Master Agreement Savings

Savings metrics refer to the difference between the budgeted and the actual costs for goods and services over a specific time period.

Prerequisites

To see the Savings tab for a master agreement, you must have enabled it in the master agreement type.

Features

Field Help for the Master Agreement Savings Value Dialog Box

Field	Description
Period	Choose the Lookup icon to select a time period during which the savings entry applied.
Expected Value	Enter the value of the spend expected to have taken place, for the specified time period, against the given agreement.

Budgeted versus Actual

Field	Description
Budgeted Value	Enter the value of the budgeted spend for the specified time period, for the given agreement.
Actual Value	Enter the value of the actual spend for the specified time period, against the given agreement.
Total Savings	Indicates the total savings, calculated as the difference between the budgeted and actual spend for the agreement. The value will compute as negative savings if the actual value exceeds the budgeted value.

Savings Breakdown

Field	Description
Cost Savings	Enter the value representing the portion of the total savings allocated to cost savings for the agreement. Buying organizations often have different definitions of cost savings. One definition is the portion of total savings attributed to having negotiated lower pricing with the given supplier.
Cost Avoidance	Enter the value representing the portion of the total savings allocated to cost avoidance for the agreement. Buying organizations often have different definitions of cost avoidance. One definition is the portion of total savings that is not attributed to having negotiated lower pricing with the given supplier, but is related to having avoided realizing certain costs. For example, a sourcing group has two separate business units in the enterprise with the same need for renting a certain piece of equipment. The group is able to match these two needs by enabling the business units to share the same rental and avoid renting the same piece of equipment on two separate occasions. The cost of the second occurrence of the rental can be allocated to cost avoidance.
Total Savings	Indicates the total savings, calculated as the sum of the cost savings plus the cost avoidance for the agreement. This savings value must equal the budgeted vs. actual total savings value.

Field

Description

Cost Savings

Enter the value representing the portion of the total savings allocated to cost savings for the agreement. Buying organizations often have different definitions of cost savings. One definition is the portion of total savings attributed to having negotiated lower pricing with the given supplier.

Cost Avoidance

Enter the value representing the portion of the total savings allocated to cost avoidance for the agreement. Buying organizations often have different definitions of cost avoidance. One definition is the portion of total savings that is not attributed to having negotiated lower pricing with the given supplier, but is related to having avoided realizing certain costs.

For example, a sourcing group has two separate business units in the enterprise with the same need for renting a certain piece of equipment. The group is able to match these two needs by enabling the business units to share the same rental and avoid renting the same piece of equipment on two separate occasions. The cost of the second occurrence of the rental can be allocated to cost avoidance.

Total Savings

Indicates the total savings, calculated as the sum of the cost savings plus the cost avoidance for the agreement. This savings value must equal the budgeted vs. actual total savings value.

Activities

Adding savings metrics to a master agreement

Savings metrics refer to the difference between the budgeted and the actual costs for goods and services over a specific time period.

To add savings metrics:

On the Savings page under Savings Metrics, choose Add.
In the Value dialog box, fill in the fields for basic information and those under Budget vs. Actual and Savings Breakdown. Field help for the Master Agreement Savings Value dialog box.
Choose OK.
Choose the Save button in the toolbar.

To edit a savings metric, choose its Edit icon on the Savings page.