Overview
Purchasing methodologies are formalised processes used to manage financial and contractual control and risk management systems in relation to goods suppliers or services providers. In this second part of the overview of purchasing we continue with further areas that need to be addressed.

Credit Cards and Petty Cash

Purchasing using these methods has the broadest potential for introducing uncontrolled risk into the workplace. An organisation must define controls for the purchase of OHS related goods and services using credit card or petty cash.

A simple option for organisations to use as a control mechanism is a mandatory requirement for no OHS-related goods or services to be purchased through these arrangements.

Alternatively it’s possible to limit purchasing using credit card or petty cash. This can be arranged through a number of options:

• Only position holders at a certain level within the organisation can exercise this function
• A mandatory procedural requirement for pre-purchase risk assessment to be conducted
• A defined list of goods or services that may be purchased using credit card or petty cash be defined

Pre Commencement meetings (Services)

The function of a pre-commencement meeting is to define specific OHS management systems requirements in relation to contractual arrangements with key stakeholders of both the organisation and the contractor providing the service.

Requirements relating to pre-commencement meetings must be evaluated to determine whether there is a risk management issue to consider. Requirements can be either procedurally defined as a mandatory function prior to commencement or as a formal consideration when conducting risk assessment of the scope of the contract.

Pre-commencement meetings are also used to establish communication and recording arrangements identify key position holders and determine the appropriate methods for verification activity.

Receipt of Goods

A process for the receipt of goods needs to be defined as a control methodology to prevent non-conforming goods from entering the workplace. The process will include the method for conducting the verification of the goods against the specification (or purchase order).

These are the basic safeguards:

OHS-compliant goods: Receipting arrangements for conforming goods and certification of OHS compliance should be proceduralised, to establish a clear working process.>

Non-compliant goods: Where goods have been identified as non-conforming to required specifications (including legislative requirements) a process must be developed to ensure that isolation and/or quarantining arrangements are implemented.

Quarantine operations: Quarantining arrangements will also define the process for the return of goods and the method used to ensure that goods can not be taken out of quarantine and inadvertently used in the workplace.

Note: Quarantine is a critical mechanism for safe practices, particularly in relation to hazardous goods, biological agents, etc. Statutory processes must be referenced in relation to these processes.

Corrective Action

Alignment with organizational corrective action processes must be standardised within purchasing procedural arrangements. These arrangements will need to identify the initiating criteria for commencement of corrective action.

Initiators for corrective action can include:

• Nonconforming goods
• Non-compliance with local ohs arrangements for service providers
• Contractual non-conformance for supplies or service providers

Monitoring

Specific OHS requirements set a performance standard to be met by a supplier or service provider and verified by the purchaser. Processes for OHS verification activity is to be defined.

Process verification activities can either be contractual/project based or determined through risk assessment activity when developing contractual specifications.

Risk assessment can also be used to vary the scope of verification activity during the contractual life cycle using preceding performance outcomes.

Records and documentation procedural requirements will also specify the OHS records to be maintained for the purpose of capturing monitoring information.

Performance Review

Performance review mechanisms are required to evaluate achievement of expected outcomes to meet contractual requirements. OHS procedural requirements should be developed in such a way that they complement those processes.

Performance review can be conducted at the completion of the delivery of the contract or at specified intervals throughout the contract life cycle. In some cases, performance monitoring may involve specific milestone tasks related to the contract.

Performance reviews will evaluate the capacity of the supplier or service provider to meet milestones and contractual OHS specifications. Where non-compliance has been identified a corrective action process must be initiated to bring the performance into line with required outcomes.

Performance reviews are also an effective tool to be used where a supplier or service provider tenders for future contractual work. This provides the organisation with practical performance outcomes in relation to the capacity to deliver on agreed arrangements and this information can be considered during the tender evaluation phase.

Common Problems

Common problems in relation to Purchasing are:

• “Generic” OHS specifications are used which do not provide specific requirements relative to the scope of the activity to be performed. The “generic” OHS approach is usually in breach of one or more statutes. In practice, OHS specifications must be case-specific, and incorporate statutory requirements.
• Lack of appropriately qualified people to assess OHS risk management issues. This situation should be avoided at all costs.OHS consulting specialists can provide this expertise if required.
• Lack of procedural understanding in the application of contractual requirements and their interaction with OHS criteria. (See Part 1, Overview and Determining contractual OHS requirements for efficiency-based options and procedures)
• Verification activity is not defined or conducted during the course of contract delivery, or is ineffective. This is a “worst practice” scenario. It’s absolutely essential that verification is conducted systematically, particularly any statutorily required procedures. Purchasers should note that failure to conduct verification processes may expose them to serious risks, and in some cases severe penalties. External consultants should be engaged ASAP to conduct a full remedial process.