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A roadmap for effective commissioning in human services

A roadmap for effective commissioning in human services

Before adopting a commissioning model in health and human service organisations, these issues should be considered.

Liz Forsyth

Global Chair of Government & Public Sector and Global Lead for Human & Social Services

KPMG Australia


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Effective commissioning in human services has enabled better outcomes for citizens and systems in many jurisdictions. For example, a review of commissioning across government in England lists increased cooperation between partner organisations, improved efficiencies, improved standards of service delivery, reduction in waiting times, better engagement of stakeholders, and in some cases improved outcomes for service users. 

However, the realisation of outcomes and benefits expected from commissioning are not easily achieved. Different sectors, client bases, stakeholders, and environments present different challenges and levels of maturity. These include:

  • gaps in capability of both staff and service providers
  • a lack of support systems to execute and manage the change
  • a lack of alignment of relevant service delivery components, including policy frameworks that overlap with or are affected by commissioning
  • the potential to destabilise the pool of providers, especially where a few major providers supply a range of interdependent services, or where present provision is a poor match for population needs.

This article provides a roadmap for the effective adoption of a commissioning approach in health and human service organisations, based on the global experience of KPMG member firm practitioners in this area.

The points listed below will not necessarily solve all the challenges related to commissioning, but will help leaders of organisations trying to adopt commissioning to identify their top priorities.

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1. Commissioning must support the vision and strategy of the organisation and sector

Whether to commission or not, the organisation’s approach should be dictated by a range of factors, including:

  • Alignment with the organisation’s overarching strategy and how the approach contributes to objectives. 
  • The organisation’s position within the broader sector; whether it can shape the market or work within its parameters.
  • Why it is commissioning and the outcomes it intends to achieve.

If the commissioning approach does not align with the direction of the organisation and sector, it is highly likely that it will fail.

2. Commissioning is not a panacea

Commissioning, when used as a strategic planning approach linking resource allocation with assessed needs, has a strong rationale. It is logical to use evidence of need and best practice to underpin government interventions, rather than funding on the basis of historical patterns.

However, depending on the maturity of the sector and the organisation, using a complex commissioning approach may not be the right way forward. 

For example, an organisation that is unsustainable is unlikely to benefit from a complex commissioning strategy. Other transformational options such as merger or acquisition, restructuring and optimisation, or other commercial partnership arrangements may be more helpful.

In addition, where organisation and sector arrangements do not require a complex approach to achieve high quality outcomes, it does not make sense to introduce one. Commissioning must therefore be applied where it is most appropriate, and where it has the greatest chances of success in achieving desired outcomes.

3. The market must be ready

The market must be sufficiently mature to respond to commissioning in the sector or a new commissioning approach. Organisations should consider a review of market maturity, including the regulatory environment, funding mechanisms and quality requirements, as mandatory. In addition, the commissioner should assess whether service providers can respond appropriately. In some cases, this may require the commissioner to stimulate, or develop the market.

If the market is not ready for a new approach, imposing a commissioning framework is likely to fail. Providers may not have the capacity or capability to respond to the new approach, or may be unable to provide services in the innovative way that the commissioner expects. This can lead to a complex commissioning arrangement that ultimately sees no change in service delivery but a substantial increase in administrative costs, or worse, a lack of provider engagement with the commissioner, rendering the whole process ineffective and wasteful.

4. Approach commissioning as a transformational change

Commissioning is not a process. While there are many technical aspects to commissioning processes, the ‘softer’ parts of this process are as, if not more, important. Commissioning involves a change in mindset, culture and behaviours, which will require change to people, processes, technologies, and infrastructure.

A thoughtful approach to planning, managing and monitoring the adoption of a commissioning approach is therefore required, including the potential use of:

  • a project management office;
  • a change management strategy which identifies and mitigates the magnitude of change required; and 
  • a staged implementation approach which seeks to create evolutionary change.

5. Capability and leadership are essential

Implementing and achieving success through commissioning processes is difficult. It requires a substantial amount of specific technical knowledge across a range of subject areas. This includes population-needs identification, contract development and management, and negotiation and stakeholder engagement skills.

Strong leadership is required to drive the process forward, bring stakeholders together with competing interests, and manage a team that is capable of developing and instituting a commissioning approach. Leadership must also hold the process to account and define priorities across the sector and/or region.

A lack of effective leadership and capability can put the whole commissioning process at risk, and increase the likelihood of substandard outcomes.

6. Communication

Commissioning comes with a reputation, preconceived notions and differing interpretations.

“Isn’t commissioning just outsourcing?”

“Isn’t commissioning just a new word for procurement?”

Staff may perceive risks to their jobs and others may fear that commissioning will lead to widespread outsourcing of public services, diversion of resources into ‘making markets’, and erosion of public service values and culture. Service providers and partner organisations may be concerned about the impact on the market, competition, and tendering process.

Effective communication is required with staff, management, service providers, clients, and the broader sector to dispel myths, create a common language and understanding, and manage expectations of change and timing.

7. Collaborate and co-design

Effective commissioning requires collaboration and partnership with service providers, adjacent sectors and customers themselves. The commissioning approach must get buy-in from all stakeholders and agreement that potential changes are achievable and sustainable.

This requires engagement with all stakeholders to understand the key challenges associated with service delivery 'on the ground', and the critical success factors for any new approach. The commissioner needs to understand:

  • Will the approach be effective for the consumer?
  • Is the market ready to deliver to the requirements? 
  • What will be the impact of the new commissioning approach on stakeholders and consumers? 
  • How will stakeholders be able to adopt the new approach? 
  • What are the key risks associated with the new approach?

By engaging with stakeholders appropriately, the commissioner can make sure the approach reflects the needs of the sector, providers and the community, maximising the chances of success.

8. Design the process to drive behavioural change and innovation

The opportunity to reshape and redesign services is one of the key benefits of creating a new commissioning approach. This will require behavioural change to instil new ways of working.

The approach should incentivise the changes and innovations it wants to promote within the sector. Incentives can encourage greater collaboration, higher quality services or new and innovative delivery methods. The incentives or performance measures of staff should also be realigned to the commissioning approach.

9. Collect data-based evidence

Achievement of outcomes is at the heart of commissioning approaches and outcomes-based funding is often synonymous with commissioning. However, to understand whether outcomes are being achieved, it is essential that the appropriate data is being collected. Achieving defined outcomes often requires collaboration between service providers, and therefore an ability to share consumer data. This means that data collection must be robust and fit for purpose, but also that the appropriate infrastructure must be available to facilitate data sharing while adhering to privacy and other policy requirements.

10. The commercials are really important

Once a commissioning approach has been agreed, the framework designed and stakeholders are engaged, the contractual arrangements that hold providers to account become critical. Commercial arrangements must be clearly defined to make sure providers deliver services in the way they were intended, and that the intended outcomes are achieved.

Appropriate commercial skills are imperative to develop contracts that will detail appropriate incentives, performance targets and the scope of services. In addition, providers must be held to account throughout the contract period through appropriate contract management. Poorly designed contractual arrangements can lead to unintended outcomes, the wrong incentives and significant cost to the commissioner and consumers.


Commissioning is not an easy exercise and the priorities above show that there are a range of considerations to improve the chances of effective commissioning. In addition, commissioning as a way of delivering services in the health and human services sector is becoming increasingly complex as we understand what produces the best outcomes for communities, and the incentives available to guide providers to achieve these outcomes. Commissioners must be at the forefront of the latest evidence of what works, and constantly adapt and reconfigure how they commission to achieve the best outcomes for their communities and society as a whole.

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