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Spend Under Management Calculator

Work out spend under management instantly with clear inputs, formula shown and shareable results.

About Spend Under Management Calculator

Spend under management is the share of addressable spend covered by an actively managed contract. It is the headline maturity measure for a procurement function, and dividing managed spend by function cost gives the leverage ratio that justifies the team's size.

Formulas

Spend under management

SUM % = Spend under managed contracts / Total addressable spend x 100

Leverage

Managed spend per cost unit = Spend under management / Procurement function cost

Worked example

With the default values below, Spend Under Management Calculator returns Spend under management of 65.00%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Total addressable spend
2,400,000,000
Spend under managed contracts
1,560,000,000
Spend competitively sourced in the last three years
1,820,000,000
Annual procurement function cost
42,000,000

Results

Spend under management
65.00%
Competitively sourced share
75.83%
Unmanaged spend
$840,000,000.00
Managed spend per unit of function cost
37.1

Step by step

  1. 1Values used
  2. 2Spend under management
  3. 3Leverage
  4. 4Spend under management= 65.00
  5. 5Competitively sourced share= 75.83
  6. 6Unmanaged spend= 840,000,000.00
  7. 7Managed spend per unit of function cost= 37.1

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What is addressable spend?

Third-party spend that procurement can influence. It excludes taxes, statutory payments, intra-group charges and, usually, direct labour.

What level is world class?

Above 85% of addressable spend under management, with 70-80% competitively sourced in the last three years.

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