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CENTRAL PURCHASING
BODIES: A FRAMEWORK FOR
MEASURING PRODUCTIVITY
AND ECONOMIC IMPACT
Paulo Magina
Head of Unit, Public Pr...
Human capital
Legal and
governance structure
Strategic
Procurement
Centralisation of
procurement
Organisational, human and...
Assessing the impact of policies
beyond economic performance
Natural capital
Economic
capital
Social capital
Human capital...
Understanding the multidimensional
impacts of procurement
Natural capital
Economic
capital
Social capital
Human capital
Su...
Examples for indicators measuring
impact on the different capitals
Ratio of public
contracts pursuing
objectives such as
h...
ENABLER #1
A LEGAL ENVIRONMENT
CONDUCIVE TO STRATEGIC
PUBLIC PROCUREMENT
6
Efficient co-ordination of the
procurement legal system
7
•National legal procurement frameworks should
allow for a number...
ENABLER #2
LEVERAGING ON
PURCHASING POWER
THROUGH
CENTRALISATION
8
Centralisation efforts provide
foundations for greater efficiency
• There are many opportunities in existing
structures: e...
• Communication is key to illustrating benefits
• Experience shows that realising economic
benefits is easiest by aligning...
 Understanding impact of centralisation in Chile
The role of technology to support
strategic centralisation
Figure 3.4. S...
ENABLER #3
USE OF TECHNOLOGY FOR
GREATER EFFICIENCY AND
PRODUCTIVITY
13
Performance management system is
still lacking in most countries
E-procurement has impact… beyond
procurement
• OECD member countries are moving towards integration
with other government ...
ENABLER #4
STRATEGIES TO ACHIEVE
BROADER POLICY
OBJECTIVES
15
Strategic procurement in Finland
The Finnish government have indicated a desire to use
procurement to achieve a number of ...
Challenge: measuring the impact
• A lot of strategic initiatives are in their
infancy = hard to measure their impact
• Eac...
DEVELOPING A
PRODUCTIVITY FRAMEWORK
FOR MEASURING THE
IMPACT OF CPB
18
CASE STUDIES: Finland & Chile
A framework for productivity:
19
Creating an indicators framework
• To assess the viability of a framework for measuring
procurement productivity such as i...
Indicators monitoring economic
impacts
21
Objective Data requirements Applicability in Finland
Overall inputs
required of
...
Indicators monitoring environmental
and social Impacts
22
Objective Data requirements Applicability in Finland
Reduction o...
FOR MORE INFORMATION ON OECD WORK ON PUBLIC PROCUREMENT
OECD.ORG/GOV/PUBLIC-PROCUREMENT
23
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Paulo Magina, OECD Public Governance Directorate, third regional conference on public procurement for ENP East countries, Tbilisi, 6 November 2019, 1

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Presentation by Paulo Magina, Head of the Public Procurement Unit, OECD Public Governance Directorate, on central purchasing bodies: a framework for measuring productivity and economic impact, Tbilisi, 6-7 November 2019.

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Paulo Magina, OECD Public Governance Directorate, third regional conference on public procurement for ENP East countries, Tbilisi, 6 November 2019, 1

  1. 1. CENTRAL PURCHASING BODIES: A FRAMEWORK FOR MEASURING PRODUCTIVITY AND ECONOMIC IMPACT Paulo Magina Head of Unit, Public Procurement Public Governance Directorate OECD 3rd regional conference on public procurement for ENP East countries Tbilisi, 6-7 November 2019
  2. 2. Human capital Legal and governance structure Strategic Procurement Centralisation of procurement Organisational, human and technological enablers of strategic procurement 2 E-procurement Economic impact
  3. 3. Assessing the impact of policies beyond economic performance Natural capital Economic capital Social capital Human capital Sustainability of well-being over time Sustainability of well- being over time Inspired by the OECD well-being framework
  4. 4. Understanding the multidimensional impacts of procurement Natural capital Economic capital Social capital Human capital Sustainability of well-being over time PP Sustainability of well-being over time
  5. 5. Examples for indicators measuring impact on the different capitals Ratio of public contracts pursuing objectives such as health, education (where possible: outcomes secured through public contracts) Proportion of government tender documents that are shared openly in a format allowing review and analysis Comparison between C02 emissions from historical goods and services bought by government, and new goods and services selected using emissions as criteria Time taken by government personnel, including non- procurement roles, to undertake procurement activity
  6. 6. ENABLER #1 A LEGAL ENVIRONMENT CONDUCIVE TO STRATEGIC PUBLIC PROCUREMENT 6
  7. 7. Efficient co-ordination of the procurement legal system 7 •National legal procurement frameworks should allow for a number of options in terms of procurement methods that can be used. •Applying the right procurement method/strategy is a key determinant of both the efficiency and effectiveness of the process. •Simple, modern and adaptable procurement legal frameworks are the key to success
  8. 8. ENABLER #2 LEVERAGING ON PURCHASING POWER THROUGH CENTRALISATION 8
  9. 9. Centralisation efforts provide foundations for greater efficiency • There are many opportunities in existing structures: efficiencies through sectorial specialisation, more targeted responses to needs • Challenges relate to overall economic sustainability 9
  10. 10. • Communication is key to illustrating benefits • Experience shows that realising economic benefits is easiest by aligning the organisational structures and collaborative tools with procurement needs • Centralisation in a federal system: from centralised systems to centre-led organisations, a range of options are offered to meet specific needs and clients' expectations Investing in centralisation: realising strategic benefits 10
  11. 11.  Understanding impact of centralisation in Chile The role of technology to support strategic centralisation Figure 3.4. Share of products transacted Total, 31.46% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Proportion of non-transacting suppliers and revenue shares of top 10 suppliers in each framework agreement 0 100 200 300 400 500 600 700 800 900 1000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
  12. 12. ENABLER #3 USE OF TECHNOLOGY FOR GREATER EFFICIENCY AND PRODUCTIVITY
  13. 13. 13 Performance management system is still lacking in most countries
  14. 14. E-procurement has impact… beyond procurement • OECD member countries are moving towards integration with other government systems • Enabling procurement platforms and financial systems to communicate allows better management of finances 14
  15. 15. ENABLER #4 STRATEGIES TO ACHIEVE BROADER POLICY OBJECTIVES 15
  16. 16. Strategic procurement in Finland The Finnish government have indicated a desire to use procurement to achieve a number of broad objectives, such as: • Strengthening competitiveness by providing opportunities for SMEs to participate in procurement processes by reforming legislation and removing regulation that prevents competition; • Creating a growth environment by ensuring the level of innovative procurement is at least 5% of all public procurement; and • Boosting the strength of the domestic market by using public procurement to make Finland a pioneer in clean technology. 16
  17. 17. Challenge: measuring the impact • A lot of strategic initiatives are in their infancy = hard to measure their impact • Each initiative is different, therefore has different indicators for success • The challenge is making a standardised measurement framework 17
  18. 18. DEVELOPING A PRODUCTIVITY FRAMEWORK FOR MEASURING THE IMPACT OF CPB 18
  19. 19. CASE STUDIES: Finland & Chile A framework for productivity: 19
  20. 20. Creating an indicators framework • To assess the viability of a framework for measuring procurement productivity such as in Finland, there needs to be an understanding of the metrics that could be used to assess performance at different levels of government, and the data that is required to ensure effective measurement. • This can be used to develop a roadmap towards comprehensive and effective measurement. • Further refinement of the measurement indicators will enable the tangible benefits to the economy in terms of value to be quantified in countries such as Finland where 5% of tenders are innovative. 20
  21. 21. Indicators monitoring economic impacts 21 Objective Data requirements Applicability in Finland Overall inputs required of CPB Staffing levels; cost of running CPB; breakdown of time spent on different activities Internal data on staffing can be used to establish overall CPB inputs, and division of inputs by activity E-procurement inputs Direct costs for purchasing, upgrading or maintaining e-procurement system; personnel costs associated with system management and maintenance Handi project can provide a central and detailed view of e-procurement system and personnel costs Innovative procurement Ratio of goods and services purchased that meet innovation criteria (e.g. purchased through PCP, first introduction into domestic market etc). Measurement has been established to ensure 5% of tenders are innovative, to meet the national target. However, further work required to a) clarify whether 5% represents value or quantity and b) to extend measurement to understand the impact of innovative procedures Measuring CPB Performance in Finland
  22. 22. Indicators monitoring environmental and social Impacts 22 Objective Data requirements Applicability in Finland Reduction of CO2 emissions Comparison between CO2 emissions from historical goods and services bought by government and new goods and services selected using emissions as criteria Requires understanding of CO2 emissions of previous goods and services throughout lifecycle, as well as emissions of current goods and services (e.g. emissions from previous vehicle fleet compared to current fleet). Current measurement purely involves calculation of spend through ‘green’ contracts Open and inclusive procurement Proportion of government tenders that use open procedures as opposed to restricted or closed tenders Data available on how many procedures are conducted by open/restricted/negotiated procedures Skills/jobs creation Number of jobs/training courses/qualifications generated through public procurement (note: specifically generated through contract clauses) Information not easily available on number of government contracts that include clauses/criteria related to creating jobs or delivering training Measuring CPB Performance in Finland
  23. 23. FOR MORE INFORMATION ON OECD WORK ON PUBLIC PROCUREMENT OECD.ORG/GOV/PUBLIC-PROCUREMENT 23

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