I always say that politicians cost taxpayers billions.

And not because of their salaries, the salaries of their friends and advisers, or the favours repaid while they are in office—or afterwards.

No.

Because of their incompetence and lack of common sense.

For example…

Never announce the marriage while you are still negotiating the prenup.

This is common sense.

Still, politicians with billions in their hands throw common sense in the bin.

We even have well-documented cases.

With papers…

And cameras.

August 2015.

Scotland’sFirst Minister, Nicola Sturgeon, visited the Ferguson Marine shipyard

Speeches.

Smiling politicians.

And a very important announcement:

Ferguson Marine was the preferred bidder for a £97 million fixed-price contract to build two new ferries.

Excellent.

Except for one small detail...

Yes… exactly, the contract had not been agreed.

The negotiations were, according to the public authority responsible for buying the ferries, “far from concluded.”

CMAL even warned that publicly announcing Ferguson Marine would:

“Materially reduce their negotiating hand.”

Not my words…. My English is not that good, nor my vocabulary that precise.

Theirs.

Then another small detail.

Ferguson Marine confirmed that it could not provide the full Builders Refund Guarantee required by the tender.

Con dos eggs.

This was not a decorative requirement. It protected the Government if the shipyard failed to deliver the ferries.

CMAL considered the risk so serious that it recommended rejecting the bid and starting the procurement again. But the Government had already announced the winner.

There had been speeches.

Photographs.

Promises about jobs.

The political champagne had already been opened.

Walking away was still legally possible.

Politically?

Slightly less convenient.

And a good proponent always knows when the client cannot afford embarrassment.

From that moment, the Government was no longer negotiating against another bidder.

It was negotiating against its own press release.

Guess which one was more expensive.

Ministers accepted the risks.

The contract was signed.

The guarantee was weakened.

And the £97 million “fixed-price” contract became considerably less fixed.

The project suffered design problems, delays, claims and disputes.

Ferguson Marine entered administration.

The Scottish Government nationalised the shipyard.

The first ferry was delivered six and a half years late.

The second is now expected around eight years late.

And total expected costs have moved from £97 million to more than £400 million.

Of course, not all was caused by the announcement.

But the announcement changed the negotiating balance.

I say this to all my public side clients… Until the contract is signed, the Government must retain a credible ability to walk away.

Without that, there is no leverage.

Only hope.

And hope is rarely a good commercial strategy.

So, here is PPP’s rule #71:

Never let the minister celebrate before the negotiation is finished.

Use this information at your own risk.

Before opening the champagne, you may want to give me a call.

The link is below.

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