Key Performance Indicators V4.0

1. Key Performance IndicatorsV4.0

2. Content • Introduction • 1.1 Background/Overview • 1.2 Purpose, Objectives and Deliverables • Procurement Turnaround Times • 2.1 Definition • 2.2 Measurement & Capture • 2.3 Comparison • Departmental Costs • 3.1 Definition • 3.2 Measurement & Capture • 3.3 Comparison • Supplier Bid Costs • 4.1 Definition • 4.2 Measurement & Capture • 4.3 Comparison • Resource Capability • 5.1 Definition • 5.2 Measurement & Capture • 5.3 Comparison UNCLASSIFIED

3. 1.1 Background/Overview Context On the 21 November 2011 the Minister for the Cabinet Office announced that Government would - Make it 40 per cent faster to do business with Government and that from January 2012 all but the most complex procurement processes will be completed within 120 days. Key Performance Indicators This KPI pack is intended to give you guidance on four specific KPIs – procurement turnaround times, departmental costs, supplier bid costs and resource capability. Why use this pack? These KPIs are relevant to understanding the impact of the application of lean on the procurement process, contributing to continuous improvement of the lean sourcing process and demonstrating progress in changing the way the government does business. Procurement turnaround times for all above OJEU procurements are being monitored by Cabinet Office through extracting data published by central government departments and their arms length bodies in Contract Award Notices via the Tenders Electronic daily system. This data is used to measure the progress being made by all departments in the application of LEAN sourcing. These KPIs are also useful for departmental performance measurement and reporting processes and can be used to support continuous improvement in resource planning and utilisation. When using this pack you should apply your professional judgement to decide whether the KPI Calculator can usefully be deployed and/or customised to meet your needs. Related Documents Visual Management Project Performance Hub Guidance SOP 2.2 Create a project performance hub KPI Calculator UNCLASSIFIED

4. 1.2 Purpose, Objectives & Deliverables Purpose • To measure the impact of applying the Lean Sourcing standard solution on: • Procurement turnaround times • Departmental costs • Supplier bid costs • Resource capability Objectives • To understand the impact of the application of lean on the procurement process • To contribute to continuous improvement of the lean sourcing process • To demonstrate progress in changing the way the government does business Deliverables • Data describing: • The number of working days from the publication of a contract notice to the contract award decision date to enable you to demonstrate a reduction in turnaround times and/or the impact of external factors (e.g. approvals) on your turnaround times. • The cost to the department of running the procurement based on the above timescale broken down by staff costs, consultancy costs, internal legal costs, Tsol costs, external legal costs and other costs to help you ensure resources are deployed effectively. • Supplier bid costs to enable you to demonstrate progress in changing the way the government does business. • Whether your team has the required skills and expertise to run the procurement and if not, to identify what impact this had on the turnaround times and costs and to use this as evidence for additional resources for future procurements. UNCLASSIFIED

5. 2. Procurement Turnaround Times 2.1 Definition • What is it? • The total number of consecutive working days from a defined start date to a defined end date including the following breakdown as a minimum: • Working days from contract notice publication date to contract award decision date (source Tenders Electronic Daily) • Note: the Minister for the Cabinet Office's target of 120 days for all but the most complex procurement processes is from contract notice publication to contract award decision date however the scope of the lean sourcing process is wider and to understand the impact of, for example, approval processes like the moratorium, internal approvals, analysing business needs, tender evaluation and so on you might want to consider tracking from a defined start date like, strategic outline business case approval or publication of a PIN through to formal contract signature. • Why measure it? • Departments and suppliers have articulated that the current process takes too long and is too costly. The lean sourcing process has been designed to streamline the process and maximise value added activity thus reducing the timescales. UNCLASSIFIED

6. 2. Procurement Turnaround Times 2.2 Measurement & Capture 1 1 2 • The source of data for this KPI is likely to be your project plan. • A KPI calculator has been developed for use if required. • How to use the KPI calculator • White cells indicate input cells and grey cells indicate cells that will auto calculate. • Use your baseline project plan to complete planned dates and the final plan to complete actual dates. • Enter as many of the planned and actual dates as possible. • The summary table will give you your procurement turnaround times in working days. UNCLASSIFIED

7. 2. Procurement Turnaround Times 2.3 Comparison • You can compare the data you have captured for procurement turnaround times to a number of sources: • The ambition for completion of all but the most complex procurements in 120 working days. • Current average baseline performance in 2011 derived from a survey of Tenders Electronic Daily based on the following criteria: • UK Central Government (including agencies) • Contracts awarded between 01/01/2011 & 31/12/2011 • Average time taken in working days from publication of contract notice to contract award decision date per procedure • Competitive dialogue 504 days • Restricted 202 days • Open 85 days • An average of your own departmental projects over a specific time period, for example average time taken per procedure from publication of contract notice to contract award decision for procurements run during 2011. • A “baseline project” i.e. comparison to a similar project that you have run previously where you have not used the lean sourcing standard solution. UNCLASSIFIED

8. 3. Departmental Costs 3.1 Definition • What is it? • The total cost of staff deployed on the procurement during a defined timescale. This should include: • Commercial staff • Programme management staff • Subject matter experts used for evaluation, requirement drafting etc • Admin staff • Staff costs should be calculated using annual capitation rates and daily rates (annual capitation / number of working days) . • The total cost of legal advice for the procurement project, this should include: • In house legal costs • Tsol legal costs • External legal costs • The total cost of external consultancy for the procurement project, this should include: • Consultancy • Interim – staff substitution • Temporary staff (e.g. used to back fill subject matter experts) • Other costs associated with running the procurement including: • Venue costs for boot camps • T&S UNCLASSIFIED

9. 3. Departmental Costs • Why measure it? • To provide internal and external assurance that the lean sourcing process costs less to run than existing practices and that internal and external resources are deployed effectively. 3.2 Measurement & Capture 1 1 1 2 4 3 5 4 • The sources of data for this KPI are likely to be your resource plan and business case. • A KPI calculator has been developed for use if required. How to use the KPI calculator White cells indicate input cells and grey cells indicate cells that will auto calculate. For staff costs insert team members (either by name or anonymous reference number), grades (e.g. SCS, Grade 7) and an annual capitation rate (source: finance). The calculator will identify a “daily rate” based on the number of working days in the year (e.g. 251 for 2011, 252 for 2012, 253 for 2013). Enter the planned number of working days for the team member. So if they are full time enter 251, or allocated to the team 50% would be 125.5, or evaluating for four weeks would be 20 and so on. This will give you a cost per team member and a total cost. Do the same for actual days worked by the team member. UNCLASSIFIED

10. 3. Departmental Costs 6 7 6 6 • For legal, consultancy and other costs enter your planned and actual. • The summary table will then give you planned and actual totals for • your departmental costs. 3.3 Comparison • The cost baseline should be your budget for the project: • Staff costs – this may be articulated in the form of headcount resource allocated to the procurement. • Legal costs budget • Consultancy budget • Venue hire • T&S • This will enable you to identify actual cost versus budget at the end of the procurement exercise – see summary table above (7). UNCLASSIFIED

11. 4. Supplier Bid Costs 4.1 Definition • What is it? • Supplier bid costs are the costs incurred by suppliers to develop a bid and to participate in the procurement process. • Suppliers should be asked to articulate their bid costs as: • The total cost of participating in the procurement exercise. • Why measure it? • Suppliers have articulated that the current process takes too long and is too costly therefore you may wish to capture feedback at the end of the process to understand whether suppliers have realised a benefit from the implementation of the lean sourcing standard solution and to collect anecdotal evidence of progress in changing the way the government does business. 4.2 Measurement & Capture • You should indicate to suppliers your intention of capturing feedback from them on the cost of participating in the procurement. • As suppliers are deselected or deselect themselves and you conduct a feedback debrief session ask them to write to you and identify the following: • Cost of participating in this specific exercise • Either average cost of bidding for similar government contracts or the cost of bidding for a specific similar government contract • Either average cost of bidding for similar private sector contracts or the cost of bidding for a specific similar private sector contract • In practice there is no way you can verify this data therefore you should view it as useful indication rather than a robust data source. 4.3 Comparison • There is no robust baseline data on supplier bid costs and therefore you should ask suppliers to provide a comparison. UNCLASSIFIED

12. 5. Resource Capability 5.1 Definition • What is it? • Resource capability is the measure of whether your team has the required skills and expertise to run the procurement. • Why measure it? • A key aspect of the lean sourcing standard solution is mobilisation – being able to get the right skills and capability in the right numbers to manage the procurement process. This also requires departments to reduce reliance on external consultants. • You will be able to identify whether you had the necessary skills and expertise and if not, to a) identify what impact this had on the turnaround times and costs and b) use this as evidence for additional resources for future procurements. 5.2 Measurement & Capture • Use the skills matrix in the standard document library. • Refer to the Performance Hub visual management pack section 3.3 which details how to use the skills matrix to identify skills and capability required versus skills and capability available. • In addition refer to SOP 2.3 Complete team skills assurance. • Refer to Departmental Costs KPI to track the use of external resources – planned versus actual. • Unplanned use of external resources – in particular consultants may indicate capability shortfalls within the team that need to be addressed. 5.3 Comparison • You will be able to compare the skills and expertise you needed to the skills and expertise you were allocated. UNCLASSIFIED