APPROVALS Gorporate Procurement Plan

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1 MAKING WATER WORK APPROVALS Gorporte Procurement Pln RECOMMENDED BY: Jnet Porchun Mnger Procurement DATE J;,ctt r 2otl RECOMMENDED BY: rte APPROVED BY:./ DATEJI I O/ I2OII

2 SunWter Gorporte Procurement Pln MAKING WATER WORK Gorporte Procurement Pln l. I - Stte Procurement Policy objectives Objectives of the procurement function L3 - Benehts I I 1 Prl2 - Performnce Review Procurement ctivity profile - SunWter from 2007 to Supply positioning mkix - SunWter for (Bsed on QP&S SUPREM - Supply Positioning nd Risk Evlution Mtrix) 3 Historicl Anlysis Chrt J Orgnistion nd Mngement of the Procurement function Achievements Prt 3 - Procurement Cpbilities Procurement prctice profile - improvement development opportunities 9 Procurement improvement cpbility development - Action Pln Recommendtions

3 SunWter Gorporte Procurement Pln CPP 1 Prt 1 - Functionl lignment SunWter's Corporte Procurement Pln (CPP) for provides the strtegic direction for SunWter's procurement ctivities in 2010 nd2}il. The CPP meets the requirements of Stte Procurement Policy 2010 (SPP) nd the SunWter Corporte Pln for Specificlly, the CPP for contins blnce of strtegic nd opertionl informtion in the following res: o The objectives to be chieved through SunWter's procurement ctivities; o Review of SunWter's 2009/10 procurement chievements including orgnistion nd mngement of the procurement function; o SunWter's procurement cpbilities for ddress vrious res such s procurement systems, processes, prctices including mngement nd resourcing rrngements nd mechnisms by which SunWter's procurement ctivities will be undertken nd mesured; nd o Recommendtions nd strtegies tht will enble SunWter to comply with the SPP in meeting its specified procurement obj ectives Súfe Procurement Policy objectives The SPP's objectives re: o o dvnce the priorities of the Government chieve vlue for money; nd. ensure probity nd ccountbility for outcomes Objectives of the procurement function In supporting SunWter's opertionl objectives the procurement function will: o develop flexible procurement models which will permit procurement stff to chieve cost effective pro curement ;. support the objectives of the SPP; nd. support the Key Reporting Activities defined in the SunWter Corporte Pln. The strtegies tht will ddress these objectives will be focussed on two min res, in line with SunWter's Smrter Lighter Fster Inititive (SLFI): o plnning for the cost-effective purchse ofgoods nd services; nd o plnning for more flexible nd efficient procurement function Benefits The benefits to SunWter when implementing these procurement strtegies re: o reduced risk; o greter security ofsupply; o lower costs; o improved qulity; o greter efficiencies; nd. new innovtions.

4 SunWter Gorporte Procurement Pln CPP 2 Prt 2 - Performnce Review 2,1 - Procurement ctivity profile - SunWter from 2007 to Procurement Activity Profile 2OO7 to O cet E Ê t x t rû t (, "êp cp' ^ç \9' cptts cpc spend crgorlcc Actul Expenditure Actul Expenditure 200E-2009 Actul Expenditure Budgeted Expenditure 20lo-2011 Consultnts $3,892,101 $11,03r,391 $s,985,85s $ r,688,213 Insurnce $3,99 l, 104 $4,803, r 34 54,7 s8,4s4 $5, I 58,562 Mterils Projects $3,401,183 57,022,006 $7,383,074 $38,982,0s3 Comm. Contrctors (Prqiects) Comm. Contrctors (Routine) ss,4s3,742 $ 17,089,4s3 s37,709,102 $51,410,1l6 s19,523,623 $5,787,263 $3,780,321 s6,340,448 Temporry Contrctors S7,500,865 $8,967,219 $355,151 $ 10r,399 Mterils Routine $2,821,680 s2,398,721 Plnt nd Equipment 54,784,075 56,253,287 54,966,251 s4,897,962 Electricity $13,sss,157 $14,13s,928 $18,078,840 $21,954,887 Plnt Hire $2,599,38s $4,395,460 $6,217,t36 s3,028,446 Miscellneous sr9,657,213 $18,995,517 $15,s67,056 s8,227,124 TOTAL $84,358,448 $98,480, ,622,920 $144,187,930

5 SunWter Corporte Procurement Pln CPP Supply positioning mtrix - SunWter for 2009/10 Historicl Anlysis Ghrt (Bsed on QP&S SUPREM - Supply Positioning nd Risk Evlution Mtrix) Lowcr 9096 of cetrgory expenditure Top 1096 outlirrs otqlecomm Dèt Line5 Electricþ Mngemcfü oi sur nce uconsult nts Comm rci l C C '4, 5 f J 5 t o.priöi owet r ost fr E M in Costs Pl nt 'Meteri ls rino lcle re.m intennce & Licence ts minrs onfcrrnces p < 1000 t fecs lrecr nt nd Equip > t 000 st es - Audit ccounting linônc. QA M ìce ofreioht nd Post Rcgistiàtion 'Rent l & Hír MV ltelephone nd Fx ion F ånd Frotectivå Clothing l 'tjniform lgr nt n d Contributions Insur ncr lenten hmentnon - FBT - ltreuel (Airfrus -domestic) off ct åtoê -Fuåls ånd (Jils ' ftw r < I lprofessiotrl Membership sehold Fe s nd L nd rbuild nq 'Buildino Må ril M inten nce nd nd I!MV Repir.ind nd Mrlnten M ntånånce 'elephonr rþi;;;j'i.-iniãn nce) tt**,..,11 &Pl nt târtð n Non Non tofrìceco,,..,,,..,-- S,G, Don tions lf res lfres Oomestic *i I ;ì ) lseruice Costs - CSA 'oth"r d Expenses!gu ld ng nd Improvements rtrining s cri pti ons 'Printing NonContest blr Elcticitt/' 'Legel fees M teri ls Non InuentoryJ roe 'Fuels nd oils tground Màint n nce Rent l & Hirg (Þ & Ef Er udifuic offìce HouseVen Renl 'MV oper ting L srs Distribution by Qudr nt Expenditure Ctegories /10 Box 1 (Top LH Qudrnt) Specilised 5474, % 3 4.7% Box 2 (Bottom LH Qudrnt) Routine $5,964, % l8 28.1% Box 3 (Top RH Qudrnt) Criticl 552,943, % 4 6.3% Box 4 (Bottom RH Qudrnt) High Vlue $5,964, % % TOTAL s107,622, % %

6 SunWter Corporte Procurement Pln CPP Orgnistion nd Mngement of the Procurement function Tble I - Current Procurement Prctice Profile Anlysis Procurement ttribute Policies, procedures ønd. purc høsing delegtìons Contrct terms ønd conditions. 2. Procurement Function Role qnd influence within the. orgnistion. Structure of procurement o function. Current prctice level [self-ssessment rting] SunWter's Procurement Policy is in ccordnce with the Queenslnd Government's SPP which ws relesed by Queenslnd Government Chief Procurement Ofltce (QGCPO) on I September SunWter's Procurement Policy is vilble on the SunWter revised intrnet pltform - SIMON. SunWter's Purchsing Guide outlines the purchsing procedures, relting to purchses of goods, services nd relted works is continuously being updted to ensure tht SunVy'ter's purchsing procedures re current nd in line with the SPP. The Purchsing Guide is vilble on the SunWter intrnet. Sun\Mter hs precedent dtbse of stndrd terms nd conditions vilble for both routine-nd significnt procurements. SunWter uses the Austrlin Stndrds nd SunWter Specil Conditions of Contrct, where necessry. Contrctul terms nd conditions re specificlly tilored to the type of goods, services nd works undertken by Sun'Wter's business groups including regionl offices. The contrctul terms nd conditions re regulrly reviewed to ensure tht they re complint with tegisltive chnges nd SunVy'ter's Procurement Policy chnges. The key roles nd responsibilities for Procurement, contining the responsibilities mtrix is vilble on the SunWter intrnet. The Mnger Procurement is responsible for the overll mngement of SunWter's procurement function, development, nd pprovl of SunWter's Procurement Policies. The centrlised Corporte Procurement Group undertkes ll procuroment ctivities over the vlue of $25,000 (excl GST) in ddition to providing specilist procurement dvice, guidnce nd ssistnce to other SunWter business groups, including regionl offices. The Corporte Procurement Group is involved in ctivities such s strtegic procurement for mjor projects, consultncies, period contrcts, stnding offer rrngements, clening nd mintennce contrcts. All Stnding Offer Arrngements re estblished by the Corporte Procurement Group nd re mnged in conjunction with the Stnding Offer Arrngement Proj ect Mnger. The procurement group sits within the Corporte Group nd is heded by the Mnger Procurement. The Business Procurement Mnger nd the Project Procurement Mnger report directly to the Mnger Procurement. Signihcnt, mjor ndy'or complex procurements re undertken under the direction of the Project Procurement Mnger. Low cost nd low risk procurements being (commonly procured goods nd services) re purchsed under the direction of the Business Procurement Mnger.

7 SunWter Gorporte Procurement Pln CPP 5 Procurement ttribute C u rrent prctice level [self-ssess ment rtin g] The Corporte Procurement Group hs legl specilists vilble for ssistnce when undertking significnt nd./or more complex procurement ctivities nd drws on specilist resources from business res within SunWter, when required. Trøining nd development 3. People Knowledge nd skills 4. Systems Informøtion, document nd knowledge mngement Pro c ure m e nt m n ge m ent Purchse order, invoìce ønd psyment o All purchsing stff exercising procurement delegtions re required to ttin certin level of trining depending on the level of thei delegtion. This trining rnges from internl purchsing trining pckges through to QGCPO Level 4 certifrction. Procurement personnel involved in SunWter's signihcnt procurement projects re required to hve pproprite qulifictions or experience equivlent to QGCPO Certifiction Level3/4, nd/or t lest 5 yers experience. Junior purchsing stff receive on-the-job trining, mentoring nd re supervised in the performnce of their duties. Procurement persorurel receive trining utilising SunWter's internl nd externl trining courses. A list of procurement certiltction off,rcers is mintined on the SunWter intrnet site. Sun'Wter uses file mngement system "Hummingbird", SAP Finncil, Mìterils Mngement modules nd the Procurement Access dtbse to cpture nd trck contrcts, finncil documenttion, trnsctions, securities, insurnces, prcticl nd finl completion dtes. SAP determines the requisition order pyment workflow. Vendor detils re stored in the finnce system. Procedures re in plce to guide the use ofcorporte Crds. Finncil nd procurement delegtions re estblished. Procurement methods employed include open nd select tenders, sole supply, nd stnding offer rrngements. Signed contrcts re hled using SunWter file mngement system. (Hummingbird). SAP determines the requisition-order p5rment workflow s per SunWter finncil nd procurement delegtions mtrixes. Purchse orders re rised in SAP Procurement module then sent electroniclly to vendors. Invoices re mtched to purchse orders nd processed in the ccounts pyble module. Pyments re recorded ginst invoices nd purchse orders.

8 SunWter Gorporte Procurement Pln CPP 6 Procurement ttribute 5. Plnning Signíftc nt procureme nt Current prctice level [self-ssessment rting] Significnt Procurement Plns re developed in-house for high vlue (> $500,000), nd/or high degree ofbusiness risk projects. Plns for significnt purchses re drfted for significnt one-off procurements or number of smller projects, which when combined, re considered significnt. Risk mnøgement 6. lmplementing Strtegies Supplier selectìon Risk mngement is considertion in ll Significnt Proçurement Plns.. Specihc Risk Mngement Plns re prepred for complex nd criticlly importnt procurement ctivities. Supplier selection for ll signifrcnt procurement projects hve been mnged in ccordnce with SunWter's Purchsing Guide. Negotition o Procurement undertkes ll pre-contrct negotitions s required, using forml structured pproch. The outcomes from this negotition process re documented, reviewed nd used for continuous improvement purposes. 7. Mnging Supply Trnsøcting purchøses Contrøct mnsgement o Commonly purchsed low vlue nd risk trnsctions hve been stremlined using the SunWter purchsing guide. o Wys to minimise trnsction costs hve been considered. And the use of corporte crd is promoted for low vlue, common commodity purchses. o Contrct Mngement is currently being undertken by Project Mngers. 8. Reporting Profiling procurement øctiviþ o Procurement profiling bsed on product ctegories is undertken nnully, utilising Queenslnd Purchsing's SLIPREM. o Plnning for signihcnt procurements re profiled within individul project's Signihcnt Procurement Plns. Reserch ønd ønølysis Perþrmnc e meøsre ment fr m ew or k of pr o c ur e m e nt functíon o Concentrted reserch nd nlysis for SunWter regionl purchses re currently being investigted. o Reserch nd nlysis is undertken on significnt ctegories of goods nd services s required, nd forms prt of the Significnt Procurement Pln. o Currently, there is no centrl performnce mesurement frmework in plce. Performnce frmework reporting is currently being investigted. o Currently, there is no centrl reporting of contrct performnce. Contrct mngement nd dministrtion is currently being undertken by individul project mngers.

9 SunWter Gorporte Procurement Pln CPP Achievements Tble 2 - Performnce of Current Procurement Projects Ctegory of good/service Degree of business risk^ Procurement project Business Are Primrily responsible for procurement How well ws this ctivity crried out n terms of efficiency, ccess to nd use of resources nd expertise Were the intended outcomes chieved? Review of SunWter Purchsing Guide nd Procurement Policy SunWter Procurement Policy hs been Corporte updted in line with Queenslnd Purchsing Recommendtions nd SLFI recommendtions (30 My 2010). This policy incorportes requirements for use ofopen nd select contrcts including tht for sole supply. SunWter Procurement Policy nd Purchsing Guide hve been updted. This will be n ongoing, continuously monitored. Successfully updted. SunVy'ter Sttionery Stnding Offer Arrngement M Sun'Wter Vendor Mnged Sttionery Corporte Supplier Arrngement. Procurement strtegies developed, implemented nd mnged by procurement specilists before being hnded over to Sttionery Co-ordintors for dy to dy implementtion. Yes Successfully implemented. SunWter Trvel Stnding Offer Arrngement M SunWter Whole of Queenslnd Trvel Corporte Supplier Arrngement. Procurement strtegies developed, implemented nd mnged by procurement specilists before being hnded over to Trvel Co-ordintors for dy to dy implementtion. Yes Successfully implemented. Regionl Procurement Plns M Develop nd implement regionl purchsing plns nd processes for SunWter regionl ofhces. Infr structure Mngement Procurement strtegies re being developed. Ongoing implementtion nd mngement is being undertken in conjunction with Regionl Mngers in line with SLFI trget projections. Ongoing - Progressing s per SLFI timefrmes. In process

10 1 SunWter Gorporte Procurement Pln 2O1O CPP 8 Stnding Offer M Ongoing review of SunWter's All Ares Arrngements Stnding Offer Arrngements. (soa) Upcoming Projects, Greter thn H $500,000 -' H ' Ongoing project Burdekin Pipeline Augmenttion ì Infrstructure Development Ongoing project l Project On-going In process Chinchill Pipeline Project InfrstructureDêvelopment Ongoingprojéct In process H Co rnors to Mõinbth Dm nd Infrstructure Development Stge one completed Pipeline Completed H Fesibility study on the construction of Infrstructure Development Mornbh Pipeiine to Alph In initil stges In process i H - i.. Fesibility study on the construction of I Infrstucture Development Bingegng- Middlemount pipeline Business cse development In process M Implementtion of Regionl Plnt Regionl Infrstructure ---Ner CompteUon Sønding Offer Arrngements. Mngement i I Ner Completion M M r Implementtion of Mintennce Type Regionl Infrstructure I Ongoing project ContrctsincludingSunWterhouse Mngement nd building mintennce. -.' i*ti"rñ;iätiõn õf Regionl Contrcts Regionl Infrstructure r Ongoing project including mowing, ground mintennce, office clening, nd I recretionl res servicing. Mngement -T In process I In process ^ Degree of business risk: L: Low; M: Moderle; H- High.

11 SunWter Corporte Procurement Pln CPP 9 Prt 3 - Procurement Gpbilities Procurement prctice profile - improvement development opportunities This Tble identifies opportunities for business improvement nd outlines where procurement prctices cn become more efficient nd effective in controlling costs nd delivering vlue for money procurement solutions. Tble 1 - Procurement lmprovement Opportunities Identified for Policies, procedures I. nd purchsing delegtions Purchsing delegtions re bsed on combintion of dollr limit nd purchse risk profiles. Procurement policies nd procedures re ccessible by ll stff vi the SunWter Intrnet. Updtes nd one ofêtrining nd dvice is given to ensure stff mintin n up to dte wreness of SunVy'ter procurement policy nd procedures. SunWter's Purchsing Policy nd Guide hve recently been reviewed nd now form two documents. (Purchsing Guide nd Purchsing Policy). Purchsing th esholds hve been incresed long with purchsing certifiction pprovl levels for low risk purchses. Bsic purchsing certifiction hining is now incorported into the new employee induction pckge. SunWter specific level I purchsing certifiction will be vilble on SunWter intrnet shortly. Procurement policies nd processes re continuously being reviewed nd refined to identifu opportunities for improving efficiencies within the procurement process. Procurement Mngement o Procurement mngement by project/contrct is trcked using n ccess dtbse. l. Procurement projects re mnged nd trcked using n ccess dtbse. ì. Systems nd processes re being investigted nd implemented to llow greter procurement visibility nd improved monitoring nd trcking processes.

12 SunWter Gorporte Procurement PIn CPP 10 Contrct Mngement Contrct mngement is undertken by Project Mngers. Procurement is heding n investigtion on Contrct dministrtion nd Contrct mngement. Contrct detils re monitored in the procurement ccess dtbse wherein criticl contrct informtion such s insurnces, security, prcticl completion dtes, nd defects libility dtes re recorded nd monitored. Procurement is investigting the level of Contrct dministrtion nd Contrct mngement currently being undertken in SunWter. Contrct dministrtion review is underwy to improve mechnisms to trck contrct vritions including retentions, progress pyments, vritions nd extensions. A process to monitor performnce trcking nd supplier performnce is being formulted. This informtion will be mde ccessible vi the SunWter intrnet. Performnce mesurement frmework of procurement function Performnce mesurement nd repofing frmework for SunVy'ter procurement functions, systems nd procedures, needs to be implemented to chieve best prctice nd continuous improvement long with meeting the Stte Procurement Policy requirements. Currently there is no system in plce for procurement performnce mesurement nd reporting. o Investigtion is underwy to develop nd implement performnce mesurements nd reporting frmework for the procurement function. i. Implementtion nd integrtion of, sustinbility into the procurement of goods i nd services. SunWter prctices sustinble procurement by considering vlue for money over the life of the cquisition. o Refine nd develop procurement sustinbility systems nd ssocited mesurements in line Stte Procurement Policy.

13 L SunWter Corporte Procurement Pln CPP Procurement improvement cpbility development - Action PIn Recommendtions The following procurement improvement ctivities hve become projects for SunV/ter to undertke nd implement throughout Undertking these ctivities will fcilitte the implementtion of procurement strtegies nd prctices tht will provide opertionl efficiencies nd cost svings long with support nd sustining of existing best prctice procurement mngement. Tble 2 - Procurement improvement projects recommended lor Cpbility lmprovement project Procurement mngement Project Description Investigtion into the continuous development of internl nd externl, Corporte (Supplier) reltionships, identiffing key requirements nd new systems to be implemented to trck nd monitor procurement ctivities. Responsible Business Unit lmplementtion Dte Ongoing Performnce mesurement. lmptement formál procurement performnce -"ur*.rn"rri nd reporting - Corporte frmework of the procurement function frmeworks in line with vy rlu Stte ulolv Procurement r tvvulwtllwrt! Policy r v tvj requirements. rwy4uwurvutù. ny lo lune ZOI1- Contrct dministrtion Investi gtion underwy processes. in reltion to current Contrct Administrtion i Corporte I By 30 June 201 1

14 APPENDIX 1 Corporte P roc u rement G ro u p Orgni stion l Structu re

15 t.fr (1)Ed-Eo FHin

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