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Using Data to Promote the Public Procurement Profession
David Davis – Washington State DOT, WABrian Smith – Multnomah County, OR
Nelson Park – Seattle City Light, ORJonathan White – Spikes Cavell, VA
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David Davis – overall reasons for procurement teams to record and report their valueBrian Smith - example processes to record your valueNelson Park – using analytics to support the value of public procurement narrativeJonathan White – calculating an ROI for procurement and procurement projects
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How is your department measured by your bosses today?
For most, it’s how much you cost…
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It’s time to change that measurement to “What value did you add?”
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Categories of Savings and Efficiencies
• Contract savings or discounts• P-card rebates• Settlements
Spend Management
• Duplex printing as default• Digitizing records vs printing reports• Reusing serviceable materials
Demand Management
• Property redistribution• Investment recovery – disposal• Supply chain management - VMI
Supply Management
• P-card payments• Online ordering• Early influence on decision cycles
Process Management
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Measured Savings and Efficiencies
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From Small Beginnings
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Create a process for recording savings
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Low Hanging
Fruit
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Low Hanging
Fruit
$344,031 Non-Cash Releasing $60,469 Cash Releasing $40,000 Approximate
Implementation Cost
113,548 Lbs. Processed 33% Internal Reallocation 44% External Reallocation 20% Recycled 3% Landfill
Surplus Program – Our First Year
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Percent of cost covered by value delivered
Switching Perspectives – Procurement Saves your Agency Money
FY 14 29%FY 15 63%FY 16 ?
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More from Multnomah County Procurement
http://www.spikescavell.com/learning-about-spend-analysis/
https://multco.us/purchasing/news/multnomah-county-presented-workshop-nigp-forum-2014
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How are we doing?How do we “meaningfully” report results upwards?
Um,…. Well…. I don’t know,
but….
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Low Hanging
Fruit
If you can’t measure it – it didn’t happen• Who did it?
• What did we do?
• When did we do it?
• Why did we do it?
• How long did it take?
• Did we do it on time?
• What were the costs
• What were gains?
How do we prove it?
How do we measure it?
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Low Hanging
Fruit
Metrics is the answer
Steps: ( Be patient, this took us 2 years +)1) Define what is important to the Stakeholders2) Define success3) Determine how success is measured4) Measure and report the results5) Revise as necessary
Ask: Did we accurately answer the question that was asked?
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Low Hanging
Fruit
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Low Hanging
Fruit
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Was Procurement
involved?
Is it consistent and will it stand up to
review?
What would have
happened otherwise?
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Average of all responsible responsive bids
Bid accepted
Simple and Endorsed RFP Savings Calculation
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Alternative RFP Savings Calculations
Budget – Bid AcceptedPrevious Price – Bid AcceptedMarket Rate – Bid AcceptedBid Accepted – Negotiated BAFO
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Net revenue generated from sale of surplus
Simple Surplus Savings Calculation
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Alternative Surplus Savings Calculations
Net Revenue – Staff TimeNet Revenue – Staff & Scrap ValueNet Revenue + Cost of Disposal – Staff
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Efficiency Calculations
(Cost to process invoice manually – cost of pCard/eProcurement transactions) * number of transactions avoided
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Get As Complicated As You Like
(Award value to local vendor * corporate/city/land tax rate) = Revenue10 * Revenue = Cost of local support services avoided
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Gains
Procurement Team Cost
Simple Cost of Procurement Calculation
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$100,000
$500,000
0.2 or 20%
Simple Cost of Procurement Calculation
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For every $1 budgeted for the procurement team, we actually only
cost the agency $0.80 so…
Simple Cost of Procurement Calculation
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Savings – Procurement Team Cost
Procurement Team Cost
Simple ROI Calculation
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$300,000 – $200,000
$200,000
0.5 ROI
Simple ROI Calculation
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For every $1 you spend on procurement, we make the agency
$0.50 in savings and efficiencies so…
Simple ROI Calculation
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Low Hanging
Fruit
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Low Hanging
Fruit
Recorded webinars http://
www.spikescavell.com/learning-about-spend-analysis/
Savings Recording Support Documents https://
multco.us/purchasing/news/multnomah-county-presented-workshop-nigp-forum-2014
Measure Registration http://www.nigp.org/measure