Category: Process

Processes like Procurement & Sourcing & Audit

PPI & PCP in Ireland

By triggering the development of breakthrough solutions ahead of the rest of the market, public authorities can, through their role of demanding first buyer, create opportunities for companies in Ireland to take international leadership in new markets. By increasing “local” public sector demand to develop innovative solutions for the societal challenges of the future, PCP can help combat delocalisation and encourage companies to invest in highly qualified R&D in Europe.

Have you an innovative product or service which the public-sector would benefit from, while the Government could become your first/early customer?

Pre-commercial procurement (PCP) is an approach with in the public procurement of innovation, developed specifically for the procurement of R&D services rather than actual goods and services;

Public procurement of innovation (PPI) occurs when public authorities act as a launch customer for innovative goods or services.

Public procurement for innovation has the potential to improve productivity and inclusiveness, if used strategically as targeted, demand-side innovation policies to meet societal needs. For example, it can anticipate future investments to address existing or future societal challenges; or it may allow potential vendors to enter the market with new, innovative goods or services, thus encouraging innovative solutions to pressing challenges.

PPI and PCP cover a large range of the industrial market through all development phases – from research to the final stage of the product – giving public buyers the opportunity to influence the market towards innovative solutions. PCP and PPI are separate but complementary procurement processes. PCP/PPI approach delivers significantly higher quality and on average 20% cheaper products compared to long term partnership R&D and deployment contracts that are prone to vendor lock-in.

Focusing PCP on ‘development’ and PPI on ‘deployment’ also enables the use of PPI for closer to the market cases where no R&D is required to address the procurement need or R&D has already finished, as follows;

The benefits of PCP & PPI for Ireland:

1. To foster more innovative public procurement procedures and admin capacities.

Main Beneficiaries & target group: procurement officers (improving know-how to run PCP/PPI procedures)

2. To foster innovation through public procurement – both PCP and PPI.

Beneficiaries: public procurers (e.g. open call offering co-financing, best ideas selected = public sector challenges that would generate maximum quality/efficiency improvement for region if solved by innovations). Target group: public sector (improved quality/efficiency) and enterprises (business opportunities).

3. To foster better meeting of public needs through buying the development (PCP) and deployment (PPI) of innovative solutions.

Beneficiaries: public procurers such as town planners, transport, environment, health etc. authorities and ministries (ERDF, Cohesion Fund and ESF). Target group: public sector (improved quality/efficiency) and enterprises (business opportunities).

Process:

For the member state or region wishing to prepare their operational programmes in order to include PCPs and PPIs, the implementing process could then be the following:

1. ANALYSIS: identification and description of the selected thematic objectives, priorities and justification of their choice,

2. AWARENESS RAISING – PROMOTION: inform potential applicants and the final beneficiaries about the available opportunities to achieve better and more innovative results for the public sector through the use of PPP and PPI.

3. IDENTIFICATION OF THE PROJECTS SUITABLE FOR PCP OR PPI: Is important to first identify those projects/investments – or parts of them – for which solutions are already so close-to-the-market that commercial end-solutions could be procured right away via PPI. Secondly, separate out those projects/investments – or parts of the above same projects/investments – that require new and better solutions not yet close-to-the-market for which the R&D could be performed via PCP.

4. IMPLEMENTATION OF PCP AND PPI IN COMPLIANCE WITH THE LEGAL FRAMEWORK:The EU Treaty principles and competition rules must be respected in the implementation of PCPs. As with all other public procurements, PCPs must thus be implemented through transparent, competitive and non-discriminatory procedures.

Next Steps:

  • Undertake your Market Research to identify the need (problem) and person (buyer), within the public sector
  • Consider supports from the European Assistance For Innovation Procurement Initiative (EAFIP), who provide free of charge technical and legal assistance to individual procurers to implement PCPs and PPIs.
  • Contact us with your PPI / PCP queries and opportunities

Revenues growing but Profits stagnating?

Activity Based Costing: It is as simple as A-B-C! 

We have all noticed the Economic growth over the past 18 months (not as much as our ‘Leprechaun Economics’ 26% growth spurt!), but gradual growth in most industries across the country. However, one challenge we hear from clients on a regular basis is that while Revenues are increasing, margins and profits are stagnant. The confidence of sales and growth are hindered by ongoing cash-flow challenges. The underlying challenge here is cost increases and supply chain leakages.While one solution to resolve this problem is is to undertake an Activity Based Costing (ABC) review so as to correctly allocate all costs underlying a product or service, by linking each direct and indirect cost to the activity that drives it. This ABC task discloses great detail to support pricing, tendering and cost reduction activities. ABC uses a P&L as the input tool to build cost models for service provision where both people and overheads are detailed in a cost, while for products, ABC allocates all costs to products by linking the cost of the activity that drives it to provide benefits such as;

  • Elimination of under cost servicing with an accurate pricing model for all products/services, especially complex service Tenders where all aspects of the job can be fully costed from the outset
  • Remove/reduce “non value added” activities from the production process, saving significant time (often estimated to be 30% of the underlying costs in all processes), while improving output
  • Determine how to positively impact sales price by adjusting costly inputs
  • “Open book” transparency to share with and/or educate clients

So to summarise, Activity-based costing (ABC) is a costing methodology that identifies activities in an organisation and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. Could a forensic ABC Review help business owners get more accurate product costing and help save time and reduce costs?

Call us today to learn of similar ABC projects which we have undertaken recently while to clarify any queries you may have.

Public Procurement Training

Empowering & Transforming the Procurement Professional

Arvo in partnership with IDD Consult offer tailored training to meet the needs of buyers, from those beginning their procurement career through to seasoned practitioners. We develop the mindset, toolset and skillset of public sector buyers to ensure you are armed to deal with the growing demands in your role e.g. risk, savings, technology and compliance

 

The first step is to assess your current procurement ways of working across 5 different levers – process, people, technology, knowledge and culture, which will diagnose an appropriate Training Plan, leading to appropriate avenues such as workshop training, Certificate/Degree/Masters Qualifications etc. We develop bespoke courses specifically to your needs, built on this initial self assessment of your procurement competencies.

 

We will empower you and your team to make the process of procurement leaner, smarter, better and develop the procurement department as a hub of trusted advisers for internal stakeholders, suppliers and customers.

 

So take the next step on your career and provide some brief contact details below so as we can furnish you with further details;

Claim all your Capital Allowance Rebates

Recently, we have worked closely with a business that saves tax for commercial property owners by generating rebates from Revenue, where suitable. This is achieved by extracting capital allowances from the integral parts of commercial buildings, that are not easily identifiable by accountants.

CAPLUS have worked with the Revenue Commissioners to develop the practice and procedure for establishing valuations, using their expertise in capital allowances to provide a streamlined claims process compliant with Irish Tax Law. A large value of allowances go unclaimed each year but these Capital Allowance experts can unlock much needed cash from businesses.

When capital expenditure is incurred on constructing, refurbishing or fitting out a property, there can be substantial tax savings available on the cost of particular installations know as plant and machinery. This category of expenditure covers many items including building services installations of heating and ventilation, hot and cold water, parts of the electrical systems and other mechanical systems. It also includes a wide range of items defined as plant under tax law and accepted practice.

 

Capital allowances reduce the amount of tax payable on profits and can also provide rebates on tax already paid in previous years. A valuable cash flow benefit can be obtained through a claim for allowances.

 

Key Points

  • Allowances reduce the amount of tax payable on profits.

  • Tax rebates can be claimed on tax paid over previous years.

  • Allowances are used over an 8 year period at 12.5% per annum straight line basis.

  • Ability to backdate claim over last 4 years provides rebate potential if tax has been paid in those prior years.

  • Best opportunity to maximise relief is historic expenditure where a 4-year rebate can be made with a further reduction in tax over the following 4 years.

  • Cash benefit of allowances depends on tax rate paid by client. It is greater with higher rate income tax payers and lower with 12.5% corporation tax payers.

  • Relief is available for new builds, refurbished or acquired properties.

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