Procurement Power - how local government can drive reform through procurement transforma3on.
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1 Driving Change Procurement Power - how local government can drive reform through procurement transforma3on. Chris Newman PMMS Consul3ng Group
2 Procurement Development Ac0vity across Australia/NZ QLD State Government QGCPO change program WA Local Government Capability Development SA Local Government Roadmap Program Regional Opportunity Analysis VIC State Government CIPSA Certification Procurement Capability Assessment / Development Gold Coast Council Capability Development and Contract Management 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 Federal Government State Government Local Government Federal Government Contract Management Development VIC Local Government Procurement Excellence Program Contract Management Guidelines and Training NZ Government Agency assessment
3 Why Procurement? Represents a large component of council ac0vity and expenditure Vic Councils spend over $4 billion each year More than half of most councils overall expenditure Is receiving significant new focus (becoming strategic not only administra0ve) Cri0cal impact on local/ regional economic development
4 Reform Objec3ves Drive efficiency and financial sustainability internal and external costs Improve probity and process - Build internal and external confidence Manage balance of procurement objec0ves Local Economic development Sustainability Social objec0ves Act as an enabler of broader reform Capital works and budget planning Project management and delivery Regional and Sector Collabora0on Establish a con0nuous improvement framework
5 Local Government Savings Programs Gold Coast City Council $9.46m for 2012/13) in bankable savings due to Council implemen0ng strategic procurement techniques Efficiency Programs City Playford 4 year Efficiency Program - Accumulated savings of 9% Regional Efficiency Programs NSW Southern Councils Group SA Regional Councils Joint Procurement tracked Savings Central Highlands Road Resealing Program $3m over 5 years 5
6 Procurement Maturity Model
7 Procurement best prac3ce dimensions 7
8 SA LG - Procurement Capability Self- Assessment Summary
9 Opportunity Analysis Individual review and analysis Roadmap for each Council Regional Opportunity Analysis Analysis of spend and prac0ce by Category Iden0fica0on of local and regional savings and benefit opportuni0es Spend analysis Benchmarking Market analysis Scoping of key projects Es0mated benefits Project Delivery process Resources required Recommended priori0es
10 Spend analysis is used to iden0fy procurement opportuni0es 10
11 Understanding procurement across the Region
12 Approaches to sustained collabora3on } Regional Procurement Bodies SA G6 Councils Regional Procurement Shared Services NSW ROCs Regional Procurement Models } Regional Shared Services/ resource NSW Southern Councils Group } Steering Group of CEOs } Funded central strategic resource Councils/ Local Government Procurement } Developing opportuni0es for collabora0on } Regional Networks Victoria Regional Procurement Excellence Networks Central Highlands Road Resealing } Riverland Savings and Economic Development opportuni0es 12
13 Example: Riverland Regional Procurement and Economic Impact Project Program Objec0ves: } Make savings & create efficiencies } S0mulate economic development } Build staff capability in procurement } Strengthen regional collabora0on } Provide a model for broader SA regional roll out Individual Council Roadmap Program Detailed Joint Spend Analysis Review of Current Contracts/ Purchasing prac0ce Opportunity Analysis Workshopping Regional Roadmap Report & Priority Project Iden0fica0on Supported Implementa0on
14 Spend Category Matrix Tier 2 Tier 1 Construc0on U0li0es Equipment Fleet Asset Mgt Professional Services Materials Opera0ons ICT Building Electricity Hardware Fuel Building Consultancy Concrete Environment Hardware Civil EPA Irriga0on Heavy Fleet Carpentry Engineering Construc0on Pool Network Concrete Water Landscaping light fleet Cleaning Environment Gas street cleaning Phones Electrical Parks R&M Electrical Finance Landscape Street ligh0ng Sojware Irriga0on Parts Registra0on Engineering Insurance Office Supplies Waste Collec0on 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 Pain0ng Paving Plumbing Pools Signage Tank cleaning Waste Mgt Weedspraying
15 Top Tier 1 Spend Categories represents 76 % of total spend 15
16 Tier 1 Category FY comparison Row Labels 11/12 12/13 Grand Total Construction 5,460,606 2,440,934 7,901,540 Utilities 4,235,290 2,619,020 6,854,310 Fleet 2,236,354 1,385,400 3,621,754 Equipment 2,339,989 1,121,347 3,461,336 Asset Management 2,203,450 1,201,240 3,404,690 Materials 1,366,201 1,706,942 3,073,143 Professional Services 1,688, ,127 2,515,330 Operations 1,201,219 1,018,794 2,220,013 ICT 741, ,941 1,157,297 Grand Total 21,472,667 12,736,744 34,209,411 11/12 12/13 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,
17 Construc0on Categories FY Row Labels C1 Berri Loxton C2 Renmark C3 Grand Total Road reseal 420,678 1,178, ,992 1,789,496 Irrigation 1,371,617 33,209 29,937 1,434,764 Civil 294, ,327 1,087,779 Building 172, , , ,570 Pipelines 251, ,279 Electrical 37,167 49,045 86,211 Sculpture 59,227 59,227 Landscape 50,065 50,065 Grand Total 2,259,097 1,805,958 1,395,551 5,460,606 C1 Berri Loxton C2 Renmark C3 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,
18 Regional Economic Analysis 3 year procurement expenditure Opportunity 12% Riverland 17% Out of region 62% Council 21% Not available in Region 50% 18
19 What needs to change } Structured vehicles for sustained regional collabora0on } New Governance and Delivery Models } Regional standardised documenta0on/ process/ thresholds } Regional Panels/ pre- qualified suppliers } Centre- led Council Procurement Models } More priori0sa0on and resourcing Councils and Regionally } Strengthened Contract and Supplier Management } Streamlined and managed low- value transac0ons } Technology Bemer use of exis0ng systems/ e- procurement } Spend analysis and market intelligence driving decision- making } Innova0ve sourcing models } Savings targets Procurement delivery of efficiency dividends } Strategic focus on driving local/ regional economic development through procurement prac0ce and supplier educa0on
20 What drives change? } Crea0ng a burning bridge to support your work using Regional/ Council s own data and benchmarking } Engaging and commipng Councillors/ CEOs and Senior Management } Providing a Business Case for: } A genuine Centre- led procurement model } Addi0onal resourcing and priori0sa0on of procurement } Sustained regional collabora0on } Providing a step by step achievable, measurable Plan (Roadmap) for development } Crea0ng momentum and enthusiasm!
21 21
22 Next Steps? } Establish a Regional Collabora0ve Procurement Model } Undertake a regional Spend and Opportunity Analysis } Establish a Free Trade Zone } Review your Roadmap and target future development } Work with industry partners and experts to understand the impact of your spend and iden0fy local and regional economic development opportuni0es } Support development of procurement within your Councils
23 Driving Change Chris Newman PMMS Consul3ng Group Contact:
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