1. Portfolio/Number/Name:Administration - A/C2 - Better Procurement |
2. Programme/Activity: The Scottish Executive plans to make savings through improving procurement practices. There are 2 main components to the procurement savings. These are: - Savings from Purchase to Pay administrative processes; and
- Price and process savings through improved procurement practices, collaborative purchasing and eprocurement, including eAuctions/electronic reverse auctions and eTendering.
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3. Efficiency | 3.1 Current target; £m | | 2005-06 | 2006-07 | 2007-08 |
Cash | 0.6 | 3.0 | 3.7 |
Time | 0 | 0 | 0 |
3.2 Efficiencies delivered; £m | | 2005-06 | 2006-07 | 2007-08 |
Cash | 0.6 | - | - |
Time | 0 | - | - |
4. Accountable Officer for delivery | John Elvidge |
5. Project Manager | Richard Dennis and Barry Graham |
6. EGDD Portfolio Manager | Rowena Simpson |
7. Description of efficiency and actions to be taken | 7.1 What is the efficiency improvement? How will the efficiencies be made? The efficiency improvement from purchase to pay processes will be delivered by spending less time procuring the same amount of goods and services. This saving will be made by replacing manual processes by electronic processes, which are faster and more efficient. The price and process savings come from procuring the same for less money or from procuring more for the same money. Price savings can occur through improved competitive tendering and through achieving greater economies of scale through collaborative purchasing. Price savings from eProcurement occur through achieving sustainable cost reductions in goods and services through making the procurement process more efficient. eAuctions secure cash savings through the bidding process with cost reductions being secured through the lowest bid. |
7.2 What are the main actions that are needed to secure the delivery of this efficiency improvement? The purchase to pay efficiency savings requires the Executive to move towards electronic processes for the vast bulk of low value purchasing. This requires improvements to the available electronic tools, training for staff, and changes to our purchasing processes to make sure electronic tools are used when they are appropriate Many of the actions required to secure the price savings have already been carried out. A professional procurement service exists within the Scottish Executive for the contracting of goods and services. EASEbuy (eProcurement) is now mandatory across the Scottish Executive and eAuctions have been successfully held in the past and are continuing to deliver efficiency savings. |
8. Associated costs | 8.1 Are there any development or redundancy costs associated with the delivery of this efficiency? There are development costs associated with the purchase to pay efficiency savings as IT improvements and rationalisation, education of staff and monitoring and measuring procedures are required. There have been significant costs involved in developing eProcurement Scotland, which has been developed for the benefit of the public sector in Scotland as a whole. Both of these initiatives were not specifically developed to deliver efficiency savings and have resulted in service improvements for both buyers and sellers more widely. Therefore, the development costs associated with improved procurement practices have not been netted off from the efficiency savings. |
9. Measurement | 9.1 What are the inputs that will be measured? For the purchase to pay project, the input that will be measured is the time spent on, and therefore the cost of, each transaction. For the price savings, the unit cost of the identified commodity or service will be monitored to ensure the planned reduction in cost is taking place. For the process savings attributed to collaborative procurement the unit costs identified for collaborative partners who do not have to run a full competition. |
9.2 What are the outputs that will be measured? For the purchase to pay project, the output that will be measured is the number of transactions carried out. For the price savings, the volume of purchases made in the commodity or service will be recorded. For the process savings on collaborative contracts the number of contracts placed off the framework agreements. |
9.3 What is the baseline for inputs and outputs? For the purchase to pay project, the baseline for inputs will be the time spent on a manual purchase to pay transaction compared with the time spent using the new electronic transaction process. The baseline for outputs will be the number of transactions in 2004-05. The input and outputs for new commodities and services will be compared with 2004-05 expenditure and volume on those commodities and services to determine the level of savings delivered. |
10. Quality cross-check | 10.1 What quality indicators are being used to ensure that quality of service is maintained or improved? For the purchase to pay project, the time taken to pay for a commodity or service will be monitored to ensure that the quality of service is improved as well as realising efficiency savings. For the price savings, the quality of the commodity or service purchased will be monitored to ensure that the service or commodity meets the requirements. |
11. Monitoring | 11.1 What are the arrangements for monitoring the delivery of efficiencies? The efficiency savings from the purchase to pay project will be monitored monthly by the project team. The price savings are monitored as and when commodities or services are purchased. |
12. Reporting | 12.1 What are the arrangements for reporting the delivery of efficiencies? Efficiency savings from improved purchase to pay processes will be reported to the Purchase to Pay Project Board who meet every 6 weeks. For the price savings, Management reports are submitted to the Procurement Management Board monthly, which sets out the estimated and actual value of contracts under negotiation and any savings made in these contracts. These are reviewed quarterly to ensure that the Executive is on course to meet targets. |
13. Dependencies | 13.1 Explain if your efficiencies are dependent on legislation or other structural changes being achieved. The procurement savings are dependant on the observance of corporate and financial disciplines within the Scottish Executive and on the resources available for collaborative purchasing. |
14. Use of efficiencies | 14.1 How are the efficiencies released from improvement activity being used to improve front-line services? The efficiency savings released from this project will help the Scottish Executive to live within the flat cash settlement it received from the Spending Review. By not increasing the administration budget in line with inflation, resources were freed up for Ministers to spend on other priorities. |