UZOCHUKWU AMAKOM D E P A R T M E N T O F E C O N O M I C S N N AM D I A Z I K I W E U N I V E R S I T Y , AW K A N I G E R I A Procurement Planning as a Tools for Effective Budget Implementation and Service Delivery
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UZOCHUKWU AMAKOM D E P A R T M E N T O F E C O N O M I C S
N N A M D I A Z I K I W E U N I V E R S I T Y , A W K A
N I G E R I A
Procurement Planning as a Tools forEffective Budget Implementation and
Service Delivery
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Introduction
The purpose of this is two fold. The role of the Procurement Planning
Committee in an MDA's procurementprocess. This includes a discussion onconduct, ethics and good businesspractices during and after theprocurement process.
The second is to describe the preliminary considerations and activities that ensurethe success of any procurement effort.
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What is Procurement?
Procurement is the acquisition of goods,civil works or services at the best possible
total cost of ownership, in the rightquantity and quality at the right time, inthe right place for the direct benefit or use
of Government, Corporation orindividuals, generally via a contract.
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What is a project?
“A planned undertaking of related activities to reachan 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, andquality.”
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What is a project? (2)
“A project is a temporary endeavour undertaken tocreate a unique product or service. Temporary
means that the project has an end date.” http://en.wikipedia.org/wiki/Project
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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
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Characteristics of projects 2
Normally closely timebound, typically short term(e.g.24 months).
Tangible „Deliverables‟ – a building, an IT system, anew process
Emphasis on production of the deliverable ratherthan realisation of the „benefits‟
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PROJECT CHARACTERISTICS
UNIQUENESS
Unique Product
Unique Context
Unique Process
DURATION
Temporary
Limited Timeframe
NUMEROUSCONSTRIANTS
PerformanceQuality
Delays
Costs
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“…as we know, there are known knowns; there arethings we know we know. We also know there areknown unknowns; that is to say we know there are
some things we do not know. But there are alsounknown unknowns -- the ones we don't know we
don't know.”
Donald Rumsfeld
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Procurement Planning
Planning is listing in details all the requirementsto complete the project, given the triple constraints
of time, cost and quality The initial step in procurement planning is the
determination of what is needed, how much, where and when.
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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 partiesto the contract)
Award (providing best value for money – often notthe cheapest bidder)
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Why Procurement Planning
To precisely define the results
To reduce uncertainty (Risk)
To realize economies of scale andscope
To maintain effective control
To facilitate decision making
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ADVANTAGES OF PLANNING
No one plans to fail, just fail to plan
Better control of delivery
Better control of costs
Better control of resources
Smarter delivery
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THE FIRST RULE OF PROJECTMANAGEMENT:
CLEARLY DEFINE THEPROJECT SCOPE, AND
ENSURE ALL STAKEHOLDERS ACCEPT THEDEFINITION
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Procurement Plan Steps
Establish the project objective & choose a basicstrategy for achieving the objective
Determine what goods, works and services are to be procured
Break the project down into sub units or steps
Determine the performance standards for each subunit - Determine agency capacity to implementprocurement- institutional, staffing, competence,
training (Make or Buy) Decide how much time is required to complete each
sub unit.
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PROCUREMENT PLANT STEPS contd.
Decide the proper sequence for completing the subunits and aggregate this information into a timetablefor the total project.
Choose the type of contract for each package Choose procurement method – OCB, TST, RB, RfQ,
DP, etc
Determine lead time for each contract package
Schedule the procurement process
Develop a critical path/bar chart
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WORK BREAKDOWN STRUCTURE (WBS)
Scope Definition is the process of subdividing themajor project deliverables into smaller, moremanageable components (tasks)
WBS : The basis of answering the following
questions: How long will each task take?
Who will do each task?
What materials, supplies and equipment are required?
How much will each task cost.
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WBS
It provides a graphic representation of the scope of the job, 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.
Because all the tasks and subtasks are graphically displayed, it becomes easy to identify material,capital equipment, etc, associated with each activity.Thus the WBS helps us to make a “Make” or “Buy”
choice.
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THE MAKE OR BUY DECISION
A decision must be made on what tasks will be done in-house, as contrasted against those that will be sent toother companies for performance.
The WBS is the tool that aids in this decision makingprocess.
As soon as the items and works to be bought aredetermined, the sellers of such items must be
identified, and the time required to procure the itemsmust be accommodated in the project master schedule.
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Level 1 Level 2 Level 3
Task 1
Subtask 1.1
Work Package 1.1.1
Work Package 1.1.2
Work Package 1.1.3
Subtask 1.2
Work Package 1.2.1
Work Package 1.2.2
Work Package 1.2.3
Subtask 1.3
Work Package 1.3.1
Work Package 1.3.2
Work Package 1.3.3
Task 2
Subtask 2.1
Work Package 2.1.1
Work Package 2.1.2
Work Package 2.1.3
The WBS may be presented in outline form:
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Example
• Procurement Planning for a Computerizationproject The main objective: Process Computerization
Objectives to be achieved in order to achieve the mainobjective: Manual Operation, Prepare process Manuals,
Reporting. Take each of the above sub-objectives, and determine the tasks that
will be carried out to achieve it.• Example: Manual Operation: Accounting, Auditing, Stores Stock
Keeping, Salary Administration.• - Each of the sub objectives may be further broken down into
sub-sub tasks (packages), until an adequate level of detail is reached. • Decide Make or Buy • Decide Procurement Method
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PROJECT PLANNING
1. Scope andDefinition
2. ActivityDefinition
3. ResourcePlanning
4. ActivitySequencing
5. ActivityDurationEstimating
7. CostEstimating
6. ScheduleDevelopment
8. Cost
Budgeting
9. ProjectPlan
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Procurement Plan
A Procurement Plan is a projectmanagement strategy that provides a
framework for major procurement.
Procurement Plans are prepared prior to
commencing any procurement action.
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TIME DELAYS THAT MUST BETAKEN INTO CONSIDERATION
Administrative Lead Time.
The period of time from initiation of the requirement by theuser to issuance of an award.
Order Ship Time Time after award required by suppliers to fill an order and
ship by designated means (truck, rail or air) to the delivery point.
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Determination of lead time
List every activity of the procurementprocess
Estimate time required for each activity
Allow for slippages
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Lead Time for Goods, Equipment Plant
Administrative Delivery/Execution Install/warranty
advertise manufacture Ocean transit
Prepare specs inspection port clearance
Prepare bid docs packaging Inland transit
Submit bids Inland transport assembly
Evaluate bids shipment Installation
Check post qualifi commissioning
Notify award TestingReceive p.g acceptance
Sign contract warranty
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Lead Time for WorksAdministrative Execution Execution
Advertise for pq
Evaluate PQapplications
mobilise Maintenance period
Claims
Prepare BOQ andspecifications
Construct, inspect Final acceptance
Prepare bid docs
Issue BD
Hold pre bid meeting
Provisional
acceptance
Submit bids
Evaluate bids
Check postqualification
Notify award
Sign contract
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Lead Time for ConsultantsAdministrative performance
Prepare TOR Mobilize staff
Prepare costestimate
Perform contract
Prepare short list Submit interimreports
Prepare RFP Submit final reportReceipt of proposals
Evaluate technicalproposals
Evaluate price proposals
Combine tech andprice evaluations
Negotiate award
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Management Structure for EffectiveProcurement Planning
Consideration must be given to appointinga Committee with responsibility foroverseeing the procurement planning
phase.
Consideration should also be given to
establishing a procurement department with a skill mix.
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Procurement Planning
Procurement planning is a process where MDA‟s review current/existing
procurement processes, identify future needs and direction forprocurement management.
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Procurement Planning (Cont‟d)
The Delta State Government PublicProcurement Law establishes a
comprehensive procurement framework, which assists MDA‟s in the efficientdelivery of services and ensuresprocurement strategies are consistent with
the Government's wider policy objectives.
P Pl
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Procurement Plan(Cont‟d)
A Procurement Plan identifiesprocurement opportunities, options forachieving outcomes, potential
partnerships and alliances, marketcapability, performance measures,stakeholders, internal organisationalrequirements, preliminary costs, risk
management issues.
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IMPLICATIONS OF THE PUBLICPROCUREMENT LAW FOR PUBLIC SECTOR
EXPENDITURE
The attainment of transparency, costeffectiveness, competitiveness andprofessionalism;
Ensuring probity, accountability, fairand value-for-money standards andpractices for the procurement anddisposal of public assets and services.
CA O S O C
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IMPLICATIONS OF THE PUBLICPROCUREMENT LAW FOR PUBLIC SECTOR
EXPENDITURE
Procurement Officers involved in procurementactivities are either directly or indirectly spendingpublic funds and subject to public scrutiny and as
such are reminded to:a. Act responsibly.
b. Conduct procurement process honestly.
c. Avoid wasteful and impracticalprocurement practices.
IMPLICATIONS OF THE PUBLIC
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IMPLICATIONS OF THE PUBLICPROCUREMENT LAW FOR PUBLIC SECTOR
EXPENDITURE
d. Avoid real or perceived conflicts whenconducting procurement process on theMDA's behalf.
e. Advise stakeholders of acceptable business practices, conflicts of interest andrespected standards of ethical and moral
behaviour during any procurementactivities involving their participation.
IMPLICATIONS OF THE PUBLIC
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IMPLICATIONS OF THE PUBLICPROCUREMENT LAW FOR PUBLIC SECTOR
EXPENDITURE
f. Seek to maintain and continuously improve their professional knowledge,skills and abilities.
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What has Procurement Planning Contribute to
Budget Implementation Process
Planning aggregates needs [ensuringthat only the needed is procured]
Market Survey Planning reduces costs
Planning reduces wastages
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Procurement Planning and Effective ServiceDelivery
Analytical procurement planning ensuresthat the right procurement method or mixof methods is chosen to implementprocurement.
Procurement planning ensures that budgetary allocations are made for projects
How can service delivery benefit from a good procurement
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How can service delivery benefit from a good procurementplan?
Assurance and availability of fundsto execute public project and
provide services. Selection of the best qualified in
technical and professional terms to
provide services and works.
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Conclusion
The Public Procurement Law provides the legal andinstitutional framework for the enthronement of Transparency, Accountability, Value for Money andEfficiency in the procurement of works, goods andservices within the State Ministries and Extra-Ministerial Depts. With this, the Objectives of theState Government shall be delivered for DIRECTBENEFITS OF DELTANS AND NIGERIANS!
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Thank You!