1. Module 10 Session 10.1 Visual 1 Module 10 Organizing Procurement Session 10.1Introduction to Procurement: Works, Consulting Services, and Goods

2. Module 10 Session 10.1 Visual 2 Instructional Objectives for Module At the end of this session, learners will be able to 1.In relation to procurement, define each of the following terms:  Works  Consulting services  Goods  Transparency in the procurement process  Accountability in procurement  Effectiveness  BOT (build-operate-transfer)  Monetarized characteristics  Nonmonetarized characteristics  Specifications  Economy in procurement  Qualitative characteristics  Quantitative characteristics

3. Module 10 Session 10.1 Visual 3 Instructional Objectives for Module (continued) 2.Give examples of works, consulting services, and goods. 3.List at least three generalizations about procurement, that is, those that apply equally to the procurement of works, consulting services, and goods. 4. Describe the role of the project manager in the procurement process. 5. List at least two common mistakes related to procurement in projects.

4. Module 10 Session 10.1 Visual 4 6. Explain the differences between (a) international competitive bidding (ICB), (b) national competitive bidding (NCB), (c) shopping, and (d) direct purchase. 7. Characterize the differences in procurement method(s) recommended for procuring (a) works, (b) consulting services, and (c) goods. 8. Use the spectrum of procurement to classify works, consulting services, and goods in terms of their quantitative and qualitative characteristics. Instructional Objectives for Module (continued)

5. Module 10 Session 10.1 Visual 5 9. Explain the importance of having a procurement strategy and schedule. 10.Develop a procurement strategy and schedule given a situation requiring procurement of works. Instructional Objectives for Module (continued)

6. Module 10 Session 10.1 Visual 6 Instructional Objectives for Session 1 Session 1 At the end of the session, the learner will be able to  Describe three generalizations that apply to all types of procurement.  Describe the role of the project manager in the procurement process.

7. Module 10 Session 10.1 Visual 7 Procurement Military works Works Civil worksGoods Consulting services Usual areas of procurement

8. Module 10 Session 10.1 Visual 8 Options for Financing Works From public fundsBy private financing Increasingly used in infrastructure sectors:  Transport  Power  Telecommunication Where demand is great and projects are large and expensive

9. Module 10 Session 10.1 Visual 9 Options for Financing Works (continued) Public funds Private financing Projects in the public sectors Private projects BOT

10. Module 10 Session 10.1 Visual 10 Generalizations Private funds Public funds Private spending decisions (may entail buying the best, not necessarily the cheapest, in first cost) Must be spent economically (value) No “outside” explanations or accountability Processes must be  Transparent  Accountable

11. Module 10 Session 10.1 Visual 11 Generalizations (continued) Risk perceived by bidders General level of bidding High Low

12. Module 10 Session 10.1 Visual 12 Above ground components; quantities known with certainty at bidding Subsurface conditions; quantities known only approximately at bidding Works

13. Module 10 Session 10.1 Visual 13 When we procure consulting services, we buy Consulting Services  Skill  Experience  Maturity  Leadership  Knowledge

14. Module 10 Session 10.1 Visual 14 GOODS Custom madeFrom suppliers’ standard line of products (“off-the-shelf”) Cheaper than “purpose- made,” but the variations in goods offered pose evaluation problems for the client Very expensive option but may be justified for specific projects

15. Module 10 Session 10.1 Visual 15 Manufacturers of Goods Long EstablishedNewly EstablishedManufacturersProducts  Tried and tested and  Unproven proven in the field  No reputation,  Good resale valuetherefore probably low resale value Established Minimal (or nonexistent)dealer service  For service and spares (Lower spares inven- tories for the clients) Possibly higher first cost, but cheaper in the long run Cheaper initially, but more expensive in the long run

16. Module 10 Session 10.1 Visual 16 Cost Comparison More expensive in first cost, but may be cheaper in the long run. Cheap in first cost “Quality” product bought in first instance Frequent replacement; poor level of service Fewer problems in operation; fewer replacements; good resale value

17. Module 10 Session 10.1 Visual 17 Characteristics of Goods For example:  Toughness of design  Reputation of manufacturer  Reputation of local agent A. CHARACTERISTICS That can be expressed in monetary terms B. CHARACTERISTICS That cannot be expressed in monetary terms For example:  Ex works price  Freight  Insurance The problem in evaluating bids for goods is how to combine A + B.

18. Module 10 Session 10.1 Visual 18 Works and Consulting Services Works  Definable  Measurable  Generally procured on the basis of competitive bidding Consulting Services  What is procured is not normally definable in measurable terms  Procured desirably on the basis of quality  Contracts generally negotiated

19. Module 10 Session 10.1 Visual 19 The Procurement Spectrum Judgmental Quantifiable Goods 100% 00 Works Consulting Services

20. Module 10 Session 10.1 Visual 20 Procurement of Works and Goods COMPETITIVE BIDDING SHOPPING DIRECT CONTRACTING INTERNATIONALNATIONAL LIMITED INTERNATIONAL INTERNATIONALNATIONAL

21. Module 10 Session 10.1 Visual 21 Project Manager’s Role  Shape strategy  Monitor execution  Establish and maintain good relationships with procurement officers

22. Module 10 Session 10.1 Visual 22 Procurement Summary Generalizations:  Transparency  Value/economy  Accountability Types of Financing  Public  Private Types of Procurement  Works  Goods  Consulting services Spectrum of Procurement  Quantifiable characteristics  Judgmental (qualitative) characteristics Project Manager’s Role  Shape strategy  Monitor execution  Manage relationship