2. Presented by:
PRESENTED BY:
Nyelu P. Mwamwaja (MCIPS)
Procurement and Supply Chain
Management Consultant
PRACTICE BEHIND PROCUREMENT
SYSTEMS:
CHALLENGES &PROSPECTS
Tanzania Institute of Quantity
Surveyors
3. The Presentation will cover:
❑ Introduction and Overview
❑ Procurement
❑ Importance of Procurement
❑ Procurement Systems
● As defined in Tanzania Laws
● As by Donors Procurement Guidelines
4. The Presentation will cover……...
❑ Basic Principles
❑ Benefits of effective Procurement System
❑ Implications of ineffective Procurement
system
5. The Presentation will cover……….:
❑ Better Value for Money Procurement
❑ Challenges and Prospects
❑ Role of Quantity Surveying Function in
Procurement & Supply Chain Management
(SCM)?
❑ Conclusion
6. Introduction and Overview
❑ Procurement has important economic and
political implications, in ensuring that the
process is economical and efficient.
❑ This requires in part that the whole
procurement process should be well
understood by the actors:
▪ Government, PEs and the business community/suppliers
and other stakeholders, including professional associations,
academic entities and the general public (Odhiambo &
Kamau, 2003: 10).
7. Introduction and Overview
❑ Any procurement system normally intends to
govern the conduct and administration of the
Procurement of GOODS, WORKS AND
SERVICES.
❑ These GOODS, WORKS AND SERVICES
are needed to implement the projects or to
support the operations of various
organizations to fulfill their vision and
missions obligations.
8. Introduction and Overview……
❑ Procuring Entities (PEs) be public or private
are held accountable to make sure, among
other things, that applicable Principles, Rules
and Procedures as set forth in the applicable
Procurement Systems/guidelines are
adhered to by every procurement
practitioners to obtain better Value For
Money(VFM)
9. Introduction and Overview ………
❑ The procurement systems are guided legal
provisions and guidelines such as:
❑ Public Procurement systems refer Acts and
Regulations, (PPA, 2011)
❑ Procurement Guidelines (refer Donor Fund
such as WB, AfDB, EU, MCC, USAID, SIDA,
JICA Etc.
❑ UN Missions Guidelines such as UNDP,
UNFPA
❑ And many more.
10. Introduction and Overview……..
❑ Procurement systems have and will always
face many challenges due to the fact that
each Country/organization has its own
Economic, Social, Cultural and Political
Environment
❑ Country’s procurement practitioners face
different types of challenges or the same
types of challenges but at different levels from
their organizations
11. Procurement
❑ Procurement is an organization system
aimed at specifying and acquiring Goods,
Works and Services (Consultant and Non
Consultant) of the required Quality, of the
right Quantity, on the right Delivery (Date &
Place), at reasonable Price, and from the
right third party considering the whole life
cost of the procured------
13. Importance of Procurement
❑ Why Procurement became important
Function in our Organization now days?
❑ PEs spend more than 70% their budget a
year on Procuring Goods, Works and
Services to deliver their core business
❑ Failure to procure them cost effectively can
put the achievement of key objectives at Risk
❑ Direct influence on profit margin and sales
volume HOW?????
14. Procurement System
● The Procurement System is a function of
business that involves using organization’s
resources to obtain goods, works and
services to meet the needs of the
organization as it carries out its
responsibilities.
● A procurement system manages the entire
acquisition process from the initiation of the
needs to the Contract Management stage.
15. Procurement System…….
❑ The common objectives of procurement
systems include:-
Ensuring that the allocated fund is used to buy
only those goods, works and Services needed by
the Organization
Ensuring fair competition for all qualified bidders
Promoting transparency or integrity
Encourage development of Local Contractors
and manufacturers
16. Procurement System---
In Tanzania Public procurement Act No. 7
of 2011 and its Regulations GN No.446 of
2013 govern the processes and Procedures
of obtaining goods, works and services to
meet the needs of the government
(Government Funded)
17. Procurement System-------
❑ What are other applicable procurement
systems in Tanzania?
❑ What are common and emerging project
delivery modes (Traditional or Modern)
❑ What are major differences and similarities?
– This is a discussion question: Participants are
expected to discuss based on their experiences
in implementation of Private, Donor and
Government funded projects
19. Benefits of an Effective
Procurement System
❑ Enhances the efficiency use of financial
resources;
❑ Improves the availability, quality, reliability
and cost of services;
❑ Encourages accountability and responsibility
in the supply management process;
❑ Improves participation and growth of the
private sector;
20. The implications of ineffective
Procurement System
❑ Encourages corruption and malpractice;
❑ Inefficiency can lead to delays in delivery of
essential services;
❑ Demotivation of private sector suppliers
leading to lack of competition; and
❑ An increase in the cost of items.
21. Better VFM Procurement
❑ Procurement should be based on:
❑ Better Value For Money(VFM)=Optimum(Whole
Life Cost + Quality)
❑ It is concerned about how customers value
the offering of goods, works and services
procured in an organization (Reliability,
Durability, dependability) and NOT about the
lowest price
22. Better VFM Procurement
● Understanding customer order of priorities
and perception of relative value rather than
cost
● It is a commitment to “Total cost of ownership
concept” by Public or Private sector
procurement officials
● Ensuring good corporate governance,
efficiency and effectiveness when acquiring
Goods, works and Services
23. Why VFM Procurement?
❑ Corporate sector is the engine for growth of
National economies. It underpins the
foundation for sustained performance of
countries and businesses
❑ VFM Procurement encourages market
discipline
❑ Essential tool for economic prosperity and
social progress
24. How to Achieve VFM
Procurement?
❑ Getting an increased level or quality at the
same cost
❑ Avoiding unnecessary Procurements
❑ Ensuring that user needs are met not
exceeded
❑ Specifying the procurement requirements in
output terms( so that suppliers can recommend cost-
effective and innovative solutions to meet the needs)
25. How to Achieve VFM
Procurement?
❑ Sharpen your approach to negotiations to get
a good deal from business community
❑ Aggregating transactions to obtain volume
discounts
❑ Developing a more effective working
relationships with key Suppliers
❑ Reducing the cost of buying goods or
Services by streamlining procurement and
Finance process
26. Six Key principles to follow:-
❑ Adopt strategic approach to Procurement
❑ Make appropriate use of technology
❑ Manage procurement risks
❑ Development Contract strategies and
manage supplier relationships
❑ Ensure there is reliable procurement financial
management information
❑ Measure and evaluate procurement
performance
27. Challenges &Prospects
❑ In Tanzania, the national procurement law and
international financing institutions procurement
guidelines are applicable and ARE critical to the
timely achievement of projects procurement
objectives (CPAR, 2003)
❑ There are enormous predicaments to effective
procurement systems, here are summarized to
include:
28. Challenges & Prospects
● Lack of proper knowledge, skills and Capacity
● Non compliance with SCM Policies and
regulations/Guidelines
● Unethical behavior/conduct
● Inadequate measures for monitoring and
evaluation of SCM
● Accountability fraud and corruption
● Inadequate planning and linking demand to
budget
29. Challenges &Prospects
● Types of goods, services and capital assets
required by Pes
● Procurement organizational structure such
as the issue of centralization vs.
decentralization;
● Procurement regulations, rules and
guidance; and
● Internal controls and legislative oversight
30. The role of QS in the P+SCM
❑ Strategic role: they ensure projects are
planned and completed at cost, quality and
time(VFM).
❑ The quantity surveying function is among
key function in implementation of projects
because it is involved in each one of these
stages of Procurement:
31. Typical Stages of a competitive procurement Process
Assessing the
Needs for the goods
or services
Specifications
of Equipment
or TOR
Agreeing the list of
potential suppliers
or Service
Providers
Invitation to
Tender
Evaluation of
Bids
Award
Agreeing
form of
contract
Formal
Appointment
Evaluation of
Contract
Performance
Key information on
supplier’s performance
and price
PMU’s advice to user
depts on procurement
methods and contracts
User depts identify demand
for goods and service and
manage and evaluate
supplier’s performance
INTERFACE
Suppliers provide goods
or services
32. The role of Quantity Surveying
The participants to discuss and share
experience on the strategic role in each of the
following stages of competitive Tendering:-
❑During the design stage
❑Tendering documents
❑Tender selection and appraisal
❑Construction/implementation and
❑Post contract
33. Conclusion
❑ Regard Procurement as a System rather
than a Dept.
❑ Consider the whole life cost (WLC) in
Procurement process rather than the initial
price.
❑ Get better Value For Money in Procurements
