Preparing for change – Understanding and
preparing for the impact of reform on
procurement in WA Local Government
Chris Newman
Director ArcBlue Consulting
Chris.newman@arcblue.com.au
www.arcblue.com.au
0412 318 384
The Global Procurement Network
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
Qld State Government
• Contract Management Capability
Assessment
WA Local Government
• Procurement Training
Program
• Spend Analysis
Gold Coast Council –
Capability Development and
Contract Management Training
SA Local Government
• Roadmap Program
• Regional Opportunity
Analysis
Procurement Capability
Assessment / Development
SA State Government
• Procurement Transformation
NSW Local Government
• Roadmap Program with LGP
• Procurement Leadership Program
• Social Procurement Development
• Metro and Regional Collaborative
Procurement development
VIC State Government
• CIPSA Certification
• Training and Development
Federal Government
State Government
Local Government
Federal Government
• Contract Management
Development
• Regional Procurement
Development Programs
NSW State Government
• Accreditation Program – preparation
and assessment
• Procurement Project support
VIC Local Government
• Procurement Roadmap
development
• Contract Management
Guidelines and Training
NZ Government
• Departmental reviews
Procurement Development
Why Procurement?
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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)
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Procurement is moving from an administrative role to a strategic one
Local Government Procurement Roadmap and Spend Analysis Programs
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Councils now recognising the importance of a structured approach to
procurement capability development
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Supported by Regional Groups and other peak Local Government
Procurement Bodies around Australia
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180 Councils across 3 States have participated in Roadmaps since 2010
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75 Councils now have Procurement ‘Dashboards’ in place
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2013/ 2014 Regional Programs – NOROC, SSROC, Riverina, WSROC,
Centroc, Eyre Peninsula, Barossa, Metro Adelaide, Geelong Region
Procurement Transformation and
Collaboration Benefits
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Sustainable savings in external expenditure through:
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Strategic Council contracts
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Expanded use of LGAP contracts
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Regional collaborative procurement
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Demand management strategies
Increased usage of local and regional suppliers, e.g.
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Improved performance, e.g.
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Gold Coast spend through local suppliers increased from 49% to 63% over 2 years
Increased completion rates and performance of Capital Works delivery
Streamlined internal processes
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Targeted productivity savings
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Improved probity and reduced risk
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Social Procurement - Employment generation for local and disadvantaged
communities, e.g.
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G21 GROW Project – cross sector development of job creation strategies through
procurement
© ArcBlue Consulting 2014
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
State
Regional
• Contracts
– Reset of contracts creates an opportunity to move
beyond ‘business as usual’
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
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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
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Training Programs running throughout the year at WALGA
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Feb, May, August, November
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Training Needs Analysis available
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Building and expanding on the success of the last 2 years
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Programs can be delivered ‘in-house’ and tailored to a council and regionally
to groups of councils – packaging of courses available
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Targeted at all staff involved in procurement, purchasing and managing
suppliers and contracts - training tailored specifically for WA LG
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Highly experienced trainers with specific experience working with Councils
Local Government Procurement Roadmap and Spend Analysis Programs
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Contract Management - Course 1 – Managing Contracts in LG Introduction
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Contract Management - Course 2 – Planning & Specification Development
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Contract Management - Course 3 – Evaluation, Supplier Selection and
Contract Establishment
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Contract Management - Course 4 – Managing contractor WHS
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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