Page 104 - Procurement guidelines for smart sustainable cities - A U4SSC deliverable

Why it's important

Doing detailed research to estimate the likely costs of the procurement is an essential part of
planning. Estimating and sharing budgets will:

• help determine what your organization can and cannot afford;

• enable suppliers to suggest the most appropriate technology or service;

• encourage competitive bidding and avoid price fixing; and
• reassure the public that money is being spent appropriately.

What it means

Public officials and stakeholders can estimate the cost of delivering a product or service by:

• looking at available data on procurement and contracts;
• asking buyers what they paid for similar product or services;

• forecasting how much a service should cost a supplier to provide; and

• calculating the “whole life cost”.

For example, if public officials and stakeholders wanted to use an external supplier for their IT
helpdesk, they could forecast the expenses they would incur for office space, technology and
salaries. This should then give them an appropriate figure that will help them evaluate bids.

Calculating the “whole life cost” should include:

• the initial outlay in buying a product or service;
• the time, costs and expertise required to switch from one technology or provider to another
(at the beginning and end of a contract);

• ongoing subscription or licence costs; and

• additional technical support services.

Forecasting can be sped up significantly by using electronic procurement or “e-Procurement” tools,
which store available data on past and current procurements.

Once public officials and stakeholders have a firm idea of what a product or service should cost,
they will be able to:

• verify that funds are available from budget holders;
• consider combining or splitting up procurements where appropriate;

• share their budget openly with suppliers and the public; and

90 Procurement guidelines for smart sustainable cities | May 2023