Original Source: NASPO

“So they [the Government] go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all-powerful to be impotent.”

Cost savings and providing for cost reduction opportunities, or “cost avoidance,” are not new concepts. Private industry has developed these terms into an accounting science that impacts the bottom line and profit and loss statements. Whole theories of management have been fostered from them and opinions and definitions are as varied as industry itself. For some time, the private sector has been conducting cost analysis and cost savings/cost avoidance benchmarking activities and using the results to establish best practices. While there are many similarities between public and private procurement best practices and sourcing techniques, attempts to find commonality and benchmarks for cost savings and cost avoidance have been somewhat alien to the public sector. 

However, as more and more emphasis is being placed upon public purchasing officials to demonstrate their public value and develop best practices that in some form mirror private enterprises, government purchasing has been called upon to document their performance in terms of savings.  

This paper is an attempt to provide tools to NASPO members to assist them in documenting and validating actual savings and estimated, projected, and potential savings. Additionally, as the final component to the NASPO Benchmarking initiative, this paper is intended to establish a framework for providing internal definitions, models for data capture, and methodologies for validation. Hopefully, over time, this framework will lead to the development of best practices in cost savings/cost avoidance that can become one of the many  standards in gauging performance across state procurement operations….”

 https://www.naspo.org/dnn/portals/16/documents/Benchmarking_Cost_Savings__and_Cost_Avoidance.pdf

 

Contributors: NASPO
Categories: SIG U Resource, Whitepaper
SRC Type: Category Specific, Finance, Real Estate