The New Challenges Facing Local Government Procurement

Transcription

1 The New Challenges Facing Local Government Procurement 08 August 2016 Chris Newman Director

2 The value curve of procurement Value Time Spent Stages of Procurement Need Strategy Market engagement Negotiate contract Manage contract The Global Procurement Network ArcBlue Consulting 2016

3 Becoming Strategic in approach Moving: from Reactive...through...Proactive.to...Deterministic Key Features: Collaborative cross business team based approach Explicit department involvement: commitment by all stakeholders Inclusive workshop approach that encourages ownership, commitment and knowledge transfer Deep understanding of the category, supply market, suppliers, and business needs Using market knowledge and innovation as a source of leverage Striving to have a deterministic influence on the supply markets With short, medium and long term SMART goals Bringing real value to the organisation 3 The Global Procurement Network ArcBlue Consulting

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8 8 Managing Contracts - definitions The process that ensures both parties to a contract fully meet their respective obligations to deliver both the business and operational objectives required from the contract. The process by which a contractor is motivated, enabled and empowered to successfully meet expected outcomes, and achieve extra value beyond the requirements of the original contract. The active management of the relationship between the client and the contractor over the term of the contract for the provision of goods, services and infrastructure. The Global Procurement Network ArcBlue Consulting

9 From a good deal to a good supplier Effective management of suppliers is critical to ensuring that value and performance objectives are achieved Supplier s Motivation Value or Performance Well-Aligned and Managed, Performing Well Poorly-Aligned and Managed, Performance Drifting Sourcing Contract Management Misaligned, Undermanaged and Non Performing Time The Global Procurement Network ArcBlue Consulting

10 Contract Management Framework The Global Procurement Network ArcBlue Consulting

11 Leadership and Culture Oversight of organisation-wide contract management has been established and clearly assigned Good contract management practice is widely recognised as a priority across all levels of the organisation Contract management practice is integrated and aligned with Procurement/ Risk/ WHS Policies and Guidelines Executive and management accountability for good contract management practice is established and acted on consistently The Global Procurement Network ArcBlue Consulting

12 People A mandatory Contract Management Induction and Training Program is operating; Roles and responsibilities are clearly understood; Appropriate resourcing is in place (centrally and in Business Areas) Skills and Expertise Personnel and time Contract management responsibilities are included in PDs and in staff performance management processes. The Global Procurement Network ArcBlue Consulting

13 Framework and Systems A clear and well-understood organisational framework is in place Good practice contract management guidance, procedures and templates are approved, maintained and adhered to Contract management processes are being followed appropriately across all areas of the organisation Well understood records management processes are followed for all contract documentation A contract management system is in place for recording all agreed contract information, including performance and milestone information Regular individual and aggregated reporting is in place The Global Procurement Network ArcBlue Consulting

14 Contract Risk Model - Overview Risk model to Tier contracts: 1. Answer a series of risk related questions to grade the total risk for the contract 2. Determine value of the contract 3. Use these factors to categorise contracts to represent the contract grouping 4. Each grouping is then designated into a Tier 5. The selected Tier represents the level of contract management process required to effectively manage the contract The Global Procurement Network ArcBlue Consulting

15 Contract Risk and Value Assessment Risks (H/L) - Are any of these risks in the high range? Political, Media/Reputation Community Operational Work Health Safety Environment Technical skill/ expertise Legal/ regulatory Relationship complexity Value Link with delegations/ thresholds E.g. 4 levels: 25,000/ <$200,000/ <$1,000,000/ >$1,000,000 The Global Procurement Network ArcBlue Consulting

16 Contract Risk Assessment Model The Global Procurement Network ArcBlue Consulting

17 Tiers of Contracts - examples Tier 1 Major construction and civil works/ major IT projects/ Waste collection Tier 2 Medium-sized ICT Projects/ Larger maintenance and service contract/ Minor infrastructure Projects Tier 3 Plant purchasers/ Minor works/ Non-critical consultancy Tier 4 Catering/ one-off purchases The Global Procurement Network ArcBlue Consulting

18 Impact of Contract Risk Assessment Capability Experience (in years) Technical expertise (qualification) Contract management capability (benchmarked assessment) KPIs Level quantity how often assessed Supplier Meetings How often operation and/or strategic with who Documentation Contract Form Contract Management Plan Approvals System Requirements and Reporting The Global Procurement Network ArcBlue Consulting

19 19 The LEAP Program? Local Ongoing spend & opportunity analysis Dashboards Capability and maturity assessments Workshops LEAP Development Plan Regional Workshops Benchmarking Collaboration Regional LEAP Development Plan Sectorwide Category events & communities of practice Annual Procurement Conference Targeted training Guidelines, Tools and Tips Development Sector-wide contracts Advocacy support Dashboards & Data Updates