Achieving Value for Money

Value for money in public procurement is achieved through pursuing the lowest “whole of life” cost, clearly defining relevant benefits and delivering on time. Preventing waste and fostering competition, transparency and accountability during the tendering process are key conditions to achieving value for money.

In some circumstances, public procurement is all the more complex because procurement specifications are difficult to define, competition is restricted by market factors or the bundling and transfer of procurement risks (e.g. public-private partnerships).

As we’ve all witnessed, strong competition between suppliers generally pushes down prices and provides variety in the types of solutions that can be matched to the identified needs of contract authorities. Transparency and accountability must be balanced with other good governance imperatives, such as administrative efficiency.

However, supporting value for money requires attention throughout the entire procurement cycle. During the pre-tendering phase, for example, understanding is required of the needs of contract authorities, the lessons learned from previous procurements, as well as a solid grasp of the market. During the post-award phase, effective contract management is essential to ensuring that contractors deliver on time, within budget and according to the needs and specifications identified by the contracting authority.

If public procurement is to be successful in achieving value for money, contracting authorities should: factor in the whole of life cost when making award decisions; avoid any unnecessary costs and delays for themselves and suppliers; monitor the supply arrangements and revisit them if they stop to provide the expected benefits; and ensure continuous improvement in the efficiency of internal processes and systems.

Talk to us now about how Public Procurement Services can help you achieve value for money.