Module 3

Effective planning
[23 JULY 2018]
Main learning objectives
By the end of this module, you will be able to understand:-

• the requirements in Part IV of Act and Part II of the Regulations

• how to prepare annual and individual procurement plans for the PE’s
procurement needs
• the integration of the procurement cycle and the budgetary cycle
• how market consultations should be conducted
• the need for continued monitoring of budget availability
• how to manage the whole preparatory process for procurement
Planning is a legal requirement

“A PE shall plan its procurement with a view to achieving maximum value for public
expenditure, so that the procurement is carried out within available financial
resources and other applicable limitations and at the most favourable time”
Section 21 (1) of Act
Key concepts in planning

1) Matching planned procurements to • Ensure that the cost of the

budgetary allocations procurement has been estimated
accurately, including the cost of
contingencies

• Ensure that this estimate has been

properly covered in the PE’s
budget for the current financial
year
Key concepts in planning

2) Estimating how long the • so that the process can begin in

procurement process is likely to take sufficient time for goods to be
delivered and works completed at
the time they are required
Key concepts in planning

3) Aggregating procurement 4) Using framework agreements where

requirements in order to achieve appropriate
economies of scale
Key concepts in planning

5) Avoiding unnecessary purchases by • E.g. A department may have goods

first investigating whether the which are surplus to its
requirement can be met internally requirements and which may be
transferred between departments
Content of the annual procurement plan
(Regulation 7 (1))
Annual plan shall contain
• Detailed breakdown of the procurement requirement
• Schedule of delivery, implementation and completion dates
• Indication of items to be aggregated as a single package through framework
agreement or shared procurement
• Estimated price of each package, budget availability and source of funding
• Anticipated procurement method
• Whether need for pre-qualification of bidders
• Anticipated time for completing the procurement cycle
• Include time for approval and time for contractor to manufacture, deliver
and install (where appropriate)
Individual procurement plan (S. 23 & R. 7 (2))
In addition to the annual plan, PE shall prepare an individual plan for each
procurement above the Prescribed threshold value
• USD 200,000 for construction works
• USD 100,000 for goods
• USD 50,000 for non-consultancy services
To contain
• Description of the requirement, including delivery, implementation or
completion, and any division into lots
• Estimated price, including price of individual lots
• Proposed procurement method
Benefits of Procurement Planning

What are the benefits of procurement planning and the

disadvantages of not planning?
 Check-list to
ensure that
procurements do
not commence
Achieves unless funds
aggregation as have been Indicates
requirements of approved priorities in
different end case of cuts
users brought
together within in budget
single contract
Benefits

Enables
understanding of Enables most
total acquisition suitable
time (and method of
avoidance of procurement
emergency to be identified
acquisitions)
Plan method of procurement (Part VI of Act)
• Open competitive bidding
• Where procurement is high value or complex, may be preceded by pre-qualification to
identify qualified bidders prior to submission of bids
• Alternative methods require specific conditions to be met
• Restricted bidding
• Request for quotations
• Direct procurement
• Selection of method of procurement is covered in Module 4
Planning size and type of contract: aggregation

• Different user needs for each category of item over defined period combined
to produce contract of greater value

• Framework agreements achieve aggregation for regular requirements

• PRAZ may direct that PEs make arrangements for shared procurement
Planning size and type of contract: avoidance of
splitting (S. 25 (2))
• Splitting occurs where contracts artificially broken up into smaller units to
avoid threshold for tendering
• May be splitting of single procurement requirement or splitting of generic
procurement requirement into several lots

Can you think of sectors where we might not want splitting

to occur?
Avoidance of splitting: answer
Where goods, construction works or services contracts are inter-related should
avoid making separate contracts if:
• Would create problems of compatibility or inter-changeability or strain
contract administration resources
• Invalidate or restrict a contractor’s warranty of liability
• Increase costs of servicing or maintenance

e.g. maintenance service contract for vehicle

procurement, supply of road signage for new road)
Contract packages
Contract packages seek optimum size and type of contract to attract greatest and
most responsive competition

Consider:
• Ability of supplier to make regular deliveries
• Ability of SMEs to compete for smaller contracts
• Division of contract into ‘lots’
Market consultations (S. 26 and R. 7): Purpose
• To learn what is available in the market for meeting a requirement, in
particular latest product innovations

• To take advantage of market knowledge to help PE when preparing

specifications

• To inform potential bidders of the PE’s procurement plans and requirements

so as to improve response
Market consultations (S. 26 and R. 7): Transparency
Notices inviting interested parties to participate in market consultations must reach
as many potential bidders as possible

Means of consultation
• Issue of online documents seeking written comments
• Open days/open discussion
• Interviews with interested market operators
• On-line notice board of contributions

Two-stage tendering (see Module 4) is one method of market consultations

Procurement preparation (s.20 of Act)
Before initiating any procurement proceedings PE must ensure that adequate
funds have been budgeted and allocated to the procurement

• If the Framework agreement did not have allocated funding, does the call-off?

• What approvals do you need to obtain?

• Include provision in contract for right to cancel

Estimating contract costs
Well-researched contract cost estimate:

Estimated value of goods, • Makes budgetary process more accurate

works or services should
be realistic and based on
up-to-date information on
economic and market
conditions
• Establishes whether tendered prices are fair and
reasonable
• Enables cost trends to be monitored over time
• Part of safeguards against collusion and
malpractice
How should contract cost estimates for items be obtained and
what factors might affect estimates?

Discuss in groups and

then share with the class
Total acquisition time
Depends on
• Procurement method used
• If pre-qualification undertaken
• Purchasing organisation’s lead time
in planning the procurement
process and preparing the bid
documents
• Time to be allowed for bids to be
submitted
• Time for tender evaluation
• Whether challenge or appeal
• Whether submission to Special
Procurement Oversight Committee
is needed
• Time required for the supplier to
produce, deliver, install and test the
goods
Estimating time: Top tips

• Work backwards from date by which goods are required to determine time when
procurement process must start

• If deadline is essential, allow time for contingencies

• Administrative review and other appeals against award

• Remember that contractor has own demands on time

Procurement plans should be updated regularly

• Actual prices obtained may be different from those set out in the plan
→ May require adjustments to the budget

• Budget may be cut requiring some items to be deleted

→ Prioritization shows which items must be protected

• Circumstances may change causing new priorities and requirements

• Plot actual events against the plan for each item

The key to successful planning

What are the key requirements for successful planning that

you will now consider when creating a procurement plan?
The key to successful planning: answers
• Well-researched contract cost estimates based on lifetime costs of ownership

• Starting the procurement process in good time, with due allowance for
contingencies

• Focus on longer-term (multi-year) needs

• Flexibility to take account of changing circumstances

• A clear agreed order of priorities

Ref. no. Item Priority No. of Unit cost Total cost Procurem Aggrega Budget Source
units (USD) (USD) ent tion available of funds
method

1.1.
Planned

2.1
Planned

27
Dates for completing key procurement processing activities

Date Pre-qualification Bid documents Invitation to Bid opening Evaluation and Special Contract signed Delivery
procurement prepared tender approval Procurement completed
process must Oversight
start Committee

1.1.
Planned

2.1 Planned

28