Research consultancy
CHAPTER TWO
2.0 Introduction
This chapter reviews what other scholars have laid down effects of user department participation on participation on procurement performance. The focus will therefore be put on the effectiveness of user department participation in the procurement performance, effects of user departments participation on the procurement performance and other factors that affect the user department participation in procurement.
2.1 Effectiveness of User Department participation in the procurement performance
End user department is essential in providing information for procurement planning procurement planning is inadequate; it has resulted in short comings of poor procurements made. in their analysis of the public procurement procedures in Turkey singled out more specifically that the first step as an important activity of procurement planning or procurement law is determination of needs. Therefore procurement planning has to be done after knowing needs of end-user, (Lysons, 2010).
Rendon (2013) contents that user department participation is a key activity in the procurement process, He observes that one of practices involved would be conducting among research to collect and analyse information about how a specific industry or sector process contain types of products and services and the best ways of ensuring that Enduser needs are delivered and met timely in order to create efficiency in procurement performance.
The Contract Management guide (2010) observes that practicing good procurement systems has the capacity to decrease costs and enhance procurement efficiency thus guaranteeing the quality obtained. Responsibilities for managing procurement systems must be clear and appropriately apportioned between the organization’s contract manager and its service provider’s representative for attainment of effective procurement (UNOPS Procurement manual 2010: the UK Office of Government Commerce, 2014). This helps to evaluate whether or not the provider is delivering the project or services or goods specified in a timely manner, in the quantity required and ensuring that the quality of the services provided are up to standard, (Sigma, 2011).
According to the contract management guide (2012), procurement process is one of the most important project management and time management techniques. It involves preparing a sequence of steps to achieve some specific goals.Management of a procurement provides a strategy for an organization to plan on how to meet the needs of a specific customer’s and also to improve on its level of service delivery by achieve better procurement performance. Arto et al, (2008) define project strategy as a direction to a project that contributes to success of a project in its environment. They interpreted direction in this context to mean either one or several of the following; goals, plans, service deliveries, means, methods, tools or governance system and mechanisms.
Procurement management is important in ensuring service delivery processes and involves; contract planning, monitoring, stakeholder involvement, performance assessment and records management (Australian National Audit Office, 2007;IAPWG, 2006). It encompasses various activities that need to be completed on a day-to-day basis, including: developing and maintaining contact details of key people involved in the contract, scheduling meetings and other actions required by the contract, delivery and acceptance of goods or services, making payments, maintaining complete records for the contract itself, and establishing and maintaining contract documentation.
Oosterom(2007) argues that the overall goals of performance must be clearly understood; quality of service (the accessibility, timeliness and quality of service levels); cost of service (value for money obtained); and customer segmentation (the need for different service channels and service offerings based on comprehensive customer insight).When parastatal bodies contract a vendor, they remain responsible for ensuring the work is performed satisfactorily and government funds are used appropriately. Accordingly, the parastatal body is responsible for the consequences of poor performance whether the agency or a vendor provided the service/project or goods as agreed (Hinton, 2003). The parastatal bodies thus must see to it that service delivery is monitored closely through effective contract management to foster achievement of contract deliverables as agreed.
The level of End user department participation on procurement performance by parastatal bodies is largely at their discretion, it primarily depends on the nature or complexity of the procurement (Republic of South Africa; Contract Management Guide, 2012). More importantly, review of the procurement performance must be done to evaluate the benefits obtained or lost due to insufficient procurement performance; there will be little opportunity to benefit from lessons learned.Good procurement requires follow-up, feedback, and enough awareness of what is occurring during the service provision to eliminate surprises.
Coordination of various future activities of an organization is by preparation of plans actions for future periods this minimizes risks and increases the degree of organizational success. Drury also further says that procurement plans made by the district should be to help in organization control and facilitate communication to ensure success in achievement of the required objectives, (Drury, (2010).
Cole (1997) also argues that planning can lead to improved efficiency and effectiveness in delivery of goods and services he further says that planning is a deliberate attempt to design a future course of action with view to optimize the use of resources. He goes ahead to certain that an organization without a plan has planned to fail because it had not had particular route to follow.
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According to UN (2006), Good procurement planning is essential to optimize the contribution of the procurement function towards achieving the overall goals of the organization. UN (2006) asserts that good procurement planning supports: transparency, Development of Key Performance Indicators (KPIs) according to milestones and accountabilities set in the procurement plan, and use of the same to monitor performance, Effective and timely solicitation of offers, award of contracts and delivery of the goods, services and works required, Early requisition to reduce any delays in procurement and timely delivery to project sites, Early identification of right commodities and quantities to meet programme needs, Sourcing the right suppliers on time to avoid cutting corners under rush procurement to meet deadlines or budget expenditure, Effective supply strategy and timely programme and project implementation.
2.2 Effects of user departments participation on the procurement performance
Leadership style and management policy determine the level pof user department participation in the procurement process, , (Hermon and Whitmon, 2014). More so stake holder involvement is essential in achieving effective procurement system in an organization as this ensures transparency in the system.
During service delivery, the key challenge is often with the nature of service providers contracted to perform the services and their ability to provide quality and efficiency as well as to have the resources to do the job well. The general feeling is that management lacks responsiveness to address issues raised by stakeholders encountered during service delivery and this in turn affects the quality of service delivered.
Chan et al (2005) noted that quality, cost and time have long been recognized as the major targets of concern by the client and is closely linked to time and cost and vice versa. Accountable project with poor quality can result in extra cost and time extensions, a project with time and cost poorly controlled can affect the conformance to quality requirements. For the majority of projects, the cost and time parameters are the mean pre- occupying factor for attributing success in achieving service delivery effectiveness.
Quality of goods or services, (Baily et al, 2004), Defines quality as “conformance to specification”, these definitions have been widely used in many sectors and industries and academic as Bailey, (2004) stipulates that if a product doesn’t meet this specified standard defined according to customer demand and requirements, then it is defective i.e. the customer will be dissatisfied with the product. Similarly, Ardizi and Gunaydon (2010) found that clear and comprehensive project specifications are important determinants to quality performance. The client’s requirements have to be translated into practical designs and specifications to ensure that production, testing, maintenance and servicing are technically and economically feasible.
Level of onsite supervision involved in the procurement process, Zou, Fang, Wang and Loose more (2007) observed that the Chinese Government requires project clients (owners to enhance on site supervision). On site project supervision process is essentially the responsibility of the supervisory company which is usually appointed by the competitive selection process. Milican and Monicious (2005) note that as organizations mature the nature of on-site supervision reduces but in the initial stages site supervision is necessary to ensure that service delivery is efficient.
Char et al, (2005) asserts that professionals and researchers recognize the need for proper training and widening experience in providing proper services to the customers in a competitive business environment. A successful contract quality assumption system needs an adequate supply of conscientious workers. Barthelemy and Geyer (2004), observed than any out sourcing contract should include clause confining, dispute procedures; who has responsibility for write and the lines of reporting. When entering a contract there is need to ensure the parties interpret the contract in the same way to achieve the desired quality levels (Will cocks and lester 1997).
Specification development is very essential for the user department participation to ensure that the procurement process is done in the right way, Boroughs and Edgar (2008) argue that procurement effectiveness, is more than simply meeting specification and that the customer’s point of view is very important because the quality is what the customer says it is and it’s the customer who set the quality and value of service but not company. The author further says that customers consider reliability and ability and service effectiveness as indicators of service delivery.
A study by young, (2008) found that, monitoring quality enabled organization ensure they are supplied with quality products at the same time reduced the cost of acquisition of purchases.Monitoring quality by the contracting institutions helps to reduce costs in the service delivery process while ensuring active commitments to continuous improvement to attainment of quality (uron et al, 2015).
Whereas there is an increase in the total amount of funds available to government bodies in Uganda, their economic and financial profile is still poor as compared to the development programmes expected to be carried out. Ahmed (2015) noted that many government bodies in Uganda, however, are unable to deliver services to residents. He said this might be because of lack of finances or lack of capacity to provide a good service at an affordable price. So government entities should find other ways to ensure that the services are improved and reach the people most in need of them.
Johan, (2015) argues that hard-earned and limited resources allocated to government entities are always misused. Priorities are misdirected; projects are done without due consideration of the demands of their stakeholders but based on selfish motives and exaggeration of the political leadership in collaboration with the senior administrators at the government entities’ level of administration. This situation is similar to the mismanagement and embezzlement of these funds by the councils (Bailey, 2010).Lawal (2010) further asserts that corruption has been rampant among the senior government bureaucrats to whom public funds meant for developmental purposes are entrusted.
At every stage in public procurement, there are risks of integrity right from procurement planning through to contract management (OECD, 2014). All these affect service delivery at the end of the day. If government parastatal bodies fail to manage these risks, accountability and eventual service delivery is greatly endangered.
2.3 Other factors that affect the user department participation in procurement.
Level of organizational attention on value for money, when there is value for money it means that even corruption is greatly reduced , Procurement in local government in Uganda has not been corruption-free. Public procurement, at the local government level, is believed to be one of the principle areas where corruption in Uganda takes place , Corruption is disastrous to the well functioning of any government department. Corruption has been an intractable problem in many developing countries; especially where it has become systematic to the point where many in government have a stake. This leads to ineffectiveness in the procurement system and value for money cannot be achieved if there is corruption (National Public Procurement Integrity Baseline Survey, (2012).
End user participation also is critical to developing effective procurement strategies and hence the best value for money outcomes. end user provide relevant Information which is critical for provision of goods and service which suite their taste and preferences and hence Analyzing supply markets which provides information that can be used to explore opportunities to advance organization priorities by identifying; competitive local suppliers and suppliers who can offer products with improved sustainability performance, provide valuable information about suppliers’ strengths and weaknesses for post-offer negotiations where the outcome may improve value for money, identify comparable substitute goods and services that offer better value for money and identify opportunities to plan and schedule procurement to provide benefits for bothsuppliers and buyers.
The organizational policy on Identification and management of supply-related risks, end user participation assist in the development or redefinition of specifications to encourage competitive offers, identifying any standards to which goods or services must comply, it provides information which can assist in negotiations, where this may lead to reduction in the ‘degree of business risk’ and ensure that all procurement activities are done in line with the governing laws, cole . (2011).
Reduction in costs of purchased components and materials, procurement effectiveness is essential to reduce on avoidable costs in procurement these costs are like purchase of unwanted goods, thought can be used to look for sources of greater value within the supply chain. The increasing development of the procurement function into strategic elements such as the management of the supply chain, world class status, lean supply cost of ownership, and so forth requires end user participation in the procurement process market intelligence to achieve best results Lysons( 2010) says that reduction in the cost of procurement is the key procurement aim.
The involvement of the intended beneficiaries of government services into monitoring service delivery is a critical component in measuring the performance of government delivery of appropriate and quality services. Currently the emphasis of government’s monitoring is on internal government processes and the voice of the intended beneficiaries/stakeholders is largely absent. This presents a risk, as the picture is not complete. It is therefore necessary to support the systematic ways to bring the experiences of stakeholders into the monitoring of services. This will provide a measure of the gap between the perceived and the actual experiences of service delivery, for both user and provider (The Performance monitoring and evaluation department of South Africa, 2013).
United Nations Development Program, (2004) defines monitoring as a continuous function that aims primarily to provide management and the main stakeholders of an on-going programme or project with early indication of progress or lack of achievement objective. According to the UNDP, without monitoring there is no way of knowing if the contractors work is inline with the contract terms. Monitoring is also regarded as the process of assessment and measurement of progress in implementing development interventions (European Commission, 2007).Monitoring is the systematic collection and analysis of information as a project progresses, it is aimed at improving the efficiency and effectiveness of a project set and activities planned during phase of work in order to determine the efficiency of service delivery, (http://www.civicus.org/new/media/monitoring and evaluation.pdf).
User department participation enables efficiency in evaluating agency performance and determining the quality of service delivery. The purpose of monitoring is to improve programme performance through early identification of questions and answers resolutions and identify potential problems that may require additional surveying, evaluate strategy service performance control to ensure there is a reliable basis for validating service delivery and to ensure that financial documentation is adequate and accordingly so that costs will not be questioned later on and above all to determine the level of stake holder involvement in the future dates so that an organization is able to evaluate its service provider performance , (http://www.cec.lacomtry.gov.html).InSouth Africa monitoring is largely conducted on a voluntary basis and can therefore be relatively low cost (Munnik et al, 2011).
According to Russell,(2003)Monitoring the performance of the contractor is a key function of proper procurement performance in an organization. The purpose is to ensure the contractor is performing all duties in accordance with the contract and for the entity to be aware of and address any developing problems or issues. The writer further asserts that, the contract manager/administrator is responsible for the oversight of all contractors, suppliers and service providers, by monitoring their compliance with the terms and conditions of their respective contracts to ensure greater service delivery. “Strategic public engagement in providing an oversight role in the delivery of public services is an essential dimension of building public accountability in local government” (Smith, 2011). Smith notes that “since 1994, South Africa has made greater strides in delivering basic services than it has in strengthening constructive public engagement about delivery where the public has access to recourse for the government’s poor performance.
Procurement monitoring emphasis is usually on collecting and analysing information to provide assurance to the acquiring entity that progress is being made in line with agreed timeframes and towards providing the contract deliverables. Monitoring can be undertaken directly by the acquiring entity or through a third party arrangement. Monitoring teams/persons are required to prepare and maintain documents and records pertaining to the procurement process and the administration of contracts following award of contracts to successful firms (European Bank for Reconstruction and Development, 2010). Monitoring may be undertaken directly by the acquiring entity or indirectly by 3rd party but the overall responsibility for accepting contract deliverables remains with the acquiring entity. Information provided by a third party or the contractor for monitoring purposes should be reviewed and audited, as necessary, to ensure its accuracy and reliability. Information provided may be verified through end-users who may be consulted to establish whether the goods and services they received met their requirements in respect to performance metrics like
quality, timely delivery, and cost. While the broad arrangements for actual monitoring over the life of the contract should generally have been set out in the contract itself, they may need further or more detailed explanation at contract start up or during the transition phase.
