presented by WILLY Niyonteze MEASURING PROCUREMENT PERFORMANCE IN RWANDA CASE STUDY: SOCIAL SECURITY FUND OF RWANDA: YEAR JULY 2010-JUNE 2011
presented by WILLY Niyonteze
MEASURING PROCUREMENT PERFORMANCE IN RWANDA
CASE STUDY: SOCIAL SECURITY FUND OF RWANDA: YEAR JULY 2010-JUNE 2011
INTRODUCTION
Importance of procurement: public sector procurement at 8% (US$3.2
trillion) of the worldwide GDP of US$40 trillion Rwanda: more than 40 % of all public
expenses. but still organizations face delays, poor
deliveries, fund misuses and other losses Some studies suggest that in developing
countries, the procurement function is transitioning from a clerical non strategic unit to an effective socio-economic unit
How about Social Security Fund of Rwanda
Objectives
Two objectives:showing the areas of improvement
by measuring procurement performance
highlight challenges faced by the procurement function specifically in those weak areas.
PROBLEM STATEMENT
Efforts improve performance of the procurement function
public procurement is still a theater of poor works, poor quality goods and services, poor deliveries even corruption
procurement performance measurement had been attracting attention from long ago
1931, the National Association of Purchasing Agents (NAPA), USA organized a contest on the topic.
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In 1945, guidelines on procurement performance in USA
2004, the European Institute of Purchasing Management (EIPM) organized a conference “Measuring Purchasing Performance”
We know about audits generalizing that the procurement function
is not performing without indicating the criteria used to reach that conclusion or just basing it on financial statements is not reasonable (Muhwezi, 2006).
RESEARCH QUESTIONS
Questions can be asked: how to judge the performance if it
measured against irrelevant criteria or if it is not measured at all
do public institutions have a framework for measuring procurement performance?
Etc.
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For the purpose of this research two questions will be asked:
What are the areas of improvement in the SSFR procurement performance?
What are the challenges faced by the procurement function specifically in those areas of weak performance?
METHODOLOGY
Techniques of data collection:Documentary technique Interview technique Methods of data analysis:Analytical methodDeductive method Sample: 30 OCB tenders out 122; 41
are OCB
WHAT TO KNOW ABOUT P.P PERFORMANCE MESUREMENT
Definition: Many different definitions meaning of purchasing performance still
difficult. covers broader areas of procurement, for instance (Knudsen, 1999)
Van Weele (2006) performance= effectiveness + efficiency
Sabine Adotévi(2004): performance= how well the process+ how good the outcome.
We keep performance= effectiveness + efficiency
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WHY MEASURING PURCHASING PERFORMANCE?
• From different authors:• Identify areas for improvement• Ensure that procurement directly contributes to
fulfillment of corporate objectives • provides information for analysis and decision
making• enhanced profitability• cost reduction, • Etc
CHARACTERISTICS
Many from different authors:SMART: Specific, Measurable,
Agreed, Realistic, Timed.Easy to measure Contributing directly to the delivery
of one or more corporate objectivesLinked to corrective actions and
outcomes, so that people could see the value that the Procurement function was delivering
MEASURING PERFORMANCE
SSFR has no P.P measurement framework
Proposed one aligned with SSFR corporate objectives:Corporate objective Procurement
indicator
PROVIDE QUALITY SERVICE TO CUSTOMERS
QUALITY
PREPARE AND IMPLEMENT ORGANIZATIONAL PLANS
DELIVERY
EFFECTIVE FUND MANAGEMENT
COST
DEVELOP A CAPABLE AND RESPONSIVE ORGANIZATION
RESPONSIVENESS
MEASURING PERFORMANCE…..
Procurement performance indicator
Targets
QUALITY The number of request for repair should zero during its guaranty period
Durability: product purchased should last the for the whole warranty period
DELIVERY All deliveries should be done in the time stipulated in the contract
The level of defects should be zero defects.
COST All contracts should be below or equal the estimated budget
Cost avoidance: the number of request modified should reach 20% of all received requests
MEASURING PERFORMANCE…..
Procurement Performance indicator
Procurement Objectives
COST………. A price market research should be conducted for each tender
RESPONSIVENESS Each customer’s query should be have a response within 48 hours after receipt
The renewal of fixed time contract should be done before the expiration date
Upon request information should be available within 3 days to the public.
MEASURING PERFORMANCE…..
Scoring: The scoring method proposed
assumes that under a certain frequency (like below or above half repetition), the indicator under reasonable performance will be considered as unrated or the score will be zero. For instance as the sample is 30, the scoring will be 100 points at maximum (30) and 0 points at the frequency of 15.
MEASURING PERFORMANCE…..
Balanced score card:General Indicator
Specific indicator Score
QUALITY NUMBER OF REPAIRS 86,6%
DURABILITY(warranty period) 66,7 %
DELIVERY DELIVERY TIME 33,3 %
DEFECTS REJECTION RATE 66,7%
COST COST AVOIDANCE 73,3%
PRICE MARKET RESEARCH 33,3%
PAYMENT VS BUDGET 80%
RESPONSIVENESS
QUICKNESS OF SATISFYING CUSTOMER REQUEST
33,3%
CONTRACT RENEWAL 75%
ACCESSIBILITY TO INFORMATION
73,3%
AREAS OF IMPROVEMENT
Areas where score is below 70%:DurabilityDelivery time Defect rejection rateMarket researchQuickness of customer
satisfaction
CHALLENGES
Durability:Testing Carelessness of users Fear of retendering delivery timeSuppliers accept penalties(1/1000
per day)Land locked country: dependence on
external factors(transport, fuel price, ……)
CHALLENGES………..
Defect rejection rate Tenders awarded to lowest price
bidders Transport Market researchAwareness quickness of customer query
satisfactionStructure Nature of some tenders(investment
projects)
RECOMMENDATIONS
Introduction of a procurement policyDraft a framework for procurement
performance measurementTo place public procurement unit
directly under the Director General’s office
Allocate more time to market research
Advocate foe the inclusion of investment project under special procurement (law)
ENDING NOTE
It is a human being work Not perfect Critics, suggestions, advices and
corrections are more than welcome.
Thanks.