TITTLE: EFFECT OF TECHNOLOGY IN PROCUREMENT AND SUPPLY CHAIN MANAGEMENT

(A CASE STUDY AT THE NAIROBI CEREALS AND PRODUCE BOARD)

PRESENTERED BY: NJOROGE WANJIRU MILKAH

INDEX NUMBER : 4060030737

NAME OF INSTITUTION: KABETE NATIONAL POLYTECHNIC

COURSE NAME: DIPLOMA IN SUPPLY CHAIN MANAGEMENT

COURSE CODE: 2903

SUPERVISOR’S NAME: MR ISABOKE

PRESENTED TO: KENYA NATIONAL EXAMINATION COUNCIL FOR THE PARTIAL

FULFULLMENT FOR THE AWARD OF DIPLOMA IN SUPPLY CHAIN

MANAGEMENT
DECLARATION

This project is my original work and has not been presented for a diploma in any other technical

institute

Signature…………………... Date………………

Supervisor’s declaration

This project has been submitted for examination with my approval as technical student

Signature……………… Date..……………….

MR. ISABOKE

i
DEDICATION

I dedicate this project to my family for their moral and financial support throughout my project.

Special thanks to God for His incessant blessings this far and beyond.

ii
ACKNOWLEDGEMENT

I would like to acknowledge God for life and protection during my studies. Secondly, my special

thanks go to my teacher Mr. Isaboke for his in valuable guidance throughout the research process.

Lastly, I would like to acknowledge my parents for their moral and financial support and for

continually believing in me during the entire process. May God bless you abundantly.

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Table of Contents
DECLARATION................................................................................................................................... i
Supervisor’s declaration ............................................................................................................... i
MR. ISABOKE ................................................................................................................................ i
DEDICATION ............................................................................................................................ ii
ACKNOWLEDGEMENT ......................................................................................................... iii
ABSTRACT ................................................................................................................................ 0
CHAPTER ONE.................................................................................................................................. 1
INTRODUCTION ...................................................................................................................... 1
1.2 Statement of the Problem .................................................................................................. 1
1.3: Objectives of the Study .................................................................................................... 3
1.6: Scope of the Study ........................................................................................................... 4
CHAPTER TWO................................................................................................................................. 5
LITERATURE REVIEW ........................................................................................................... 5
2.1 Introduction ....................................................................................................................... 5
2.2 Theoretical Framework ..................................................................................................... 5
Figure 2.1 Agency Theory ...................................................................................................... 6
CHAPTER THREE ............................................................................................................................ 19
RESEARCH METHODOLOGY .............................................................................................. 19
3.0 Introduction ..................................................................................................................... 19
3.1 Research Design .............................................................................................................. 19
3.2 Population ....................................................................................................................... 20
Table 3.1 Target Population .................................................................................................. 20
Table 3.2 Sample Size ........................................................................................................... 21
CHAPTER FOUR.............................................................................................................................. 24
RESEARCH FINDINGS AND DISCUSSION ........................................................................ 24
Table: 4.1 Departmental Participation .................................................................................. 24
Table: 4.2 Importance of Prequalification Procurement ....................................................... 25
Fig: 4.1 Effects of Supplier Evaluation Modes ..................................................................... 31
CHAPTER FIVE ................................................................................................................................ 33
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION ....................... 33
5.1: Introduction .................................................................................................................... 33
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 5.2: Summary of Finding ...................................................................................................... 33
5.3: Conclusion ..................................................................................................................... 34
5.4: Recommendation ........................................................................................................... 34
5.5: Recommendations for further study............................................................................... 35
REFERENCES.......................................................................................................................... 36
APPENDIX II: SURVEY QUESTIONAIRES......................................................................... 38
SECTION B:PART I: QUALITY DELIVERY........................................................................... 39
SA – Strongly Agree A – Agree N – Neutral D – Disagree SD – Strongly Disagree .... 39
PART II: COST EFFECTIVENESS ............................................................................................. 40
PART III: BID EVALUATION.................................................................................................... 41
PARTIV: SUPPLIER EFFICIENCY ............................................................................................ 42
APPENDIX III: WORK PLAN ................................................................................................ 45

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ACRONYMS

CPF County Pension Fund

GDP Gross Domestic Product

LAP TRUST Local Authority Pension Trust

LAP FUND Local Authority Pension Fund

PPDA Public Procurement Disposal Act

PPOA Public Procurement Oversight Authority

SGR Standard Gauge Railway

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DEFINITION OF TERMS

Data Analysis It is a process of gathering, modeling and transformation data with

the goal of highlighting useful information, suggesting conclusions
and supporting decision making hence preparing crude data into
interpretable designs (Mugenda, 2003).

Target Population This refers to all the members of a real or hypothetical set of people,
events or objects to which the researcher wishes to generalize the

results of the research (Sekaran, 2010).

Principal Agent Theory This occur when one person or the agent is able to make decisions
on behalf of, or that impact, another person or entity the principal
(Ross, 1973).
Relationship
A relationship is defined, inter alia, as connection of association
which applies when individuals, organizations and groups within and
external to an enterprise interact (Lysons & Farrington, 2006).

Adversary Approach

It is a bidding procedure in which multiple suppliers compete in an

effort to bring down costs and collaborative approach which seeks to
lower acquisition costs and operating costs through joint efforts of
buyers and suppliers (Amihud, 1976).

Research Design
It is the arrangement of conditions for collections and analysis of
data in manner that aims to combine relevance to the research,
purpose with economy in procured (Kothari, 2004)

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ABSTRACT

Effective procurement policies are important from a development perspective. Prequalification

procurement is a risk management strategy by procuring entities to reduce supplier related risks

such as failure to deliver supplies on time, health and safety needs and litigation costs due to failure

or cancelation of tenders, supplier insolvency, technical competencies as well as resource

capabilities. It is important especially in costly procurement and sensitive tenders. The main

objective of carrying out prequalification procurement is to remove potential bidders that are not

capable of meeting contract requirements, short list those that meet basic requirements for the bid

and remove unsuitable bidders on legal basis.

It is through pre-qualification of suppliers that organizations are able to optimize returns while

cutting costs, enhancing competition and accountability, fostering the culture of fair play in the

business industry and eradicating corruption. In this regard, therefore, the study of the impact of

pre-qualification of suppliers on organization performance is important. This study will seek to

establish the impact of pre-qualification procurement on performance of County Pension Fund

(CPF).

The study will use descriptive research design. The target population will be 65 employees of CPF

who are working at the headquarters. CPF have its headquarters in Nairobi and its activities are

centrally located at the headquarters since it has no other branches across the country. The sample

size will be 50% of the target population. The researcher will use descriptive statistics and integrate

both qualitative and quantitative techniques in the data analysis

0
CHAPTER ONE
INTRODUCTION

1.1 Background of the Study

The concept of pre-qualification of suppliers in the procurement function is a strategic activity in

public institutions in Kenya. It fosters competition in contracting, acquisition and disposal of goods

and services. The procurement function in the business industry has been associated with adverse

practices such as corruption and escalation of costs. There is therefore need to carry out a study

with a focus on the impact of pre-qualification of suppliers with the aim of establishing its

contribution to the procurement function in terms of cost, time and efficiency.Lam et al, (2000)

define prequalification as the process of evaluating a supplier’s ability to complete a contract

bidding process using certain criteria such as supplier’s reputation, past performance, financial

stability, current workload, firm prequalification procurement is to remove incompetent bidders,

draw basic requirements for bidding and remove unsuitable bidders on legal basis. It is important

to perform prequalification procurement when time and costs are realistic and influence the risks

facing the organization. According to OECD, (2001) report, procurement cost account to 7% of

world GDP and 30% of world merchandise trade. Triofetti, (2000) suggested that central

government in Africa spends 5-8% .Triton scandal, Maize scandal, Anglo Leasing, Nairobi

cemetery scandal, Standard Gauge Railway (SGR) scandal among many others.

1.2 Statement of the Problem

In general, the procurement function is one of the key pillars in any organization hence its

contribution is significant. The procurement function has changed conventional purchase and

suppliers’ role in public institutions to strategic management to optimize returns while cutting

costs, enhancing competition and accountability, fostering the culture of fair play in the business

1
industry and eradication of corruption. The purpose of prequalification tendering is to allow a

procuring entity to identify a shortlist of potential bidders who have the experience,

technical/financial capacity as well as legal suitability to provide the product/service needed to be

procured. Following this evaluation, the entity then invites the shortlisted bidders to tender (Jasprit,

2000). Rajkumar, (2001) contends that procurement systems contribute significantly to national

productivity growth through the removal of non-value added activities in acquisition and disposal

of goods and services. Adoption of pre-qualification of suppliers in Kenya has been slow with

practical difficulties experienced in getting the system up and running (Ernst and Young, 2001).

There is still discussion on implementation and management models of prequalification of

suppliers and perhaps the inter-link of the models with suppliers, customers and other stakeholders.

Since other studies on procurement in Kenya have focused on challenges facing procurement

systems in manufacturing industries (Migwe, 2004) total quality management for purchasing

management (Gali, 1993) the role of strategic purchasing in the efficiency of industries in Kenya

(Mulwa, 2000) evaluation of the purchasing department in local authorities (Kimuyu, 2004) and

factors influencing the implementation of E-procurement among firms listed in the Nairobi

Securities Exchange in Kenya (Kiburi, 2010). The results of these studies do not explain the impact

of pre-qualification of suppliers on organizational performance. It’s through prequalification of

supplies that organizations are able to optimize returns while cutting costs, enhancing competition

and accountability, fostering the culture of fair play in the business industry and eradication of

corruption. In addition, the depth of empirical evidence on impact of pre-qualification of suppliers

on organizational performance explains to some extent, the necessity of conducting research in

this area. Among other objectives, this study intends to fill the research gaps on impact of pre-

qualification of suppliers on organizational performance.

2
1.3: Objectives of the Study

1.3.1: General Objectives

The general objective of this study was to assess the impact of procurement pre-qualification on

the performance of County Pension Fund (CPF).

1.3.2 Specific Objectives

1 To establish the extent to which organization have adopted technology

2 To identify indicators of effective supply chain management

3To identify how technology has enhanced service delivery in an organization

1.4 Research Questions

The study was guided by the following questions:-

i. What is the effect of quality service delivery on organizational performance at the County

ii. What is the effect of overall costs/overheads on organizational performance at the County

iii. What is the effect of bid evaluation on organizational performance at the County Pension

Fund in Kenya?

iv. What is the effect of supplier efficiency on organizational performance at the County

1.5 Significance of the Study

This study was intended to provide new knowledge in the field of procurement, more especially in

those organizations that have adopted pre-qualification of suppliers as spelled out in the Public

Procurement and Disposal Act, 2005 and the Regulation, 2006 since they would be in a position

to identify with the enlisted benefits, challenges and recommendations on how to mitigate those
3
challenges. The study will also be useful to the public institution managers handling the

procurement function and also a source of crucial information to stakeholders such as scholars,

consumers and suppliers. This study will be useful to the legislative arm of the Kenyan government

especially in formulating the Public Procurement Bill. The Government will be able to identify

areas of strategic intervention such as capacity building and support. The regulator, Public

Procurement Oversight Authority (PPOA) will also benefit greatly with the findings of this

research through mapping of policies against the organization’s performance and administer these

research findings to all public procuring entities.

1.6: Scope of the Study

The study evaluated the impact of pre-qualification in procurement on organizational performance

and was undertaken at the County Pension Fund in Kenya. CPF has its headquarters in Nairobi

and its activities are centrally located at the headquarters since it has no other branches across the

country. It is a relatively new government institution that faces challenges in procurement

prequalification due to a supplier base that is under the initial phases of

formulation.

1.7 Limitations of the Study

The researcher only majored in one office since CPF has no other branches and this did not give a

clear picture of the impact of procurement pre-qualification on organizational performance in the

entire country. Another remarkable limitation of the study was that only three heads of departments

were picked from the entire institution. The researcher viewed this as wide enough to give a

satisfactory conclusion on the subject matter. The third limitation was that CPF being a new

organization had a relatively small supplier base thereby limiting accessibility to adequate research

information.
4
CHAPTER TWO
LITERATURE REVIEW

2.1 Introduction

In this chapter the researcher reviewed the empirical and theoretical literature relevant to the

problem being investigated, conceptual framework, critique of the existing literature relevant to

the study, summary and the research gaps.

2.2 Theoretical Framework

2.2.1 Agency Theory

According to Ross (1973) the principal–agent theory or agency dilemma occurs when one person

or the agent is able to make decisions on behalf of, or that impact, another person or entity the

principal. The dilemma exists because sometimes the agent is motivated to act in his own best

interests rather than those of the principal. The agent-principal relationship is a useful analytic tool

in political science and economics, but may also apply to other areas.The problem arises where

the two parties have different interests and asymmetric information, such that the principal cannot

directly ensure that the agent is always acting in its best interests, particularly when activities that

are useful to the principal are costly to the agent, and where elements of what the agent does are

costly for the principal to observe. Moral hazard and conflict of interest may arise. Indeed, the

principal may be sufficiently concerned at the possibility of being exploited by the agent that he

chooses not to enter into a transaction at all, when that deal would have actually been , typically

at a higher rate than the hourly rate implied by the salary. In conclusion the above theory shows

clearly how buyer-supplier relationship should exist and depend on each other in order to ensure

effective performance to supply chain management unit in each and every organization.

5
The diagram below clearly shows the basic idea of agency theory (Ross, 1973).

KEY p. principal A.Agent

Figure 2.1 Agency Theory

2.2.2 Organizational Theory

Organizational theory is a loosely knit community of many approaches to organizational analysis.

Its themes, questions, methods, and explanatory modes are extremely diverse. Organizational

theory is not a single theory. Organization theory certainly cannot be described as an orderly

progression of ideas, or a unified body of knowledge in which each development builds carefully

on and extends the one before it. Rather, developments in theory and prescriptions for practice

6
show disagreement about the purposes and uses of a theory of organization, the issues to which it

should address itself (supervisory style, organizational culture), and the concepts and variables

that should enter into such a theory. Organizations are defined as social units of people that are

structured and managed to meet a need, or to pursue collective goals (Schein, 2010). Organizations

in the United States are said to have risen within a variety of social and historical contexts. Several

of those factors are credited with making organizations viable and necessary options for citizens,

and they built on one another to bring organizations to the level of importance that they have as of

2004. In addition to a shift to wage dependence, externalities from industrialization also created a

perfect opportunity for the rise of organizations. Various negative effects such as pollution,

workplace accidents, crowded cities, and unemployment became rising concerns. Rather than

small groups such as families and churches being able to control these problems as they had in the

past, new organizations and systems were required in order to keep their heightened effects down

(Wilson, 2009). According to Dobler (1996) the smaller associations that had contained various

social issues in the past were no longer viable, and instead were collapsed into larger formal

organizations. These organizations were less personal, more distant, and more centralized; but,

what they lacked in locality, they made up for in efficiency. Along with wage dependency and

externalities, the growth of industry also played a large role in the develoThrough much

advancement in the interaction of capitalistic bureaucracies, the development of organizations is

what has driven contemporary firms to thrive in its modern-day society (Frost, 1997).

2.3 Conceptual Framework

A conceptual framework is an analytical tool with several variations and contexts that can be used

to make conceptual distinctions and organize ideas. Strong conceptual frameworks capture

something real and do this in way that is easy to recall and apply (Robinson, 2009). However if

7
one variable depends upon or is a consequence of the other variable, it is termed as a dependent

variable, and the variable that is antecedent to the dependent variable is termed as an independent

variable (Kothari, 1995). In this study the organizational performance depends upon procurement

pre-qualification, and hence organizational performance will be the dependent variable and

independent variables will be quality delivery, cost effectiveness, bid evaluation and supplier

performance. Following is an illustration of the relationship between the dependent and the

independent variables of this study

8
Quality
Delivery
Standar
services/goo
Qualit of the
end

Cost
Effectiveness
Cost
Tendering
Screening/anal
ing bid
Organizatio
Bid Performan
n
Evaluation ce Profiabilit
Evaluation
Effectivene
Bid Flexibilit
Transparency of Dependabili
evaluatio
Supplie
Efficienc
..........................
...Supply
failure
..........................
...Timely
..........................
...Failure to
at
Fig:2.2 Conceptual
Framework

9
2.4 Empirical Review of Study Variables

2.4.1 Quality Delivery

The award of tender to a competent supplier organization should ensure effective delivery of

services/goods in terms of cost, time and quality standard. Chua et al. (1999) submit that it is

generally accepted that the major goals in any supply are budget, schedule and quality.

Corroborating this view, Russell et al. (1997) content that the overall success of a supply includes

meeting goals related to cost, schedule, quality .According to Dissanayaka and Kumaraswamy

(1999) time, cost, quality target and participants' satisfaction are the main criteria for measuring

the overall success of supply. A successful supply satisfies its clients and sponsors with an outcome

that achieves objectives within time and cost constraints (Pitagorsky, 1998). Moreover, Oladapo

(2000) submits that a supply is considered successful when it is completed on time, within cost

and to the required quality standard. However, Kog et al. (1999) observe that budget and schedule

performances are the most important criteria for measuring supply success. Similarly, Laufer and

Tucker (1987) note that cost and time are two major goals of a supply which receive relatively

more attention than quality. Selecting capable suppliers is one of the most important tasks faced

by a procuring entity who wishes to achieve successful project outcomes (Fong and Choi, 2.

(Mshelbwala, 2005). Kramer and White-McCurry (2002) suggest that one method of improving

construction performance is to prequalify suppliers prior to the bidding process so as to ensure that

suppliers are able to execute the assigned project in accordance with client and project objectives.

Suppliers’ prequalification is therefore a commonly used process for identifying a pool of

competitive, competent and capable suppliers from which tenders may be sought (Lam et al.,

2000). In view of the foregoing, it is expedient to investigate the effect of suppliers prequalification

on service delivery, more importantly at this time when supplies have become more sophisticated.

10
2.4.2 Cost Effectiveness

To have diverse range of suppliers requires prequalification procurement. Carter et al. (2006) states

that many suppliers may be advantageous to the firm as it opens up positions for innovation or

cost effectiveness solutions leading to strategic advantage through differentiations or cost

leaderships. In order to achieve this, firms need to streamline their supplier network and enshrine

prequalification and supplier diversity in their organization culture and procurement strategies

(Baily et al., 2008). The public sector system of bid evaluation concentrating solely on bid price

alone is one of the major causes of supply delivery problems (Hatush and Skitmore, 1997). This

is because suppliers when faced with shortage of work are more likely to enter low bids simply to

stay in business in the short term and in the hope of somehow raising additional claims or cutting

cost to compensate. Therefore, automatic selection of the lowest bidding suppliers is risky. On the

other hand open tendering is an expensive process for both suppliers and the procuring entity

especially when too many bidders are involved (Hue and Skitmore, 2001). Clients incur cost in

screening and analyzing bids tendered, while suppliers incur cost in bid preparation and

submission. Since a contract is awarded to only a single supplier under normal circumstances,

bidders have to recover the costs associated with every unsuccessful bid through the increase of

subsequent bid prices. As a result, the entire cost of bidding is ultimately borne by the clients.

The aim of prequalification process is to ensure that clients obtain a number of competitive,

reasonable and easy-to-evaluate bids submitted by equally suitable and experienced suppliers.

Therefore, suppliers’ ability to perform on a project prior to the bidding process is evaluated during

this process. This evaluation process allows clients and their consultants to select suppliers based

on the suppliers’ performance, reputation of delivering quality service and also the most

competitive in terms of cost of supply. According to Tarawneh (2004), prequalification process

11
provides suppliers with the opportunity to differentiate themselves from their competitors and to

impress clients and consultants to have a place in their tender list. Therefore, considerable goals

that could be achieved by effective suppliers’ selection through prequalification process include

economic cost and value for money (Russell and Skibniewski, 1990). Hue et al. (1999) assert that

huge proportion of national resources could be salvaged through effective suppliers’ selection

especially using modalities of prequalification. Wong et al.

(2000) also opine that with the emergence of modern approaches in suppliers’ selection through

prequalification, there has been a trend away from a lowest price wins principle to a multi criteria

selection approach.

2.4.3 Bid Evaluation

Flanagan (1990) suggests that what is required is a broader evaluation technique that takes into

account the risk of poor performance by suppliers through examination of other non-price data

concerning the individual suppliers. Therefore, Seeley (1986) suggests that with selective

tendering, prequalification of suppliers is normally a prerequisite to assist in compiling a list of

firms qualified to receive invitation to tender. Suppliers invited to tender are required to submit

details of their experience relevant to the specific supply under consideration. Suppliers’

prequalification according to Russell and Skibniewski (1988) is a process of determining a

candidate's competence or ability to meet the specific requirements for a task involving a wide

range of criteria for which information is often qualitative or subjective. Prequalification as a

commonly used pre-tender process for identifying a pool of competitive, competent and capable

suppliers from who tenders may be sought (Lam et al., 2000). It is a method of ensuring that a

supplier is able to execute the assigned supplies in accordance with the client and project

objectives.

12
According to Russell and Skibniewski (1987) prequalification systems operate in two stages.

Firstly, the scope of the work and supply type is defined, and secondly a list of suitable bidders is

identified. The following stages are therefore involved in the suppliers’ prequalification process

(Russell and Skibniewski, 1988): development of selection criteria; gathering data on suppliers’

capabilities; evaluating suppliers’ data; applying suppliers’ data to criteria; gathering more data

for the decision if needed; and making the decision. The development of relevant criteria for which

the suitability of the suppliers to carry out the supply can conveniently be measured. However, Ng

and Skitmore (1999) contend that despite several studies into prequalification . The inability to

accommodate the specific interests and requirements of clients is a major obstacle to adopting

universal criteria for prequalification (Ng and Skitmore, Paleneeswaran and Kumaraswamy (2000)

proposed the assessment of suppliers on the basis of ten key pre-selection criteria. They are

finance, human resources, organization and management, project specific requirements, past

experience, past performance, technology, quality system, health and safety system, and

equipment. Weightings are assigned to represent the importance of these criteria and different

scores are assessed for each criterion. The sum of the products of the weight and the score for each

criterion form the multi-criteria scoring model for suppliers’ selection. In improving the

rigorousness and reliability of suppliers’ selection decisions, many public and quasi-governmental

clients have adopted a two-tier process for evaluating suppliers’, which involves the pre-selection

and final selection stages (Leung, 1995). The notion of preselection is to formulate a list of equally

suita’ from which invitation for submitting a bid for supply assignment can be founded on. The

focus of pre-selection is primarily on evaluating suppliers’ general capabilities (HKSAR

Government, 2001). have developed their own suppliers’ selection frameworks to improve the

transparency of evaluation. The importance of suppliers’ evaluation has also given rise to several

research studies which focused on the process of suppliers’ selection (Avila, 1997).

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2.4.4 Supplier Performance

The use of key performance indicators to monitor the efficiency and effectiveness of different

levels of supply chain operations have been discussed at length. However, these performance

metrics solely focused on assessing internal performance. It is seen that current PMSs in the market

only focus on investigating different level of supplier service according to a set of internal

performance indicators. Hence, a set of external performance metrics has to be created for

companies to perform supply chain benchmarking with the best-in-class company (Caplice and

Sheffi, 1995).In the past, generic balanced supply chain measurements systems emphasized on

financial measuring issue were defined (Beamon, 1999). According to Bullinger et al. (2002)

financial data showed only the result of yesterday's action rather than indicating tomorrow's

performance.The measure did not provide any forward-looking perspective and lacked predictive

power. Therefore, the financial measurement system could not capture key business changes.

Besides, the tracking of financial performance was insufficient to measure supply chain

performance. As the supplier performance was not solely assessed from financial context, such

PMS could not be applied in supplier performance measurement. Another measurement issue was

to create an internal PMS. Performance measurement models defined a list of metrics to measure

the internal logistics operations were proposed (Lambert & Gilmour, 1999). As these PMS only

focused on internal operation, the methodology developed here could not be applied for supplier

performance measurement. Marshal & Heffes (2006) found out that organizations with high level

of diverse suppliers tend to have 133% greater returns on cost of procurement operations that

average performer. So having new or many entities than a single supplier was important. However,

such move exposes the procuring firms to many potential risks. Apart from the issues of the PMS

selection, the benchmarking scheme on supplier's performance plays an important role for

14
developing response supply chain collaboration. Many researchers have examined the usage of

benchmarking models to assess organizational internal performance with the best-in-class practice

in order to lead to the development of the competencies through learning from others. Cassellet al.

(2001), Chan and Burns (2002), and Talluri (2000) proposed similar benchmarking exercises to

find the competency gaps within the company. The primary objective of these benchmarking

methods is for firm improvement. Hence, the methodology developed here cannot be applied for

supply chain benchmarking. Lau et al. (2001)Supply management becomes more critical because

the increasing dependence on suppliers makes companies highly exposed to supply risks. Similar

to project risk management's importance in project management (Project Management Institute

2004), SRM is becoming ingrained within supply management in order to mitigate the risks of the

supply chain. Even though supply risks can be reduced through improved processes and buffer

strategies such as prequalification of suppliers, organizations still need to take actions against

unforeseen events because risk cannot be completely eliminated (Fisher, 1999, if so, how that may

be established (Krause and Handfield, 1999” between suppliers who either “take turns” in putting

in winning bids or, in some cases, make a reasonable living by being paid for putting in failing

bids. Achille (2012) study concluded that large companies ensured compliance to prequalification

procurement by ensuring complete audit of the procuring entity and suppliers regularly on

financial, quality, health and safety, environment, Data security, insurance, legal compliance,

business continuity as well as corporate social responsibilities. Such companies view audit as a

risk management activity and not a necessary evil or administrative burden.

15
2.5 Critique of Existing Literature Relevant to the Study

According to Chua et al. (1999) submit that it is generally accepted that the major goals in any

supply are budget, schedule and quality. Corroborating this view, Russell et al. (1997) content that

the overall success of a supply includes meeting goals related to cost, schedule, quality and safety.

However, quality delivery does not assure quality services if an organization does not set standards

to regulate their suppliers this can be achieved through creation of policies that govern and

regulates its suppliers. It is also important to evaluate your suppliers continuously this however

increases quality services of both the supplier and the organization. According to Carter et al.

(2006) states that many suppliers may be advantageous to the firm as it open up positions for

innovation or cost effectiveness solutions leading to strategic advantage through differentiations

or cost leaderships. In order to achieve this, firms need to streamline their supplier network and

enshrine prequalification and supplier diversity in their organization culture and procurement

strategies (Baily et al., 2008). However, poor management of suppliers can sometimes prove to be

challenging to an organization. An organization can choose to have a large number of suppliers in

order to reduce cost or increase their bargaining power this can lead to suppliers forming cartels

which in turn end up .The above studies have been conducted by various researchers concerning

the impact of procurement pre-qualification on organizational performance in both public and

private body with the aim of identifying the causes of its underperformance..

16
2.6 Summary

This chapter has basically explained theories that relate with the researchers’ topic it clearly

explains the researchers’ independent variables its advantages and disadvantages. It has also

included a clear explanation of existing literature that is relevant to the researchers’ independent

variables. Furthermore it has also helped in clearly indentify the gaps that were researched on, in

order to improve the efficiency of organizational performance in an organization. Finally it helped

in the realization of procurement pre-qualification can make a strategic difference to an

organization’s capability of providing continuing improvement in customer satisfaction drives the

search for new ways of managing pre-qualification.

2.7 Research Gap

There are apparently significant gaps in the academic area of impact of procurement

prequalification on organizational performance in Kenya leading to unnecessary loss and wastage

of scarce public resources. No decisive study has been carried out to quantify the extent of effects

of procurement pre-qualification on organizational performance failure and the resulting wastage

of resources. A preceding study by Wayne (2006) appears only to focus on gaps on perceptions of

requirements and performance held by suppliers in the areas of quality, delivery, service, range

and price within organizational performance.

According to Lysons (1999) prequalification procurement is a risk management strategy by

procuring entities to reduce suppliers’ related risks such as failure to deliver supplies on time,

health and safety needs, litigation costs due to failure or cancelation of tender, suppliers’

insolvency, technical competences as well as resource capabilities. It is important especially in

costly procurement and also sensitive tenders. It can affect financial and reputation of the firm.

17
The study also seeks to generate interest among public policy makers to come up with a manual

or revise existing policies on impact of procurement on organizational performance

implementation for all public officers, and more so those charged with the responsibility of

implementing them to enhance successful implementation. Moreover, organizations whether in

private or public sector, business oriented or non-profit making cannot down play the inherent

challenges in the modern turbulent environment characterized by competition, undercutting,

downsizing, and economic meltdown among others. To be successful in the current rapidly

changing world, organizations need to understand the challenges facing them and to maximize the

productivity of all their resources; physical, financial, information and human resources. The

nature of strategic management is so dynamic that no one particular description can explain it since

it is a process bound concept that depends on the environment, change, technology among others.

It is therefore a phenomenon that organizations embrace not only to gain a viable fit but also seize

a competitive advantage in the turbulent market (Ochieng, 2011).

Even though some researchers such as Smith (2011) William (2010) & Davis (2009) have

attempted to bring to the fore the relevance of organizational performance on impact of

procurement pre-qualification on its implementation, their effort has generally been rather too

general and as such wanting in detail thereby failing to address the specific aspects on impact of

procurement pre-qualification on organizational performance. The researcher intends to bridge

these glaring research gaps.

18
CHAPTER THREE
RESEARCH METHODOLOGY

3.0 Introduction

This chapter of the study provides the procedures that were used in carrying out this research. It

dealt with research design, population of study, sampling frame, sample and sampling

techniques, research instruments, data collection procedure and data analysis.

3.1 Research Design

According to Kothari (2004) research design is the arrangement of conditions for collection and

analysis of data in a manner that aims to combine relevance to the research, purpose with

economy in procurement. Descriptive design is appropriate because it involves a means of

collecting and analyzing data in order to answer research questions (Mugenda & Mugenda,

2003). The research design that was used in carrying out the study was descriptive design since

the method is less time consuming and it captures a lot of data. Descriptive design describes the

characteristics of something by ensuring complete description of the situation, making sure there

is minimum bias in the collection of the data and thus reducing the errors in interpreting the data

to be collected (Boyd, 1989).

A descriptive study is appropriate if description is informative. This is useful in applied research

like describing customer attitudes or behavior of drug addicts (Formell, 1996). Descriptive

studies are not only restrictive to fact findings but may often result in the formation of important

principles (Kerlinger, 1969).

19
3.2 Population

Mugenda & Mugenda (2003) define a population as a complete set of individuals, cases or objects

with some common observable characteristics. The basic idea of sampling is by selecting some of

the elements in a population, conclusions may be drawn about the entire population

(Cooper & Schindler, 2003).

3.2.1 Target Population

According to Sekaran, (2010) a target population refers to all the members of a real or hypothetical

set of people, events or objects to which the researcher wishes to generalize the results of the

research. It is important for the researcher to find out possible elements about the study population

which includes age, gender and classes of the population. The target population for this research

comprised of sixty five (65) employees from procurement, logistics and stores department in

County Pension Fund.

Table 3.1 Target Population

Category Target Population Percentage

Logistics 5 7.69%

Stores 10 15.39%

Procurement 50 76.92%

Total 65 100%

Source: www.countypensionfund.co.ke

20
3.3 Sampling Frame

Table 3.2 Sample Size

Category Sample Size Percentage

Logistics 3 9.1%

Stores 5 15.15%

Procurement 25 75.75%

Total 33 100%

Source: www.countypensionfund.co.ke

The sampling frame describes the list of all population units from which the sample was selected,

Kothari (2004). From the above target population of 65, proportional allocation method was used

to calculate the sample size from each stratum using stratified random sampling which gives each

item in the population an equal probability chance of being selected. Stratified random sampling

method is used in a situation where the population being studied is heterogeneous and thus can be

subdivided into groups or strata to obtain a representative sample. According to Kothari (2004), a

representative sample is one which is at least 10% of the population, thus the choice of 10% of the

65 which is 33 is considered as representative from procurement (25), stores (5) and logistics (3)

departments.

21
3.4 Sample and Sampling Technique

Sampling technique involves dividing the population into homogenous subgroups and then taking

sample in each subgroup (Kothari, 2004). A sample is a portion of the target population that

carefully selected to represent that population. In survey methodology, sampling is concerned with

the selection of subset of individuals from within a statistical population to estimate characteristics

of the whole population (Kothari, 2004). Two advantages of sampling are that the cost is lower

and data collection is faster than measuring the entire population. The study used stratified random

sampling to determine the sample which is the least biased of all sampling techniques, there is no

subjectivity-each member of the total population has an equal chance of being selected.

3.5 Research Instruments

The researcher used questionnaires to collect primary data. The researcher issued questionnaires

to staff in County Pension Fund departments. This instrument was used due to its suitability of

having an ample time for the staff concerned to adequately fill the form. A tally table was

adopted to analyze the findings. Secondary data was obtained from published materials.

3.6 Data Collection Procedure

The researcher first sought permission from the management through an official written consent

letter. Thereafter data was collected using questionnaires with tallied sheets so as to give accurate

information. There was pre-testing questionnaires whereby respondents were served with

questionnaires and given a few days to fill them at their own time. Questionnaires were hand

delivered and due to time constrains were collected as agreed. The questionnaire had both

structured and semi-structured questions to ensure that the given answers were relevant and also

22
for in depth response and accuracy. Open ended questions were used because they are e feelings,

background, hidden motivation, interests and decisions.

3.7 Pilot Test

A pilot test is a small scale preliminary study conducted in order to evaluate feasibility, time,
cost, adverse events and statistical variability in an attempt to predict an appropriate sample size
and improve upon the study design prior to performance of the full scale study. The Reliability
and Validity of each instrument was ascertained through a discussion with several students
pursuing their degree and in the process of writing their projects. The researcher also discussed
the drafts with the supervisor and made necessary adjustments to the research instrument before
conducting a pilot study which was undertaken to identify elements of study population and unit
of analysis. During the study, draft questions were pre-tested to remove ambiguity and achieve
high degree precision. On the other hand, questions which did not yield the required data were
discarded. In this case, the researcher conducted a test from the right category of the population
of study that was conversant with the organizational performance. Ten respondents were asked to
fill the questionnaire during the test and another two were interviewed. Consequently, the
researcher discussed the findings of the study with the supervisor and established content validity
before engaging in the real field study.

3.8 Data Processing and Analysis

Data analysis is a process of gathering, modeling and transforming data with the goal of

highlighting useful information, suggesting conclusions and supporting decision making hence

preparing crude data into interpretable designs (Mugenda, 2003). All data obtained from the survey

was presented and tabulated on the basis of various objectives and variables that measure them.

23
CHAPTER FOUR
RESEARCH FINDINGS AND DISCUSSION

4.1: Introduction

This chapter is about data analysis, presentation and interpretation of collected information from

the field. The information collected has been presented in tables, graphs and charts format. The

information analyzed was interpreted in relation to the research objectives to ensure that it

provided answers to the research questions.

4.2: Departmental Participation

Table: 4.1 Departmental Participation

Frequency Percent

Human Resource 2 7.1

Operations 17 60.7

Finance 2 7.1

Administration 3 10.7

Information And Communication Technology(ICT) 1 3.6

Internal Audit 1 3.6

Corporate Affairs And Marketing 2 7.1

Total 28 100.0

From the study the operations department led by 60.7%, followed by administration with 10.7%

of the respondents participating in the study. Respondents from Human Resource, Finance and

24
Corporate Affairs department garnered 7.1% each of the total number of respondents while ICT

and internal audit had the least number of respondents who comprised of 3.6% each. Therefore the

majority of personnel who participated were mainly drawn from the operations department which

mainly constituted of low level managerial positions.

4.2: Importance of Prequalification Procurement

Table: 4.2 Importance of Prequalification Procurement

Frequency Percent

Of no importance 2 7.1

Fairly unimportant 3 10.7

Fairly important 7 25

Very important 16 57.1

Total 28 100.0

The table above shows that 16 members of staff agreed that prequalification procurement was

very important having 57.1%. This was followed by a mean of 25% on those who voted for

prequalification procurement being fairly important. Another 10.7% of the total respondents

indicated that the prequalification procurement to be fairly unimportant while the remaining 7.1%

saw the process being of no importance. This shows that majority regarded the prequalification

procurement to be very important.

25
4.3 Demographic Information

In order to get to the main objective of the study, the researcher saw it fit to first understand about

the respondents being questioned and how valid and reliable their information would be. Some of

the items included gender, their departments, number of years in service in County pension fund.

4.3.1 Gender of the Respondents

Table: 4.2 Gender of the Respondents Frequency Percentage

Male 41 63

Female 24 37
Table 4.2 shows the gender of respondents. Majority of the respondents 41 (63%) were male
while a smaller number 24 (37%) were female. This infers that most of the employees at CPF are
male while female employees are fewer.

4.3.2 Years of Service

The researcher sought to assess for how long the respondents had worked for the organization
Table: 4.4 Years of Service

Years of service Frequency Percentage

Less than 1 year 2 3

1-2 years 21 32

3-5 years 42 65

TOTAL 65 100

26
Table 4.4 shows that 3% of the respondents indicated that they had worked for less than 1 year,

32% indicated that they had worked for between 1 to 2 years, 65% indicated they had worked for

between 3 to 5 years. This shows that the organization has been able to retain its workers due to

the fact that most of the respondents had worked for more than 3 years.

4.4: Impact of Prequalification Procurement on Organizational Performance

4.4.1: Quality Delivery

Std.

Deviation
Mean
Prequalification leads to effective delivery of quality standard
service/goods
4.26 1.043

Quality target is the main criteria for measuring the overall success
of supply thus there is need to emphasize it during prequalification
of suppliers
2.39 1.114

Suppliers are one of the major players in CPF and the services they
render are critical to the quality of the end product
4.43 1.218

One method of improving CPF performance is to prequalify

suppliers prior to the bidding process so as to ensure that suppliers

are able to execute the assigned project in accordance with CPF and
project objectives 3.84 1.051

Prequalification favors the supplier who has a reputation of

delivering quality service to get the tender
3.23 0.976

27
 Std.

Deviation
Mean
Many suppliers may be advantageous to CPF as they open up 4.26
positions for innovation or cost effectiveness solutions thus the need
for prequalification 1.043

Prequalification lead to strategic advantage through cost leadership 2.39

of the suppliers 1.114

Open tendering is an expensive process especially when too many 4.02

bidders are involved thus need for prequalification of suppliers 1.218

The aim of prequalification process is to ensure that clients obtain a 3.84

number of competitive, reasonable and easy-to-evaluate bids 1.051

Prequalification enhances most competitive firms in terms of cost of 2.21 0.912

supply to win the tender

Considerable goals are achieved by effective supplier selection

through prequalification process including economic cost and value 3.23 1.341

for money

Huge proportion of national resources could be salvaged through

effective supplier selection especially using modalities of

prequalification 2.45 1.224

Prequalification of suppliers has led to a trend away from a lowest

price wins to a multi criteria selection approach during tendering
4.03
0.745

28
 With a mean of 4.43 the respondents agreed that suppliers were the major players in CPF and the
services they rendered were critical to the quality of the end product. A further mean of 4.26 implied
that the respondents agreed that prequalification led to effective delivery of quality standard
service/goods. This was followed by a mean of 3.84 which showed that the respondents agreed that
one of the methods of improving CPF performance was to prequalify suppliers prior to the bidding
process so as to ensure that suppliers were able to execute the assigned project in accordance with
CPF and project objectives. A mean of 3.23 reflected the respondents’ indecision on whether
prequalification enhances the supplier who had reputation of delivering quality service to the
tender. Further mean of 2.39 however showed that the respondents disagreed that quality target was
the main criteria for measuring the overall success of supply thus there was need to emphasize
during prequalification of suppliers.

4.4.2: Cost

A mean of 4.26 from the study indicated that the respondents strongly agreed that many suppliers

might be advantageous to the trust as it opened up positions for innovation or cost effectiveness

solutions thus the need of prequalification. They further agreed that the prequalification of

suppliers had led to a trend away from a lowest price wins principle to multi criteria selection

approach during tendering with a mean of 4.03. An additional mean of 4.02 indicated that the

respondents agreed that open tendering was an expensive process especially when too many

bidders were involved thus need for prequalification of suppliers.They also agreed that the aim of

prequalification process was to ensure that clients obtained a number of competitive, reasonable

and easy to evaluate bids having a mean of 3.84. They were however undecided on whether

considerable goals were achieved by effective suppliers’ selection through prequalification process

including economic cost and value for money from a mean of 3.23 obtained. They disagreed with

the statement that huge proportion of national resources could be salvaged through effective

suppliers’ selection especially using modalities of prequalification as shown by a mean oindicated

by a mean of 2.39. From a mean of 2.21 the respondents seemed to disagree with the statement

that prequalification enhanced most competitive firms in terms of cost of supply to win the tender.

29
4.4.3: Bid Evaluation

The respondents identified the following as the key pre-selection criteria of tenders at CPF:

Compliance with the mandatory requirements set out in Ministerial Directions, and associated

Guides and Practice Notes. Compliance with the mandatory requirements in respect of the

Victorian Government's OH&S and Industrial Relations policy. Others include Affiliation,

Relevant experience, Current workload, financial status, Referees, Size and structure of company,

Nominated personnel and Environmental sustainability policies.

Tender procedures must be clearly set out and recorded to ensure evidence of full compliance with

the Code. Care should be taken regarding the receipt, recording, assessment, confidentiality etc. of

all communications including verbal, written and electronic methods

Std.

Deviation
Mean

Bid evaluation concentrating solely on bid price alone is one of the 2.26 1.043
major causes of supply delivery problems

With selective tendering, prequalification of suppliers is normally a

prerequisite to assist in compiling a list of firms qualified to receive
invitation to tender
3.39 1.114

30
Suppliers selection frameworks helps to improve the transparency of
evaluation
2.39 1.065

Fig: 4.1 Effects of Supplier Evaluation Modes

The mean of 3.39 indicated that the respondents were undecided on whether selective tendering,

prequalification of suppliers was normally a prerequisite to assist in compiling a list of firms

qualified to receive invitation to tender. They however disagreed that the suppliers framework

helped to improve the transparency of evaluation as indicated by a mean of 2.39 obtained. A further

mean of 2.26 showed that the respondents disagreed with the statement that bid evaluation

concentrating solely on bid price alone was one of the major causes of supply delivery problems.

4.4.4: Supplier Performance

The respondents highlighted the following as the main procurement failures that they normally

face: lack of skills, strategy and inter-departmental collaboration, lack of understanding of how to

31
gather requirements and develop relationships with suppliers, Collusive bidding at auction and

Inadequate tender management.

Fig: 4.2 Supplier Risk Factors

The graph above shows the factors of a supplier that pre-dispose CPF to risk in terms of curtailing

its operations. From the graph, it is clear that supply chain failures pose the highest risk to

organizational performance of CPF with a mean of 4.23 as further elaborated in the frequency

table below. The lowest risk factor to organizational performance is overdependence on

suppliers.

Std. From a mean

of 4.23
Mean Deviation obtained it
indicated that
Automatic selection of the lowest bidder is risky 3.43 1.217 the respondents
agreed that
CPF faces imminent risks from supply chain failures 4. CPF face
imminent risks
which include; suppliers’ failure to deliver quality from supply
3.21 0.906
chain failures
products, timing or even failure to deliver the service at all which
1.410 included;
Having many suppliers exposes CPF to high risk
suppliers’
failure to
32
Increasing dependence on suppliers makes companies deliver quality
highly exposed to supply risks thus need for products,
prequalification 2.43 1.363 timing or even
failure to
deliver the
service at all. A further mean of 3.43 showed that the respondents were undecided on whether
automatic selection of the lowest bidder was risky. They were further undecided on whether
having many suppliers exposed CPF to high risk from the mean of 3.21. an additional mean of
2.43 indicated that the respondents disagreed with the statement that Increasing dependence on
suppliers made companies highly exposed to supply risks thus need for prequalification.

CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1: Introduction

This chapter presents the summary of findings, discussion, conclusion drawn from the findings

and recommendations made. The conclusions and recommendations drawn focus on the purpose

of the study.

5.2: Summary of Finding

The majority of workers were mainly drawn from the operations department which mainly

constituted of low level managerial positions. The prequalification procurement was considered a

very important aspect in the company. Suppliers were the major players in CPF and the services

they rendered were critical to the quality of the end product. It can also be seen that prequalification

led to effective delivery of quality standard services/goods. It was also seen that one of the methods

of improving CPF performance was to prequalify suppliers prior to the bidding process so as to

ensure that suppliers were able to execute the assigned project in accordance with CPF and project

objectives. It was not clear whether prequalification enhanced the supplier who had reputation of

33
delivering quality service to the tender. Quality target was seen not to be the main criteria for

measuring the overall success of supply contradicting the need to emphasize during

prequalification of suppliers.

Many suppliers were advantageous to the trust for it opened up positions for innovation or cost

effectiveness solutions and hence the need of prequalification. It was also found out that selection

especially using modalities of prequalification. Prequalification did not lead to strategic advantage

through cost leadership of the suppliers. It was further noted that prequalification did not enhance

most competitive firms in terms of cost of supply so as to win the tender.From the study it was

indistinct whether selective tendering, prequalification of suppliers was normally a prerequisite to

assist in compiling a list of firms qualified to receive invitation to tender. The study also showed

that supplier frameworks did not help in improving the transparency of evaluation. Bid evaluation

concentrating solely on bid price alone . A further debate was whether many suppliers exposed

CPF to high risk. The study found out that increasing dependence on suppliers did not make

companies highly exposed to supply risks and did not require prequalification.

5.3: Conclusion

Publication of the public procurement notice marks the start of the formal procurement process.

The Authority must comply with all requirements related to the publication of notices. It is good

practice to also publish the procurement notice in one or more international periodicals. The notice

should be followed by a questionnaire to enable interested companies to demonstrate their

qualifications also known as the submission of an “expression of interest”

5.4: Recommendation

The study recommends that in procurement pre-qualifications, quality goods must be delivered so

that the suppliers can earn trust of business owners and also their market level. The services must

34
be standard and of high quality too. The study further recommends that the cost of the goods and

services should be standardized and the appropriate cost procedures followed. Also business

owners should ensure that in procurement pre-qualification there should be transparency in bid

price evaluation and the time taken should be evaluated. The study also recommends that business

owners should evaluate the performance of the supplier in procurement pre-qualification so that

good quality of goods and services are delivered. This increases efficiency in the business.

5.5: Recommendations for further study

The study recommends that a similar study should be undertaken by future researchers in different

areas dealing with procurement pre-qualification to verify the study results. The study further

recommends more research on individual variables, to enhance deep and thorough understanding

of influences of procurement prequalification.

35
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Adobor , H &McMuller, R.(2007). Supplier Diversity & Supply Chain Management: A strategic

Approach, Business Horizons, 50(3), 219-229

Ansoff, H (1987): Corporate Strategy, Mcgraw Hill, New York Aosa E, (1998) The Leadership
Challenge Facing Kenyan Organizations; Journal of the Institute of Certified Public accountants
of Kenya, Jan-March.pp 24-26.

Baier, C Hartmann, E. & Moser, R., (2008). Strategic Alignment of procurement and Purchasing

efficacy: an exploratory analysis of the impact of financial performance, Journal of supply

Chain management, 44(4) 36-52

Baily,P., Farmer, D., Jessop, D. & Jones, D.(2008).10th edition, Procurement principles and

Management, prentice Hall, London. CAPs, Center for Advanced Purchasing studies,
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Carter, C.R, Auskainis, R.J.& Ketchum, C.L (2006). Purchasing from minority Business

Enterprises. Key success factors, Journal of Supply Chain management, 35(1), 28-32

Dollinger, M.J, Enz, C.A & Daily, C.M (1991), Purchasing from minority small business, G.

&international journal of purchasing & material management, 27(2), 9-14 Ernst and
Young, (2001) Enabling E- Commerce; E-Procurement- Boosting the Bottom-line.

Gali J.F, (1993) TQM for Purchasing Management, Unpublished MBA Project, Jomo Kenyatta

University of Agriculture and Technology.Kothari, C.R (1990): Research Methodology;

Methods and Techniques, WishiraPrakishan, 2nd

Edition.

Krause, D.R., Ragatz, G. &Hughley, S (1999) Supply development from minority supplier’s

perspective, Journal of Supply Chain management, 35(4), 33 Lam, K.C., Nkitmore, M. &

Cheung, S.O. (2000). Decision Supply system for contractor prequalification-artificial

neutral network model. Construction & Architectural management. Vol.7 pg 251-256 Lap

Trust (2005): Benefits Operation Manual.

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Lap Trust (2006): Legal Notice 50.

Madiero, D. &Lumpkin, S. (2007). A review of the Pros and Cons of Integrating Pension

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(2003), A Study Of Strategic Change Management Process In Hybrid Private Public

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Mugenda O.M and Mugenda A.G (1999); Research Methods; Quantitative and Qualitative

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Business Horizon 51, 201-209

APPENDIX II: SURVEY QUESTIONAIRES

QUESTIONNAIRE

The questionnaire is divided into two sections, A and B. Section A consists of personal

information while section B consists of the areas of study, this part is further subdivided into parts

I, II, III and IV according to factors of prequalification that affect organizational performance.

Kindly complete the questionnaire to the best of your ability . Any information gathered will be

treated with utmost confidentiality

SECTION A . PERSONAL INFORMATION. (Tick Where Applicable)

1. What is your highest level of education?

Postgraduate

University degree
College Diploma

College Certificate

Secondary level

Others

If others please state

………………………………………………………………………………………………

…………………………………………………………………………………………

38
2. How long have you been working in the organization?

Less than 5 years

6 – 10 years

11 – 15 years

16 – 20 years

Over 20 years

SECTION B:PART I: QUALITY DELIVERY

3. To what extent do you agree with the following statements on the impact of prequalification

procurement on quality delivery at CPF? (Tick where applicable).

SA – Strongly Agree A – Agree N – Neutral D – Disagree SD – Strongly Disagree

Statements SA A N D SD

Prequalification lead to effective delivery of

quality standard service/goods.

Quality target is the main criteria for

measuring the overall success of supply thus
there is need to emphasized during
prequalification of suppliers

Suppliers are one of the major players in CPF

and the services they render are critical to the
quality of the end product

One method of improving CPF performance is

to prequalify suppliers prior to the bidding
process so as to ensure that suppliers are able
to execute the assigned project in accordance
with CPF and project objectives

39
Prequalification enhances the supplier who
has reputation of delivering quality service to
get the tender

4. Does quality delivery improve organizational performance at CPF?

Yes No

If No, briefly explain why

............................................................................................................................................................

................................................................................

PART II: COST EFFECTIVENESS

5. To what extent do you agree with the following statements on the impact of prequalification
procurement on cost at CPF? (Tick where applicable).
Statements SA A N D SD

Prequalification leads to strategic advantage

through cost leadership of the suppliers

Considerable goals are achieved by effective

supplier selection through prequalification
process including economic cost and value for
money

Prequalification of suppliers minimizes the

cost incurred in screening and analyzing bids
tendered,

40
The aim of prequalification process is to
ensure that clients obtain a number of
competitive, reasonable and easy-to-evaluate
bids

Prequalification enhances most competitive

firms in terms of cost of supply to win the
tender

6. Does cost effectiveness increases organizational performance at CPF?

Yes No

If No, briefly explain why

............................................................................................................................................................

.........................................................................

PART III: BID EVALUATION

7. To what extent do you agree with the following statements on the impact of prequalification
procurement on bid evaluation & decision making at CPF? (Tick where applicable).
Statements SA A N D SD

Bid evaluation concentrating solely on bid

price alone is one of the major causes of supply
delivery problems

With selective tendering, prequalification of

suppliers is normally a prerequisite to assist in
compiling a list of firms qualified to
receive invitation to tender

Prequalification is a commonly used pretender

process for identifying a pool of competitive,
competent and capable suppliers from who
tenders may be sought

41
The focus of pre-selection is primarily on
evaluating suppliers’ general capabilities

Suppliers selection frameworks helps to

improve the transparency of evaluation

8. Does bid evaluation increase organizational performance at CPF?

Yes No

If No, briefly explain why

............................................................................................................................................................

...................................................................

PARTIV: SUPPLIER EFFICIENCY

9. To what extent do you agree with the following statements on the impact of prequalification
procurement on procurement risk at CPF? (Tick where applicable).

Statements SA A N D SD

Automatic selection of the lowest bidder is

risky

CPF face imminent risks from supply chain

failures which include; suppliers’ failure to
deliver quality products, timing or even
failure to deliver the service at all

Having many suppliers exposes CPF to high

risk

42
Increasing dependence on suppliers makes
companies highly exposed to supply risks
thus need for prequalification
Automatic selection of the lowest bidder is
risky

9. Does supplier performance increases organizational performance at CPF?

Yes No

If No, briefly explain why

....................................................................................................................................................
..
.........................................................................

THANK YOU FOR YOUR TIME

. APPENDIX II: RESEARCH BUDGET

ACTIVITY QUANTITY
UNIT COST TOTAL COST
(KSHS) (KSHS)

STATIONERY

Hard Disk
1 Pcs 6,500 6,500

Foolscaps 4 Reams 1,000 4,000

65 Pages 25 1,625
Typesetting/Printing
Proposal

Pens 20 Pcs 30 600

43
 Photocopying 300 Copies 5 1,500

Literature review 4 Times 600 2,400

Spring file 10 Pcs 300 3,000

SUBTOTAL 19,625

DATA COLLECTION

4 Pages 50 200
Questionnaires
printing

Photocopying 70 Pages 5 350

Travel/Lunch costs 5 Times 700 3,500

Data analysis 2,500

Grand Total 26,175

44
Phase Description No of Weeks

1 2

1 Data collection
3 4
5 6 7
8

2 Data analysis

3 Result writing

4 Report writing

5 Compilation and

presentation

APPENDIX III: WORK PLAN

45