THE INSTITUTE OF PROCUREMENT AND SUPLY

POSTGRADUATE DIPLOMA IN PROCUREMENT AND SUPPLY MANAGEMENT

SUBJECT: THE PUBLIC PROCUREMENT

PGD6

TOPIC 1

SALIENT FEATURES OF TANZANIA PUBLIC PROCUREMENT ACT NO. 21 OF 2004

1.0 OVERVIEW OF PUBLIC PROCUREMENT ACT NO.21 OF 2004

1.1 LEARNING OBJECTIVES:When you have completed this TOPIC you should be able to:-

Outline the objectives of the PPA and its Regulations Identify and explain the general guidelines of Public Procurement Identify Principles governing the Public Procurement. Identify the contents and parts of the PPA and its regulations

1.2 GENERAL OVERVIEW OF PUBLIC PROCUREMENT ACTThe Public Procurement Act No. 3 of 2001 (Repealed by Act No.21 of 2004) and the relevant regulations (i.e. the Selection and Employment of

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Consultants and the Procurement of Goods and Works) Govt notices 98/97contain a limited number of laws within the branches of the law.

Firstly, the law of Contract which is expressed by contractual relations to be entered between two parties, as an individual and a public body; commercial law by the tendering process; labour law as expressed by employment of consultants and contractors which belong to the civil law.

Secondly, the public law which includes generally criminal law and administrative law. Criminal law includes fraud and corruption, which basically deals with the settlement of disputes.

1.3 OBJECTIVES FOR THE PUBLIC PROCUREMENT ACT AND ITS REGULATIONS

The Government established the Procurement Act No. 3 of 2001 to guide government ministries, departments and public bodies including parastatals organisations in the procurement of goods, works and services with effect from 2nd July, 2001. Act No.21 of 2004 repealed this Act, was made effective after the Minister responsible approved the regulations per Govt. Notice No 97 for Goods and Works and Notice No. 98 for Consultancy.

The Procurement Act has the intention of regulating the relations between natural person(s) and the state, and those against the Government interest.

The Procurement Act provides punishment for damages to those who have inflicted some harm against the government or for damages against those who have caused loss to another natural person.

The Procurement Act is intended to regulate, alleviate and eradicate conflicting interests to business activities between the government and the natural person. Conclusively it is intended to provide for better approach by putting controls to the mechanism for the management of procurement in the government.

Further from that the PPA 2004 Section 76 indicates clearly that “the measures provided by the Act shall not preclude the institution of criminal proceedings pursuant to the Penal Code (Cap. 16) the Prevention of Corruption Act, 1971 or any other written law against any person discharging functions or excising powers under this Act or Regulations made under this Act”.

1.4 PUBLIC PROCUREMENT ACT AND ITS RELEVANT REGULATIONSThe Public Procurement Act No. 21 of 2004 is an Act of Parliament. The Act and its Regulations override all other laws in respect of public procurement.

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Public Procurement Act Sect 90 as quoted hereunder is relevant for this context:-

Upon the coming into implementation of this Act all laws, regulations or rules relating to Procurement shall cease to have any effect, power, function, authority or duty in relation to any matter connected with the procurement of goods, services or works.

In the course, in matters of procurement of goods, services or works only this Act of Parliament applies for any assertion related to the public procurement.

- The Minister may make regulations and rules for the better carrying out of the provision of this Act and such Regulations shall include yearly review of the limits of Authority for each procuring entity and approving entity.

- All Regulations and directions made in connection with this Act shall be published in the Government Gazette.

- The Public Procurement (Selection and Employment of Consultants) Act No. 21 of 2004 also came into operation on 11th Feb 2005. However, Sect. 113 of the Regulations empowers the Minister to make amendments where applicable. Similarly the Procurement of goods and works Regulations were also made under Sect. 88 (1-2) of the Public Procurement Act No. 21 of 2004. Regulations 129 (1-2) have again given power of amendment of the same to the respective Minister.

- It should therefore be noted that basically the sense of establishment of the Procurement Act is to improve and correct the inappropriate and outdated law/regulations. Reference should be made to the Financial Standing Order No. 3 which showed the following weaknesses:-

(a) Non-compliance to the Standing Order.(b) Poor information on the procurement needs.(c) Encroachment of the procurement functions by non-professionals

due to shortage of professional staff.

The Public Procurement Act No. 3 of 2001 is indeed implemented vide Government Notice No. 138 – Public Procurement Regulations (Selection and Employment of Consultants) and Government Notice No. 138. Procurement of Goods and Works Regulations. These Regulations have now been replaced by Govt. Notices Nos. 97 for Goods/Works and No 98 for Consultancy

The Procurement Act applies to all procurement undertaken by a procuring entity except where it is provided otherwise in the Act.

- In this regard the Procurement Act shall not apply to any Parastatal organisation except where a Parastatal organisation receives government

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subsidiary or subversion and is specified in the Regulations as being Government Department or Public body, and/or Public Authority for the purpose of the Act (Section 2(2) of the Act).

Under Section 28 of the Act, there shall be established in every governing body of a Public Authority a TENDER BOARD.

The Public Procurement Policies are based on the need to make the best possible use of public funds while conducting all procurement with honesty and fairness (Regulation 4(1)) for goods and work Government notice 97.

Members of Tender Board who are undertaking or approving procurement must be guided by the following basic considerations of the Public Procurement Policy: -

(a) The need for economy and efficiency in the use of public funds and in the implementation of projects including the provision of related goods and services.

(b) The best interest of a Public Authority in giving all eligible suppliers and contractors equal opportunities to compete in providing goods or executing works and service.

(c) Encouraging of national manufacturing contracting and service industries.

(d) The importance of integrity, accountability, fairness and transparency in the procurement process.

1.5 GENERAL GUIDELINES FOR PUBLIC PROCUREMENTThe following are general guidelines that govern the public procurement:-

(a)The Public Procurement Act No. 21 of 2004 require that the proceeds of any public funded procurement be used with due regards to economy and efficiency. The Government shall make arrangement to ensure that the proceeds of any public funds are used only for the purpose for which the funds was granted with due attention to considerations of economy and efficiency (Refer PPR 4 (2) (a)). For goods and works Government notice. 97.

(b)The Public Procurement Act requires that in most cases a system of open competitive tendering be used in procurement of any goods and in contracting for works needed for the public financed projects (Refer PPR (1)).

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(c) The responsibility for the execution of the procurement and therefore award and management of contracts under the public projects rests with the procurement entity. However, the Tender Boards are required by the Public Procurement Act to ensure that the proceeds of any public funded procurement are used only for the purpose for which the funds were intended.

(d)The Public Procurement Act is generally guided by four basic policy considerations:- (PPR 4)

(i) The need for economy and efficiency in the provision of works, goods, and services.

(ii) The Government’s interest in giving all eligible contractors and suppliers equal opportunity to compete in the supply of goods and works financed by the government.

(iii) The Government’s interest in encouraging the development and participation of local contractors and suppliers.

(iv) The importance of transparency in the procurement process.

1.6 PRINCIPLES GOVERNING ALL PUBLIC PROCUREMENTThe Public Procurement Act sets out the principle and procedures, which govern all public procurement without exception. There is no Authority delegated below the Approving Authority to set aside these procedures.

They are derived from and hence empty to the Public Procurement Act and Regulations. The principles that govern all public procurement are:-

(a)The objective of Public Procurement Policy is to ensure that goods, works and services acquired by any public funds are in line with the following:-

(i) Comprehensive technical specifications matched to end use application.

(ii) Well-planned commercial practice, which ensure minimum overall costs of acquisition, stockholding and distribution.

(iii) Public’s strict and rigorous procurement procedures fully comply with all government guidelines.

(b)It is the policy of the Government to acquire all goods, works and services by open and competitive tender. A decision note to seek competitive bids for any reason is reserved to the Tender Board.

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(c) In the context of these objectives for effective Procurement the role of the Procurement Department is to ensure that the (company) procuring entity procures materials, goods and services using good commercial practice and taking into account not only, initial costs, but full life cycle costs for the particular product or services.

(d)Procurement of all stock items require the prior authorization of the Procurement Department or authorization by an appropriate person(s) directed by the Department to exercise such authority on the Department’s behalf.

(e)All overseas purchases shall require the approval of the Head of Procurement Department, Chief Accountant and the Approving Authority or Chief Executive (for parastatals tender).

(f) Procurement of all stock items requires an approval requisition to purchase.

(g)Optimum value for money will be obtained by a combination of comprehensive specifications in line with industry and international norms, coupled with effective procurement. The Technical, Commercial and user roles are fully complementary and independent.

(h)Procurement and repair of assets required the prior approval of works order.

(i) Good Procurement management means the effective operation of an efficient Procurement and Supply Chain Management from forecasting to procurement, warehousing and distribution to end-user. This demand full cooperation/coordination from all involved in the process, the Technical Department for the technical specification, the Regions for accurate forecasting of its user requirements and the Procurement Department for effective procurement of the goods/services it’s stocking and distribution to the user in the most efficient manner possible.

(j) Contractors and/or suppliers engaged by a public Procuring Entry (PPE) must abide by the appropriate conditions of contract and in particular must have Public and Employers liability insurance policies and the existence and verified prior to commencement or work.

(k)Suppliers of goods, works and services to a public procuring entity must comply with all Government Regulations requirements.

(l) In addition to ensuring that the PPE gets value for money in all its procurement these procedures also provide the checks and balances necessary for security and control purposes and comply with current Government Regulations.

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(m) The accountable board or body is responsible for ensuring that all procurement is full consistent with procedures and policies adopted by Public Procuring Entity. In discharging that responsibility the accountable board or body may arrange the allocation of procurement delegation/authorization to a person or body in such a way as to ensure that an appropriate level of control and judgment will be brought to bear on procurement decision.

1.7 CONTENTS OF THE PUBLIC PROCUREMENT ACT No.21 OF 2004 FEATURESThe PPA No. 21 of 2004 has the following parts and sections

PART 1: Preliminary Provisions

Section 1-4: Include short title and commencement, Applications, Interpretation and International Obligations.

PART II: Public Procurement Regulatory Authority PPRA

Section 5-27: Include Establishment, Objectives, Functions, Investigations Procedures, Powers, Disciplinary Actions, Recommendations and appointment of Directors.

PART III: Tender Boards

Section 28 -43: Include Establishment, Powers, Functions of Tender Boards, Establishment of Procurement Management Unit (PMU’s) Functions of PMU’s User Departments,

Evaluation Committees, Third party Procurement.

PART IV: Public Procurement Principles

Section 44 – 57: Include duties of Procuring Entities, Procurement Planning, Qualification of Supplies, Pre- qualification/Post

Qualification, National Preference, Tender securities, Records.

PART V: Methods of Procurement Section 58 – 71: Include selection methods, Invitation to

Tender, Tender documents, Validity of Tenders, Evaluation Criteria Receipt of Tenders and Opening, Evaluation/Comparison of Tenders, Approval, Selection of Consultants/Negotiation and Award.

PART VI: Prohibitions

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Section 72-76: Include Fraud and Corruption, Conducts influencing Public, Disclosure of Payment, Institution of Criminal Proceedings.

PART VII: Disputes Settlements

Section 77 -85: Include Establishment of appeals authority, Functions of PPAA, Right of review, Administrative review,

Judicial review.

PART VIII: Miscellaneous Provisions

Section 86 -91: Include of conduct, Offences, Regulations and guidelines, Transitional provisions

PROGRESS CHECK:1. Outline the Objectives of the PPA2. Identify the Guidelines and Principles governing the Public

Procurement

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Section 1: Short title This Act may be cited as the Public Procurement Act, No. 21 of 2004 and came into operation on 8th February 2005.

Section 2: Application

The PPA apply to all Public Bodies and entities not of Government for Procurement Financed from Specific Public Finances.

Section 2: Defense and National service Organs shall agree annually with the PPRA on the categories of items to be included under the restricted list on which restricted Procurement methods set out in the act or regulations shall apply. (Ref Sect 2 (a – b)

Section 3: Deals with interpretations of various words including the meaning of procurement, goods, works, services, Contractor, supplier, Consultant etc.

‘Procurement’ Means buying, purchasing, renting, leasing or

otherwise acquiring any goods, works or services by a procuring entity spending public funds on behalf of the Ministry, Department or regional administration of the Government or public body and includes all functions that pertain to the obtaining of any good, works or services, including description of requirements, selection and invitation, preparation and award of contract

“Goods” means raw materials, products equipment and other physical objects of every kind and description, whether in solid, liquid or gaseous form, electricity intangible asset and intellectually property, as well as services incidental to the supply the good themselves. Of the goods provided that the value of the services does exceed

“Services” means any object of Procurement other than goods or works, which involve the furnishing of labour, time or effort including the delivery of reports, drawings or designs, or the hire or use of vehicles, machinery or equipment for the purposes of providing transport, or for carrying out wok of any kind with or without the provision of drivers operator, or technicians.

“Works” means:

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2.0 PRELIMINARY PROVISIONS OF THE PPA

(i) All Works associated with the construction, reconstruction, demolition, repair or renovation of a building, structure, road or airfield.

(ii) Any other civil works, such as site preparation, excavation erection, building, installation of equipment or materials, decoration and finishing.

(iii) Services which are tendered and contracted on the basis of performance of a measurable physical output such as drilling, mapping, satellite photography or seismic investigations, provided that, contracts which include the provisions of works and services shall be regarded as works contract if the total value of the works is greater then the value of the services covered by the contract.

“Consultant” means a Company, corporation, organization, partnership or Individual person engaged in or able to be engaged in the business of providing services in architecture, economics, engineering, surveying or any field of professional activity and who is according to the context a potential party or party to a contract with the procuring entity

“Contractor” means a Company, corporation, organization, partnership or Individual person engaged in civil, electrical or mechanical engineering or in construction or building work of any kind including repairs and renovation and is according to the context a potential party or party to a procurement contract with the procuring entity.

“Supplier” means a Company, corporation, organization, partnership or Individual person supplying goods or services, hiring equipment or providing transport services and who is according to the contract a potential party or the party to a procurement contract with the Procurement

Section 4: Conflicts with an obligation of the government arising out of any agreement with international organs, the requirement of the international obligation shall prevail.

Also any agreement entered into by the United Republic with an Inter-Governmental or International financing institutions in which the United Republic is the beneficiary, the requirement of such treaty or agreement shall prevail, but in all other respects the procurement shall be governed by this Act

TRAINEE ACTIVITIES;

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1. Read Section 3 of the PPA No. 21 of 2004 and suggest which of the definitions is more likely to be frequently used by the procurement specialist in performing his/her duties.

2. Section 2 and section 4 of the PPA No.21 of 2004 are both concerned with the application of the Act. Discuss

PROGRESS CHECK;1. All procurement falls under main categories of expenditure

namely: Works, Goods, Consultancy and Non-Consultancy Services. How would you differentiate the individual category from each other?

2. Differentiate the term ‘Pre-qualification’ from ‘Post-qualification’

3.0 PUBLIC PROCUREMENT REGULATORY AUTHORITY(PPRA)

Section 6: objectives of the authority:

(a) Ensure the application of fair, competitive, transparent, and (b) Non-discriminatory and value for money, procurement standards and

practices.

(c) Harmonize the procurement policies systems and practices of the central governments, Local governments and statutory bodies.

(d) Set standard for the public procurement systems in the united republic of Tanzania.

(e) Monitor compliance of procuring entities.

(f) In collaboration with relevant professional bodies build procurement capacity in the United Republic of Tanzania.

Section 7: Functions of PPRA Functions of PPRA include advisory, monitoring and regulatory.

The functions also include the issues under Sect 89 of the Act; preparation and issuing of standard tendering documents, procedural forms and any other attendant documents to procuring levels, certification requirements, setting training standards,

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competence and professional development paths for procurement experts in consultation with relevant professional bodies and any other competent authorities. Conducting periodic inspection of the records and proceedings of the procuring entities to ensure full and correct application of the act. To discharge its functions under the act the PPRA shall be entitled to be advised of the award and variation of any public contract by procuring entity.

Section 8: Authorizes the PPRA to conduct an investigation into the whole aspect of the procurement proceedings:

Section 14: Gives the PPRA a mandate to report the results of the investigations to the minister with recommendations on the appropriate action against any public officer.

Section 16: Powers of the authority This section gives powers to the PPRA to require any information,

documents, records and reports in respect of any aspect of the Public Procurement Process where a breach, wrong doing, mismanagement or collusion has been alleged, reported or proven against any procuring entity or supplier, contractor or consultant. It shall also act upon complaints by procuring entities, suppliers, contractors or consultants and any other entity or person in respect of any party to procurement proceedings in accordance with the procedure set out under disputes settlement procedures sections of the Act. Where there are persistent or serious breaches of this Act or regulations or guidelines made under this Act, the PPRA may recommend to the competent authority for the suspension of officers concerned with the procurement process issue, or the replacement of a procurement management unit, the chairman, or any member of a tender board, or the disciplinary of the accounting officers or the temporary transfer of procurement functions to the procurement agent.

The competent authority must respond within a period specified in the regulations (section 17(2).

TRAINEE ACTIVITIES;1. Read part II of the PPA and identify sections that may not be

used as means to enforce compliance to the PPA and its Regulations

PROGRESS CHECK;1. Identify functions and powers of the PPRA that may be used to enforce compliance of the Procuring Entity to the PPA requirements.

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4.0 TENDER BOARDS

Functions of Tender Boards (Sections 30) includes:

(a)Adjudication of recommendations from the Procurement Management Unit (PMU) and award of contracts

(b)Review all applications for Variations, addenda or amendments to ongoing contracts.

(c) Approving tendering and contract documents

(d)Approving procurement and disposal by tender procedures

(e)Ensure that best practices in relation to procurement and disposal by procuring entities

(f) Ensure compliance with the PPA(g)Liaising directly with the PPRA

No Public body shall advertise, invite, solicit or call for tenders or proposals in respect of a contract unless authorized by the appropriate tender board (section 31(a). The section further prohibits the award of any contract without prior approval by the tender board; and that all procurements whose values exceed the limit set out in the regulations must be reported to the PPRA within 14 days of commencement of the Procurement process.

Powers of tender boards (section 32(1)

1. In the exercise of their powers under this Act, tender boards may: -

(a) Call for such information and documents as they may require from any public body;

(b) Commission any studies relevant to the determination of award of contracts;(c) Request any professional or technical assistance from any appropriate body

or person in Tanzania or elsewhere, and

(d) Do all such acts and things, as they may consider incidental or conducive to the attainment of their objects;

(2) Tender boards may: –

(a) Require the chairman, accounting officer or chief executive officer of a public body:

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(i) to furnish any information or produce any records or other documents relating to a contract;

(ii) to answer all relevant questions;

(b) Examine such records or other documents and take copies or extracts therefrom.

Functions of a Procurement Management Unit (Section 35) include:

(a) Manage all Procurement and disposal by tender activities of the Procuring entity except adjudication and the award of contract.

(b) Support the functioning of the tender board.

(c) Liaise with the PPRA

(d) Act as a secretariat to the tender board

(e) Plan the Procurement and disposal by tender activities of the PE

(f) Implement decisions of the tender board

(g) Recommend procurement and disposal by tender proceedings

(h) Check and prepare statements of requirements

(i) Prepare tendering documents

(j) Prepare tender advertisements

(k) Prepare contract documents

(l) Issue approved contract documents

(m) Maintain Procurement and archive disposal records(n) Maintain a list or register of all contract awarded

(o) Prepare monthly reports for the tender board

(p) Coordinate the procurement and disposal activities of all departments of the PE

(q) Prepare any other reports. Section 36 provides for the functions of the user department of the PE, which include providing assistance to the PMU throughout the procurement or disposal

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by tender process to the point of contract placement including input with technical evaluation of tenders received as required by the PMU.

Section 37 provides that an evaluation committee, which shall report to the PMU, the membership of which shall be recommended by the PMU and approved by the accounting officer, shall conduct the all evaluations. The members may be external to the PE where the required skills or experience are not available within the PE.

TRAINEE ACTIVITIES;1. Read part III of the PPA and explain the establishment

and scope of services of the PMU, Tender Board, PE, CEO, User Department and the Evaluation Committee.

PROGRESS CHECK;1. Explain the Functions and Powers of:

The Tender Board The PMU The User Department

Duties of the Procuring entity (PE)It is the duty of the Procuring Entity (PE) to ensure that procurement is in accordance with the Act. The accounting officer or CEO shall be held responsible for any failure unless s/he satisfies the PPRA that s/he had delegated her/his functions in accordance with the law.

Procurement Planning (PP)A procuring entity shall plan its procurement in a rational manner (Section 45), in order to:-

(a)Avoid emergency procurement wherever possible

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5.0 PRINCIPLES AND METHODS OF PUBLIC PROCUREMENT

(b)Aggregate its requirements whenever possible both within and between procuring entities to obtain value for money and reduce procurement costs.

(c) Make use of framework contract whenever appropriate.

(d)Avoid splitting of procurement to defeat the use of appropriate procurement methods unless such splitting is to enable wider participation of local bidders.

(e)Integrate its procurement budget with its expenditure programme.

Qualifications of Suppliers (QS)The PE may engage pre-qualification and post-qualification proceedings as stipulated under sections 47 and 48 respectively. The Criteria must be set out in the tendering documents. Section 49 provides for eligibility for the national preference and for funding by a Tanzanian public body the procurement shall be reserved exclusively focal persons of firms. Procurement may be made from the government stores. Procedures are specified in the regulations (sections 50 & 51).Section 56 specifies a period of not less than 5 years for keeping the procurement records.

Procurement Methods (PM) All procurement and disposal shall be conducted in a manner to maximize competition and achieve economy, efficiency, transparency and value for money (Section 58).

All procurement and disposal shall be made through competitive tendering (section 59) except under circumstances listed under section 59 (2). These are:-

(a) Where Pre-qualification has been made pursuant to section 47.

(b) Procurement for urgent needs

(c) Need to achieve certain social objectives by calling for the participation of local communities.

The methodology is specified in the regulations, and the PE shall include in the records a statement of the grounds for its decision to justify the restriction.

Invitation procedures, issue of tender documents validity of tenders, contents of tender documents, evaluation criteria, receipt of tenders and opening (Sections 61-66) are set out in the regulations.

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Section 67 specifies the bases for evaluation and comparison of tenders. All tenders for works shall be evaluated based on monetary terms and completion period for goods and equipment other factors in addition to price may be prescribed in the tendering documents.

Any Procedure under which tenders above or bellow a pre-determined assessment of tender value are automatically disqualified is not acceptable.

Any additions to the value of a procurement contract shall be reviewed and agreed by the approving and agreed by the approving authority and must be to the benefit of the government or not disadvantageous to the government (section 69)

Selection of consultants (section 70) provides three methods:

(a) Based on quality only(b) Based on quality and price consideration(c) Based on lowest price on comparable technical proposal and services.Other methods and justifications are set out in the regulations. Section 70 (3) provides that the PE shall use standard documents issued by the PPRA. Where the standard forms are not appropriate, the PE may use other forms acceptable to the PPRA.

Elements of Negotiations (EN)Section 71(1) provides that, depending on the method of selection of consultant used, the firm submitting the best proposal shall be invited for negotiations.

Subsection (2) specifies that, negotiations shall include discussions of the terms of reference, the methodology, staffing, procuring entity's inputs and special conditions of contract and the discussions shall not substantially alter the original terms of reference or the terms of the contract.

Subsection (3) specifies that, where the negotiation under subsection (2), fail to result in an acceptable contract, the procuring entity shall terminate the negotiations and after consultation with the appropriate tender board, invite the next ranked firm for negotiations.

Subsection (4) further specifies that, after negotiations are successfully completed, the procuring entity shall within the time set out in the Regulations notify other firms on the short list that they were un-successful.

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TRAINEE ACTIVITIES;1. Read section 44 of the Act, and explain how other written Laws

relate to this Act?2. Read relevant section of Part IV of the Act, and explain

a) The reasons for procurement Planningb) What are the qualification requirements and procedures for pre-

qualification and post-qualifications proceedings?c) Procedures for National Preferenced) Procedures for entry into force of a contracte) Requirement for record- keeping and blacklisting of suppliers.

3. Discuss the appropriate actions, which you think may be taken by respective Tender Boards in respect of failure to comply with provisions entailed under section 44(6) of the Act.

PROGRESS CHECK;

1. “Lack of competition shall not be determined solely on the basis of the number of tenderers or persons who made proposals when recommending for the rejection of all tenders”. Discuss.

2. Explain the circumstances, which may lead to the deviation from competitive tendering procedures. Identify relevant sections of the Act to support your answer.

3. What are the differences between procedures for competitive tendering for Goods and Works, and that of selection of Consultancy as outlined under Part V of the PPA of 2004.

6.0 PROHIBITIONS, DISPUTE SETTLEMENTS AND MISCELLANENOUS PROVISIONS

ProhibitionsSection 72 prohibits fraud and corruption and action against the defaulters shall include institutions of criminal proceedings cap.16 act No. 3 of 1971; the Penal Code, the Prevention of corruption Act, 1971 as provided under section 76 of the PPA or any other written law against any person discharging functions or exercising powers under the PPA or its regulations.Any conduct influencing public officer is prohibited under sections 73 of the Act.

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All payments made by way of commission must be declared in writing and furnished to the Prevention of Corruption Bureau (PCB) and Tanzania Revenue Authority (TRA) pursuant to section 74 of the Act.

Dispute Settlements. (section 77 (1))

The aggrieved suppliers, contractors or consultants must register their complaints within 28 days of awareness of the circumstances giving rise to the complaints.

The review shall not apply to the selection of method of procurement, rejection of all tenders, national preference and refusal of expression of interest (section 79). No complaints or dispute shall be entertained after the procurement contract has entered into force.

The PE or approving authority shall deliver a written decision within 30 days after submission of the complaint in case no mutual agreement and this decision shall be final unless the aggrieved party institutes the procedures for administrative review by the PPRA within 14 days of the PE’S decision (section 80 and 81). The PPRA shall deliver decision within 30 days. Procedures for review by the PPAA are stipulated under section (82 -84). If the ruling of the PPAA does not satisfy the aggrieved party, that party shall have the right to institute judicial review pursuant to section 85 of the Act.

Miscellaneous ProvisionsOffences, which are listed under section 87 of the Act include: -

(a) Knowingly giving false or misleading information or evidence in purported compliance with a summons issued under the Act.

(b) Without reasonable excuse fails or refuse to give information, or produce any document, record or reports required by the PPRA or tender board of (section 32)

(c) Refusal to answer summons pursuant to section 32

(d) Undue influence on any officer or employee of the PPRA/PE or member of tender board in the performance of their functions or exercise of their powers under the act.

(e) Collusion to commit a fraudulent act or corrupt act pursuant to section 3

(f) Contravenes or fails to comply with a provision of the act and its regulations.

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On conviction a person is liable for a fine not exceeding 500,000 or to imprisonment for a term not exceeding 3 years or both fine and imprisonment. Where a PE consistently contravenes the act, its procurement function shall be transferred to procurement agent appointed by the authority until the PPRA is satisfied that the causes of contravention have been rectified.

Section 88 and 89 gives authority for the Minister and PPRA to issue regulations and guidelines for better implementation of the Act respectively.SCHEDULES1st Schedule -Composition, appointment and procedures of the Authority.

2nd Schedule -Composition appointment and procedures of the Tender Board.

Composition:

- Chairman to be appointed by the accounting officer among the heads of departments or a person of similar standing.

- Six members who are heads of departments or persons of similar standing appointed by the accounting officer.

- Procurement Specialist appointed by the accounting officer and who shall be the head of PMU.

- Office tenure is 3 years to maximum of two terms.

3rd Schedule - Composition appointment and procedures of the PPAA

TRAINEES ACTIVITIES; 1. Read the sections under prohibitions and explains the

key areas of the prohibitions under the PPA 2004. 2. Read relevant sections under Part VI of the PPA and

explain the procedures for settlement of complaints or disputes by PE and approving Authorities.

3. Read the relevant sections under the miscellaneous provision of the Act and explain what circumstances may lead to the recommendation by the Authority to have functions of procurement of any PE transferred to a third party Procurement Agency.

PROGRESS CHECK;1. What are consequences of contradicting the procedures

set out in the PPA of 2004?2. Explain the composition of:

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a) PPRA.b) PPAA.c) Public Tender Board.

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1.0 PRELIMINARY AND GENERAL PROVISIONS

Application of the Public Procurement Regulations (PPR)

The Public procurement Regulations applies to all procurement of goods, works and related services and non- consultants services undertaken by a Public authority procuring entity and to the specified parastatals organizations except where it is provided otherwise by the act.

Interpretation of various terminologies.

“Procuring entity” means Ministry government department, agency, parastatals organisations, a regional or local authority.

“Public body or public authority” means any ministry, department or agency or government; any body corporate or statutory body or authority established for the Purposes of the government; any registered company in which the government has shares; any local government authority, any parastatals organization (Regulations 3).

“Procurement” means buying, purchasing, renting, leasing or otherwise acquiring any goods, works or services by a procuring entity spending public funds on behalf of the Ministry, Department or regional administration of the Government or public body and includes all functions that pertain to the obtaining of any good, works or services, including description of requirements, selection and invitation, preparation and award of contract

“Goods” means raw materials, products equipment and other physical objects of every kind and description, whether in solid, liquid or gaseous form, electricity intangible asset and intellectually property, as well as services incidental to the supply the good themselves. Of the goods provided that the value of the services does not exceed the value of goods themselves.

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SALIENT FEATURES OF PUBLIC PROCUREMENT REGULATIONS FOR GOODS, WORKS, NON

CONSULTANCY AND DISPOSAL OF PUBLIC ASSETS BY TENDER ( GOVT NOTICE NO. 97)

“ Works” means:

(iv) All Works associated with the construction, reconstruction, demolition, repair or renovation of a building, structure, road or airfield.

(v) Any other civil works, such as site preparation, excavation erection, building, installation of equipment or materials, decoration and finishing.

(vi) Services which are tendered and contracted on the basis of performance of a measurable physical output such as drilling, mapping, satellite photography or seismic investigations, provided that, contracts which include the provisions of works and services shall be regarded as works contract if the total value of the works is greater then the value of the services covered by the contract.

“Contractor” means a Company, corporation, organization, partnership or Individual person engaged in civil, electrical or mechanical engineering or in construction or building work of any kind including repairs and renovation and is according to the context a potential party or party to a procurement contract with the procuring entity.

“Supplier” means a Company, corporation, organization, partnership or Individual person supplying goods or services, hiring equipment or providing transport services and who is according to the contract a potential party or the party to a procurement contract with the Procurement

“Competitive tendering” or “tendering” means the method of procurement whereby suppliers, contractors or consultants are invited by the procuring entity to compete with each other in submitting priced tenders for goods, works or services;

“Goods” means raw materials, products, equipment and other physical objects of every kind and description, whether in solid, liquid or gaseous form, electricity, intangible asset and intellectual property, as well as services incidental to thesupply of the goods provided that the value of the services does not exceed the value of the goods themselves;

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“Lowest evaluated cost” means the price offered by a supplier, contractor, or consultant that is found to be the lowest after consideration of all relevant factors and the calculation of

“Minor Value” means an amount of money up to a maximum limit forthe procurement of goods, works and services of a minor nature, to be determined each year by the Minister;““Procurement Expert or Specialist” means a person who is engaged in a profession, occupation or calling in which recourse to procurement is directly or indirectly involved and has such knowledge and experience of the practice of procurement;

"Procurement Management Unit" means a division or department in each procuring entity responsible for the execution of the rocurement functions;

“Procurement proceedings” means the proceedings to be followed by a procuring entity or any approving authority when engaging in rocurement;

"Procurement process" means the successive stages in the procurement cycle, including planning, choice of procedures, measures to solicit offers from tenderers, examination and evaluation of those offers, award of contract and contract management;

“Public body or public authority” means -(i) Any ministry, department or agency of government;(ii) Any body corporate or statutory body or authority established for the

purposes of the Government; Cap 212,(iii) Any company registered under the Companies Ordinance being a company

in which the Government or an agency of Government is in the position to influence the policy of the company;

(iv) Any local government authority;(v) Any parastatals organization.

General ProvisionsRegulation 4 provides that the Public Procurement policies are based on the need to make the best possible use of Public funds, whilst conducting all procurement with honesty and fairness. The basic considerations of the public procurement policy are:

(a) The need for economy and efficiency in the use of public funds.

(b) Equal opportunities to eligible suppliers and contractors.

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(c) Encouragement of national manufacturing, contracting and service industries.

(d) Importance of integrity, accountability fairness and transparency in the procurement process.

Regulation 7 Provides that Procurement of Goods, works and related Services through international and national competitive tendering shall be considered before other methods of tendering is used as long as the selection is done with due regard for Transparency, Economy and efficiency in the implementation of the project.

Regulation 8 of this Act stipulates that all public officers concerned with procurement and members of Tender Boards must be scrupulously honest in all their dealings with suppliers, contractors, and members of the public and with the Public Authority itself. This means the PEs and members of Tender Boards must conduct procurement proceedings with complete probity and in such a manner that public authority is respected and trusted as a client or a customer whilst maintaining good reputation with contractors and suppliers.

Regulation 9 of the Act stipulates the need for Equality of participation for all eligible suppliers and contractors. This means that all PEs and approving authorities shall take the necessary measures to ensure the widest possible participation by suppliers or contractors on equal term in invitations for tender for Goods and Works contracts, as appropriate measures to: -a) Ensure publication of invitations to tender in the Government Gazette,

Local newspapers of wide circulation and any other appropriate information media.

b) Eliminate discriminatory practices or technical specifications, which might stand in the way of widespread participation on equal terms.

c) Ensure that all the selection criteria are specified in the tender documents, and

d) Ensure that the tender selected conforms to the requirement of the tender documents and meets the selection criteria stated therein.

Regulation 10 stipulates the need for eligibility where in accordance to regulation 26 participation in the invitations to tender and in the award of contract shall be open on equal terms to:-a) Natural persons, companies or firms or public or semi-public agencies of

Tanzania and foreign countries.b) Co-operative societies and other legal persons governed by public or

private law.c) Joint ventures or groupings of companies or firms.

Regulation 11 of the Act provides the need for Transparency and fairness where a procuring entity and tender boards are required to maintain adequate written records of all procurement proceedings in which they are involved, including

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any procurement conducted other than by competitive tendering. Such records shall show which suppliers or contractors responded to advertisements or were approached to tender, who was chosen and the reasons.

Under Regulation 13, in dealing with donor funded procurement entity shall uphold provisions of Section 4(1) of the Act, and shall not seek clearance of tender documents or award recommendation from an external government, agency or institution that extended a loan, credit or grant before obtaining internal clearance of the same from an appropriate approving authority or tender board. In case that the clearance or approval of the appropriate internal approving authority conflict with the external clearance or approval of an external approving authority arising out of the loan or credit or grant agreement, the clearance or approval of the external approving authority shall prevail, but in all other respects, the internal clearance or approval shall prevail

In qualifying Suppliers or contractors, qualifications Criteria are stipulated under Regulation 14 as follows:

(a) That the firm possess the necessary professional and technical qualifications, professional and technical competence, financial resources, equipment and other physical facilities, managerial capability, reliability, experience and reputation, and the personnel to perform the contract.

(b) That they have legal capacity to enter into the procurement contract.

(c) That they are not insolvent, in receivership, bankrupt or being wound up, their officers are not being administered by a court or a judicial officer, their business activities have not been suspended, and they are not the subject of legal proceedings for any of the foregoing.

(d) That they have fulfilled their obligations to pay taxes and social security contributions in Tanzania where required.

(e) That they have not been convicted of any criminal offences related to their profession or have not been otherwise disqualified pursuant to administrative suspension or disbarment proceedings.

Regulation 14 (4) restricts a procurement entity to impose criterion, requirement or procedure with respect to qualifications of suppliers or contractors other than those provided for Regulation 14. Pre-qualification proceedings are stipulated under Regulation 15.

Each procuring entity and each approving authority shall maintain a record of procurement proceedings and such record shall be kept for a period of not less than five (5) years from date of completion of the contract. Regulation 19 Stipulates relevant information that shall be included and maintained in the procurement proceedings containing, at a minimum, the following information.

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a) A brief description of the Goods, or works to be procured, or of the procurement need for which the procuring entity offers

b) The names and address of suppliers or contractors that submitted tenders, offers, or quotations, and the name and address of the supplier or contractor.

c) The information relative to the qualifications, or lack thereof, of suppliers or contractors that submitted tenders, offers or quotations.

d) A summary of the evaluation and comparison of tenders, offers or quotations, including the application of any margin of preference.

e) A summary of any request for clarification of the pre-qualification or solicitation document, the responses thereto, as well as summary of any modification of those documents.

The annulment of a tender may take place in the following cases (Regulation 20(2)

(a) If no responsive tender

(b) If no tender satisfies the award criteria

(c) If economic/ technical data of the Project have changed

(d) Under exceptional circumstances the performance of the contract is impossible

(e) If every tender received exceeds the budgetary resources available

(f) Under serious irregularities

(g) If no competition

Regulation 21 specified rules for public notice of procurement contract awards, Regulation 22 specifies rules concerning description of goods or works. The regulation stipulates that any specifications, plans, drawings, designs and requirements or descriptions of goods or construction shall be based on the relevant objective, technical and quality characteristics of the goods or construction to be procured. There shall be no requirement of or reference to a particular trade mark, name, patent, design, type, specific origin or producer unless there is no other sufficiently precise or intelligible way of describing the characteristics of goods or works and the words ‘ or equivalent ‘ and included

- Price adjustment Regulation 23 (1-4)- Language Regulation 24(1-2)- National preference Regulation 25 & 26- Tender sample Regulation 28- Specification for Vehicles, machinery etc,

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- Regulation 30 (1-3)

TRAINEE ACTIVITIES

1. Read Regulations (23-29) from Part II of the Regulation and identify their impotency in procurement proceedings

PROGRESS CHECK

1. How Public Procurement Policies as laid down under Regulation 4 of the Act can be achieved.

2. Outline the Objectives of PPR for goods and Works.

3. Define the following:- Competitive tendering Lowest evaluated Cost Tender. Minor Value Procurement expert or specialist Procurement

Procurement proceedings

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Approval of ProcurementAny procurement by PE must be authorized by the accounting officer and enclosed by a tender board. A tender board must approve all tender documents before tenders are invited (Regulation. 40-41).

Accounting officers and delegated powerRegulation 32 of this Act stipulates that an accounting officer or procuring entity is responsible for all procurement of Goods and works undertaken by his/her department or region and shall be accountable for the use made of the funds voted by parliament to that ministry or department and for that justification for the requirement that are procured.

Tender Boards.Regulation 41 of the Act stipulates that, tenders may only be issued with the approval of the appropriate tender board, which may examine the draft tender document before approving the issue of the tender. Also the tender board may make a decision of the tender board without a meeting by circular resolution by circulation of the relevant papers among members of the tender board.

Emergency procurement.Emergency procurement is allowed under Regulation 42 with due regard to circumstances of urgency and without regard to the limits of the approving authority. The approving officer must promptly present the unauthorized procurement to the paymaster general, treasury for retrospective approval. Lack of foresight in not procuring at the right time authority is held personally liable to the extra costs implications.

Under this chapter regulation 43-45 provides the details on the alteration and amendments of a procurement contract, Conditions for additions to contract value and validity of procurement authorization given by a tender board.

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2.0 PROCUREMENT ORGANISATION AND LIMITS OF AUTHORITY.

TRAINEE ACTIVITIES.1. Read Part III of the Regulation and identify the powers of

the Accounting officer in comparison to that of the Tender Board.

PROGRESS CHECK.

1. Emergency procurement is generally prohibited but it is only allowed under Regulation 32.Discuss

3.0 PROCUREMENT PLANNING AND FINANCIAL CONTROLS

3.1. LEARNING OBJECTIVESWhen you have completed this chapter you should be able:-

Develop an appropriate strategy of procurement planning. To aggregate or separate requirements in accordance with the strategy

chosen. To identify options for packaging for goods and works.

PlanningRegulation 46 stipulated the procedures for procurement planning; Planning for implementation shall involve preparation of a project work plan describing the various project tasks and activities, including how the tasks will be accomplished and managed and identify the resources necessary to carry out the various project activities.

Procurement planning shall begin at the design stage during the identification / preparation stages of the project cycle.

The procuring entity shall take a strategy decision whether the most economic and efficient procurement can best be achieved by separating contracts for each component.

A procuring entity must forecast its requirements for goods and works as accurately as is practicable, with particular reference to works already programmed in the public authority’s annual work plan and included in the annual estimates.The forecasts shall include an estimate of the optimum time to the nearest month for receipt of each consignment of goods or completion of required works.

The estimate shall be shown in the tender evaluation report and priorities for procurement may be determined in accordance with available funds.

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A procuring entity shall then draw up procurement plans for those requirements for which sufficient funds are available in the current vote, sub-head or, if payment will be due in a subsequent financial year, have been budget for that year.

In compiling such plans, a procuring entity shall establish the appropriate method of procurement, as set out in Part VI of these Regulations, to be employed for each requirement.

The timescale for each procurement shall then be calculated on the basis of the standard processing times at Fourth Schedule to these Regulations, allowing any necessary margin for delays in transmission of documents or clarification of tenders. From this timescale, the start dated and critical points in the procurement process shall be set out in the procurement plans.

Except for institutions, which have fully fledged engineering service departments or such other similar professional service department, and those, that are in position to use the services of such professional departments, all procuring entities shall engage the services of consultants to prepare tender documents, evaluate and make recommendations to tender boards.

Approval to proceed with procurementBefore the preparation of tendering documents, shall be established genuine intention to proceed with the procurement.Approval of the accounting officer or chief executive officer must be held either by inclusion of that procurement in procurement programme or plan or by request as an individual item of procurement.

Aggregating requirements.In order to maximize economy and efficiency in its procurement, a procuring entity may group goods or works of a broadly similar or related nature into a single tender or number of tenders of a size and type that will be likely to attract he most suppliers or contractors, provided that this is practicable and will not cause unreasonable delay in the procurement.

Requirement that are to be debited to different vote sub-heads shall only be combined into one tender if all costs of the procurement can be easily identified and separately debited.

Such as to maximize participation in such tenders, suppliers or contractors need not be required to tender for all the goods or works so grouped but may be permitted to submit tender in respect of each item or a combination of items of goods, or individual contracts or a combination of contracts for works

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Such tenders shall be received and opened by the same deadline and evaluated simultaneously so as to determine the tender or combination of tenders that offers the lowest evaluated cost.

Prohibition of splinting tenders and contracts.A procuring entity shall not divide its procurement into separate contracts for the purpose of a voiding international or national tendering.

Any procuring entity proved to have divided its procurement for the purpose of provisions of regulation 49(2) the head of that procuring entity and such other officer shall be held personally responsible in accordance with Section 76 of the Act.

Notwithstanding provisions of sub-regulation (1) and (2), a procuring entity shall be allowed, with prior approval of the authority, to split contracts to enable participation of local firms or person.

Procuring entities should plan their requirements in such a manner that the same goods or works are not procured more than once in every six months within the limits given to the accounting officer/ chief executive officer or tender boars. Items or consumables, which require constant use, shall be procured on specified length of period on annual basis. It is not permitted to subdivide the requirements to bring the total value within the lowest limits of authorization.

Packaging of procurement.In considering how a project may be carried out, account shall be taken of the advantage, for economic and technical reasons, of dividing the project into homogeneous lots or packages, which are as large as possible.

Where a project has been divided into packages, the size of the package should be appropriate to foster maximum competition to obtain the most economic contract.

If similar items of equipment are to be procured for several subcomponents in a project or for several projects, it may be convenient to combine them all into one procurement package in

Where a project has been divided into lots or packages, the instructions to tenders shall state:-

The number of lots or packages; The nature, location and size of each lot; and Where appropriate; the minimum and maximum number of

lots or packages for which a tender may tender.The procedure for submitting a tender for package tenders shall be as follows:

a) Tender may submit a tender for each lot or package;

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b) Unless the instructions to tenders provide otherwise, a tendered may include in his tender the overall rebate he would grant in the event of amalgamation of some or all of the lots or packages for which he has submitted individual tenders;

c) Unless the instructions to tenders state that lots or packages apportioned on the same tender shall form a single contract each lot shall form a separate contract:

d) Where lots or packages are to be appointed to different tenders, the invitation to tender document or the instructions to tenders may provide that the tender for a particular lot or packages shall ensure the coordination of the execution of all the lots or packages.

- Types of works contracts Regulation 56

- Procurement from government stores Regulation 57

- Procurement of vehicles, heavy plant and spare part regulation 58

- Maintenance and repair of vehicles, plant and equipment to be made in case the price offered is above the market prices or lack of technical know-how or resource constraint then must be made in the approved garages or by competitive quotations from private garages (regulation 59)

- Procurement of computers and software (Regulation 60).

TRAINEE ACTIVITIES

1. Read Part V under regulations (46-50) of the Act and discuss their importance to the procuring entity.

PROGRESS CHECK1. How Procurement Planning can be used to

achieve Economy and Efficiency as stipulated under the Public Procurement Policies?

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4.O METHODS OF PROCUREMENT AND THEIR CONDITIONS FOR USE

Selection of a method of procurementRegulation 63 of the Act stipulates that, except otherwise provided by this regulation a procuring entity engaging in procurement of goods or work or build, operate and transfer (BOT) or build, own, operate and transfer (BOOT) and turnkey projects shall do so by means of competitive tender proceedings.In any case where tendering would not be the most economic and efficient method of procurement and the nature and estimated value of the goods or works permit, a procuring entity may select an appropriate alternative method of procurement as provided for in Regulation 68-73.

International Competitive Bidding (ICB)Regulation 65 of the Act stipulates that procurement of goods, works and related services shall be made through international competitive tendering and a procuring entity shall invite suppliers/ contractors regardless of their nationality, by means of a tender notice that shall be advertised nationally and internationally.

Also students should understand that this method of procurement shall be used in all cases where:-a) Payment may be made in whole or in part in foreign currency.b) The estimated cost of the goods or works exceeds the threshold for such

tenders shown in 3rd schedule to these Regulations.c) It is desired to attract tenders from the widest range of supplier the suppliers

or contractors, regardless of the estimated value of the goods or works to be procured.

National competitive Bidding (NCB) Regulation 66 of the Act stipulates that, a procuring entity shall invite suppliers/ contractors regardless of their nationality by means of a tender notice advertised only in the United Republic of Tanzania in this case to submit priced tenders for goods or works.

The following conditions should be taken into consideration when selecting this method of procurement: -

a) Payment may be made wholly in T/Shillingsb) Goods/Works are available locally at prices below international market.c) The estimated cost of the goods or works is small and does not exceed the

thresholds for open International tenderingd) Works are scattered geographically or spread over time.e) Works are labour intensivef) The advantages of ICB are clearly outweighed by the admistrative or

financial burden are involved, andg) Where foreign firms have participated domestic or national preference shall

apply in the evaluation of tenders.

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Regulation 67 of the Act insist that, a procuring entity may restrict the issue of tender document to a limited number of suppliers or contractors when:-a) Pre-qualification have been conductedb) The works or goods required are of specialized nature or can be obtained

from a limited number of specialized contractors or reputable sources.c) The estimated contract values are within the limit for restricted tendering

shown at the 3rd schedule to these regulations.d) There is an agent need for the goods or works and that the would be

insufficient time for PE to engage in open NCB or ICB provided that the circumstances giving rise to the agency could not have been foreseen by the PE and have not been caused by dilatory conduct on its part.

International and National Shopping

Regulation 68 of the Act stipulates that, shopping is procurement method based on comparing price quotations obtained from several suppliers, usually at least three to ensure competitive prices, and is an appropriate method for procuring readily available off-the shelf goods or standard specification commodities that are in small value.A minimum period of 30 days for International shopping and 7 days for local shopping shall be allowed for the preparation of the tenders and quotations and may be submitted by Telex or facsimile as stipulated under Regulation 68(6) of the Act

Under this Regulation as specified in Regulation 68(7) minimum information to be included in a quotation form are as follows:a) The full name and address of the PE.b) A full description of the goods or works to be procured. e.g. Required

technical or quality characteristics, specifications, designs, plans and drawings.

c) Quantity of any goods to be supplied, time and place of delivery and any requirement of such goods.

d) The period for validity of quotations is 90 days.

Single Source procurement for goodsSubject to approval by the tender board a procuring entity may engage in a single source procurement or direct contracting in accordance with Regulation 70 as stipulated under Regulation 69 of this Act under the following circumstances: -a) The goods are available only from a particular supplier or particular supplier

exclusive rights in respect of the goods and no reasonable alternative or substitute exist.

b) There is an agent need for the goods and must be provided that the circumstance giving rise to the urgency where neither foreseeable by the PE nor the result of dilatory conduct on its part

c) Where NCB or ICB is carried out and PE determined that additional supplies of the same type as those purchased under existing contract are required.

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d) Where the PE seeks to enter into a contract with a supplier for the purpose of research, experiment, study or development.

e) Procurement National Defense or National Security.f) Where critical items need to be purchased from a specified supplier to

ensure that the contractor shall guarantee the output of a process plant responsible for the process design.

g) Where standardization of equipment is essential for economic and technical reason and it has been proved to the tender board’s satisfaction that compatibility of the existing equipment with another make of equipment cannot be established and that there is no advantage in having an alternative supplier.

h) Where an on-going project, additional items need to be purchased for the completion of implementation.

Direct contracting for works A procuring entity may obtain a priced quotation from a single contractor and negotiate and enter into a direct contract when:-a) There is an agent need for the works such that there would be insufficient

time for a PE to engage in tendering or any other method of procurement provided that the circumstances giving rise to the agency could not have been foreseen by the PE and have not been caused by dilatory conduct on its part.

b) There is only one particular contractor, which a PE can reasonably expect to undertake the required works.

c) There are advantages to a PE in using a particular contractor who has undertaken or is undertaking similar work or who may have already been mobilized with plant, equipment and staff in the vicinity.

d) Civil works are already satisfactorily under construction are to extended and the prices on the extended contract are reasonable and competitive and there is no advantage to further tendering.

e) The estimated value of the works does no exceed the limit specified in 3rd

schedule to these regulations.

Minor value procurementGoods, works and services of minor value as may be determined by the Minister in the Regulations may be procured directly by a procuring entity without seeking competition in accordance with provision in the Regulations.This is stipulated under regulation 71 where a contract may be on Local Purchasing Order (LPO).

Community participation in procurement Regulation 75 of the Act stipulate the need for community participation in procurement for the interest of project sustainability or to achieve certain specific social objectives of the project, increase the utilization of local know- how and materials as well as employing labour intensive and appropriate technologies.

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Procurement of Commodities Regulation 76 of this Act provides the details on procurement of Commodities such as grain, animal feed, cooking oil, fuel, fertilizer and metals, the market price of which fluctuate depending upon the demand

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and supply at any particular time, may involve multiple awards for partial quantities to assure security and multiple purchases over a period of time to take advantage of favorable market conditions and to keep inventories low. In any procurement of such commodities a PE may: -a) Draw up a list pre-qualified suppliers and issue periodic invitations for the

supply of commodities to quote price linked to the market price at that time of or prior to, the shipment of such commodity and tender validities shall be as short as possible.

b) Specify single currency in which a commodity is priced in the market to be used in for tendering and payment,

Procurement agents (A procuring entity may procure the services of a procurement agent to undertake any or all of those procurement functions which would otherwise carried out by the entity provided that all such procurement functions are carried out in conformity with the Act and in accordance with these Regulations. This is stipulated under Regulation 77 of the Act where a PE shall:-a) Be responsible for instructing any procurement agentb) Only authorize a procurement agent to act on its behalf and ensure that any

procurement is reviewed and authorized by the appropriate approving authority before any contract is placed.

c) Ensure strictly follow-up of all the procurement procedures outlined in these regulations.

Inspection agents Regulation 78 stipulates the need for inspection agent to undertake pre-shipment inspection and certification of imports.But where exemption by the Minister has no been granted, any inspection agents’ fees are not to be included in the price tendered or considered in the evaluation of a tender.

TRAINEE ACTIVITIES

1. Read Part V of the Regulation and assess the shortfalls of each procurement method if any.

PROGRESS CHECK

1. Explain why ICB is said to be a Default method of Procurement in any procurement proceedings?

2. “ICB is suitable only in certain condition”. Discuss this statement and justify your discussion by citing relevant regulations

5.0 TENDERING PROCEEDINGS

Invitation to tender and Advertising Procedures for competitive tendering for goods and works are stipulated under Regulation 79 and invitation to tender and advertising procedures are stipulated under Regulation 80. Where:-

(i) A procuring entity wishing to commence competitive tendering proceedings shall prepare a tender notice inviting suppliers or contractors to submit priced offers for the supply of the required goods or works.

(ii)The approved tender notice shall be advertised by the procuring entity at least twice in one or more newspaper of national circulation and in case of international tendering, a similar notice may be published in appropriate foreign publication or trade journals.

(iii) Any tender notice shall be published in sufficient time, to enable the prospective tenderers to obtain tender documents, prepare and submit their responses before the deadline for receipt of tenders.

(iv) The time specified for the opening of the tenders submitted shall be the same as the deadline for receipt of tenders or immediately thereafter, and shall be repeated, together with the place for tender opening in the invitation to tender.

Contents of invitation to tenderParticular attention is drawn to Regulation 81 and Regulation 83, which stipulate contents of invitation to tender, and those of solicitation documents respectively.

Tender PeriodTime allowed for preparation of tenders shall depend on the magnitude and complexity of the procurement sought, tender boards would require the following minimum times as stipulated under Regulation 84

- NCB = 30 days

- ICB= 45 days

- Restricted (National) – 21 days

- Restricted (International) - 30 days

- National shopping – 7 days

- International shopping – 14 days

- Where large works are involved are specified on the Third Schedule GN 97

Clarifications and modifications of solicitation documents.

Regulation 85 provides that bidders are allowed to seek clarifications 14 days before submission date and for the procuring entity to make modifications and issue addendum at any time prior to submission date.

Submission of tenders.Regulation 86 provides that the procuring entity shall indicate the specific place, date and time for bid submissions and opening. Note That:The time for the tender opening shall be the same as time for deadline for the receipt of tenders

Period of effectiveness of tender, modification and withdrawal of tendersThe procuring entity shall require tenderers to make their tenders and tender securities valid for periods specified in the tendering documents and such periods shall be sufficient to enable the procuring entity to complete the comparison and evaluation of the tenders and for the appropriate tender board to review the recommendations and give its approval for the contract to be awarded while the tenders are still valid.Tender validity period shall be a maximum of 120 days and modification or withdrawal the tender prior to the deadline for the submission of tenders should be done if its stipulated in the tender document (Regulation 87)

Tender securities.If the procuring entity requires suppliers, contractors or consultants who are submitting tenders to provide any form of tender security or any form of guarantee or bond against satisfactory performance of the contract, such requirement shall apply equally to all suppliers, contractors (regulation 88)

Receipt of tenders and tender openingReceipt of tenders and tenders opening as stipulated under Regulation 89 all tenders submitted before the deadline time and date for submission shall be opened in public, in the presence of tenderers, or their representative and other partner. (Regulation 89 (7))

Tender received after the time stipulated as well as those not opened and not read out at the tender opening, shall not be considered, and shall be returned un opened (Regulation 89 (11)).

Examination, evaluation and comparison of tenders.Examination, Evaluation and Comparison of tenders’ procedures are set out in Regulation 90. The committee shall have 3-5 members.Any evaluation procedure under which tenders above or below a pre-determined tender value are automatically disqualified shall not be accepted Regulation 90 (14).

Methods of evaluation and evaluation criteria (Regulation 90 (18) ) Regulation 90 (18) (b) (ii) specifies that the evaluation criteria shall, to extend practicable,

be objective and quantifiable, and shall be given a relative weight in the evaluation procedure or be expressed in monetary terms.

Evaluation with margin for preference.Evaluation with margin of preference for goods (Regulation 91 & 92)Evaluation with margin of preference for works (Regulation 93)

Negotiations with suppliers or contractors (Regulation 95) Approval of award ( Regulation 96) Acceptance of tender and entry into force of procurement contract

(Regulation 97) Tendering procedures for selected sub-contractors or suppliers for

provisional and prime cost sums in works contracts (Regulation 98).

TRAINEE ACTIVITIES1. Read Part VI of the regulation and identify main steps in

tender proceedings.2. Read Part VI of the Regulation and identify how

encouragement of the national can be exercised and when it should be applied?

PROGRESS CHECK1. How does efficient tender proceedings enhance Economy

and Efficiency as required by the Act.2. What is a tender security and when can it be issued

during the tendering process?

ProhibitionRegulation 100 stipulates that procuring entities and approving authorities as well as consultants under public financed contracts shall proceed in a transparent and accountable manner during the selection and execution of such contracts as required by Section V of the Act

6.0 PROHIBITION AND MISCELLANEOUS PROVISIONS

Regulation 101 of the Act prohibits improper inducement of procuring entities, approving authorities and tenderers in soliciting contracts either direct or indirectly.

Regulation102 & 103 concerns conflict of interest. Members of the procuring entities, tender boards and approving authorities shall declare their personal interest which can influence decisions in any procuring contracts.

Miscellaneous ProvisionsLiquidated damages Regulation 119 & 120 concerns pre-estimated rates of 0.1-0.2% of undelivered values of goods or materials and 0.1-0.15% of the contract value for delayed works, up to a sum equivalent to the amount of the performance guarantee.

Regulation 121 refers to continuous monitoring and evaluation of performance of the contract by the procuring entity.

Goods delivered shall be inspected sampled and tested by the receiving entity and procedures for inspection of goods shall be carried out by PE through inspecting and counting the goods in order to ascertain whether they are correct and complete in accordance with the agreement and the accounting officer shall appoint a works inspection committee which shall inspect, supervise and see to it that the work(s) is progressing in accordance with the approved programme of works and order variations to the contracted work(s), if considered expedient in accordance with the contract conditions, drawings and specifications as stipulated under Regulations (126-127)

Schedules

1st Schedule Authorized limits for accounting officers and heads of departments

2nd Schedule methods of selection and limit of application.

- ICB - No limit- NCB - goods 800m, -works 3000m

Restricted tendering- Goods 400 m- Works 800 m

Competitive quotations- Goods 80 m- Works 200 m

Single source- Goods – No limit but must be justified- Works – 800 m

3rd Schedule Standard Procurement Processing time.

4th Schedule National and Exclusive Preference.

TRAINEES ACTIVITIES1. Read Part VII of the regulation under prohibitions and

explain the key areas of the prohibitions under the PPR of 2005

2. Read the relevant regulations under the miscellaneous provision of the Act and explain what circumstances may lead to the omission of regulation 126-127.

PROGRESS CHECK1. With reference to the prohibitions listed in the PPR

explain how transparency and accountability during the selection and execution of contract can be achieved.

SALIENT FEATURES OF PUBLIC PROCUREMENT (SELECTION AND EMPLOYMENT OF CONSULTANTS) REGULATIONS

GOVT.NOTICE NO. 98

GENERAL OVERVIEW

COMPETITIVE SELECTION OF CONSULTANTS

A procuring entity wishing to commence competitive selection proceedings shall prepare inviting consultants to submit expressions of interest for providing the services required, and such a notice shall be submitted in good time before the planned issue of the request for proposal to the Secretary of the tender board.

(i) The notice for invitation of consultants shall be published in the ‘Gazette’ and it shall contain:

(a) The name and address of the procuring entity;(b) A brief description of the services to be procured; and(c) The deadline and place of the submission of the expressions of interests.

(ii) The notice shall be published in a language customarily used in international trade in a newspaper of wide national or international circulation.

(iii) The selection process shall include the following steps:-

(a) Preparation of cost estimates and the budget;(b) Advertising of expressions of interests;(c) Preparation of the short list of consultants;(d) Preparation and issuance of the request for proposals;(e) Receipt of proposals;(f) Evaluation of technical proposals in particular consideration of quality;(g) Evaluation of financial proposals;(h) Final evaluation of quality and cost; and(i) Negotiations and award of the contract to the selected consultant firm.

SELECTION OF CONSULTANTSA procuring entity when selecting consultants may use the following principal selection

methods:-

(a) Selection based on technical quality by evaluation of the firms’ competence, the staff seconded to the assignment and the technical value or quality of the proposal, or

(b) Selection based on the technical quality with price consideration, or

(c) Selection based on the lowest price after establishing compatibility of technical proposals and the service to be provided.

1.0 PRELIMINARY PROVISIONS:- Application Regulation 2.- Interpretation Regulation. 3

“ Consultancy Service” means a service of an intellectual or advisory nature, provided by a practitioner who is skilled and qualified in a particular field or profession and includes, but not limited to engineering design or supervision architecture, quantity surveying, accountancy, auditing, financial services, procurement services, training and capacity building services, management services, policy studies, and advice and assistance with institutional reforms.

“ Non- consultancy services” means a service of a skilled or non-skilled nature, which is not a consultancy service and includes but not limited to cleaning, security, maintenance, and repair services.

“ Services” means any object of procurement other than goods or works, which involve the furnishing of labour, time or effort including the delivery of reports, drawings or designs, or the hire or use of vehicles, machinery or equipment for the purposes of providing transport, or for carrying out work of any kind, with or without the provision of drivers, operators or technicians;

2.0 GENERAL PROVISIONEligibility of consultants (Regulation 11)

     Consultants are permitted to compete for consultancy job without regard to nationality except in case where a Procuring entity decides otherwise;     Foreign consultants shall be eligible if: - (a): They are are registered or if elected are capable of being registered by the

relevant professional registration board; and (b):They have entered into a voluntary joint venture or association with a local

consultant or if selected are capable of forming or entering into voluntary joint venture or association with a local consultant.

A consultant from a foreign country may be excluded if:-

(a) As a matter of law or official regulations, Tanzania prohibits commercial relations with that country or

(b) By compliance with a decision of the united Nation Security Council, Tanzania prohibits any payments to persons or entities in that country.

(c) It is proved beyond reasonable doubt that the consultant does not satisfy the relevant regulations governing the provision of those services in Tanzania.

Natural persons companies or firm shall not be eligible for the award of contracts where:-

(a) They are bankrupt (b) Payments to them have been suspended in accordance with the judgment

of a court.(c) Legal proceedings have been instituted against them involving an order

suspending payments and which may result in a declaration of bankruptcy.(d) They have been found guilty of any offence with respect to their

professional conduct.(e): They are guilty of serious misrepresentation with regard to information

required for participation in invitation to submit proposals. (f): They are in breach of contract on another contract with a local government

authority.(g): They have been declared ineligible due to corrupt or fraudulent practices.

Conflict of interest (Regulation 13)Consultants are required to provide professional objective and impartial advice and at all times to hold the clients interests paramount without any future consideration for work and strictly avoid conflicts with other assignments or their own corporate interests.

Record of selection proceedings (Regulation 20)When procuring services a PE shall maintain a record of the selection proceeding containing the following information:-(a) A brief description of the service to be procured(b) A record of the procedures used in the short listing of consultants,(c) The names and addresses of consultants that were short listed and were

requested to submit proposals,(d) The names and addresses of consultants that had submitted proposals (e) Information relative to the qualifications of consultants that submitted

proposals(f) The price, or the basis for determining the price and summary of the other

principal terms and condition of each proposal(g) A summary of the evaluation and comparison of proposals.(h) If all proposals were rejected pursuant to Regulations 14, a statement and

reasons for doing so should be given(i) a statement must be made if selection was made other than through

competitive selection

Rejection of all Proposals (Regulation 21)The rejection of a selection may take place in the following cases:The rejection of a selection may take place in the following cases:(a)(a) If no proposal is responsive to the request for proposalsIf no proposal is responsive to the request for proposals(b)(b) If no proposal satisfies the criteria for the a ward of the contract If no proposal satisfies the criteria for the a ward of the contract (c)(c) if the economic and technical data of project have been alteredif the economic and technical data of project have been altered(d)(d) If every proposal received exceeds the financial resources earmarked forIf every proposal received exceeds the financial resources earmarked for

the contractthe contract(e)(e) If there has been no competitionIf there has been no competition..

Public notice of contract awards (Regulation 22).A procuring entity shall within 28 days publish notice of procurement contract awards in newspapers of wide circulation after obtaining all relevant approvals

Information for consultants through GPN – (Regulation 24)

A procuring entity shall publish a General Procuring Notice in a newspaper ofA procuring entity shall publish a General Procuring Notice in a newspaper of wide circulation within Tanzania at least one month prior to any publication orwide circulation within Tanzania at least one month prior to any publication or notification of a request for the recruitment of consultants.notification of a request for the recruitment of consultants.-The General Procuring Notice shall describe and define the nature of the-The General Procuring Notice shall describe and define the nature of the consultancy services sought and the process to be followed for acquiring suchconsultancy services sought and the process to be followed for acquiring such services and restrictions attachedservices and restrictions attachedThe notice shall state details of the name, postal and telegraphic address, andThe notice shall state details of the name, postal and telegraphic address, and facsimile and telephone numbers of the procuring entity.facsimile and telephone numbers of the procuring entity.

Planning (Regulation 25)

A procuring entity shall forecast its requirements for services as accurately asA procuring entity shall forecast its requirements for services as accurately as possible with reference to service already in the annual work plan and includedpossible with reference to service already in the annual work plan and included in the annual estimates.in the annual estimates. The forecast shall include an estimate of the nearest month of performanceThe forecast shall include an estimate of the nearest month of performance and completion of services.and completion of services. The cost of such requirements shall be estimated and compared with the likelyThe cost of such requirements shall be estimated and compared with the likely availability of voted or donor funds so that priority for procurement may beavailability of voted or donor funds so that priority for procurement may be determined in accordance with available funds.determined in accordance with available funds.

Approval to proceed with procurement (Regulation 26)  Before the preparation of the request for proposals there must be a genuineBefore the preparation of the request for proposals there must be a genuine intention to proceed with the procurement. intention to proceed with the procurement. Approval of the accounting officer must be obtained either by inclusion of theApproval of the accounting officer must be obtained either by inclusion of the procurement in a procurement programme or by request as an individual itemprocurement in a procurement programme or by request as an individual item of procurementof procurement

Aggregating requirements (Regulation. 27)Where several services that are to be procured require co-ordination orWhere several services that are to be procured require co-ordination or collective responsibility of the service providers, a procuring entity shall groupcollective responsibility of the service providers, a procuring entity shall group these services and seek to employ a single consultant for the performance ofthese services and seek to employ a single consultant for the performance of those services.those services.Prohibition of splitting contract (Regulation 28)A procuring entity shall not divide its procurement into separate contracts:(a) For the purposes of avoiding a more competitive method of selection, or(b) So that the procurement may be authorized by a lower level of authority

than would be appropriate for the total requirements.

TRAINEE ACTIVITIES;

3. Read Section 3 of the PPA No. 23 of 2004 and suggest which of the definitions is more likely to be frequently used by the procurement specialist in performing his/her duties.

4. Section 2 and section 4 of the PPA No.23 of 2004 are both concerned with the application of the Act. Discuss

PROGRESS CHECK;3. All procurement falls under main categories of expenditure

namely: Works, Goods, Consultancy and Non-Consultancy Services. How would you differentiate the individual category from each other.

4. Differentiate the term ‘Pre-qualification’ from ‘Post-qualification’

3.0 METHODS FOR SELECTION

International competitive selection (Regulation 32)This method of selection shall be used in all cases where:-a) Payment may be made in all or in part in foreign currencyb) The estimated cost exceeds the threshold for such tenders shown in the 2nd

schedule to these regulationc) It is desired to attract expression of interest from the widest range of

consultants regardless of the estimated value of the services to be procured

National competitive selection (Regulation 33)In using this method of procurement a procuring entity shall invite consultants regardless of their nationality, and such method of selection may be used in case where:-a) Payment may be made wholly in Tanzania Shillingsb) The services can be obtained locally at price below the international marketc) The estimated cost of the service is small and does not exceed threshold

for International competitive selection.

Restricted selection (Regulation 38)A procuring entity may restrict the issue of RFP to a limited number of specified consultants when:-a) There is an urgent need for the services. b) Pre-qualification have been carried outc) Service required are within the competence of a limited number of

specialized consultants

Single source selection (Regulation 35)A procuring entity may engage in single procurement directly with a supplier, contractor or consultant for goods, works or services in accordance with the conditions prescribed in the Regulations and shall include in the record a statement of the grounds for its decision to justify the restriction to a single source.

PROGRESS CHECK:3. Outline the Objectives of Selecting different consultants4. Identify the Guidelines and Principles governing the Selecion and

Employment of Consultancy

4.0 SELECTION PROCEDURES AND CONDITIONS FOR APPLICATION

A procuring entity when selecting consultants may use the following principal selection methods:-

(d) Selection based on technical quality by evaluation of the firms’ competence, the staff seconded to the assignment and the technical value or quality of the proposal, or

(e) Selection based on the technical quality with price consideration, or

(f) Selection based on the lowest price after establishing compatibility of technical proposals and the service to be provided.

There are four basic selection procedures (Regulation 36)

(a) Based on technical Quality(b) Based on technical quality with price consideration(c) Based on compatibility of technical proposal and least cost consideration(d) Based on quality and fixed budget

Procedures for selection based on technical quality Regulation 37, stipulates that the firm which has submitted the best technically acceptable proposal shall be the first to be invited for negotiation with its financial proposal opened first. If negotiation fails the second ranked firm is invited for negotiations.Conditions for application are outlined under Regulation 38 selection based on combined technical quality and price consideration (Regulation 38.).

Two envelopes are submitted for technical and financial proposals respectively. Technical proposals and evaluated first and those passing the minimum technical score shall have their financial proposals opened in Public.

Technical proposal weights are combined with financial proposal weights and the highest ranked firm is invited for negotiation first.

Selection based on compatibility of technical proposals and least cost consideration (Regulation 39).

The firms, which submitted the technical proposals with weights not less than 80%, shall have their financial proposal opened and the firm with the lowest offer shall be invited for negations.

Selection under fixed budget (Regulation 40) is the procedure under which the RFP shall indicate the available budget and request the consultants to submit technical and financial proposals within the budget; The firm with highest rank in technical proposal whose budget is within the limit shall be invited for negotiations.

Selection based on consultants’ qualification (Regulation 41) is for very small assignments for which the need for preparing and evaluating proposals is not justified. “Very small” means minor value contracts. TOR is prepared and them EOI whereby a shortlist is established and a firm with most appropriate qualifications and references are selected. The firm small then be asked to submit a combined technical and financial proposal and then be invited to negotiate the contract.

TRAINEE ACTIVITIES;

Read Section 3 of the PPA No. 21 of 2004 and suggest which of the definitions is more likely to be frequently used by the procurement specialist in performing his/her duties.

Section 2 and section 4 of the PPA No.23 of 2004 are both concerned with the application of the Act. Discuss

PROGRESS CHECK; All procurement falls under main categories of expenditure

namely: Works, Goods, Consultancy and Non-Consultancy Services. How would you differentiate the individual category from each other.

Differentiate the term ‘Pre-qualification’ from ‘Post-qualification’

5.0 BASIC PRINCIPLES FOR SELECTION:Regulation 42 provides that proposals shall be invited from five to ten qualified and experienced consultants:

Principal stages are as per Regulation 42 (2)

(a) Preparation of TOR(b) Preparation of cost estimate and budget(c) Advertisement(d) Prepare short list(e) Determine selection process(f) Prepare and issue Request For Proposals(g) Invite proposals(h) Receive proposals(i) Evaluate technical proposals(j) Evaluate finance proposals(k) Final evaluation (combined technical & financial)(l) Negotiation and contract award (m) Signing of contract.

Terms of References (TOR) (Regulation. 43) shall provide:

(a) Precise statement of the objectives and goals sought

(b) Clear description of the nature and scope of the services required and their context as well as the time interval in which they shall be provided.

(c) Description of duties and responsibilities of the consultant

(d) Description of duties and responsibilities of the procuring entity.(e) Information of counterpart staff and roles

(f) Information on training if required

(g) Summary of data & facilities to be provided by the PE.

PE’s contributions (Regulation 44)Cost estimates and budget (Regulation 48) principal cost categories are: -(a) Consultant’s staff in puts in Person – months(b) Other professional and support staff(c) Direct costs such as travel, per-diems transport etc.(d) Cost of physical inputs and materials such as equipment, vehicles, office

supplies(e) Miscellaneous(f) Other special services if any.

Advertisement (Regulation 49) must be made for EOIs and copy sent to PPRA for values exceeding TSh 100m, and giving a minimum of 14 days to respond to the EOI.

Preparation of short list (Regulation 50 requires that at least 3 firms must be from Tanzania.

RFP regulation 52 must be in the standard document prepared by the PPRA.- Information to consultants (Regulation 54)- Receipt of proposals must be within 30-90 days (Regulation 56).- Evaluation of proposals shall be two stage; for the quality and then the

cost (Regulation.57)- Evaluation of technical proposal shall use merit point system (Regulation

58)- Evaluation committee shall comprise 5 or more specialists. Regulation 58

(2)

Relative merit points for individual criteria out of 100.(a) 5%-15% for general experience, reputation and experience in previous

similar assignments(b) 20% - 40% for under standing of the TOR, methodology and overall

quality of proposal(c) 30% - 60% for qualification of key personnel(d) 5% - 15 % for local firms participation(e) 5% - 10% for local participation by national export

(f) 5% - 10% for knowledge of the countryRegulation (8) specifies the ratings of individual key staff to be based on the following:

a) General qualification:- General education & training- Length of experience - Positions held- Time with the consulting firm- Experience in developing countries etc.

b) Adequacy for the assignment - education- training and experience in the specific sector, field, subject, etc

relevant to the particular assignment.

c) Experience in regional countries knowledge of local language administration system & culture.

Regulation 58 stipulates that a proposal shall be rejected at this stage if it does not respond to important aspects of TOR or if it fails to achieve minimum score specified in the RFP. The evaluation report shall describe relative strengths and weakness of the proposals with individual mark sheets.

- Notification of results of technical evaluation (Regulation 59) - Date of opening of financial proposals to be no sooner than two weeks after

notification date (Regulation 60)- Evaluation financial proposal ( Regulation 62)- Combined quality and cost evaluation (Regulation 63)- Contract negotiations (Regulation 66) shall include discussions on:

(a) TOR(b) Comments made by consultant on the scope of services(c) Methodology(d) Staffing and training(e) PE’S inputs(f) Special conditions of contract(g) Consultant’s proposed work programme- Award by contract ( Regulation 67)- Role of tender board ( Regulation 68)

PROGRESS CHECK;What are the basic considerations when preparing TOR?

6.0SELECTION OF PARTICULAR TYPES OF CONSULTANTS

Selection of Public bodies agencies, as consultants (Regulation 70)Selection of UN- (regulations 71)Selection of NGOs (Regulations 72)Selection of Procurement Agents (Regulation 73)

TRAINEE ACTIVITIES;

For more reference Read Part VI of GN 98 of 2005(Selection and Employment of Consultant Regulation0.

7.0 SELECTION OF INDIVIDUAL CONSULTANTS

Regulation 77 stipulates that individual consultants shall be employed, on assignments for which

(a) Teams of personnel are not required(b) No additional outside Professional support is required(c) The experience and qualifications of the individuals are the paramount

requirement.

Regulation 78 specifies types of services recommended for individual consultants as follows:

(a) Preparation of TOR(b) Opening and evaluation of tenders for works, goods and proposals.(c) Preparation of the brief where architectural services are to be procured(d) Revision and updating of feasibility studies(e) Preliminary or Project engineering design (f) Technical assistance for planning(g) Training(h) Assistance with project implementation(i) Preparation of project completion report(j) All other necessary assistance decided by the PE.

Selection Process of individual consultants ( Regulation 79)(a) Prepare TOR and contract(b) Advertisement(c) Prepare cost estimates(d) Prepare short list (e) Evaluate qualifications and experience(f) Negotiations(g) Signing contract

Regulation 79 (2) stipulated that for short-term assignments of a few weeks to one or two months, the PE may after approval by the tender board recruit a qualified individual consultant directly on the basis of information available.

Criteria for evaluation:(a) General qualification and suitability – 45%(b) Experience in specific assignment 40%(c) Language 10%(d) Knowledge of the country 5%

TRAINEE ACTIVITIES;

For more reference Read Part VI of GN 98 of 2005(Selection and Employment of Consultant Regulation0.

8.0 TYPES OF CONTRACT AND THEIR CONDITIONS FOR USE

- Regulation 80 lump sum contract- Regulation 81 Time based contracts

- Regulation 82 Retainer and/or contingency fee contract

- Regulation 83 Percentage contract- Regulation 84 indefinite delivery (price

agreement)TRAINEE ACTIVITIES;

For more reference Read Part VIII of GN 98 of 2005(Selection and Employment of Consultant Regulation0.

9.0 DELEGATION OF PROCUREMENT AUTHORITY

Regulation 86: Delegation and contract acting out procurement and disposal by Tender functions.

Regulation 87: Delegation of the accounting Offer or chief Executive Officer own functions.

Regulation 88: Delegation of the functions of Tender Board or Procurement Management Unit.

Regulation 89: Contracting out to another Procuring entity.Regulation 90: Contract out to Procurement AgentRegulation 91: Disagreement between the Accounting Officer or Chief Executive

Officer and the Tender Board

Regulation 92: Disagreements between the Tender Board and the Procurement Management Unit.

Regulation 93: Disagreement between the Procurement Management Unit and the User Department.

PROGRESS CHECK;What are the powers and functions which shall not be delegated by

AO/CEO?

10.0 IMPORTANT PROVISIONS IN THE IMPLEMENTATION OF CONTRACT.

- Regulation 94 modification of contracts- Regulations 95 Emergency procurement

PROGRESS CHECK;Why is it important to seek for approval to respective authority for

additional contract?

11.0 PROHIBITIONS

Disclosure of pecuniary interest (Regulation 100-102) Tempering with submitted proposals Reg.103

PROGRESS CHECK;Why is it important to observe ethical behavior in procurement?

12.0 REVIEW OF PROCUREMENT REVISIONS AND DISPUTES SETTLEMENT

12.1. LEARNING OBJECTIVESWhen you complete this chapter you should be able to:-

Identify different disputes settlement methods Determine time limit of reviewing procurement decicions

Regulation 104: Review of Procurement decision Regulation 105: Time limit on reviewRegulation 106: Submission of applications for reviewRegulation 107: Administrative Review by Accounting OfficerRegulation 108: Administrative Review by the AuthorityRegulation 109: Review by the Public Procurement Appeals Authority

PROGRESS CHECK;Examine time limits for reviewing procurement decisions and appeal

13.0 MISCELANEOUS PROVISIONS

o Regulations111) Role of consultanto Regulation (112) Action by the Tender Boardo Amendment of the regulations

Schedules 1-7Limits of methods -ICS - No limitNCS - 800 mLimited selection 500mSingle source - 300m

PROGRESS CHECK;Study all the schedules and time limits of authorities for schedule 1-7

TOPIC-2

STRATEGIC PROCUREMENT PLANNING

Learning objectives1.0 INTRODUCTION

Efficient and adequate provision of goods, works and services is essential to activities of any organization. However, the procurement proceeding is expensive, and to procure effectively and efficiently it must be planned and closely controlled. Financial resources are scarce and it is quiet important that funds are not depleted trough inefficient management and control mechanism or the inefficient use of procurement resources available.

Development of an effective procurement plan is therefore very important. The plans have to be designed to ensure that the expenditure of funds is properly controlled to minimise waste. It is recommended that wherever possible procurement schedules are produced to maximise the utilisation of procurement funds, and that appropriate procurement methods be adopted to ensure that all procurement ethics are maintained to high standard of reliability, and that the procurement costs are kept to a minimum.

Alternative Definitions of Strategy

Strategy is defined as: ‘a course of action, including the specification of resources required, to achieve a specific objective’.

1.1 A wider view emphasises the development of resources in the context of competition from rival organisations, and stresses that a strategy must embody a future plan of action.

1.2 Hofer and Schendel emphasise the impact of the environment: strategy is the mediating force or ‘match’ between the organisation and the environment.

1.3 Andrews emphasises the links between plans, decisions and actions: the corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purpose or goals, and produces the principal policies and plans for achieving those goals.

1.4 Mintzberg’s five Ps – strategy is: a plan a ploy a pattern (of consistent behaviour)

a position a perspective.

The Different Levels of StrategyCorporate strategy is not confined to any one area. It embraces all functions within an organisation and covers a long time period.

There are three levels of strategy: Corporate strategy Business strategy Functional strategy

Corporate strategy is concerned with the scope of the organisation’s activities, its environment, its resources, and its stakeholders.

Business strategy is concerned with how each business attempts to achieve its mission within its chosen area of activity.

Functional strategy relates to the separate organisational functions (marketing, production, etc) and how they support the corporate and business strategies.

SETTING PROCUREMENT OBJECTIVES • Should they be set at an ambitious level or realistic level? • Should they be long-term or concentrate on short-term profits? • One problem is that objectives may be used as post-rationalisations

rather than being genuinely set in advance.

Purposes of Procurement objectives • Targets/benchmark for evaluating tenders/quotations and for plans • Participation of managers is good for motivation the achievement of the

corporate goals. • Yardsticks for comparing with actual outcomes of contract performance • Harmonisation of the Procurement goals

The Planning PeriodFactors to take into account when deciding how far ahead to plan objectives

• The organisation’s time horizon • Strategic lead time • Resource stability • Estimated life of production or service facilities • Estimated life of products/services • Reliability of forecasts

CORPORATE PROCUREMENT PLANNING• Procurement planning is ‘a systematic approach to clarifying procurement

objectives, making strategic decisions and checking progress towards the objectives.

• Strategic Procurement planning is ‘the formulation, evaluation and selection of strategies for the purpose of preparing a long-term plan of action to attain the Procurement objectives.

Important features of Procurement corporate planning • Definition and clarification of the objectives of the organisation’s

Procurement as a whole • Systematic process, not a haphazard approach • Provides for the monitoring of Procurement plans to check progress

PROCUREMENT STRATEGY AND PLANNING Procurement planning stands at the heart of our purchasing operation: without it all of our efforts would be opportunistic and we almost certainly would overlook important opportunities to contribute to our organization’s profits and/or objectives.The Procurement PlanTo prepare a procurement plan you need to:

• Identify needs and how to satisfy them • Plan within framework of the Government’s regulations • Identify barriers and eliminate them early

DEVELOPMENT AND MANAGEMENT OF PROCUREMENT PLANS• Since most of materials can be forecasted, Procurement Specialists can

develop annual procurement plan for their key materials when it is practical to do so. Included in this plan is the use of a variety of volume buying and longer-term contracting techniques. Thus, Progressive Procurement Management Units are Proactive; that is they make things happen. In this case, they prepare a flexible “game plan” before specific resources needs arise.

The Annual Operating Plan

• A forecast of the scope and magnitude of key operating activities is the starting point for development of the plan,

• e.g. in the Public organisation this is the forecast work breakdown structure, which usually consists of activities to implement to achieve the objectives with an annual budget that is further, divided into quarterly and monthly estimates by target type. The service level forecast is then translated into an aggregate plan of action and Master Schedule, taking into account works, goods and services to be procured in the year under review

BUYING PLAN OBJECTIVES

Purchasing and supply management objectives are developed for use at three levels:

• managerial activities, • functional operations and• detailed buying plan development

In developing a buying plan, objectives and target modes of operation should be established within each of the broader functional objectives of the department.Fundamentals of developing an effective buying plan are:

• To develop effective suppliers. • To buy competitively. • To optimise material availability. • To buy quality effectively. • To coordinate effectively with users.

BUYING STRATEGYFrom a department perspective, the purchasing and supply management team must develop an overall strategy for handling its buying responsibilities in the aggregate. This strategy includes three elements:  Term contract buying –this is suitable for materials that represent 60 to 80 percent of the firm’s annual purchasing expenditures. Minimizing small orders –small orders account for a disproportionately high percentage of the purchase orders placed. Techniques such as, systems contracting and blanket orders should be used to effectively reduce both purchasing and clerical efforts and improve price and service and performance. Managing the ‘in-between’ materials –these are materials that are purchased in response to requisitions from inventory and operating departments. This is done for many B and C materials that do not posses a stable enough demand to warrant the use of contract buying, and the market is too unstable to warrant for contract buying. SOURCES OF AUTHORITY AND PROCEDURE Purchasing department in non-profit making organizations generally operate under authority granted to them by boards of directors or trustees that are provided in by laws and policies. Whereas in government they operate under authority granted by constitutional provisions, status and ordinances. Purchasing by Governmental Organizations tends to be more regulated by legal requirements and more open to public scrutiny

ROLES OF THE PROCUREMENT ENTITYThe roles, which distinguish the procurement entity in public sector from that of industrial organisation, include those of:

• A supplier of wide variety of goods and services to many departments and agencies, which in turn, use those items to produce public service and support internal operations

• A decision maker, which must strike the balance between quality, total cost, timeliness, control, accountability and politics.

• A staff adviser, which assists management and line departments in developing budgets, planning projects.

• An implementer of socio-economic policy in the frontline of economic development for local, small and the disadvantaged business.

THE PURCHASING CYCLE IN PUBLIC PROCUREMENT • This begins with the determination that a product or service is needed. • For goods, the cycle ends when the organization has consumed or

disposed of the item. • For services, it ends when the final payment has been made. • Planning and scheduling, supplier selection and contract management are

the three principal phases in cycle. PURCHASING REQUISITIONING Requisitioning for goods and services has been a major source of inefficiency and delay due to lack of understanding between the purchasing department and the operating departments of their respective needs. There may be hundreds of requisitions dispersed throughout a large Organization that may cause difficultly in processing the requisitions by the buying department. Additionally, most requisitioners’ are technical people such as doctors, engineers, field experts, etc. Who have very low tolerance for the competitive procurement process 

THE ANNUAL PROCUREMENT PLAN• After the preliminary annual work plan and budget has been developed for

the coming year, procurement plans are then developed for the same period. A precise procurement plan should be structured for each major material or category of materials.

• There are three major steps in developing a precise procurement plan:1.CARRYIING OUT PROCUREMENT SITUATION

ANALYSIS2.DEVELOPING STRATEGY OF PROCUREMENT

PLANNING3.PREPARING DETAILED PROCUREMENT PLAN AND

SCHEDULESPROCUREMENT SITUATION ANALYSIS

There are three steps in carrying out procurement situation analysis• Demand analysis • Market analysis

• Supplier analysis

Demand analysis

As a general rule, the 80-20 phenomenon holds for most organizations, and for obvious reasons, it is particularly important that plan for top 20% or 50% of the materials be developed using careful detailed analyses. The 80% of the materials that account for approximately 20% of the firm’s expenditures are grouped by general classifications and a plan is made for each group of similar items.•  Identify various works contracts under each component/department. In case

of public works the interpretations in the Public Procurement Regulations should be applied.

• Identify various consultancy services and non-consultant’s services in accordance with the Public Procurement Regulations where necessary.

Market analysis• Since the buyer’s major initial concerns are availability and price, the

anticipated supply and demand factors, along with their expected stability, must be reviewed

Supplier analysis• A general review of other potential suppliers, contractors and service

providers in additional to current suppliers are done to determine whether any particularly attractive possibilities should subsequently be investigated more closely

STRATEGY OF PROCUREMENT PLANNING

Option for packaging and Methods of Procurement in public procurement

General strategy: • From the Procurement Regulations, obtain guidance from the sections of

“Methods of Procurement” and “Thresholds” applicable for each category of procurement

• From procurement Regulations, obtain guidance from the “Aggregate Totals” applicable for each category of procurement

• Depend upon relevant regulations for choice of different methods of procurement (for consultants, and for Goods and works)

• Cost of individual procurement proposals is an important factor in the options, ad chosen strategy, for procurement

• Nature of product to be procured an important factor • General approach is to develop the most economic and efficient

procurement strategy, including an estimation, in each case, whether this can be achieved by:

(i) separating contracts fro each component, (ii) awarding a single responsibility contract for groups of contracts (or items), or (iii) awarding a turnkey contract for the entire project.

PACKAGING OPTIONS.  For Goods and Works

• Sub-categorize requirements according to similarities of items to procure; size of each package should be appropriate to obtain maximum possible competition from qualified bidders

• Group requirements to get larger size of contract to facilitate international competitive bidding (ICB) and to get economies of scale

• Create Lots within a single procurement proposal (a)    To reduce the number of procurement proposals, and (b) To facilitate procurement of “grouped” items as a Lot

• Create Lots that include items of similar nature likely to be supplied by dealers (or manufacturers) specializing in such items

• If large quantities of a single commodity are being procured, then packaging should take into consideration market practices for that item, transportation costs, ship unloading capabilities, storage capacities, inventory carrying costs.

• Decide, for each individual case, if it is better to include “supply of materials” and “supply of equipment” within the scope of a Works Contract

• Package separately the Good and Works required to be delivered and erected at different dates during the project implementation period.

PACKAGING OPTIONS.  For Consultancy services

• Sub-categorize according to nature of work • Do not make the scope of work too large or too small. Guide: Nature and

Size of average Consultancy firm active in the relevant field • For Consultants (where firms are to be hired), as far as possible, define

scope of work such that payments are made for measurable outputs rather than a periodic payment (example: avoid monthly payments without relation to outputs achieved). However, in the case of time-based contracts, this may be more difficult to achieve, but at least a part of the payments could be linked to measurable outputs to be delivered.

• For Consultants (where individuals are to be hired), the normal payment method could be periodic payments, but a part of the payment could also be linked to specific outputs to be delivered.

OPTIONS ON METHODS OF PROCUREMENTFor Goods and Works • ICB the preferred option to consider first in each case • To facilitate development of local firms, ICB preferred to NCB or LIB

(Restricted Tendering) – Because NCB and LIB procurement are not eligible for “domestic preference” to local firms

• For Smaller Works, preferable to go for lump-sum contracts (rather than Bill of Quantity based ones), wherever feasible.

OPTIONS ON METHODS AND PROCEDURES FOR SELECTION OF CONSULTANTS

• For Consultancy, Short-list based on Expression of Interest advertisement published in the Development Business and National newspapers is the preferred option under the Quality and Cost Based Selection (QCBS)

• Other selection procedures include Quality only, Consultant’s Qualifications (CQ), Fixed cost and least cost for comparable services.

• Individual Consultants preferred where institutional support not needed for the assignment and number of consultants is small

• Decide whether to go for Lump-sum contracts or Time-based ones - depends upon nature of assignment. Primary criteria are the level of uncertainty involved in the estimation of the requirements of inputs to complete the task. Another factor is the need to provide the consultant with flexibility to complete the task effectively even if it means that the original estimate of the time required has to be changed for this purpose.

• Depend upon Public Procurement Regulations as necessary

STEPS IN PREPARING DETAILED PROCUREMENT PLAN AND SCHEDULESThere are four steps in preparing annual procurement plan and schedules:STEP 1. Group the requirements under the relevant procurement categories of expenditure. List of goods, works and servicesSTEP 2. Prepare List of Goods, works and Services (LOGWS). These should be in the Procurement cost tables (Expenditure Schedule) by Category. The cost tables are extracted from the Plan of Action (PoA) and the budget.This is a summary of the total costs under each category of procurement. It gives the totals of all procurement packages of the organization.

Lots and Package The Lots may exist under certain procurement packages. E.g. Construction works package may have lots such as:Lot 1: Rehabilitation of office blockLot 2: Construction of conference hallLot 3: construction of drainage system Consultancy services for works may have:

• Lot 1: Consultancy for rehabilitation works• Lot 2: Consultancy for construction work (office block)• Lot 3: Consultancy for design and supervision

• Equipment Package may have:Lot 1: Staff busLot 2: Office equipmentLot 3: Conference equipment

•  Training package may have:

Lot 1: IT trainingLot 2: Training for market researchLot 3: Capacity building in procurement and contract management

• Materials and Stationery Package may have:Lot 1: StationeryLot 2: Cleaning materialsLot 3: Office suppliesLot 4: Staff uniforms

• Operating costsTo be procured continuously without lots. The plan indicate expenditure per quarter.  STEP NO. 3: Prepare Procurement ScheduleAfter the determination of procurement arrangements and preparation of the LOGWS with appropriate packages and lots, the next step would be to prepare the procurement schedules with target dates for each main task. To this end, the Procurement Officer should bear in mind the lead time required for each procurement cycle. This should be taken into consideration when preparing the annual procurementschedules.  STEP NO. 4: Prepare Detailed Procurement Implementation Plan (PIP

• This is normally prepared in the form of a bar chart showing the list of goods and services, the cost estimate, the wks/months.  

The PIP may further be divided into sub-tasks and detailed activities to show specific responsibilities

MODE OF PROCUREMENT This should be decided in accordance with the Public Procurement regulations in case of public fund expenditure or procurement regulations of the respective firm.However, the following basic principles should be taken into consideration

• The amount of expenditure per contract • The need for agency • The need for economy • Efficiency and transparency requirement • Competition and sources of supply • Any other constraints of procurement.

TOPIC3: TECHNICAL SPECIFICATIONS AND TERMS OF REFERENCEThis topic covers:

1. Preparation of Technical Specifications and schedule of requirements for goods

2. Preparation of Technical Specifications and BOQ for Works3. Preparation of Technical Specifications and activity schedules for non-

consultant’s services4. Preparation of Terms of Reference and activity schedule for Consultant

services

Learning Objectives:When you have completed this topic you should be able to:

Define technical specifications and their main objectives. Identify and apply the different considerations in the preparation of

technical specifications for goods, works and Non consultancy services. Define contents of terms of reference and their main objectives.

.

3.1 PREPARATION OF TECHNICAL SPECIFICATIONS AND SCHEDULE OF

REQUIREMENTS: Definition of Technical Specifications

Specification is simply the definitive description of what is wanted. The object of internal specifications is to ensure that the purchasing department knows just what to buy; the object of external specifications is to ensure that the supplier knows just what to supply. Specifications for external use need to be drawn even more carefully and precisely than the specification for internal use, because inside an organization there may exist established customs for interpreting drawings and instructions and there will exists channels of communication which makes it relatively simple (in case of doubt) to ask for clarification from those responsible for issuing the specification. But an external supplier who deals with many different customers tend to learn heavily on what is actually down in writing. Every purchase order must communicate the requirement to the seller.

The purpose of the Technical Specifications is to define the technical characteristics of the Goods and Related Services required by the Purchaser. The Technical Specification, as part of the Schedule of Supply, constitutes a Contract document and are, therefore, a part of the Contract. The Purchaser must prepare the Technical Specification and include them as a part of the Bidding Documents, as applicable to each Contract.

o Is the means that play important role in the search for the quality

and the right value

o Assist in resolving design conflicts between departments and therefore this is the heart of resulting purchase order or contract.

o Is the method of describing requirements

o It is important to have written description of quality of goods and their impact.

Objectives: The main objectives of describing materials to be procured are:

Communicate to the buyer what to buy. Communicate to prospective suppliers what is required. Serve as the heart of the resulting procurement contract. Establish the standards against which ingredients, lists and

quality checks are made.

In preparing the Technical Specification, the Purchaser should take into account the following:

Well-prepared Technical Specification will facilitate the examination, evaluation, and comparison of the bids by the Purchaser, as the Technical Specification constitute the benchmarks against which the Purchaser will verify the technical responsiveness of bids and subsequently evaluate the bids.

The Technical Specifications should require that all goods and materials to be incorporated in the goods be new, unused, and of the most recent or current models, and that they incorporate all recent improvements in design and materials, unless provided for otherwise in the contract. Cautions in Purchasing Used Equipment .It is difficult to determine the true condition of a used machine and to estimate the type and length of service it will provide. For this reason it is wise to have one buyer specialized in used equipment. Moreover, it is virtually essential to enlist the cooperation of an experienced production or maintenance specialist in appraising used equipment. It is always sound practice to check the reputation of a used equipment supplier and to shop around, inspecting several machines before making a purchase. Whenever possible, a machine should be observed under power through a complete operating cycle. Finally, a prospective buyer should determine the age of a machine. If not available in the seller's records, the age of a machine can be traced through the manufacturer simply by serial number identification. The combined knowledge of age and usage history is a key guide in predicting the future performance of a used machine.

The Technical Specification should make use of best practices. Samples of specifications from successful similar procurements in the same country or sector may provide a sound basis for drafting the Technical Specification.

The use of metric units should be encouraged.

THE GENERAL RULE:

Standardizing technical specifications under General Technical Specifications may be advantageous, depending on the complexity of the goods and the repetitiveness of the type of procurement. Technical Specifications should be broad enough to avoid restrictions on workmanship, materials, and equipment commonly involved in manufacturing similar kinds of goods, even if these may not necessarily apply to a particular procurement. Particular technical requirements for a particular procurement would be in each case specified through deletions or addenda to the Technical Specifications.

The specification of standards for equipment, materials, and workmanship shall not be restrictive. Recognized international standards should be specified as much as possible. Reference to brand names, catalogue numbers, or other details that limit any materials or items to a specific manufacturer should be avoided as far as possible. Where unavoidable, such item description should always be followed by the words "or substantially equivalent." When other particular standards or codes of practice are referred to in the TS, whether from the Buyer's or from other eligible countries, a statement should follow other authoritative standards that ensure at least a substantially equal quality, then the standards mentioned in the Technical Specification will also be acceptable.

Reference to brand names and catalogue numbers should be avoided as far as possible; where unavoidable the words "or at least equivalent" shall always follow such references.

Technical Specifications shall be fully descriptive of the requirements in respect of, but not limited to, the following:

Standards of materials and workmanship required for the production and manufacturing of the Goods.

Detailed tests required (type and number). Other additional work and/or Related Services required achieving full

delivery completion. Detailed activities to be performed by the Supplier, and participation

of the Purchaser thereon. List of detailed functional guarantees covered by the Warranty and

the specification of the liquidated damages to be applied in the event that such guarantees are not met.

The TS shall specify all essential technical and performance characteristics and requirements, including guaranteed or acceptable maximum or minimum values, as appropriate. Whenever necessary, the Purchaser shall include an additional ad-hoc bidding form (to be an Attachment to the Bid Submission Sheet), where the Bidder shall provide detailed information on such technical performance characteristics in respect to the corresponding acceptable or guaranteed values.

When the Purchaser requests that the Bidder provides in its bid a part or all of the Technical Specifications, technical schedules, or other technical information, the Purchaser shall specify in detail the nature and extent of the required information and the manner in which it has to be presented by the Bidder in its bid.

The heart of the procurement is formed by purchase description. A purchase order or contract will be performed to the satisfaction of the buying organization only when the purchase description is selected or written, specifying the quality requirements properly. It is the only form of communication where the need for greater clarity and precision is expressed.

In order to purchase the right quality the three considerations should be in mind.

The first consideration should be to decide and state clearly what exactly it is required; what are the right goods, in the sense of those considered most suitable for intended application. We must first get the specification which the supplier has to comply with.

The second consideration must therefore be to ensure that the chosen supplier is informed of specification and has the capability to comply with it.

Third and finally is to check the reliability of the goods and supplier’s output, sort goods from bad and initiate remedial. In this we are interested with the goods, which will have trouble free performance during the expected life cycle of them.

What do we mean by the term “quality?”There is a root sense (from the Latin ‘qualis’, of what kind) in which the word refers to the kind of thing we want. Things of different kinds differ in many ways, some quality characteristics are: chemical analysis, physical dimensions, tensile strength, hardness, surface finish, colour, conductivity, elasticity and many more.

Trainee Activity:

Discuss different considerations involved in the preparation of Technical Specifications for goods.

SPECIFICATIONS AND STANDARDS

Definition of Standard:

Any specification intended for repeated use becomes a standard. The word “standard” refer to anything we use as a measure; we speak for instance of a standard of length, a standard of living, a standard of value. A builder who builds every house to a different specification has not standardized his main product; but he may well have standardized some part of it, for instance the kitchen. If he supplies a standard kitchen in each house, this is to say that the kitchen in each house is built to the same specification. The word also implies the notion of measuring or comparison; if one of the kitchens does not comply with the specification, we would say it is not up to standard. The organized process of formulating standards and getting everyone concerned to adopt them is called standardization.

DESIGN ANALYSIS

When designing technical specification the application of Design analysis is important. Value analysis and value engineering are jointly used. Value engineering application, focuses on new specifications developed at the engineering design stage. On the other hand, in most analysis applications, management attempts to coordinate the talent of personnel in engineering, operations and purchasing in conducting a meticulocis investigation, which usually leads to improvement of existing rather than new specifications.

Design analysis entails a methodical step-by-step study of all phases of the design of a given item in relation to the function it performs. The philosophy underlying this approach is not concerned with appraisal of any given part per se. Rather, the appraisal focuses on the function, which the part, or the larger assembly containing the part, performs. This approach is designed to lead the analyst away from a traditional perspective which views a part as having certain accepted characteristics and configurations. Instead, it encourages the analyst to adopt a broader point of view and to consider whether the part performs the required function both as effectively and as efficiently as possible. Both quality and cost are objects of the analysis.

One technique many firms use in analyzing component parts of a subassembly is to dismantle, or “explode” the unit and then mount each part adjacent to its mating part on a pegboard or a table. The idea is to demonstrate visually the functional relationships of the various parts. Each component can thus be studied as it relates to the performance of the complete unit, rather than as an isolated element. Analysis of each component in this fashion attempts to answer four specific questions:

1. Can any part be eliminated without impairing the operation of the complete unit?

2. Can the design of the part be simplified to reduce its basic cost?3. Can the design of the part be changed to permit the use of simplified and less

costly production methods?4. Can less expensive but equally satisfactory materials be used in the part?

When viewed in this manner - from the standpoint of composite operation and cost-possibilities for making component design simplifications are frequently more apparent than is possible under the original design conditions. This in no way reflects unfavorably on the work done by the design engineer. The discovery of such potential improvements is simply the product of an analysis

with a substantially broader orientation than that possessed by the original designer. An organized value analysis study usually utilizes a number of individuals with different types of background, experience, and skill impossible to combine in the person of a single designer. Resulting design changes often permit the substitution of standardized production operations for more expensive operations required special setup work. In some cases, considering the volume of parts to be produced, an entirely different material or production process turns out to be more efficient than the one originally specified.

VALUE ANALYSIS APPROACHES: The specific manner in which a value analyst approaches the problem of design analysis is a highly creative matter, which differs from one analyst to another. Each possesses unique analytical abilities and develops unique pattern of thought. Some companies, however, require analyst to follow several general approaches, which are designed to stimulate and organize their efforts. Those commonly used are (1) the value analysis checklist, (2) the functional cost approach, (3) the use of brainstorming, and (4) the use of suppliers.

TRAINEE ACTIVITY:

Discuss main issues involved in specifications and standards for goods and works.

DEVELOPING BALANCED SPECIFICATIONS

INTRODUCTION:

CHAPTER 3

TITLE: HOW BALANCED SPECIFICATIONS ARE DEVELOPED

LEARNING UNIT 1: PREPARATION OF TECHNICALSPECIFICATIONS AND SCHEDULES OF REQUIREMENTS FOR GOODS

3.l General Outline

3.1.1 Learning Objectives:When you have completed this chapter you should be able to:

Discuss importance of preparing balanced specifications for goods.

Define and apply all the approaches for preparation of balanced technical

specifications.

3.1.2 Chapter Three Contents:

General Outline. Introduction. Approaches to Develop Balanced Specifications. Trainee Activity. Progress Check.

3.1.3 Tools and Aids you will Need:

Conducive learning environment. Guidance where necessary from a facilitator/trainer.

3.1.4 Other Related Reference Materials:

Learning from Case Studies by G. Easton (Prentice/Hall), IPS. ………………………………………………………………… …………………………………………………………………

Specifications are the most detailed method of describing requirements. Various types of design specifications are the detailed descriptions of materials, parts and components to be used in making a product. They are the description, which tells the seller exactly what the buyer wants to purchase, they define the technical characteristics of the goods and related services needed for a particular application by purchaser.

Too often design engineers and production engineers resolve between themselves all four of the major considerations of specifications preparation without consulting purchasing or other concerned departments. This is regrettable because professional engineers seldom have the commercial experience and market information required to resolve the procurement considerations of specifications. In their attempts to do so, they frequently develop stringent specifications that do not provide sufficient latitude to allow effective competition.

When specification conflicts arise, final authority for the decision should rest with the department having responsibility for the product’s performance. This is usually the design-engineering department. However this is not justifiable reason for engineering unnecessary to subordinate the design considerations of manufacturing, procurement, quality and marketing. From a company viewpoint, the right specifications are those that blend the requirements of all departments. Only such specifications can satisfy the goals of top management i.e., increased sales, decreased costs, and the added corporate security, which comes with an increasingly strong competitive position.

APPROACHES TO DEVELOP BALANCED SPECIFICATIONS:

To develop specifications that properly balance product quality characteristics and product cost, management must coordinate the firm’s technical and business skills. Four approaches can be used.

(a)Early Purchasing Involvement

More and more progressive firms involve purchasing and potential suppliers during the early stages of new product development. Such early involvement optimizes the development of specifications since the technical and commercial issues are addressed at as point where there is maximum objectivity and flexibility. Prospective suppliers are provided rough function – fit specifications. As the item’s configuration takes form, more definitive specifications evolve. Progressive firms find that this approach is an element in their quest for quality at realistic costs.

(b) The Formal Committee Approach

This approach recognizes that a good specification is a compromise of basic objectives. A specifications review committee is established, with representation (as appropriate) from design engineering, production engineering, purchasing, marketing, operations, quality and standards. When a new product design is proposed, all members of committee receive copies of all drawings, bill of materials and specifications. No design becomes final until it is approved by this committee.

(c) The Informal ApproachThis method emphasis the concept of buyer responsibility to “challenge” materials requests. At the same time top management urges designers to request advice from buyers and work with them on all items that may involve commercial consideration. Emphasis at all times is placed on person-to-person communication and cooperation between individual buyers and designers.

(d) The Purchasing Coordinator Approach

One or more positions are created in the purchasing department for individuals frequently called materials engineers, to serve in liaison capacity with the design department. Typically the materials engineer spends most of his/her time in the engineering department reviewing design work as it comes of the drawing boards. The materials engineers searches for potential purchasing problems in an attempt to forestall them before they become serious.

TRAINEE ACTIVITY:

Discuss importance of preparing balanced specifications for goods.

CHAPTER 4

TITLE:

LEARNING UNIT 1: PREPARATION OF TECHNICALSPECIFICATIONS AND SCHEDULES OF REQUIREMENTS FOR GOODS

4.l General Outline

4.1.1 Learning Objectives:When you have completed this chapter you should be able to:

Prepare specifications.

Develop requirements for a specification.

4.1.2 Chapter Four Content:

General Outline. Needs in writing Specifications Examples of Writing Specifications. Trainee Activity. Progress Check.

4.1.3 Tools and Aids you will need:

Conducive learning environment. Guidance where necessary from a facilitator/trainer.

4.1.4 Other Related Reference Materials:

Learning from Case Studies by G. Easton (Prentice/Hall), IPS. ………………………………………………………………… …………………………………………………………………

4.2 INTRODUCTIONWRITING SPECIFICATIONS

After a design of a product is determined, the next step is to translate the individual part and material specifications into written form. The need for clarity and precision of expression is important in all business communication emanating from purchase contracts.

Optimal performance in all departments is contingent on good specifications. To meet the needs of all departments, a specification must satisfy the following requirements:

(i) Design and marketing requirements for functional characteristics, chemical properties, dimensions appearance, etc.

(ii) Manufacturing requirements for workability of materials.

(iii) Inspection’s requirements to test materials for compliance with the specifications.

(iv) Stores’ needs to receive, store, and issue the materials economically.

(v) Production controls and purchasing ability to substitute materials when such materials become necessary.

(vi) Production control’s requirement to schedule the material economically.

(vii) Purchasing ability to procure material without difficulty and with adequate competition from reliable sources of supply.

(viii) The total firm’s requirement to use commercial and industrial standard materials whenever possible and to establish company standards in all other cases where non-standard material is used repetitively.

(ix) The total firm’s requirements of suitable quality at the lowest overall cost.

EXAMPLE OF WRITING SPECIFICATIONS(a) Design and marketing requirements (for functional

characteristics, chemical properties, dimensions, appearance etc.) Example of Tomato Paste (Hot Break): Tomato Paste shall be the

product resulting from concentration of the liquid obtained from clean, sound, well-ripened tomatoes of red varieties. Free from skin, seed particles, black specks, foreign material, added salt or colouring and harmful contaminants.

(b)Manufacturing requirements for the workability of materials. The Tomato paste must be processed using 0.60 finishing screens.

(c) Inspection requirements to test materials for compliance with the specification: General requirements Organoleptic requirements Analytical requirements Microbiological requirements Manufacturing and packaging requirements

(d)Store’s needs to receive, store and issue: Cans -in accordance with can specification attached Filled weights-1 kg gross for Net Cases-in accordance with case specification attached

(e) Production control’s and purchasing’s ability to substitute materials when such material becomes necessary Free from scorched, bitter, green tomato flavours or

objectionable flavours or objectionable odours of any kind.

(f) Production control’s requirement to schedule the material economically, i.e. statement of ordering cans and cases which will conform to the

production schedule.

(g)Purchasing ability to procure material without difficulty and with adequate competition from reliable sources of supply. The descriptions here are clean and mercies as explained above.

(h) The total firm’s requirement to use commercial and industrial standards and materials whenever possible and to establish company standard in all other cases where nonstandard material is used. Colour: Gardner colour difference at 12½% total solids by

reflactometer: L25 ± 1, 25 +, b + less than ½ a. Flavour and Aroma-Free from scorched, bitter, green tomato

flavours or objectionable flavours or objectionable odours of any kind.

Since this production will repeat to be produced then using the same specifications becomes the measure of the company and so become standard. This will enable the firm to produce the batch of the same quality and hence reduced costs of production.

Table 1: COMMODITY SPECIFICATION FOR TOMATO PASTE

STANDARD COMMODITY SPECIFICATION No.0114TITLE: TOMATO PASTE (HOT BREAK)COMMODITY CODE: 0114

Date Issued: 15.08.02Replaces ---------

DETAILS1. GENERAL REQUIREMENTS

Tomato Paste shall be the product resulting from concentration of the liquid obtained from clean, sound, well ripened tomatoes of red varieties. Free from skin, seed particles, black specks, foreign material, added salt or colouring and harmful contaminants.

2. ORGANOLEPTIC REQUIREMENTSa. Flavour and Aroma

Free from scorched, bitter, green tomato flavours or objectionable flavours or objectionable odours of any kind.

b. ColourGardner Colour difference meter targets at 12½ % total solids by refractometer: L25 ± 1, a 25 +, b + less than ½ a.

3. ANALYTICAL REQUIREMENTS (on sample(s) as designated by an approved random sampling method).

a. ConsistencyConsistency below 10.0 cms measured by Bostwick consistometer at 12½ % total solids by refractometer 250 C for 10 secs.

b. Copper (as Cu)Not more than 50 p.p.m. calculated on dry residue.

c. Lead (as Pb)Not more than 5 p.p.m. on the concentrate.

4. MICROBIOLOGICAL REQUIREMENTSa. Mould Count

Not exceeding 50% positive fields as determined by the Howard Mould Count Method

b. Insects fragmentsFree from insect eggs, hair or fragments.

5. MANUFACTURING AND PACKAGING REQUIREMENTSa. Screen Size

The tomato paste shall be processed using 0.60 m.m. finishing screens.

b. CansIn accordance with can specification attached.

c. Filled weights

1 kg gross for Netd. Cases

In accordance with case specification attached.

Example of Technical Specification for a 4WD VEHICLE

Model Engine 4100CC – six cylinder inline Transmission 5 speed manual right hand drive, Tyre 23/85/R16, seating capacity 6 persons Fuel Tank Capacity 90LTS, Wheel Base 2800 mm, Engine Power 120kw/4000NM/rpm. Stealing: Integral power sterling.

In depended Suspension, Coil springs and telescopic shock absorbers, Torsion bar type stabilizer, Electric winch, 210mm Road clearance Roof Rack, Disc Wheel 6.5, Spare Wheel Carrier with Cover, Stealing Column tilt, double fuel filter, Rear differential Lock, power door lock/power windows Anti-Theft immobiliser ÷ Security system, Electrical winch.

TRAINEE ACTIVITY

With example describe the process of writing specifications .

PROCUREMENT IMPORTANCE OF SPECIFICATION

One of the basic requirements of good specification is to satisfy the procurement consideration of markets, materials availability, and price. The specification must also be clear enough for both buyer and seller to be absolutely certain they are considering the same thing. Clarity in written expression is not always easy to achieve. A certain TV company recently lost 65,000,000/= on a closed circuit television installation because its written specification mislead the supplier into believing that a more expensive installation than the buyer really wanted was specified.

In addition to achieving clarity, care must be exercised to ensure that specifications are not written around a specific product; so as to limit competition.

There are sometime where specifications given land to a sole supplier because of specifying the design like asking for a particular truck with an engine of 10 cylinders which is being produced by one manufacturer. This completely restricts the competition. Had the buyer specified what was wanted in terms of performance characteristics, such as speed and acceleration, competition would have been plentiful. Specification writing should also be economical for example in producing 1000 drive pulleys for use in vacuum – sweeper motors, the first decision would be to determine whether the pulley would be manufactured satisfactorily by a casting process. Although this method dictates the use of looser tolerances, in large volume its unit cost is considerable lower than that of a second alternative, machining the pulleys from bar stock. The second decision would be to select an industrial standard for the part, regardless of the method of manufacture used. This decision leads directly to a consideration of standardization.

PRINCIPAL TYPES OF DETAILED SPECIFICATION

- Commercial Standards- Design specification (generally accompanied by engineering

drawing)- Material and method-of-manufacture specification

5.3.1Commercial Standard:

Due to recurring needs of the same material have led industry and government to develop commercial standards for these materials; A commercial standard is nothing more than a complete description of the item standardized.

The descriptions include the quality of materials and workmanship that should be used in manufacturing the item, along with dimension, chemical composition and so on. It includes a method for testing both materials and workmanship. Commercial standards are a cornerstone of the mass production system; therefore they are important to efficient purchasing and standard of living.

All nuts, bolts, pipes, and electrical items that are made to standard specification can be expected to fit all standard applications regardless that manufactured the item. Materials ordered by standardized specifications leave no doubt on the part of either the buyer or the seller as to what is required. Standard specification has been prepared for many goods in commercial trade. Copies of standard specification can be obtained from a number of government trade associations and testing

association sources. The easiest way to get a particular specification is to ask a manufacturer to provide a copy of the standard specification of the material or produce that it recommends for the buyers intended need. Commercial standard items should be used whenever possible. They contribute greatly to the simplification of design purchasing procedures, inventory management and cost reduction. Purchasing by commercial standards in somewhat similar to purchasing by brand name, in both methods the descriptions of what is wanted can be set forth accurately and easily. Commercial standards are also applicable to raw materials fabricated materials, individual parts and components and subassemblies.

5.3.2Design Specification

This is normally used for items, which are not covered, by standard specifications or brands. It broadens buyers field of competition by preparing their own specifications. By so doing you allow the competition for the manufacturers who are capable of making the item described in buyer’s specifications knows as Potential Suppliers.

Describing requirements with chemical or electronic specifications or with physical specifications and accompanying engineering drawings entails some risks. For example, if a buyer details for a paint manufacturer the exact chemical specifications of the paint desired, the buyer assumes a complete responsibility for the paint’s performance. Should the paint fade in the first months, it is the buyer’s responsibility.

The costs of inspection to assure compliance can also be high, since the very nature of materials purchased under this method of description requires special inspection. Engineering drawings are the most accurate method of describing what is wanted where precise shapes, dimensions and spatial relationships are required.

5.3.3Material and Method-of Manufacture Specifications:

In this method prospective suppliers are instructed precisely as to specific materials to be used and how they are to be processed. The buyer assumes full responsibility for product performance. Further the buyer should have the latest knowledge concerning materials, techniques and manufacturing for the item being purchased and the buyer see no reason to pay another company for this knowledge.

The armed services and the department of energy use this method extensively. A modified version of these specifications is used by industry. Large buyers of paint, for example, frequently request manufacturers of standard paint to add or delete certain chemicals when producing paint for them. Large steel buyers make the same type of request when purchasing special steels. Chemical and drug buyers for reasons of health and safety sometimes approach full use of materials and method-of-manufacture techniques in describing quality. These specifications are used most appropriately in those situations where technically

sophisticated buyers in large companies deal with small suppliers having limited research and development staffs.

Specifications of this type are expensive to prepare, inspection generally is very expensive.

OTHER PROCUREMENT DESCRIPTIONS

Performance Specification:

In theory this is the perfect method of describing a requirement. Instead of describing the item in terms of its design characteristics, performance specifications describe in words and quantitatively where possible what the items is required to do. The potential suppliers are told only the performance that is required. Though the performance is specified in detail suppliers are not told how the product should be manufactured or what materials should be used in its manufacture.

A performance specification for wire may require it to withstand a given temperature, have a designated resistance to abrasion, and have as given conductivity capability. No mention is made in the specifications of materials to be used or how the wire is to be manufactured or insulated to give it the required characteristics. Manufacturers are free to make these choices as they see fit.

Industries use performance specifications extensively to buy expensive complicated machines and machine tools. To reduce and control the expense associated with this approach to describing requirements, descriptions should be written as explicitly as possible. Also the product being purchased should be sectionalized into the greatest practical number of district components with potential sellers required to quote on each component.

This method has two main advantages:

(i) Ease of preparing specifications, and(ii) Assurance of obtaining the precise performance desire.

For complex products, it is by far the easiest type of specification to write. It assures performance and, if is competent, it assures inclusion of all applicable new developments. Potential problems with performance specifications includes in appropriate use, poor supplier selection and pricing. Because performance specifications can be easy to prepare, indifferent buyers’ sometimes apply them in appropriately. Such buyers use performance specifications to avoid preparing more suitable descriptions that may lead to less costly purchases.

When using performance specifications, buyers must solicit competition among a number of capable sellers. Capable suppliers ensure quality, competition ensure reasonable prices.

Function and Fit Specification:

These are the variation for performance specifications and are used in early supplier involvement programs. With this approach the design team describes the function to be performed and the way the item is to fit into the larger system (e.g automobile, computer, etc) together with several design objectives (cost, weight, reliability). This method (ESI) is now becoming very popular, and with careful pre-qualification of suppliers, there are no significant disadvantages with this approach.

Brand and Trade Names

Branding or differentiating a product is generally done to develop a recognized reputation and thus gain repeat sales, protect the product against substitutes, maintain price stability and simply sales promotion. Brand name products are the simplest to describe on a purchase order. They save purchasing time and reduce purchasing expenses.

It is often said that when a buyer purchases by brand name he/she eliminates competition by limiting the purchase to a single source of supply. If a buyer had to limit the purchases to a single brand from a single source, this would represent a major of purchasing by brand names. However, in fact, there are very few situations in which only one brand is acceptable for a given purpose! A profitable market for any item in competitive enterprise economy attracts other manufacturers to make the item. Competition is therefore available by brands just as it is by other types of quality descriptions. In addition the same branded Product may be available from different wholesalers or jobbers who are willing to compete on price and service to get a buyer’s order.

Specifying ‘brand X or equivalent’, but what does or equivalent mean usually attains competition among brands?For small quantities, brand buying is excellent.

Samples

When samples are used, the buyer does not have to look for an equal brand, pick a standard specification, or describe the performance wanted. Samples specification is normally called the Lazy person’s method of describing requirements. This method should be used only if other methods of description are not feasible, e.g. in colour, texture, printing, and grading.

Samples are neither the cheapest nor the most satisfactory method of purchase. Usually the money spent on inspection costs substantially exceeds the money saved in description costs. It is usually difficult to determine inspection that the item delivered is, in fact, the same as the simple. Quality of materials and quality of workmanship are generally exceedingly difficult to determine from routine inspection.

Market grades

Grading is a method of determining the quality of commodities. A grade is determining by comparing a specific commodity with standards previously agreed on, e.g. on wheat, hides, cotton, etc. In buying graded commodities, buyer often use personal inspection as part of their buying techniques. This is done in the same way one selects a shoe in a shop.

Qualified Products

This method is applied when it is necessary to determine in advance of purchase whether a product can meet specifications. For example: (a) when it takes too long to conduct the normal post purchase

inspection and test to ensure quality compliance.(b) When special tests are involved, and(c) When purchase involves safety equipment, life survival equipment,

research equipment, etc.

Combination of methods

A combination of more than one method may be used when a single method of description cannot adequately describe an item, e.g. something like space vehicle. Performance specifications could describe overall characteristics of the vehicle, i.e. its ability to withstand certain temperatures; physical specification describes the vehicles configuration, commercial standards or brand names used to describe selected pieces of electrical hardware for its support systems.

TRAINEE ACTIVITY

Explain the advantages of performance specification.

STANDARDISATION AND VARIETY REDUCTIONThe use of standards permits a firm to purchase fewer terms, in larger quantities and at lower prices. Thus fewer items are processed and stocked. This lowers purchasing, receiving, inspection and payment costs. The use of standardized approved items drastically reduces the number of defects in incoming materials and increases the quality which enters in production line due to the fact that the specifications sets for the past purchases are now repeatedly used as standard for the incoming goods. By using proper specified standards the organization reduces the rate of deterioration and defects items, as the items purchased should have life span period, which is within the specifications and will be turned according to the stock turnover, hence reduces costs. Consequently, the purchase of standardized materials saves money four ways: lower prices, lower processing costs, lower inventory caring costs and few quality problems.

THE USE OF NATIONAL AND INTERNATIONAL STANDARDS There were basically two kinds of material standards: which were:(1) Industry or National Standards, and(2) Company Standard.But with the increase use of International Standard now we have three kinds of materials standards.

If the designer or user cannot adopt a national standard for his/her purpose the second choice is to use a company standard. But if the required part is truly a non-repetitive “special” then use of standard is impossible. The increase of international trade and by eliminating technical trade barriers the need for international standards is fundamental.

The standards specifications, which are the specification for the items that have been standardized, can be obtained from the organizations that have developed them, such as Tanzania Bureau of Standards and many of commercial trade associations, and testing associations. Some of the standards used are adopted from international organizational standards like BS ie, British Standards, American Bureau of Standards which share

the common standards like bolts and nuts sizes, electrical equipments and spare parts. In 1979 the International Standard Code Multilateral Trade Agreements was signed which involved thirty signatory nations including United States, The European Economic Community, The Nordic countries, Canada, New Zealand and Japan who current use the code.

The mechanism used to create international standards was relatively easy. However, actually getting International Standards adopted will be a long and difficult task. Consider just a few of existing difficulties. Many countries includes United States are in the early stages of implementing metric standards. Although metric standards are use din both Europe and Japan, product dimension have not been standardized so parts from these countries are not yet interchangeable. Standardizing electric power characteristics in a very difficult problem; for example voltage requirements for electrical equipment vary significantly between the United States and Europe. In short countries around the world currently have widely different standards for virtually everything from safety to ecology.

Nevertheless, simply because there is no quick or easy way to get international standards adopted does not mean that progress will not be made. The economic states associated with the development of international standards are so high in terms of increased international trade and prosperity that progress, albeit slow, is inevitable. Because private organizations, national and regional governments and other international organizations are all involved in the adoption process, political infighting is inescapable. This of itself precludes fast action.

VALUE ANALYSIS AND VALUE ENGINEERINGLawrence D. Miles of the General Electric purchasing organization originally developed value analysis. The terms value analysis and value engineering are often used synonymously. However the key difference is in the timing of activity. Value engineering takes place during product design phase while value analysis is usually associated with improvements after the product or service has been created. Design for manufacturability is a relatively recent approach that is in reality a variation of value engineering. The goal of both value analysis and value engineering is to attain the best product value to accomplish the required function at the least possible cost. Value is increased when cost is reduced without reducing performance or performance is increased without increasing cost. Value analysis provides a process for evaluating the organization’s cost reduction ideas, coordinating the affected parts of the organization, selling proposed improvements to management, implementing ideas and documenting the cost reduction.

The value analysis function may be formal or informal in an organization. A firm could have a dedicated staff whose primary function is value analysis and engineering. Generally firms use an ad-hoc approach,

creating a value analysis team when it is deemed appropriate. The value analysis team should be cross functional with representatives from the areas involved, such as purchasing engineering, materials, quality, production, customers, and suppliers. Even if a formal team is not established, purchasing has an ongoing responsibility to analyze the function and value of the items and services it is responsible for acquiring.

The value analysis process insist of six steps; identification, appraisal, solution generation, solution evaluation, implementation planning and execution, and the project follow-up.

Identification:The identification step determines the functions of the item, the customer’s requirements, the costs, the value of function and the service and maintenance issues that are present. The value analysis team must identify the facts that are known about the items under analysis, the assumptions that are being made, and the information that is not known.

Appraisal:The purpose of appraisal step is to investigate and prioritized the information created in the identification stage. The value analysis team first prioritizes the identified functions into primary and secondary functions by analyzing their relative importance to total performance.

Solution Generation:This is where creativity enters the process. The objective is to identify alternative ways to do the job by determining what can be modified, simplified, combined or eliminated in terms of functions, features, or processes.

Solution Evaluation:Once a set of potential solutions is generated, the next stage in the process is to evaluate the feasibility, appropriateness and cost of each potential solution. The team must evaluate if each solution is technically feasible and evaluate the suitability of a particular solution.

Implementation Planning and Execution: Once a preferred solution is identified the team needs to develop a plan for making the required changes in the product and/or process.

Project Follow-up:Probable the most important stage of the process is to verify that the project objectives were achieved. Has the item’s cost been reduced? Does the consumer perceive an increase or maintenance of value?

TRAINEE ACTIVITY Discuss the use of National and International Standards.

Explain importance of Standardization and Variety Reduction. Distinguish between Value Analysis and Value Engineering.

THE TOOLS OF QUALITY MANAGEMENT

DEFINITION OF QUALITYThere is several different view of quality depending on one’s perspective. It is important to understand the significance of these different concepts. Basically quality can be defined in three ways:

In absolute terms Relative to perceived need As conformance with stated requirements

In Absolute TermsQuality is the function of excellence, intrinsic value, or grade as

determined before by society generally. Hence most people consider gold to be a high quality precious metal. In a more utilitarian sense “prime” beef is generally considered to be among the highest-quality meat in the meet market.

Relative to Perceive needIn business and industrial activities, generally quality is first defined in

terms of relationship to a need or function. In this case the important thing is not the absolute quality of an item, but the suitability of the item in satisfying the particular need at hand. Thus design engineers; users, and buyers attempt to develop a material specification in which the quality characteristics of the specified material match closely with the quality characteristics needed to satisfactorily fulfill the functional requirements of the job. Consequently in the development of product or material specifications, quality is defined relative to the need.

As Conformance with Stated RequirementsA buyer’s responsibility, and a supplier’s job, is to deliver material whose

quality conforms satisfactorily to specification requirement. Once the specifications have been finalized, the specific requirements have been set for those who subsequently work with the specifications. For these people, especially purchasing personnel and suppliers, quality is defined very simply – conformance with the stated requirements.

MATERIAL SPECIFICATIONA sound material specification represents a blend of four different considerations:1. Design requirements2. Production factors3. Commercial purchasing considerations, and4. Frequently marketing factors.

When dealing with commercial considerations, purchasing personnel should make the following investigations with respect to quality. Study the quality requirements Ensure that quality requirements are completely and

unambiguously stated in the specification. Investigate their reasonableness, relative to cost Ensure that specification is written in a manner that permits

competition among potential suppliers. Determination whether the desired quality can be built into the

material by existing suppliers. Ensure the feasibility of the inspections and tests required to assure

quality.For some materials and components, such investigations are relatively simple. For other they are extremely complex, involving high technical considerations. Example some firms includes “reliability or quality engineers” on the purchasing staff to assists in analysis of the more complex problems.

QUALITY MANAGEMENT CONCEPTSAll buyers should have at least a little understanding of quality systems, process capability analysis and statistical process control concepts. As pointed out earlier, a progressive firm views its quality system as two parts of a single integrated system. The buyer is the middle person in this operation. He or she first must be able to cooperate with in-house quality people intelligently in designing and making operating decisions about the firm’s quality systems. Next because the buyer is the key communication link with suppliers, he or she must be able to deal with them effectively on a wide variety of quality issues.

PROCESS CAPABILITY ANALYSISFigure 1: The output distribution of a process that is “in control.”

Prediction

Time

Size

Fig. 2 and 3: An illustrative comparison of quality requirements with process

Capability.

(Process frequency distribution curves for shafts are shown)

Natural range of processBuyers acceptance quality capability

range of quality

Natural range of process Buyer’s acceptable quality capability range of capability

0.996 1 1.004 0.997 1 1.0030.995 1.005 0.996 1.004 Fig. 2 Fig. 3

No operations activity can produce identical results time after time. This is true even for machine-based production processes. Every process possesses some natural variability due to such things as machine part tolerances or clearances, bearing wear, lubrication, variations in operator technique, and so on. These are common causes, which produce random variations in the output. Overtime, this natural variability in the output of a process will produce a distribution of outputs around the mean quality level. In many cases this distribution approximates the normal bell-shaped curve. The difference between the two extremes of the curve, the high and low values are defined as the “natural tolerance range” of the process. As long as the process is properly adjusted and is not affected by any outside non-random forces – as long as the process is “in control” – the distribution it produces is predictable (shown in Fig. 1).

If a buyer’s desired range of quality for a given purchased part is compatible with the natural tolerance range of a potential supplier’s production process, the supplier should have a little difficult in providing the buyer with parts that meet specifications. On the other hand, when the buyer’s required quality range is narrower than the natural capability range of the process, the supplier is bound to produce some unacceptable parts.

Alert buyers recognize the direct economic relationship between their specified quality requirements and the produce’s ability to perform consistently at the specified level. In the case of a non-standard item, the capable buyer before selecting a supplier, must determine:

1. Whether the potential supplier in-fact knows what the natural capability range for its production process is;

2. If so, whether the buyer’s desired range of quality is compatible with the supplier’s natural capability range; and

3. If so, how the supplier plans to monitor the process to ensure that it stays in control so that it will consistently produce satisfactory output. The following examples should clarify this concept.

In figure 2(a) assume that a buyer want to purchase 100,000 metal shafts 1 inch in diameter, with a tolerance of + 0.005 inch. Assume further that the supplier has studied his process, stabilized it, and knows its natural capability for this type of job to be 1 inch + 0.004. Examining Figure 2, the buyer sees that as long as the supplier’s process operates normally and remains centered on 1:0 inch, every piece produced will fall within his/her acceptable range of quality. In this example, then if the supplier is able to keep the process in control, this situation appears to represent a sound purchase for the buyer from a quality point view

Assume now that the buyer wants to purchase 100,000 shafts 1 inch in diameter, with a tolerance of + 0.003 inch. Examination of Figure 3 reveal that, dealing with the same supplier, under normal operating conditions, the production process cannot entirely satisfy the buyer’s requirement. Some shafts will be produced with diameters less than 0.997 inch and some with diameters larger than 1.003 inches. It is important for the buyer to understand this type of situation. Unusable shafts, whether re-worked or scrapped, must be paid for. In the long run it will be the buyer who pays. Assuming that the buyer’s requirements cannot be compromised, he or she is faced with two alternatives:

Negotiate with the supplier to determine whether the natural range of process capability can be narrowed economically to a point nearer the buyer’s requirements.

Seek another supplier whose process can meet the requirements more economically.

Process Capability Index

Another way of expressing a process’s capability relative to a buyer’s specific design requirements is by means of a process capability index (Cp). This index is defined as

Cp = buyer’s absolute design tolerancenatural capability range of the process

Note: In practice, the natural capability range of the process frequently is estimated by taking the mean output quality + 3 std deviations of the output values.

A Cp value of 1 indicates that the capability range of the process matches exactly the quality range required by the buyer. From practical point of view, this is a very marginal fit for the buyer. A value of more than 1 reveals excess process quality capability, while a value of less than 1 indicates insufficient process capability.

Consider the examples in Fig. 2

Cp (a) = 1.005 – 0.995 = 0.01 = 1.25 1.004 – 0.996 0.008

Cp (b) = 1.003 – 0.997 = 0.006 = 0.75 1.004 – 0.996 0.008

In case (a) the Cp = 1.25, indicating that the quality capability of the process, if it stays centered, exceeds the buyer’s requirement. In case (b), the Cp = 0.75. Showing clearly that the process is not capable of satisfying the buyer’s quality requirement. In the vernacular, the case (a) the process is “capable” for case (b) the process is “incapable.”

PREPARATION OF SCHEDULE OF REQUIREMENTS

What is schedule of requirements?

It is defined as the schedule, which provides brief description of goods or services, unit of measure, quantity required and the delivery schedule in weeks or months.

Example

S/N DESCRIPTION (S) UNIT QTY DELIVERY PERIOD FROM CONTRACT

SIGNATURE

The schedule of requirements shall be included in the bidding documents by the purchaser, and shall cover, at a minimum, a description of the goods and services to be supplied and the delivery schedule

OBJECTIVESThe objective of the schedule of requirements is to provide sufficient information to enable bidders to prepare their bids efficiently and accurately, in particular, the price schedule, for which a form is provided.

In addition, the schedule of requirements, together with the price schedule, should serve as a basis in the event of quantity variation at the time of award of contract.

The date or period for delivery should be carefully specified, taking into account:

(i) The implications of delivery terms stipulated in the instructions to bidders, pursuant to the Incoterms rules (i.e EXW, or CIF, CIP, FOB, FCA terms- that “ delivery” take place when goods are delivered ( to the carriers),

(ii) The date prescribed herein inform which the purchaser’s delivery obligations start (i.e notice of award, contract signature, opening or confirmation of the L/C.

The delivery schedule expressed as weeks/ months stipulates hereafter a delivery date, which is the date of delivery:-

(i) At EXW premises(ii) To the carrier at the port of shipment when the contract is

placed on FOB or CIF terms(iii) To the first carrier when the contract is placed on FCA or CIP

terms

In order to determine the correct date of delivery hereafter specified, the purchaser has taken into account the additional time that will be needed for international or national transit to the Project site or to another commonplace.

CLASS ACTIVITYPrepare a schedule of requirements for a photocopying papers need by your company for annual use.

Reference Materials:

Learning from Case Studies by G. Easton (Prentice/Hall), IPS. PPA and its Regulations Purchasing principles-Peter Baily Purchasing and Material management-Text and Cases- Dobler

3.2 TECHNICAL SPECIFICATIONS FOR WORKS

Writing Specification for Works

After the design of the required construction, the next step is to translate the individual part and material specifications into written form. The need for clarity and precision of expression is important in all business communication emanating from purchase contract.

Optimal performance in all departments responsible for the design is contingent on good specifications. To meet the needs required, specifications must satisfy the following requirement:

i) Design and marketing requirements of the construction expected, functional characteristics of materials to be used their chemical properties, dimensions in the drawings and appearance of the construction.

ii) Manufacturing requirement for workability of construction materials.

iii) Inspection requirements to test materials and performance of the construction quality for compliance with the specifications.

iv) Stores’ needs to receive, store and issue the construction materials

v) Construction control’s and purchasing’ ability to substitute materials when such materials become necessary.

vi) Construction control’s requirement to schedule the construction economically.

vii) Purchasing ability to procure construction materials without difficult and with adequate competition from reliable sources of supply.

viii) The total project requirement to use commercial and industrial standard materials whenever possible and to establish company standards in all other cases where the construction will be required.

Example of specification for works

Constructions of water tank stand at Institute of Procurement and Supply – CHANIKA.The required stand should be of concrete base and blocks in + (cross) shape. 150mm Thick round concrete base with the ratio of 1:3:6 and diameter of 1.5 meter. The cross walls of 225mm of 18 courses of blocks will be constructed by mortar ratio 1:3 cement, sand, the same as the ratio used for blocks.On top a slab of 100mm with concrete ratio of 1:3:6 reinforced with 10mm round mild steel rod with spacing of 150mm square binded.Plastering of 25mm will be used with the mortar ratio of 1:3 cement sand.Tairolean (putching) of mixture of cement, lime and sand will be applied for finishing.

Example 1

100mm

1500mm

225mm

3000mm

150mm

Top concrete slab

Block walls

Block walls

Bottom roundconcrete base

CONSIDERATIONS WHEN PREPARING SPECIFICATIONS FOR WORKS

In preparing the Technical Specification for works the purchaser should take into account the following.

1. A well-prepared Technical Specification will facilitate the evaluation, examination and comparison of the bids by the purchaser or Client, as the Technical Specifications constitutes the benchmark against which the purchaser will verify the technical responsiveness of bids and subsequently evaluate the bids.

2. The Technical Specifications should require that all construction materials to be incorporated in construction be new, unused and of the most recent or current models, and that they incorporate all recent improvements in design and materials, unless provided for otherwise in the contract.

3. The Technical Specification should make use of the best practices. Samples of specification from successful similar procurements in the same country or sector may provide a sound basis for drafting the TS.

4. The Government encourages the use of metric units.

5. Standardizing technical specifications under General Technical Specifications may be advantageous, depending on the complexity of the construction and the repetitiveness of the type of procurement. Technical Specifications should be broad enough to avoid restrictions on workmanship, materials, and equipment commonly involved in manufacturing similar kinds materials even if these may not necessarily apply to a particular procurement. Particular technical requirements for a particular procurement would be in each case specified through deletions or addenda to the Technical Specification.

6. The specification of standards for equipment, materials and workmanship shall not be restrictive. Recognized international standards should be specified as much as possible. Reference to brand names, catalogue numbers or other details that limit any materials to a specific manufacturer should be avoided as far as possible. Where unavoidable, such material description should always be followed by the words “or substantially equivalent.” When other particular standards or codes of practice are referred to in the Technical Specification, whether from the purchaser’s or from other eligible countries, a statement should follow other authoritative standards that ensure at least a substantially equal quality, then the standard mentioned in Technical Specification will also be accepted.

7. Reference to brand names and catalogue numbers should be avoided as far as possible; where unavoidable the work “or at least equivalent” shall always follow such references.

The Technical Specifications shall specify all essential technical and performance characteristics and requirements, including guaranteed or acceptable maximum or minimum values, as appropriate. Whenever necessary, the purchaser shall include an additional ad-hoc bidding form (to be an Attachment to Bid Submission Sheet), where the bidder shall provide detailed information on such technical performance characteristics in respect to the corresponding acceptable or guaranteed values.

When the purchaser requests that the bidder provides in its bid a part of all the technical specifications technical schedules or other technical information, the purchaser shall specify in detail the nature and extent of the required information and the manner in which it has to be presented by the Bidder in its Bid.

DRAWINGS

This is the major part of specification in the procurement of works. The purpose of drawings it to specify locations, dimension, materials to be used, stages of construction, details of hidden parts, and other characteristics of work or construction.

The purchaser should prepared appropriate drawings as needed this is normally prepared by Architects and later bill of quantities which are prepared by Quantity Surveyors. This is done through procurement of consultancy services.

The purchaser includes the drawings in the Bidding documents. Such drawing which are part of schedule of supply are contract documents and therefore shall be part of contract. Similarly the purchaser may request the contractor to provide drawings either with its bid or for approval during contract execution.

PREPARATION OF BILLS OF QUANTITIES (BOQS)DEFINITION:

Bills of Quantities are the statements, which state the quantities of materials and labour for the various sections of works. They state the general condition of works, workmanship required and quantity of materials.

3.1.1 Function of Bills of Quantities1. Helps bidders to quote in a uniform manner

2. Used when correcting errors during tender evaluation

3. Assists and act as the base for valuation during work progress or construction (interim valuation)

4. Means of valuing variations issued by client during work progress.

5. Used as basis for cost analysis.

6. Provides unit of measure for individual items under the works contracts

PROCEDURES FOR PREPARATION OF BOQS

Taking – offIn this step the process of determining the quantities of labour and materials required for each part of a building or a Civil Works. Measures and calculations shall be based an Architectural drawings.

1. Decide on unit of measure and dimensions i.e. linear (Running meters), Area (M2) (volume) (M3) and weights (kg), Pcs, etc.

2. Preparing activities required using the WBS

3. Preparing abstracts, checking and grouping similar tasks in single elements

THE CONTENTS OF BILL OF QUANTITIES (BOQS)

The Bill of Quantities normally prepared by Engineers contains two parts. One part consists of General Materials Preliminary (items), which normally consists of items, which are priced, in lump sum. The second part contains elements, which are priced according to the units given.

Examples of Preliminary items are:

Tools, Plants and Scaffolding:The contractor is required to estimate for items necessary for the execution of the works according to the requirements meaning of the Drawings. This

includes provision of all necessary cranes, wrist, and concrete mixers and other plant including ladders, tools, modules, staging access gangways etc.

Site Accommodation

(i) The contractor shall provide and maintain any necessary temporary office accommodation required by himself and his subcontractors suitably equipped with desks, chairs, drawing boards and electric lighting where possible.

(ii) The contractor shall provide and maintain for his workers latrine facilities, washing and drinking water, first aid equipment, first aid equipment and shelter equipped with tables, benches and cooking facilities all to the reasonable satisfaction of Project Manager and the Health Authorities.

(iii) The contractor shall provide and maintain any temporary storage shed or building which in his opinion are necessary for execution of the works.

(iv) The contractor shall provide a temporary office of approved design for the sole use of the Project Manager.

Telephone:Allow for the installation, paying bills and later removal of the telephone for the sole use of the Project Manager at site if the service is available.

Water for WorksThe contractor shall allow for all necessary clean fresh water for the works, including that required by subcontractors and for any temporary plumbing meter and storage facilities and pay all the changes in connection therewith and clear away on completion and make good all works disturbed.

Lighting and Power for the WorksThe contractor shall allow for providing and maintaining a temporary electricity supply for the works including that required by subcontractors and for any meters and fittings to give artificial lighting and power necessary for the execution of the works and pay all charges in connection therewith and clean away on completion and make good all works disturbed.

Watching and lightingThe contractor shall allow for providing and maintaining any barrier, loading, watching and lighting which must comply with the bylaw or requirements of the local Authority and Police Regulation and the contractor must give all requisite notices to these authorities and provide everything necessary to protect the general public, workmen, plant, materials and the whole of the works from injury or damage.

SignboardThe contractor shall provide and exact a signboard on the site showing the little of the contract, the name and address of Employer, Project financier, Project Manager, Nominated subcontractors and such information as may be required by the Project Manager.

ProtectionThe contractor is required to protect the works in all sections until practical completion.

Removing rubbish and cleaningThe contractor shall remove all rubbish and superfluous materials from the site of the works with all reasonable speed from time to time and at completion.

Disturbance or Nuisance The contractor shall allow for taking all necessary precaution in the cause of execution of the works as to avoid causing disturbance or nuisance to the occupants of the existing building and those adjacent to the works and complying with the Project Manager’s instructions in this respect.

Trespass, Damage and care of works The contractor shall prevent any trespass on the adjoining property, and he shall take reasonable precautions during the progress of the contract to prevent any damage to the adjoining property or public or private read ways and to prevent materials, plant; rubbish, debris etc.The contractor will be reasonable for protection of adjoining buildings, boundary walls, fences, services either overhead or underground and for the making good of or paying for all damage there to should such be caused in the course of building or civil operations.

The contractor shall be required to take all reasonable care during alternations as not to damage the existing structure.

The collection of the above priced items are added and taken as the total Preliminary Items which be carried to General Summary.

Part two of Bill of Quantities after the Preliminary items which are quoted in lump sum is that part which is normally divided into Elements and are Quoted according to the provided units. The costing is done according to Work Breakdown Structure (WBS). Starting from the first activity to the required last finishing activity.

The elements, which form part of similar materials, are collected in one Bill of the PACKAGE EXAMPLE: BILL NO. ------------------------- ACCOMODATION UNIT

ITEM DESCRIPTION UNIT QUANTITY

RATE AMOUNT (TSHS

ELEMENT NO.1 substructureElement No. 2 FrameElement No. 4 WallingElement No.5 DoorsElement no.6 windowsElement no. 7 RoofingElement no. 8 FinishingElement no.9 DecorationsElement no.10 Fitting & fixturesElement no. 11 Plumbing and Engineering InstallationElement No. 12 Drainage

TOTAL ACCOMODATION UNIT CARRIED TO GENERAL SUMMARY

PREPARATION OF BOQs

Normally the Bill of Quantities shall be read in conjunction with the Instruction to Bidders, General Conditions of Contracts, Technical specification and Drawing.

A rate or price shall be entered against each item in the priced Bill of Quantities. The cost of items against which contractor has failed to be fill, shall be deemed to be covered by other rates or prices entered in the bill of Quantities.

The detailed drawings, which are used for preparation of Bill of Quantities, are normally attached with BOQ for the proper quotation.

In the preparation of BOQ the description of the site location is necessary. The Bidder is advised to visit the site and acquaint himself with the nature and terrain of the sites.

The reason of visiting the sites is to make the contractor to satisfy himself as to:- The nature of the sites

- The amount of bush, rubbish or debris to be cleared away before commencement of work

- The nature and size of any adjoining building’s and property - Sources of electricity water etc.

After the description of site the BOQ has also to describe the works to be done whether it is Building works or Civil Works. It is also to describe whether there is an external works like construction of rainwater harvesting system, which may include supply and installation of rainwater roof gutters and pipes for building works and Excavation and construction of Catch Water drainage and Mitter for Civil Works.

BUYERS CONTRIBUTION TO THE PREPARATION OF BOQS

In the formation of specification, the buyer must make sure that the prepared specifications by user (by this case Engineers and Quantity Surveyors) are challenged so as to assure the inclusion of commercial aspects, which are seldomly included by Engineers.

The buyer should provide information on alternative of materials required in the BOQ, Availability of these materials in the market and if they are not available, the required quality in the BOQ compared to buying which fit for the required purpose. In the normal course of designing, most of Engineers tend to over specify materials in the construction to maximize Quality. But as buying economically and efficiently as per PPA, Buyers must challenge these specifications to make sure that the conformation of them fit for the required purpose and fulfill the required objectives.

It is also through this Bill of Quantities Buyers establish the market prices and prepare cost estimates for the procurement of the particular works.

Example of Bill of Quantity (BOQ)

Bill No.-------------- Construction of VIP Latrine

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

             ELEMENT No. 1: SUBSTRUCTURE (All Provisional)                     EXCAVATION AND EARTHWORK                   

AExcavate foundation trench commencing at formation        

  level and not exceeding 1.50 metres deep 4 CM 1,000.00

4,000.00            

BExcavate pit commencing at stripped level not exceeding        

  1.50 metres deep. 33 CM 1,000.00 33,000.00

           

C Ditto over 1.50 but not exceeding 3.00 metres deep 33 CM 2,000.00 66,000.00

           

D Ditto over 3.00 but not exceeding 4.50 metres deep 1 CM 5,000.00 5,000.00

           

EExtra over any kind of excavation for breaking up rock and        

  the like 7 CM 2,000.00 14,000.00

           

FEarth backfilling well rammed and consolidated around        

  foundations and the like 18 CM 600.00 10,800.00

           G Selected excavated material filling, well rammed and        

 consolidated to make up levels under floor, 100mm thick 5 SM 2,000.00

10,000.00

           

HLoad up surplus excavated material and remove from site 53 CM 1,500.00

79,500.00

             Disposal of water                   

IAllow for keeping excavations free from water (except        

 spring or running water) by pumping, baling or by other        

  means necessary. ITEM                   Planking and strutting                   

JAllow for the provision and subsequent removal of planking        

  and strutting to uphold and maintain all faces of          excavations. ITEM        Hardcore                   

K200mm Bed levelled and blinded to receive concrete bed        

  (measured separately). 21 SM 3,500.00 73,500.00

           

L200mm Bed laid to slope and blinded to receive concrete        

  bed 2 SM 3,500.00

7,000.00            

M 200mm Bed to make up levels 1 SM 3,500.00 3,500.00

           

N Labour, hand packing to form vertical faces 2 LM 1,000.00 2,000.00

                                                       

  To collection       308,300.00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

             Soil sterilisation                   A Aldrin 0.50% solution applied at a rate of 7 litres per        

  square metre to hardcore beds. 5 SM 600.00 3,000.00

           

BDitto at a rate of 8 litres per linear metre per 300mm depth        

  per 235mm width to backfilling to one side of wall        

  foundations. 22 LM 500.00 11,000.00

             CONCRETE WORK                     Plain concrete grade "20"                   

C Foundations including steps and the like 1 CM 80,000.00 80,000.00

           

D 150mm Bed 22 SM 12,000.00

264,000.00

           

E 150mm Ramp 2 SM 12,000.00 24,000.00

           F Extra over 150mm bed for forming thicknessing        

  200mm wide x 250mm (average) deep 1 LM 4,000.00 4,000.00

           

GExtra over steps and the like for thicknessing size 200mm        

  x 250mm (average) deep 1 LM 4,000.00 4,000.00

             Reinforced concrete grade "20" including          vibrating around reinforcements                   

H 150mm Suspended slab 17 SM 12,000.00

204,000.00

           

IExtra over 150mm slab for forming 300mm long x 200mm        

  wide x 150mm high foot rest 4 NO 4,800.00 19,200.00

           

JForm opening size 250mm long x 200mm wide in 150mm        

 reinforced concrete slab including formwork to edges and        

  cutting fabric reinforcement 2 NO 2,000.00 4,000.00

             Reinforcement                   

KFabric reinforcement to BS 4483:1969,ref. 252 weighing        

  3.95kg per square metre in slab 17 SM 3,500.00 59,500.00

             Sawn formwork to                   

L Horizontal soffits of suspended slab, left in 13 SM 2,500.00 32,500.00

           

MVertical edge of bed over 75 but not exceeding 150mm        

  high 24 LM 600.00 14,400.00

                                                       

  To collection      

723,600.00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

           

AVertical edge of slab over 75 but not exceeding 150mm        

  high 17 LM 600.00 10,200.00

           

BVertical risers of steps over 75 but not exceeding 150mm high 2 LM 600.00

1,200.00

 

C Vertical sides of steps, ramp and the like 1 SM 2,500.00 2,500.00

             WALLING                   

 Solid concrete blocks to BS 2028 type "A" bedded and jointed in cement mortar (1:3)        

           

D 230mm Wall 54 SM 12,000.00 648,000.00

  ______________        E Build end of 100mm PVC pipe through 230mm        

  blockwall and make good sorrounds 2 No 1,000.00 2,000.00

             Finishes                   F 12mm Cement and sand (1:3) external rendering        

  to concrete blockwall 12 SM 1,500.00 18,000.00

           

GPrepare and apply two coats of black bituminous paint on rendered or concrete surfaces, externally 12 SM 1,000.00

12,000.00

         

  To collection      

693,900.00

             COLLECTION                   

  Page No. 8/11/8/1      

308,300.00

           

  Page No. 8/11/8/2      

723,600.00

  Page No. 8/11/8/3      

693,900.00

  TOTAL, SUBSTRUCTURE CARRIED TO SUMMARY OF BILL No. 8/11/8

      1,725,800.

00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

             ELEMENT No. 4: WALLING                     CONCRETE WORK                   

 Reinforced concrete grade "20" including vibrating        

  around reinforcements                   

A Horizontal isolated beam 1 CM 90,000.00 90,000.00

             Reinforcement                   

 Mild steel bar round bar reinforcement to BS 4449:1969        

           

B 16mm Bar 119 Kg 600.00 71,400.00

           

C 8mm Bar 28 Kg 600.00 16,800.00

             Sawn formwork to                   

D Sides and soffits of horizontal isolated beams 10 SM 2,500.00 25,000.00

             Blockwork                     Solid concrete blocks to BS 2028 type "A"          bedded and jointed in cement mortar (1:3)                   

E 150mm Wall 62 SM 10,000.00 620,000.00

           

F Raking cutting 10 LM 2,000.00 20,000.00

           

 Precast concrete grade "20" louvre blocks bedded and jointed in cement mortar (1:4)        

           

G 150mm Wall built fair and flush 5 SM 10,000.00 50,000.00

           

 TOTAL, WALLING CARRIED TO SUMMARY OF BILL No. 8/11/8      

893,200.00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

             ELEMENT No. 5: DOORS                     Joinery                     Prime quality mninga or other equal and          approved hardwood                     Batten door                   

A45mm Ledged and braced batten door size 780 x 2040mm        

  comprising of 25 x 135mm ledges and bracing and        

  20 x 130mm vertical boarding 2 NO 70,000.00 140,000.00

           

B Ditto size 680 x 2040mm ditto 2 NO 60,000.00 120,000.00

             Frames and finishing                   

C40 x 135mm Frame fixed to hardwood grounds (measured separately) 20 LM 3,750.00

75,000.00

 

D 15 x 55mm Door stopper 19 LM 600.00 11,400.00

             Sawn hardwood third grade                   

E 15 x 100mm rough grounds, plugged 20 LM 1,000.00 20,000.00

             Ironmongery                   

 

Supply and fixed the following ironmongery as manufactured by "UNION" or other equal and approved fixed to hardwood with matching screws        

           

F 100mm Aluminium butt hinges 6 PRS 3,500.00 21,000.00

           

G 100mm Brass barrel bolts 4 NO 1,000.00 4,000.00

             TOTAL, DOORS CARRIED TO SUMMARY OF BILL      

No. 8/11/8391,400.00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

  ELEMENT No. 7: ROOFING                     Roof covering                   

 22 Gauge industrial trough aluminium sheeting,        

 lapped 300mm at joints fixed to softwood purlins        

           A Roof covering sloping not exceeding 45 degrees        

from horizontal 24 SM 14,000.00 336,000.00

           

BHole through roof covering for large pipes and make good        

  with cement sand mortar (1:3) 2 No 2,000.00 4,000.00

             Roof structure                     Sawn softwood pressure impregnated with          preservative                   

C 50 x 150mm Wall plate 10 LM 1,800.00 8,000.00

           

D 50 x 150mm Rafters 20 LM 1,800.00 36,0

00.00            

E 50 x 75mm Purlins 23 LM 900.00 20,7

00.00              Vent pipe                     Unplasticised PVC pipes and fittings to BS 4514                   

F100mm Pipe fixed to blockwall with straps, plugged and screwed 8 LM 4,000.00

32,000.00

 

G Bend 2 NO 2,000.00 4,000.

00            H Copper wire balloon set on top of 100mm pipe and        

  covered with mosquito gauze 2 NO 2,000.00 4,0

00.00

 TOTAL, ROOFING CARRIED TO SUMMARY OF BILL No. 8/11/8      

454,700.00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

             ELEMENT No. 10: FINISHINGS                     In-situ finishing                     Cement and sand (1:4) screed flooring          incorporating an approved hardener trowelled          hard and smooth                   

A 40mm Floors and paving 12 SM 4,000.00 48,000.00

           

  40mm Floors and paving to fails and cross falls 8 SM 4,000.00 32,000.00

           

B 40mm Treads 300mm wide 2 LM 1,300.00 2,600.00

           C 18mm Riser 150mm wide with rounded nosing and        

  coved junction with treads 4 LM 600.00 2,400.00

           

DDishing around drain holes, pit latrines holes and the like 4 NO 3,000.00

12,000.00

           

E Working around vent pipes and the like 2 NO 2,000.00 4,000.00

           

 Internal plastering in two coats, steel trowelled to a smooth finish        

           

F 15mm To walls 64 SM 1,800.00 115,200.00

             External cement and sand (1:4) rendering with        

 approved plasticizer in two coats, steel trowelled to a smooth finish        

           

G 15mm To walls 28 SM 1,800.00 50,400.00

             External Tyrolean render in three coats        

H 22mm To walls 39 SM 2,200.00 85,800.00

 TOTAL, FINISHINGS CARRIED TO SUMMARY OF BILL No. 8/11/8      

352,400.00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

             ELEMENT No. 11: DECORATIONS Internal work                   

 Prepare and apply one thinned coat and two full coats of emulsion paint        

           

A Plastered walls 41 SM 1,000.00 41,000.00

           

B Fairfaced louvered blockwall 5 SM 1,000.00 5,000.00

 Prepare apply one undercoat and two finishing coats of gloss paint on        

           

C Plastered walls 23 SM 1,200.00 7,600.00

           

 Prepare and prime only wood surfaces before fixing        

           

DFrames and the like over 100 but not exceeding 200mm girth 20 LM 240.00

4,800.00

 

 

Prepare, prime and apply one undercoat and two finishing coats of gloss paint on wood surfaces        

         

E General surfaces 6 SM 1,200.00 7,200.00

           

FFrames and the like over 100 but not exceeding 200mm        

  girth 40 LM 240.00 9,600.00

  External work                   

 Prepare and apply one thinned coat and two full        

  coats of emulsion paint        

G Rendered walls 28 SM 1,000.00 28,000.00

           

H Fairfaced louvered block wall 5 SM 1,000.00 5,000.00

           

 Prepare and apply two coats of black gloss paint on        

I PVC large pipe 8 LM 120.00 960.00

 TOTAL DECORATIONS CARRIED TO SUMMARY OF BILL No. 8/11/8      

129,160.00

ITEM DESCRIPTION QTY UNIT RATE

AMOUNT (TSHS)

             BILL No. 8/11/8: VIP LATRINE                     SUMMARY                   

  Element No. 1: Substructure Page No. 8/11/8/3       1,725,800.00

           

  Element No. 4: Walling Page No. 8/11/8/4      

893,200.00

           

  Element No. 5: Doors Page No. 8/11/8/5      

391,400.00

           

  Element No. 7: Roofing Page No. 8/11/8/6      

454,700.00

           

  Element No. 10: Finishing Page No. 8/11/8/7      

352,400.00

           

  Element No. 11: Decorations Page No. 8/11/8/8      

129,160.00

                                            

 TOTAL, VIP LATRINE CARRIED TO GENERAL SUMMARY OF PACKAGE 11      

3,946,660.00

CASE STUDY

A Special Procurement Audit conducted by a consultant for the Chanika consulting agency revealed that the cost for constructing a conference hall was higher than the budget by TShs. 7.0m. The auditors observed that the higher costs were due to unnecessary steel reinforcement, which were used in the

construction of floors. The Specifications for the floor work indicated that 1000kgs of round bars were used to reinforce the floors. When asked, the engineer said that this was because he wanted a floor, which could not deteriorate easily.

Furthermore, the bricks used were made of concrete to support a heavy roof made of 4”x 6” timber traces placed 20cm apart. The Engineer justified the specifications by saying that the conference hall shall be used by students whom he thought are normally shouting and he would not like to disturb passers-by.”

TASKExplain how Procurement Specialist could assist in the preparation of BOQ to help reduce the costs.

TERMS OF REFERENCE (TOR)

INTRODUCTIONWhat is consulting Services?

It is a service of intellectual and Advisory nature performed for a fee by qualified practitioners, to help the clients or firms to achieve their goals and objectives. In other words it is the business of managing change and hence consultants are skilled knowledgeable agents of change.

The purpose of every consulting assignment is to make something in the client’s organization happen that will improve its performance and change for the better. In order to carry out the assignments the clients or procuring entity has to produce and issue to the Consultants with the terms of reference (TOR)

Definition of Terms of Reference

Terms of reference are the statements issued by the procurement entity giving the definition of the objectives, goals, scope of the services, including, where applicable the means to be used.

TORs are prepared to serve as the basis on which proposals shall be sought and contracts negotiated. Hence great emphasis should/must be placed on its careful preparation, clarity and consciousness. It is a of the law, under the Public Procurement Act No. 21 of 2004 The procuring entity is a fully responsible body for preparing the terms of reference so that scope of the services described in the TOR is compatible with the available budget.

Preparation of Terms of Reference (TOR)

In any Consultancy assignments at local or international levels requires that terms of reference (TOR) be prepared to serve as the basis on which proposals for procurement of goods, works and services shall be sought, contracts negotiated. The life of the TOR extends through all phases of the prospective consultancy assignment. Hence great emphasis must be placed on its careful preparation, clarity, conciseness and completeness as per Public Procurement Act No. 21 of 2004.

(i) TOR’s are normally used by procurement entity for three purposes:-

(a) For reaching agreement among the responsible agencies within the country or sector concerned, and between the executing agency and the prospective financing agency, on the objectives and scope of the proposed assignments

(b) To inform prospective consultants of the objectives and detailed intended scope of work when they are invited to submit proposals (The TOR is normally enclosed with the Request for proposals or in special circumstances at the stage of the Expression of Interests) and

(c) To define the Consultancy services in the contract to be negotiated after selection

(ii) Normally the TOR shall include and provide:

(a) A precise definition or statement of the assignment, objectives and goal set

(b) A clear description of the nature and detailed scope of services required as well as the context

(c) Qualification and experience of the consultants and counterparts staff

(d) Training of the required services (the time interval in which they shall be provided)

(e) Location or place of the assignments to be carried out

(f) Specific description of the outputs, duties responsibilities of the consultants

(g) Specific description of the inputs, duties and responsibilities to be provided or undertaken by the client or procurement entity

(h) Background information of the problem areas, available data, reference to all previous studies related to the assignment. This should provided by the procurement

(i) Information on any counterpart staff and its role

(j) Information on training and the transfer of technology where necessary

(k) Summary of facilities and services which the procurement entity will provide to the consultants

(l) Fees to be paid and the relevant payment modality

(m)The reporting requirements either

i. Draft report to be presentedii. Final report

(n) Furthermore the TOR should

Be as detailed and as accurate as possible Provide a relatively neutral list of duties to be performed Be prepared with great care, in view of its significance Be prepared by experts who are suitably qualified and well

experienced in the particular discipline and are familiar with the project area.

Scope of ServiceThe scope of service for consultant’s work is to be defined in a detailed engineering designs following successful feasibility study since on the one hand the basic characteristics of the project and the related problem areas are known and on the other, the technical specifications and other important criteria may be determined on the basis of study.

Projects for which there are no or insufficient pre-investment studies shall be given particular attention regarding technical design parameters.

For very large projects or where the nature of the work requires major inputs from diverse disciplines, it may be deemed necessary to retain more than one consultant. In such cases, the terms of reference will include specific provision for coordination of various consultants’ work.

For the preparation of final detailed designs and tender documents, the procurement entity requires the consultant to be made solely responsible for the accuracy and the suitability of its work. The terms of reference will provide, therefore, that while the buyer shall supervise and review the consultants’ work, no modifications shall be made in the final documents prepared by the consultant without his consent. As appropriate the

consultant may be appointed to act as adviser to the buyer on all technical problems related to the project, with authority to make final decisions within such limits as may be prescribed by the buyer.

For works supervision and inspection services, the definition of the consultant’s tasks is in general fairly simple. There may be instances; however, where the buyer may consider that an additional consultant is necessary because of the complexity of the project or the highly specialized nature of the inputs from diverse disciplines.

In such case, the terms of reference will provide for coordination of the work and specify the responsibilities of the different consultants.

At the stage of detailed engineering designs, detailed designs and supervision of construction, it is important that the responsibilities of the consultants be clearly understood by the buyer and all other interested parties.

Counterpart Staff

The Government insists that, during the acquisition of consultancy services, qualified counterpart employed by the procuring entity or its executing agency be involved in the assignment. Ideally, in some types of assignments such as feasibility studies, would be desirable to assign to each key experts of the consultant’s team and the counterpart from the executing agency, if possible temporarily released from his function.

In view of the staffing constraints of the executing agencies the members of counterparts shall be determined on a individual basis depending on the importance of the assignment and the requirement of the executing agency or procuring entity.

The role of counterpart varies from assignment to assignment and includes the following responsibilities and elements:

a) Through a day-to-day contact with a consultant’s experts, benefit from a transfer of skills and thus receive on the job training.

b) Liase between the organs of the procuring entity and the consultants and assist the latter with data collection providing it will all available information, documentation and studies of assignment.

Prior to any decision regarding the level, qualifications, number and responsibilities of each counterpart, discussions shall be held during the negotiation to determine:

a) The number and responsibilities of the counterpart staff cooperating with the consulting team.

b) The extent to which counterpart staffs are released from their normal duties.

c) The extent to which counterpart can fit into the consultants proposed work schedule.

d) The arrangement made to cover field and travel expenses of the counterpart staff.

e) The arrangements for Training replacements of unsuitable counterpart staff.

1.6.2 Training

The strengthening of national capability `of agencies or agent in the procuring entities through a transfer of knowledge and skills to local professionals, is of key concerned to the government.

It is based on programmes which falls within the frame – work or assignment whose principle objective may not necessarily be training and transfer of technology, but which meet requirements related to the principal project or its sector and the programmes may provide an opportunity for strengthening the capacity of the counterpart staff involved in the assignments to that of the national staff participating in a joint venture between foreign consultants.

For the successful implementation of this programme, the procuring entity must be convinced of its necessity, and consequently, sele1ct the necessary qualified professionals to participate in it, and release these professionals for the duration of the programme. The consultant shall accept the training function and its inclusions an obligation which is separate and distinct from the other services and propose corresponding costs and an implementation time – frame.

The objective of the programme shall be define and included in the TOR sent to the consultants invited to submit proposals; it will be defined during the negotiations both with regard to trainers, trainees, the skills to be transferred both with regard to trainers, trainees, the skills to be transferred and the time-frame.

1.6.3 Cost Estimates for Key StaffThe cost estimate shall be made on the basis of the cost of consulting assignment on the assessment of the resources needed to carry out the assignment: staff time, logistical support, and physical inputs (for example vehicle, laboratory equipment).

The cost estimate and budget for key staffs shall be based on the Terms of Reference. The budget shall be as detailed and as accurate as possible.

Although assignments often vary in importance, type, duration and complexity, the buyer shall be able to prepare a detailed estimate by breaking down each assignment into activities to be undertaken in time, in a given order and subsequently determine the duration and cost of each.

An estimate of the level of key staff inputs (in staff – month) require of the consultants, and indication of minimum expense, academic achievement and so forth, expected of key staff of the total budget, if a given figure cannot be exceeded.

Therefore the principal cost categories and characteristics on which the cost estimate based are the following:

(a) The consultant’s staff, profile, qualifications, time spent at headquarters and in the field, whose cost in (person/months for person/weeks, person/day) is based on the fixed rate of the cost of one person/month.

(b) National professional and support staff, whose cost is in general, estimated on the basis of local salaries.

(c) Direct costs such as travel, transport, per diem.

(d) The cost of physical inputs and materials such as equipment, vehicles, office supplies.

(e) Other expenditure (offices, communications, services, etc)

(f) An amount shall always be allocated, over and above the basic costs, to cover physical and price contingencies.

Some items of the cost estimate in foreign exchange or in local currency may be reimbursable and, as such, shall be clearly identified. These could be cost covering, travel, and vehicles equipment purchased especially for the assignment, some surveys and special investigations.

Any taxes and customs duties component of the cost estimate shall also be identified and appropriately handled by the buyer.

Trainee Activities

Explain the purposes for the preparation of TOR.

Discuss Scope of Service of Consultant’s Work.

STEPS FOR THE PREPARATION OF THE TORWriting the Background

This contains the problem statement, the mission and efforts being made by the procuring entity in solving this problem. The problem statement, the mission statement and causes and effects of the core problem should give the historical background of the key issues with which the consultancy services is being sought. The general scope of services should also be shown here.

Writing the ObjectivesThis section deals with the definition of the assignment goals and objectives. The objective should be clear and straightforward. Ambiguous statements should be avoided as far as possible. Here are just a few of the objectives of the project, to illustrate.

(a) Objectives:

(a)To present a program that will enable a learner to put together a plan, schedule, and control system by the end of the class.

(a)To develop a course that is highly practical, rather than theoretical. (No date is needed for this objective.)

(a)To have the course reviewed by at least two experienced project managers by December 30,1995.

(b) A list of deliverables would include the following:

i. A workbook to be used in the class

ii. Overhead transparencies to illustrate significant points covered in the class

iii. Handouts to be used in testing a learner's understanding of the material, and for use in class exercises

iv. Structured exercises to illustrate development of a Work Breakdown Structure, developing a CPM schedule (no resource allocation involved), and how to interpret a progress report using variance or earned-value measures.

The nature and scope of the services to be provided:The third step is to write down a clear description of nature and scope of services is required and their context. State the items that are excluded in the scope.

Sample Project Plan

To illustrate the principles presented in this part of module, a sample project plan will be developed. I have tried to choose a project that a person from any discipline can follow. That is a tall order in itself, but I have found that the one described fits the requirements fairly well a project to develop a training program for new project managers. A general description of the project follows. The example plan will include most of the core elements from the list of contents recommended for a project plan.

General Description Of the Project

This training program will be offered by Lewis Consulting & Training on both a public and in-company basis. That is, public programs will be offered that can be attended by anyone, and the class will also be offered to companies that have enough trainees to make their own class, usually in the range of 10 to 30 participants.

The class will include a participant workbook, some overhead transparencies, and a number of exercises that will help participants develop their competence in applying the skills being taught. Following are the components of the plan, together with commentary on various elements.

The Project Plan

The first step is to develop a problem statement. Here is the one written for this project:

Problem Statement: New project managers usually have no formal training in the tools and techniques of project management. They do not know how to plan, schedule, and control a project and therefore try to manage by the "seat of the pants."

Based on this problem statement, an overall statement of the goal of the project can be written. Following is the goal of the training program project:

Project Goal: To develop a training program for new project managers that will teach how to develop a project plan, a schedule with resources allocated realistically, and a control system. The program should be completed by November 30,2002. It is a good idea at this point to list the assumptions that will govern the project plan and have those agreed upon before going further. Some of the assumptions that might govern this project include:

The class is targeted at people who have little or no training in project management; that is, it is not an advanced class.

Resources applied to the project will be available full-time for the duration of the project.

A market exists for the training program as defined. Next, a statement of the scope of the project might be written, to

define the boundaries of the job.

Project Scope: The training program will include the essential tools of project management, including how to plan, how to schedule using either CPM or PERT methods, how to allocate resources in scheduling, and how to do variance or earned-value analysis. It will not include training in supervisory skills, as these are already available in another course. The course is also not aimed at experienced project managers, and so no advanced concepts will be presented. A mission statement for this project follows:

Our mission is to develop a training program in the tools and techniques of project management for project managers who have little or no training in the discipline. This is to be achieved by benchmarking best practice throughout the world and incorporating those methods into the course.

Although the mission statement provides a general approach to doing the project, it is helpful to spell this out more explicitly:

The workbook will be prepared by the instructor, using word processing combined with clip art and conventional illustrations. Desktop publishing will be used wherever possible. The camera-ready art will be provided to a printer for preparation of workbooks.

Overhead transparencies that support the text will be prepared as required. The workbook will contain ample space for participants to take notes in class.

Here are just a few of the objectives of the project, to illustrate. Time interval in which the services shall be provided:

This step involves the breaking down of the major activities to be carried out by the consultant showing the expected duration of each activity. Under this section it is important to indicate the key staff

Duties and Responsibilities of the Consultant:Write down a comprehensive job specification required for the consultant to carry out and jot down a list of duties. This, section also entails the responsibilities and accountabilities of the consultant.

Duties and Responsibilities of the Procuring Entity:This section defines the duties and responsibilities of the procuring entity that needs no attention of the consultant. It contains clear statements regarding financial liabilities of each party.

Key qualification required for the consultant and the key staff:

Under this section, the procuring entity should state the required skills and knowledge to accomplish the above duties; the experience and minimum level of education as well, as areas

The role of counterpart Staff:This section is important as it deals with the possibility of transfer of skills and knowledge to the client’s staff. The relationship between the consultant and the counterpart staff should be clearly shown. The section entails the separation of authority lines as well as the disciplinary actions that might be taken when things go wrong and the methods for replacing the counterpart staff.

Information on Training and Transfer of Knowledge:This entails writing down the training requirements and the asking the consultant on the skills transfer methodology requirement.

Reporting Requirements:There should be a section indicating the requirements of report writing formats and stages. This should be related to the time intervals of the assignment. The number of reports depends on the complexity of the assignment and the duration.

Trainee Activities

Discuss steps for the Preparation of TOR.

MANAGING THE CONSULTANCY PROGRAMME

Authority

The program manager has the delegated authority from general management to direct all program activities. He or she represents the company in contacts with the customer and all internal and external negotiations. Project personnel have the typical dual- reporting relationship: to functional management for technical performance and to the program manager for contractual performance in accordance with specifications, schedules, and budgets. The program manager approves all project personnel assignments and influences their salary and promotional status via formal performance reports to their functional managers. Travel and customer contact activities must be coordinated and approved by the program manager.

Any conflict with functional management or company policy shall be resolved by the general manager or his or her staff.

Responsibility

The program manager's responsibilities are to the general manager for overall program direction according to established business objectives and contractual requirements regarding technical specifications, schedules, and budgets. More specifically, the program manager is responsible for

Establishing and maintaining the program plan, Establishing the program organization, Managing and controlling the program, and Communicating the program status.

1. Establishing and maintaining the program plan. Prior to authorizing the work, the program manager develops the program plan in concert with all key members of the program team. This includes master schedules, budgets, performance specifications, statements of work, work breakdown structures, task and work authorizations. All of these documents must be negotiated and agreed upon with both the customer and the performing organizations before they become management tools for controlling the program. The program manager is further responsible for updating and maintaining the plan during the life cycle of the program, including the issuance of work authorizations and budgets for each work package in accordance with the master plan.

2. Establishing the program organization. In accordance with company policy, the program manager establishes the necessary program organization by defining the type of each functional group needed, including their charters, specific roles, and authority relationships.

3. Managing the program. The program manager is responsible for the effective management and control of the program according to established customer requirements and business objectives. He or she directs the coordination and integration of the various disciplines for all program phases through the functional organizations and subcontractors. He or she monitors and controls the work in progress according to the program plan, Potential deficiencies regarding the quality of work, specifications, cost, or schedule must be assessed immediately. It is the responsibility of the program manager to rectify any performance deficiencies. 4. Communicating the program status. The program manager is responsible for building and maintaining the necessary communication channels among project team members to the customer community and to the firm's management. The type and extent of management tools employed for facilitating communications must be carefully chosen by the program manager. They include status meetings, design reviews, periodic program reviews, schedules, budgets, data banks, progress reports, and team coloration.

Coloration of the project manager. This constitutes an obvious source of power in the project environment. While this gives project managers the right to exercise that power, the significance of authority under the project-functional interface cannot be understated. While project managers may have the final, unilateral right to order affairs in the project, it would be foolhardy for them to substitute their views without fully considering the "crystallization of thinking" of the other stakeholders in their project. Project managers rarely hope to gain and build alliances in their environments by arbitrarily overruling the team members who contribute to a project. They may not have the control for such arbitrary action. Even if they did, they should be most judicious in using authority in such a manner so that the culture in which the project team is operating is not adversely affected.

Authority operates in the context of responsibility and accountability. These concepts are presented in the following material.

What Is Responsibility? Responsibility, a corollary of authority, is a state, quality, or fact of being responsible. A responsible person is one who is legally and ethically answerable for the care or welfare of people and organizations. A person who is responsible is expected to act without specific guidance or being told to do so by a superior authority. To be responsible is to be able to make rational decisions on one's own, to be trusted to make such decisions, and to be

held liable for one's decisions. Archibald, a noted author in the field of project management, notes the following concerning the project manger's responsibility:

If the project manager's responsibilities are divided among several per- sons (such as one man for engineering, another for scheduling, a third for cost, a fourth for contract administration, etc.) such division is the most common cause of projects not achieving their objectives. Unless one person integrates the efforts of the project engineer, the project contract administrator, and so on, it is not possible to evaluate the project effectively to identify current or future problems and initiate corrective action in time to assure that the project objectives will be met.

The project manager cannot actually perform all the planning, controlling and evaluation activities needed, any more than he can perform all the technical specialty activities required. Project management support services must be provided to him, and he must direct and control these support activities. The hazard is that the support activities may exist, but in the absence of an assigned project manager, they are not properly used.

Some companies are very explicit about their project manager's responsibilities. For example, within the Fluor Corporation, a major engineering/construction company, project managers have "...total responsibility for the execution of the project from its earliest stages right through to completion. What is Accountability?

Accountability is the state of assuming liability for something of value, whether through a contract or because of one's position of responsibility. A professional is held accountable for excellence in the quality of the service rendered to the organization. Project managers have dual accountability: They are held answerable for their own performances and for the performance of people who comprise the project team. One of the basic characteristics of managers is that they are held accountable for the effectiveness and efficiency of the people who report to them.

Authority, responsibility, and accountability can rest with a single person or with a group of people. An example of pluralism in this sense is found in the use of a plural executive at the top-management level of organizations such as a management councilor the board of directors. The plural executive serves as an integrator of top-management decision-making and implementation. The increasing complexity and size of many large organizations have created managerial responsibilities beyond the capabilities of one individual. The plural executive that has been created by organizations usually acts in an advisory capacity to the chief executive by providing stewardship for the strategic management of the company. The specific authority of such plural executives depends on the character establishing such a body. Authority, responsibility, and accountability within the matrix context are the cohesive forces which hold-the

organization together and make possible the attainment of the organization's cost schedule and technical performance objectives. Figure 10.2 is one way of portraying these forces. The existence of cost, schedule, and technical performance objectives in this figure means that the degree of completeness of authority, responsibility, and accountability at each level in the model can influence any of or all the parameters.

Summary

In this chapter we addressed the de jure and de facto elements of authority. A project manager can never be granted all the authority

Board of

Directors ----------------

CEO and staff

-------------------------Manager of

projects ---------------------------------

Project managers

-----------------------------------------Functional managers

---------------------------------------------------Work package

managers ------------------------------------------------------------

Project professionals

Technical performance objective

Figure 4 Project management organizational designs.

Necessary to discharge his or her project management responsibilities. That manager must develop de facto sources and uses of authority through the development of knowledge, skills, expertise, personality, interpersonal skills, ability to build and maintain alliances, and so forth.

Projects can fail because of authority, responsibility, and account- ability ambiguities. Documentation of the project manager's and other key managers' authority in the project is a must. Criteria for the delineation of the legal authority of such managers were provided in the text of this chapter. The last measure of authority is the individual's ability to influence all the people who have some interest in the project and, in so doing, to deliver

Project management

organizational design

Role definition: authority

responsibility accountability

Sche

dule

obj

ectiv

e

Cost objective

the project on time, within budget, satisfying both the project objectives as well as the strategic objectives of the project owner.

The linear responsibility charting process described in Chap. 9 is an excellent tool to use in getting down to the specifics of authority in project management. Once an LRC is completed, the project team will have a better understanding of their individual and collective authority, responsibility, and accountability.

Trainee Activities

What is the difference between authority, responsibility, and accountability?

What role does power play in project management? List and discuss some power sources.