Procurement Written by Crescent Purchasing Consortium (CPC)
Further insight into procurement consultancies
There are several methods to calculate a saving: budget versus tender cost; existing service cost versus tender cost; chosen tender versus nearest comparison; and cost avoidance. You will need to agree your preferred method to generate the most accurate savings figure by considering the following points. How was this budget calculated? How confident are you that the budget is a realistic figure for the goods/service you require? Are there any significant changes within the new specification that will add or reduce cost from your existing service cost i.e. increased staffing or fewer buildings to service? Will you The ‘share of savings’ cost model from procurement consultants be able to compare ‘apples with apples’? is designed to enable the buyer to pay no upfront costs but A tender comparison meanwhile would compare the chosen tender to the next best instead pay a percentage of the savings that are achieved. tender. This is usually an option taken where Crescent Purchasing Consortium explores this model to help you there is no benchmark or where the buyer determine if it best fits your school is unsure if their budget is realistic. Are the two tenders comparable in all aspects? Finally, consider if the avoided cost We will explore the share of savings Cost Model 2: A share of savings can be evidenced. cost model in this second article in The model is designed to enable the buyer Calculating the value the Insider Insight into Procurement to pay no upfront costs but instead using the share of It is Consultancy series, to help you determine choose to pay the procurement savings model is importa the best model for your institution. consultant a percentage of savings impossible until This series has been designed to that are achieved upon the the procurement to agre nt e with help you get the most out of your completion of the procurement process is t h e consu budget when using a procurement process. Percentage figures completed and ltant prior to consultancy and has been written by of up to 50 per cent of the final costs are t h comme e project professional procurement consultants achieved savings are charged established. ncing, h who are employed by a registered charity by procurement consultants What y ow our sav which operates a Public Sector Buying within the education sector. happens if a i be calc ngs will Organisation (PSBO). The articles offer It is important to agree saving is not ulated unbiased opinion and are designed to with the consultant prior to achieved? A buyer help you seek the best procurement the project commencing, how needs to agree in solution for your individual institution. your savings will be calculated. advance of appointing E Issue 24.3 | EDUCATION BUSINESS MAGAZINE
25
