By Ross Moody, IPWEA National Executive Officer
Buying off State based contracts is becoming increasingly popular in local government because it can save time and hassle for the purchaser. However, it may not be delivering best value.
It is critical to assess best value when purchasing or leasing plant and light fleet in order to give proper consideration to all the options available. This also applies when entering into a long term hiring contract. 
There is concern that some organisations are simply buying what they want off a State contract price list without exercising due diligence to ensure they actually get a best value outcome. An organisation that makes purchase decisions solely on net capital costs (i.e. new price less trade in) will take substantial risks. Firstly, they may not be buying the lowest cost item if they fail to consider fuel consumption along with repair and maintenance costs over the life of the item. Secondly, if they are unable to get local service and spare parts readily, the machine’s downtime could be significant. And thirdly, if the operator's needs are not considered, productivity could fall.
The objective in purchasing should be to achieve a best value outcome for the buying organisation. That means assessing the most important criteria for the item being purchased. Typically, that assessment should include:
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whole-of-life costs including contract price offer
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operational assessment
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mechanical assessment
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warranty, service and parts back-up
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environmental issues
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risk assessment (accident and injury)
Using a weighted analysis of the above criteria to assess best value is now common practice and should not be overlooked when buying off State contracts. Weighted analysis is a decision tool by which the relative importance of various factors in a decision is taken into account.
All potential suppliers need to be considered.
An experienced operator who is familiar with the role the item has to perform should undertake operational assessment. Similarly, the mechanical assessment should be undertaken by someone with mechanical and technical knowledge who is familiar with the maintenance and support requirements of the item.
In order to comply with Occupational Health & Safety regulations on plant to be introduced or commissioned, a risk identification and assessment should also be conducted as part of the tender assessment process. But this should be considered separately from the best value assessment.
This topic will be discussed during May at the IPWEA Plant & Vehicle Management workshops. The discussions will include use of the IPWEA online tender analysis template, which provides a weighted-criteria analysis for best-value purchase decisions. Visit www.ipwea.org.au/fleet for details.