Procurement Process Review and Mapping
Powerlink is a state government owned corporation, which owns, develops, operates and maintains the high voltage electricity transmission network that extends 1700km from north of Cairns to the New South Wales border. To deliver on the business strategy, the Finance & Business Performance Divisional Business Plan 2014/15 committed to undertaking a review of the procurement and contract delivery process as a performance improvement initiative supporting the strategic theme of agile people and processes. Powerlink engaged the services of Charles Kendall Australia to conduct a review of its procurement processes and procedures with the aim of identifying potential improvements and efficiencies.
- Mapping of the current state procurement processes.
- Identification of inefficiencies and opportunities to improve procurement processes and overall operations of the procurement team.
- Mapping of the future state procurement processes.
- Development of a recommendations report with consideration of key factors such as commercial and financial risk, governance and compliance, business needs and industry best practice.
Identification and analysis of the following:
- Strategic documentation including policies, standards, manuals, business plans and strategies, and organisational charts.
- Operational documentation including work instructions, toolboxes and templates.
- Team structure, resourcing, roles and responsibilities.
- Systems and tools.
- Core service offerings.
- Strategic procurement functions and projects.
- Customer engagement and communication practices.
- Reporting structure and practices.
- A number of recommendations were identified and broken down into seven categories such as contract management, team structure and strategy operations and service delivery.
- Procurement process maps were developed for the current state and future state.
Review of Strategic Contracts Team
SPARQ Solutions provides information and communications technology services to Queensland’s electricity suppliers, Energex and Ergon Energy. The Strategic Contracts Team (SCT) maintains primary responsibility for procurement strategy and delivery on behalf of SPARQ Solutions. Procurement of circa $100 million of goods, services and licensing is facilitated annually by the SCT. Upon acknowledgement that the SCT may be improperly utilised and thereby less able to undertake value adding activities, CKA was engaged to perform a comprehensive review of the SCT.
- The review was to evaluate and verify consistency with sound commercial practice, extent of focus on value adding activities, efficiency and effectiveness, appropriate levels of governance, stakeholder satisfaction, and the division of roles and responsibilities.
- SPARQ Solutions set a strict deadline of three weeks from commencement of the engagement.
Upon commencement, immediate action was taken to organise an array of interviews (17 in total) required to obtain insight into current practices, along with any associated shortcomings and opportunities. In addition to interviews, CKA conducted a comprehensive review of records and resources, including an audit of several procurement activities. Investigations addressed:
- administration practices;
- procurement framework and related processes;
- systems supporting procurement;
- probity and governance; and
- people, roles and responsibilities.
All investigations were completed, and the report was published within the three week time frame stipulated by SPARQ Solutions.
Thorough investigations led to a comprehensive report capturing a vast range of findings. Across the interest areas listed, 28 improvement recommendations were made. To plan for implementation of each recommendation, the report presented a table that highlighted required activities, prioritised & scheduled activities, allocated resources, estimated effort, and nominated duration. All recommendations were charted to diagrammatically illustrate, for implementation of each recommendation, the estimated level of effort, versus the likely benefits generated.
Origin Energy is one of Australia’s leading integrated energy companies; supplying electricity to 4.2 million customers and developing and producing natural gas. At a time of peak activity and when the organisation was also undergoing a significant restructure, Origin Energy engaged CKA for the role of category specialist to service the Water Solutions team and the Non-Production Facilities, People and Logistics team.
In consideration of staff movements prior to engagement of CKA, there was a steep learning curve involved with continuation of a significant workload that was already previously delayed. CKA’s scope broadly included, for example:
- develop sourcing strategies;
- develop documentation and coordinate requests for tender;
- facilitate and participate in contracts review board approvals;
- manage negotiations for contract award and contract variations etc.; and
- develop comprehensive scopes of services.
The below list includes some examples of arrangements that required CKA’s attention at Origin Energy.
- Significant contract variation for international supplier of interferometric synthetic aperture radar monitoring.
- Procurement of contractor for demolition and transport of specialist plant and equipment.
- Procurement of contractor for storage and management of core samples.
- Significant contract variation for residential accommodation and related services.
- Various service orders for bore hole monitoring, ground water modelling, hydrogeological studies, labour hire, and so on.
- Leasing arrangements for office accommodation in two separate locations.
- Hotel accommodation and related services.
- A methodical, pragmatic approach was required to meet the demands of the engagement. It was imperative that time was taken to collect and analyse data whilst nevertheless facilitating progress of ongoing activities.
- This engagement required a resource to be located full time on site at Origin Energy. Significant stakeholder consultation was required to collect data, collaborate, facilitate approvals, and provide reporting.
Engagement of CKA provided Origin Energy with flexibility to meet resourcing demands at short notice. CKA’s relevant experience and the ability to manage multiple projects simultaneously resulted in consistent and positive progress throughout the duration of the engagement. Furthermore, in many cases, professional advice and procurement expertise resulted in realisation of tangible cost benefits for multi-year contracts.