Sector-led procurement: seizing the opportunity

Transcription

1 Sector-led procurement: seizing the opportunity NIFHA Annual Conference 2015 Thursday 5th November 2015 Rob Peck Head of Procurement Services

2 Agenda Benefits and Challenges of Collaboration Summary of findings in relation to: Current Procurement Regulatory Environment Existing Sector Dynamics Feedback on Collaborative Procurement Reflection on Spend Analysis Presentation of recommendations for a Sector led Procurement Vehicle Questions

3 Benefits and Challenges of Collaboration

4 What are the benefits of Sector-led procurement? Develop a value focused approach to procurement Effective sharing of best practice Development of greater category expertise Aggregated contracts

5 Challenges to Collaboration Lack of procurement maturity Absence of a trusted broker Lack of baselining and performance measurement Aggregated contracts not sustainable long-term Protectionism by individuals, departments and member organisations

6 Summary of Findings and key Themes

7 Summary of findings and key themes: Current Procurement Regulatory Environment

8 Summary of findings and key themes: Existing Sector Dynamics Segment 1 Northern Ireland Housing Executive Segment 2 Large HAs Managing > 2,500 units Segment 3 Small HAs Managing < 2,500 units

9 Summary of findings and key themes Segment 1 - NIHE Responsible for two thirds of the social housing stock in NI Procurement team of 20 managing circa 340m (85-90% of which is on repairs, maintenance and planned works) Significant internal demand on procurement run on average 120 tenders per annum Procurement team apply processes and procedures that have been reviewed and accredited through the CoPE accreditation Acknowledgement that the NIHE could learn from HA s. NIHE procurement team also undertake the role of the CoPE resource challenges Sector feedback highlights gaps in CoPE performance Willingness from the NIHE to address issues

10 Summary of findings and key themes Segment 2 Large HA s 6 HA s typically with dedicated procurement resource Generally associate procurement with value creation rather than compliance Alignment between procurement and development teams Expressed challenges and frustrations over the application of the NIPPP Commercially minded Competition over development programmes Mixed feedback around collaboration

11 Summary of findings and key themes Segment 3 Small HA s 17 HA s typically no dedicated procurement positions Largely immature approach to procurement Evident procurement training and support requirement Requirement for support from the CoPE Some caution towards collaborative procurement Appetite for collaboration remains Definite requirement for support from an independent SLPV

12 Summary of findings and key themes: Feedback on Collaborative Procurement By 2011 the structure of the Procurement Groups was: Procurement Group No. of HAs Total Units Abacus 11 17,942 Accord 5 8,632 Apex 8 7,424 Total 24 33,998 Groups were forced together Housing Association-led structures created barriers Impact difficult to quantify Members want flexibility to opt-in or opt-out

13 Spend Analysis

14 Sector Spend Analysis Table 1 Table 2

15 Sector Spend Analysis: Common Suppliers Data excludes NIHE figures and 3 housing association datasets where no supplier information was provided.

16 Sector Spend Analysis: Category Analysis Category Total Spend No. of HA's with Spend in this Category % of Total Spend Development Total 40,213, % Repairs, Maintenance & Planned Works Total 11,902, % Financial & Insurance Services Total 3,861, % Professional Services - Development Total 2,593, % Energy & Utilities Total 2,510, % Recruitment Services Total 1,276, % Facilities Management & Security Total 870, % Food, Beverage & Catering Services Total 699, % IT & Telecoms Total 620, % Legal Services Total 526, % Furniture & Fittings Total 406, % Professional Services Total 356, % Other Goods & Services Total 1,788, % 67,628, Data excludes NIHE figures

17 Sector Spend Analysis: Key Points Requirement to improve the granularity of spend data The category values of small housing associations will be insufficient in the majority of categories to support a SLPV Spend analysis exercise required to baseline current performance - consider introducing a mandated annual return?

18 Recommendation for Sector-led Procurement Vehicle

19 Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Recommendation for a Sector-led Procurement Vehicle Develop Procurement Maturity Participation in Established Frameworks Develop Low Risk NI Frameworks Committed Spend Contracting Collaboration around Development Programmes

20 Recommendation for a Sector-led Procurement Vehicle Phase 1 Developing Procurement Maturity Immediate requirement to narrow procurement maturity gaps SLPV must be independent Recruit or outsource? Phase 1 - Areas of focus for SLPV Developing and sharing best practice procurement procedures Realigning procurement to be value driven not box ticking Supporting procurement delivery Driving sector benchmarking and price baselining activity

21 Recommendation for a Sector-led Procurement Vehicle Phase 1 Developing Procurement Maturity Suggested structure: Effective sector engagement through the Advisory Board Critical phase in tackling barriers to collaboration Set parameters for future performance measurement 18-months mobilisation period

22 Recommendation for a Sector-led Procurement Vehicle Phase 2 Participation in established frameworks Potential to achieve quick wins whilst Phase 1 mobilises Supports the transitioning of collaborative procurement Recruitment services, Food and Office Supplies potential category areas Risk of market disaggregation and longer term impact to SLPV Optional Phase in the process Non Critical Consider between 0 18 months

23 Recommendation for a Sector-led Procurement Vehicle Phase 3 Development of low risk NI frameworks Initial commitment free NI frameworks Requirement for SLPV to sell frameworks to members SLPV to provide benchmarking and mini-competition support First opportunity for SLPV to deliver efficiencies Flexibility will compromise potential outcomes SLPV responsible for supplier and framework management Tendering activity to commence from month 12

24 Recommendation for a Sector-led Procurement Vehicle Phase 4 Committed spend contracting Development from Phase 3 to committed spend frameworks Establish Product Development Groups

25 Recommendation for a Sector-led Procurement Vehicle Phase 4 Committed spend contracting Committed spend model critical Offers greater certainty and visibility to supply chain Level of commitment linked to success of previous phases Increased risk of supplier resistance Closed Shop SLPV will manage risk and look for innovative solutions From months

26 Recommendation for a Sector-led Procurement Vehicle Phase 5 Collaboration around development programmes Competition between HA s creates significant barrier Scarcity of land fundamental challenge Change in mind set and approach required Annual development budget allocation makes collaboration difficult Opportunities to collaborate do exist

27 Recommendation for a Sector-led Procurement Vehicle Phase 5 Collaboration around development programmes

28 Conclusion Commitment from the sector to support a SLPV Phased approach rather than immediate change SLPV must be independent Requirement to develop procurement maturity Initially create environment of training, support and sharing best practice Generate value to secure HA buy-in Longer term shift to committed spend models in strategically important categories

29 Sector-led procurement: seizing the opportunity Questions