Complex outsourcing projects fail at setup, not at signature
When a big outsourcing contract goes wrong, the post-mortem usually points at delivery: the supplier underperformed, the relationship soured, the costs crept. But the May 2021 Approval Processes guidance note starts from a more uncomfortable truth. Experience across government shows that early decisions can set projects up to fail, and that the moment of maximum influence is before the commercial strategy is even fixed. That is why the guidance makes one deceptively small change for complex outsourcing: it puts commercial experts in the room at the Project Validation Review.
The cheapest assurance you will ever get
A Project Validation Review happens at a very early stage of the project lifecycle, before strategic options are fully developed. That timing is the whole point. Challenge received at PVR costs a few uncomfortable conversations. The same challenge received at Full Business Case costs months of rework, and challenge that never arrives at all can cost a decade of contractual pain.
The guidance note is explicit that the PVR is designed to support as well as challenge. Reviewers bring a cross-government view that no single department can have: which markets are strong, which delivery models have worked elsewhere, where volumes assumptions have unravelled before. Departments that treat the review as a hostile gate rather than free consultancy are leaving value on the table.
Do you even know if your project is complex?
The strengthened process only applies to complex outsourcing, and the indicators are worth memorising: first generation outsourcing, planned transformation of services, a limited market or government as the only buyer, and services or assets not well understood internally. Notice what these have in common. They are all forms of uncertainty about things the department itself controls or should know.
The mechanism for identifying these projects is the commercial pipeline. Departments flag candidates, Cabinet Office commercial teams decide in conjunction with HM Treasury spending teams, and there is an appeal route if a department disagrees. In practice, that means a weak pipeline is not just an administrative gap. It is a way of accidentally opting out of support your project probably needs.
What most teams get wrong about the questions
Look at the commercial discussion topics the guidance lists for a PVR: delivery model assessment decisions, market engagement, market capability and strength, internal capability and accuracy of information, pilots and proof of concept, volumes, and TUPE. None of these can be answered well in the week before the review. They are the product of months of groundwork.
The same is true at the later gates. At OBC the assurance team wants to see pricing mechanisms, risk transfer, KPIs, requirements structure, a Should Cost model and bidder financial standing. At FBC it is the Should Cost model again, low cost bid bias, supplier financial stability, cash flow and benefits realisation. Teams that discover these lists late end up reverse-engineering evidence. Teams that know them from day one simply collect it as they go.
Keep talking after the review
The report lands within five days of the review, and the SRO owns the action plan that follows. But the guidance is clear that the commercial conversation should not stop there. Central commercial teams remain a resource through OBC and FBC, and the departments that get the most from the process are the ones that keep the dialogue open rather than re-engaging only when the next gate looms.
One government, talking early and often, is the whole philosophy of this note. It is a short document, but its discipline is the difference between projects that are set up to succeed and projects that spend years paying for their first six months.
The takeaways
- The window of maximum influence on a complex outsourcing project closes before the commercial strategy is set.
- A well maintained commercial pipeline is how complex projects get identified and supported early.
- The PVR discussion topics and the OBC and FBC evidence lists are known in advance: collect against them from day one.
- The PVR report arrives within five days; the SRO must convert it into a tracked action plan.
- Treat central commercial teams as ongoing consultancy, not a gate to survive.
Want the full breakdown?
The complete explainer covers the key facts, the requirements in detail and a practical action list, free and printable in the Procurement Library.