File Name: basic engineering work and services procurement exercise .zip
Engineering projects require a lot of logical and analytical thinking to solve problems that occur on the job.
- What is Project Procurement Management?
- Glossary of Procurement Terms
- USA: Public Procurement Laws and Regulations 2021
A complete guide to spend analysis. You can skip ahead to the most relevant areas or download the whole guide for future reference as a pdf. This guide is for anyone who wants a refresher on the most important aspects and best practices for analysing procurement spend. We cover the basics as well as some hot topics everyone should know. Spend analysis is the practice of analyzing procurement spend to decrease costs, increase efficiency or improve supplier relationships.
What is Project Procurement Management?
A complete guide to spend analysis. You can skip ahead to the most relevant areas or download the whole guide for future reference as a pdf. This guide is for anyone who wants a refresher on the most important aspects and best practices for analysing procurement spend. We cover the basics as well as some hot topics everyone should know.
Spend analysis is the practice of analyzing procurement spend to decrease costs, increase efficiency or improve supplier relationships. Procurement spend analytics is the process to collect, cleanse, classify and analyze spend data through either dedicated software or one-off spend cubes. It is often regarded as the fundamental foundation of sourcing. It is a tool that sourcing executives can utilize to engineer superior performance.
Data from spend analysis can improve visibility into corporate spend, as well as drive performance improvement, contract compliance, and most importantly, cost savings. Analysing procurement spend provides data that can be used as a baseline to measure improvements, and to also provide reliable data for deciding strategies to realize short and long term savings.
Any spend visibility project starts with the identification of relevant spend data sources. So where do you start? Here are some of the most common sources of procurement spend analysis data. The difference between direct and indirect spend often causes confusion. Direct spend in procurement refers to goods and services that are directly related to making products. Examples may include raw materials, components, hardware and services related to manufacturing processes.
Indirect spend in procurement is the sourcing of goods and services not directly related to manufacturing of products. Indirect procurement enables businesses to maintain and develop its operations.
Examples of indirect spend categories include:. Both direct and indirect procurement spend can be grouped into categories, enabling analysis and management of similar goods or services.
A spend category is the logical grouping of similar expenditure items or services that have been clearly defined on an organizational level. The spend taxonomy is the way a procurement organisation classifies spend into hierarchies. One way to view spend categories is like a tree with many branches for different levels or sub-categories of spend. A list of procurement spend categories for the UN includes:.
Procurement data can be sliced and diced based on a number of key performance indicators KPIs relevant to the procurement organization. Some of the most common spend analysis metrics and KPIs include:. Spend analysis is often viewed as part of a larger domain known as spend management.
There are three core areas of spend analysis: visibility, analysis and process. Visibility in the spend management area refers to the ability of an organization to have a comprehensive view of the metrics that drive improved cost savings, process efficiency and supply-chain performance. Having spend visibility gives way to the possibility of analyzing past spend that can be utilized for planning future direction.
Spend visibility goes beyond tracking spending as it gives both a detailed and holistic picture of how money is moving through your company. Within the process of collating, cleansing, categorizing and analyzing expenditure information, spend analysis provides consistent spend visibility information on suppliers, spend and compliance.
Will you still place more orders when your budget for office supplies is on the verge of maxing out? You need to determine what portion of your budget for office supplies has already been spent, and if more can be spent without exceeding the budget.
Without spend visibility — in this case, a real-time count of how much of their budget has already been spent — most companies would have ordered the office supplies anyway. They would find out later on that they exceeded the budget for office supplies after finance publishes a quarterly report. Spend visibility is the cornerstone of superior procurement performance. It brings about knowledge into the core components of spend categories. Organizations with clearer spend visibility into their sourcing activities can utilize their reports and insights to drive better performance, and to make more informed business decisions.
The key benefit that spend analysis can provide to an organization is better visibility and actionable spend intelligence. Spend analysis offers an organization greater transparency into the amount of money it spends purchasing materials and services. It allows the procurement organization to have a look into the core of their expenses and purchases.
As the data needed for spend analysis is often extracted from multiple systems across an organization, a lot of de-duplication, cleansing and classification may be needed before analysis can be performed.
Data accuracy and consistency can only be achieved if organizations take full advantage of spend analysis. Spend analysis not only gives them a more effective way to collect, store, and manage the enormous amount of data they have but also provides a deeper understanding that can be used to develop initiatives and make confident spending decisions.
As a sourcing manager, one reason why you want to conduct a spend analysis is to meet your cost reduction goals. When all the numbers have been crunched, the resulting metrics will show the spending patterns and the potential savings in several categories. Depending on the reports conducted, purchasing managers may then be able to cut costs through the use of alternative products, supplier consolidation, and merging products that were purchased separately into groups that can be negotiated on and contracted together.
Price reductions can be achieved through contract buying, improved contract compliance, and reductions in maverick spending. Organizations can also achieve additional savings on indirect items ranging from office supplies to temporary staffing, contractors and consulting services.
Spend analysis has been proven to contribute to driving cost effectiveness and process efficiency in a lot of organizations. The whole process will vastly improve, from financial reporting to budget preparation, if there is detailed information organized around multiple dimensions.
A more productive and efficient procurement function conducting spend analysis will build deeper relationships with fewer key suppliers and need fewer employees for unnecessary delegated tasks.
There will be a significant reduction in cycle time for creating reports and ad-hoc analyses, therefore reducing labour costs or freeing up time for more productive work. Good spend analysis data will also allow you to track and identify suppliers who have non-contracted spend, as well as spend with non-contracted vendors.
You can identify the categories of spend where there may be too many suppliers with no contract in place. The risk in the contract is reflected in the pricing, and that can be from a lack of orders being made or alternatively not being able to scale up fast enough to deliver the volume of goods and services required. The reduced contract risk to the vendor often translates into lower costs. Contract compliance information can drive savings, while enriching spend data with supplier risk information helps the organization in utilizing spend data to avoid supply chain disruptions.
The starting point for superior procurement performance and supplier relationships is information. Spend analysis provides data and insights into the potential value of improved supplier relationships. Once the organization determines which suppliers offer the best value, it can work with them to establish more evolved procurement processes and inventory programs.
Procurement professionals can peer into the performance of their suppliers to encourage proactive supplier development. At the same time, they can root out non-performing suppliers and help boost contract compliance by monitoring pricing on a continuous basis.
Scorecards help evaluate suppliers and vendors by capturing metrics that evaluate performance. Having a comprehensive spend analysis gives more information on the amount of money an organization spends on purchasing materials and services, and with which suppliers it spends the most. This information is useful in contract negotiations and can be used to maximize the money the organization spends on procurement. When successfully implemented, this would leave an organization with fewer suppliers to work with to attain greater value and establish a more efficient and leaner procurement process.
Spend analysis gives you the opportunity to benchmark your performance internally across business units in different locations. This paves the way for meaningful comparisons that can be used for strategic decision-making. Collecting and organizing spend data together in one place enables you to answer a wider range of questions such as the average number of vendors or spend by category, and which vendors are generating the highest cumulative revenues.
Understanding this is crucial to set targets for improvement that are realistic and achievable. Data extracted and analysed in spend analysis systems plays a major role in the strategic planning of the procurement function. However, other internal business units are also currently leveraging spend analysis to achieve their business objectives.
Finance professionals can leverage spend analysis systems to analyze data from purchasing card, invoice, requisition or invoice sources as a means of generating more accurate accounting reports.
Each individual organization should develop their own blueprint to deliver savings and efficiencies, but working with a group can help generate a more powerful strategic plan.
A collaborative spend analysis project provides the group with the visibility to plan the most effective time to carry out a joint competitive solicitation for those commonly procured goods and services. Having a firm understanding of which members of the group are buying those goods or services can already go a long way towards delivering savings and efficiencies for all involved. Having all spend data in the same, consolidated format makes it easier to get everything in one place.
This generally has the effect of making your collaborative efforts more strategic. When you can easily identify common suppliers, you can more quickly see savings opportunities.
A collaborative spend analysis provides the basis for more proactive and strategic discussions with other members of the buying group. While spend analysis projects vary in shape and size, they typically include six key steps from spend identification to analysis. To start a spend analysis, the first step is to check the extent of spend. Doing this allows you to restrict those required to purchase to just a few, instead of scouting through thousands. You can segment your spend into different groups and from there, you can determine all the spend data sources available from all of your departments, plants and business units.
Start by identifying the areas of your business that make purchases such as procurement, finance and marketing. Once you have narrowed the scope down, you can now capture your spend data and consolidate all of it into one central database. Data is usually in different formats, different languages and different currencies, so collecting it into one single source might be challenging.
There are, however, software programs available to make this step easier. Cleansing is about detecting inaccuracies and removing corrupt records and redundancies from a set of data.
This includes finding and eliminating errors and discrepancies in descriptions and transactions to ensure its accuracy. Through data cleansing, you can identify which contacts in your database are incomplete or irrelevant.
Typos are removed and missing codes are validated and corrected for up-to-date information. Data enrichment refers to the process of enhancing, refining, and improving raw spend data. It also includes standardizing the spend data for easy viewing. Enriching the spend data makes sure that all the header and line-level names and details are accurate and to a specific naming standard. Data is often missing specific fields, and misspellings and abbreviations are common — as are incorrectly coded fields.
Group your suppliers for better supplier management.
Glossary of Procurement Terms
Includes the establishment of needs, description of requirements, selection of procurement method, selection of sources, solicitation of procurement, solicitation for offers, award of contract, financing, contraction administration, and related functions. ADVERTISE To make a public announcement of the intention to purchase goods, services or construction with the intention of increasing the response and enlarging the competition. The announcement must conform to the legal requirements imposed by established laws, rules, policies and procedures to inform the public. ALP Authority for Local Purchase: granted by the commissioner of Administration to an individual who has successfully completed all requirements established by the Office of State Procurement. Price must be one of the evaluation criteria when acquiring goods and services. Other evaluation criteria may include, but are not limited to environmental considerations, quality, and vendor performance.
About UNDP. The Sustainable Development Goals. Business opportunities Procurement notices Contract awards. Consultant on Communications for Business and Human Rights. Sustainable Finance Specialist National Consultant. Multimedia services and products for South-South Cooperation in promoting mutual learning and collaboration for sustainable development.
September 2, Staff Writers. The purpose of project procurement management is to establish and maintain relationships with vendors of goods and services during the project life cycle. This unique function is an essential part of project management , which is concerned with overseeing designated sets of temporary operations. Project management for procurement purposes is an essential part of supply chain management. Figuring out where to apply? These top, accredited schools offer a variety of online degrees.
A strong procurement process is key to the financial efficiency of any business. It aids in paying the right price for goods and services, minimises delivery times and helps you choose the best partners to work with your business. How a procurement process looks is completely dependent on the size and type of business. Your procurement process should start when you realise that you need to obtain goods or services from an outsourced company. With this in mind, your first step should be looking at the whole business and recognising the needs of each department.
USA: Public Procurement Laws and Regulations 2021
ICLG - Public Procurement Laws and Regulations - USA covers common issues including application of the law to entities and contracts, award procedures, exclusions and exemptions, remedies, privatisations and PPPs - in 18 jurisdictions. The rules governing federal procurement in the United States are set forth in various statutes, regulations, and decisions that interpret the procurement laws. The cornerstones of federal procurement are the Competition in Contracting Act of , which enhanced competition in federal procurement and established a variety of acquisition procedures, including competitive negotiation, and the Federal Acquisition Streamlining Act of and the Federal Acquisition Reform Act of , which simplified the federal procurement process.
Procurement is the process of finding and agreeing to terms, and acquiring goods , services , or works from an external source, often via a tendering or competitive bidding process. Procurement generally involves making buying decisions under conditions of scarcity. If sound data is available, it is good practice to make use of economic analysis methods such as cost-benefit analysis or cost-utility analysis. Procurement as an organizational process is intended to ensure that the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared. Almost all purchasing decisions include factors such as delivery and handling, marginal benefit , and price fluctuations.
PROCUREMENT OF GOODS, WORKS, AND GENERAL SERVICES Works: Activities associated with civil engineering, such as construction, demolition, repair, or the basic procurement principles to be applied in order to achieve sound.
Abbreviations Shortened forms of a set of words, consisting of initial letters pronounced separately, for example, invitation to tender ITT. ABC classification A system of prioritising different types of inventory based on their value or importance to the business. Acceptance criteria Indicators or measures used to assess whether a product or service meets the standard required. Acceptance sampling A measure, using the number of defects detected, that determines whether a batch of manufactured products meets the standard required. Accreditation A process of external verification to provide evidence that a standard of quality has been achieved, for example, competency, authority or credibility.