Purchase Order Variations

• As you are all aware the delegations as at 01 August 12 in respect of FINMAN 2 are:

• SES Band 1 LOFA• Ex Director CFI $20m• Director CFI $20m• EL1 Project Director CFI $ 5m• APS 6 $ 250 thousand.

• CFI proposed new delegation limits last November but during this period we were advised of some changes within the FINMAN 2 delegation policy. This would simplify our processes for delegation approval so we withdrew our proposal.

• The Divn has now taken an approach that we all do purchase order variations in line with CFOG Financial Policy.

• This policy states that delegation for purchase order variations are to be for the unspent value of the purchase order,

ie. remaining funds on p/order, plus the variation amount.

A Variation to an arrangement generally amounts to a new spending proposal. The new spending proposal must be approved under Reg 9 before the variation to the arrangement may be signed.

If the variation takes effect within the current contract period then the approval of the new spending proposal should take into account:

- any remaining expenditure under the original arrangement;

- the additional costs associated with the proposed variation;

- any other changes to the key terms of the arrangement; and

- any other resource implications of the changed terms and conditions of the arrangement.

Therefore you do not need to approve any amounts which have already been spent.

What does this mean:

• Here is an example:

• P/order 4500843489

• The value of the p/order (contract) is $13,454,394.62.

• Spend to date is $9,303,469.00.

• I have a variation for $850,000.00 which is within the funds available for the project.

• The residual (remaining) amount on the contract, ie. unspent value of the p/order is $4,150,925.62.

The variation is $850,000.00. Therefore the delegation amount is $5,000,925.62.

($4,150,925.62+$850,000.00)

This amount falls into the delegation threshold of a Director or Executive Director.

• However if the variation was for $200,000.00 then the threshold for delegation is

$4,350,925.62 ($4,786,018.18 GST Inclusive) and the delegate would be

an EL1 Project Director, or Director or Ex Director.

• If the Branch thinks I need to develop a proforma for this process then I can meet with a few of you next week to create one.

• At the end of the day the delegate needs assurance that what she/he is being asked to sign is within their delegation.

• As was highlighted in our many discussion last year, project staff do keep a variation register however

if a template would help then I am more than happy to discuss.