Scottish procurement and commercial competency framework

Commercial and Financial Awareness

Early Engagement and Role of the Intelligent Client (Drives Better Outcomes)

Commercial Competence [back to list]

Theme:

Commercial Competence is evaluating commercial options and associated risks to make sustainable decisions that deliver commercial objectives. Understanding and leading on securing value for money and a good return on investment. Building relationships with suppliers through understanding their commercial perspective.

Why it matters:

Commercial Competence is crucial to ensuring the best commercial outcomes for Scotland. This is about making sound business-based decisions and securing best value for the public.

Level 1 – Foundation:

• Developing a basic understanding of commercial drivers.

Global Standards: None

Level 2 – Working Knowledge:

• Can make recommendations on commercial options based on early engagement with stakeholders and partners, using risk analysis.
• Applies commercial principles within the boundaries of contract law, contributing to securing value for money on low risk and value commercial activities.
• Can describe the commercial motivations and drivers of stakeholders, suppliers, and networks.

Global Standards: CIPS: 9 Delivering, 12 Delivering, CMI: Organisational Performance (1)

Level 3 – Practitioner:

• Delivers value for money through understanding of commercial options and can articulate what a successful return on investment looks like for a commercial project or programme.
• Builds relationships with stakeholders, suppliers and networks to further develop understanding of their commercial drivers.
• Applies commercial principles within the boundaries of contract law to secure value for money on medium to high risk and value commercial activities.

Global Standards: CIPS: 9 Managing, CMI: Organisational Performance (2)

Level 4 – Expert:

• Understands the impact of outcomes on other areas of the organisation and manages complex deals, competing views, trade-offs and contradictions
• Develops and defines standards of success in regards to the return on investment for a commercial project/programme in their business area, including delivering value for money for Scotland.
• Uses strong relationships with stakeholders, suppliers, and networks to deliver on the business area and wider organisation’s commercial obligations.
• Challenges conventional approaches to deliver better outcomes and encourages ideas, improvements, and measured risk-taking to deliver better outcomes and services.

Global Standards: CIPS: 9 Leading, 12 Leading, CMI: Organisational Performance (3)

Level 5 – Leader:

• Understands the commercial and organisational risks impacting own business area and ensures they are robustly managed.
• Champions a stronger commercial focus across the wider organisation where the standards for this are set by the definition of value for money.
• Takes accountability for achieving and developing value for money across the organisation and uses nuanced understanding of the commercial drivers of stakeholders, suppliers, and networks to achieve the organisation’s objectives.

Global Standards: CIPS: 9 Influencing, 12 Influencing, 13 Influencing, CMI: Organisational Performance (4)

Commercial Models [back to list]

Theme:

Understanding commercial models underpinning contractual, operational and financial relationships with suppliers to deliver value for money and to support organisational objectives. This includes make-buy decisions, outsourcing, joint ventures, partnerships, and other innovative financing options.

Why it matters:

Commercial models provide opportunities for innovation, creativity, risk sharing, and risk reduction within the procurement process and often enable longer-term more sustainable options. They can bring about shared investment, developing greater value for money for taxpayers, and contribute to achieving government policy and objectives.

Level 1 – Foundation:

• Awareness of some of the contracts and commercial models used by the organisation.

Global Standards: None

Level 2 – Working Knowledge:

• Applies commercial models used by the organisation appropriately.
• Understands supplier pricing strategies and cost drivers.
• An understanding of risk allocation for different contracts.

Global Standards: CIPS: 8 Delivering, 12 Delivering

Level 3 – Practitioner:

• Manages contracts and selects the most appropriate commercial models for different categories and commodities.
• Negotiates terms considering a balance of cost, risk and performance
• Understands financial implications (including tax) of commercial decisions, including value for money analysis and investment.
• Recommends most viable commercial model to stakeholders and business partners.

Global Standards: CIPS: 8 Managing, 12 Managing

Level 4 – Expert:

• Develops and makes recommendations on most viable commercial models and financing used by the organisation along with identification and mitigation of financial risks.
• Assesses the impact of supply chain on the organisation and its working capital, working with senior stakeholders to effectively manage commercial risk and ensure financial liquidity.
• Evaluates the potential impact of mergers, acquisitions, takeovers, outsourcing, and make-buy decisions on the supply chain and recommends appropriate courses of action to the senior management.

Global Standards: CIPS: 8 Leading, 12 Leading

Level 5 – Leader:

• Leads on commercial models used by the organisation and its supply chain, defining and implementing the organisation’s commercial strategy, policy and objectives.
• Applies a deep understanding of the whole commercial life cycle, innovations, commercial models, and financing options to maximise commercial benefits.

Global Standards: CIPS: 8 Influencing, 12 Influencing

Business Cases [back to list]

Theme:

Includes costs, benefits, options, alignment with organisational needs and delivery strategies, alongside timescales for implementation and associated risks. It also allows for monitoring of agreed arrangements and commercial contracts based upon the business case.

Why it matters:

Clear, concise, and compelling business cases are essential to ensure informed decision making, buy in and sign-off for projects, justifying the approach to key stakeholders and tracking the ultimate return on investment.

Level 1 – Foundation:

• Understands the purpose of and able to support the development of a business case.

Global Standards: APM: Business case (1 Aware)

Level 2 - Working Knowledge:

• Contributes to small, low risk business cases in a concise and compelling way, following good practice.
• Under guidance, contributes to the identification, evaluation, and appraisal of benefits for the business case.

Global Standards: CIPS: 14 Delivering, APM: Business case (2 Practised)

Level 3 – Practitioner:

• Contributes to the development of medium to higher risk business cases through the provision of research, data, overall analysis, and recommending a way forward.
• Contributes to the identification, evaluation, and appraisal of benefits for the business case, using recognised tools and techniques.

Global Standards: CIPS: 13 Managing, 14 Managing, APM: Business case (3 Competent)

Level 4 – Expert:

• Develops business cases that are professionally presented, supported by data and evidence, making robust recommendations demonstrating the benefits and value of the investment.
• Advises senior management on supply chain investment decisions to secure supply innovation, ownership on intellectual property rights, and other financial decisions.
• Provides detailed analysis on the commercial case including equity, joint ventures, seed funding, and outright acquisition, if appropriate.

Global Standards: CIPS: 13 Leading, APM: Business case (4 Proficient)

Level 5 – Leader:

• Leads on the development of business cases and displays a complete understanding of the key parameters for the business case and can make a compelling argument in both business negotiations and political situations.
• Advises leadership and the organisation on the commercial case for its highest risk cases and investment decisions.

Global Standards: CIPS: 10 Influencing, 12 Influencing, 13 Influencing, APM: Business case (5 Expert)

Financial Management [back to list]

Theme:

Understanding, evaluating, and auditing operational finances, spend authorisation, cash flow, liquidity, and performance. Reviewing and taking action on unusual and unplanned spend. Understanding, predicting, managing, and mitigating cost flexibility and volatility. Managing budget and key performance indicators.

Why it matters:

Financial Management is important to ensure that all teams, business functions, projects, and programmes understand the current financial position. Particularly how it relates to spend, cash flow, unusual and unapproved spend patterns, but also to manage the volatility of unexpected spend patterns. Financial management also falls under good governance and accountability when spending taxpayers’ money.

Level 1 – Foundation:

• Has basic financial knowledge and understanding, including of fraud risk’s impact on financial control, and is able to analyse information.

Global Standards: APM: Financial management (1 Aware)

Level 2 – Working Knowledge:

• Performs, under guidance, appropriate financial appraisals, total and whole life costing models focussed on commercial transactions.
• Understands the audit and financial compliance needs, ensuring that processes are adapted appropriately.
• Manages cash flow implications of stock holding and order processing for own area of work where relevant.
• Knows and implements policy and practical steps to minimise fraud or misappropriation of goods and can escalate and report irregularities.

Global Standards: CIPS: 8 Delivering, 12 Delivering, 14 Delivering, APM: Financial management (2 Practised)

Level 3 – Practitioner:

• Undertakes detailed financial appraisals, using sophisticated financial analysis to indicate potential financial challenges.
• Can advise staff on key financial factors and risks, including a variety of commodity and exchange rate fluctuations.
• Experienced in the use of multi-tiered supply chain costing methods, total and whole life costing models, and can provide guidance to other staff on their use.
• Understands the importance of audit and compliance in terms of financial management.

Global Standards: CIPS: 8 Managing, 10 Managing, 12 Managing, 14 Managing, APM: Financial management (3 Competent)

Level 4 – Expert:

• Reviews and manages financial appraisal and assessments, able to provide guidance on approaches, techniques, outputs, funding models, and available funds for projects identified in the function.
• Provides high-level financial planning and forecasting information, for continuous review, annual reports and financial planning.

Global Standards: CIPS: 10 Leading, 12 Leading, 14 Leading, APM: Financial management (4 Proficient)

Level 5 – Leader:

• Has expertise in forecasting funding requirements to meet organisational targets, financial planning, and directing funding reallocations as required.
• Able to review and provide advice and guidance on financial analysis techniques, while encouraging and developing best practice in financial management.

Global Standards: CIPS: 8 Influencing, 12 Influencing, 14 Influencing, APM: Financial management (5 Expert)

Budgets [back to list]

Theme:

Setting and managing budgets is a requirement for every function, project, and programme, sourcing and contracting activity. Budgets are there to inform planning, delivery, and achievement of objectives. They should be planned, approved, and monitored effectively.

Why it matters:

Budgets are an important mechanism in achieving planned activity. They need to be defined and managed in terms of both volume and timing. Budget management can leverage cash flow and maximise impact on working capital, overall liquidity, and overall financial risk. Budgets are part of the governance and compliance framework of Scottish procurement.

Level 1 – Foundation:

• Aware of the functional budget and those allocated for their own procurement and supply spend.

Global Standards: APM: Budgeting and cost control (1 Aware)

Level 2 – Working Knowledge:

• Able to report on budget needs and manage cash flow, through awareness of spend, spend patterns, existing and future demand, and avoiding overruns.

Global Standards: CIPS: 10 Delivering, 14 Delivering, APM: Budgeting and cost control (2 Practised)

Level 3 – Practitioner:

• Takes responsibility for the effective monitoring and management of own delegated budget for team or commodity requirements, escalating challenges as required.
• Accurately budgets, avoiding variations and over budgeting, and innovative in leveraging.

Global Standards: CIPS: 10 Managing, APM: Budgeting and cost control (3 Competent)

Level 4 – Expert:

• Budget setting and development through data and information collection and analysis for budget spend based on forecast demand.
• Applies monitoring and reviewing workgroup budgets to managing overruns and shortfalls and reports on projected budgets.

Global Standards: CIPS: 10 Leading, 15 Leading, APM: Budgeting and cost control (4 Proficient)

Level 5 – Leader:

• Leads on budget planning and forecasting for the function.
• Knows and understands how the business works affects financial decision making and cross-function budget planning.
• Aligns financial decisions with the vision and objectives of the organisation and function, dealing with budget problems, taking affirmative action where appropriate.

Global Standards: CIPS: 8 Influencing, 12 Influencing, 14 Influencing, APM: Budgeting and cost control (5 Expert)