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PMIGPUBLIC SECTOR PROCUREMENT

BEST PRACTICES & LESSONS LEARNED

Kevin James

Barrie Kroukamp

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TAU AIM

To support the improvement of procurement management as part of

the programme management cycle on government programmes in

cooperation with the SCM Units / PMU

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TAU SUPPORT

• Strategic & Policy level support

• Operational level support– Advice & mentoring– Support to SCM Units & PMU's

• Knowledge sharing

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SUPPLY CHAIN MANAGEMENTDefinitions

• SCM ensures that the right goods / services are delivered to the right place, in the right quantity, with the right quality, at the right cost and at the right time.

• SCM is the integration of the key business processes of demand, acquisition, logistics and disposal for the provision of goods or services in an effective, efficient and economic manner.

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PROCUREMENT MANAGEMENT Background

• DEMAND MANAGEMENT– Knowing what you need, why, when and

where ( = procurement business case)

• ACQUSITION MANAGEMENT– Actually getting what you need from the right

supplier / service provider at the right price

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DEMAND MANAGEMENT

• Quantify needs & frequency thereof

• Critical target (delivery) dates

• Budget determination

• Expenditure patterns / project cycle

• Specifications / quality

• Assumptions & risks

• Supplier research

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ACQUISITION MANAGEMENT

• Sourcing strategy– Procurement legislation– Market / supplier research

• Bid documentation– Goods– Services– Works

• Evaluation & Recommendation• Adjudication• Contracting / Award

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PROGRAMME OR PROJECT MANAGEMENT

Need Assessment

Plan

Procurement

Implement

Monitor

Review & Evaluate

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PROGRAMME MANAGEMENTKey factors

• Governance– Structures– Stakeholder management

• Project Management – adopting project management principles– Risk, quality, scope, issues

• Planning and Control– A crucial element - knowing up front what needs to be done

• Financial / resource management– Knowing budgets & multi-year expenditure requirements– Tracking expenditure– Being "geared up"

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PROCUREMENT PRINCIPLES & STEPS

1. GENERAL

• Policy– Rules

– Procedures

• Competition• Value for money• Fair, open & transparent• Quality processes

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PROCUREMENT PRINCIPLES & STEPS“Getting prepared”

2. Procurement strategy– In programme design

3. Procurement planning– Detailed thinking– Risks & assumptions– Role of other stakeholders– Scheduling activities & resourcing

4. Market research– Suppliers

– Service providers

5. Business case (procurement justification)– Be sure that doing the right thing

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PROCUREMENT PRINCIPLES & STEPS“Getting going”

6. Project Management from start up (PMBOK)7. Confirming the requirement / need

– Input to specification / ToR

8. Supplier selection / targeting– Align to the Specification / ToR

9. Tender documentation– General and standard documentation – Specification / ToR– Schedule of quantities

10. Tender evaluation– Evaluation Committee– Process

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PROCUREMENT PRINCIPLES & STEPS“Getting it done”

11. Award– Appoint knowing the ToR and Contract

12. Closure– Recording lessons

– Confirm procurement objectives met etc

13. Contract Management– Ensuring delivery

– Project Management continues …….

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PROCUREMENT PROBLEM AREAS

• Procurement management is a common problem across government irrespective of the funding source (i.e. government or donor) and irrespective of the sphere of government.

• Procurement seen as onerous, inflexible, intimidating, etc

• Knowledge of the basic procurement principles, practices and procedures (3P’s) is often lacking.

• Those that may fully understand the procurement 3P's may fail in that they do not fully understand the environment in which they are require to do the procurement e.g. the building or construction environment.

• There is a need for improved appreciation of the crucial role of procurement in project / programme implementation.

• Need for strong project management skills (plan, organise (resource), lead and control) and ethical approaches.

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LESSONS

• Governance structures– SCM units

• Need support from Top Management

• Need “Functional” & procurement staff alignment (… need each other…)

– PMU units• Resourcing & administration

• Alignment with SCM Units (…supported by SCM …)

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LESSONS (CONTINUED)“Seeing the big picture”

• Planning within the programme or project cycle

– Having the end in mind

– Timing issues

• Project & budget alignment– Avoiding canceled projects– Avoiding delayed projects– Avoiding under spend / lost budgets

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MANAGING CASHFLOWS ACROSS YEARS

Infr. Plan update

IPMP IPIP

IPIPIPMP

Planned Multi-year Commitments

Project Implementation

Project Design & Tender

Project Implementation

Project Implementation

Project Design & Tender

Planned Multi-year Commitments

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LESSONS (CONTINUED)“Need for Procurement Experts”

• Management of the procurement process– Teams are often under resourced– Teams are often under prepared– There is a shortage of standard operating procedures (SOP’s)

• Understanding of SCM Regulations– Compliance criteria– Evaluation criteria– Processes to follow

• Tender documentation compilation– Standard Forms – (as appropriate)– Compliance criteria (essential and practical minimum requirements – don’t over do it)– Evaluation criteria – (different between bidders – quality selection)– Quality editing / completion – (quality docs get quality tenders)

• Launching of tenders– Timing & preparedness issues – Briefing sessions - can add major value to the process – improved understanding !

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LESSONS (CONTINUED)“Need for Technical support”

• Identification of needs– Functional / Technical Dept input– Input to Specification / ToR

• Market analysis– Need good supplier data base or quality supplier short listing– Bidders incorrectly targeted – resultant poor submissions

• Specifications / ToR's– Mis-interpretation by bidders– Incomparable bids – poor ToR’s yield poor submissions

• Understanding of risks– Lack of understanding of the environment– Simplification of procurement situations– Assumptions / risks need to be thoroughly understood

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LESSONS (CONTINUED)“Need for Technical support”

• Evaluations & recommendations– Appropriate expertise available

– Criteria are difficult to use in practical evaluation

– Adoption of quality processes ( eg donor processes)

– Record keeping (transparency trail)

– Stand up to an audit

• Contract management– Need to ensure that you get what you intended

– Maintain control over supplier / service provider

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SO WHERE TO FROM HERE?

• PMU– Need Procurement Specialists– Need Project Managers– Need Technical advisors– Need Administration support– Need financial backing

• Relationship management– Top management buy in– Support from Functional Depts– With Suppliers / Service Providers

• Firm Strategy & Plans– start early– Spend time on the right things

• Know the budgets and programme implications

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BOTTOM LINE!

PROCUREMENT IS CHALLENGING

• Don't under estimate the work required !• Provide for dedicated management !!• Manage all the steps and procedures!!!

Manage the detail with the big picture in mind