Effective management of projects requires adequate planning. Procurement plans translate to budgets. In addition to planning the financial part of the procurement, timeframes also need to be managed.
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Effectiveness of contract and project management measure the performance of time. The whole planning process should satisfy probity matters relating to accuracy of details in specifications, budgets and timelines, integrity of processes, and concern for moral issues in business to minimise planning risks.
Budgets are significant in a procurement process. They measure compliance if they are included in the evaluation criteria in a public procurement system. The application of budgets, as an evaluation criteria, does not have strict rules in the private sector.
A procurement process can be cancelled on the basis of inadequate budget. This inevitably affects project schedules. The purchase is delayed and there is an additional cost of retendering.
The source of the risk is poor procurement planning. The budget may have been based on a wrong price or wrong specification.
The risk is high in big projects that take a significant period to complete. A significant number of construction projects fail to see the light of day on the basis of poor planning, which then leads to insufficient funding.
Project escalations also need to be planned, most of them are predictable in stable economies, where issues such as commodity prices, labour and inflation become the major risk on the budget.
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Timeframes in procurement are considered from various angles. It could relate to time allocated to a project, which might be inadequate forcing contractors to compromise on quality for fear of liquidated damages.
In some cases, where time allocated is not adequate, delivery of goods and services are delayed.
Procurement of imported goods now needs to factor requirements of pre-shipment inspections that were introduced to reduce dumping.
It is no longer reasonable to demand delivery periods less than eight weeks in view of the new development on imports.
There is another risk of limiting market response time on a tender. Although the law provides for a minimum of 15 and 30 days for informal and formal tenders respectively, some tender processes require more time depending on complexity.
Limiting the tender window attracts inadequate responses from tenders increasing non-compliance. Competition is inevitably reduced at the expense of competitiveness. Probity issues have a tendency of increasing procurement costs, they promote misuse of resources, in some cases, the most suitable product is not obtained and that it creates fertile ground for unethical conduct.
Probity relates to three main broad areas of correctness in the manner requirements are specified, the integrity of the procurement process and issues of morality in procurement.
The garbage in garbage out in planning relates to the quality of the planning process. There is high risk that most procurement processes are initiated based on incorrect information, hence the failure of major projects.
Integrity relates to the wholeness of the process.
There is risk that a procurement process may be initiated as an open process, whereas the specifications maybe tailor made for an individual.
Issues of unnecessarily limiting the tender period is a risk to the integrity of the process. Morality also affects the integrity.
Public procurement requires disclosure of interests in advance. There are instances where even after a disclosure, the integrity of a process is still questionable.
It is not morally correct for a senior government official to trade with agencies that they directly supervise. The impartiality of junior officers who adjudicate is eroded affecting the integrity of the process.
It is important that considerable time is spent during planning to minimise project risks associated with procurement.
Nyasha Chizu is a fellow of the Chartered Institute of Procurement and Supply writing in his personal capacity. Feedback: [email protected] Skype: Nyasha.chizu
