Procurement Support and Process Review

LinkWater (now Seqwater), the Queensland Government Statutory Authority responsible for water infrastructure throughout south-east Queensland, engaged Charles Kendall Australia (CKA) to assist with tendering, contract execution, and the development and implementation of a strategic Procure to Pay (P2P) process. CKA delivered a number of critical procurement activities, achieving over $1.6 million in savings for a number of LinkWater's business units over the 2012-13 financial year.

The Challenge

Provide support in executing several urgent tenders and contracts;
Develop and implement a strategic P2P process;
Work in conjunction with the LinkWater procurement team to deliver goods and services contracts and panel arrangements;
Adhere to and ensure performance within Queensland Government State Procurement Policies and critical timeframes.

Our Approach

Provide support in executing several urgent tenders and contracts.
Develop and implement a strategic P2P process.
Work in conjunction with the LinkWater procurement team to deliver goods and services contracts and panel arrangements.
Adhere to and ensure performance within Queensland Government State Procurement Policies and critical timeframes.

Outcome

Successfully delivered over $1.6 million in savings in 2012-13 budget across LinkWater’s Capital Projects, Operational Services and Corporate business units;
Implemented a best-practice P2P process, driving ongoing long-term value and efficiency in procurement functions across multiple business areas;
Supported internal procurement staff through execution of implemented changes and improvements.

Framework Contracting Project

In 2011, the Millennium Challenge Corporation (MCC) agreed to provide funding to the Government of Indonesia (GoI) for various projects, including the Procurement Modernisation Project (PMP) that ran from 2012 to 2018; with the objective of reducing poverty through economic growth. This project was carried out through the Millennium Challenge Account Indonesia and the National Public Procurement agency (LKPP) with the intention to improve the procurement function in Indonesia through three key projects – one of which was the Framework Contracting Project. Charles Kendall Australia (CKA) was engaged to provide specialist advisory and project management services to achieve the objectives of PMP and sustain long term success.

The Challenge

Achieve cost savings and efficiencies on procured goods and services through the sustainable implementation of framework contracting and an electronic catalogue.
Develop an Integrity Filter program that covers all aspects of the procurement process (i.e. tendering, selection/award, purchasing and contract management) to prevent fraud of public funds.

Our Approach

Undertake a needs assessment to determine level of procurement competency through the use of surveys, meetings and stakeholder engagement.
Based on the needs assessment, support the development and selection of suitable basic, intermediate and advanced training courses, tailored to the needs of the staff.
Strategically choose PSUs and non-PSUs, through criteria which includes geographic location.
Coordinate research to identify best methods of training and mentoring.
Recruit qualified trainers and mentors using MCA-I approved recruitment policies and processes to effectively deliver training and mentoring.
Identify sustainability strengthening activities to provide a way to continuously promote the value of the HRD project and build on to, and expand the network of procurement professionals.

Outcome

Implemented a total of 65 signed framework agreements for 25 categories; combining national, provincial and local agreements while reducing internal costs by approximately USD 2.2 million (30% reduction).
Increased procurement governance, security of supply, and standardisation of specifications and quality.
Increased procurement and operational man-days efficiencies (from 11% to 99%) through reductions in duplication and administration workload, improved supplier relationships and improved procurement planning.
Developed and implemented a total of 20 system based Integrity Filters to assist with the identification of fraud and waste in the procurement process.

Procurement Transformation

Broadspectrum is a facilities management organisation that operates in a complex matrix organisation, with five service lines across three major sectors servicing across nine industries, four of which are NSW Government. Charles Kendall Australia (CKA) was engaged to provide quality procurement consultants for Project Turbo, an initiative established by the CEO and the board to improve EBITDA, provide a holistic view of procurement activities to identify and assess synergies, process re-engineering and overall improvement opportunities within a wide range of categories.

The Challenge

Cleansing of data to get an accurate baseline, products, services and supplier classification.
Stakeholder change management to manage the transition from a decentralised procurement model to a centralised model.
Reduce the lead-time for the hardware delivery category from 21 days lead time, and reduce the bottleneck in payment process.
Rebranding Transfield Services to Broadspectrum (raise procurement profile as a service under new name).
Management of national tenders, including scope definition, contract documentation and so on.

Our Approach

To devise accurate products and services classification, by supplier, across specific categories.
To obtain spend records by collaborating with the finance team to establish an agreed spend baseline.
Project management to ascertain and agree transparent process objectives, actions and timelines.
To review and evaluate current materials resource planning process, defining true lead-times.
Develop a strategy to market procurement as a service position across the organisation and its clients.
Identify category synergies across clients, review & evaluate supplier response, and introduce standard commercial models.

Outcomes

Accurate data analysis, reporting and assessments.
Accurate spend data landscape between BRS, suppliers and clients.
Established strong relationships and communication lines between key stakeholders and procurement.
Implemented total cost of ownership solutions, reducing lead time from 21 days to 3 days.
New logo applied in procurement tools, systems (TenderLink) notification to suppliers, and negotiation with suppliers that provided branded products.
Commercial outcome of 25%-45% reduction across categories; predominately facilities management and information and technology.

Procurement & Advanced Contract Management Training

Queensland Gas Company Ltd (QGC) engaged Charles Kendall Australia (CKA) to aid in skills and capability improvement among their procurement and contract management staff. CKA delivered customised training for 75 contracts and procurement personnel, filling skill gaps and supporting professional development.

The Challenge

Develop tailored programs to target specific areas of weakness across diverse disciplines.
Design practical, interactive and customised courses to provide immediate and long-lasting results.
Incorporate local policy and procedures, while ensuring minimal disruption to participants’ daily work functions.

Our Approach

Conduct reviews of QGC’s policies, procedures and standards to ensure detailed understanding of the environment.
Engage stakeholders to establish key issues, outcomes and methodologies.
Collaboratively design course content and structure to include:
An introduction to procurement. - Tender development. - Supplier management. - Contract management. - Category management. - Best-practice procurement.

Outcome

Successful delivery of the course, with QGC engaging CKA to deliver subsequent courses.
Creation of high-quality, corporate-branded support materials, including PowerPoint presentation, desk manuals, reference guides, case studies, activities and notes pages.
Minimal disruption to business operations.
Positive feedback from participants, particularly regarding course relevancy and practical benefits.

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 Challenge

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.

Our Approach

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:

templates;
administration practices;
procurement framework and related processes;
systems supporting procurement;
probity and governance; and
people, roles and responsibilities.

Outcomes

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.

Contract Management Review

The Department of Transport and Main Roads (TMR) engaged Charles Kendall Australia to review existing contracts within the Passenger Transport (PT) Division to improve and build its procurement and contract management capabilities while minimising exposure to the risks involved in third-party transport service contracts.

The Challenge

Develop and implement recommendations to increase procurement and contract management capability.
Improve organisational and individual competency based on review of existing practices and contracts.

Our Approach

Detailed review of existing transport service contracts to identify shortfalls and areas for performance and capability/key skill improvement.
Capability gap analysis to identify current procurement and contract management practice levels versus best standards.
Market research/analysis to identify contract management systems for adoption by PT for future use.

Outcome

Recommendations for improved contract performance, including proposed clause variations and tasks/activities to be undertaken for each contract reviewed.
Best practice performance management framework for management of PT contracts, plus options for changes to organisational structure.
Detailed report and analysis of shortfalls within PT staff’s current procurement capability and practice level, with proposals for improvements.
Comprehensive list of contract management system tools, outlining pricing, functionality and potential software providers to engage.

Procurement Policy Alignment

Queensland Treasury (QT) engaged Charles Kendall Australia (CKA) to update their procurement policy and procedure documentation in order to comply to the Queensland Procurement Policy 2017 (QPP 2017).

The Challenge

The Queensland Government established QPP 2017 and required all government agencies to comply to the policy by 1 March 2018.
A number of new requirements set out in QPP 2017, such as local benefits test, have a direct impact to how procurement has to be conducted by Government employees.
QT’s procurement policy and procedure documents were lengthy, difficult to understand and lacked practical guidance material to facilitate the delivery of procurement by QT employees.

Our Approach

The initial activity was to conduct a gap analysis of the current policy and procedure against QPP 2017.
The gap analysis identified areas of partial and/or non-compliance which were broken down into three categories as follows: - areas requiring significant updates or development; - areas required to be partly updated; and - areas requiring minor updates.
The gap analysis provided a detailed list of the proposed amendments which, following acceptance from Treasury, were implemented by CKA within a short timeframe.
As part of the review of existing procurement documentation, CKA made recommendations for improvements which included the alignment and improvement of existing guidance materials as well as addition of new guidance materials to support Treasury employees in conducting procurement activities in line with the new QPP 2017 requirements.
As a result, CKA developed the following suite of sourcing guideline documents in alignment QPP2017 and the updated policy and procedure: - Procurement process workflow (plan, source and manage). - Procurement process visual infographic. - ICT procurement visual infographic. - Checklist for conducting a tender. - Procurement plan and significant procurement plan template redesign. - Guidance for local benefits test application in procurement. - Procurement performance management and reporting framework guideline.

Outcome

The updated policy and procedure were reviewed by Treasury’s external auditor who advised that the updated documentation was compliant with the QPP 2017 and can be implemented within Treasury.
The sourcing guideline documents were delivered to a high-quality standard with highly visual web-ready documents to improve readability and allow employees to conduct procurement as per the Treasury policy, procedures and overarching QPP 2017.

Procurement Process Review

At the time of engagement, the procurement function within Department of State Development (DSD) provided procurement services to within DSD, as well as to Department of Local Government, Infrastructure and Planning including subordinate groups and entities, such as Economic Development Queensland (EDQ). A machinery of government change, throughout 2012 to 2015, led to ambiguity of responsibilities and, therefore, concern with respect to the efficiency and effectiveness of EDQ’s procurement practices.

The Challenge

DSD engaged Charles Kendall Australia (CKA) to undertake a comprehensive review of procurement practices, within EDQ, to ascertain any extent of non-compliance and devise possible means for improvement to efficiency and effectiveness.

Our Approach

The review process was conducted in a way that showed sympathy for the historical approaches to procurement, whilst challenging the existing procurement practices in order to test where value could be added. It was also recognised as imperative that the review carefully consider competing interests and viewpoints so as to appropriately consider all factors prior to recommendations being provided.

CKA conducted various interviews and undertook an audit of procurement records in order to form a view of how current procurement processes compare to what would be considered best practice. The review focused on the following areas of interest:

forms and templates
procedures and administration
training
systems
procurement delivery model.

Outcomes

The comprehensive review led to 21 recommendations across the interest areas. Recommendations were prioritised and prospective benefits for each were articulated. Fundamentally, the final report provided senior management with an objective, reliable basis for continuous improvement.

Should-Cost Modelling

Petroleum Development Oman (PDO) is the foremost exploration and production company in the Sultanate. PDO accounts for more than 70% of the country's crude oil production and nearly all of its natural gas supply. PDO engaged Charles Kendall Australia (CKA) to develop several should-cost models for complex areas of spend. Should-cost models are tools that provide a clear understanding of the specific economics behind manufacturing a particular product or service. Benefits range from improving efficiencies and delivering substantial costs savings (without cutting back on scope, quality, capabilities or suppliers’ profits), to improved supplier relationships.

The Challenge

Developing accurate should-cost models with restrictions such as limited data availability and no direct interaction with PDO’s contractors.
Developing should-cost models for complex areas of spend across several contractors.
Developing models for multiple layers and interactions of the supply chain.
Delivering the models in a short time frame.
Preparing the ground for fact-based negotiations with contractors.

Our Approach

Reviewed and analysed PDO’s expenditure, existing pricing schedules, contractor’s financial data, asset and vehicle lists, responses to a request for information, etc.
Leveraged Charles Kendall Group and CKA’s market knowledge and understanding of the oil & gas industry and supply base in Oman.
Mapped out the supply chain for each service and identified all cost drivers.
Determined target prices and compared them against PDO’s current pricing.
Estimated potential cost reduction opportunities.

Outcome

The deliverables included:

producing the should-cost models in an Excel format that could be updated by PDO;
a presentation of the should-cost models to PDO; and
a report including an overview of the potential savings, general findings and recommendations, assumptions, the should-cost models results and the methodology followed.

The models provided PDO with in-depth insights into the cost structure of the services in scope and target pricing for those services which allowed PDO to enter into fact-based contractor negotiations.

Procurement Delivery

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.

The Challenge

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.

Our Approach

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.

Outcome

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.