1. CONSTRUCTION PROCUREMENT, CONTRACTING AND CONTRACTS MANAGEMENT IN GHANA PREPARED BY: SURV. OSEI AGYEMANG-BADU MSc, BSc, MGhIS. (PROCUREMENT SPECIALIST) NOVEMBER 2011

2. Outline Definitions Construction Procurement & Contracting – Historical Background – Application Procedure Contract Management Contract Performance 2

3. DEFINITIONS PROCUREMENT Act of procuring or obtaining or getting by effort, care or use of special means. RIGHT PRICE; RIGHT SOURCE; RIGHT QUANTITY; RIGHT QUALITY; RIGHT TIME. 3

4. CONTRACTING Agreement between two or more parties especially one that is written and enforceable by Law. DEFINITIONS 4

5. CONTRACT MANAGEMENT Process of ensuring that parties to a legal contract meet their obligations in order to deliver the objectives required from the contract. Involves optimization of efficiency, effectiveness and economy of Product/Service. Elimination of any associated Risk. DEFINITIONS 5

6. A. CONSTRUCTION PROCUREMENT & CONTRACTING A 1. HISTORICAL BACKGROUND Contribution of Procurement to Public Spending. Previous Procurement Practice. Need for a structured Procurement Practice as a Policy of Good Governance. 6

7. ESTABLISHMENT OF ACT 663 (PUBLIC PROCUREMENT ACT), 2003. OBJECTIVE Harmonies processes of the Public Procurement in Public Service to secure a judicious, economic and efficient use of State Resources in Public Procurement and ensure that Public Procurement is carried out in a FAIR, TRANSPARENT AND NON- DISCRIMINATORY MANNER. 7

8. PPA, 2003 (Cont’d) Private Sector to a large extent also has corporate policies and similar procedures on Procurement. i.e. Banks, MIDA, GOIL, etc. 8

9. A 2 APPLICATION PROCEDURES PROCUREMENT STRUCTURES SCOPE OF APPLICATION (SECTION 14) Works or Services financed in whole or in part from Public funds (Minister’s prerogative to use different procedures in National Interest). Procurement with funds or loans taken or guaranteed by the State and foreign Aid Funds (Exception Section 96). 9

10. SCOPE OF APPLICATION (Cont’d) Central Management Agencies; MDA’s, Subverted Agencies; Governance Institutions; Sate Owned Enterprise; Public Universities; Schools, Colleges; Hospitals; Bank of Ghana; Financial Institutions such as Public Trust; Pension Funds; Insurance Companies; etc. 10

11. PROCUREMENT ENTITY Responsible for Procurement, with Head responsible and accountable for actions taken. Concurrent approval by any Tender Board shall not absolve Head from Accountability. 11

12. ENTITY TENDER COMMITTEE (SECTION 15) Shall meet at least once a quarter. Exercise sound judgment in making procurement decisions. Ensure that at each stage of the Procurement activity, procedures in the Act have been followed. Refer to appropriate TRB for approval, any procurement above its approval threshold. 12

13. Evaluation Panel Members (Section 19) Procurement Entity shall appoint, a Tender Evaluation Panel with THE REQUISITE EXPERTISE to evaluate tenders. Shall proceed accordingly with pre- determined and published evaluation criteria. 13

14. TENDER REVIEW BOARD (SECTION 20) Review activities at each stage of a procurement cycle, leading to the selection of the lowest evaluated bid, best offer in order to ensure compliance with the Act. Central Tender Review Board Ministerial Tender Review Boards Regional Tender Review Board District Tender Review Board. 14

15. PROCUREMENT RULES (SECTION 21) PROCUREMENT PLANS Time of submission of Plan – After budget approval and at Quarterly intervals. Furnish TRB’s with Procurement Plans. Bulk breaking of Procurement Order. MANY OTHER RULES IN ACT 663. 15

16. QUALIFICATION OF TENDERS Requirements to attract adequate capacity. Factors to determine capacity. Experience Plant and Personnel availability, Access to funds Any other relevant factors. 16

17. Method of Procurement (Section 35) Two-Stage Tendering Competitive Tendering Restrictive Tendering Sole Sourcing Request for quotations 17

18. TENDERING PROCEDURES National Competitive Tendering International Competitive Tendering Prequalification Preparation of Tender Document to attract suitable Contractors for Construction Works. Use of appropriate TD with minimum and relevant changes. Clear evaluation criteria including any margin of preference 18

19. RECOMMENDATION OF CONTRACT AWARD AND CONTRACTING Contract award is done by Procurement Entity and not a review Board. Parties to contract to sign a completely prepared contract document. Required securities to be provided prior to signing contracts. 19

20. B. CONTRACT MANAGEMENT Applicable in all Procurement transactions. Challenges Abandonment of Projects by Contractors. Lack of funds for a Project. Long periods of delays on Projects, etc. 20

21. CONTRACT MANAGEMENT (Cont’d) Contract Management begins as soon as a Contractor has been selected and accepted to perform a contract. - Does not relate to high value or volume procurement but also, low value and critical procurement. 21

22. FACTORS RESPONSIBLE FOR SUCCESSFUL PROJECT IMPLEMENTATION Adequate Project preparation, in terms of scope, availability of funding, etc. Capacity of Contractors Understanding a Contract before signing -Joy of winning contract preventing thorough scruitinization of Terms and Conditions. -Provisions of necessary securities to cover future occurrences. 22

23. FACTORS RESPONSIBLE FOR SUCCESSFUL PROJECT IMPLEMENTATION (Cont’d) Adequate and sound project supervision Involvement of relevant stakeholders. Reliable payment regime/plan. 23

24. C.Contract Performance Adequacy of scope – Thoroughly outlined detailed specification, bills of quantities. Competence of Contractor should have been properly ascertained. Adequate contract documentation, with clear terms and conditions, obligations and responsibilities of both parties, payment terms, commencements, duration, price adjustment clause, etc. 24

25. Contract Performance (Cont’d) Effective Supervision Site meeting and monitoring of work performance must be regular to ensure that parties have the opportunity to share problems and resolve them. Relationship Management Parties to contract and other stakeholders must know how to relate to themselves. 25

26. Contract Performance (Cont’d) Payment Delays – A critical factor that affect contract execution and cost - Interest on delayed Payments -Bureaucratic approval process. 26

27. Conclusion To achieve value for money in Construction Projects, there is the need to follow a sound procurement procedure in the selection of competent Contractors. There is the further need to properly and formally execute the contracting process and effectively monitor and supervise the Project in strict accordance with Terms and Conditions of Contract. 27

28. THANK YOU. 28