Er.

Satya Narayan Shah

B.Sc. In Mechanical Engineering (India)
MS in Manufacturing Engineering & Management (UK)

Email: er.snshah@gmail.com
Cell : 9851004366
May, 2018

1
 Definition
• Procurement planning is the process of
identifying and consolidating
requirements and determining the
timeframes for their procurement with
the aim of having them as and when they
are required.
• A good procurement plan will describe
the process in the identification and
selection of
suppliers/contractors/consultants.
Er. Satya Narayan Shah 2
 The Terms
Sourcing:
– Identification and vetting of suppliers, is a
function that occurs prior to procurement.
– Put reliable, affordable suppliers in place
for the procurement.
– tasked with assessing purchasing needs,
building sourcing plans, conducting market
research, identifying and evaluating
suppliers, and selecting the most suitable
supplier or suppliers for the need.
3
 The Terms
Procurement:
• the process of selecting vendors, establishing
payment terms, strategic vetting, selection,
the negotiation of contracts.
• Procurement is concerned with acquiring
(procuring) all of the goods, services, and
works.
• Procurement is, essentially, the overarching
or umbrella term within which purchasing can
be found.
Er. Satya Narayan Shah 4
 The Terms
Purchasing:
• as the transactional function of procurement with the
following activities
a) Purchase Order Acknowledgement
b) Advance Shipment Notice
c) Goods Receipt
d) Invoice Recording
e) 3 Way Match-matching three documents - the invoice,
the purchase order, and the receiving report
• Payment to Supplier
• Purchasing rely on the judgment of procurement
• Purchasing is concerned with budget and cost
control. 5
 The Typical Procure to Pay Cycle
• Steps usually involved:
– Identification of Requirement
– Authorization of Purchase Request
– Final Approval of Purchase Request
– Procurement
– Identification of Suppliers
– Inquiries
– Receipt of the Quotation
– Negotiation
– Selection of the Vendor
– Purchase Order Acknowledgement
– Advance Shipment Notice
– Goods Receipt
– Invoice Recording
– 3 Way Match
– Payment to Supplier 6
 Planning
Planning Process includes three major
components:

1. Information: A collection of facts

from which conclusions may be
drawn
2. Deliberation: Discussion of all
sides of a question, Careful
consideration
3. Instruction:A message describing
how something is to be done
Legal Backing

Er. Satya Narayan Shah 8

 Procurement Procedure
• Formation procuring Unit -PPA -7(3)
• Formation Evaluation Committee-PPA -71
• Preparation of procurement Plan/strategy PPA -6; PPR-
7,8
• Preparation of Estimate (Rs. 100,000.00 excluding works)-
PPA (5)
• Preparation of Bid document
• Opening of Bids
• Evaluation of bids
• Award of the contract
• Completion/Termination of the contract
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 Procurement Plan
 Master Procurement Plan to be
Prepared- PPA (clause 6), PPR (clause
7)
– for a period of more than one year or in
making a procurement of an amount
exceeding one hundred million Rupees
annually (Ten Crores).
• The master procurement plan to be approved
by the secretary of the Public Entity.
• To be up dated each fiscal year.
Importance of Procurement Planning (1)
• It helps to decide what to buy, when and from what
sources.
• Allows planners to determine if expectations are realistic;
particularly the expectations of the requesting entities,
which usually expect their requirements met on short
notice and over a shorter period than the application of the
corresponding procurement method allows.
• An opportunity for all stakeholders involved in the
processes to discuss about procurement requirements.
Stakeholders- the requesting entity, end users,
procurement department, technical experts, and even
vendors to give relevant inputs on specific
requirements.
Er. Satya Narayan Shah 11
Importance of Procurement Planning (2)
• It permits the creation of a procurement strategy for
procuring each requirement that will be included in
the procurement plan. Such strategy includes a
market survey and determining the applicable
procurement method given the requirement and the
circumstances.
• Planners can estimate the time required to complete
the procurement process and award contract for
each requirement. This is valuable information as it
serves to confirm if the requirement can be fulfilled
within the period expected, or required, by the
requesting entity.
Er. Satya Narayan Shah 12
Importance of Procurement Planning (3)
• The need for technical expertise to develop technical
specifications and/or scope of work for certain
requirements can be assessed, especially where in-
house technical capacity is not available or is non-
existent.
• Planners can assess feasibility of combining or
dividing procurement requirements into different
contract packages.
• The Procurement Plan is the product of the
procurement planning process. It can be developed
for a particular requirement, a specific project, or for a
number of requirements for one or many entities in the
public or private sectors. 13
 Importance of Procurement Planning (4)
• From it the procurement schedule is developed, which
establishes the timelines for carrying out each step in
the procurement process up to contract award and the
fulfilment of the requirement.
• It allows for the consolidation of similar requirements
under one contract or the division of a requirement
into several contract packages for economies of scale.
• From the number of requirements on the procurement
plan, the procuring entity can determine beforehand
any need for additional staffing, including external
assistance for the purpose of completing all
procurement requirements listed on the procurement
plan. 14
Importance of Procurement Planning (5)
• It allows for the monitoring of the procuring
process to determine how actual
performance compares with planned
activities, and thus to alert the pertinent
departments and adjust the procurement
plan accordingly.
• It enhances the transparency and
predictability of the procurement process.

Er. Satya Narayan Shah 15

Factors Affecting Procurement Planning
• Market Analysis
– strong understanding of the market dynamics,
availability etc
• Spend Analysis
– visibility of spend data-accurately analyse the goods
and services that have been historically procured.
– analysis will disclose issues concerning spend visibility,
contract compliance and control.
• Needs Analysis
– It is important to identify the ‘need’ and not the ‘want’.

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 NEED ANALYSIS
PPR 5 Ka
• मालसामान, निमार्ण कार्य र सेवाको विवरण स्वीकृ त गर्नु पर्ने:
(१) सावर्जिनक निकायको प्रमुखले कु नै मालसामान, निमार्ण
कार्य वा सेवा खरिद गर्नु अघि ऐनको दफा ४ बमोजीमको
स्पेसीफिके शन, योजना, नक्शा, डीजाइन, बिशेष आवशयकता
वा अन्य विवरण तयार गर्नु वा गराउनु पर्नेछ । 

Er. Satya Narayan Shah 17

 Procurement Plan (need analysis)
The following questions should be answered
• what is the procurement aiming to achieve?
• Do we really need to purchase, or can the need be met in another
way?
• Can the quantity or scale of the goods, works or services be
reduced whilst achieving the same service delivery?
• Can alternative goods or service be used to meet this need?
• Can the works, goods, service be specified to have improved
sustainability outcomes, including being able to serve a useful
purpose after its initial use?
• What information is available regarding sustainably-preferable
options for this purchasing requirement? Where can more
information be obtained about suitable alternatives?
• what happens to the product at the end-of-life?
• how does this procurement impact upon our (environmental/
social) objectives and policies?
 Content of Procurement Plan (1)
1. Key project information
• objectives and plan to achieve them
• an outline of what's being procured and the costs
involved
• planned approach to meet the Principles of Public
Procurement (eg transparent, fair to all, get the right
supplier or provider and the best outcome) and the
Government Rules of Sourcing
• governance arrangements and approvals processes
• key stakeholders and your plan for engaging with
them
• links to agency's procurement strategy. 19
Content of Procurement Plan (2)
2. Sourcing plan
• the type of procurement approach (eg open
process or direct sourcing)
• how suppliers or providers and their
proposals will be evaluated and what due
diligence will be conducted
• a written document detailing your strategy for
approaching the supplier or provider
community.

Er. Satya Narayan Shah 20

Content of Procurement Plan (3)
3. Exclusions and exceptions
• a record of any exclusions or exemptions
to the Government Rules of Sourcing,
giving specific justification for the
approach
• evidence of an approved formal exemption
from an independent senior manager if
your proposed approach proposes a
departure from your agency’s own
procurement policy.
Er. Satya Narayan Shah 21
 Content of Procurement Plan (4)
4. Contract information
• a description of the contract that will be used
• how the contract will be delivered and its completion
date
• how the contract will be managed during delivery.
5. Risks and Integrity
• the risks associated with the project and how they will
be managed.
• how the probity process will be managed.
6. Timetable
• a realistic step-by-step timetable for the procurement
process 22
 Procurement Plan
• Annual Procurement Plan to be Prepared-
PPR (clause 8)-
– In the cases where a Public Entity requires to make
procurement of an amount exceeding one million Rupees
annually.
• Annual procurement plan to be attached with
the annual program and budget of the next
fiscal.
• The annual procurement plan to be revised
and sent to its superior office, Treasury/
Controller Office and PPMO. 23
 Procurement Planning and Budget Linkage:
 Legal Reference {PPR 8 (5)}

The chief of the Public Entity shall, after

receiving the approved program and budget of
the current fiscal year, have to revise
accordingly the annual procurement plan
prepared pursuant to this Rule and approve it
and send one copy each of such plan to
– its superior office,
–Treasury and Controller Office, and
–Public Procurement Monitoring Office.
Procurement Plan Deliverables
The Procurement Plan should include five
key Steps. The Procurement Steps are

• Requirement Step
• Requisition Step
• Solicitation - Selection Step
• Contract Administration Step
• Contract Closeout Step
Er. Satya Narayan Shah 25
 Requirement Step
• Conduct market analysis to gain awareness of
the products / services that are available for
purchase.
• Perform a make vs. buy analysis.
• Estimate investment costs of the Procurement.
• Based on the Procurement Plan, obtain
authorization to proceed from appropriate
agency/ departments.
• Create a Project Procurement Teams
(Procurement Unit, Bid evaluation Committee,
etc.) 26
 Requisition Step
• Verify that necessary specifications have
been provided.
• Prepare solicitation package (e.g. Bill of
quantity, IFB, Bid document, RFP etc.)
• Review by procurement team and, with
final approval of the IFB, RFP by Agency
Procurement Officer, send for publication
to news papers /e-procurement system.
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 Solicitation - Selection Step
• Issue the solicitation document (Bid,
RFP).
• Answer questions received from vendors
in a public forum (Pre-bid meeting based
on instructions published in IFB, RFP).
• If necessary, prepare for vendor product
demonstrations, or oral presentations.
• Receive and Evaluate Proposals (by
Project Procurement Team)
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 Contract Administration Step
• Interpret specifications.
• Ensure that quality of the product or service is
maintained.
• Manage product warranties.
• Manage sub-contractors (if required by the contract).
• Direct change management;
• Resolve contract disputes;
• Completion of the project;
• Terminate the contract;
• Manage contract risk associated with the project
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 Contract Closeout Step
• Verify product and services meet acceptance
criteria.
• Complete fiscal activities:
– Approve final payment (notify appropriate
accounts payable office),
– Update project and activity records,
– Close purchase order (notify appropriate
procurement office),
– Update contract file.
• Notify all the stakeholders, if required.
• Archive contract files/documents.
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 Procurement Plan
 Master Procurement Plan
 shall contain, the following matters:-
• Type, quantity and tentative estimated cost,
• Procurement method,
• Slice or package for maximizing competition,
• Tentative numbers of contracts,
• Pre-qualification proceedings (if required),
• Tentative time-table of proceedings,
• Any other matter as directed by PPMO
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 Procurement Plan
• Annual Procurement Plan to be Prepared- PPR
(clause 8)-
– the following matters shall have to be stated
• The types of procurement,
• Possible package of procurement,
• Time table of procurement proceedings,
– such as Preparation of specification, cost estimate, bidding
documents, notice for invitation, evaluation, Acceptance,
contract, commencement, and completion.
• Procurement method,
• Types of contracts, and
• Any other matter as directed by PPMO 34
 Procurement Planning Contents
• Time table of procurement proceedings
should include the following:
– Specifications preparation (for the
procurement of goods),
– Cost estimation of procurement,
– Preparation of sealed quotation form, bidding
documents or documents relating to proposal
for pre-qualification or request for proposal
(RFP) for consultancy service,
– Publication of a notice for invitation to sealed
quotation, pre-qualification proposal, bid or
request for the proposal of consultancy
services,
 Procurement Planning Contents
• Time table of procurement proceedings
should include the following:
– Evaluation of sealed quotation, pre-
qualification proposal, bid or proposal for
consultancy service,
– Approval of sealed quotation, pre-qualification
proposal, bid or request for proposal for
consultancy service,
– Endorsement of Contract,
– Commencement of the job, and
– Accomplishment of the job
 Procurement Plan Contents

Project Details
Title: Procurement Plan (PP) for Civil Works [Period
between September 2010-February 2012]
Project Name & ID: Road Sector Development Project
Additional Financing RSDP, AF
Loan/Credit/Grant No.:
Executing Agency: Department of Roads, MOPPW
Implementing Agency: Department of Roads,
Babarmahal, Kathmandu
37
 Procurement Plan Contents
Activities Details
1. S No 2. Description of Works & Contract
ID No.
3. Prior/ Post Review 4. PP Status
5. Cost Estimate (NRs Million) 6. Method of Procurement
7. Proc. procedure: GoN or WB? 8. Bid document to WB
9. WB’s NOL to Bid Doc 10. Bid Invitation
11. Public Opening of Bids 12. BER & Award Recommendation
to WB
13. WB’s NOL to Award 14. Contract Signing
Recommendation
15. Completion date of the 16. Procurement at center/ district
contract
38
17. Remarks
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 Consequences of Lack of
Procurement Planning
• Delays in project implementation
• Inappropriate procurements
• Use of inappropriate
procurement methods and
procedures
• Increased packaging costs

Er. Satya Narayan Shah 40

Good planning is 80% of the
task completed
Poor or no planning manifests

in inefficiencies in the
procurement function
Failing to plan is planning to

fail