Delivery Model Assessment: An Eight-Step Process for Insourcing, Outsourcing and Hybrid Options

Purpose: A process-led guide to the eight-step Delivery Model Assessment used to compare in-house, market and mixed delivery options.

A process-led guide to the eight-step Delivery Model Assessment used to compare in-house, market and mixed delivery options. This matters because public procurement decisions are rarely isolated events. A choice made during planning can affect competition, affordability, service quality, supplier behaviour and the ability to manage the contract later. The strongest approach is therefore to use the source guidance as part of an end-to-end commercial process, with clear ownership and evidence rather than as a document that is completed after the key decisions have already been taken.

Quick summary

• The guidance describes the DMA as an analytical, evidence-based approach to deciding whether to deliver a service in-house, buy from the market or use a hybrid solution.
• Public sector options can also include wider public bodies, the third sector, joint ventures and government companies.
• The assessment should be proportionate to project criticality, complexity and size.
• The guidance sets out eight steps, beginning with framing the challenge and ending with piloting and implementation.
• Strategic and operational criteria are assessed alongside whole-life cost through a Should Cost Model.

What the guidance means in practice

The source material gives several anchors for that process. The guidance describes the DMA as an analytical, evidence-based approach to deciding whether to deliver a service in-house, buy from the market or use a hybrid solution. Public sector options can also include wider public bodies, the third sector, joint ventures and government companies. The assessment should be proportionate to project criticality, complexity and size. These are not interchangeable statements: some describe statutory or policy requirements and others describe recommended commercial practice. Teams should identify which category each requirement falls into, apply it to the organisation and procurement in scope, and keep a record of the judgement. Where guidance from 2021 or 2023 predates the Procurement Act 2023, its commercial principles can remain useful, but current legislation, regulations and current statutory guidance take precedence on legal process.

The practical value becomes clearer when the remaining guidance is read alongside the project lifecycle. The guidance sets out eight steps, beginning with framing the challenge and ending with piloting and implementation. Strategic and operational criteria are assessed alongside whole-life cost through a Should Cost Model. The initial assessment is ideally completed around Strategic Outline Case stage and then iterated as evidence develops. In day-to-day terms, this means the buyer should be able to answer three questions at any approval point: what outcome are we trying to achieve, what evidence supports the proposed commercial approach, and what will need to be managed after the decision is made? If those answers are weak, more analysis is normally more useful than adding another layer of narrative to an approval paper.

A practical process to follow

A proportionate process can be built into existing governance. The steps below are deliberately practical. They are not a substitute for the detailed source guidance, legal advice or local standing orders, but they provide a useful structure for a procurement or commercial team.

1. Step 1. Frame the challenge, objectives, timetable, stakeholders and governance. Record any assumption that could change the conclusion and when it will be reviewed.
2. Step 2. Define the service, components, delivery options and data needs. Keep the analysis proportionate to the value, risk, novelty and criticality of the requirement.
3. Step 3. Set strategic and operational evaluation criteria before judging the options. Capture the source evidence and name the person accountable for the next decision.
4. Step 4. Build the whole-life cost view for the shortlisted delivery models. Record any assumption that could change the conclusion and when it will be reviewed.
5. Step 5. Conduct the evaluation and align cost and non-cost findings. Keep the analysis proportionate to the value, risk, novelty and criticality of the requirement.
6. Step 6. Document the recommendation, approvals and implementation or pilot plan. Capture the source evidence and name the person accountable for the next decision.

What good looks like

Good practice is visible in the decision trail, not only in the final document. A reviewer should be able to follow the line from the service need, through market and cost evidence, to the route, evaluation, contract terms and management arrangements. Where several functions contribute, the file should show who owns each decision and where challenge occurred. The same principle applies to handover: useful assumptions, models, KPI definitions, risks, supplier information and approval conditions should move into mobilisation and contract management instead of being left in the sourcing archive. This continuity is particularly important for long-running public services, where staff can change but the organisation remains accountable for the outcome.

Recommendations for procurement teams

The following recommendations are suitable for teams that want to embed the topic into normal ways of working rather than create a parallel compliance process:

• Use a cross-functional core team.
• Define the current service before comparing future models.
• Agree criteria and weightings before a preferred option emerges.
• Retain evidence behind every material judgement.
• Iterate assumptions as service data and market evidence improve.
• Plan transition and capability-building as part of the recommended delivery model.

Common pitfalls to avoid

The most common problems are usually process failures rather than a lack of templates. Watch particularly for the following:

• Starting with a predetermined answer.
• Comparing only full insourcing and full outsourcing when hybrid options may be credible.
• Treating the DMA as a supplier evaluation.
• Allowing a single cost number to overwhelm material strategic differences.

Easy-to-read takeaway

For delivery model assessment: an eight-step process for insourcing, outsourcing and hybrid options, the core discipline is to start early, connect the analysis to a real decision and preserve enough evidence for the next stage of the lifecycle. The source material should help teams make better decisions, not merely produce more paperwork. Before acting on a live procurement, confirm the current version of the Procurement Act 2023, regulations, Procurement Policy Notes and any organisation-specific approvals or delegations. This is especially important for thresholds, notice duties, exemptions and policy requirements that can change over time.

Source basis

Primary source used: Delivery Model Assessments Guidance Note, May 2021. Related articles in this collection also draw on the other supplied Cabinet Office, HM Treasury and Procurement Act materials where the topics overlap.

This article is general procurement support content. It should be read alongside current legislation, statutory guidance and your organisation’s own governance and legal advice.