Procurement Planning Effectiveness in Ethiopia: The Case of Minister of Urban Development, Housing and Construction /MUDHCo/ Anteneh Getahun EMBA EMBA Advisor: Dr. Mohammed Seid June, 2015

Outline 1. Introduction 1.2 Statement of the Problem 1.3 Research Questions 1.4 Research Objectives 2. Methodology 3. Findings 4. Recommendations 2

Introduction Procurement Planning Stages Stage 1: User Departments Raise annual procurement need Stage 2: Procurement unit Consolidate the departments needs Stage 3: Organization proc. Plan send to the appropriate public body, Announce to company Website and dispatch to Departments. 1. Goods 2. Service 3. Works To perform their Work programs After Approval of the annual budget

Cont… The required goods/service The user Dept. needs, mainly acquire Specification or Terms of reference Estimated price/cost Date When it requires

Cont… Method of Procurement Consolidated plan, mainly acquire Type of procurement National/International Detailed specifications Lead-time Source of fund Gov’t/Grant or other Internal Lead Time : from need identification to contract signing or purchase order issuance External Lead time : from contract signing / receiving of purchase order to the final Delivery of goods/service Cost/budget allocated

Cont… Procurement plan and performance Annual Procurement Plan Quarterly Performance Report

Benefit of Having Procurement Plan Economical & Efficiency of procurement Avoid Delay Decrease Cost(Due to bulk purchase ) Improve Transparency Reduces Corruption….. 7

Cont… The intend of the research was to assess what Procurement Planning and Implementation Practice looks like Within the Ministry? 8

2.Statment of the Problem Too much delay in the process Under-utilization of the budget. The cause of: 9 Work Program Affected by Poor Procurement Function. The Organization Fail to Achieve Objectives in Due Time.

Cont… Unplanned Purchase which is The major cause for: 10 Corruption, Malpractice & Fail to achieve value for money Effective Efficient Least price/ Economy

Cont… Problem in Preparing and Properly Deploying a Procurement Plan. 11

Research questions 1. What do the current procurement- planning practice looks like? 2. Does the plan have complete specifications? 3. Does the organization use market assessment, to estimate price? 12

General Objective of the research: To Assess The Practice of Procurement Planning And Implementation Practice. Specific Objectives: Describe the Current Procurement-planning Practice. Find out the completeness of the specification. Assess the trend of market price assessment. 13

Cont… The study aimed to help the Ministry to improve institutional performance. 14

Conceptual Framework Procurement-planning practice Timely raising of needs, Competence of staff, Participation, Extended process, and Plan versus performance, Completeness of specifications Easy to understand, Clear, Accurate & Complete Realistic price estimation Trend in Market Price Assessment Procurement-Planning Effectiveness Independent Variables Dependent Variables (Source: Adapted from Celestine Joan Onyango, 2012) 15

The Scope of the Research The study assessment considered the Government Budget. (The Ministry has also Fund budget) The study assessed Internal Factors.(External factors also affect the procurement function) 16

Significance of the Study For Management, For Policy Makers, For Employees, For Further Research. 17

Methodology Research Design Descriptive Statistics used: As the study is intends to describe the existing practice. 18

Data Sources Primary data: - Close-ended and - Open-ended Questionnaires. Secondary data - Procurement plan versus performance of 2012/2013 & 2013/2014 were used 19

Target population

Sampling Techniques Stratified Sampling Technique is used to select target population. Simple random sampling is used to select respondents from each strata. 21

Data Analysis The Close-ended: SPSS; Mean, Standard Deviation and Percentile. Open-ended questions were used by Coded. Plan Versus performance of procurement for the year 2012/2013 and 2013/2014 were used. 22

Result and discussions Respondent rate was 95 Percent 23 It shows they had reach experience to respond the questionnaires

Qualifications of the Respondents 24 It shows how the study able to get Rational Information

Profession of the Respondents 25 It shows how The study able to get Rational Information

Findings The user departments: They often Raise procurement needs The work programs had been Affected by poor procurement function Lack of qualified staff is moderate. PROCUREMENT PLANNING PRACTICE

Cont… The Procurement Unit: Evaluation of Plan Versus Performance is weak Revising the Plan when Necessary is weak Estimating Internal and External Lead-time is Very Weak. PROCUREMENT PLANNING PRACTICE

Cont… The Procurement Unit: Urgent/unplanned procurement Requisitions is challenge Lack of qualified staff is a challenge. Planning & Reporting Format is not coherent PROCUREMENT PLANNING PRACTICE

Secondary data Findings Method of Procurement 1. Open Bidding : all eligible potential bidders determine their interest and have an equal opportunity to submit the tender. 2. Restricted tendering method (Limited Tender): - If it only available from a limited number of suppliers. - When open bid is fails to attract bidders. 29

Cont.. 3. Direct procurement method: - Available from single suppliers - Small value contract( Only Birr : within a fiscal year, it shall not exceed 30,000.00) - Emergencies 4. Two-stage Bidding Method: - For complex goods & service purchase - By announcing expression of interest & select the potential suppliers 30

Cont.. 5. Request for Quotations Method: (shopping) - For readily available, - ETB is 250,000 Million for construction, - 100, for goods. - 60, for service and - 75, for consultancy service. 31

2012/2013 Total performance is 14%. Open bid performance is only 9.27% %(however, the plan was 91.31%) Request for quotation(shopping) is 416%(however, the plan was 0.6%) 32

2013/2014 Total performance is 17%. Open bid performance is only 13%, plan was 82% Request for quotation(shopping) is 292%, plan was 1% 33

Cont… User Departments: In preparing clarified specification And in using Standard Specification Format they are Moderate. SPECIFICATION COMPLETENESS

Cont… The Procurement Unit: Only 20% of User Departments Prepare Specifications. From those specification Only 40 percent is preparing well. From those only 60% have been using Standard specification format. PROCUREMENT PLANNING PRACTICE

Cont… MARKET ASSESSMENT TREND User Departments & Procurement Unit Were Poor

Lack of technical know-how in bid preparation 38% Percent: Tender approval committee too many other assignments.

Open ended… Lack of know-how in bid doc. prep. User Department Raised Drawbacks Clarity of procurement guideline Delay in technical Evaluation Finance Dep. Delay in payment Approval committee delay Lack of Monitoring & Evaluation User department not pay Enough attention Lack of Technology Usage

Cont… Request for quotation (Shopping) was increased, in the past years, which is the major cause for corruption and malpractice. The open tendering is very low performance. The procurement plan format and the procurement reporting format were not coherent. 39

Cont… Lack of technical know-how In bid document and specification preparation. Extra delay In Technical document evaluation. 40

Cont… Currently, the Ministry has been affected by the poor performance of procurement planning and implementation practice. Plan was not transparent, and there was a gap to make corruption and malpractice due to piecemeal purchasing practice without market price assessment trend. 41

Recommendations 1. The organization should vigorously develop continuous training programs. This can help: -To mitigate lack of technical know-how in bid preparation and other procurement process 42

Cont… 2. The planning and reporting format should display the lead-time in detail & should be coherent. It can help: To track the plan versus performance to make early corrective measurement. 43

Cont… 3. Prepare early the bid process. It can help: - To reduce delay in procurement process. - To tackle bureaucratic process beforehand. 44

Cont.. 4. The Ministry should establish a system to gather market price. It can help: - To reduce corruption - To know potential supplier 45

Cont… 5. Departments should try hard to plan the required materials and service at the most possible extent. It can help: - To reduce unplanned procurement the cause of corruption and malpractice. 46

Recommendations for Future Research As per the researcher, there is a need for future to examine other variable like: (i) Organizational Culture, (ii) Documentation, (iii) Contract Administration, (iv) Risk Assessment in Procurement, (v) E-procurement usage to procurement. 47

Thank you 48

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