Strategic commercial interventions: assurance playbook

Commercial Intervention SMART Objectives and Objective Bank

What is it?

Projects can fall short of meeting their goals due to a lack of consensus on the definition of success. SMART (Specific, Measurable, Achievable, Relevant and Time-Limited) objectives use a specific set of criteria to help ensure that objectives are clearly defined and attainable within a certain timeframe.

In general, for each intervention we would expect to see:

• Clearly articulated objectives setting out how the outcomes for the asset can be achieved for the strategic commercial asset, both in the short and long term.
• Objectives are aligned with national and regional policy objectives and the priorities set out in the National Strategy for Economic Transformation.
• A series of SMART objectives may sit underneath strategic policy objectives set out and agreed with ministers.
• Clear review points in the process for re-assessing the validity of objectives to ensure continued relevance.

To ensure objectives are set in a way to allow them to be tracked, assessed and evaluated, Intervention Objectives should be set ‘SMART’, This gold-standard objective development methodology set out in the HMT Green Book and referenced in the Scottish Public Finance Manual (SPFM) should ensure that objectives are designed to comply with ‘SMART’ principles which are defined as being:

• Specific and clear to avoid ambiguity.
• Measurable through the inclusion of a quantifiable metric such as a figure or milestone achievement.
• Achievable, avoiding reference to externalities outwith Scottish Governments (SG) control.
• Realistic, understanding the company in question and the environment in which it operates to ensure objectives set are relevant.
• Time-limited, setting a targeted end date to focus efforts and review success or failure.

An example of a SMART objective might look like this: Our goal is to [quantifiable objective] by [timeframe or deadline]. [Key players or teams] will accomplish this goal by [what steps you’ll take to achieve the goal]. Accomplishing this goal will [result or benefit].

What is its purpose?

The HMT Green Book states that “clear objectives are vital for [the] success” of a project, and that “a lack of clear objectives negates effective appraisal, planning, monitoring and evaluation”.^[1]

These principles are highlighted further in the SPFM where it states that, “Objectives and outputs should be set out clearly and relate explicitly to policy or strategy. They should be defined so that it can be established by evaluation after the event whether and to what extent objectives have been met. It is important that objectives are not described in such a way as to exclude options. Ideally they should be specific, measurable, agreed, realistic and time-dependent (SMART).”^[2]

It is therefore crucial that when SG intervenes to provide financial support to a business considered to be of strategic significance to Scotland, that clear and measurable objectives are considered. Officials should define clear and assessable objectives early in any intervention process to ensure everyone within the project team, including external stakeholders such as the board/management of the company subject to SG’s intervention and any external commercial advisors are able to easily understand their role in contributing to the success of the objectives set.

When should it be used?

It is crucial when SG intervenes to provide financial support to a business considered to be of strategic significance to Scotland, that clear and measurable objectives are considered at the initial intervention point including the decision-making process on acquiring an asset, investing more money into the asset and ultimately divesting the asset.

Officials should define clear and assessable objectives early in any due diligence process. This will help to ensure everyone within the project team, including external stakeholders such as the board/management of the company subject to SG’s intervention and any external commercial advisors can easily understand their contribution to achieving the objectives.

In line with HMT Green Book methodology a workshop should be held to set objectives with relevant stakeholders, specialists and decision-makers in attendance. Officials should agree specific review points through the intervention lifecycle to measure progress and whether the objectives originally agreed are on course to be met or whether there is a change in direction within the intervention which may result in new objectives being agreed. Chapter three of the Monitoring Framework sets out guidance on monitoring including coverage of monitoring objectives.

Useful Resources

The Green Book (2022) - GOV.UK (www.gov.uk)

Annex A: Business Investment Framework - Scottish Public Finance Manual - gov.scot (www.gov.scot)