A detailed procurement or tender strategy is an important part of planning a procurement.
A strategy will help you achieve your priorities and goals. Your strategy uses analysis and information you have gathered during the planning process.
The procurement or tender strategy will outline:
- how you will select the supplier
- the scope of the project
- the delivery model
- your planned approach towards the market or tender
- whether you plan to use a single or multi-stage process
Develop a procurement strategy
Procurement management planning may be different for every activity. It’s generally developed in 3 stages:
Stage 1: gather information and analyse the data
Stage 2: determine the best delivery model
Stage 3: plan your approach to market
How detailed the strategy is depends on the complexity of your procurement. All VGPB guides are modular and written to be scalable depending on the level of complexity. A procurement or tender strategy generally includes:
- a statement of objectives
- a review of the capabilities and capacity
- the scope of works or services
- the tender approach
- a form of invitation to tender
- project staging and structuring, including timing and interface risks
- contract management requirements
It includes analysis of:
- project needs, characteristics, risks and goals
- delivery models, including the model best suited to the activity
You also need to include governance and resourcing requirements. Governance is about who you need to get approval from.
Your approval point depends on your organisation. It also depends on whether the procurement is for goods, works or services.
Talk to your procurement governance unit if you have any questions about the approval process.
Create a procurement business case for goods and services
Information in a procurement business case helps decide whether a procurement should continue to completion. It should be considered in goods and services procurements. This stops your organisation from committing too much time and money to an unsuitable project.
Please note a business case is only used for goods and services, and is only mandatory for 32 entities. It’s not required for construction procurement. Check whether your organisation is listed.
You may need a business case to keep track of:
- the decision-making process
- the scope of factors that impact procurement
- your procurement outcome
You can use the business case as a template to check the outcomes of your procurement. Your business case includes information from your:
- market analysis
- demand and project scoping analysis
- delivery option analysis
A simple purchase is low in risk and value. This kind of project usually only needs a description of your organisation’s need and the agreed estimated price of the solution.
A standard procurement will have:
- clear needs
- competitive market
- standardised good or service
This kind of procurement needs more information in a procurement approval template.
A highly complex procurement includes:
- unclear or less-understood needs
- diverse levels of capability and capacity in the market
- different options for goods and services
A complex project needs a business case with more in-depth information. It also justifies the need and includes a detailed list of different delivery options.
Supplier engagement plan
A supplier engagement plan explains your processes and how you plan to communicate with suppliers.
These plans are an efficient way to ensure transparency and trust between buyer and supplier. Some of the objectives of a supplier engagement plan are to:
- make a procurement clear and the information accessible to suppliers
- map the engagement with the supplier market
- encourage small and medium business and not-for-profit organisations to get involved
- encourage feedback from the supply market
- find new ways to engage with suppliers
Think about how you plan to manage supplier relationships and keep the market informed. There are 3 stages in developing a supplier engagement plan:
Stage 1: Develop and document how you will engage suppliers and the processes you will use
Stage 2: Put the processes into effect
Stage 3: Tell your suppliers about the processes
This is an important part of maintaining a positive relationship between the government and the market.
Please note construction does not require a supplier engagement plan, but does require planning for supplier engagement, which is usually addressed in the tender strategy.
Construction tender strategy
The tender strategy includes information on:
- the scope of the works
- project staging and structuring including timing and interface risks
- the tender approach
- the form of invitation to tender
The tender strategy is just one part of procurement management planning. There is no one-size-fits-all approach to tender preparation and planning. The amount of preparation will differ according to factors such as the scale and complexity of the project.
If your project needs to follow the investment lifecycle guidelines you will need a procurement strategy and a business case.
Social purchasing uses buying power to effect positive social change within communities.
Buying socially can support the community by creating jobs, conserving the environment, supporting social enterprise and more.
Whether you need a social procurement plan will depend on thresholds. Requirements and approaches will differ across these bands.
The thresholds are:
- Below: $1 million for regional, and $3 million for metro or state-wide
- Lower band: $1-$20 million for regional, and $3-$20 million for metro or state-wide
- Middle band: $20million to $50 million
- Upper band: Over $50 million
If your procurement is below the threshold or in the lower band, add social objectives into regular procurement planning.
If your procurement is in the middle or upper band, complete a social procurement plan as part of your planning.
If your project is below the threshold, seek opportunities with social enterprises, Australian disability enterprises, or Aboriginal businesses.
If your project is in the:
- lower band: You must use evaluation criteria to favour businesses with practices that support social and sustainable objectives
- middle band: You must include performance standards and contract requirements with social and sustainable objectives
- upper band: You must include targets and contract requirements that pursue social and sustainable objectives
Local Jobs First - Victorian industry participation policy
This policy allows local small and medium businesses to get more opportunities. It makes it possible for them to compete with bigger businesses for contracts.
Where your procurement meets the thresholds, you must apply the policy to your project.
Find out if your project needs to follow this policy
Major projects skills guarantee
If a works project is worth $20 million or more, it must use local apprentices, trainees or engineering cadets. These junior staff should make up at least 10 percent of the total estimated labour hours. This makes sure Victorians benefit from major publicly-funded works happening in Victoria.
Read more about the Major Project Skills Guarantee