Chris NewmanPMMS Consulting Group

Driving ChangeSA LGAP Procurement Development Programs

- NPP Presentation

Procurement Development Activity across Australia/NZ

QLD State Government• QGCPO change program

VIC State Government• CIPSA Certification

VIC Local Government• Procurement Excellence

Program• Contract Management

Guidelines and Training

NZ Government Agency assessment

NSW State Government• Accreditation process with 7

Departments• $1bn Savings Program

NSW Local Government• Roadmap Program with LGP• Procurement Leadership Program• Social Procurement Guidelines• Sydney Metro Councils (16) Joint

Procurement Development Program

State Government

Local Government

SA Local Government• Roadmap Program• Regional Opportunity

Analysis

Procurement Capability Assessment / Development

Federal Government• Contract Management

Development

Federal Government

Gold Coast Council – Capability Development and Contract Management

SA LGA Procurement Roadmap Pilot Program

• Based on PMMS Procurement Capability Analysis (PCA) methodology – undertaken with over 300 organisations

• Capability Assessment benchmarked against over 140 Victorian, NSW and South Australian Councils

• 7 Councils participated in the PilotMetro RegionalWest Torrens Loxton WaikerieSalisbury Wattle RangeBurnside Mount Barker

Murray Bridge

Why the focus on procurement ?The benefits

1. Drive efficiency and financial sustainability2. Improve probity and process3. Support council strategic objectives

o Delivering services, projects and capital works programso Regional/ Local Economic developmento Sustainability and Social objectives

4. Act as an enabler of broader reformo Capital works and budget planningo Project management and deliveryo Regional and Sector Collaboration

Procurement Maturity Model

6

Process & Governance Strategy &

Organisation

Leadership & Influence

Technology

FOUNDATIONS

People & skills

Triple Bottom Line Supplier

management

Sourcing & Collaboration

STRATEGY

BENEFITSCouncilobjectives

Dimensions of Procurement Excellence

Procurement best practice ‘dimensions’

Data Capture

Consultant Analysis

Roadmap Workshop

Roadmap Review

What it is

• Data analytics pack

• Capability assessment

• Stakeholder questionnaire

• Documentation review

• Opportunity analysis

• Spend analysis

• Best practice comparison

• Single council

• Review analysis findings

• Validate opportunities

• Draft strategy and roadmap

• Regular reviews of roadmap progress

• Tracking at 6,12 and 24 monthly reviews

• Background

• Process overview

Who Attends

• All Council Project Leaders/ Teams

• PMMS

• Council Project Team

• Key Council Stakeholders

• PMMS Support

• PMMS • All Council Project Teams

• Key Council Stakeholders

• Council Project Team

• Key Council Stakeholders

• PMMS

• Presentation to Senior Management Team

• Project Leaders

• GM and Senior Management Team

• PMMS

1.5 Hours 1 day 2 hours 6/12/24 months

• Preparation of Roadmaps

• Distribution to Key Stakeholders for review

• Council Project Team

• Key Council Stakeholders

• PMMS

Procurement Roadmap Process

Half – Full day

• Brining together participating councils

• Sharing of roadmaps, issues and opportunities

• Identification of collaboration opportunities

• All Council Project Leaders/ Teams

• Key Council stakeholders

• PMMS

Roadmap Implementation

Final Program Workshop

Senior Mgmt Presentation

Kick-Off Workshop

3-4 weeks

2-3 weeks

1-2 weeks

1 2 3 4 5 6 7 8

8

Direction, Roles and Procedures Communication , Training and Annual Planning

Supplier Engagement and Strategic Opportunities

Procurement Roadmap

1. Build Roadmap into Council Strategy/ Action Plan

2. Establish Procurement Steering Group

3. Finalise procurement processes, documentation and templates

4. Incorporate Procurement into key processes - Budget, Records, Corruption Prevention Plan

5. Introduce Leadership Training and Induction

6. Develop program for introducing purchase cards

7. Develop business case for procurement resource

8. Review application of Finance System for data and procure-to-pay model

Phase 1 0-6 months Phase 2 6-12 months Phase 3 12-24 months

9. Develop Procurement Portal on Intranet site

10. Staff Training Program11. Develop contract

management processes and systems

12. Review current contract coverage and plan for new panel contracts

13. Develop Annual Procurement Plan and Quarterly Reports

14. Develop Supplier Education Program to assist local businesses

15. Develop Category Coding Structure

16. Undertake Procurement Audit as part of internal audit program

17. Develop Triple Bottom Line Procurement

18. Define contract management roles and undertake training

19. Audit compliance to preferred supplier contracts

20. Develop procurement skills development/ training plan

21. Hold supplier forums assist local businesses

22. Review Stores processes and opportunities

23. Incorporate Disposal of Assets into procurement procedures

24. Develop and implement Cost Savings Tracking Register

Procurement RoadmapExample

Detailed description Responsibility Target date

1Build Roadmap into Council

Strategy/ Action PlanPresent to senior management to gain endorsement and establish Roadmap as on-going Strategy/ Action Plan

VC/KM/CSM 1/11/2011

2Establish Procurement Steering

Group

Establish a Procurement Steering Group to co-ordinate the implementation of the Roadmap, procurement activity generally and the Annual Procurement Plan. Meet regularly (eg quarterly).

CSM 1/11/2011

Finalise procedures document and associated templates VC/KM 31/01/2012Develop a Procurement Flowchart including roles and responsibilities VC/KM 31/01/2012Request final feedback from stakeholders on current processes and templates PSG 31/01/2012Develop Role Statements for key Procurement Roles - eg Procurement Team and Contract Managers

VC/KM 16/12/2011

Ensure procedures include consistent Procurement team involvement in evaluation

VC/KM 31/01/2012

Implement LGP Tender Toolbox (Updated by MIDGOC Procurement Alliance) VC/KM 31/01/2012

Develop Segregation of duties model as part of process documentation to eliminate potential for the same person to order/approve/pay suppliers

VC/KM 16/12/2011

Add Procurement Checklist to Budget Bid Documents/s CSM 30/11/2011

Introduce structured Numbering system for Tenders (lin with new Records requirements)

VC 31/01/2012

Link to Procurement Roadmap to Corruption Prevention Plans CSM 19/11/2011

Hold a Training Program for the Senior Leadership Team (incl: Team Leaders). Half day on why and how for procurement practice at Taree.

VC/KM/CSM 30/03/2012

Incorporate Procurement into new Council Induction Program VC/MG 30/11/2011

6Develop program for introducing

purchase cardsEstablish Purchase Cards Program VC/CSM 1/02/2012

7Develop business case for

procurement resource

Identify required resource to deliver against priorities and actions in this plan. Forecast benefits from additional support (financial, risk, compliance, performance etc)

VC/KM 1/02/2012

Develop preferred option/s and business case for introducing a Procure-To-Pay System - including review of the Sun e-Procurement module

VC/KM/CSM 1/02/2012

Review Finance and Procurement Structure to explore easy and consistent access to procurement and spend data

VC/KM/CSM/ CC 31/03/2012

Define accounts payable processes and accounctabilities VC/KM/CSM/ CC 30/11/2011

8

Incorporate Procurement into key processes - Budget, Records, Corruption Prevention Plan

4

High level action

3Finalise procurement processes, documentation and templates

Review application of Finance System for data and procure-to-pay

model

Introduce Leadership Training and Induction

5

Spend analysis is used to identify procurement opportunities

10

Total Procurement Spend

SA LG - Procurement Capability Self-Assessment Summary

Key Opportunities

Regional Collaboration Centre-led Procurement Models Spend analysis and market intelligence driving decision-

making Increasing contract coverage – panels/ supply contracts Innovative sourcing models Savings – Procurement delivery of efficiency dividends Strengthened Contract and Supplier Management Streamlined and managed low-value transactions Technology – Better use of existing systems/ e-

procurement/ panel management

Why Participate?

Creating a ‘burning bridge’ to support your work using Council’s own data and benchmarking

Engaging and committing the GM and Senior Management Establishing organisational ownership of procurement

development (incl: engineering) Providing a Business Case for:

A genuine Centre-led procurement model Raising the seniority of procurement roles Additional resourcing in procurement teams A new focus on strategic procurement

Providing a step by step achievable, measurable Plan (Roadmap) for development

Creating momentum and enthusiasm!

Key Benefits (From Participants):• Engagement and participation from client business units• Developing a plan for continuous improvement• An action plan with achievable and tangible benefits• Staff enthusiasm and understanding of what council needs to do• A focused approach to improving current procurement practices

and developing a Targeted savings program's• Meeting other like minded people in local government and

other contacts to allow for information sharing and exchange.• Networking and identifying similar across industry issues,

collaboration to deal with "issues", increased collaboration and break down of barriers between metro and regional councils

• Agreement to engage a Senior Procurement Officer to progress a centre led model

Pilot Roadmap Program feedback

• “A great program that supports change and provides credible, practical and customisable assistance for implementation in any Council situation.” Julie Bussenschutt – Burnside City Council

• “The delivery of the programme allowed all staff - from coal face purchasing to strategic management to give input and understand where the council needs to improve or look at alternative money saving alternatives. We had lots of "ahhh light globe moments" that could be implemented very quickly.” Robyn Cusick – District Council of Loxton Waikerie

• “You do not have to invent the wheel, someone else already has it and they are more than willing to share.” Andrew Makin – Rural City of Murray Bridge

Riverland Regional Procurement and Economic Impact Project

Program Objectives: Make savings & create efficiencies Stimulate economic development Build staff capability in procurement Strengthen regional collaboration Provide a model for broader SA regional roll out

Individual Council

Roadmap Program

Detailed Joint Spend

Analysis

Review of Current

Contracts/ Purchasing

practice

Opportunity Analysis

Workshopping

Regional Roadmap Report & Priority Project

Identification

Supported Implementati

on

Spend Category Matrix

Tier 1

Tier 2

Construction Utilities Equipment Fleet Asset MgtProfessional Services Materials Operations ICT

Building Electricity Hardware Fuel Building Consultancy Concrete Environment HardwareCivil EPA Irrigation Heavy Fleet Carpentry Engineering Construction Pool NetworkConcrete Water Landscaping light fleet Cleaning Environment Gas street cleaning PhonesElectrical Parks R&M Electrical Finance Landscape Street lighting SoftwareIrrigation Parts Registration Engineering Insurance Office Supplies Waste Collection Landscape Plant Hire Tyres Fencing Legal Quarry Waste Management Pipelines PPE Hygiene Architect Signage Water Road reseal Pumps Landscaping Training Bins Sculpture R&M Linemarking labour hire Pest Control Walls Locksmith Planning Maintenance Painting Paving Plumbing Pools Signage Tank cleaning Waste Mgt Weedspraying

Procurement enabling strategiesStrategy Outcome Pros Cons

Establish new regional contract

Leverage volume via new market approach

Potentially high impact

Requires time & resources

Renegotiate existing contract

Improve current contract including option to leverage added volume

Less time & effort – also less disruptive

Limited negotiating leverage

Piggy-back other contracts

Leverage LGAP / State Govt contracts

Ease of implementation

Quality of regional service & influence on large contract

Vary the supply model or change demand

Innovative solution and /or reduced demand

Breakthrough improvement

Potentially higher risk and effort to establish

Establish effective contract management

Achieve desired outcomes, manage change & target improvement

Short term return, eliminate waste & leverage supplier resource

Requires resource & capability to establish & maintain

20

Top Tier 1 Spend Categories FY 11-12represents 76 % of total spend

21

Tier 1 Category FY comparisonRow Labels 11/12 12/13 Grand TotalConstruction 5,460,606 2,440,934 7,901,540Utilities 4,235,290 2,619,020 6,854,310Fleet 2,236,354 1,385,400 3,621,754Equipment 2,339,989 1,121,347 3,461,336Asset Management 2,203,450 1,201,240 3,404,690Materials 1,366,201 1,706,942 3,073,143Professional Services 1,688,202 827,127 2,515,330Operations 1,201,219 1,018,794 2,220,013ICT 741,356 415,941 1,157,297Grand Total 21,472,667 12,736,744 34,209,411

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

11/12 12/13

22

Construction Categories FY 11-12Row Labels Berri Loxton Renmark Grand TotalRoad reseal 420,678 1,178,826 189,992 1,789,496Irrigation 1,371,617 33,209 29,937 1,434,764Civil 294,452 793,327 1,087,779Building 172,350 204,423 279,797 656,570Pipelines 251,279 251,279Electrical 37,167 49,045 86,211Sculpture 59,227 59,227Landscape 50,065 50,065Grand Total 2,259,097 1,805,958 1,395,551 5,460,606

0200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,0001,800,0002,000,000

Berri Loxton Renmark

C1 C2 C3

C1 C2 C3

23

Category: Construction – Road Reseal FY 11-12

Sum of Spend Column LabelsRow Labels Berri Loxton Renmark Grand TotalBORAL CONSTRUCTION MATERIALS GROUP LTD 54,088 914,073 968,161MILDURA RURAL CITY COUNCIL 196,746 165,500 362,245FULTON HOGAN INDUSTRIES PTY LTD 264,753 19,096 283,849DOWNER EDI WORKS PTY LTD 112,517 112,517TOPCOAT ASPHALT CONTRACTOR 57,327 5,396 62,724Grand Total 420,678 1,178,826 189,992 1,789,496

0200,000400,000600,000800,000

1,000,0001,200,000

Renmark

Loxton

Berri

C1 C2 C3

Next Steps?

New LGA Roadmap Program participation opportunities in 2013 EOIs now open for Program to begin in June/ July

Individual Councils Council Groups

Subsidised by the LGA $4,000 cost for Regional Councils $5,000 cost for Metro Councils

On-going support for all participating Councils Expansion of the Riverland Regional Development

Model to other SA Regions New activities to support council development