In today’s business environment, upgrading existing systems, migrating to the cloud or engaging a managed service partner, it is essential to adopt procurement ‘best practice principles & framework’. In this briefing paper, we define ‘best practice’ procurement lifecycle framework.
Procurement Best Practise Principles
- Value for Money
- Open & Fair Competition
- Risk Management
- Probity & Transparency
Procurement Lifecycle Framework
- Procurement Strategy
- Requirements & Proposal
- Market Analysis
- Evaluation & Selection
- Agreement Formation
- Implementation & Transition
Value for Money
‘Value for money’ involves considering all costs from the initial price, ongoing costs, financial and non-financial costs, Total Cost of Ownership (ToC) through the whole-of-asset-life combination of quality, timeliness, acquisition cost, fitness for purpose, contract transition, disposing of goods, and service & support.
Open and Fair Competition
Procurement governance must provide Vendors, organisation management, stockholders and the general public with confidence in the process. Prospective Vendors must be seen to be treated equally, openly and fairly with access to information to enable them to respond, and, decide without any perception of any bias.
The procurement board and steering committee are responsible for the actions and decisions through the procurement process. Authority, delegation and accountability are documented in the procurement charter, with the CEO ultimately accountable. The charter must ensure adequate accountability, and, the team must provide enough information for a sound decision to be made.
Managing procurement risk is a responsibility of the steering committee, who will be guided by the organisation risk framework. Procurements risk range from fraud, delivery delays, cost reviews, statutory regulations, or failure of a supplier, and, will be evaluated to ‘risk criteria’ with mitigation controls and contingency planning applied at each stage of the procurement lifecycle.
The probity advisor will be responsible for a plan to ensure procedural integrity. The advisor will audit and advise on the ability to withstand internal and external scrutiny, focusing on ethical governance practices, regulation compliance, confidentiality, conflict of interest, organisation code of conduct, selection and evaluation and procurement best practices.
All prospective Vendor bids need to be evaluated systematically against predetermined and disclosed evaluation criteria. Relevant documents must be made available, along with questions about the procurement activity and responses. Maintaining disclosure of information, managing feedback, briefing sessions, and handling grievances all form transparent procurement practises.