100322 procurement for planning managers
DESCRIPTION
Workshop faciliatation/presentation on procurement for Planning Managers, Planning Advisory Service, Warwick Business School, 22 and 23 March 2010.TRANSCRIPT
Getting value for consultants: Practical approaches to working with suppliers
Dr Gordon Murray22 and 23 March 2010
National picture
•Professional services in #5 out of six
•£1.8bn per year on consultants (£2.2bn on temporary staff)
•Belief that £100m can be saved on consultancy by March 2011
•5-6% potential savings on consultancy by March 2010.
Agenda for discussion
• Why is procurement important?• ‘Policy through procurement’• Procurement cycle • Roles, responsibilities, remits, relationships • ABC, category management, collaboration,
frameworks• The legal framework• Your issues?• Night work – developing a brief• The navigating the process• Your procurement improvement plan
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
Public procurement: Getting value?
What do you mean
• Getting value?• Value?• Practical approaches?• Suppliers?
Getting the jargon right
The commissioning cycle
Strategic needs assessment
Decide priorities and outcomes
Plan and design services
Optional appraisal
Sourcing
Delivery
Monitor and review
The commissioning
cycle
Strategic needs assessment
Decide priorities and outcomes
Plan and design services
Optional appraisal
Sourcing
Delivery
Monitor and review
Determine the need
Supplier selection
Contracting
Ordering
Expediting
Follow-up/evaluation
The commissioning
cycle
The purchasing
cycle
procurement
Eight principles of good commissioning
1. Understand the needs of users etc., by engaging with TSOs as advocates to access their specialist knowledge
2. Consult provider organisations when setting priorities
3. Put outcomes for users are the heart of the process
4. Map the fullest practical range of providers5. Consider investing in the provider base6. Ensure contract processes are transparent and
fair7. Ensure long-term contracts and risk-sharing8. Seek feedback to review effectiveness of the
commissioning process
Policy through procurement
What are the core internal policies which are applicable to
your procurement?
Policy through procurement
• SMEs, incl. TSOs, lowering barriers to their participation
• Supporting skills training, providing apprenticeship opportunities and tackling youth unemployment
• Resource efficiency focusing on carbon reduction.
How can we manage strategic procurement risk?
Kraljic’s Positioning Model
Bottleneck Strategic
Routine Leverage
Supply Market
Complexity/Risk
Expenditure
Procurement Cycle
8. Closure / Review Need
1. Identify Need
2. Develop Business Case
3. Define Procurement Approach
4. Supplier Appraisal5. Tender Evaluation
6. Award Contract
7. ManageImplementation
of Contract
8. Closure / Review Need
1. Identify Need
2. Develop Business Case
3. Define Procurement Approach
4. Supplier Appraisal5. Tender Evaluation
6. Award Contract
7. ManageImplementation
of Contract
Gateway Stages
Challenge
Challenge
Challenge
Challenge
Challenge
Challenge
Procurement Disasters of our time
For each case study1. Analyse the news article and summarise2. Identify the main issues and what went wrong3. Identify the stages in the procurement cycle
when effective scrutiny could have been used to reduce the risk
4. Identify which questions you would have asked at that stage/s
5. Prepare to feedback
Key lessons
• Cross-functional team with appropriate skills & roles
• Understand the trade-offs• The right brief• Robust business case• WLC• Tight project management• Proactive SCM throughout the procurement cycle• Challenge through the procurement process
Roles, responsibilities, remits
and relationships
Roles, responsibilities, remits and relationships
• Who does what in your procurement process?
• Who should to be part of your procurement process?
• Why?• What needs to happen to make
procurement relationships more effective?
Legality
The core framework
• EU• Thresholds:
£156,442• Procedures
• UK Regulations
• Council• Constitution/
Standing orders • Financial
Regulations• Corporate
procurement strategy
• Procurement Codes of Practice
• Procurement KPIs
Principles, regardless of contract value
• Equal treatment• Transparency • Non-discrimination• Proportionality• Mutual recognition
The Public Contracts Regulations 2006
• Open • Restricted• Competitive dialogue for ‘complex
contracts’• Negotiated • Consortia• ‘Stand still’ periods• Remedies
Framework Agreements
What is a framework?
• Standing offers, or• Binding contracts
•Quantities•Prices
Framework Agreements: Project start-up questions (1)
• Is a framework the right approach?• Cost Benefit Analysis of using someone else’s?• Lead-time sufficient to do it right?• Term?• Participants?• Migration strategy?• Quantity?• ‘Lots/bundles’?
Framework Agreements: Project start-up questions (2)
• Pricing strategy: e.g. Fixed price/Rise and Fall?
• Standardisation with existing?• Scope?• Single/many providers?• Procedure: open or restricted?• E-auction?• Selection and award criteria, including
quality/price weighting?
Framework agreements: Award process• Threshold £156,442• Need to ensure process
integrity, i.e. do what you say you’re going to do!
• Tender strategy• OJEU• Make clear Framework is
being used• Detail who can use the
framework• Should be maximum of four
years• Aggregation rules
• Restricted procedure• Supplier appraisal• Specification• Tenders invited• Tender evaluation: MEAT• Standstill period • Award of Contract• Constructive Debriefing
Framework agreements:Post-award• Migration management• Contact management
Cost and quality managementRelationship management: Customers
and providersDispute resolution
• Management of opportunistic losers• Closure and re-letting
What makes services procurement so different?
The problem with services
• Inseparable • the person receiving the service needs
to be part of the delivery/provision • Perishable
• can’t be stored • Intangible
• isn’t something to be looked at and say ‘look what bought’
• Heterogeneous • quality control is difficult because it
depends on the quality of the person delivering
Navigating the procurement cycle
Procurement Cycle
8. Closure / Review Need
1. Identify Need
2. Develop Business Case
3. Define Procurement Approach
4. Supplier Appraisal5. Tender Evaluation
6. Award Contract
7. ManageImplementation
of Contract
Selection & award criteria
Is there a difference?
Developing the Brief
• Can you define the outcomes to be achieved
• Strategic fit• Who, what, where, why, how and
when• What are the KPIs • Selection and Award Criteria
Business case
The procurement approach
Strategic procurement options appraisal
Cost reduction orientation Achieving community benefits orientation
Long-term contracts Short-term contracts
Single-sourcing Multi-sourcing
Consortium purchasing Local purchasing
Functional specification focus Social clauses
E-procurement for cost reduction
Supplier Cash flow
… …
ABC analysis
Category management
Category strategyMap future procurements
Adopt a risk-based approach: Identify the most important categories
Develop a clear plan for effective category management,
exploring options, and with targets
Within each business unit designate someone to target a category for improvement
Discuss with the supply market future plans & how to minimise/maximise your impacts
Specify, by preference, in performance and output standards
Going to market
Short listing
Selection criteria
• Technical capability• Technical capacity• Financial stability
Tender evaluation
Award criteria
• Price• Delivery time• Quality• Technical back-up• Technical merit• Technical ability• …
Award
Contract management
Close and review
Your procurement improvement plan
1. What are you going to do when you go back?
Efficiency Exchange
Imagine a tool for …• collaborative knowledge sharing
what works and doesn’t work, but will in certain circumstances
• collaborative problem solving helping find the one person who’s thinking about the same
challenge or has a suggestion which could help or enabling suggestions which could help someone else
• drawing on local government expertise in Drafting a policy, specification, contract ...
• mass on-line conferences, debates and ability to question experts
• Comparative benchmarking on efficiency• …
Getting value for consultants: Practical approaches to working with suppliers
[email protected]/DrGordonMurray