Procurement Performance Report

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1 Procurement Report The Procurement Directorate supports the achievement of high quality education and training for students in NSW public schools by delivering strategic supply solutions and effective cost management strategies. Full year results have exceeded NSW Department of Education and Communities targets in the key areas of realised savings; customer satisfaction; vendor performance and electronic trading. Overview Realised Savings Measure overall department savings attributed to centrally managed procurement. The directorate delivered $84 million in realised savings, achieving 111 per cent performance against the target of $75 million. These savings included products and services purchased as part of the Digital Education Revolution and Building Education Revolution programs. $66 million (87 per cent) of these savings were returned to schools through lower prices. An average of $29,422 has been returned per school ($7,8 per school since inception of the directorate in 28). Information technology and imaging devices returned the greatest proportion of savings, delivering $59 million ($168 million since inception). Overall the directorate captured $88 million in total savings, in cost avoidance ($243 million achieved since inception of the directorate in 28). Electronic Trading Measures the department s total expenditure through electronic channels. A total of $1.4 billion was transacted through smartbuy and 52, ecatalogue search and browse sessions were conducted, reaching a performance level of 121 per cent. ($2.52 billion transacted since inception of the directorate in 28). Customer Satisfaction Measures satisfaction of department staff with the activities of the directorate. Average monthly satisfaction with the procurement contracts and service delivery was 8 per cent. Satisfaction with contract value (including prices) among principals and school administration managers rose to 91 per cent. Vendor Measures performance of the vendors managed by the directorate. Overall compliance of the supply base to requirements was 97 per cent, exceeding the department target of 95 per cent. Contract Delivery Measures delivery of the Program of Contract and Priority Works. Achieved 8 per cent performance, with 19 of 26 projects delivered on time with a further 2 projects active. Annual Scorecard The Savings Reform Scorecard provides a summary of the Procurement Directorate s 21/11 performance through the five key performance indicators. Additional performance results include: Cash savings returned to CorporateFinance was $1.3 million. Return on investment: 12:1. That means $12 in savings realised for every $1 of Procurement Directorate costs. Savings per full-time employee (FTE): $1.3 million net savings achieved for the department for each Procurement Directorate FTE. NSW DEPARTMENT OF EDUCATION AND COMMUNITIES

2 Avg YTD Index 111% 111% PROCUREMENT SAVINGS REFORM SCORECARD - JUNE 21/11 13% 11% 9% 11% 19% 19% 124% Monthly Index 19% 12% 123% 119% 112% 19% 17% 16% DETP Index Target Net Cost of Return on Investment Savings per FTE +$1.3m 12:1 $1.3m Realised Savings 112% Realised Savings BER Savings DER Savings DETP Savings Target Realised Savings $84m ($9M Retained) Contract Delivery Pro ogram (No.) Program of Contract & Priority Works Active (2) Completed (26) Behind At Risk On Track Contracts Program 46 ($18m Savings) Electronic Trading 121% 2, 1,5 1, 5 Electronic Purchasing ,8 1,115 1,164 1,336 1,44 Actual Target Electronic Purchasing $1.4B (52k sessions) Customer Satisfaction 114% Satisfaction 1% 5% % 77% 77% 79% Customer Satisfaction 78% 78% 81% 81% 81% 81% 83% 83% Actual Target Customer Satisfaction* Avg Vendor 12% 1% 9% Vendor 96% 96% 95% 98% 96% 97% 97% 97% 97% 98% 97% 98% Actual Low Target High Target Vendor * 97% Avg All figures correct as at 18 July 211 *Based on financial year average

3 SAVINGS PLAN REPORT Realised Savings REALISED SAVINGS PLAN % Savings by Organisation 6% 88% 6% Corporate Schools TAFE DETP DER BER Target Savings by Type 85% 4% 11% Cost Avoidance Retained Returned Savings YTD Retained Savings Student Laptops (DER) IWBs Imaging Office Products Telephony (GTA) Furniture Flued Heaters Lenovo Laptops S'ware Fees Travel Sporting Goods Process Savings Print Production Solar Panels Electricity Optimisation Recruitment Tractors Print Mngmnt Solution Asian Language Training Back to School Card Readers Welding Mats Printing Services (TAFE) Telephone Audit Teacher Retraining ect'lg Vendor Machine Tools Early Learning & Care Realised Target (Finance) Expenses Page 2 of 6

4 PROGRAM OF CONTRACT AND PRIORITY WORKS Contract Delivery Program (No.) PROGRAM OF CONTRACT AND PRIORITY WORKS Active (2) Completed (26) Behind At Risk On Track Key Indicators Savings Delivery Program () FTE Allocation (%) (All DETP Projects) 1 8 Project Delivery Mandat ory 6% Non Priority 5% Priority 89% Mandat ory 5% Priority 28% Non Priority 22% No Jun 8 Aug 8 Oct 8 Dec 8 Feb 9 Apr 9 Jun 9 Aug 9 Oct 9 Dec 9 Feb 1 Apr 1 Jun 1 Aug 1 Oct 1 Dec 1 Feb 11 Apr 11 Jun 11 Active & On Hold Planning Delivered Contract Delivery is (no. at risk + no. on track) / (total number of projects) Savings Delivery Program represents the total $ value (and %) of priority, non priority and mandatory programs being delivered for the financial year. FTE allocation is the percentage of hours worked (total hours/7) in the financial year for active and completed projects. Project Delivery is the number of projects in each month including active, planning and on hold. Also shown is the cumulative number of projects delivered in each month. Page 3 of 6

5 eprocurement Electronic Trading 121% 1,6 1,4 1,2 1, ELECTRONIC TRADING 1,336 1, ,8 1,115 1, ,37 1,79 1,229 1, Spend (Services) Spend (Goods) Spend (Target) Key Indicators DETBUY ecatalogue Sessions (YTD) TAFE, Corporate, 9% 19,479, 19,428, 8% Schools, 192,493, 83% Sessions (') Search & Browse Sessions (YTD) 231 Jul AugSep OctNovDec Jan FebMarAprMayJun smartbuy Ctl'g DETBUY ectl'g Consolidated Invoicing (YTD) Jul Aug Sep Oct NovDec Jan FebMarAprMayJun Total Value Page 4 of 6

6 CUSTOMER SATISFACTION Customer Satisfaction 114% Satisfaction Rate (%) 85% 75% 65% CUSTOMER SATISFACTION 77% 77% 79% 81% 81% 81% 83% 83% 78% 78% Actual Target Customer Satisfaction is calculated as the average of results for 1/11 compared to the target. Targets are based on the 21/11 CPO Agreement. Key Indicators % Satisfied 1% 9% 7% 6% Jul Satisfaction Measures Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Support Calls (') Customer Support % 1% 9% 7% 6% 5% SLA (%) Contract Value Process Service Communications DETBUY Support Calls (YTD) % Met SLA (YTD) % Met SLA (Target) Page 5 of 6

7 VENDOR PERFORMANCE Vendor 12% Office Products Furniture Sporting Goods IWB Imaging Devices Recruitment Other Average YTD by Category (%) Overall Average 97% Managed Expenditure $263m (35 vendors) Average YTD by Vendor Corporate Express OfficeMax Sebel Furniture Corporate Express Furniture Watts Commercial furniture RH Sport HART Sport Sportime Panasonic Electroboard Fuji Xerox Hewlet Packard Ricoh Canon Australia Personnel Global Chandler Macleod Clicks Hoban Recruitment Finite Recruitment Greythorn Smalls Hamilton James & Bruce Hays Specialist Recruitment Hudson Global Resources IPA Personnel Michael Page International Paxus Australia PeopleBank Australia Quay Appointments Randstad Ross Human Directions Talent International Workforce International AGL JR Turk Coffs Factory Seconds Print & Elec. Solutions Office Products Furniture Sporting Goods IWB Imaging Devices Recruitment Other Page 6 of 6

8 since inception of the directorate The Procurement Directorate was established in 28 to deliver savings reform. This report outlines its cumulative performance for the three-year period from July 28 to June 211. Savings delivered The Procurement Directorate has achieved total performance savings of $243 million through taking advantage of the NSW Department of Education and Communities purchasing power and economies of scale. $3 $25 $2 $15 $1 $5 $ Realised Savings Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 Dec-8 Jan-9 Feb-9 Mar-9 Apr-9 May-9 Jun-9 Jul-9 Aug-9 Sep-9 Oct-9 Nov-9 Dec-9 Jan-1 Feb-1 Mar-1 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Dec-1 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Retained Returned 23 Of this, $181 million (74 per cent) has been returned to schools, TAFEs and state offices through lower pricing and operating costs. Of this amount, $158 million or 87 per cent has been returned to schools, which is an average reduction in costs of $7,8 per school over the past three years*. Corporat e $11,986, 563 TAFE Returned Savings by Organisation - $181M $11,96, 545 6% Schools $157,884,272 87% Cost Avoida nce 16% Savings by Savings Type - $243M Return ed 74% Retain ed 1% * Figures based on 2,23 schools Thirty-nine million dollars (16 per cent) has been delivered to budgets in avoidance of non-budgeted costs. The retained $23 million (1 per cent) is being redeployed by the executive across the department to cover frontline requirements and support operations.

9 Top areas of savings Student learning technologies and imaging devices have delivered the most procurement savings to the department. The top four savings initiatives are student laptops ($92 million), interactive whiteboards ($34 million), imaging devices ($26 million) and multimedia tools ($25 million). This demonstrates the shift in contemporary teaching practices and the economics of scale now being delivered by the market. Project delivery The Procurement Directorate is delivering a high volume of contracts and projects for the department. These projects have helped the department to capture savings, minimise risk and build better service levels to assist the delivery of education to NSW students. No Project Delivery Jun-8 Aug-8 Oct-8 Dec-8 Feb-9 Apr-9 Jun-9 Aug-9 Oct-9 Dec-9 Feb-1 Apr-1 Jun-1 Aug-1 Oct-1 Dec-1 Feb-11 Apr-11 Jun-11 Active & On Hold Planning Delivered The project delivery graph shows the number of contract initiatives active each month since the Procurement Directorate s establishment in July 28. The red line depicts the cumulative number of projects successfully completed in each month. Fifty-two separate projects have been delivered so far.

10 Vendor management The Procurement Directorate is sustaining high levels of supplier support and performance while continuing to increase the number of suppliers and expenditure under its management. This ensures the quality and consistency of products, pricing and service for customers in all areas of the department. Overall, performance in has continuously met target, with supplier performance consistently averaging 97 per cent this year, and achieving an average of 94 per cent since February 29 when the survey commenced. 1% 95% 9% 85% Vendor Management 94% 75% Feb-9 Monthly Apr-9 Jun-9 Aug-9 Target (Low) Oct-9 Dec-9 Feb-1 Apr-1 Rolling Average Jun-1 Aug-1 Oct-1 Dec-1 Target (High) Feb-11 Apr-11 Jun-11 Customer satisfaction Customer satisfaction has continued at a high level throughout the year. Overall satisfaction has been sitting consistently above 77 per cent, and rose to 83 per cent in June 211. Changes introduced to service delivery have improved customers satisfaction with all measures (value, process, communications and service) reporting significant improvements. It is also believed this high level is sustained, in part, by the Procurement Directorate s quick response and action to feedback and/or complaints. 1% Satisfaction Rate 9% 7% 6% 5% 4% Customer Satisfaction 77% 77% 79% 78% 78% 81% 81% 81% 81% 83% 83% Total Service Contract Value Process

11 Customer satisfaction - continued Principals are reporting high levels of satisfaction with the Procurement Directorate s performance with satisfaction currently at 81 per cent. Satisfaction Rate 9% 7% Customer Satisfaction - Principals 6% Satisfaction with contract value (which includes prices) continues to rise and is at 91 per cent, well exceeding the 8 per cent target. Satisfaction Rate 95% 9% 85% 75% 7% Customer Satisfaction with Contract Value 91% Contract Value

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