Procurement Planning Effectiveness Procurement Planning Effectiveness in Ethiopia: The Case of Minister of in Ethiopia: The Case of Minister of

Urban Development, Housing and Urban Development, Housing and Construction /MUDHCo/Construction /MUDHCo/

Anteneh GetahunAnteneh Getahun EMBAEMBAAdvisor: Dr. Mohammed Seid Advisor: Dr. Mohammed Seid

June, 2105June, 2105

Outline1. Introduction1.2 Statement of the Problem1.3 Research Questions1.4 Research Objectives2. Methodology3. Findings4. Recommendations 2

IntroductionIn public organizations, department’s needs:-

Goods,

Services & Works

to perform work programs in due time.3

Cont….

After approval of budget, they raise needs on annual base, by describing, mainly,

The required goods/service Data when it requires Specification/TOR Estimated price/cost

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Cont..

Then, the procurement units consolidate the organization annual need.

The performance report also prepare quarterly.

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Benefit of Having Procurement Plan

Economical & Efficiency of procurement Avoid DelayDecrease Cost(Economic of scale) Improve TransparencyReduces Corruption…..

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Cont…

The intend of the research was to assess what Procurement Planning and Implementation Practice looks like Within the Ministry?

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2.Statment of the Problem

Too much delay in the processUnder-utilization of the budget.

The cause of:

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Work Programs Affected by Poor Procurement Function.

The Organization Fail to Achieve Objectives in Due Time.

Cont…

Unplanned Purchase which is The major cause for:

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Corruption Malpractice

Fail to achieve value for money

Cont… Problem in Preparing and Properly Deploying a Procurement Plan.

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Research questions

1. What do the current procurement-planning practice looks like?2. Does the plan have complete specifications?3. Does the organization use market assessment, to estimate price?

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General Objective of the research:To Assess The Practice of Procurement Planning And Implementation Practice.

Specific Objectives:Describe the Current Procurement-planning

Practice.Find out the completeness of the specification.

Assess the trend of market price assessment. 12

Cont…

The study aimed to help the Ministry to improve institutional performance.

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Conceptual Framework Procurement-planning practice

Timely raising of needs,Competence of staff,Participation,Extended process, andPlan versus performance,

Completeness of specificationsEasy to understand, Clear, Accurate & Complete

Realistic price estimationTrend in Market Price

Assessment

Procurement-Planning Effectiveness

Independent Variables Dependent Variables(Source: Adapted from Celestine Joan Onyango, 2012)

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The Scope of the ResearchThe study assessment considered the Government Budget. (The Ministry has also Fund budget) 

The study assessed Internal Factors.(External factors also affect the procurement function)

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Significance of the Study

For management,

For policy makers,

For employees,

For further research.16

MethodologyResearch Design

Descriptive Statistics used: As the study is intends to describe the existing practice.

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Data Sources

Primary data: - Close-ended and

- Open-ended Questionnaires. Secondary data - Procurement plan versus performance of 2012/2013 & 2013/2014 were used

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Target population

Sampling TechniquesStratified Sampling Technique is used to select target population.

Simple random sampling is used to select respondents from each strata.

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Data Analysis The Close-ended: SPSS; Mean, Standard Deviation and Percentile.

Open-ended questions were used by Coded.

Plan Versus performance of procurement for the year 2012/2013 and 2013/2014 were used.

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Result and discussions

Respondent rate was 95 Percent

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Qualifications of the Respondents

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Profession of the Respondents

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Practice of procurement planning The user departments:

Have often raised procurement needs

The work programs had been affected by poor procurement function.

Lack of qualified staff in user department is moderate.

Findings

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Cont…Practice of procurement planning

Procurement Units:Evaluation of plan versus performance,

Revising the plan when necessary,

Estimating internal and external lead-time was very weak.

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Cont…

Urgent/unplanned procurement requisitions is challenge.

Lack of qualified staff is a challenge.

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Cont…Planning & Reporting Format is not coherent, it is impossible to track the performance level.

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Secondary data Findings

Method of Procurement1. Open Bidding : all eligible potential bidders determine their interest and have an equal opportunity to submit the tender. 2. Restricted tendering method (Limited Tender): - If it only available from a limited number of

suppliers. - When open bid is fails to attract bidders.

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Cont..3. Direct procurement method: -Available from single suppliers-Small value contract( Only Birr 1500.00: within a fiscal year, it shall not exceed 30,000.00)-Emergencies4. Two-stage Bidding Method: -For complex goods & service purchase-By announcing expression of interest & select the potential suppliers 30

Cont..

5. Request for Quotations Method: (shopping)

-For readily available, - ETB is 250,000 Million for construction, - 100,000.00 for goods. - 60,000.00 for service and - 75,000.00 for consultancy service.

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2012/2013Total performance is 14%.

Open bid performance is only 9.27% %(however, the plan was 91.31%)

Request for quotation(shopping) is 416%(however, the plan was 0.6%)

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Frequency of Procurement

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2013/2014

Total performance is 17%.

Open bid performance is only 13%, plan was 82%

Request for quotation(shopping) is 292%, plan was 1%

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Frequency of Procurement

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Specification CompletenessUser Departments:

In preparing clarified specification:

In using standard specification format they are moderate.

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Cont…

Procurement Unit:Only 20% of user departments prepare

specifications.

From those specification only 40 percent is preparing well.

From those only 60% have been using standard specification format.

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Market Assessment trend

Market Assessment in user department & procurement unit were poor.

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Lack of technical know-how in bid preparation 38%

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15 Percent: Tender approval committee too many other assignments.

Cont…

Request for quotation (Shopping) was increased, in the past years, which is the major corruption and malpractice.

The open tendering is very low performance.

The procurement plan format and the procurement reporting format were not coherent.

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Cont…

Lack of technical know-how In bid document and specification

preparation.

Extra delay

In Technical document evaluation.41

Cont…Currently, the Ministry has been affected by the poor performance of procurement planning and implementation practice.

Plan was not transparent, and there was a gap to make corruption and malpractice due to piecemeal purchasing practice without market price assessment trend.

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Recommendations

The organization should vigorously develop continuous training programs.

The planning and reporting format should display the lead-time in detail.

The reporting format should be coherent with the plan.

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Cont…Prepare early the bid process.

The Ministry should establish a system to gather market price.

The Ministry departments should try hard to plan the required materials and service at the most possible extent.

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Recommendations for Future Research

As per the researcher, there is a need for future to examine other variable like:

(i) Organizational Culture, (ii) Documentation, (iii) Contract Administration, (iv) Risk Assessment in Procurement, (v) E-procurement usage to procurement.

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Thank you

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