saving that’s not associated with any term, a full-year (12-month) effect should be reported unless otherwise agreed Currency fluctuations if a product/service has been negotiated in a foreign currency. Any fluctuations will be a gain/loss, not a procurement benefit/increase The ‘time value of money’. If you’re comparing current and predicted costs/savings over multiple years, and depending on the expenditure amount, your finance team might require you to define each year’s cash flows in terms of their ‘present value’, using what’s known as Present Value analysis. If you’re unsure, talk to your finance team. Ongoing measurement The savings from a procurement activity are generally predictive if you’re using a baseline of historic practices, pricing and volumes – and for some departments, that’s enough to report the forecast savings. However, it’s also good practice to report on the savings achieved throughout the contract and at its closure. Reporting on savings during the contract Wherever possible, track the ‘actual’ delivered savings throughout the contract, taking into account any price variances. You should also consider variations in volume (up or down), but exclude them when calculating your procurement savings. Using this information, you can benchmark and compare service improvements or time efficiencies within your organisation and with other agencies. This should link to ongoing performance and relationship management in conjunction with relevant supplier information. Reporting on savings at contract end Reporting on procurement savings at the end of a contract will help your department to learn from previous practice.
saving that’s not associated with any term, a full-year (12-month) effect should be reported unless otherwise agreed Currency fluctuations if a product/service has been negotiated in a foreign currency. Any fluctuations will be a gain/loss, not a procurement benefit/increase The ‘time value of money’. If you’re comparing current and predicted costs/savings over multiple years, and depending on the expenditure amount, your finance team might require you to define each year’s cash flows in terms of their ‘present value’, using what’s known as Present Value analysis. If you’re unsure, talk to your finance team. Ongoing measurement The savings from a procurement activity are generally predictive if you’re using a baseline of historic practices, pricing and volumes – and for some departments, that’s enough to report the forecast savings. However, it’s also good practice to report on the savings achieved throughout the contract and at its closure. Reporting on savings during the contract Wherever possible, track the ‘actual’ delivered savings throughout the contract, taking into account any price variances. You should also consider variations in volume (up or down), but exclude them when calculating your procurement savings. Using this information, you can benchmark and compare service improvements or time efficiencies within your organisation and with other agencies. This should link to ongoing performance and relationship management in conjunction with relevant supplier information. Reporting on savings at contract end Reporting on procurement savings at the end of a contract will help your department to learn from previous practice.
2A(7.3)%20SPF%20GPG%20-%20Benefits%20Tracking.docx