You’ll be astonished!
Procurement in government agencies is usually either done by internal staff, or – if there’s nobody with current skills in procurement – an external consultant is brought in.
Those consultants are typically seasoned professionals, with fees ranging from $1,500 – $2,000 per day. Their job in managing a procurement process can take a few days, or a few weeks, or sometimes even longer (without counting any technical or engineering expertise they may also offer).
Naturally, if you’re lucky enough to have suitable internal staff to manage your procurement, they also bring in a cost. Of course, their time is valuable (although to many organisations, that cost is hidden within the overall salary expenditure). Let’s say, very conservatively, that costs for your internal people are around $600 per day (not counting the costs of Administration, office space and equipment, holiday pay, sick pay, ACC, and all the other things that every employee costs their organisation: those typically add up to at least double their salary costs).
If they’re not in the first place, qualified procurement professionals, then diverting them from their core competencies not only adds that direct daily cost to your overall procurement budget, but also may add to the risk of inefficient procurement.
If your internal people or your external consultants are up to speed with current best practice procurement tools (like risk-based procurement planning, effective pre-conditions, targeted questions, scoring guidelines in the RFT, SQP25 weight setting methods, Anchored Scales for scoring and Promises Registers) – then they can save weeks or even months from the evaluation process.
At anything between $600 and $2,000 per day, it doesn’t take a mathematical genius to work out that there are big savings available. Here’s why –
…for every single week that’s saved from your procurement programme, at least $3,000 (and maybe up to $10,000) for each member of your procurement team can be re-diverted to implementing the contract works. That’s the shovel-ready stuff – the actual building and maintenance of your asset.
The pay-back for your investment in procurement training on this basis alone, is just a few days. The direct cost/benefit ratio is stellar!
But it doesn’t stop there!
Streamlined tenders prepared by qualified procurement professionals also save time for suppliers in responding. And those savings will, eventually, find their way into lower tender prices. The more efficiently your contractors can operate, and the less tedious, irrelevant or unnecessary documentation that they have to prepare, the more time they can spend to focus on designing and delivering the most cost-effective, efficient and innovative solution for your project.
A tender that has the benefit of thorough and powerful planning by qualified procurement professionals, will identify the key drivers to Value for Money. It will then differentiate the tenderers on their ability to deliver those priorities – and nothing else!
The successful tenderer, then, is poised to deliver the best possible value by addressing the risks under their control through their experience and methodology; and delivering additional value through innovation and other community benefits.
It’s hard to estimate the tangible savings from getting the right supplier on board, but one thing is for sure – the selection of the most cost-effective supplier happens when procurement processes are run by people who have been trained in current best practice.
Without trained, qualified procurement people managing the process, the risks of hemorrhaging money in both the procurement process and the ensuing works, are huge.
Investment in procurement training delivers a double whammy!
Trained and qualified procurement professionals not only deliver major cost savings through more efficient, cut-to-the-chase procurement methods, but also they’ll zero in to the best choice of supplier to deliver value for money. And that can be worth millions, over the life of the asset they’re working on.
What are you waiting for? Developing your procurement skill-base is the most obvious, and the best value for money you can invest in, both on a personal basis and at an agency level.
Find out more about procurement training that will work for you and your team, here.