This is a subject that is near and dear to many procurement professionals.
In my discipline, contracts and RFP’s, it is always paramount to be aware of what strategies you can use and employ during a procurement to ensure cost avoidance.
The following steps can be taken to develop and implement a cost avoidance program:
1. The internal customer department needs to determine that the annual department demand requirements for a needed specific product or service are accurate.
2. The procurement professional works with the internal customer department to review agency specifications/scope of work to make sure they are reflective of actual agency quality levels and requirements and eliminate all unnecessary requirements and features from the specification (value analysis).
3. The procurement professional conducts a market analysis to determine if agency specifications/scope of work are compatible with commercially available products or services.
4. The procurement professional adjusts, wherever possible, agency specifications/scope of work to be compatible with commercially available products or services in order to meet minimum agency requirements. The procurement professional must ensure that all specifications/scope of work can support competition thereby reducing the chances of creating a sole source or single source procurement.
5. The procurement professional documents how specification/scope of work changes were made to achieve any cost avoidance opportunities. (Reference: CPPB prep guide)
For another excellent reference about cost avoidance be sure check out this link for this article: