Key Performance Indicators V3.0

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Key Performance IndicatorsV3.0
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Content

• Introduction
• 1.1 Background/Overview
• 1.2 Purpose, Objectives and Deliverables
• Procurement Turnaround Times
• 2.1 Definition
• 2.2 Measurement Capture
• 2.3 Comparison
• Departmental Costs
• 3.1 Definition
• 3.2 Measurement Capture
• 3.3 Comparison
• Supplier Bid Costs
• 4.1 Definition
• 4.2 Measurement Capture
• 4.3 Comparison

• Resource Capability
• 5.1 Definition
• 5.2 Measurement Capture
• 5.3 Comparison

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1.1 Background/Overview
Context On the 21 November 2011 the Minister for
the Cabinet Office announced that Government
would Make it 40 per cent faster to do business
with Government and that from January 2012 all
but the most complex procurement processes will
be completed within 120 days. Key Performance
Indicators This KPI pack is intended to give you
guidance on four specific KPIs procurement
turnaround times, departmental costs, supplier
bid costs and resource capability. Why use this
pack? These KPIs are relevant to understanding
the impact of the application of lean on the
procurement process, contributing to continuous
improvement of the lean sourcing process and
demonstrating progress in changing the way the
government does business. Whilst there is no
plan to collect and report this data centrally
the context of Government policy particularly in
reducing procurement turnaround times is likely
to result in you being asked questions from
inside and outside your department about your
performance. Using these KPIs and potentially
feeding them into your departmental performance
measurement and reporting could therefore be
helpful. When using this pack you should apply
your professional judgement to decide whether the
KPI Calculator can usefully be deployed and/or
customised to meet your needs. Related
Documents Visual Management Project Performance
Hub Guidance SOP 2.2 Create a project performance
hub KPI Calculator
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1.2 Purpose, Objectives Deliverables
Purpose

• To measure the impact of applying the Lean
  Sourcing standard solution on
• Procurement turnaround times
• Departmental costs
• Supplier bid costs
• Resource capability

Objectives

• To understand the impact of the application of
  lean on the procurement process
• To contribute to continuous improvement of the
  lean sourcing process
• To demonstrate progress in changing the way the
  government does business

Deliverables

• Data describing
• The number of working days from the publication
  of a contract notice to the contract award date
  to enable you to demonstrate a reduction in
  turnaround times and/or the impact of external
  factors (e.g. approvals) on your turnaround
  times.
• The cost to the department of running the
  procurement based on the above timescale broken
  down by staff costs, consultancy costs, internal
  legal costs, Tsol costs, external legal costs and
  other costs to help you ensure resources are
  deployed effectively.
• Supplier bid costs to enable you to demonstrate
  progress in changing the way the government does
  business.
• Whether your team has the required skills and
  expertise to run the procurement and if not, to
  identify what impact this had on the turnaround
  times and costs and to use this as evidence for
  additional resources for future procurements.

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2. Procurement Turnaround Times
2.1 Definition

• What is it?
• The total number of consecutive working days from
  a defined start date to a defined end date
  including the following breakdown as a minimum
• Working days from contract notice publication
  date to contract award decision date (source
  Tenders Electronic Daily)
• Note the Minister for the Cabinet Office's
  target of 120 days for all but the most complex
  procurement processes is from contract notice
  publication to contract award decision date
  however the scope of the lean sourcing process is
  wider and to understand the impact of, for
  example, approval processes like the moratorium,
  internal approvals, analysing business needs,
  tender evaluation and so on you might want to
  consider tracking from a defined start date like,
  strategic outline business case approval or
  publication of a PIN through to formal contract
  signature.
• Why measure it?
• Departments and suppliers have articulated that
  the current process takes too long and is too
  costly. The lean sourcing process has been
  designed to streamline the process and maximise
  value added activity thus reducing the timescales.

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2. Procurement Turnaround Times
2.2 Measurement Capture
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• The source of data for this KPI is likely to be
  your project plan.
• A KPI calculator has been developed for use if
  required.
• How to use the KPI calculator
• White cells indicate input cells and grey cells
  indicate cells that will auto calculate.
• Use your baseline project plan to complete
  planned dates and the final plan to complete
  actual dates.
• Enter as many of the planned and actual dates as
  possible.
• The summary table will give you your procurement
  turnaround times in working days.

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2. Procurement Turnaround Times
2.3 Comparison

• You can compare the data you have captured for
  procurement turnaround times to a number of
  sources
• The ambition for completion of all but the most
  complex procurements in 120 working days.
• Current average baseline performance in 2011
  derived from a survey of Tenders Electronic Daily
  based on the following criteria
• UK Central Government (including agencies)
• Contracts awarded between 01/01/2011 03/08/2011
• Average time taken in working days from
  publication of contract notice to contract award
  decision date per procedure
• Competitive dialogue 439 days
• Restricted 202 days
• Open 111 days
• An average of your own departmental projects over
  a specific time period, for example average time
  taken per procedure from publication of contract
  notice to contract award decision for
  procurements run during 2011.
• A baseline project i.e. comparison to a similar
  project that you have run previously where you
  have not used the lean sourcing standard solution.

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3. Departmental Costs
3.1 Definition

• What is it?
• The total cost of staff deployed on the
  procurement during a defined timescale. This
  should include
• Commercial staff
• Programme management staff
• Subject matter experts used for evaluation,
  requirement drafting etc
• Admin staff
• Staff costs should be calculated using annual
  capitation rates and daily rates (annual
  capitation / number of working days) .
• The total cost of legal advice for the
  procurement project, this should include
• In house legal costs
• Tsol legal costs
• External legal costs
• The total cost of external consultancy for the
  procurement project, this should include
• Consultancy
• Interim staff substitution
• Temporary staff (e.g. used to back fill subject
  matter experts)
• Other costs associated with running the
  procurement including

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3. Departmental Costs

• Why measure it?
• To provide internal and external assurance that
  the lean sourcing process costs less to run than
  existing practices and that internal and external
  resources are deployed effectively.

3.2 Measurement Capture
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• The sources of data for this KPI are likely to be
  your resource plan and business case.
• A KPI calculator has been developed for use if
  required.

• How to use the KPI calculator
• White cells indicate input cells and grey cells
  indicate cells that will auto calculate.
• For staff costs insert team members (either by
  name or anonymous reference number), grades (e.g.
  SCS, Grade 7) and an annual capitation rate
  (source finance).
• The calculator will identify a daily rate based
  on the number of working days in the year (e.g.
  251 for 2011, 252 for 2012, 253 for 2013).

• Enter the planned number of working days for the
  team member. So if they are full time enter 251,
  or allocated to the team 50 would be 125.5, or
  evaluating for four weeks would be 20 and so on.
• This will give you a cost per team member and a
  total cost.
• Do the same for actual days worked by the team
  member.

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3. Departmental Costs
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1. For legal, consultancy and other costs enter your
   planned and actual.

• The summary table will then give you planned and
  actual totals for
• your departmental costs.

3.3 Comparison

• The cost baseline should be your budget for the
  project
• Staff costs this may be articulated in the form
  of headcount resource allocated to the
  procurement.
• Legal costs budget
• Consultancy budget
• Venue hire
• TS
• This will enable you to identify actual cost
  versus budget at the end of the procurement
  exercise see summary table above (7).

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4. Supplier Bid Costs
4.1 Definition

• What is it?
• Supplier bid costs are the costs incurred by
  suppliers to develop a bid and to participate in
  the procurement process.
• Suppliers should be asked to articulate their bid
  costs as
• The total cost of participating in the
  procurement exercise.
• Why measure it?
• Suppliers have articulated that the current
  process takes too long and is too costly
  therefore you may wish to capture feedback at the
  end of the process to understand whether
  suppliers have realised a benefit from the
  implementation of the lean sourcing standard
  solution and to collect anecdotal evidence of
  progress in changing the way the government does
  business.

4.2 Measurement Capture

• You should indicate to suppliers your intention
  of capturing feedback from them on the cost of
  participating in the procurement.
• As suppliers are deselected or deselect
  themselves and you conduct a feedback debrief
  session ask them to write to you and identify the
  following
• Cost of participating in this specific exercise
• Either average cost of bidding for similar
  government contracts or the cost of bidding for a
  specific similar government contract
• Either average cost of bidding for similar
  private sector contracts or the cost of bidding
  for a specific similar private sector contract
• In practice there is no way you can verify this
  data therefore you should view it as useful
  indication rather than a robust data source.

4.3 Comparison

• There is no robust baseline data on supplier bid
  costs and therefore you should ask suppliers to
  provide a comparison.

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5. Resource Capability
5.1 Definition

• What is it?
• Resource capability is the measure of whether
  your team has the required skills and expertise
  to run the procurement.
• Why measure it?
• A key aspect of the lean sourcing standard
  solution is mobilisation being able to get the
  right skills and capability in the right numbers
  to manage the procurement process. This also
  requires departments to reduce reliance on
  external consultants.
• You will be able to identify whether you had the
  necessary skills and expertise and if not, to a)
  identify what impact this had on the turnaround
  times and costs and b) use this as evidence for
  additional resources for future procurements.

5.2 Measurement Capture

• Use the skills matrix in the standard document
  library.
• Refer to the Performance Hub visual management
  pack section 3.3 which details how to use the
  skills matrix to identify skills and capability
  required versus skills and capability available.
• In addition refer to SOP 2.3 Complete team skills
  assurance.
• Refer to Departmental Costs KPI to track the use
  of external resources planned versus actual.
• Unplanned use of external resources in
  particular consultants may indicate capability
  shortfalls within the team that need to be
  addressed.

5.3 Comparison

• You will be able to compare the skills and
  expertise you needed to the skills and expertise
  you were allocated.