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MAKING WATER WORK
APPROVALS
Gorporate Procurement Plan
2010-2011
RECOMMENDED BY:
Janet Porchun
Manager Procurement
DATE
RECOMMENDED BY:
APPROVED BY:
J; ,ctt r 2otl
rate
./
DATEJI I O/ I2OII
SunWater Gorporate Procurement Plan 2010 -2011
MAKING WATER WORK
Gorporate Procurement Plan
2010-2011
I
I
l. I
- State Procurement Policy objectives
1.2 - Objectives of the procurement function
L3 - Benehts
Parl2
2.1
2.2
-
Performance
1
Review....
....................2
2010
2009110
-
Procurement activity profile - SunWater from 2007 to
2
-
Supply positioning makix - SunWater for
3
(Based on QP&S SUPREM - Supply Positioning and Risk Evaluation
Historical Analysis Chart 2009 12010
2.3
-
Organisation and Management of the Procurement function
2.4
-
Achievements
-
-
Matrix)
2009-2010
3
J
4
7
2009-20 10
..........
....................9
Part 3 - Procurement Capabilities 2010-2011
9
3.1 - Procurement practice profile - improvement development opportunities
3.2 - Procurement improvement capability development - Action Plan Recommendations 11
SunWater Gorporate Procurement Plan 2010 -
2011
CPP
1
Part 1 - Functional alignment
SunWater's Corporate Procurement Plan (CPP) for 2010-2011 provides the strategic direction
for SunWater's procurement activities in 2010
and2}Il.
The CPP meets the requirements of State Procurement Policy 2010 (SPP) and the SunWater
Corporate Plan for 2010 - 2015. Specifically, the CPP for 2010-2011 contains a balance of
strategic and operational information in the following areas:
o
o
o
o
1
The objectives to be achieved through SunWater's procurement activities;
Review of SunWater's 2009/10 procurement achievements including organisation and
management of the procurement function;
SunWater's procurement capabilities for 2010 - 11 address various areas such as
procurement systems, processes, practices including management and resourcing
arrangements and mechanisms by which SunWater's procurement activities will be
undertaken and measured; and
Recommendations and strategies that will enable SunWater to comply with the SPP in
meeting its specified procurement obj ectives.
.1
-
Súafe Procurement
Policy objectives
The SPP's objectives are:
o
o
.
advance the priorities of the Government
achieve value for money; and
ensure probity and accountability for outcomes.
1.2
- Objectives of the procurement function
In supporting SunWater's operational objectives the procurement function will:
o
.
.
develop flexible procurement models which will permit procurement staff to achieve cost
effective pro curement ;
support the objectives of the SPP; and
support the Key Reporting Activities defined in the SunWater Corporate Plan.
The strategies that will address these objectives
will
be focussed on two main areas, in line
with SunWater's Smarter Lighter Faster Initiative (SLFI):
o
o
planning for the cost-effective purchase ofgoods and services; and
planning for a more flexible and efficient procurement function.
1.3
- Benefits
The benefits to SunWater when implementing these procurement strategies are:
o reduced risk;
o greater security ofsupply;
o lower costs;
o improved quality;
o greater efficiencies; and
. new innovations.
2011
SunWater Gorporate Procurement Plan 2010 -
CPP 2
Part 2 - Performance Review
2,1
-
Procurement activity profile - SunWater from 2007 to 2010
Procurement Activity Profile
40
2OO7
to 2010
35
O
30
c
e
t
¡€E
25
t¡¡
15
tx
20
Ê
rû
t
(,
10
5
0
\9'^ç
"êP
cP'
cPtts cPC
Insurance
Actual
Expenditure
Actual
Expenditure
Actual
Expenditure
2007-2008
200E-2009
2009-2010
Projects
$3,401,183
Comm. Contractors
(Prqiects)
ss,4s3,742
Comm. Contractors
(Routine)
s19,523,623
Contractors S7,500,865
$r
54,7 s8,4s4
$5, I 58,562
$7,383,074
$38,982,0s3
17,089,4s3
s37,709,102
$51,410,1l6
$5,787,263
$3,780,321
s6,340,448
r
57,022,006
$
$8,967,219
Materials Routine
Plant and
Equipment
54,784,075
56,253,287
Electricity
$13,sss,157 $14,13s,928
Plant Hire
$2,599,38s $4,395,460
sr9,657,213 $18,995,517
$84,358,448 $98,480,658
Miscellaneous
TOTAL
Budgeted
Expenditure
20lo-2011
$s,985,85s
l,
Temporary
cargorlcc
$3,892,101 $11,03r,391
$4,803, 34
$3,99 104
Consultants
Materials
sPend
$355,151
$
,688,213
10r,399
$2,821,680
s2,398,721
54,966,251
s4,897,962
$18,078,840
$21,954,887
$6,217,t36
s3,028,446
$15,s67,056
s8,227,124
5107,622,920
$144,187,930
SunWater Corporate Procurement Plan 2010 - 2011
2.2
-
CPP 3
Supply positioning matrix - SunWater for 2009/10
Historical Analysis Ghart 200912010
(Based on QP&S SUPREM - Supply Positioning and Risk Evaluation Matrix)
Top 1096 outlirrs
Lowcr 9096 of cetrgory expenditure
oI¡sur¡nce
uConsult¡nts
otqlecomm Dèt¿Line5
Electricþ
Comm¡rci¡l
Mangemcfü
¡
C
'4,
5
f
J
a
5
ost¡fr
t
o
Pl¡nt
'Meteri¡ls
rino lcle¡
onfcrrnces
t fecs lRecr
owet¿r ¡
tS¿minars
st
Rcgistiàtion
ion F
NonContest¡blr Elacticitt/'
¡re.M¡intenance & Licence
p < 1000
nt and Equip > t 000
Audit ¡ccounting linônc. QA
oFreioht¿nd Post
lTelephone ¡nd Fax
'Rent¡l & Hír¡ MV
ånd Frotectivå Clothing
es -
M
off¡ct
ftw¡r¡ < I
¡sehold Fe¡s
nd
I
'elephonr
L¡nd
Membership
rBuild¡nq M¡inten¡nce
'Buildino Må¡ril
¡nd M¡¡ntånånce
Mrlnten¡¡
Repair.ind
!MV
rÞi;;;J'i
S,G
¡*i
I
'oth"r d
'Printing
fees
M¡teri¡ls
Non
InuentoryJ
Rent¡l & Hirg (Þ & Ef
offìce HouseVen Renl
'MV oper¡ting L¡asrs
.-iniãn¡nce)
tt**,..,11
târtð¡n Non
'Legel
ìce
'tJniform
lGr¿nt ¡n d Contributions
lEnten¡hmentNon - FBT lTreuel (Airfarus -domestic)
åtoê
oils tGround
Màint¡n¡nce
roe
¡nd (Jils
-Fuåls
' lProfessiotral
'Fuels ånd
¡l
Insur¡ncr
¿nd ¡nd
E
M¡in Costs
.Priöi
&Pl¡nt
Non tOfrìceCo,,..,,,..,-lF¡res Oo
lFares
Don¡tions
Oomestic
lseruice Costs - CSA
;ì)
,
Expenses
s
cri pti ons
and Improvements
!gu¡ld¡ng
rTraining
Er¡udifuic
Distribution by Quadr¡nt
Expenditure - 2009110
Quadrant) Specialised 5474,044 0.4%
Box 2 (Bottom LH Quadrant) Routine $5,964,555 5.5%
Critical 552,943,486 49.2%
Box 3 (Top RH Quadrant)
Box 1 (Top LH
Box 4 (Bottom RH
TOTAL
Quadrant)
High
Value
$5,964,555 44.8%
s107,622,920 100.0%
Categories - 2009/10
3
l8
4
28.1%
39
60.9%
64
100.0%
4.7%
6.3%
C
SunWater Corporate Procurement Plan 2010 - 2011
2.3
CPP 4
- Organisation and Management of the Procurement function -
Table
2009-2010
I - Current Procurement Practice Profile Analysis
Procurement attribute
Current practice level [self-assessment rating]
.
Policies, procedures ønd
purc høsing delegatìons
a
Contract terms ønd
conditions .
SunWater's Procurement Policy is in accordance with the Queensland Government's SPP which was released by Queensland Government Chief
Procurement Ofltce (QGCPO) on I September 2010. SunWater's Procurement Policy is available on the SunWater revised intranet platform - SIMON.
SunWater's Purchasing Guide outlines the purchasing procedures, relating to purchases of goods, services and related works is continuously being
updated to ensure that SunVy'ater's purchasing procedures are current and in line with the SPP. The Purchasing Guide is available on the SunWater
intranet.
a
Sun\Mater has a precedent database of standard terms and conditions available for both routine-and significant procurements.
SunWater uses the Australian Standards and SunWater Special Conditions of Contract, where necessary.
Contractual terms and conditions are specifically tailored to the type of goods, services and works undertaken by Sun'Water's business groups including
a
regional offices.
The contractual terms and conditions are regularly reviewed to ensure that they are compliant with tegislative changes and SunVy'ater's Procurement
a
Policy changes.
2. Procurement Function
Role qnd influence within
organisation
the .
.
a
Structure of procurement
function
o
.
a
The key roles and responsibilities for Procurement, containing the responsibilities matrix is available on the SunWater intranet.
The Manager Procurement is responsible for the overall management of SunWater's procurement function, development, and approval of SunWater's
Procurement Policies.
The centralised Corporate Procurement Group undertakes all procuroment activities over the value of $25,000 (excl GST) in addition to providing
specialist procurement advice, guidance and assistance to other SunWater business groups, including regional offices. The Corporate Procurement
Group is involved in activities such as strategic procurement for major projects, consultancies, period contracts, standing offer arrangements, cleaning
and maintenance contracts.
All Standing Offer Arrangements are established by the Corporate Procurement Group and are managed in conjunction with the Standing Offer
Arrangement Proj ect Manager.
The procurement group sits within the Corporate Group and is headed by the Manager Procurement.
The Business Procurement Manager and the Project Procurement Manager report directly to the Manager Procurement.
Signihcant, major andy'or complex procurements are undertaken under the direction of the Project Procurement Manager.
Low cost and low risk procurements being (commonly procured goods and services) are purchased under the direction of the Business Procurement
Manager.
SunWater Gorporate Procurement Plan 2010 - 2011
Procurement attribute
CPP 5
Cu
rrent practice level [self-assess ment ratin g]
The Corporate Procurement Group has legal specialists available for assistance when undertaking significant and./or more complex procurement
activities and draws on specialist resources from business areas within SunWater, when required.
Trøining and development
All purchasing staff exercising procurement delegations
are required to attain a certain level of training depending on the level of thei¡ delegation. This
training ranges from internal purchasing training packages through to QGCPO Level 4 certifrcation.
3. People
Knowledge and skills
a
a
a
Procurement personnel involved in SunWater's signihcant procurement projects are required to have appropriate qualifications or experience equivalent
to QGCPO Certification Level3/4, and/or at least 5 years experience.
Junior purchasing staff receive on-the-job training, mentoring and are supervised in the performance of their duties.
Procurement persorurel receive training utilising SunWater's internal and external training courses.
A list of procurement certiltcation off,rcers is maintained on the SunWater intranet site.
4. Systems
Informøtion, document and
Sun'Water uses a file management system "Hummingbird", SAP Financial, Mìterials Management modules and the Procurement Access database to
capture and track contracts, financial documentation, transactions, securities, insurances, practical and final completion dates.
knowledge management
Pro c ure m e nt m an age m ent
a
a
a
a
o
Purchase order, invoìce ønd
psyment
SAP determines the requisition order payment workflow. Vendor details are stored in the finance system.
Procedures are in place to guide the use ofCorporate Cards.
Financial and procurement delegations are established.
Procurement methods employed include open and select tenders, sole supply, and standing offer arrangements.
Signed contracts are hled using SunWater file management system. (Hummingbird).
SAP determines the requisition-order pa5rment workflow as per SunWater financial and procurement delegations matrixes. Purchase orders are raised in
SAP Procurement module then sent electronically to vendors. Invoices are matched to purchase orders and processed in the accounts payable module.
Payments are recorded against invoices and purchase orders.
SunWater Gorporate Procurement Plan 2010 - 2011
CPP 6
Current practice level [self-assessment rating]
Procurement attribute
5. Planning
Signíftc ant procureme
nt
Risk manøgement
a
Significant Procurement Plans are developed in-house for high value (> $500,000), and/or a high degree ofbusiness risk projects.
Plans for significant purchases are drafted for significant one-off procurements or a number of smaller projects, which when combined, are considered
significant.
¡
.
Risk management is a consideration in all Significant Proçurement Plans.
Specihc Risk Management Plans are prepared for complex and critically important procurement activities.
a
6. lmplementing
Strategies
Supplier selection for all signifrcant procurement projects have been managed in accordance with SunWater's Purchasing Guide.
Supplier selectìon
Negotiation
7. Managing Supply
Transøcting purchøses
Contrøct
mansgement
8. Reporting
a
Procurement undertakes all pre-contract negotiations as required, using a formal structured approach.
The outcomes from this negotiation process are documented, reviewed and used for continuous improvement purposes.
o
o
Commonly purchased low value and risk transactions have been streamlined using the SunWater purchasing guide.
Ways to minimise transaction costs have been considered. And the use of corporate card is promoted for low value, common commodity purchases.
o
Contract Management is currently being undertaken by Project Managers.
o
Profiling procurement
øctiviþ o
o
Research ønd ønølysis
o
o
Concentrated research and analysis for SunWater regional purchases are currently being investigated.
Research and analysis is undertaken on significant categories of goods and services as required, and forms part of the Significant Procurement Plan.
Perþrmanc e meøsare ment
fr am ew or k of pr o c ur e m e nt
o
o
Currently, there is no central performance measurement framework in place. Performance framework reporting is currently being investigated.
Currently, there is no central reporting of contract performance. Contract management and administration is currently being undertaken by individual
project managers.
functíon
Procurement profiling based on product categories is undertaken annually, utilising Queensland Purchasing's SLIPREM.
Planning for signihcant procurements are profiled within individual project's Signihcant Procurement Plans.
SunWater Gorporate Procurement Plan 2010 - 2011
2.4
-
Achievements
-
CPP 7
2009-2010
Table 2 - Performance of Current Procurement Projects
Category of
good/service
Degree of
business
Procurement project
Business Area
Primarily responsible
for procurement
risk^
Review
of
SunWater Procurement Policy has been Corporate
updated in line with Queensland
Purchasing Recommendations and
SLFI recommendations (30 May 2010).
This policy incorporates requirements
for use ofopen and select contracts
including that for sole supply.
SunWater
Purchasing Guide
and Procurement
Policy
SunVy'ater
M
Sun'Water Vendor Managed
Stationery
Corporate
How well was this activity carried out ¡n
terms of efficiency, access to and use of
resources and expertise
SunWater Procurement Policy and Purchasing Guide
have been updated. This will be an ongoing,
continuously monitored.
Successfully updated.
Standing Offer
Procurement strategies developed, implemented and
managed by procurement specialists before being
handed over to Stationery Co-ordinators for day to day
Arrangement
implementation.
Stationery
Supplier Arrangement.
Were the intended
outcomes
achieved?
Yes
Successfully implemented.
SunWater
M
SunWater Whole of Queensland
Travel
Corporate
Standing Offer
Procurement strategies developed, implemented and
managed by procurement specialists before being
handed over to Travel Co-ordinators for day to day
Arrangement
implementation.
Travel
Supplier Arrangement.
Yes
Successfully implemented.
Regional
Procurement
Plans
M
Develop and implement regional
purchasing plans and processes for
SunWater regional ofhces.
Infr astructure Management
Procurement strategies are being developed. Ongoing
implementation and management is being undertaken
in conjunction with Regional Managers in line with
SLFI target projections.
Ongoing - Progressing as per SLFI timeframes.
In process
SunWater Gorporate Procurement Plan 2O1O -2011
M
Standing Offer
Arrangements
Ongoing review of
CPP 8
SunWater's
All Areas
Ongoing project
On-going
ì Infrastructure Development Ongoing project
In process
Standing Offer Arrangements.
(soA)
H
Upcoming
Projects,
Greater than
$500,000
-'
H
Burdekin Pipeline
Project
'
Augmentation
l
InfrastructureDêvelopment Ongoingprojéct
Chinchilla Pipeline Project
H
Co¡rnors to Mõianbth Dam
and
Infrastructure
Development
In process
Stage one completed
Completed
In initial stages
In
Pipeline
H
Feasibility study on the construction
Moranbah Pipeiine to Alpha
of
Infrastructure Development
Feasibility study on the construction
of
I Infrastucture Development
process
i
1
H
-
i..
Bingegang- Middlemount pipeline
Implementation of Regional Plant
Sønding Offer Arrangements.
M
Regional
Business case
Infrastructure ---Near
development
CompteUon
In process
I
Near Completion
Management
i
M
r Implementation of Maintenance
Type
Regional
Infrastructure
I Ongoing project
-T
In
process
ContractsincludingSunWaterhouse Management
and building maintenance.
M
^ Degree of business
risk:
L:
-.'
õf Regional Contracts Regional Infrastructure r Ongoing
Management
including mowing, ground
maintenance, office cleaning, and
I recreational areas servicing.
i*ti"rñ;iätiõn
Low;
M:
Moderale;
H-
High.
project
In process
I
SunWater Corporate Procurement Plan 2010 - 2011
CPP 9
Part 3 - Procurement Gapabilities 2010-2011
3.1
-
Procurement practice profile
- improvement
development opportunities
This Table identifies opportunities for business improvement and outlines where procurement practices can become more efficient and effective in
controlling costs and delivering value for money procurement solutions.
Table
1
-
Procurement lmprovement Opportunities Identified for 2010-2011
Policies, procedures I
and purchasing
delegations
.
SunWater's Purchasing Policy and Guide have
recently been reviewed and now form two
documents. (Purchasing Guide and Purchasing
Policy).
Purchasing th¡esholds have been increased along
with purchasing certification approval levels for
low risk purchases.
Basic purchasing certification haining is now
incorporated into the new employee induction
profiles.
a
Procurement
Management
Purchasing delegations are based on a
combination of dollar limit and purchase risk
o
Procurement policies and procedures are
accessible by all staff via the SunWater
Intranet.
Updates and one ofÊtraining and advice is
given to ensure staff maintain an up to date
awareness of SunVy'ater procurement policy
and procedures.
Procurement management by project/contract
is tracked using an access database.
Procurement policies and processes are
continuously being reviewed and refined to
identifu opportunities for improving
efficiencies within the procurement process.
package.
SunWater specific level I purchasing certification
will be available on SunWater intranet shortly.
l.
Procurement projects are managed and tracked
using an access database.
ì
.
Systems and processes are being investigated
and implemented to allow greater
procurement visibility and improved
monitoring and tracking processes.
CPP 10
SunWater Gorporate Procurement PIan 2010 -2011
Contract
Contract management is undertaken by
Project Managers.
Procurement is heading an investigation on
Contract administration and Contract
Management
management.
Performance
Performance measurement and repofing
measurement
framework for SunVy'ater procurement
functions, systems and procedures, needs to
be implemented to achieve best practice and
continuous improvement along with meeting
the State Procurement Policy requirements.
framework of
procurement
function
i
,
i
.
Implementation and integration of
sustainability into the procurement of goods
and services.
Contract details are monitored in the procurement
access database wherein critical contract
information such as insurances, security, practical
completion dates, and defects liability dates are
recorded and monitored.
Procurement is investigating the level of Contract
administration and Contract management
currently being undertaken in SunWater.
¡
Currently there is no system in place for
procurement performance measurement and
o
Investigation is underway to develop and
implement performance measurements and a
reporting framework for the procurement
function.
o
Refine and develop procurement
sustainability systems and associated
¡
reporting.
¡
SunWater practices sustainable procurement by
considering value for money over the life of the
acquisition.
Contract administration review is underway
to improve mechanisms to track contract
variations including retentions, progress
payments, variations and extensions.
A process to monitor performance tracking
and supplier performance is being
formulated. This information will be made
accessible via the SunWater intranet.
measurements in line State Procurement
Policy.
SunWater Corporate Procurement Plan 2010 - 2011
3.2
- Procurement
CPP
11
improvement capability development - Action PIan Recommendations
The following procurement improvement activities have become projects for SunV/ater to undertake and implement throughout 2010-11. Undertaking
these activities will facilitate the implementation of procurement strategies and practices that will provide operational efficiencies and cost savings along
with support and sustaining of existing best practice procurement management.
Table 2 - Procurement improvement projects recommended lor 2010-2011
Capability lmprovement
project
Project Description
Procurement management
¡
Performance measurement
framework of the
procurement function
.
Contract administration
Responsible Business
Unit
Investigation into the continuous development of internal and external , Corporate
(Supplier) relationships, identiffing key requirements and new systems to
be implemented to track and monitor procurement activities.
lmptement formál procurement performance -"ur*.rn"rri and reporting
frameworks in line with
vy rlu State
uLolv rProcurement
tvvulwtllwrt!
rPolicy
v¡tvJ rwy4uwurvutù.
requirements.
Investi gation underway in relation to current Contract
processes.
- Corporate
Administration i Corporate
I
L
lmplementation Date
Ongoing
ny lO lune ZOI1-
By 30 June 201 1
APPENDIX 1
Corporate P roc u rement G ro u p Organi sation al Structu re
t.Fr
(1)Ed-Eo¡¡FHin