Procurement Capability Assessment 2010

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Section 8

PERFORMANCE MEASUREMENT

8. Does the organisation have a sound approach to assessing and demonstrating its procurement performance?

8.1 Does the organisation have a clear, well-balanced and fully aligned set of measures to help improve procurement performance and support business improvement?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A. What are the criteria used to drive Procurement decisions and define benefits?

Overall Value of Results

Capability

Minimise Price

or

Minimise price with selective focus on operational requirements, e.g. delivery/availability.

The tender evaluation criteria is detailed and takes into account technical and commercial criteria incl. consideration of Total Acquisition Costs and service level consideration.

Taking into account some appropriate community benefits and sustainability improvement appropriate to the commodity/project strategy. Understanding of supply chain impacts and service impacts.

Taking into account Whole Life Costs and reviewing the appropriate community benefits and sustainability improvement appropriate to the commodity/project strategy.

B. How well defined are the Procurement performance targets and measures?

Reporting & KPI

Capturing Savings and Benefits

There are no measures in place or some measures set around basic elements. Evidence of obvious gaps between targets and actuals. Measures and performance not communicated. Little evidence at senior level of monitoring of progress.

Good set of performance measures with some gap areas (e.g. BPI Profile information updated regularly).

Strong set of performance measures with small gaps (e.g. full BPI Reporting). Well communicated. Regular monitoring and review. Some trend monitoring.

Some measures developed internally with other departments.

Review by senior managers.

Clear measures are in place developed with key stakeholders across the business.

Performance measures well defined and agreed and published at management level (e.g. full BPI Reporting plus additional comprehensive measures covering the service provided). Takes account of: Cost, performance, risk and service continuity, sector and organisation reputation.

C Do Procurement Officers and relevant managers get appropriate, timely and accurate procurement spend information?

Overall Value of Results

Capability

Little or no systematic reporting information is available e.g. variance analysis, comparison of outturn against budget, performance against targets & measures.

As part of standard financial reporting, Procurement Officers and relevant managers routinely get relevant, timely and accurate statements of procurement spend against budgets.

Procurement Officers and relevant managers receive reports on variances over a specified amount.

Financial reporting includes spend against budget and variance analysis. Areas of high costs are scrutinised and reviewed on a regular basis. Budget holders report unusual patterns or variances to Procurement.

Financial reporting also defines and measures performance targets.

8.2 Do the available performance measures and reports suggest the organisation is achieving best value and continuous improvement in procurement?

Question

McClelland Attribute

7 Cs

Level 0

Level 1

Level 2

Level 3

A Does the organisation have a clear approach to assessing/ demonstrating its procurement performance?

Overall Value of Results

Capability

No clear approach, few reports.

Procurement reports on savings to demonstrate procurement performance. Contract register in place covering over 50% of organisation's procurement spend.

The procurement function feeds appropriate information into the corporate performance framework. Procurement Risks and Issues are identified however are not reported outwith Procurement. Contract register in place covering over 75% of organisation's procurement spend.

Procurement savings and other procurement benefits are separately identified in discussions and reports on the organisation's overall financial strategy and performance. Procurement Risks and Issues are identified and reported to the Board. Contract register in place covering over 90% of organisation's procurement spend.

B. Is procurement spending monitored to ensure that it realises its anticipated benefits and savings against targets?

Overall Value of Results

Capability

No monitoring evident, few reports.

Basic attempts are made to monitor procurement outcomes on a contract by contract basis. There may be gaps in the analysis and no overall picture of performance is provided.

Procurement outcomes - financial, quality of goods/service and wider benefits and savings - are monitored and are on track to deliver against targets.

Procurement benefits are clearly defined at project and business level and are quantified in terms of clearly improving business performance.

Performance information is highly accessible and easy to interpret.

Any remedial decisions based on the performance information are communicated and documented appropriately. All benefits and savings are on track and some are being delivered quicker than plan.