Procurement Fitness Test: How do you shape up?

Procurement practice has come a long way in the past five years.

As the number and success rates of legal challenges to public and private organisations on tendering processes have climbed, so have the concerns of CEOs, elected members, and procurement managers.

If you're responsible for the procurment of services or products for your organisation, you’re most likely to be concerned about three key procurement issues:

  1. What are the risks that you’ll be the next organisation to be slammed by the papers and/or the courts for unfair tendering processes?
  2. How confident are you that the time and money you invest into procurement is used efficiently?
  3. What evidence do you have that your tender processes deliver best overall value for money?

Organisations that have revised their procurement practices recently have realised significant cost and time savings. In the process, they have also minimised the chances of legal challenge, improved supplier relationships, and gained confidence that their procurement decisions are delivering best value. There’s a clear win-win, with tangible all-round benefits.

“But do we need this?” I hear you say. “Our procurement staff are experienced and have surely been following best practice for years!” Or have they?

The NZ Government’s Procurement Capability Index and the Road Efficiency Group (REG) Smart Buyer Guidelines are useful tools to gauge strategic procurement capability, but the quiz below is focused on practical procurement practice that makes a difference to the immediate efficiency and effectiveness of tendering processes.

The Acid Test:

Try this quick fitness test to assess your organisation’s procurement fitness and effectiveness.

  Always Usually Some-times Rarely Never
  1. Our procurement staff have been trained in the Government’s Principles of Procurement and Rules of Sourcing
         
  1. Our procurement planners also develop RFx documents, and evaluate tenders
         
  1. We don’t recycle generic RFx documents without carefully tailoring them to the project
         
  1. The questions in our tenders focus only on the project-specific drivers for value for money
         
  1. Our tenders evaluate the social and environmental impacts of the project
         
  1. We use pre-conditions, supplier panels, prequalification or expressions of interest to eliminate unsuitable suppliers early
         
  1. Our pass/fail attributes include fact-based definitions of non-conformance, clearly stated in the RFx
         
  1. Our evaluation teams meet to agree a fact-based scoring system before they review the responses
         
  1. Attribute weightings are always more than 10%. We use pass/fail for attributes of minor importance.
         
  1. On Lowest Price Conforming tenders, we open and rank the prices first and only check the attributes of the lowest price bidder
         
  1. We use NZQA Qualified evaluators for all NZTA projects over $200k
         
  1. Our Evaluation Reports include detailed commentary on how the scores were allocated in each attribute.
         

 

How did your organisation score?

If your answers were mostly ‘Always’ or ‘Usually’ – congratulations! Your procurement people are doing a great job of encouraging competition, following fair and legal processes, and securing sound value for the money your organisation spends.

If you had several responses in the ‘Rarely’ or ‘Never’ columns, then it’s time for a shake-up of your procurement practices across the board. Chances are, you’re spending far more than you need to, compromising value for money, and exposing your organisation to unnecessary risks.

Consider running a training course in procurement and getting your key procurement staff qualified with the NZQA Level Six NZ Certificate in Infrastructure Procurement. It will be an investment that will pay you back, many times over.

Caroline Boot, Clever Buying Ltd

For more information, see www.cleverbuying.com or contact caroline.boot@cleverbuying.com or 021 722 005.