Eyre Region Roadmap Workshop Agenda 1 Confidential Chris Newman 0412 318 384 [email protected] Rob Ackland 0477 370 201 [email protected].

Eyre RegionRoadmap

Workshop Agenda

1

Confidential

Chris Newman0412 318 [email protected]

Rob Ackland0477 370 [email protected]

Steve Gillis0403 603 [email protected]

Agenda

Introductions Context

Program Objectives Roadmap Common Themes

Governance risk assessment Capability & capacity development – collaboration opportunities

LGAP support and development Spend Analysis & Category Opportunities

Spend analysis overview Identify potential collaborative opportunities Consolidate and prioritise potential action plan

Program governance, resourcing and implementation Agree next steps

Context

4

Regional Procurement Development ProgramObjectives & Process

Program Objectives: Make sustainable savings & create efficiencies Stimulate economic development Improve probity and reduce risk Build staff and organisational capability in procurement Strengthen regional collaboration

Joint Council Kick-off

Data Collection

Individual Council

Workshops

Detailed Joint Spend

Analysis

Opportunity Analysis

Workshop

Regional Roadmap

Development and

Validation

Final Roadmap Workshop

Progress Reviews and

Support

Roadmap Common Themes Governance risk assessment Capability & capacity development

Discussion: collaboration opportunities

6© PMMS Consulting Group

• Professional procurement

• Influencing the business

• Transactional• Order placement

Level 1

Emergent

Level 2

Basic

Level 3

Developing

Centre of Excellence across all expenditure

Procurement foundations in place with improved controlsSome functional and category strategies in place

Focus on meeting legislative requirements

Largely uncoordinated procurement with gaps in

compliance

Level 4

Advanced

Levels of procurement maturity

7

Maturity Assessment

Strategic Procurement

External Focus Internal Focus

MissionDeliv

ery

Enablers Framework

8

Key Areas of Opportunity

• Significant potential for savingsExternal– Introduction of strategic procurement practice– Establishment of new co-ordinated council contracts

• Better use of aggregated sector contracts• Establishment of regional arrangements

– Improved and standardised procurement/ supplier documentation and process– Improved contract management practice

Internal– Reducing volume and cost of low-value transactions– Better use of technology– Organisational co-ordination of purchasing and procurement

• Opportunities to improve probity and reduce risks– Introduce and ensure the consistent use of good practice processes and documents– Establish simple compliance tracking and accountability

Form project team

Internal analysis

Supply Market analysis

Planning and analysis

Develop sourcing strategy

Go to Market

Develop specification

Analyse strategic options

Set evaluation criteria & weightings

Risk analysis

Prepare documentation

Issue RFx

Clarifications

Receive responses

Evaluation

Shortlist

Negotiate

Agree and sign contract

Evaluate responses

Negotiate contract

Manage supplier

relationship

Contract Management Plan

Monitor performance

Benefits realisation

Approval of recommendations

Strategy Execute Manage

Procurement Strategy

ArcBlue Procurement Model

© ArcBlue Consulting

Compliance Gaps: Activity Area Risk Consequence

Select Quote / Tender

Conflict of interest not managed / documented

Perceived or actual bias/ Ombudsman/ ICAC risk

inadequate Contractor WHS capability & insurance

WHS incident & potential insurance risk/ Legislative breaches

Inadequate Contractor capacity

Delayed project or lack of service

Limited response & lack of competitiveness

• VFM not achieved or validated• Responses < policy guidelines

Non-preferred contractors unable to compete

• New entrants not attracted• Excluded contractors challenge

procurement processFinancial Approval Funding approval &

capacity not validated• Cost exceeds budget• Uncontrolled expense

Sourcing Phase

Compliance Gaps: Activity Area Risk Consequence

Quote /Tender Documentation

Incorrect and Inconsistent use of documents

• Process does not comply with policy

• Contractors fail to respondPO / Contract lack of formal agreement

Lack of clarity and consistency re contract formDefault to contractor T&C

• Inappropriate Commercial risk accepted

• Process not compliant with Policy• Lack of control on T&C

Evaluation Evaluation criteria not defined prior to responses & limited VFM criteria

• Unable to demonstrate fairness and VFM assessment in process

• Ombudsman/ ICAC risk Inadequate Contractor

financial sustainability reviewContractor financial failure

Approval Lack of documented recommendations / approval

• Process does not comply with policy

Lack of segregation of duties • Potential fraud

Execute Phase

Compliance Gaps: Activity Area Risk Consequence

Contract approval

Lack of control of contract expenditure

Contract spend exceeds approval

Variations Uncontrolled negotiations and acceptance of contract variations

Approvals does not comply with Policy

Contract renewal

Lack of control of expiring contracts

Commercial risk

Contract adoption

Lack of awareness and usage of preferred contracts

Contract leakage Actual spend not aligned with strategy

Contractor performance

Performance is not measured and managed

Poor performance and related risks not addressed

Manage Phase

Compliance Monitoring

– Clear agreed processes– Consistent application– Prioritisation/ planning/ time allocation– Available expertise– Internal controls and compliance monitoring– Controlled use of Registers

• Prequalified contractors• Contracts

– Management Reporting – Risk Management

14

Emerging Themes - Mission

Procurement Strategy; Organisation & People– Annual/ Forward Procurement Plans– Category Procurement strategies– Whole of organisational co-ordination & oversight– Movement towards Centre-led Procurement models– Led by a Procurement Steering Group– Staff awareness and training needs

Collaboration Opportunities– Annual/ Forward Procurement Plan process and template– Annual/ Forward Regional/ Cluster Plans – Regional Category Strategies– Explore potential for resource sharing/ central resourcing– Steering Group structure & reporting– Training Planning & Delivery

Strategic Procurement

Mission

15

Emerging Themes - Framework

Policy, Procedures; Systems; Data and Compliance– Review & update processes & documents– Update Procurement Guidelines / Manual– Introduce Acquisition Plans– Strengthen Evaluation and COI processes– Regional/ Cluster approach Prequalification / Preferred Contractors /

Panel Contracts– Contractor WHS Management Practices– Consistent records management practices– Knowledge Management - linkage to LGAP processes and contracts– Internal control and compliance audit – method & resources

Collaboration opportunity – all of above

Strategic Procurement

Framework

16

Emerging Themes – TBL Enablers

Economic Development; Social & Environment– Develop TBL objectives into Annual Procurement Plan – Develop approaches and models to apply in practice– Develop local supplier education program– Develop Buy local program– Case studies to stimulate Social Procurement opportunities

Collaboration opportunity – all of above

Strategic Procurement

Enablers

17

Emerging Themes - Delivery

Contract Mgt; Category Mgt; Benefits Reporting– Develop Contracts Management process & guidelines– Establish contractor performance management– Streamline low value / high volume transactions– Develop spend analysis– Introduce Category Management approach– Develop & Implement KPI– Develop standard Procurement reports

Collaboration opportunity – all of above

Strategic Procurement

Delivery

Some thoughts on procurement

Rob AcklandCEO, LGA Procurement

Discussion – Strategic and Operational Collaboration

What do we do?• A procurement aggregator to increase the purchasing

power of Councils, reduce costs and risks• Preferred supply panels from which Councils can

purchase, to any value, without tendering, using Vendor Panel. National and SA based

• Consulting services to meet specific Council(s) needs/projects

• Support collaborative procurement strategies within and across regions

• Promote the development of sector wide procurement capability

Capability BuildingDevelopment of consistent good practice• On line access to suite of procurement documents and

contracts

Discussion on user group experience and future development opportunities

Skills Development• LGAP Training Program future direction

Tendering can cost money?• Anecdotal evidence from NSW, MAV and WALGA &

supported by State Governments • Standard tender, $15-$25k• More for complex tenders, $50- $70k+, waste, construction,

etc.• Supplier costs, $10-25k to respond to simple bids• Feedback from suppliers is the variations in Council tender

requirements for the same good or service are increasing their costs and risks

• One supplier(engineering services) has responded to 162, State and local government tenders this year at an estimated $10k each so $1.62M just to bid

Sharing the load……. and the benefits

Everything in one place

National – Oils & Fuels

Statewide - Consulting Services Panels

Statewide – IT and Telecommunications Panel

Statewide – Library Resources Panel

Regional – Panels

Regional - Pre-Qualified Contractors

Regional – Contractors (not pre-qualified)

Open Market (Public)

Managed by Council

Managed by Region

Managed by NPN via LGAP

Managed by LGAP

Local – Council Pre-Qualified Contractors

Local – Contractors (not prequalified)

National – Vehicles, Truck Vehicles Panels

National – Mobile Garbage Bins

National – Plant & Machinery

National – After Hours Call Service

Current LGAP focus: 1. Engineering Services Panel2. Temporary Labour Panel

Vendor Panel• A contract supermarket• Pre-qualified suppliers so risk already managed• Simple, quick, safe and easy to use• Removes the need to tender so low cost and risk• Provides access to NPN and LGAP preferred suppliers• Issue an RFQ, evaluate and place an order• Can be tailored by Council, Group or Region by adding

your own contracts• The more it gets used the better the response by

suppliers

Some thoughts on collaboration

Cooperation is the thorough conviction that nobody can get there unless everybody gets there. ~Virginia Burden

No one can whistle a symphony. It takes a whole orchestra to play it. ~H.E. Luccock

None of us is as smart as all of us. ~Ken Blanchard

Thank you for the opportunity to introduce the LGA Procurement

team, our services and capabilities!

Rob AcklandCEO, LGA Procurement

[email protected] or 8224 2012

Discussion: LGAP contracts

Everything in one place

National – Oils & Fuels

Statewide - Consulting Services Panels

Statewide – IT and Telecommunications Panel

Statewide – Library Resources Panel

Managed by NPN via LGAP

Managed by LGAP

National – Vehicles, Truck Vehicles Panels

National – Mobile Garbage Bins

National – Plant & Machinery

National – After Hours Call Service

Which contracts are working well?

Where are the constraints to use of LGAP contracts?

Spend & Opportunity Analysis

Category Opportunities Collaboration

StateRegionCluster

Discussion: Category collaboration opportunities

Opportunity identification process

Cleanse data

Initial review

Define output requirements

Define coding structure

Check sufficient data granularity exists

Import additional data sets into database if necessary

Agree which fields are to be used for the analysis

Initial spend analysis

Develop graphs and analysis on spend

Highlight ‘influenceable spend’

Add in contract view to understand contracted spend

Develop hypotheses

Create hypothesis opportunities

Hypotheses cover areas of potential opportunity that has been highlighted through the spend analysis process

Validate

Validation teams launched to review each potential opportunity

Detailed spend analysis per opportunity

Review of constraints (eg contracts)

Discussion with key stakeholders

Validation of opportunity

Implement

Develop implementation plan

Incorporate into project charter

Approval of project charter

Tracking of progress

Implementation of plan

31 4 5 6Categorize

data

Review current coding structure

Remove irrelevant categories

Implement consistent coding structure

2

Spend Analytics Opportunity delivery

Potential Collaboration OpportunitiesCategory Spend Cluster Region

Bitumen $2.7mWest Coast Bitumen

• Consolidate spend• Common standards• Manage contractor(s)

Road Reseal, Civil & Materials• Road resealing/

Quarry materials/ Regional crushed rubble arrangements/ Carting

• Line-marking/ Kerbing

$11m • Regional longer term arrangements on quarry, rubble

• Shared services

• Cluster contracts

• Develop Common stds, documents, processes

• Regional contracts based on agreed Program and multi-year deal

Potential Collaboration OpportunitiesCategory Spend Cluster Region

Waste Management- Kerbside, transfer

stations, recycling, landfill

$4.4m • Expand arrangements

• Strengthen range of collaboration

• Regional Recycling strategy

• Consolidate spend & manage contractors

• Regional Landfill and Waste Strategy

Utilities $4.5m • Demand efficiency strategies

• Billing accuracy & efficiency

CWMS services and supplies, e.g. pumps, pipes, de-sludging service etc.

? • Develop Procurement strategies to support CWMS Group

Potential Collaboration OpportunitiesCategory Spend Cluster Region

Professional • Legal• Engineering

Asset Mgt

$1.7m$1.6m

• Consolidate spend• Managed Contractor

Panels• LGAP Contracts

R&M $6.4m Managed Panels Building mtce Street sweeping Trees & VegetationCross council contracting Kerbing Linemarking

• Develop Common stds• Managed specific

contracts• Pre-qualification Model

Fleet – Heavy and LightFuel/ Tyres etc.

$2.6m • Asset sharing• Managed Panels

Develop common stdsLGAP Contracts

ICT $2.1m Systems support leverage expertise

Systems strategy

Discussion – Developing Category Strategies

Program Governance, Resourcing & Implementation

Next Steps