Suggestive slides presented as part my recruitment with the objective to designing a customized and an all new Procurement Directive for the newly established Construction Business Unit within the overarching Ethiopian Engineering and Investment Group (EEIG), a state-owned corporation having 8 business units being restructured to forming a holding company.

1. EEIG CONSTRUCTION
POSSIBLE SUGGESTION TO STREAMLINING EEIG CONSTRUCTION PROCUREMENT
PROCESSES/PROCEDURES

2. ETHIOPIAN ENGINEERING AND INVESTMENT GROUP (EEIG) –
VISION & EEIG-CONSTRUCTION AIMS/OBJECTIVES
EEIG VISION
 Diversify to becoming a significant player in the Ethiopian Construction Industry and deliver excellence
 Fill the current gap in the industry and replace the need for having international construction companies
are dominating the government mega scale projects
EEIG CONSTRUCTION – PLANNED KEY ACTIVITIES
 High-end complex projects
 Infrastructure (roads, railways and airports) & water and energy sector construction
 Become a conglomerate of several business units including underground and foundation Works, Energy
Solutions), Electro- Mechanical Solution, Landscape, Construction Materials Production etc

3. PROCUREMENT DEPARTMENT GOALS - EEIG CON.
A. Maximizing Profitability
B. Cost Minimization
C. Contribute towards organizational ‘Cash Flow Positivity’

4. SUGGESTION AREAS FOR EEIG CONSTRUCTION TO ACHIEVE AN
EFFICIENT & EFFECTIVE PROCUREMENT
A. Procurement Solution
B. Framework Arrangement
C. Category Management Framework

5. A. PROCUREMENT SOLUTION
Introduce a ‘Hybrid Procurement Solution (offline and Cloud)’ tailored to the company’s needs and
consideration of the procurement process, fitting approval layers and organizational structure.
Expected to: -
 Provide role-based access to employees
 Create transparency and accountability
 Better operational performance
 Standardization of work-flow
 Automates and streamlines departmental processes
 Improves collaboration, analysis and data driven decision making
Value Adding: -
 Potential integration with solutions of relevant departments

6. B. FRAMEWORK ARRANGEMENT
What is a Framework Arrangement : -
A framework is an arrangement with suppliers to establish terms governing contracts that may be awarded during the life of the
agreement. In other words, it is a general term for agreements that set out terms and conditions for making specific purchases (Call-
A key aim of a framework arrangement should be to establish a pricing structure; however this does not mean that actual prices should
be fixed but rather that there should be a mechanism that will be applied to pricing particular requirements during the period of the
framework. It should also be possible to establish the scope and types of goods/services that will need to be called-off.
Consequently, such arrangements are: -
 Proved to be best suited for construction projects mainly because such arrangements enable detailed specifications to be worked
at an appropriate time within the project.
 also often used for high volume/low value orders such as for ‘repeat buy’ orders of goods but are also useful for other segments of
high-risk/high-spend supply needs like specialty contractors, procurement of direct construction inputs, etc
Also the initial work needed to establish such a framework is more than that for tendering and awarding a single major contract, but
down-stream benefits will far outweigh this. Companies with framework agreements have achieved up to 10% year-to-year
in the time and cost of delivery. This is particularly the case when the use of such arrangements is combined with e-purchasing systems.
Hence, generally it can be said that framework arrangements are usually put in place for those quantifiable supply needs in terms of
and/or quantity with predetermined specification and evaluation criteria(s) set in advance ‘during the currency of the agreement’
purchased, terms of delivery [Incoterms], contracted price).

7. C. CATEGORY MANAGEMENT
Category Management is...
 A strategic approach where organizations segment their spend in to areas which contain similar or related
products enabling focus opportunities for consolidation and efficiency.
 It may involve the splitting of direct and indirect products or services or may relate to the dissecting of
products or services by value, supplier type or volume.
Benefits of setting up a Category Management Framework for EEIG CONSTRUCTION...
 Enables procurement professionals to focus their time and conduct market analysis to fully leverage their
negotiations and correctly manage their suppliers in alignment with the organizational objectives
 Helps to organize the procurement team resources and contribute towards economies of scale and enhanced
supplier relationship whilst gaining an indepth understanding of how each category contributes to risk
management

8. PROPOSED ADAPTATION PLAN TO EEIG-CONSTRUCTION
Design, setup and prepare an organizational ‘Framework Arrangement’ customized to meet buyer’s supply needs in
goods, services and/or works for optimum resource utilization and to streamline processes within the procurement
department as well as among concerned cross-functional units.
Thus, to better understand this arrangement see below suggestions on possible initial activities to realizing an EEIG-
Construction focused procurement supply framework arrangement system:
 Identify and prepare an all rounded and in-depth assessment of EEIG-Construction’s supply (goods, services
works) needs and requirements
 Categorize and sub-categorize those identified needs in the kind of supply (goods/services/works) and supply
availability (local/international).
In the categorization of ‘Supply Availability’ however, I would say, best to consider having separate framework
arrangement for local and international suppliers solely for the purpose of fostering competitiveness among suppliers’
(across/within local) and avoid unfeasible supplier performance evaluation with respect to the understandable gaps in
their respective capacities.

9. FA - POSSIBLE OBJECTIVES, ACTIONS AND BENEFITS TO EEIG-CON.
Objectives Actions Benefits
Improve
the
demand
side
Rationalize
expenditure
• Framework Arrangements for the major spending
categories
• Goods and services standardization
• Reduction and rationalization of expenditure
• Reduction of waste
• Controlling debt
Increase savings
and quality
• Defining max. price and/or min. technical specifications,
assuring quality and service-level agreement (SLA)
• Awarding on the Most Economically Advantageous
Tender (MEAT) if the subject of the contract allows it, OR
lowest price
• Scale Benefits
• VFM
• Increased quality of procured goods and
services
• Better management of product and services
Improve
the
Supply
side
Improve
competitiveness
• Supplier selection based on technical, financial, quality,
environmental and SLA performance criteria
• Possibility of grouping and sub-contracting
• Subdivision into lots – by category of goods or services
• Reducing tendering procedures for EEIG Con.
• Support the diversity of suppliers
• Increased transparency
• Environmental and social sustainability
Improve
the
mgt.
Increase
efficiency
• Purchasing process simplification
• E-procurement development
• Dematerialization of the business process
• Possibility to free-up resources
• 10% year-to-year improvements in the time
and cost of delivery when combined with e-
purchasing systems
• Avoid re-works & economies of scale through
aggregation
Ensure
compliance
• Comply with EEIG-Con. procurement directives
• Follow guidelines
• Leverage local and international experience
• Avoid disputes

10. SUGGESTED PLAN VS EEIG CON.’S PROCUREMENT GOALS
Department Goals Proposed Plan/Action Expected Outcome/Benefits
• Maximizing
Profitability
• Cost Minimization
• Get a 360° view of all suppliers - SRM
• Streamlining supplier lifecycle
management via E-procurement
systems and framework
• Increase negotiation capabilities
• Reduce costs by eliminating the business
overheads
• Process simplification through supplier self
service portal for e.g
Cash Flow Positivity
• Optimize procurement processes and
inventory control
• Supplier Relationships (choosing the
right supplier)
• Payment terms
• Effective Inventory Control
• Online inventory management
• Reduce carrying costs (storage,
opportunity costs etc)
• Profit maximization
• Competitive suppliers
• Extend payment terms
• Negotiate an early payment discount
• Reduce waste by optimizing stock levels
• Minimize risk of damage
• To making an informed decision in real-
time

11. ADDITIONAL SUGGESTIONS ON EXISTING PROCUREMENT MANUAL
 More emphasis should be given to the existing procurement technical proposal evaluation process (technical vs financial) to using ‘actual
weighed point scoring system’ all the way.
 In addition, evaluators should also consider to include other parameters in combination with the technical prop. and/or separately in the
least cost approach of financial proposal evaluations like for e.g. delivery schedule, management cost (overhead) vs operational cost etc.
 Per EEIG-Con’s plan to becoming a significant player to bridging the gap in the Ethiopian Construction Industry, I suggest to revise the
procurement threshold currently implemented with reference to either the PPA and/or the corporation manual towards EEIG Construction's
expected future work requirements and capacity of project(s) envisaged.
 Pre-qualify selected suppliers using these 4 pillars – Governance and Control, Financial Stability, Ability to Deliver & Downstream Partners –
to ensure more commitment, integrity, consistency and reliability.
Possible Milestone: Apply the international procurement standards set by the
International Organization for Standardization - ISO 10845-1:2020 Construction
Procurement – Part 1 of 8 : Processes, Methods and Procedures