Procurement Planning as a Tools for Effective Budget Implementation and Service Delivery
DEPARTMENT OF ECONOMICS NNAMDI AZIKIWE UNIVERSITY, AWKA NIGERIA
The purpose of this is two fold. The role of the Procurement Planning Committee in an MDA's procurement process. This includes a discussion on conduct, ethics and good business practices during and after the procurement process. The second is to describe the preliminary considerations and activities that ensure the success of any procurement effort.
What is Procurement?
Procurement is the acquisition of goods, civil works or services at the best possible total cost of ownership, in the right quantity and quality at the right time, in the right place for the direct benefit or use of Government, Corporation or individuals, generally via a contract.
What is a project?
“A planned undertaking of related activities to reach
an objective that has a beginning and an end.”
“A unique venture with a beginning and an end,
undertaken by people to meet established goals within defined constraints of time, resources, and quality.”
.What is a project? (2)
“A project is a temporary endeavour undertaken to
create a unique product or service. Temporary means that the project has an end date.
Characteristics of projects
Focused activity delivering predetermined output Closely bounded and scoped deliverables that can be
relatively well defined Realises benefits following end of the project. after implementation of the project‟s outputs
g. Tangible „Deliverables‟ – a building. an IT system.Characteristics of projects 2
Normally closely timebound. a new process Emphasis on production of the deliverable rather than realisation of the „benefits‟
.24 months). typically short term
Product Unique Context Unique Process Temporary Limited Timeframe
that is to say we know there are some things we do not know. there are known knowns. We also know there are known unknowns. there are things we know we know. But there are also unknown unknowns -.“…as we know.the ones we don't know we don't know.” Donald Rumsfeld
Planning is listing in details all the requirements to complete the project. how much. cost and quality The initial step in procurement planning is the determination of what is needed. where and when. given the triple constraints of time.
Procurement Planning 2
Specifications (what you are procuring) Tender process (how you are procuring) Selection (who you are procuring from)
Contract definition (the responsibilities of the parties
to the contract) Award (providing best value for money – often not the cheapest bidder)
Why Procurement Planning
To precisely define the results To reduce uncertainty (Risk)
To realize economies of scale and
scope To maintain effective control To facilitate decision making
just fail to plan
Better control of delivery
Better control of costs Better control of resources
.ADVANTAGES OF PLANNING
No one plans to fail.
AND ENSURE ALL STAKE HOLDERS ACCEPT THE DEFINITION
.THE FIRST RULE OF PROJECT MANAGEMENT:
CLEARLY DEFINE THE PROJECT SCOPE.
Procurement Plan Steps
Establish the project objective & choose a basic strategy for achieving the objective Determine what goods.institutional. works and services are to be procured Break the project down into sub units or steps Determine the performance standards for each sub unit . staffing.
.Determine agency capacity to implement procurement. training (Make or Buy) Decide how much time is required to complete each sub unit. competence.
DP. RB. Choose the type of contract for each package Choose procurement method – OCB.
Decide the proper sequence for completing the sub
units and aggregate this information into a timetable for the total project.PROCUREMENT PLANT STEPS contd. TST. RfQ. etc Determine lead time for each contract package Schedule the procurement process Develop a critical path/bar chart
. more manageable components (tasks) WBS : The basis of answering the following questions:
How long will each task take? Who will do each task? What materials.WORK BREAKDOWN STRUCTURE (WBS)
Scope Definition is the process of subdividing the
major project deliverables into smaller. supplies and equipment are required? How much will each task cost.
and this makes it easy to have a full grasp of all the work elements that will have to be completed. to successfully complete the project. associated with each activity. etc. Thus the WBS helps us to make a “Make” or “Buy” choice.
. it becomes easy to identify material.WBS
It provides a graphic representation of the scope of
the job. capital equipment. Because all the tasks and subtasks are graphically displayed.
THE MAKE OR BUY DECISION
A decision must be made on what tasks will be done in-
house. As soon as the items and works to be bought are determined.
. and the time required to procure the items must be accommodated in the project master schedule. as contrasted against those that will be sent to other companies for performance. The WBS is the tool that aids in this decision making process. the sellers of such items must be identified.
3 Work Package 1.2.1 Work Package 2.3
Work Package 1.1.1 Work Package 1.2 Work Package 220.127.116.11.3 Subtask 1.1 Work Package 18.104.22.168.1 Work Package 1.1 Work Package 1.3.1
Work Package 1.2 Work Package 1.2 Work Package 1.2 Work Package 22.214.171.124 Subtask 1.The WBS may be presented in outline form:
Task 1 Subtask 1.3 Task 2 Subtask 2.
• Example: Manual Operation: Accounting. Reporting. Stores Stock Keeping.
• Decide Make or Buy • Decide Procurement Method
Take each of the above sub-objectives. • Each of the sub objectives may be further broken down into sub-sub tasks (packages). until an adequate level of detail is reached. Prepare process Manuals.Example
• Procurement Planning for a Computerization project
The main objective: Process Computerization Objectives to be achieved in order to achieve the main objective: Manual Operation. and determine the tasks that will be carried out to achieve it. Auditing. Salary Administration.
4. Project Plan 8. Scope and Definition 3. Activity Duration Estimating
. Resource Planning 7. Activity Definition 1. Schedule Development 9. Cost Estimating
6. Cost Budgeting
5. Activity Sequencing 2.
A Procurement Plan is a project management strategy that provides a framework for major procurement.
Procurement Plans are prepared prior to commencing any procurement action.
rail or air) to the delivery point.
.TIME DELAYS THAT MUST BE TAKEN INTO CONSIDERATION
Administrative Lead Time. The period of time from initiation of the requirement by the user to issuance of an award.
Order Ship Time Time after award required by suppliers to fill an order and ship by designated means (truck.
Determination of lead time
every activity of the procurement process
Estimate time required for each activity Allow for slippages
Administrative advertise Prepare specs Prepare bid docs Delivery/Execution Install/warranty manufacture inspection packaging Ocean transit port clearance Inland transit
Evaluate bids Check post qualifi Notify award Receive p.Lead Time for Goods.g Sign contract
Installation commissioning Testing acceptance warranty
inspect Provisional acceptance
Prepare bid docs Issue BD Hold pre bid meeting Submit bids Evaluate bids Check post qualification Notify award Sign contract
.Lead Time for Works
Administrative Advertise for pq Evaluate PQ applications
Prepare BOQ and specifications
Execution Maintenance period Claims Final acceptance
Lead Time for Consultants
Prepare cost estimate Prepare short list Prepare RFP Receipt of proposals Evaluate technical proposals
Evaluate price proposals
Perform contract Submit interim reports Submit final report
Combine tech and price evaluations Negotiate award
should also be given to establishing a procurement department with a skill mix.Management Structure for Effective Procurement Planning
must be given to appointing a Committee with responsibility for overseeing the procurement planning phase.
. identify future needs and direction for procurement management.Procurement Planning
Procurement planning is a process where MDA‟s review current/existing procurement processes.
.Procurement Planning (Cont‟d)
The Delta State Government Public Procurement Law establishes a comprehensive procurement framework. which assists MDA‟s in the efficient delivery of services and ensures procurement strategies are consistent with the Government's wider policy objectives.
. preliminary costs. internal organisational requirements. market capability. options for achieving outcomes. potential partnerships and alliances.Procurement Plan (Cont‟d)
A Procurement Plan identifies procurement opportunities. performance measures. risk management issues.
fair and value-for-money standards and practices for the procurement and disposal of public assets and services. Ensuring probity.
. cost effectiveness. accountability.IMPLICATIONS OF THE PUBLIC PROCUREMENT LAW FOR PUBLIC SECTOR EXPENDITURE
The attainment of transparency. competitiveness and professionalism.
.IMPLICATIONS OF THE PUBLIC PROCUREMENT LAW FOR PUBLIC SECTOR EXPENDITURE
Procurement Officers involved in procurement
activities are either directly or indirectly spending public funds and subject to public scrutiny and as such are reminded to: a. Act responsibly. Avoid wasteful and impractical procurement practices. c. Conduct procurement process honestly.
e.IMPLICATIONS OF THE PUBLIC PROCUREMENT LAW FOR PUBLIC SECTOR EXPENDITURE
d. Advise stakeholders of acceptable business practices.
. conflicts of interest and respected standards of ethical and moral behaviour during any procurement activities involving their participation. Avoid real or perceived conflicts when conducting procurement process on the MDA's behalf.
.IMPLICATIONS OF THE PUBLIC PROCUREMENT LAW FOR PUBLIC SECTOR EXPENDITURE
Seek to maintain and continuously improve their professional knowledge. skills and abilities.
What has Procurement Planning Contribute to Budget Implementation Process
Planning aggregates needs [ensuring
that only the needed is procured] Market Survey Planning reduces costs Planning reduces wastages
Procurement planning ensures that budgetary allocations are made for projects
.Procurement Planning and Effective Service Delivery
Analytical procurement planning ensures
that the right procurement method or mix of methods is chosen to implement procurement.
Selection of the best qualified in technical and professional terms to provide services and works.
.How can service delivery benefit from a good procurement plan?
Assurance and availability of funds
to execute public project and provide services.
With this. Value for Money and Efficiency in the procurement of works. the Objectives of the State Government shall be delivered for DIRECT BENEFITS OF DELTANS AND NIGERIANS!
. goods and services within the State Ministries and ExtraMinisterial Depts. Accountability.Conclusion
The Public Procurement Law provides the legal and
institutional framework for the enthronement of Transparency.