Updated

11 June 2014

Describe the category of goods/services are you assessing

Question Answer Score Comments

Risk Questions (X axis) 27Q1. Do the specifications of the goods/services in the category require

customisation?Yes, however the goods/services only require a low level

of customisation (e.g. small/minor configuration or

specialisation)

4

Q2. Is the category of goods/services critical to the organisation and/or its

core operations?No, the goods/services are of low criticality (i.e. minor or

insignificant) to the organisation or core operations

(e.g. generally used in back-office functions or are

consumables)

0

Q3. Is the category of goods/services being purchased from a competitive

market? Competitive market includes consideration of substitute

goods/services and the suppliers within that market

Yes, there is a competitive market where at least 3-5

suitable substitutes or suppliers exist

3

Q4. Will the purchase(s) within the category impact the local market? Yes, the procurement has potential to significantly

impact the market and may result in a reduction in

competition between existing suppliers

4

Q5. Would there be a significant interruption to the organisation’s core

operations if the supplier(s) defaults?No, because the time to transition to an alternate

supplier would be acceptable

4

Q6. Are there local industry considerations with this category? E.g.

recognise the impact of international suppliers on participation by local

businesses.

Yes, changes to the level of international market

participation will impact local suppliers

6

Q7. What level of confidence do stakeholders and/or the community (if

relevant) have that the required outcome(s) will be delivered?High: The community and/or stakeholders have a high

level of confidence that the required outcome(s) will be

delivered

6

Value Questions (Y axis) 30Q8. What is the total cost of ownership (TCO) for this category of

goods/services?

(See Procurement Guide - Value for Money for further information if

required)

MODERATE: TCO of this category of goods/services is of

moderate value (e.g. top 20 categories for the

organisation). There may be a high volume of low value

transactions. Include implementation costs across

multiple organisations in TCO calculations

4

Q9. Is the non cost value of this category of goods/services high?

(Examples of non-cost factors include fitness for purpose, quality, delivery,

service, support and sustainability impacts) (See Procurement Guide -

Value for Money for further information if required)

Yes, the non cost value of the goods/services is very high

(e.g. critical to quality and achieving value for money,

therefore KPI's would be developed and compliance

monitored)

18

Q10. Would it be beneficial to aggregate demand for this category within

an organisation or across organisations?Demand aggregation should not occur: (1) specs. too

complex/novel (2) insufficient demand/economies of

scale to benefit (3) good/service is organisation specific

limited benefit (4) potential to create a monopoly (5)

cost outweighs the benefit

0

Q11. Is the purchase of the goods/services within the category consistent

with the Government's priorities and objectives (economic, environmental

and social) as identified in the Queensland Procurement Policy, State

Procurement Plan and State Category Plans?

Partly, purchase of the goods/services aligns with some

of the priorities/objectives of Government. May be

some trade-off between objectives of the procurement

for the organisation and Govt environmental, social or

economic policies.

8

Results of Value Risk Assessment for a Category/Categories

This VRM can be used to assess the complexity (based on value and risk) of a category (or sub-category) of goods/services

Value Risk Matrix (VRM) for a category of goods or services

[e.g. Professional Services]

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Assessing Value/Risk of a Category [e.g. Professional Services]

Routine

Leveraged Strategic

Focused

Risk

Val

ue

Updated

11 June 2014

What goods/services are you sourcing (buying)?

Question Answer Score Comments

Risk Questions (X axis) 52Q1. Do the specifications of the goods/services require customisation? Yes, however the goods/services only require a low level

of customisation (e.g. small/minor configuration or

specialisation)

4

Q2. Are the goods/services critical to the organisation and/or its core

operations?Yes, the goods/services are highly critical (i.e.

fundamental) to the organisation and/or core

operations (e.g. direct impact on critical front line

services)

9

Q3. Are the goods/services being purchased from a competitive market?

Competitive market includes consideration of substitute goods/services

and the suppliers within that market

No, only one suitable substitute or supplier has been

identified and qualified (e.g. where prior intellectual

property has been co-developed with a supplier)

9

Q4. Will the purchase(s) impact the market? Yes, the procurement is likely to result in the creation of

a monopoly or potential market power by government

6

Q5. Would there be a significant interruption to the organisation’s core

operations if the supplier defaults?Yes, there would be a significant interruption (major or

severe risk) to the organisation’s core operations with a

high transition time to an alternate supplier

12

Q6. Are there local industry considerations with this purchase? E.g.

recognise the impact of international suppliers on participation by local

businesses.

Yes, changes to the level of international market

participation will impact local suppliers

6

Q7. What level of confidence do stakeholders and/or the community (if

relevant) have that the required outcome(s) will be delivered?High: The community and/or stakeholders have a high

level of confidence that the required outcome(s) will be

delivered

6

Value Questions (Y axis) 36Q8. What is the total cost of ownership (TCO) for the goods/services?

(See Procurement Guide - Value for Money for further information if

required)

VERY HIGH: TCO for the goods/services is of very high

value (e.g. top 3 categories for the organisation) and

might require specialised/dedicated skills to manage the

procurement/contract.

18

Q9. Is the non cost value of the goods/services high? (Examples of non-

cost factors include fitness for purpose, quality, delivery, service, support

and sustainability impacts) (See Procurement Guide - Value for Money for

further information if required)

Yes, the non cost value of the goods/services is very high

(e.g. critical to quality and achieving value for money,

therefore KPI's would be developed and compliance

monitored)

18

Q10. Would it be beneficial to aggregate demand within an organisation

or across organisations?Demand aggregation should not occur: (1) specs. too

complex/novel (2) insufficient demand/economies of

scale to benefit (3) good/service is organisation specific

limited benefit (4) potential to create a monopoly (5)

cost outweighs the benefit

0

Q11. Is the purchase of the goods/services consistent with the

Government's priorities and objectives (economic, environmental and

social) as identified in the Queensland Procurement Policy, State

Procurement Plan and State Category Plans?

Purchase of the goods/services has no (or very little)

alignment with priorities or objectives of Government

0

This VRM can be used to assess the complexity (based on value and risk) of a sourcing activity for goods or services.

Results of Value Risk Assessment for a sourcing activity

Value Risk Matrix (VRM) for sourcing goods or services

[e.g. Engineering Services]

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Assessing Value/Risk for a sourcing activity [e.g. Engineering Services]

Routine

Leveraged Strategic

Focused

Risk

Val

ue

Updated

11 June 2014

What is the scope of the contract(s) are you assessing?

Contract Name:

Supplier(s):

Value/Risk Assessment performed by: [insert] DD/MM/YY

Contract Manager:

Contract Owner:

Question Answer Score Comments

Risk Questions (X axis) 60Q1. Is the contract for goods/services that are critical to the

organisation and/or its core operations?

Yes, the goods/services are highly critical (i.e. fundamental) to

the organisation and/or core operations (e.g. direct impact

on critical front line services)

10

Q2. Would there be a significant interruption to the organisation’s

core operations if the supplier defaults?

Yes, there would be a significant interruption (major or severe

risk) to the organisation’s core operations with a high

transition time to an alternate supplier

10

Q3. What is the financial risk to the organisation if the supplier

defaults? (Assess this using the risk assessment framework within

your organisation)

High risk 8

Q4. What is the legal or regulatory risk to the organisation if the

supplier defaults? (Assess this using the risk assessment

framework within your organisation)

High risk 8

Q5. What is the risk to people (e.g. health, welfare, safety) if the

supplier defaults? (Assess this using the risk assessment

framework within your organisation)

High risk 8

Q6. What is the reputational / social / media risk to the

organisation if the supplier defaults? (Assess this using the risk

assessment framework within your organisation)

High risk 8

Q7. Have any risks (unique to the supplier) been identified that

need to be managed? (e.g. past performance issues, financial

viability, start-up company, previous disputes, difficult dealings

with supplier, issues raised in contract negotiations)? Would you

classify the supplier as low, medium or high risk?

High risk 8

Value Questions (Y axis) 48Q8. What is the total cost of ownership (TCO) for the

goods/services purchased under the contract(s)?

(See Procurement Guide - Value for Money for further information

if required)

VERY HIGH (Top 5/>$5M): TCO for the goods/services is of

very high value (e.g. top 5 contracts/suppliers for the

organisation, or contracts >$5M in value)

40

Q9. Is the non cost value of the goods/services high? (Examples of

non-cost factors include fitness for purpose, quality, delivery,

service, support and sustainability impacts) (See Procurement

Guide - Value for Money for further information if required)

MODERATE: The non cost value of the goods/services is

moderate (e.g. non-cost factors have relevance in determining

whether value for money is achieved. Some standard KPI's

apply. Non cost value is relevant to assessing performance.

8

Q10. [This has been left blank in case other questions need to be included in the

VRM for contracts. If so, scoring of questions will need to be adjusted]Option A 0

Q11. [This has been left blank in case other questions need to be included in the

VRM for contracts. If so, scoring of questions will need to be adjusted]Option B 0

This VRM can be used to assess the complexity of a contract(s) for specific goods or services

Results of Value/Risk Assessment for a Contract(s)

[e.g. SOA for Legal Services]

Value Risk Matrix (VRM) for a contract(s)

[insert]

[insert]

[insert]

[insert]

0

10

20

30

40

50

60

0 20 40 60

Assessing Value/Risk of a Contract [e.g. SOA for Legal Services]

Routine contracts

Leveraged (high value contracts)

Strategic contracts

Risk

Val

ue

Focused (high risk contracts)