Developing

Report
Eyre Region
Roadmap
Workshop Agenda
Rob Ackland
0477 370 201
[email protected]
Chris Newman
0412 318 384
[email protected]
Steve Gillis
0403 603 929
[email protected]
Confidential
1
Agenda
 Introductions
 Context
 Program Objectives
 Roadmap Common Themes
 Governance risk assessment
 Capability & capacity development – collaboration opportunities
 LGAP support and development
 Spend Analysis & Category Opportunities
 Spend analysis overview
 Identify potential collaborative opportunities
 Consolidate and prioritise potential action plan
 Program governance, resourcing and implementation
 Agree next steps
Context
Regional Procurement Development Program
Objectives & Process
Program Objectives:
 Make sustainable savings & create efficiencies
 Stimulate economic development
 Improve probity and reduce risk
 Build staff and organisational capability in procurement
 Strengthen regional collaboration
Joint Council
Kick-off
Data
Collection
Individual
Council
Workshops
Detailed Joint
Spend
Analysis
Opportunity
Analysis
Workshop
Regional
Roadmap
Development
and
Validation
Final
Roadmap
Workshop
Progress
Reviews and
Support
4
Roadmap Common Themes
 Governance risk assessment
 Capability & capacity development
Discussion: collaboration opportunities
Levels of procurement maturity
Centre of Excellence
across all expenditure
Procurement foundations in
place with improved controls
Some functional and category
strategies in place
Level 4
3
•Level
Influencing
theAdvanced
business
Largely uncoordinated
procurement with gaps in
• Transactional
compliance
• Professional
procurement
Level
2
Developing
• Order placement
Level 1
Basic
Emergent
Focus on meeting legislative
requirements
© PMMS Consulting Group
6
Maturity Assessment
External Focus
Strategic
Procurement
Internal Focus
7
Key Areas of Opportunity
• Significant potential for savings
External
– Introduction of strategic procurement practice
– Establishment of new co-ordinated council contracts
• Better use of aggregated sector contracts
• Establishment of regional arrangements
– Improved and standardised procurement/ supplier documentation and process
– Improved contract management practice
Internal
– Reducing volume and cost of low-value transactions
– Better use of technology
– Organisational co-ordination of purchasing and procurement
• Opportunities to improve probity and reduce risks
– Introduce and ensure the consistent use of good practice processes and
documents
– Establish simple compliance tracking and accountability
8
ArcBlue Procurement Model
Strategy

Planning
and analysis

Execute
Develop
sourcing
strategy
 Form project
team
 Develop
specification
 Internal
analysis
 Analyse
strategic
options
 Supply Market
analysis
 Set evaluation
criteria &
weightings


Go to Market
 Prepare
documentation
 Issue RFx
Manage

Evaluate
responses

Negotiate
contract
 Evaluation
 Negotiate
 Shortlist
 Agree and
sign contract
© ArcBlue Consulting
 Contract
Management
Plan
 Clarifications
 Monitor
performance
 Receive
responses
 Benefits
realisation
 Risk analysis
Procurement
Strategy
Manage
supplier
relationship
Approval of
recommendations
Compliance Gaps:
Sourcing Phase
Activity Area
Risk
Consequence
Select Quote /
Tender
Conflict of interest not
managed / documented
Perceived or actual bias/
Ombudsman/ ICAC risk
inadequate Contractor
WHS capability &
insurance
WHS incident & potential insurance
risk/ Legislative breaches
Inadequate Contractor
capacity
Delayed project or lack of service
Limited response & lack of
competitiveness
• VFM not achieved or validated
• Responses < policy guidelines
Non-preferred contractors
unable to compete
• New entrants not attracted
• Excluded contractors challenge
procurement process
Funding approval &
capacity not validated
• Cost exceeds budget
• Uncontrolled expense
Financial
Approval
Compliance Gaps:
Activity Area
Risk
Execute Phase
Consequence
Quote /Tender Incorrect and Inconsistent
Documentation use of documents
• Process does not comply with
policy
• Contractors fail to respond
PO / Contract
lack of formal agreement
Lack of clarity and
consistency re contract form
Default to contractor T&C
• Inappropriate Commercial risk
accepted
• Process not compliant with Policy
• Lack of control on T&C
Evaluation
Evaluation criteria not
defined prior to responses &
limited VFM criteria
• Unable to demonstrate fairness
and VFM assessment in process
• Ombudsman/ ICAC risk
Inadequate Contractor
Contractor financial failure
financial sustainability review
Approval
Lack of documented
recommendations / approval
• Process does not comply with
policy
Lack of segregation of duties
• Potential fraud
Compliance Gaps:
Manage Phase
Activity Area
Risk
Consequence
Contract
approval
Lack of control of contract
expenditure
Contract spend exceeds approval
Variations
Uncontrolled negotiations
and acceptance of contract
variations
Approvals does not comply with
Policy
Contract
renewal
Lack of control of expiring
contracts
Commercial risk
Contract
adoption
Lack of awareness and usage
of preferred contracts
Contract leakage
Actual spend not aligned with
strategy
Contractor
performance
Performance is not measured Poor performance and related risks
and managed
not addressed
Compliance Monitoring
–
–
–
–
–
–
Clear agreed processes
Consistent application
Prioritisation/ planning/ time allocation
Available expertise
Internal controls and compliance monitoring
Controlled use of Registers
• Prequalified contractors
• Contracts
– Management Reporting
– Risk Management
Emerging Themes - Mission
Procurement Strategy; Organisation & People
– Annual/ Forward Procurement Plans
– Category Procurement strategies
– Whole of organisational co-ordination & oversight
– Movement towards Centre-led Procurement models
– Led by a Procurement Steering Group
– Staff awareness and training needs
Strategic
Procurement
Collaboration Opportunities
– Annual/ Forward Procurement Plan process and template
– Annual/ Forward Regional/ Cluster Plans
– Regional Category Strategies
– Explore potential for resource sharing/ central resourcing
– Steering Group structure & reporting
– Training Planning & Delivery
14
Emerging Themes - Framework
Strategic
Procurement
Policy, Procedures; Systems; Data and Compliance
– Review & update processes & documents
– Update Procurement Guidelines / Manual
– Introduce Acquisition Plans
– Strengthen Evaluation and COI processes
– Regional/ Cluster approach Prequalification / Preferred
Contractors / Panel Contracts
– Contractor WHS Management Practices
– Consistent records management practices
– Knowledge Management - linkage to LGAP processes and
contracts
– Internal control and compliance audit – method & resources
Collaboration opportunity – all of above
15
Emerging Themes – TBL Enablers
Strategic
Procurement
Economic Development; Social & Environment
– Develop TBL objectives into Annual Procurement Plan
– Develop approaches and models to apply in practice
– Develop local supplier education program
– Develop Buy local program
– Case studies to stimulate Social Procurement opportunities
Collaboration opportunity – all of above
16
Emerging Themes - Delivery
Strategic
Procurement
Contract Mgt; Category Mgt; Benefits Reporting
– Develop Contracts Management process & guidelines
– Establish contractor performance management
– Streamline low value / high volume transactions
– Develop spend analysis
– Introduce Category Management approach
– Develop & Implement KPI
– Develop standard Procurement reports
Collaboration opportunity – all of above
17
Some thoughts on procurement
Rob Ackland
CEO, LGA Procurement
Discussion – Strategic and Operational
Collaboration
What do we do?
• A procurement aggregator to increase the purchasing
power of Councils, reduce costs and risks
• Preferred supply panels from which Councils can
purchase, to any value, without tendering, using Vendor
Panel. National and SA based
• Consulting services to meet specific Council(s)
needs/projects
• Support collaborative procurement strategies within and
across regions
• Promote the development of sector wide procurement
capability
Capability Building
Development of consistent good practice
• On line access to suite of procurement documents and
contracts
Discussion on user group experience and future
development opportunities
Skills Development
• LGAP Training Program future direction
Tendering can cost money?
• Anecdotal evidence from NSW, MAV and WALGA &
supported by State Governments
• Standard tender, $15-$25k
• More for complex tenders, $50- $70k+, waste,
construction, etc.
• Supplier costs, $10-25k to respond to simple bids
• Feedback from suppliers is the variations in Council
tender requirements for the same good or service are
increasing their costs and risks
• One supplier(engineering services) has responded to
162, State and local government tenders this year at an
estimated $10k each so $1.62M just to bid
Sharing the load……. and the benefits
Managed by NPN via LGAP
National – Vehicles, Truck Vehicles Panels
National – Oils & Fuels
National – Mobile Garbage Bins
National – Plant & Machinery
National – After Hours Call Service
Statewide - Consulting Services Panels
Managed by LGAP
Statewide – IT and Telecommunications Panel
Statewide – Library Resources Panel
Regional – Panels
Regional - Pre-Qualified Contractors
Managed by Region
Regional – Contractors (not pre-qualified)
Local – Council Pre-Qualified Contractors
Local – Contractors (not prequalified)
Everything in
one place
Open Market (Public)
Current LGAP focus:
1. Engineering Services Panel
2. Temporary Labour Panel
Managed by Council
Vendor Panel
•
•
•
•
•
•
•
A contract supermarket
Pre-qualified suppliers so risk already managed
Simple, quick, safe and easy to use
Removes the need to tender so low cost and risk
Provides access to NPN and LGAP preferred suppliers
Issue an RFQ, evaluate and place an order
Can be tailored by Council, Group or Region by adding
your own contracts
• The more it gets used the better the response by
suppliers
Some thoughts on collaboration
Cooperation is the thorough conviction that nobody can get
there unless everybody gets there. ~Virginia Burden
No one can whistle a symphony. It takes a whole
orchestra to play it. ~H.E. Luccock
None of us is as smart as all of us. ~Ken Blanchard
Thank you for the opportunity to
introduce the LGA Procurement
team, our services and capabilities!
Rob Ackland
CEO, LGA Procurement
[email protected] or 8224 2012
Discussion: LGAP contracts
Managed by NPN via LGAP
National – Vehicles, Truck Vehicles Panels
National – Oils & Fuels
National – Mobile Garbage Bins
National – Plant & Machinery
National – After Hours Call Service
Statewide - Consulting Services Panels
Managed by LGAP
Statewide – IT and Telecommunications Panel
Statewide – Library Resources Panel
Which contracts are working well?
Everything in
Where are the constraints to use
LGAP contracts?
oneof
place
Spend & Opportunity Analysis
 Category Opportunities
 Collaboration
 State
 Region
 Cluster
Discussion: Category collaboration opportunities
Opportunity identification process
Opportunity delivery
Spend Analytics
1
2
3
4
Cleanse data
Categorize
data
Initial spend
analysis
Develop
hypotheses
 Review current
coding structure
 Develop graphs
and analysis on
spend
 Create
hypothesis
opportunities
 Highlight
‘influenceable
spend’
 Hypotheses
cover areas of
potential
opportunity that
has been
highlighted
through the
spend analysis
process
 Initial review
 Define output
requirements
 Define coding
structure
 Check sufficient
data granularity
exists
 Import additional
data sets into
database if
necessary
 Agree which fields
are to be used for
the analysis
 Remove
irrelevant
categories
 Implement
consistent coding
structure
 Add in contract
view to
understand
contracted spend
5
6
Validate
Implement
 Validation teams
launched to
review each
potential
opportunity
 Develop
implementation
plan
 Detailed spend
analysis per
opportunity
 Review of
constraints (eg
contracts)
 Discussion with
key stakeholders
 Validation of
opportunity
 Incorporate into
project charter
 Approval of
project charter
 Tracking of
progress
 Implementation
of plan
Potential Collaboration Opportunities
Category
Spend
Bitumen
$2.7m
West Coast
Bitumen
Road Reseal, Civil &
Materials
• Road resealing/
Quarry materials/
Regional crushed
rubble
arrangements/
Carting
• Line-marking/
Kerbing
$11m
Cluster
Region
• Consolidate spend
• Common standards
• Manage contractor(s)
• Regional
• Develop Common stds,
longer term
documents, processes
arrangements • Regional contracts based
on quarry,
on agreed Program and
rubble
multi-year deal
• Shared
services
• Cluster
contracts
Potential Collaboration Opportunities
Category
Spend
Cluster
Region
Waste Management
- Kerbside, transfer
stations, recycling,
landfill
$4.4m
• Expand
arrangements
• Strengthen range
of collaboration
• Regional Recycling
strategy
• Consolidate spend &
manage contractors
• Regional Landfill and
Waste Strategy
Utilities
$4.5m
• Demand efficiency
strategies
• Billing accuracy &
efficiency
CWMS services and
supplies, e.g. pumps,
pipes, de-sludging
service etc.
?
• Develop Procurement
strategies to support
CWMS Group
Potential Collaboration Opportunities
Category
Spend
Cluster
Region
• Consolidate spend
• Managed Contractor
Panels
• LGAP Contracts
Professional
• Legal
• Engineering
Asset Mgt
$1.7m
$1.6m
R&M
$6.4m
Managed Panels
 Building mtce
 Street sweeping
 Trees & Vegetation
Cross council contracting
 Kerbing
 Linemarking
• Develop Common stds
• Managed specific
contracts
• Pre-qualification Model
Fleet – Heavy
and Light
Fuel/ Tyres etc.
$2.6m
• Asset sharing
• Managed Panels
Develop common stds
LGAP Contracts
ICT
$2.1m
Systems support leverage
expertise
Systems strategy
Discussion – Developing Category Strategies
Program Governance,
Resourcing & Implementation
Next Steps

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