Eyre Region Roadmap Workshop Agenda 1 Confidential Chris Newman Rob Ackland Steve Gillis

Agenda  Introductions  Context  Program Objectives  Roadmap Common Themes  Governance risk assessment  Capability & capacity development – collaboration opportunities  LGAP support and development  Spend Analysis & Category Opportunities  Spend analysis overview  Identify potential collaborative opportunities  Consolidate and prioritise potential action plan  Program governance, resourcing and implementation  Agree next steps

Context

4 Regional Procurement Development Program Objectives & Process Program Objectives:  Make sustainable savings & create efficiencies  Stimulate economic development  Improve probity and reduce risk  Build staff and organisational capability in procurement  Strengthen regional collaboration Joint Council Kick-off Data Collection Individual Council Workshops Detailed Joint Spend Analysis Opportunity Analysis Workshop Regional Roadmap Developmen t and Validation Final Roadmap Workshop Progress Reviews and Support

Roadmap Common Themes  Governance risk assessment  Capability & capacity development Discussion: collaboration opportunities

6 © PMMS Consulting Group Professional procurement Influencing the business Transactional Order placement Level 1 Emergent Level 2 Basic Level 3 Developing Centre of Excellence across all expenditure Procurement foundations in place with improved controls Some functional and category strategies in place Focus on meeting legislative requirements Largely uncoordinated procurement with gaps in compliance Level 4 Advanced Levels of procurement maturity

7 Maturity Assessment

8 Key Areas of Opportunity Significant potential for savings External – Introduction of strategic procurement practice – Establishment of new co-ordinated council contracts Better use of aggregated sector contracts Establishment of regional arrangements – Improved and standardised procurement/ supplier documentation and process – Improved contract management practice Internal – Reducing volume and cost of low-value transactions – Better use of technology – Organisational co-ordination of purchasing and procurement Opportunities to improve probity and reduce risks – Introduce and ensure the consistent use of good practice processes and documents – Establish simple compliance tracking and accountability

 Form project team  Internal analysis  Supply Market analysis Planning and analysis Develop sourcing strategy Go to Market  Develop specification  Analyse strategic options  Set evaluation criteria & weightings  Risk analysis  Prepare documentation  Issue RFx  Clarifications  Receive responses  Evaluation  Shortlist  Negotiate  Agree and sign contract Evaluate responses Negotiate contract Manage supplier relationship  Contract Management Plan  Monitor performance  Benefits realisation Approval of recommendations StrategyExecute Manage Procurement Strategy   ArcBlue Procurement Model © ArcBlue Consulting

Compliance Gaps: Activity AreaRiskConsequence Select Quote / Tender Conflict of interest not managed / documented Perceived or actual bias/ Ombudsman/ ICAC risk inadequate Contractor WHS capability & insurance WHS incident & potential insurance risk/ Legislative breaches Inadequate Contractor capacity Delayed project or lack of service Limited response & lack of competitiveness VFM not achieved or validated Responses < policy guidelines Non-preferred contractors unable to compete New entrants not attracted Excluded contractors challenge procurement process Financial Approval Funding approval & capacity not validated Cost exceeds budget Uncontrolled expense Sourcing Phase

Compliance Gaps: Activity AreaRiskConsequence Quote /Tender Documentation Incorrect and Inconsistent use of documents Process does not comply with policy Contractors fail to respond PO / Contractlack of formal agreement Lack of clarity and consistency re contract form Default to contractor T&C Inappropriate Commercial risk accepted Process not compliant with Policy Lack of control on T&C EvaluationEvaluation criteria not defined prior to responses & limited VFM criteria Unable to demonstrate fairness and VFM assessment in process Ombudsman/ ICAC risk Inadequate Contractor financial sustainability review Contractor financial failure ApprovalLack of documented recommendations / approval Process does not comply with policy Lack of segregation of duties Potential fraud Execute Phase

Compliance Gaps: Activity AreaRiskConsequence Contract approval Lack of control of contract expenditure Contract spend exceeds approval VariationsUncontrolled negotiations and acceptance of contract variations Approvals does not comply with Policy Contract renewal Lack of control of expiring contracts Commercial risk Contract adoption Lack of awareness and usage of preferred contracts Contract leakage Actual spend not aligned with strategy Contractor performance Performance is not measured and managed Poor performance and related risks not addressed Manage Phase

Compliance Monitoring – Clear agreed processes – Consistent application – Prioritisation/ planning/ time allocation – Available expertise – Internal controls and compliance monitoring – Controlled use of Registers Prequalified contractors Contracts – Management Reporting – Risk Management

14 Emerging Themes - Mission Procurement Strategy; Organisation & People – Annual/ Forward Procurement Plans – Category Procurement strategies – Whole of organisational co-ordination & oversight – Movement towards Centre-led Procurement models – Led by a Procurement Steering Group – Staff awareness and training needs Collaboration Opportunities – Annual/ Forward Procurement Plan process and template – Annual/ Forward Regional/ Cluster Plans – Regional Category Strategies – Explore potential for resource sharing/ central resourcing – Steering Group structure & reporting – Training Planning & Delivery

15 Emerging Themes - Framework Policy, Procedures; Systems; Data and Compliance – Review & update processes & documents – Update Procurement Guidelines / Manual – Introduce Acquisition Plans – Strengthen Evaluation and COI processes – Regional/ Cluster approach Prequalification / Preferred Contractors / Panel Contracts – Contractor WHS Management Practices – Consistent records management practices – Knowledge Management - linkage to LGAP processes and contracts – Internal control and compliance audit – method & resources Collaboration opportunity – all of above

16 Emerging Themes – TBL Enablers Economic Development; Social & Environment – Develop TBL objectives into Annual Procurement Plan – Develop approaches and models to apply in practice – Develop local supplier education program – Develop Buy local program – Case studies to stimulate Social Procurement opportunities Collaboration opportunity – all of above

17 Emerging Themes - Delivery Contract Mgt; Category Mgt; Benefits Reporting – Develop Contracts Management process & guidelines – Establish contractor performance management – Streamline low value / high volume transactions – Develop spend analysis – Introduce Category Management approach – Develop & Implement KPI – Develop standard Procurement reports Collaboration opportunity – all of above

Some thoughts on procurement Rob Ackland CEO, LGA Procurement

Discussion – Strategic and Operational Collaboration

What do we do? A procurement aggregator to increase the purchasing power of Councils, reduce costs and risks Preferred supply panels from which Councils can purchase, to any value, without tendering, using Vendor Panel. National and SA based Consulting services to meet specific Council(s) needs/projects Support collaborative procurement strategies within and across regions Promote the development of sector wide procurement capability

Capability Building Development of consistent good practice On line access to suite of procurement documents and contracts Discussion on user group experience and future development opportunities Skills Development LGAP Training Program future direction

Tendering can cost money? Anecdotal evidence from NSW, MAV and WALGA & supported by State Governments Standard tender, $15-$25k More for complex tenders, $50- $70k+, waste, construction, etc. Supplier costs, $10-25k to respond to simple bids Feedback from suppliers is the variations in Council tender requirements for the same good or service are increasing their costs and risks One supplier(engineering services) has responded to 162, State and local government tenders this year at an estimated $10k each so $1.62M just to bid

Sharing the load……. and the benefits Everything in one place National – Oils & Fuels Statewide - Consulting Services Panels Statewide – IT and Telecommunications Panel Statewide – Library Resources Panel Regional – Panels Regional - Pre-Qualified Contractors Regional – Contractors (not pre-qualified) Open Market (Public) Managed by Council Managed by Region Managed by NPN via LGAP Managed by LGAP Local – Council Pre-Qualified Contractors Local – Contractors (not prequalified) National – Vehicles, Truck Vehicles Panels National – Mobile Garbage Bins National – Plant & Machinery National – After Hours Call Service Current LGAP focus: 1.Engineering Services Panel 2.Temporary Labour Panel

Vendor Panel A contract supermarket Pre-qualified suppliers so risk already managed Simple, quick, safe and easy to use Removes the need to tender so low cost and risk Provides access to NPN and LGAP preferred suppliers Issue an RFQ, evaluate and place an order Can be tailored by Council, Group or Region by adding your own contracts The more it gets used the better the response by suppliers

Some thoughts on collaboration Cooperation is the thorough conviction that nobody can get there unless everybody gets there. ~Virginia Burden No one can whistle a symphony. It takes a whole orchestra to play it. ~H.E. Luccock None of us is as smart as all of us. ~Ken Blanchard

Thank you for the opportunity to introduce the LGA Procurement team, our services and capabilities! Rob Ackland CEO, LGA Procurement or

Discussion: LGAP contracts Everything in one place National – Oils & Fuels Statewide - Consulting Services Panels Statewide – IT and Telecommunications Panel Statewide – Library Resources Panel Managed by NPN via LGAP Managed by LGAP National – Vehicles, Truck Vehicles Panels National – Mobile Garbage Bins National – Plant & Machinery National – After Hours Call Service Which contracts are working well? Where are the constraints to use of LGAP contracts?

Spend & Opportunity Analysis  Category Opportunities  Collaboration  State  Region  Cluster Discussion: Category collaboration opportunities

Opportunity identification process Cleanse data  Initial review  Define output requirements  Define coding structure  Check sufficient data granularity exists  Import additional data sets into database if necessary  Agree which fields are to be used for the analysis  Initial review  Define output requirements  Define coding structure  Check sufficient data granularity exists  Import additional data sets into database if necessary  Agree which fields are to be used for the analysis Initial spend analysis  Develop graphs and analysis on spend  Highlight ‘influenceable spend’  Add in contract view to understand contracted spend  Develop graphs and analysis on spend  Highlight ‘influenceable spend’  Add in contract view to understand contracted spend Develop hypotheses  Create hypothesis opportunities  Hypotheses cover areas of potential opportunity that has been highlighted through the spend analysis process  Create hypothesis opportunities  Hypotheses cover areas of potential opportunity that has been highlighted through the spend analysis process Validate  Validation teams launched to review each potential opportunity  Detailed spend analysis per opportunity  Review of constraints (eg contracts)  Discussion with key stakeholders  Validation of opportunity  Validation teams launched to review each potential opportunity  Detailed spend analysis per opportunity  Review of constraints (eg contracts)  Discussion with key stakeholders  Validation of opportunity Implement  Develop implementation plan  Incorporate into project charter  Approval of project charter  Tracking of progress  Implementation of plan  Develop implementation plan  Incorporate into project charter  Approval of project charter  Tracking of progress  Implementation of plan Categorize data  Review current coding structure  Remove irrelevant categories  Implement consistent coding structure  Review current coding structure  Remove irrelevant categories  Implement consistent coding structure Spend Analytics Opportunity delivery

Potential Collaboration Opportunities CategorySpendClusterRegion Bitumen$2.7m West Coast Bitumen Consolidate spend Common standards Manage contractor(s) Road Reseal, Civil & Materials Road resealing/ Quarry materials/ Regional crushed rubble arrangements/ Carting Line-marking/ Kerbing $11m Regional longer term arrangements on quarry, rubble Shared services Cluster contracts Develop Common stds, documents, processes Regional contracts based on agreed Program and multi-year deal

Potential Collaboration Opportunities CategorySpendClusterRegion Waste Management -Kerbside, transfer stations, recycling, landfill $4.4m Expand arrangements Strengthen range of collaboration Regional Recycling strategy Consolidate spend & manage contractors Regional Landfill and Waste Strategy Utilities$4.5m Demand efficiency strategies Billing accuracy & efficiency CWMS services and supplies, e.g. pumps, pipes, de-sludging service etc. ? Develop Procurement strategies to support CWMS Group

Potential Collaboration Opportunities CategorySpendClusterRegion Professional Legal Engineering Asset Mgt $1.7m $1.6m Consolidate spend Managed Contractor Panels LGAP Contracts R&M$6.4mManaged Panels  Building mtce  Street sweeping  Trees & Vegetation Cross council contracting  Kerbing  Linemarking Develop Common stds Managed specific contracts Pre-qualification Model Fleet – Heavy and Light Fuel/ Tyres etc. $2.6m Asset sharing Managed Panels Develop common stds LGAP Contracts ICT$2.1mSystems support leverage expertise Systems strategy

Discussion – Developing Category Strategies

Program Governance, Resourcing & Implementation

Next Steps