Procurement Planning and Budget Implementation

8/3/2019 Procurement Planning and Budget Implementation

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UZOCHUKWU AMAKOM D E P A R T M E N T O F E C O N O M I C S

N N A M D I A Z I K I W E U N I V E R S I T Y , A W K A

N I G E R I A

Procurement Planning as a Tools forEffective Budget Implementation and

Service Delivery



Introduction

The purpose of this is two fold. The role of the Procurement Planning

Committee in an MDA's procurementprocess. This includes a discussion onconduct, ethics and good businesspractices during and after theprocurement process.

The second is to describe the preliminary considerations and activities that ensurethe 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 rightquantity and quality at the right time, inthe right place for the direct benefit or use

of Government, Corporation orindividuals, generally via a contract.



What is a project?

“A planned undertaking of related activities to reachan 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, andquality.”



What is a project? (2)

“A project is a temporary endeavour undertaken tocreate a unique product or service. Temporary

means that the project has an end date.” http://en.wikipedia.org/wiki/Project

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, anew process

Emphasis on production of the deliverable ratherthan realisation of the „benefits‟



PROJECT CHARACTERISTICS

UNIQUENESS

Unique Product

Unique Context

Unique Process

DURATION

Temporary

Limited Timeframe

NUMEROUSCONSTRIANTS

PerformanceQuality

Delays

Costs



“…as we know, there are known knowns; there arethings we know we know. We also know there areknown unknowns; that is to say we know there are

some things we do not know. But there are alsounknown unknowns -- the ones we don't know we

don't know.”

Donald Rumsfeld



Procurement Planning

Planning is listing in details all the requirementsto 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 partiesto the contract)

Award (providing best value for money – often notthe cheapest bidder)



Why Procurement Planning

To precisely define the results

To reduce uncertainty (Risk)

To realize economies of scale andscope

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 PROJECTMANAGEMENT:

CLEARLY DEFINE THEPROJECT SCOPE, AND

ENSURE ALL STAKEHOLDERS ACCEPT THEDEFINITION



Procurement Plan Steps

Establish the project objective & choose a basicstrategy 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 subunit - Determine agency capacity to implementprocurement- 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 subunits and aggregate this information into a timetablefor 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 themajor project deliverables into smaller, moremanageable 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 toother companies for performance.

The WBS is the tool that aids in this decision makingprocess.

As soon as the items and works to be bought aredetermined, the sellers of such items must be

identified, and the time required to procure the itemsmust be accommodated in the project master schedule.



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

The WBS may be presented in outline form:



Example

• Procurement Planning for a Computerizationproject The main objective: Process Computerization

Objectives to be achieved in order to achieve the mainobjective: 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

1. Scope andDefinition

2. ActivityDefinition

3. ResourcePlanning

4. ActivitySequencing

5. ActivityDurationEstimating

7. CostEstimating

6. ScheduleDevelopment

8. Cost

Budgeting

9. ProjectPlan



Procurement Plan

A Procurement Plan is a projectmanagement strategy that provides a

framework for major procurement.

Procurement Plans are prepared prior to

commencing any procurement action.



TIME DELAYS THAT MUST BETAKEN INTO CONSIDERATION

Administrative Lead Time.

The period of time from initiation of the requirement by theuser 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

List every activity of the procurementprocess

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 TestingReceive p.g acceptance

Sign contract warranty



Lead Time for WorksAdministrative Execution Execution

Advertise for pq

Evaluate PQapplications

mobilise Maintenance period

Claims

Prepare BOQ andspecifications

Construct, inspect Final acceptance

Prepare bid docs

Issue BD

Hold pre bid meeting

Provisional

acceptance

Submit bids

Evaluate bids

Check postqualification

Notify award

Sign contract



Lead Time for ConsultantsAdministrative performance

Prepare TOR Mobilize staff

Prepare costestimate

Perform contract

Prepare short list Submit interimreports

Prepare RFP Submit final reportReceipt of proposals

Evaluate technicalproposals

Evaluate price proposals

Combine tech andprice evaluations

Negotiate award



Management Structure for EffectiveProcurement Planning

Consideration must be given to appointinga Committee with responsibility foroverseeing 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 forprocurement management.



Procurement Planning (Cont‟d)

The Delta State Government PublicProcurement Law establishes a

comprehensive procurement framework, which assists MDA‟s in the efficientdelivery of services and ensuresprocurement strategies are consistent with

the Government's wider policy objectives.

P Pl



Procurement Plan(Cont‟d)

A Procurement Plan identifiesprocurement opportunities, options forachieving outcomes, potential

partnerships and alliances, marketcapability, performance measures,stakeholders, internal organisationalrequirements, preliminary costs, risk

management issues.



IMPLICATIONS OF THE PUBLICPROCUREMENT LAW FOR PUBLIC SECTOR

EXPENDITURE

The attainment of transparency, costeffectiveness, competitiveness andprofessionalism;

Ensuring probity, accountability, fairand value-for-money standards andpractices for the procurement anddisposal of public assets and services.

CA O S O C




EXPENDITURE

Procurement Officers involved in procurementactivities are either directly or indirectly spendingpublic funds and subject to public scrutiny and as

such are reminded to:a. Act responsibly.

b. Conduct procurement process honestly.

c. Avoid wasteful and impracticalprocurement practices.

IMPLICATIONS OF THE PUBLIC




EXPENDITURE

d. Avoid real or perceived conflicts whenconducting procurement process on theMDA's behalf.

e. Advise stakeholders of acceptable business practices, conflicts of interest andrespected standards of ethical and moral

behaviour during any procurementactivities involving their participation.

IMPLICATIONS OF THE PUBLIC




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 [ensuringthat only the needed is procured]

Market Survey Planning reduces costs

Planning reduces wastages



Procurement Planning and Effective ServiceDelivery

Analytical procurement planning ensuresthat the right procurement method or mixof methods is chosen to implementprocurement.

Procurement planning ensures that budgetary allocations are made for projects

How can service delivery benefit from a good procurement



How can service delivery benefit from a good procurementplan?

Assurance and availability of fundsto 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 andinstitutional framework for the enthronement of Transparency, Accountability, Value for Money andEfficiency in the procurement of works, goods andservices within the State Ministries and Extra-Ministerial Depts. With this, the Objectives of theState Government shall be delivered for DIRECTBENEFITS OF DELTANS AND NIGERIANS!



Thank You!

Procurement Planning and Budget Implementation

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