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Finance
Since the academies programme began in 2010, almost 3450
schools have completed the conversion process. Becoming
independent from their local education authorities has
provided academies with new freedoms, such as the ability to
design their own curriculums. Perhaps less well-known are some
of the challenges that they, and particularly their school business
manager may face during and after the transition period.
Quite rightly, the focus for any new academy is the education
programme and the development of the new curriculum.
However, this can often mean that other important areas are
overlooked, such as securing the best value deals on goods and
services. The responsibility for procurement can be daunting but
get the contract negotiation and management right and there is
potential to achieve considerable cost savings.
Good contract negotiation and management will also offer a
level of protection, ensuring that the goods and services remain
fit for purpose, and that contracts are fully compliant with
procurement rules and regulations.
So how can academies ensure they are procuring the most
cost-effective products and services?
Once the desired product or service has been clearly identified
it is advisable to carry out research into the market. Find out
about potential suppliers, their reputation, pricing and the
quality of the service they deliver, before making an approach.
One way of ensuring your academy is receiving true market
value for goods or services is asking a select number of suppliers
to enter in a tender process. This could be done in a number
of ways, for example, via e-auctions or sealed bids. This can
be a time consuming and costly process but it is likely to
deliver benefits in the long-term. Alternatively, a purchasing
organisation can provide support to identify the right supplier
for the needs of your academy.
Selecting the right supplier is crucial but it is only the first
stage of the procurement process. Perhaps more important is the
second stage of negotiating and preparing the contract. Goods
and services should never be obtained without ensuring a robust
contract is in place. This all-important document provides
protection for both the purchaser and supplier, and ensures that
what was agreed in principle is delivered in reality.
When putting a contract in place, it is vital that it clearly
reflects the needs and requirements of your academy.
Understanding the difference between essential and desirable
requirements will help you determine what the contract needs
to include, and how a supplier can deliver these requirements.
Problems often arise if the requirements are not well-defined
or non-essentials are included within the specification. In such
instances, the likely outcome is that the customer over pays for
what they actually need.
A degree of flexibility in a contract is beneficial to both
supplier and customer. For example, an academy’s requirements
are unlikely to remain the same throughout the contract. The
level of demand, the environment in which the contract is
needed, or the supply chain may change. If any of these changes
take place, good contract management will ensure that your
academy is not negatively affected. In fact, a flexible contract
will enable regular reviews against current requirements and
renegotiate on key deliverables and pricing. For this reason, YPO
recommends that clauses are included in the contract to enable
regular review.
Any contract should also be supported by a solid Service Level
Agreement (SLA). The purpose of a SLA is to set expectations
on the service to be received. This enables the customer to
monitor and control the performance of the provider against
mutually agreed standards, such as delivery and response times.
Establishing key performance indicators as part of the SLA will
help to measure the effectiveness of the service delivery, and
confirm that your academy is receiving what has been agreed
within the desired timeframes. We recommend that SLAs are
reviewed on an annual basis.
Of course, it is important that any problems are raised quickly
to give the supplier an opportunity to rectify the situation.
However, it is equally important to highlight when a job is done
well. It is also courteous to alert the supplier when internal issues
may affect their ability to deliver a service to a business.
In a worst case scenario if a service is not fit for purpose, it is
important to have a well-designed escalation route in place. If the
contract is not being followed for any reason, or the Service Level
Agreement is not meeting the targets, backup and protection
is required. In some cases the supplier could offer financial
recompense. Alternatively, ensure there is a clause in the contract
enabling termination without any legal repercussions.
Good contract management and service delivery relies
on effective supplier-customer relationships throughout
the duration of the contract. Establishing a good working
relationship with suppliers can benefit an academy in the long
run. Recognising their expertise and taking their advice will help
to maintain confidence that they have your best interests at heart.
YPO has launched a new free support and
advice service to help academies achieve
best value when buying services, such
as insurance and energy contracts. The
YPO Procurement Service for Academies
is a free service designed to help school
business managers navigate through
procurement and purchasing processes.
Benefits of the service include access to
a procurement health check, dedicated
helpline and category specialists that
provide industry and market expertise.
Summer 2014 | 83