PAST, PRESENT AND FUTURE COLLABORATIVE WORK BENCHMARKING, STRATEGIC PROCUREMENT AND ACTIVITY BASED C

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PAST, PRESENT AND FUTURE COLLABORATIVE WORK
BENCHMARKING, STRATEGIC PROCUREMENT AND ACTIVITY
BASED COSTING

• Go8 Directors Presentation 29 May 2009
• David Sturgiss, CFO ANU

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PAST, PRESENT AND FUTURE

• The Past
• Go8 CFOs have operated as an informal group.
• Meeting held once or twice a year since 2006.
• Sector wide state based meetings generally held
  twice per annum.
• Key issues that have been covered at CFO meetings
  have been-

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PAST, PRESENT AND FUTURE

• August 2006 at UNSW (first meeting)
• Financing of major capital projects.
• Traditional fixed term loans.
• Indexed Annuity Bonds.
• BOOT Schemes for Student Accommodation.
• Procurement collaborative opportunities.
• Considered Energy , Telcos and IT equipment.
• Joint buys more likely on a state basis.
• Qantas is an example of sector wide success.
• Benchmarking of financial processes.
• Against a global database of Service
  organisations.

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PAST, PRESENT AND FUTURE

• May 2007 at Melbourne University
• Revenue recognition.
• Business intelligence tools.
• Generally we are just starting out.
• Business interruption insurance.
• November 2007 at University of Western Australia
• Financing University Capital programs.
• Traditional and new.
• HEEF.
• Student accommodation.
• Financing models.

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PAST, PRESENT AND FUTURE

• RQF update.
• Information Management.
• Centralisation versus devolved service delivery
  models.
• July 2008 at University of Sydney
• Benchmarking/KPIs financial processes, systems
  and practices.
• Senior Finance Officers Forum.
• Benchmarking financial management.
• Shared services.
• _________________________________

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Go8 Financial Benchmarking The way forward.
A presentation by Gaye McMath
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Background
Objectives Strengthen collaboration
benchmarking process. Compile data for the
Go8 dashboard for analysis. Report identify
areas for further in-depth analysis.
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Benchmarking Process

• Commenced late Feb 2009
• Identified benchmarks focused on high level,
  publically available information.
• Developed populated standard template for the
  data data collected from 2006 2008
• Report drafted - summarises data, identifies
  trends highlights areas for further analysis.
• All responses are now received and the report
  is in the final stages of review.

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Examples of key points
Operating Margin decreased significantly in
2008 due to the poor performance of investment
markets
Return on Investment in 2008 was significantly
lower than in prior years, driven down by
unrealised revaluation losses impairment
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Example of key points (Cont.)
Benchmarking indicates a large variance in
State Local Government income between
universities, indicating a potential growth area
Although research income is increasing, the
rate of increase is lower than the increase in
academic staff spend
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Future Financial Benchmarking Opportunities

• Recurring Opportunities
• Benchmark publically available information to
  track high level trends and populate the Go8
  dashboard
• Specific Benchmarking Opportunities
• Debt Investment Strategies
• Capital Expenditure Strategy
• IT spend
• Efficiency of research

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PAST, PRESENT AND FUTURE COLLABORATIVE WORK
STRATEGIC PROCUREMENT

• Go8 Directors Presentation 29 May 2009
• Shane McGregor, CFO, The University of Adelaide

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PAST, PRESENT AND FUTURE

• Strategic Procurement has had an increased focus
  across the GO8 Universities recently.
• In many cases, the Strategic Procurement
  Manager/Director now reports directly to the CFO.
• Spend analysis including number of suppliers used
  and average spend per transaction indicated
  significant savings were possible (typically 90
  of the transactions are 10 of the spend).
• GO8s have been investigating collaborative
  opportunities.

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PAST, PRESENT AND FUTURE

• Sciences Top 10 Vendors by Transaction Number
• Approximately one third of transactions with
• Top 10 Vendors (with also one third of spend)
• Six vendors in both Top 10 by Spend and
• Transactions for Sciences in 2006

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PAST, PRESENT AND FUTURE
Sciences Transactions by Monetary
Amount Sciences 0 - 1000 Transactions - 88 of
transactions in 2006 - 9 increase from 2004 to
2006 Total Faculty 0 - 1000 Transactions - 88
of transactions in 2006 - 3.5 decrease from 2004
to 2006
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PAST, PRESENT AND FUTURE

• Sciences Commodity Spend
• Top two spend commodities (50 of Sciences spend)
  comprise mostly Chemicals, Lab Equipment and Lab
  Consumables.
• Laboratory and Medical spend is greater than 50
  of the total University spend for this commodity.

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PAST, PRESENT AND FUTURE

• 6m received through WPP for Newcastle and AUPN
  for cross sector benchmarking including
• - Stationary and office supplies - IT Leasing
• - Telecommunications - Lab Supplies
• - Travel - Banking services
• - PC Laptop purchasing - Multifunction devices
  copiers
• Some Universities have leveraged off these
  exercises to achieve direct savings through
  renegotiating contracts/pricing agreements.
• The University of Adelaide will use this
  intelligence when it renegotiates supply
  arrangements as part of its on-line requestioning
  implementation and in other tendering projects
  this year such as the telecommunications tender.
• Some University wide Australia wide contracts
  implemented
• - Technical, specialist and scientific gases
  UoA savings 50k p.a
• - Airfares Qantas
• - Travel - Thrifty

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PAST, PRESENT AND FUTURE

• There are various similar projects occurring
  across the GO8s and market intelligence and prior
  experiences are regularly shared
• - Online Requisitioning Systems including links
  to OHS and asset management systems and
  supplier hubs to improve value for money and
  lower risk.
• - Wider use of credit cards to support travel
  and other high volume/low value
  transactions.
• - Establishment of tender panels and use of
  tools such as eTendering to improve
  governance.
• - Sharing of intelligence around spend analysis
  and spend analysis tools.
• - Sharing opportunities around different
  commodity groupings.
• - Working with academics when acquiring new
  equipment for research.

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Presented by David PittMay 2009

• Costing at Monash

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Overview

• Activity based costing at Monash
• How we use it
• The future

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Costing at Monash

• Monash costs all centrally provided services and
  university wide infrastructure (e.g Space and
  ICT) using ABC techniques
• Done annually and integrated with the budget
  process
• Costs are attributed to all users of a service
  based on consumption (no exceptions)
• Service are identified as holistic not
  functional (e.g. cost of research applications
  management will include Research office, legal
  and finance functional units)

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Costing at Monash cont

• Drivers closely match consumption and are
  reviewed on an annual basis in consultation with
  faculties
• Faculty based ABC costing exercises, done
  periodically, assess costs, revenue and
  profitability of programs, student types (UG,
  HDR) and research.

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How we use it

• Assessing faculty financial performance gross
  revenues, costs and margins
• Keep a focus on service costs and the cost of
  accommodation
• Easy assessment of overheads to different
  situations or new business opportunities (e.g
  cost of HDR students in India, indirect costs of
  competitive research)
• Decision makers understand the revenues costs
  of projects and courses via tools provided for
  profitability assessment

To develop a culture of cost management
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The future

• Cost transparency and reporting will be driven
  harder by Governments in the future
• Facts for backing-up arguments to stakeholders
  and governments will be pivotal for the sector
• Understanding overhead costs (especially when
  you are a larger organisation), is vital for
  business strategy and competing in the future

Emphasis on costs will increase in the future