The Global Procurement Network

Preparing for change – Understanding and preparing for the impact of reform on procurement in WA Local Government

Chris NewmanDirector ArcBlue ConsultingChris.newman@arcblue.com.auwww.arcblue.com.au 0412 318 384

Agenda

• Background to Procurement Reform

• Overview of the impact of reform on procurement:

structures, collaboration, resourcing, contracts

• Strategies and tools and support available to assist in

preparing for and making the most of the opportunities

associated with reform:– Procurement Reviews and Strategy Development

– Spend and Opportunity Analysis

– Training and Capability Development

– Procure to Pay and Systems development

ArcBlue Government Procurement Development Activity across Australia/NZ

VIC State Government• CIPSA Certification• Training and

DevelopmentVIC Local Government• Procurement Roadmap

development• Contract Management

Guidelines and Training

NSW State Government• Accreditation Program –

preparation and assessment• Procurement Project support

NSW Local Government• Roadmap Program with LGP• Procurement Leadership Program• Social Procurement Development• Metro and Regional Collaborative

Procurement development

State Government

Local Government

SA Local Government• Roadmap Program• Regional Opportunity

Analysis

Procurement Capability Assessment / Development

Federal Government• Contract Management

Development• Regional Procurement

Development Programs

Federal Government

Gold Coast Council – Capability Development and Contract Management Training

WA Local Government• Procurement Training

Program• Spend Analysis

NZ Government • Departmental

reviews

Qld State Government• Contract Management Capability

Assessment

SA State Government• Procurement

Transformation

Procurement Development

Why Procurement?

• E.g. NSW $32bn/ year – State Gov’t $25bn/ Local Gov’t $7bn

– More than half of most councils’ overall expenditure

– Has received little focus (administrative – not strategic)

• Procurement is moving from an administrative role to a strategic one

Local Government Procurement Roadmap and Spend Analysis

Programs

• Councils now recognising the importance of a structured approach to

procurement capability development

• Supported by Regional Groups and other peak Local Government

Procurement Bodies around Australia

• 180 Councils across 3 States have participated in Roadmaps since 2010

• 75 Councils now have Procurement ‘Dashboards’ in place

• 2013/ 2014 Regional Programs – NOROC, SSROC, Riverina, WSROC, Centroc,

Eyre Peninsula, Barossa, Metro Adelaide, Geelong Region

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• Sustainable savings in external expenditure through:

– Strategic Council contracts

– Expanded use of LGAP contracts

– Regional collaborative procurement

– Demand management strategies

• Increased usage of local and regional suppliers, e.g.

– Gold Coast spend through local suppliers increased from 49% to 63% over 2 years

• Improved performance, e.g.

– Increased completion rates and performance of Capital Works delivery

• Streamlined internal processes

– Targeted productivity savings

• Improved probity and reduced risk

• Social Procurement - Employment generation for local and disadvantaged

communities, e.g.

– G21 GROW Project – cross sector development of job creation strategies through procurement

Procurement Transformation and

Collaboration Benefits

Impact of Reform on Procurement

• Structures

– New economies of scale and maturity leading to new Centre-led

structures

• Collaboration

– Opportunities for stronger collaborative models and approaches

• Across Councils

• Local, Regional, State-wide

• Resourcing– Organisational restructuring - new opportunities

for strengthened procurement commitment

• Contracts

– Reset of contracts creates an opportunity to move

beyond ‘business as usual’

State

Regional

Local

Procurement Reviews and Strategy Development

• Assessment of current state– Individual and joint

• Developing a clear strategy– Timing? – e.g. NSW Joint Organisations

• Procurement as a driver and enabler of change – e.g.

Auckland City Council (ACC), Renewals SA

• Procurement Reviews provided by WALGA and supported

by ArcBlue– Council by Council or opportunities for regional/ sector-wide

programs?

• E.g. Vic, SA, NSW

Data Analysis

• Data Analysis

– Data analytics is transforming our understanding of local

government procurement and service delivery

– Individual, joint and regional data analysis – e.g. NSW Joint

Organisations

– Creation of Shared ‘Dashboards• Spend and Opportunity Dashboards, Service delivery comparisons, Data

matching and sharing to support decision-making

• ArcBlue ‘Dashboards’

– Now available in partnership with WALGA

– Specifically designed for Local Government

Why analyse spend?

• LG Sector generally has a poor understanding of what

we spend and who we spend it with

• Reduces Councils ability to:– Analyse spend and transaction patterns, and strategically plan for

better procurement (opportunity analysis)– Easily track spend and performance by category, supplier or

contract– Track compliance, cumulative/purchase card spend etc.– Quickly and effectively report on procurement and performance

• Reduces Regional/ sector ability to:– Track spend patterns and identify opportunities to improve existing

contracts or identify new ones– Accurately monitor and measure contracts and suppliers– Benchmark performance

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Spend analysis challenges

• Reasons for lack of spend analysis in LG Sector:– Range of financial systems used: Civica, Tech One, Oracle etc.

makes it difficult to extract and then consolidate data

– Systems are set up for finance processes, not procurement

– Data in the systems is often poor quality (not ‘clean’ – not categorised, inconsistent supplier names used, etc.)

– Spend analytics done in-house is often time consuming and expensive because skills are underdeveloped in the sector

– It has always been difficult to compare data across Councils

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ArcBlue Dashboards overview

• Tailored application using modern Business Intelligence software → standardised set of interactive, user driven Dashboards designed specifically for Local Government

• Displays categorised areas of spend with the ability to drill down to enable detailed review

• Data can be both aggregated at national, state and Regional level or drilled down for use by individual Councils

• Intuitive and visually attractive

• Easy to use and understand

• Online interactive ‘Dashboards’ that allow flexible analysis and reporting

• Very cost effective one-off and on-going solutions

– Includes full Spend Analysis and ‘Dashboard’ creation and access

– Regional and joint council solutions available

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Procurement ‘Dashboards’ – Categories

Procurement ‘Dashboards’ – Sub-Categories

Procurement ‘Dashboards’ – Suppliers

Procurement ‘Dashboards’ – Geo-spend

Procurement ‘Dashboards’ – Transactions

Procurement ‘Dashboards’ – Spend Patterns

Procurement ‘Dashboards’ – Contracts

Procurement ‘Dashboards’ – Purchase Card Tracking

Training Program - 2015

WALGA Training Programs

• Training Programs running throughout the year at WALGA

– Feb, May, August, November

• Training Needs Analysis available

• Building and expanding on the success of the last 2 years

• Programs can be delivered ‘in-house’ and tailored to a council and regionally to

groups of councils – packaging of courses available

• Targeted at all staff involved in procurement, purchasing and managing suppliers

and contracts - training tailored specifically for WA LG

• Highly experienced trainers with specific experience working with Councils

Local Government Procurement Roadmap and Spend Analysis Programs

• Contract Management - Course 1 – Managing Contracts in LG Introduction

• Contract Management - Course 2 – Planning & Specification Development

• Contract Management - Course 3 – Evaluation, Supplier Selection and Contract

Establishment

• Contract Management - Course 4 – Managing contractor WHS

• Procurement for Officers – 2 day Program

Procure to Pay and Systems Development

• Reviewing Systems and processes to drive efficiencies and

ensure a smooth transition through amalgamation

• ArcBlue Procure to Pay Process and Systems Health Check,

now available in partnership with WALGA – Service delivered by highly experienced experts in ‘good practice’

purchasing and procurement systems

– Simplify, streamline and drive savings

– Designing the right model in preparation for reform