Procurement Power: How Local Government
Can Drive Reform Through Procurement
Transformation’
Chris Newman MBA
Director ArcBlue Consulting
8 October 2014
ArcBlue Consulting Group
www.arcblue.com.au
@arcblueconsulting
ArcBlue Government Procurement
Development Activity across Australia/NZ
QLD State Government
• Contract Management Capability
Assessment & Development Program
Gold Coast Council –
Capability Development and
Contract Management
WA Local Government
• Procurement Training
Program
• Spend Analysis
Procurement Capability
Assessment / Development
SA Local Government
• Roadmap Program
• Regional Opportunity
Analysis
NSW Local Government
• Roadmap Program with LGP
• Procurement Leadership Program
• Social Procurement Development
• Sydney Metro Councils Joint
Procurement Development Program
VIC State Government
• CIPSA Certification
Federal Government
State Government
Local Government
Federal Government
• Contract Management
Development
• Regional Procurement
Development Programs
NSW State Government
• Accreditation Program – preparation
and assessment
VIC Local Government
• Procurement Roadmap
development
• Contract Management
Guidelines and Training
NZ Government
• Departmental reviews
Procurement Development
Why Procurement?
• Represents a large component of council activity and expenditure
– Victorian Councils spend over $4 billion each year (estimate)
– More than half of most councils’ overall expenditure
– Has received little focus (administrative – not strategic)
Procurement Development Programs
• National and State Government Procurement Development
Programs across Australia and New Zealand
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 since 2010
• 2014 Regional Programs –
– NSW: NOROC, Riverina, WSROC, Centroc
– SA: Eyre Peninsula, ERA, Barossa Region, Council Solutions
Procurement Local Government
State
Regional
Local
Why the focus on procurement ?
The benefits
o Reduce external supplier costs
o Increase internal efficiencies
o Build confidence
o Reduce risk
o Demonstrate professionalism
o Project delivery
o Environmental sustainability
o Regional/local economic
development
o Social Objectives
o Capital works and budget planning
o Project management and delivery
o Regional and Sector Collaboration
Organisational Assessment
External Focus
Strategic
Procurement
Internal Focus
Program: Objectives and Process
• Support Councils and the region in driving savings and
improved performance through their procurement practice
• Identify and explore further opportunities for regional
collaboration and the most effective role for regional groups
in supporting regional projects and programs
• Support participating Councils at an individual and regional
level in better understanding and managing and identifying
opportunities for improved performance
Joint Council
Kick-off
Data and
Information
Collection
Joint Spend
Analysis and
Assessment
Regional
Opportunity
Analysis
Workshop
Develop
Regional
Roadmap
Develop Council
Solutions
Strategy
Individual
Council
Roadmaps
On-going
Support
Regional Roadmap Example
Priorities – Wave 1
Road Reseal
Bulk Cartage
Line Marking
Wave 2
Street Sweeping
Waste Management – including leverage NORMA contract
EWMS
Building Maintenance & Cleaning
Services Panel - Including Shared Portal
ICT
Rubble Raising & Crushing
Heavy Plant & Equipment sharing
Materials supply
Procurement Transformation and
Collaboration Benefits
• Sustainable savings in external expenditure, e.g.
–
–
–
–
Blue Mountains $800,000
Murray Bridge $500,000
Burnside $600,000
Riverland Region – Over 20% savings through regional contracts
• Increased usage of local suppliers, e.g.
– Gold Coast spend through local suppliers increased from 49% to 63%
over 2 years
• Improved performance, e.g.
– Increased completion rates for Capital Works
• 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
9
© ArcBlue Consulting 2014
Data Analytics
Data Analytics
Transforming Local Government
• Data analytics is transforming our understanding of local
government procurement.
• Regional Procurement Roadmap Programs across NSW
and SA in 2014 have incorporated new technology and
data collection and analysis ‘Dashboards’ tailored
specifically for local government.
• The ‘Dashboards’ create a new understanding and
capacity for driving cost savings, compliance and
regional economic development outcomes.
• There is much broader application of data analytics in
transforming our capacity to understand and drive
individual development and regional and sector
collaboration across a wide range of council activities
11
© ArcBlue Consulting 2014
Individual Council Procurement
‘Dashboards’
Sample Council Dashboards
Dashboards include
 Top 20 Suppliers
 Category spend
 Local spend
 Invoices and POs
 Cumulative spend compliance
 Contract spend
 Aggregator spend
 Procurement KPIs
 Performance benchmarking
All rights reserved
13
Local Spend Dashboard
All rights reserved
14
Spend
Summary
Regional Spend Analysis - example
Regional Categories & Suppliers
COUNCIL 1
COUNCIL 2
COUNCIL 3
16
© ArcBlue Consulting 2014
Regional Category Dashboard
17
© ArcBlue Consulting 2014
Regional Demographics
All rights reserved
18
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
All rights reserved
19
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
All rights reserved
20
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
All rights reserved
21
LEAP - Procurement Continuous
Improvement Program
MAV LEAP Program - Background
• Procurement leaders conference May 2014
• 40 LG procurement professionals
• Focus on individual and sector wide capability
development
• Identified successful STEP program methodology
(Asset Management, Planning) as applicable
• Need for spend analysis, benchmarking and
performance reporting across the board
• Priority to support structured collaboration and
enable local/regional economic development
23
© ArcBlue Consulting 2014
Program Design
•
•
Detailed LEAP Plan
Council workshops
Phase 3
IMPLEMENT
Phase 2
DEVELOP
•
Phase 1
ASSESS
•
•
•
•
Spend Analysis
Maturity assessment
Practices & Priorities survey
CONTINUOUS IMPROVEMENT
PREPARATION
All rights reserved
Implementation support for
delivering LEAP Plan
Informing priorities for MAV
Central Capability Development
support activities eg. Training,
Documents, Guidelines, Events
etc/.
24
Maturity/Capability Assessment
• Online maturity/capability assessment based on 12
procurement dimensions
• Input into sector and regional benchmarking and presented in
dashboards
• Inform the development of priority actions for Phases 2 & 3
• Annual update to track movement and achievements
• Results reported back via dashboards
All rights reserved
25
Practices & Priorities Survey
 Procurement Practice and Priorities Survey to be deployed
online to each Council to capture outline of current practices
 Survey to capture information regarding each individual
councils current focus and priorities including:




Social procurement and local economic development objectives
Current contracts and renewal schedule
Procurement technologies being used
Major upcoming procurement projects (procurement plan)
 Analysis of survey results to inform benchmarking, regional
collaboration opportunities and contract priorities
 Results including benchmarking reported back via
dashboards
All rights reserved
26
Workshops and Presentation
• Workshop with Stakeholder group to review spend
analysis results and benchmarking identified
through the ASSESS phase activities
• Training in on-going usage of Council’s individual
Procurement ‘Dashboards’
• Facilitated Senior Management Presentation to put
forward the outcomes of the ASSESS phase,
• Development of individual Council LEAP Plan
developed as part of the workshop
All rights reserved
27
Regional Development
• The LEAP Program presents an ideal opportunity for
Councils to strengthen collaboration across regions
in both metropolitan and regional Victoria.
• For no extra cost, regions with 5 or more LEAP
participating Councils will have access to:
– A fully developed regional spend analysis
– Online regional ‘Dashboards’
– Regional Opportunity Analysis Workshop to support the
development of opportunities for a wide range of
collaboration.
All rights reserved
28
Phase 3 - IMPLEMENT
• Implementation support to ensure that priority
action areas are being implemented
• Example Leap Program Modules
Savings & efficiencies program
Procurement process and systems review
Probity and compliance diagnostic
Procurement reporting and KPI development
Training program
Purchase card strategy
Social procurement & Local Economic Development
program
– Collaborative procurement program
–
–
–
–
–
–
–
All rights reserved
29
LEAP Ongoing
Annual Cycle:
 LEAP progress review
 Spend analysis update
 Practices/Priorities survey
 Maturity assessment
 Update of LEAP Plan
 Report back on progress,
performance and
benchmarking
 On-going priority
continuous improvement
plan implementation
ASSESS
IMPLEMENT
All rights reserved
DEVELOP
30
Next Steps
• Letter to go to all CEOs in mid October
• Annual cost per participating Council including full
spend analysis is $9,000
• Information Session at the MAV on October 31st
• Registration for Stage 1 Councils by November 31
• More information will be available on:
www.mav.asn.au
www.arcblue.com.au
• Or contact Cameron Spence on
[email protected] or
[email protected]
All rights reserved
31