Docstoc

Procurement Planning and Budget Implementation

Document Sample
Procurement Planning and Budget Implementation Powered By Docstoc
					Procurement Planning as a Tools for
Effective Budget Implementation and
           Service Delivery



       U Z O C H UK W U A M A K O M
        DEPARTMENT OF ECONOMICS
     NNAMDI AZIKIWE UNIVERSITY, AWKA
                 NIGERIA
            Introduction

The purpose of this is two fold.
 The role of the Procurement Planning
   Committee in an MDA's procurement
   process. This includes a discussion on
   conduct, ethics and good business
   practices    during      and  after    the
   procurement process.
 The second is to describe the preliminary
   considerations and activities that ensure
   the success of any procurement effort.
        What is Procurement?


Procurement is the acquisition of goods,
civil works or services at the best possible
total cost of ownership, in the right
quantity and quality at the right time, in
the right place for the direct benefit or use
of     Government,       Corporation       or
individuals, generally via a contract.
                What is a project?

 “A planned undertaking of related activities to reach
 an objective that has a beginning and an end.”

 “A unique venture with a beginning and an end,
 undertaken by people to meet established goals
 within defined constraints of time, resources, and
 quality.”
                 What is a project? (2)


 “A project is a temporary endeavour undertaken to
 create a unique product or service. Temporary
 means that the project has an end date.”
    http://en.wikipedia.org/wiki/Project
            Characteristics of projects


 Focused activity delivering predetermined output
 Closely bounded and scoped deliverables that can be
  relatively well defined
 Realises benefits following end of the project, after
  implementation of the project‟s outputs
          Characteristics of projects 2


 Normally closely timebound, typically short term
  (e.g.24 months).
 Tangible „Deliverables‟ – a building, an IT system, a
  new process
 Emphasis on production of the deliverable rather
  than realisation of the „benefits‟
  PROJECT CHARACTERISTICS

                Unique  Product
UNIQUENESS      Unique Context

                Unique Process

                Temporary

DURATION        Limited Timeframe


                Performance

NUMEROUS        Quality
CONSTRIANTS     Delays

                Costs
“…as we know, there are known knowns; there are
 things we know we know. We also know there are
 known unknowns; that is to say we know there are
  some things we do not know. But there are also
 unknown unknowns -- the ones we don't know we
                  don't know.”

                                 Donald Rumsfeld
              Procurement Planning


   Planning is listing in details all the requirements
    to complete the project, given the triple constraints
    of time, cost and quality
   The initial step in procurement planning is the
    determination of what is needed, how much,
    where and when.
              Procurement Planning 2


 Specifications (what you are procuring)
 Tender process (how you are procuring)
 Selection (who you are procuring from)
 Contract definition (the responsibilities of the parties
  to the contract)
 Award (providing best value for money – often not
  the cheapest bidder)
        Why Procurement Planning

 To precisely define the results
 To reduce uncertainty (Risk)
 To realize economies of scale and
  scope
 To maintain effective control
 To facilitate decision making
   ADVANTAGES OF PLANNING


 No one plans to fail, just fail to plan
 Better control of delivery
 Better control of costs
 Better control of resources
 Smarter delivery
  THE FIRST RULE OF PROJECT
        MANAGEMENT:

CLEARLY DEFINE THE
PROJECT SCOPE, AND
ENSURE ALL STAKE
HOLDERS ACCEPT THE
DEFINITION
            Procurement Plan Steps

   Establish the project objective & choose a basic
    strategy for achieving the objective
      Determine what goods, works and services are to
       be procured
   Break the project down into sub units or steps
   Determine the performance standards for each sub
    unit - Determine agency capacity to implement
    procurement- institutional, staffing, competence,
    training (Make or Buy)
   Decide how much time is required to complete each
    sub unit.
          PROCUREMENT PLANT STEPS contd.


 Decide the proper sequence for completing the sub
    units and aggregate this information into a timetable
    for the total project.
   Choose the type of contract for each package
   Choose procurement method – OCB, TST, RB, RfQ,
    DP, etc
   Determine lead time for each contract package
   Schedule the procurement process
   Develop a critical path/bar chart
WORK BREAKDOWN STRUCTURE (WBS)

 Scope Definition is the process of subdividing the
  major project deliverables into smaller, more
  manageable components (tasks)
 WBS : The basis of answering the following
  questions:
    How long will each task take?
    Who will do each task?
    What materials, supplies and equipment are required?
    How much will each task cost.
                         WBS

 It provides a graphic representation of the scope of
  the job, and this makes it easy to have a full grasp of
  all the work elements that will have to be completed,
  to successfully complete the project.
 Because all the tasks and subtasks are graphically
  displayed, it becomes easy to identify material,
  capital equipment, etc, associated with each activity.
  Thus the WBS helps us to make a “Make” or “Buy”
  choice.
        THE MAKE OR BUY DECISION

 A decision must be made on what tasks will be done in-
  house, as contrasted against those that will be sent to
  other companies for performance.
 The WBS is the tool that aids in this decision making
  process.
 As soon as the items and works to be bought are
  determined, the sellers of such items must be
  identified, and the time required to procure the items
  must be accommodated in the project master schedule.
          The WBS may be presented in outline form:

Level 1                Level 2             Level 3
Task 1
                       Subtask 1.1
                                           Work Package 1.1.1
                                           Work Package 1.1.2
                                           Work Package 1.1.3
                       Subtask 1.2
                                           Work Package 1.2.1
                                           Work Package 1.2.2
                                           Work Package 1.2.3
                       Subtask 1.3
                                           Work Package 1.3.1
                                           Work Package 1.3.2
                                           Work Package 1.3.3
Task 2
                       Subtask 2.1
                                           Work Package 2.1.1
                                           Work Package 2.1.2
                                           Work Package 2.1.3
                                  Example

• Procurement Planning for a Computerization
  project
    The main objective: Process Computerization
      Objectives to be achieved in order to achieve the main
       objective: Manual Operation, Prepare process Manuals,
       Reporting.
          Take each of the above sub-objectives, and determine the tasks that
           will be carried out to achieve it.
           • Example: Manual Operation: Accounting, Auditing, Stores Stock
              Keeping, Salary Administration.
           • -     Each of the sub objectives may be further broken down into
              sub-sub tasks (packages), until an adequate level of detail is reached.
           • Decide Make or Buy
           • Decide Procurement Method
      PROJECT PLANNING


                                 4. Activity
                                Sequencing
                                                6. Schedule
                                                 Development
                 2. Activity
                   Definition    5. Activity
                                  Duration                   9. Project
1. Scope and
                                 Estimating                       Plan
   Definition
                3. Resource
                   Planning                      8. Cost
                                   7. Cost       Budgeting
                                   Estimating
           Procurement Plan


   A Procurement Plan is a project
    management strategy that provides a
    framework for major procurement.

   Procurement Plans are prepared prior to
    commencing any procurement action.
   TIME DELAYS THAT MUST BE
   TAKEN INTO CONSIDERATION

 Administrative Lead Time.
   The period of time from initiation of the requirement by the
    user to issuance of an award.
 Order Ship Time
   Time after award required by suppliers to fill an order and
    ship by designated means (truck, rail or air) to the delivery
    point.
Determination of lead time

 Listevery activity of the procurement
 process

 Estimate time required for each activity


 Allow for slippages
 Lead Time for Goods, Equipment Plant

Administrative       Delivery/Execution Install/warranty
advertise            manufacture         Ocean transit
Prepare specs        inspection          port clearance
Prepare bid docs     packaging           Inland transit
Submit bids          Inland transport    assembly
Evaluate bids        shipment            Installation
Check post qualifi                       commissioning
Notify award                             Testing
Receive p.g                              acceptance
Sign contract                            warranty
                   Lead Time for Works
Administrative         Execution            Execution
Advertise for pq       mobilise             Maintenance period
Evaluate PQ                                 Claims
applications
Prepare BOQ and        Construct, inspect   Final acceptance
specifications
Prepare bid docs       Provisional
Issue BD               acceptance
Hold pre bid meeting
Submit bids
Evaluate bids
Check post
qualification
Notify award
Sign contract
                  Lead Time for Consultants
Administrative             performance
Prepare TOR                Mobilize staff
Prepare cost               Perform contract
estimate
Prepare short list         Submit interim
                           reports
Prepare RFP                Submit final report
Receipt of proposals
Evaluate technical
proposals
Evaluate price proposals

Combine tech and
price evaluations
Negotiate award
   Management Structure for Effective
        Procurement Planning

              must be given to appointing
 Consideration
 a Committee with responsibility for
 overseeing the procurement planning
 phase.

 Consideration    should also be given to
 establishing a procurement department
 with a skill mix.
          Procurement Planning


   Procurement planning is a process
    where MDA‟s review current/existing
    procurement   processes,   identify
    future needs and direction for
    procurement management.
     Procurement Planning (Cont‟d)


   The Delta State Government Public
    Procurement     Law      establishes      a
    comprehensive procurement framework,
    which assists MDA‟s in the efficient
    delivery  of   services    and     ensures
    procurement strategies are consistent with
    the Government's wider policy objectives.
        Procurement Plan
            (Cont‟d)
A Procurement Plan identifies
procurement opportunities, options for
achieving outcomes, potential
partnerships and alliances, market
capability, performance measures,
stakeholders, internal organisational
requirements, preliminary costs, risk
management issues.
        IMPLICATIONS OF THE PUBLIC
    PROCUREMENT LAW FOR PUBLIC SECTOR
               EXPENDITURE

    The attainment of transparency, cost
     effectiveness,    competitiveness      and
     professionalism;
    Ensuring probity, accountability, fair
     and value-for-money standards and
     practices for the procurement and
     disposal of public assets and services.
     IMPLICATIONS OF THE PUBLIC
 PROCUREMENT LAW FOR PUBLIC SECTOR
            EXPENDITURE

 Procurement Officers involved in procurement
   activities are either directly or indirectly spending
   public funds and subject to public scrutiny and as
   such are reminded to:
a.      Act responsibly.
b.      Conduct procurement process honestly.
c.      Avoid        wasteful      and        impractical
        procurement practices.
     IMPLICATIONS OF THE PUBLIC
 PROCUREMENT LAW FOR PUBLIC SECTOR
            EXPENDITURE

d. Avoid real or perceived conflicts when
  conducting procurement process on the
  MDA's behalf.
e. Advise stakeholders of acceptable
  business practices, conflicts of interest and
  respected standards of ethical and moral
  behaviour during any procurement
  activities involving their participation.
         IMPLICATIONS OF THE PUBLIC
     PROCUREMENT LAW FOR PUBLIC SECTOR
                EXPENDITURE

f.       Seek to maintain and continuously
     improve their professional knowledge,
     skills and abilities.
What has Procurement Planning Contribute to
      Budget Implementation Process


 Planning aggregates needs [ensuring
  that only the needed is procured]
 Market Survey
 Planning reduces costs
 Planning reduces wastages
  Procurement Planning and Effective Service
                  Delivery

 Analytical procurement planning ensures
  that the right procurement method or mix
  of methods is chosen to implement
  procurement.
 Procurement      planning ensures that
  budgetary allocations are made for projects
 How can service delivery benefit from a good procurement
                           plan?




 Assurance and availability of funds
  to execute public project and
  provide services.
 Selection of the best qualified in
  technical and professional terms to
  provide services and works.
                   Conclusion

 The Public Procurement Law provides the legal and
 institutional framework for the enthronement of
 Transparency, Accountability, Value for Money and
 Efficiency in the procurement of works, goods and
 services within the State Ministries and Extra-
 Ministerial Depts. With this, the Objectives of the
 State Government shall be delivered for DIRECT
 BENEFITS OF DELTANS AND NIGERIANS!
Thank You!

				
DOCUMENT INFO