1. SA LGAP Procurement Development Programs - NPP Presentation
Driving Change
SA LGAP Procurement Development Programs - NPP Presentation
Chris Newman
PMMS Consulting Group

2. Procurement Development Activity across Australia/NZ
QLD State Government
QGCPO change program
Gold Coast Council – Capability Development and Contract Management
NSW State Government
Accreditation process with 7 Departments
$1bn Savings Program
Procurement Capability Assessment / Development
SA Local Government
Roadmap Program
Regional Opportunity Analysis
NSW Local Government
Roadmap Program with LGP
Procurement Leadership Program
Social Procurement Guidelines
Sydney Metro Councils (16) Joint Procurement Development Program
VIC State Government
CIPSA Certification
Federal Government
State Government
NZ Government
Agency assessment
Local Government
Federal Government
Contract Management Development
VIC Local Government
Procurement Excellence Program
Contract Management Guidelines and Training

3. 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 Pilot
Metro Regional
West Torrens Loxton Waikerie
Salisbury Wattle Range
Burnside Mount Barker
Murray Bridge

4. Why the focus on procurement ? The benefits
Drive efficiency and financial sustainability
Improve probity and process
Support council strategic objectives
Delivering services, projects and capital works programs
Regional/ Local Economic development
Sustainability and Social objectives
Act as an enabler of broader reform
Capital works and budget planning
Project management and delivery
Regional and Sector Collaboration
7bn across/50% of spend

5. Procurement Maturity Model5

6. Procurement best practice ‘dimensions’
BENEFITS
Council
objectives
Sourcing & Collaboration
STRATEGY
Triple
Bottom Line
Supplier
management
PMMS – Brief overview – do not spend too much time but get across broad capability required
Our experience tells us that for procurement to be successful it not only needs to be aligned to councils business objectives but also supported by :
Competent procurement professionals providing clear leadership for the procurement process
Thorough understanding of the supply markets we use and the suppliers we buy from
X-functional team working that enable structured decision-making
Sourcing strategies designed to achieve sustainable value for money outcomes
The model shown here has been widely used to illustrate the 8 building blocks or dimensions needed to develop a successful Procurement team
At the base of the pyramid there are five “core” or foundation elements that need to be in place to support and implement individual sourcing strategies. This is followed by 3 elements that focus on the Strategies needed to deliver results
With our foundation elements are in place then we have the infrastructure required to not drive change and work collaboratively with internal stakeholders to put in place sourcing strategies that will help to contain cots, reduce supply side risks and improve business performance
Process & Governance
Strategy & Organisation
FOUNDATIONS
Technology
People & skills
Leadership & Influence
Dimensions of Procurement Excellence

7. Procurement Roadmap Process
Data Capture
Consultant Analysis
Roadmap Workshop
Roadmap Review
Procurement Roadmap Process
Senior Mgmt Presentation
Roadmap Implementation
Kick-Off Workshop 1 2 3 4 5 6
Final Program Workshop 7 8
1.5 Hours
3-4 weeks
1-2 weeks
1 day
2-3 weeks
2 hours
Half – Full day
6/12/24 months
Background
Process overview
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
Preparation of Roadmaps
Distribution to Key Stakeholders for review
Presentation to Senior Management Team
Brining together participating councils
Sharing of roadmaps, issues and opportunities
Identification of collaboration opportunities
Regular reviews of roadmap progress
Tracking at 6,12 and 24 monthly reviews
What
it is
All Council Project Leaders/ Teams
PMMS
Council Project Team
Key Council Stakeholders
PMMS Support
PMMS
Council Project Team
Key Council Stakeholders
PMMS
Council Project Team
Key Council Stakeholders
PMMS
Project Leaders
GM and Senior Management Team
PMMS
All Council Project Leaders/ Teams
Key Council stakeholders
PMMS
All Council Project Teams
Key Council Stakeholders
Who
Attends
PMMS
Outline the roadmapping process
What is involved
Why we are here today

8. Procurement Roadmap Direction, Roles and Procedures
Phase months
Phase months
Phase months
Direction, Roles and Procedures
Communication , Training and Annual Planning
Supplier Engagement and Strategic Opportunities
Build Roadmap into Council Strategy/ Action Plan
Establish Procurement Steering Group
Finalise procurement processes, documentation and templates
Incorporate Procurement into key processes - Budget, Records, Corruption Prevention Plan
Introduce Leadership Training and Induction
Develop program for introducing purchase cards
Develop business case for procurement resource
Review application of Finance System for data and procure- to-pay model
Develop Procurement Portal on Intranet site
Staff Training Program
Develop contract management processes and systems
Review current contract coverage and plan for new panel contracts
Develop Annual Procurement Plan and Quarterly Reports
Develop Supplier Education Program to assist local businesses
Develop Category Coding Structure
Undertake Procurement Audit as part of internal audit program
Develop Triple Bottom Line Procurement
Define contract management roles and undertake training
Audit compliance to preferred supplier contracts
Develop procurement skills development/ training plan
Hold supplier forums assist local businesses
Review Stores processes and opportunities
Incorporate Disposal of Assets into procurement procedures
Develop and implement Cost Savings Tracking Register
PMMS
To give you a clearer picture of what we are aiming to achieve by the end of today …..this is an example of a Roadmap document that was used to present to a councils Senior Management Team and to get their endorsement and support for the changes required to improve Procurements contribution
This High-Level overview is supported by a more detailed spreadsheet with specific actions and with names assigned to those who will be responsible for completing each task.
Each Roadmap has 3 Phases with a high level description of which each Phase is intending to achieve
RRC’s will be on hand to provide on-going support through the early stages of implementation …..and each council will have access to the wealth of data and support that is available through the e-hub and other DPCD initiatives that were explained earlier

9. Procurement Roadmap Example PMMS
To give you a clearer picture of what we are aiming to achieve by the end of today …..this is an example of a Roadmap document that was used to present to a councils Senior Management Team and to get their endorsement and support for the changes required to improve Procurements contribution
This High-Level overview is supported by a more detailed spreadsheet with specific actions and with names assigned to those who will be responsible for completing each task.
Each Roadmap has 3 Phases with a high level description of which each Phase is intending to achieve
RRC’s will be on hand to provide on-going support through the early stages of implementation …..and each council will have access to the wealth of data and support that is available through the e-hub and other DPCD initiatives that were explained earlier

10. Spend analysis is used to identify procurement opportunities

11. Total Procurement Spend
High levels of decentralisation particularly in regional councils, but still common in some netros
Much higher % of metro councils with a central department
Very few Procurement strategy documents in place
Only a few annual procurement plans

12. SA LG - Procurement Capability Self-Assessment Summary
High levels of importance assigned to most areas of procurement
Not a substantial difference between perceptions of importance by Regional and Metro Councils
Except in Regional collaboration seen as less important by regional councils (perhaps because of G6 and they don’t do it)
Perceptions of effectiveness levels are fairly consistent between metro and regional councils (somewhat surprisingly)
Except in Probity and Compliance Management and Regional collaboration
Regional collaboration is very low in regional areas
Substantial difference in perceptions of importance vs effectiveness. This is a positive finding because it provides an impetus for change
Key differences in:
Acjieving Cost Savings
Streamlining Administration
Probity and Compliance Management
Training and Education
Effective Contract Management
Providing Quality Procurement Data
Effective Management of Categories of Spend
Interesting that Tender Process Management is seen to be done well by both regional and metro
Triple Bottom line low in importance and very low in effectiveness particularly in regional areas

13. 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

14. 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!

15. 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

16. 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

17. 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 Implementation

18. Spend Category Matrix Tier 1 Tier 2
Tier 1
Tier 2
Construction
Utilities
Equipment
Fleet
Asset Mgt
Professional Services
Materials
Operations
ICT
Building
Electricity
Hardware
Fuel
Consultancy
Concrete
Environment
Civil
EPA
Irrigation
Heavy Fleet
Carpentry
Engineering
Pool
Network
Water
Landscaping
light fleet
Cleaning
Gas
street cleaning
Phones
Electrical
Parks
R&M
Finance
Landscape
Street lighting
Software
Parts
Registration
Insurance
Office Supplies
Waste Collection
Plant Hire
Tyres
Fencing
Legal
Quarry
Waste Management
Pipelines
PPE
Hygiene
Architect
Signage
Road reseal
Pumps
Training
Bins
Sculpture
Linemarking
labour hire
Pest Control
Walls
Locksmith
Planning
Maintenance
Painting
Paving
Plumbing
Pools
Tank cleaning
Waste Mgt
Weedspraying
Pragmatic approach to 2 tier category classification – it is possible to break down further such as Engineering
Category structure & coding for ongoing spend capture and regional analysis

19. Procurement enabling strategies
Strategy
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
Pragmatic approach to 2 tier category classification – it is possible to break down further such as Engineering
Category structure & coding for ongoing spend capture and regional analysis

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

21. Tier 1 Category FY comparison
FY 12/13 Utilities spend tracking above prior full year
Materials spike relates to high value bin purchase by Renmark and Berri (going forward these also represent opportunities for regional consolidation)

22. Construction Categories FY 11-12
C1 C C3
C1 C C3
Irrigation large Thinkwater project
Pipelines – Alona Water project

23. Category: Construction – Road Reseal FY 11-12
C C C3
High priority to consolidate and no apparent contractual constraints

24. 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