Using Data to Promote the Public Procurement Profession

David Davis – Washington State DOT, WABrian Smith – Multnomah County, OR

Nelson Park – Seattle City Light, ORJonathan White – Spikes Cavell, VA

David Davis – overall reasons for procurement teams to record and report their valueBrian Smith - example processes to record your valueNelson Park – using analytics to support the value of public procurement narrativeJonathan White – calculating an ROI for procurement and procurement projects

How is your department measured by your bosses today?

For most, it’s how much you cost…

It’s time to change that measurement to “What value did you add?”

Categories of Savings and Efficiencies

• Contract savings or discounts• P-card rebates• Settlements

Spend Management

• Duplex printing as default• Digitizing records vs printing reports• Reusing serviceable materials

Demand Management

• Property redistribution• Investment recovery – disposal• Supply chain management - VMI

Supply Management

• P-card payments• Online ordering• Early influence on decision cycles

Process Management

Measured Savings and Efficiencies

From Small Beginnings

Create a process for recording savings

Low Hanging

Fruit

Low Hanging

Fruit

$344,031 Non-Cash Releasing $60,469 Cash Releasing $40,000 Approximate

Implementation Cost

113,548 Lbs. Processed 33% Internal Reallocation 44% External Reallocation 20% Recycled 3% Landfill

Surplus Program – Our First Year

Percent of cost covered by value delivered

Switching Perspectives – Procurement Saves your Agency Money

FY 14 29%FY 15 63%FY 16 ?

More from Multnomah County Procurement

http://www.spikescavell.com/learning-about-spend-analysis/

https://multco.us/purchasing/news/multnomah-county-presented-workshop-nigp-forum-2014

How are we doing?How do we “meaningfully” report results upwards?

Um,…. Well…. I don’t know,

but….

Low Hanging

Fruit

If you can’t measure it – it didn’t happen• Who did it?

• What did we do?

• When did we do it?

• Why did we do it?

• How long did it take?

• Did we do it on time?

• What were the costs

• What were gains?

How do we prove it?

How do we measure it?

Low Hanging

Fruit

Metrics is the answer

Steps: ( Be patient, this took us 2 years +)1) Define what is important to the Stakeholders2) Define success3) Determine how success is measured4) Measure and report the results5) Revise as necessary

Ask: Did we accurately answer the question that was asked?

Low Hanging

Fruit

Low Hanging

Fruit

Was Procurement

involved?

Is it consistent and will it stand up to

review?

What would have

happened otherwise?

Average of all responsible responsive bids

Bid accepted

Simple and Endorsed RFP Savings Calculation

Alternative RFP Savings Calculations

Budget – Bid AcceptedPrevious Price – Bid AcceptedMarket Rate – Bid AcceptedBid Accepted – Negotiated BAFO

Net revenue generated from sale of surplus

Simple Surplus Savings Calculation

Alternative Surplus Savings Calculations

Net Revenue – Staff TimeNet Revenue – Staff & Scrap ValueNet Revenue + Cost of Disposal – Staff

Efficiency Calculations

(Cost to process invoice manually – cost of pCard/eProcurement transactions) * number of transactions avoided

Get As Complicated As You Like

(Award value to local vendor * corporate/city/land tax rate) = Revenue10 * Revenue = Cost of local support services avoided

Gains

Procurement Team Cost

Simple Cost of Procurement Calculation

$100,000

$500,000

0.2 or 20%

Simple Cost of Procurement Calculation

For every $1 budgeted for the procurement team, we actually only

cost the agency $0.80 so…

Simple Cost of Procurement Calculation

Savings – Procurement Team Cost

Procurement Team Cost

Simple ROI Calculation

$300,000 – $200,000

$200,000

0.5 ROI

Simple ROI Calculation

For every $1 you spend on procurement, we make the agency

$0.50 in savings and efficiencies so…

Simple ROI Calculation

Low Hanging

Fruit

Low Hanging

Fruit

Recorded webinars http://

www.spikescavell.com/learning-about-spend-analysis/

Savings Recording Support Documents https://

multco.us/purchasing/news/multnomah-county-presented-workshop-nigp-forum-2014

Measure Registration http://www.nigp.org/measure