bids. They make their tenders subject to the customer meeting certain performance assumptions or dependencies. Of course, they will exclude specific issues. This is very harmful. In seeking to design and deliver certainty, they can cause resentment. Often the parties do not feel they are in a partnership, rather an abusive relationship.
 
They can enhance the profitability of a project. In bid reviews, I have seen teams identify 20 to 30% expected gains through change controls. Such sums identified through the raid log and not shared with the Client before contract signature is likely to have a detrimental effect on the relationship.
 

Why is this a problem?

 
It creates a culture of conflict ” Oh! We did not do that because we were dependent upon you, ; it’s going to cost you an extra X”. It does not take too many such events for the parties to start to retreat and take adversarial positions.
 
Government realises if this is to change it requires organisations to overcome the people element of the process:
 
  • all projects suffer from people not wishing to give bad news
  • over-optimistic belief of what can be completed and by when
  • overconfidence in forecasting. Such forecasting is often based on historical evidence. This is unlikely to be true in an unknown future environment.
  • narrowing of risk assessment’s
  • sponsors can suffer from a little confirmation bias. They dismiss negative data country to their position
  • People’s ability to ignore red flags and push on to “just get it done”
  • the ability for groupthink to take hold
 
It is for that reason Government has been active in trying to improve its commercial cohort.
 

How to improve the situation by using a RADIO?

 
We have talked about the risk of groupthink. In our experience those associated with a RAID log are trying to identify everything that can go wrong:
 
  • They are seeking ways to identify risks and pass them off to another party.
  • Any offer they make is conditional on many assumptions.
  • They highlight issues with the project. They encourage management by avoidance.
  • They seek to place upon the customer as many dependencies as possible.
 
This is all very negative and if we are to avoid groupthink and this negativity, we need to change the group. By adding opportunities you create a RADIO log. This creates a positive attitude and reduces the inherent negativity. Individuals are no longer required to focus solely on identifying problems. They are also required to consider and capture the opportunities problems provide. Introducing other people to the team (product managers/sales/marketing) changes the dynamics. Such individuals tend to be more positive in their outlook and less risk-averse than the traditional members of a RAID log team (Lawyers/Commercial/Project Managers/Finance Managers).
 
It is time to move beyond the use of the RAID log as a means to transfer risk to the other party. Consider a model that seeks the active participation of both parties in the contract. A cloud-based portal enables all parties to collaborate in a shared workspace. You can work together on reducing the risks, assumptions, dependencies and issues while exploiting the opportunities. Similar in many ways to relational contracting.
 
HEIs are more collaborative than many commercial organisations. Thus, more likely to be an excellent cultural fit for such an approach.

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