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Savings approach

Savings are measured in accordance with guidance provided by the Efficiency and Reform Group guide “Measuring Up”, which was published on 29 November 2010.

The guidance aims to introduce a unified approach to driving savings, and is based on a number of principles. We are responsible for validating and reporting all savings for common goods and services procurement.

Principles

  • All benefits are, wherever possible, calculated against a pan government 2009/10 baseline.
  • The baseline represents actual prices paid by central government for the same product/service during the baseline period.
  • Transactions from 1 April 2010 are eligible to generate savings.
  • Benefits must release cash and be net of any implementation costs (including significant whole life costs where relevant).
  • One-off savings can be included where they do not represent deferred expenditure.
  • Approved counterfactuals (inflation percentages) can be used where they are appropriate and approved by the savings team.
  • Benefits are summarised in the following classifications:
    • Standardisation
    • New commercial arrangements
    • New volumes
    • Demand management
  • All savings are subject to an approved initiative methodology, supported by a formal sign-off route.
  • All savings must be evidenced by supplier provided transactional Management Information.