There are two key methods to determining a need to purchase supplies or services:
A specific requirement is identified, in which case is it necessary to ensure that the need is genuine and cannot be satisfied in some other way
A review of historical payments to a supplier or group of suppliers may suggest a need to:
Investigate and formalise the procurement process with a view to obtaining improved terms and value for money whilst equally addressing compliance with your internal financial regulations of the Procurement Act; or
Consider the suitability of the area of expenditure for a co-ordinated procurement either within your institution, with other local institutions or at consortia, or national level. This is aggregation of spend, allowing you to reduce the number of suppliers and maximise value from a single procurement for like supplies or services
Before starting the procurement exercise, ask yourself the following questions to help determine the need for your requirement, either in the first place, or to refine your requirements:
Does the institution need the supplies or services being considered?
Do the supplies or services fit in with the department's or institution's overall strategy?
Would it be possible to use supplies or services available in another department, institution or organisation?
Are new items required or would refurbished, ex-demonstration or second-hand ones be acceptable?
How long are the supplies or services needed for? Could they be leased or hired rather than purchased?
Are funds available to pay for the supplies or services?
Are there likely to be any other costs associated with the procurement of the required supplies or service? For example:
If the requirement is for a piece of equipment, are any additional resources needed such as a 3-phase electrical power supply?
Does space need to be modified to take the equipment?
If it automates a labour-intensive process and releases staff time, can the staff be allocated new tasks? Are there any personnel issues if jobs are changed substantially?
In other words, think any potential repercussions of bringing in the identified supplies or services as sometimes these costs can be much higher than that of the identified need.
Do the users of the supplies or services need to be involved in the procurement process to ensure that the right products are obtained?
Identification of requirement - associated risks | ||
Issues | Risks | Solutions |
Unrealistic costs estimated for the project | · Wrong amount of funds allocated · Project not funded because costs are too high · Funds miss-allocated to project that could be used elsewhere · Wrong competitive procurement process followed leading to risk of challenge under UK procurement rules | · Use a Whole Life Costing Model to explore and identify the operating and end of life costs of the proposed purchase · Prepare an outline business case and an options appraisal that explores the likely costs and benefits of the procurement · Ensure the value of proposed projects follow the valuation methods published in the procurement legislation |
Consideration not given to future costs associated with the procurement | · Insufficient funds or other resources (staff etc) available to ensure the best use is made of the supplies or services · Inefficient use of the procured supplies or services · Funds are wasted | · Use a Whole Life Costing Model to explore and identify the operating and end of life costs of the proposed purchase |
Need not challenged Alternative solutions not considered | · Unnecessary or inappropriate purchase made, and funds used that could have been put to better use | · Ensure that questions are asked when a requirement is proposed. The level of challenge should reflect the value and complexity of the procurement |
Outline business case not prepared Investment appraisal not completed | · Alternative solutions not identified or considered · Opportunity of a better solution is missed or a purchase made when it was not necessary | · An outline business case and an options appraisal should be completed for all procurements above a stated value. The detail in both reflecting the value and complexity of the proposed procurement · The ‘do nothing’ options should always be considered to identify if there is a genuine need for the proposed supplies or services |
School / MAT members - the information on this page aligns with the following ISBL Professional Standards: 3.21, 3.22, 3.23, 3.24