Assignment about Understand the core concepts of procurement and contract management.

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Unit 717: Procurement Risk and Contract Management
Mohamed Fawzy Mohamed Shabana.
QN: Q030152
Dr. Ahmed Alsenosy
2022

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Table of Contents
Task 1. Understand the core concepts of procurement and contract management........................................................... 4
1.1 Define procurement and contract management..................................................................................................... 4
1.2 Examine the principles of procurement and contract management as applied to a large multinational
organization........................................................................................................................................................................... 8
1.3 Evaluate the importance of sustainable procurement. ........................................................................................ 14
Task 2. Be able to critically evaluate procurement operating environment and legislation. ........................................... 17
2.1 Assess the impact of legislative frameworks on procurement in the impact public and private sector................ 17
2.2 Evaluate the importance of establishing ‘Contract Procedure Rules’ and applying financial regulations.......... 20
Task 3. Understand the management of procurement operations...................................................................................... 22
3.1 Discuss the key principles and application of category management. ..................................................................... 22
3.2 Critically assess the impact of technology on procurement operations. .................................................................. 26
3.3 Examine the use of electronic promotion of contract opportunities and electronic tendering.............................. 30
3.4 Explain the various risks associated with e-tendering............................................................................................... 33
Task 4. Understand the risk management process in procurement and contract management...................................... 36
4.1 Evaluate the risk management factors that impact on procurement and contract management. ........................ 36
4.2 Evaluate frameworks of risk assessment in relation to procurement. ..................................................................... 39
References................................................................................................................................................................................ 48

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Figures
Figure 1Procurement Management Process Flow chart. ______________________________________________________ 5
Figure 2 Procurement, Sourcing, and Purchasing (digitalsupplychaintoday, 2021) _________________________________ 6
Figure 3 Contract Management Process Map. (Eby, 2019) ____________________________________________________ 7
Figure 4 KEY PRINCIPLES OF CATEGORY MANAGEMENT. (Henshall, 2022) ______________________________ 22
Figure 5The Procurement Risk Framework.(Procurement Risk Framework: Guidance Note on Procurement, 2021)______ 40
Figure 6 The Risk Management Process (Procurement Risk Framework: Guidance Note on Procurement, 2021) ________ 40
Figure 7 Risk Management through Planning, Bidding, and Implementation. ____________________________________ 43
Figure 8 Risk Rating Matrix(Procurement Risk Framework: Guidance Note on Procurement, 2021) __________________ 46
Figure 9 Risk Rating Key(Procurement Risk Framework: Guidance Note on Procurement, 2021) ____________________ 46
Figure 10 Risk Treatment Options(Procurement Risk Framework: Guidance Note on Procurement, 2021) _____________ 47
Tables
Table 1 Applicability of Risk Management Tools to Organizational/Entity Level.................................................. 41
Table 2Risk Likelihood(Procurement Risk Framework: Guidance Note on Procurement, 2021) ........................... 45
Table 3Risk Consequence(Procurement Risk Framework: Guidance Note on Procurement, 2021) ....................... 45

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Task 1. Understand the core concepts of procurement and contract management.
1.1 Define procurement and contract management.
Procurement refers to the process of acquiring or buying products or services, usually for an organization's needs.
Businesses are the most prevalent users of the term "procurement," since they are the ones that regularly engage in
the practice of requesting and paying for services and items. The whole procurement procedure might be included
since it plays a significant role in the buying decision-making process for businesses. Companies may participate in
the procurement process either as buyers or sellers, but in this article, we will mostly look at the requesting company's
perspective. (YOUNG, 2022)
Procurement is the process of getting or locating anything that is required. Businesses get supplies and raw
materials, while governments may obtain contractors or service providers. (YOUNG, 2022)
An integral part of every successful company is its procurement department. Procurement refers to the process of
acquiring goods and services, often for use in an organization. From determining what commodities and services
are needed to allocating them, the process encompasses the whole value chain. If we're talking broadly, Procurement
encompasses things like. (Blogs, 2017)
➢ Selecting vendors
➢ Establishing payment terms
➢ Negotiating Contracts
➢ Regulatory compliance
➢ Analysis and sourcing
Therefore, Purchasing is merely one part of the larger process known as procurement. Procurement encompasses all
of a company's fundamental operations, thus it should be prioritized as a top priority. (Blogs, 2017)
Finally, we have Purchasing, which is a special case of the broader category of Procurement. There is a difference
in meaning despite the fact that both names are often used interchangeably. Acquiring products and services requires
nothing more than a simple exchange of money. Buying is limited to only making and receiving payments. One of
the most recognizable aspects of Procurement is purchasing, which is primarily concerned with making and
completing transactions. (Blogs, 2017)

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What is Sourcing?
Simply put, "sourcing" refers to the process of identifying potential suppliers for a product or service. Sourcing is
a subset of procurement that focuses on locating the most cost-effective source for the acquisition of products and
services. Finding reliable suppliers is a crucial initial step for every company before making their first sale, since
this is where the bulk of their income will come from.
These are some of the most fundamental ideas in procurement, and having a clear understanding of the nuances
between the many terminologies in the field can help us communicate more effectively and expand our knowledge
of the procurement sector as a whole. (Blogs, 2017)
Figure 1Procurement Management Process Flow chart.

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Figure 2 Procurement, Sourcing, and Purchasing (digitalsupplychaintoday, 2021)
What is Contract Management?
Contract management is the process of overseeing agreements from their start through its implementation by the
selected party and ultimate end. Principal tasks include performance analysis against contract conditions to optimize
operational and financial performance and to detect and minimize the financial and reputational risk associated with
noncompliance with contract requirements. (medius, 2022)
The fundamentals of contract management
When two businesses agree to work together, a contract lays out the obligations of each party and the means by
which they will meet those obligations. Profitability is heavily influenced by contracts because of their focus on
income and costs. If a contract is badly written, a company might stand to lose hundreds of thousands of dollars due
to a technicality they lacked the means to detect. Managing contracts well may lead to stronger business relationships
and increased long-term profitability, but only if done so. When discussing contract management, it is recommended
that a legal representative or department be present. Accurately worded contracts are a must for effective contract
management. The term "contract management" may also be used to the process of overseeing several agreements
with contractors or workers. At times, these situations call for management and adjustments that are mutually

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beneficial. There are often many phases involved in managing contracts. In the beginning, there's the pre-award
period. All of the preparation that goes into awarding a contract to a company or an individual. The procedure
awarding phase is in the center. This contains any and all documentation required to officially seal the deal. And
last, there's the time after the prize has been given out. Here comes the heavy lifting of contract administration and
upkeep. There is more to contract management than just these three stages, and other perspectives may reveal
additional phases, depending on the level of detail being considered. Later, we'll get into a more nuanced
understanding of the procedure. (Conlin, 2022)
What Are the Stages of Contract Management?
Organizational performance, sales, and income may all benefit from careful contract management and
administration, which takes care of everything from drafting to enforcing to analyzing contracts. It's designed to
work with you throughout your whole customer and sales cycle, as well as the duration of any contracts you may
have. This process map for managing contracts will take you through the 10 phases involved. Inputs, outputs, and
deliverables may be easily tracked throughout the contract management process with its help. (Eby, 2019)
Figure 3 Contract Management Process Map. (Eby, 2019)

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1.2 Examine the principles of procurement and contract management as applied to a large multinational
organization.
In this task, we will examine the principles of some countries or international companies as per the principle and the
availability of information and discuss the principles as these countries, or companies were implemented.
Spending public money in a transparent, efficient, and equitable way is important to the public procurement system,
the goal of which is to maximize value for the ministries and lower local governments. In the public sector, there
are a few fundamental rules that must be followed when buying anything:
• Transparency
A modern public procurement system provides the public and bidders with information about and access to
government Procuring Entities' procurement laws, regulations, rules, and practices (Rwanda Public Procurement
Authority, 2012). Procurement should be transparent and clear so that all parties understand how contracts are
allocated and handled. A transparent procurement system has clear rules, uniform tender forms and contracts, and a
fair process. Procurement should be transparent. Awards should be duly communicated to the winning bidder and
posted on procurement notice boards or websites. Oral debriefing of defeated bids should include the decision
principles. Electronic procurement and public contract monitoring may help promote procurement transparency.
Suppliers or contractors require a single point of contact inside the business to handle issues and clarify public
procurement choices and procedures. A grievance appeals point should be independent. In Uganda, the Public
Procurement and Disposal of Public Assets Authority (PPDA) sets up rules, builds stakeholder capacity, and
supervises compliance. However, the Authority reserves the right to intervene in the procurement or disposal process
where there are complaints and may halt the process while giving the accounting officer a chance to address the
issue raised since they have the overall responsibility for procurement and disposal functions. Suppliers can appeal
to the authority after confirmation of the administrative fee paid to the respective entity. In Uganda, transparency
differs according to (Komakech, 2016)
a- The sensitivity of information: To protect commercially sensitive information in tenders, for example, the
content of open tenders like commercial secrets, individual prices, or security sensitive information for
governments like defense, national security that could harm the interest of the tenders, there are a few
restrictions on the information provided outside the government.(Komakech, 2016)

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b- The specificity and value of the procurement: Depending on the nature of the contract at hand, there is a
middle ground to be reached between the competing values of openness and other factors like efficiency.
Therefore, the amount of information made accessible and the methods for its distribution varies based on
the size of the contract and the specifics of the product to be bought.(Komakech, 2016)
c- The stage of the public procurement process: Although there are regulations in place to ensure openness
and accountability throughout the bidding process, they are less stringent during the pre- and post-bid stages.
While it is true that openness is highly valued in public procurement, it is also crucial to keep in mind that it
is not without its drawbacks and may work against rather than in service of the goals of public procurement,
as pointed out by Arrowsmith (2010). In the context of the European Union (EU) procurement system,
Arrowsmith has noted one manner in which transparency principles may impede the achievement of
procurement goals:(Komakech, 2016)
Transparency may also have an impact on business goals by raising associated expenses. More time and money are
needed for planning and assessing results when employing open processes. It adds significantly to participation and
assessment expenses, particularly for complicated projects, to require full bids that may be approved or rejected
without debate. According to recent research conducted in the United Kingdom, the bidding costs for publicly funded
projects are often 10–50% more than for privately funded projects of similar scope and complexity. Competition-
killing red tape: how transparency regulations may stifle innovation.(Komakech, 2016)
• Accountability
The public authorities involved in the procurement process have duties of performance and stewardship. Public
authorities responsible for procurement should be held accountable for their actions, and an effective procurement
system should have clear lines of authority in decision making. Accountability is described as "the quality or state
of being accountable, specifically a duty or desire to take blame or to account for one's conduct." Public leaders,
under this view, must be both obligated and willing to take personal responsibility for their decisions and acts.
Therefore, public servants, citizens, and representatives of non-governmental organizations must exhibit good
governance, enforce procurement rules or regulations, avoid corrupt practices, and take responsibility for their acts.
Current best practice includes some of the following measures to incorporate the principle of accountability in
procurement: arbitration in the event of disputes; all interested parties should sign a joint undertaking guaranteeing
the integrity of the process and accepting sanctions in the event of a lapse; monitoring by a third party such as a civil
society body; keeping of proper auditable records, which can be scrutinized at any point in the process; and
instituting and enforcing sanctions in the event of a breach.

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On other hand, the international company implements this principle according to its perception and code of
conduct for example in Apple inc. the apple supplier code of conduct includes that in order to ensure that its
management systems are put into action and are being regularly reviewed, the Supplier must designate corporate
representatives to take on these responsibilities. A supplier must have a designated CSR or Sustainability
representative who is accountable to upper management and has the power to oversee the company's social and
environmental compliance initiatives.(Apple Supplier Code of Conduct, n.d.2022)
• Equal Treatment/Fairness
Effective public procurement policies provide fair competition by treating all bids equally. All potential vendors
should be given the same consideration and given the same opportunity to win the contract. According to this rule,
circumstances that are identical must be addressed similarly, while situations that are not similar must be treated
differently. Unlike the nondiscrimination principle, it is not predicated on a person's nationality but rather on the
concept of treating all people fairly. As an example, there would be no discrimination based on nationality if two
bids from the same country were treated differently despite the fact that they were both from that
country.(Komakech, 2016)
In National water company this principle is implemented by executing the procurement in three stages the first stage
is to qualify the bidders as per the company rules and the result of the pre-qualification is available for all
competitors, once the bidder is qualified to submit his proposal he can go through the second stage, this stage is to
submit his proposal according to clear conditions listed in the RFP and the rules of selection also included and
available for all competitors once this stage has finished the stage of negotiation and selection the best proposal will
start and the result of negotiation and its steps will be available on the company website and all bidders have the
right to log in and review.
• Competition
The word "competition" is used to describe situations in which private companies bid against one another for a
public contract to supply products, services, or both. Unless there are exceptional circumstances, procurement should
be conducted via open bidding. The goal of any public procurement system should be to draw in the best and
brightest from all over the world to compete for the privilege of supplying goods and services the government need.
Key elements of competition in Uganda include open access to public procurement and disposal opportunities for
all interested providers; adequate time given to bidders, contractors, or suppliers; uniform evaluation of all bidders,
contractors, or suppliers based on the criteria outlined in the bidding documents; clear and non-restrictive

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specifications, scopes of work, or terms of reference; and the use of Standard Bidding Documents (SBDs). Therefore,
competitive processes should be the usual approach for conducting procurement as a means of generating efficiency,
combating corruption, and guaranteeing competitive results. Given the higher danger of corruption, notably from
foreign suppliers, any exceptions to the use of competitive bidding and the use of single-source procurement should
be narrow, well-defined, and subject to acceptable explanation when applied.(Komakech, 2016)
• Integrity
Integrity is one of the most important principles in government contracting. Integrity is using public money and
assets in a way that serves the public interest and stays true to the letter of the law.
No amount of money is worth the risk of corruption or collusion between public authorities in charge of procurement
and the vendors or anybody else involved in the process. The concept includes the "wholeness" one feels on the
inside when they are truthful and consistent in their moral behavior. In the realm of public contracts, this rule of
thumb is crucial. It improves transparency and accountability in government spending, which in turn helps save
money for the public welfare.(Komakech, 2016)
Each competitor must sign a disclosure form for any relations to National Water Company employees, including
any kinship ties, and the company has strict rules for applying its conflict-of-interest policy. This is done to protect
the fairness of the bidding process, the reliability of procedures, and the independence of business dealings from
corruption and favoritism.
• Appeal rights
Those who want to become suppliers should be given a way to air their complaints and have any problems with the
system addressed.
In the case of Uganda, a bidder may request administrative review for any omission or infraction of the Act, these
Regulations, the guidelines, the terms of bid papers, or best practises, by a procuring and disposing organization.
This is stated in Sections 89 and 91 of the Act of 2003.No legally binding document (such as a contract, purchase
order, letter of bid acceptance, or other communication expressing acceptance of a bid) must be issued by a procuring
and disposing body or Authority until the administrative evaluation of the procurement need has been completed.
Within ten business days after the day the award was posted publicly, the losing bidder may request an administrative
review. Those seeking an administrative review must submit their request in writing to a responsible official in the
finance department. The following items must be included in the request for administrative review:

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Complaints should include the following information:
i. Specifics about the procurement or disposal requirement at issue.
ii. Specifics about the rule or provision that has been breached or omitted.
iii. An explanation of how the rule or provision has been breached or omitted, including the dates and the name
of the responsible public officer, if known.
iv. Any supporting documentation or other evidence, if any; and
v. Any other information relevant to the complaint.(Komakech, 2016)
• Economy and Efficiency
Efficiency is the achievement of the intended outputs using the available and cheapest methods or resources, whereas
economy refers to the control and management of public resources in a manner to save money and provide value for
money. Costs in terms of time and manpower, as well as the number of bids received and the involvement of
international and domestic bidders, are taken into account when evaluating the success of public procurement efforts.
As a result, every government agency needs a comprehensive system for tracking and improving the effectiveness
of its own internal procurement operations. The success of procurement as a whole should be evaluated by the
program. All government agencies, departments, and other organizations would benefit from creating and frequently
measuring a uniform set of Key Performance Indicators (KPIs) to ensure efficiency and effectiveness.
The list of key performance indicators must include, among other things, the total procurement expenditure, the
procurement expenditure broken down by spending department, the procurement expenditure broken down by
commodity or service, the procurement expenditure broken down by geographic reach, the total number of
procurement transactions, the total cost of resources in the procurement department, the total cost of resources in the
procurement process, including the cost to support departments, and the average expenditure per order.(Komakech,
2016)
• Value for Money (VfM)
Despite the idea that procurement costs should be the foundation of Value for Money,
The government procurement process should prioritise timely, cost-effective, and appropriate acquisition of the
necessary supplies.
actions. Value for Money, as defined by Mamiro (2010), is a critical criterion against which a procurement
organisation

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results from a purchase that were made. Value for money is the benefit to the consumer or audience that a product
or service provides relative to the cost (output) associated with a certain price tag (input). When strictly defined,
value for money refers to allocation of means in light of the likelihood that certain target outcomes will be achieved.
Department of Use or Customer tries to put a price on the goods or services one has gotten and evaluates this against
the cost of providing them. At least three factors contribute to a product's overall value, as outlined by Arrowsmith
(2010):
✓ Verifying the quality of the purchased services, products, or projects. What this implies is that both are
sufficiently flexible to do the necessary work without being too specific (or "gold-plated").
✓ Reaching an agreement to acquire the necessary resources on favorable conditions (which are not always the
cheapest).
✓ Making sure the other party can provide the products, services, or tasks as promised is also important.
Therefore, it is crucial that procurement acquires the highest quality goods and services at the most cost-effective
rates.
This means that calculating the total cost throughout the course of the project's life cycle is an integral aspect of the
appraisal process that should result in a recommendation to award. Value for Money could be achieved through the
following strategies: conducting value analyses for contracts above a certain threshold; holding public consultations
on the rationale and elements of major projects during the design phase prior to the finalisation of the bidding
documents; increasing the use of standard clauses in conditions of contract; establishing a registration system for
endorsed suppliers, contractors, and consultants who are given preference for contracts due to their endorsement;
and increasing the use of standard clauses in conditions of contract.(Komakech, 2016)

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1.3 Evaluate the importance of sustainable procurement.
What Is Sustainable Procurement?
Sustainable procurement, sometimes known as "green procurement," refers to minimising an organization's negative
effects on the public health by incorporating ecologically, fiscally, and socially responsible practises into its supply
chain. When it comes to implementing more moral business practises, many corporations turn to CSR ideas as a
means to achieve their goals of sustainable buying. Your whole supply chain, from raw materials to finished products
to the people who make it all possible, may benefit from a sustainable procurement plan. Supply chain modifications
made with social responsibility in mind should not compromise the company's ability to serve its customers or other
stakeholders. (drydengroup, 2022)
Keeping these competing goals in check may improve your business's long-term success. There are a variety of
advantages for companies to adopt sustainable purchasing policies. Customers have been more cautious about
making purchases for a number of reasons, including the ongoing discussion of climate change and
environmentalism. Sustainable sourcing helps businesses provide goods that reflect shifting societal priorities. There
is a rising demand in new markets, but a shrinking supply, making green procurement a must. To continue expanding
even as the market changes, businesses should use sustainable procurement practises that enable them maximise
supply chain investments and maximise resource longevity. (drydengroup, 2022)
The importance of sustainable procurement.
Sustainable purchasing, from a commercial perspective, may boost profits and prepare your company for economic
uncertainty. In-depth research like that which comes with sustainable procurement may help you attain the revenue
and adaptability your business needs to survive. Not only can this policy help the company save money and work
more efficiently, but it also covers potential threats and how to deal with them. While profitability and flexibility
are both important, sustainable procurement is more in tune with the priorities of today's consumers. Companies
need to adapt to the shifting social climate as more consumers look for brands that share their ethical and ecological
concerns. Sustainable purchasing practices help businesses succeed over the long haul. As more businesses
incorporate eco-friendly buying practices, this trend begins to play a role in wage competition. As a result of this

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rivalry, a growing number of businesses are focusing on becoming more environmentally friendly, which has far-
reaching positive effects on society and the environment. (drydengroup, 2022)
The industrial sector is responsible for 23 percent of the world's greenhouse gas emissions, and 2019 saw the highest
atmospheric amounts of carbon dioxide in 2 million years. These emissions contribute to global warming, which in
turn threatens biodiversity and, ultimately, human survival. Businesses may significantly decrease the rate of climate
change by reducing their energy use and carbon dioxide emissions.
When it comes to the climatic and social challenges that touch us all, sustainable buying is invaluable on a global
scale. A sustainable procurement plan considers both the economic and environmental impacts of its actions. Ethical
purchasing also takes into account issues like employees' rights and labor standards.
When companies prioritize the needs of their employees and the planet, they improve life for everyone. Sustainable
purchasing may serve both your business's objectives and the demands of society as a whole.
Several positive outcomes for your organization and society at large may result from implementing sustainable
procurement methods across your company's supply chain. Sustainable purchasing allows you to do the following:
➢ Grow revenue: Many members of the expanding eco-conscious consumer community are on the lookout
for companies that share their commitment to environmental responsibility. Many of these buyers will pay
extra for a product or service that was produced in an ethical manner, therefore expanding your profit
margins. (drydengroup, 2022)
➢ Increase compliance: The body of law concerning ecologically sound commercial activities grows. Some
of these requirements, such as those set by the Environmental Protection Agency, are really laws that you
must follow (EPA). As an added bonus, meeting the requirements of several voluntary programs might earn
your company superior ratings and perhaps even recognition. for example. Over $39 billion was saved in
2019 alone because to the support of Energy Star ratings and resources, (drydengroup, 2022)
➢ Decrease costs: Like Energy Star's mission has shown, there are ways in which your company may save
money via more environmentally friendly purchasing practices. Industry in the United States accounts for
one-third of the country's overall energy usage. Reduced waste and energy consumption are two potential
benefits of adhering to sustainable buying practices. Reducing energy use and recycling materials reduces
the amount of money spent on non-negotiables like new appliances and packaging. (drydengroup, 2022)
➢ Reduce risk: When you have a thorough understanding of your supply chain, you can lessen risk in ways
you never imagined. It's possible that a current supplier has shortage problems with a key resource; in this

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case, sustainable sourcing might assist you plan ahead for potential difficulties. The hazards posed by things
like pollution and water waste may be mitigated with the help of sustainability principles. Poor indoor air
quality, for instance, has been linked to an increase in sick days and a subsequent drop in productivity.
(drydengroup, 2022)
➢ Enhance brand: Conscientiously harming the environment or making working conditions difficult for
workers might cause consumers to associate your brand with negativity. Sustainable procurement analyses
how a business may improve its public image by taking responsibility in several areas. (drydengroup, 2022)
➢ Prepare for the future: Businesses must be able to adapt to the ever-evolving economic and environmental
conditions. To ensure the company's continued success over time, sustainable sourcing strategies take into
account variables including technological advancements and economic developments. (drydengroup, 2022)

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Task 2. Be able to critically evaluate procurement operating environment and legislation.
2.1 Assess the impact of legislative frameworks on procurement in the impact public and private sector.
Value for money, or "the optimal balance of quality and effectiveness for the least expenditure during the time of
use of the products or services obtained," is one of the overarching stipulations of public procurement policy. To
ensure that public sector procurement is conducted fairly and in accordance with globally and domestically
recognized norms and rules, a legislative framework has been established. (mynewlab, 2022)
What is Procurement Legal and Regulatory Framework?
The rules, laws, norms, and regulations that regulate procurement within an organization are collectively referred to
as the "legal and regulatory framework" for procurement. Whether they operate in the public, commercial, or non-
profit sectors, all organizations need a set of guidelines for purchasing products, works, and services in order to be
successful. When we talk about the "legal and regulatory framework for public procurement," we're referring to the
rules and regulations that regulate how government agencies buy supplies and services. (Cholopray, 2022)
Components of the Procurement Legal and Regulatory Framework
Constitution: The Constitution of any given nation serves as the supreme legislation of that nation. This corpus of
legislation is intended to be supported by, rather than contradict, other laws. A constitution is the fundamental
principles and rules of a country, state, or social organization that sets up the roles and responsibilities of government
and protects the rights of its citizens, as defined by the Merriam-Webster Dictionary. Policies or rules governing
national procurement must be consistent with the constitution. This clause supersedes any other provision, which is
thus null and invalid. (Cholopray, 2022)
National Procurement Laws: The Constitution of any given nation serves as the supreme legislation of that nation.
This corpus of legislation is intended to be supported by, rather than contradict, other laws. A constitution is the
fundamental principles and rules of a country, state, or social organization that sets up the roles and responsibilities
of government and protects the rights of its citizens, as defined by the Merriam-Webster Dictionary. Policies or rules

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governing national procurement must be consistent with the constitution. This clause supersedes any other provision,
which is thus null and invalid. (Cholopray, 2022)
Procurement Regulations: In certain nations, the rules are second only to the Procurement Laws. The national
procurement legislation is bolstered by these enabling legislative mechanisms. A country's procurement regulatory
authority is often the source of such documents. As a supplement to the procurement legislation, these rules clarify
its requirements. (Cholopray, 2022)
Standard Bidding Documents and Related Standard Template; Standard bidding papers are those used to
request bids from potential buyers. Each procurement opportunity has its own unique set of terms and conditions
that are spelled forth in these papers. They outline the specifics of the bidding process, including what is needed,
who may participate, how bids should be produced, who is eligible to bid, and so on. Standard bidding papers for
commodities, works, and services are available in every system and may be modified to fit individual requirements.
These records must comply with all applicable rules and legislation regarding national procurement policies and
procedures. The procurement regulatory authority is the primary source of standard bidding papers and associated
templates in most countries. (Cholopray, 2022)
Procurement Manual: The procurement handbook provides a thorough or step-by-step description of the processes
and procedures necessary to execute procurement of products, works, and services under the various procurement
techniques. (Cholopray, 2022)
Organization Procurement Policies: The procurement handbook provides a thorough or step-by-step description
of the processes and procedures necessary to execute procurement of products, works, and services under the various
procurement techniques. (Cholopray, 2022)
Contracts: A valid contract is an agreement that may be enforced by the courts. A legally binding contract between
the government and the supplier, contractor, or service provider is the typical result of a successful procurement
process. In the terms and conditions, the responsibilities of each party are specified. (Cholopray, 2022)
The significance of the legal and regulatory framework for procurement is that it provides a clear definition of the
rules that govern the procedures and processes of every aspect of public procurement management and ensures that
the principles of public procurement are achieved to the fullest extent possible. In every nation, the legal and
regulatory framework for procurement is also often meant to promote the economic growth plans of that nation. This
is the case in every country. It is essential to keep in mind that the Gross Domestic Product (GDP) Economic Model
includes public procurement as a component of the actual execution of governmental expenditures. The manner in

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which procurement is carried out is of the utmost significance to the accomplishment of the supply of public goods
and services as well as the growth of the economy. The legislative and regulatory structure that governs public
procurement is designed to guarantee this.
✓ All contracts must adhere to the basic principles that govern the procurements processes according to
Procurement Legal and Regulatory Framework.
✓ Laws governing contracts and a regulatory framework that outlines the responsibilities and authority of
public entities are both part of an overarching framework of law that all public bodies must adhere to. Then,
these government organizations develop their own policies for internal operations.

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2.2 Evaluate the importance of establishing ‘Contract Procedure Rules’ and applying financial regulations.
Establishing contract procedure rules and applying financial regulations creates an standardization in the
implementing the procurements processes, and this will add a lot of values in this field as below: -
1- Greater clarity & predictability.
The adoption of standards helps eliminate any unwelcome shocks. Your operations, including their inputs and
outputs, will become more predictable, allowing you to more easily prepare for them. You are fully aware of their
precise configuration, the processes that comprise it, and the amount of time it takes to complete it. This is
comforting for both the workers and the management, since it allows the managers to more easily direct the
processes, and it lets the personnel know in advance what the expected outputs should be. (Niels., 2022)
2- Knowledge retention.
Knowledge is power, and this maxim holds truer than ever before in our information-based contemporary culture.
When procedures and responsibilities are standardized, it is much simpler to record everything and then to remember
it. Standardization entails the writing of unambiguous instructions, which means that it is far less likely that you will
lose critical information when someone quits the firm to pursue a new position or retires. This is because you will
have standardized the instructions. In addition to this, it helps you train new employees in a more expedient manner.
(Niels., 2022)
3- Greater flexibility
Standardization makes it simpler to cycle staff members since it provides them with a distinct road map to follow,
which in turn makes it simpler for them to take up new responsibilities. When anything breaks, it takes less time to
identify the proper replacement components or parts if the items and tools you use have been standardised. This is
another benefit of standardising products and equipment. (Niels., 2022)
4- Consistent quality

21. 21
Is there a uniform approach that everyone takes to doing a certain task? If this is the case, then the output and,
eventually, the product you create will be of a high quality continuously. In practise, this paves the way for the
establishment of an internal system of quality standards that might assist you in standing out from your rivals. (Niels.,
2022)
5- Easier compliance.
The vast majority of manufacturers are required to conform to various standards, whether they be national,
international, or industry-specific, such as ISO 9000. There is just no room for noncompliance in this scenario.
Standardization serves as a control mechanism in this kind of situation, assisting you in meeting all of the rules,
laws, and standards that are in place. (Niels., 2022)
6- Reduced waste
When every member of your business completes a work in the same manner, it is much simpler to identify any
bottlenecks or other sources of waste that may be present. When you've fixed these problems, your company will be
able to make better use of its human resources, raw materials, and energy resources, which will result in cost savings.
(Niels., 2022)

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Task 3. Understand the management of procurement operations.
3.1 Discuss the key principles and application of category management.
Category Management is the process that businesses go through in order to make their purchases more efficiently
and thus save huge amounts of money by streamlining their procurement. The term "category" is used to refer to the
bundling together of distinct commodities, works, or services into a single group for the purpose of entering into a
single contract arrangement. Because of this, there is no longer a need to draught numerous contracts for the same
demand, which results in a savings of time, resources, and planning effort that is normally associated with the
procurement process. (delta-esourcing, 2020)
Figure 4 KEY PRINCIPLES OF CATEGORY MANAGEMENT. (Henshall, 2022)
The practice of category management is based on the following five fundamental principles:
✓ Cross- functional team approach

23. 23
✓ Strong supply market knowledge
✓ Make change happen
✓ Stakeholder engagement
✓ Facts and data based
Category management is a process that is often used by businesses that have operations in several countries
throughout the world in order to create procurement that is more organized, productive, and cost-effective. The
robust modules that Delta offers as an eProcurement platform assist organizations in becoming champions of
category management within their procurement strategy. There are ten pillars upon which category management
rests; these are the pillars upon which the category management process at all levels of an organization must be built
and kept.
1- Value creating
Using category management, a company may see where it can save costs and save time with its present
purchasing processes. They achieve fruitful results that contribute to the success of the company and go above
and beyond in meeting its requirements. (delta-esourcing, 2020)
2- Facts and data driven
Both the program level, where a guiding group defines and administers the category programs, and the
corporate governance level, which oversees the direction of category management for an organization, need
robust corporate governance. To successfully adopt category management, businesses must first have a
thorough grasp of their efforts and develop a plan outlining each stage of the process. With this information,
businesses may better back their activities via performance benchmarking, business case formulation, strategy
development, organizational design, and coordinated programming. (delta-esourcing, 2020)
3- Consistent application
Consistency in delivery is essential due to the many moving parts involved in category management. To
guarantee uniformity in the application of the process, standardization in the measurement of data, and
equitable allocation of costs, it is necessary to maintain open lines of communication between the program
level and the governance level, where decisions regarding category management are made. (delta-esourcing,
2020)
4- Flexible application

24. 24
Category management, like regular implementation, requires motion and adaptability to measure performance.
To be able to work across several categories effectively, employees need a deep grasp of how the notion
operates. In addition to the necessary skillsets, however, organizations also need to be flexible and pragmatic
in their approach to applying the standards in order to succeed.
Flexibility is essential to the success of category management, which is why it's important to develop a strategy
that can be used across a wide variety of contexts without requiring much adaptation. The approach your
company uses to think about any category should include the preparation required to produce this idea. (delta-
esourcing, 2020)
5- Cross-functional working
When groups work together, they achieve more success in Category Management. In order to complete the
process successfully, workers need to be adaptable in a variety of roles. Organizations using category
management split their procurement processes so that different departments may focus on different areas.
Because of this, they have a better grasp of how the procurement strategy as a whole (which includes total
category expenditure, marketplaces, and suppliers) affects each specific category. (delta-esourcing, 2020)
6- Easy access
When it comes to the success of a category management rollout, suppliers are crucial. In order to offer a
service that aids customers in making educated selections, they need have ready access to data-driven
evidence and thorough market research. Maintaining efficient cross-functional collaboration requires making
this information and the total visibility of all actions that drive category management readily available to all
components of an organization. (delta-esourcing, 2020)
7- Data capture
At its heart, category management is an examination of the who, what, where, and when of consumer
demand. Therefore, collecting useful information where it is needed is foundational to the notion of
category management and its capacity to provide efficiency to firms. As a means of reliably tracking
development or success, products need to be allotted space based on hard numbers. (delta-esourcing, 2020)
8- Project management
With the aid of category management, firms are better able to focus on their most pressing goals. In order
to discover, classify, and prioritize improvement opportunities in collaboration with service lines or

25. 25
stakeholders, the organization putting up the category management framework must collect all necessary
data. By doing so, businesses may establish quantifiable short-term and long-term objectives and shape
their procurement strategy accordingly. (delta-esourcing, 2020)
9- Governance
With category management in place, all workers are able to participate in all aspects of procurement. Staff
members may then have a firm grasp on the products, works, and services needed, as well as the procedure
by which they are delivered. In addition to deep category knowledge, they also have a thorough grasp of
the market and the nuances of the procurement process. Organizations may boost their chances of
achieving breakthrough results and original ideas by devoting more resources to the planning process.
(delta-esourcing, 2020)
10- Interactive environment
Category management's ability to foster improved communication and collaboration across different
business units and important stakeholders is one of its primary advantages. Organizations may facilitate
effective procurement by working together with suppliers, purchasers, and other stakeholders in a
coordinated effort. This is accomplished without sacrificing control over tactics and results by individual
service lines.
Delta's Bidding Management is a collaborative platform where buyers and suppliers may interact to
streamline the tender process. It is straightforward to use and may be used in connection with Workspace
Manager, to offer easier procurement across and across many teams and locations. (delta-esourcing, 2020)

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3.2 Critically assess the impact of technology on procurement operations.
➢ The Role Technology Plays in Procurement Management
Technology was initially intended to simplify procurement. Reduce issues, collect data, and simplify procurement
teams' purchases and progress. Technology was already used in analytical commercial sectors and was spreading to
other aspects of society. To stay current, its inclusion made sense. No matter the situation, introducing new
technology is appropriate.
Technology has increased in procurement management. Procurement has quietly kept up with business and society
thanks to technology. It manages teams' massive data sets for negotiations and decision-making. Software and digital
systems monitor inventory, orders, strategy, contracts, and budgets. Even smaller procurement teams with less data
will use technology for all of their business activities. Tech in procurement is omnipresent and can do anything.
(universalclass, 2022)
➢ Why Use Technology?
To a certain extent, procurement teams may get by without using a lot of technology and continuing to do many of
their tasks the old-fashioned manner. The amount they do spend is determined by the level of effort required to
maintain relationships with suppliers and other organizations important to their purchasing strategies. Some
procurement processes may resort to low-tech solutions because of need rather than personal preference. But it
doesn't imply tech implementation isn't necessary or worthwhile. In most cases, companies and procurement groups
choose to enhance their tech use because of the benefits it provides. The most typical explanations are as follows:
1- Organizational Purposes-- Data volumes in procurement may be unusually large and unwieldy. Since there
is so much to keep tabs on, certain details inevitably go overlooked, leading to blunders. If you aren't careful,
things may swiftly devolve into chaos. Cloud computing and other forms of electronic inventory
management have greatly simplified the process of keeping things in order. Important procurement data that

27. 27
would have previously required a room to store in hard copy form is now easily accessible from a single
computer, saving both time and space. Making decisions based on this information is quicker and simpler,
and it helps you remain up to date more quickly. (universalclass, 2022)
2- Streamlines The Process-- Technology, as most would agree, speeds up and improves the precision of the
purchasing process. Once time-consuming processes may now be completed in a matter of days or even
hours. As we travel farther down the supply chain, the quality of the final product remains consistent because
we are using technology to ensure that nothing is overlooked or cut short. The technology at hand allows
users to retrace their steps if they make a mistake, rather of having to start from the beginning. (universalclass,
2022)
3- Reduces Issues-- If technology is making it possible to take a closer look at the processes and data utilised
in procurement, then mistakes may be spotted before they become a major issue. Software is available that
keeps track of mistakes and sends alerts the moment one is committed. You're picking up on details sooner,
sometimes as they're happening, and can now see the ripple impact of decisions as they're made throughout
the purchasing cycle. It's not only about the immediate effects, but also about everything that follows from
it. The technology can help you locate the root of the issue if you can identify its impacts first. (universalclass,
2022)
4- Relevance In Industry, Economy-- You may remember your mom telling you that you should never follow
the crowd. True enough, but when it comes to your company's methods, you want to be sure you're at the
very least maintaining parity. Technology's pervasiveness in business and its importance to many sectors and
the economy imply that you may need to follow the herd if you want to succeed. There's a distinction to be
made between following the crowd and doing what's required to maintain your social standing. Changes in
business and purchasing practices have been implemented as a result of technological progress. You'll have
a hard time staying afloat if you can't adapt to the new circumstances. (universalclass, 2022)
➢ How is Tech Commonly Used?
Technology in procurement must have a purpose. It's wasteful and costly to integrate every program,
equipment, and software into your business. Moderation is key to avoiding robotization. Technology's most
effective uses are:
1- Storage and Organization-- Many different types of software exist for the purpose of digital storage and
organizing. These applications are useful in the field of procurement because they ease the management

28. 28
of stock and data pertinent to the process. Cloud-based data storage and management systems are used by
the vast majority. The cloud is a collection of interconnected computers, each of which performs some
useful tasks for the end user; nonetheless, a significant chunk of the cloud is dedicated to the task of
archiving digital files. It is possible to provide just certain individuals, such as the procurement team,
access to this information, which may then be accessed remotely with the right software. (universalclass,
2022)
2- Analytics--. As we're about information, it's important to note that technology is also often utilized to
analyses information. With the use of technology, it is possible to keep tabs on everything from
development to strategy use to spending patterns to inventory depletion. Data submitted into standalone or
system-wide programs is analyzed and presented in a form that personnel can understand and use. When
used properly, these applications reduce the likelihood of mistakes and help the procurement team make
better use of their time. (universalclass, 2022)
3- Information Technology (IT)-- The term "IT" (Information Technology) is what most people think of
when they need assistance with their office computers, yet it serves a far broader purpose. Technology-
related items and services that are important to the procurement team's work may be acquired and kept up
to date with the use of information technology. Everything that uses a digital system, software, or
programming is included in this category. Employees whose primary responsibility is IT procurement
ensure that the technology being utilized functions properly within the context of the procurement system,
satisfies the need(s) it was designed to address, and provides some value to the procurement group. It's an
important strategic position since it ensures that all available technical alternatives are being used
effectively and that their value to the company is recognized. (universalclass, 2022)
4- Inventory Management-- Technology is often used in inventory management via tracking and filing.
Technologies like Radio Frequency Identification (RFID), which have many applications, provide precise
data in real time from the shelves to aid in inventory management. The RFID technology keeps track of
all inventory items via their unique identification codes for as long as they are in the system. A few lines
of code may track an item throughout its full lifespan in the inventory management system, providing
valuable insights that can be used to cut down on waste and excess. Because RFID-tagged things are often
labelled as being in designated locations unless otherwise stated, any unauthorized removal of such an
item is immediately detected. (universalclass, 2022)
5- Finances-- You have undoubtedly used some kind of technology in your personal life to monitor your
financial situation. Tools like internet banking and budgeting apps fall under this category. Technology in

29. 29
procurement allows for the same functions to be performed on a bigger and more nuanced scale.
Everything from purchases to transactions to invoices to budgeting and expenditures is recorded and
analyzed in detail thanks to this program. Each one of these tasks may be accomplished by using software.
It's possible to use a mix of automated processes and human data entry workers. The program maintains
track of the data and organizes it for you, relieving procurement teams of some of the burdensome tasks
associated with financial management. (universalclass, 2022)
➢ How To Choose The Right Tech.
You want to use the correct procurement management technology in the right places. The diversity implies some
alternatives are better than others. Before choosing, you must weigh your selections and consider specific
considerations. When picking tech, consider:
1- Consider Needs-- Incorporating technologies like this, for what reason specifically? Consider the end goal
and the optimal setting for its use. Considering software solutions that are relevant to data analysis and
organization is important if you want to enhance your data analysis and organization skills. (universalclass,
2022)
2- Consider Cost-- Due to the complexity of the tasks it must do and the scale of the business, some of the
technology used in procurement may be rather expensive. Total expenses are not only the one-time cost of
acquiring a software or system, which may vary widely depending on its functionality. Integrating and
installing such a massive system might incur additional service and hardware costs. It's likely that normal
company activities may need to be placed on hold while these massive changes are implemented, which
might have a negative influence on profits and the overall financial plan. (universalclass, 2022)
3- Additional Training-- Workers are likely to be unfamiliar with the procurement technology being used,
even if it has a personal equivalent. This implies that instruction and training in the use of the technology are
essential, particularly in the case of a comprehensive and complex system like RFID. Additional training
may incur its own expenses and take a certain amount of time to bring everyone up to speed on the software.
New technologies with more moving parts will need more study time. In the beginning, while employees
become used to the new system, there may be a dip in output and efficiency. (universalclass, 2022)

30. 30
4- Maintenance Requirements-- You can't automate procurement without some degree of maintenance, and
that includes whatever technology you use. After some period of time, it will be necessary to update the
software, repair or replace the hardware, and the system as a whole will have degraded in performance due
to normal wear and tear. Thus, technical assistance and maintenance may be required to ensure continuity of
service and fix any issues that crop up. That may be handled in part by IT personnel, but many vendors and
providers of such systems also provide technical assistance, either as part of the deal or as an add-on.
(universalclass, 2022)
3.3 Examine the use of electronic promotion of contract opportunities and electronic tendering.
As a crucial link in the e-procurement process, "e-Tendering" refers to the electronic submission of bids.
Electronic/digital procurement refers to the sending and receiving of bids using such channels. As a result, the
procurement process is simplified, and productivity is increased because of the increased availability of high-quality
suppliers.
Electronic tendering (or "e-Tendering") plays a significant role in today's e-procurement processes since it
streamlines the procedure of finding suitable vendors or suppliers. Document management via the internet is
impossible without a robust degree of security. Procurement processes may now be managed with more efficiency
and precision thanks to the automation afforded by digital tendering. Thus, making it simpler for the procurement
manager to handle bid management and analysis. (aavenir, 2022)
Consider these benefits of using an electronic tendering procurement system at your company. Here are some of the
benefits of electronic tendering:
1- Higher cost savings - Electronic tendering eliminates the need for the usual paperwork. It releases them
from the obligation of participating in a tendering procedure that entails issuing a tender notice in a
newspaper. (aavenir, 2022)
2- Transparent system - Provides a rapid and open channel of communication with suppliers, allowing for full
view of all activities taking place throughout the procurement process. The audit trail provides insight into
spending, eliminating any potential for misinterpretation between. (aavenir, 2022)

31. 31
3- Easy to use - When submitting a traditional tender, you run the risk of having the decision overly influenced
by elements such as design flair and addressing criteria that go beyond what has been sought. When using
an electronic tender, everyone responds to the same questions, and there is often a word restriction that must
be adhered to, which should make it simpler for the evaluator to make an impartial conclusion. It cuts down
on administrative work and speeds up the turnaround time. (aavenir, 2022)
4- Better vendor database - The use of an electronic tendering system makes it possible to monitor the
performance of suppliers and compile a list of the most qualified candidates. In this setting, several suppliers
fight to get your business, and the result is that you receive the greatest possible price from the most qualified
individual. (aavenir, 2022)
5- Higher efficiency - E-tendering makes everything digital, which contributes to an improvement in
operational efficacy. The time-consuming practice of switching back and forth between sheets, Excel files,
and emails, among other things, is no longer necessary.
6- Simpler evaluation - You will have the ability to access and manage information via a centralized platform
when you use e-Tendering. The process of comparing and assessing different providers is simplified as a
result of this. (aavenir, 2022)
7- Technology benefit-. The use of this digital method of tendering gives you the ability to resume the process
from the point at which you left off, without the risk of losing data or missing the context. (aavenir, 2022)
8- Improved organization - Many businesses are plagued by chaos because of the difficulty in scheduling
orders and managing purchases. Such an unstructured procedure makes it difficult to make adjustments and
often results in special cases. E-procurement is the way to go since it simplifies the purchase process and
lowers the likelihood of mistakes. You can consolidate your buying power, which is another plus. (Procurify,
2022)
9- Enhanced control - You may be as nimble as you want with what you include and how you limit access
when you do business online. The correct e-procurement software may help you restrict many different
aspects of your purchases, such as the approved pricing from each vendor, the things you order, the suppliers
you choose, and the types of purchases you make. You can keep order times consistent and prevent wasteful
expenditure by keeping a close eye on these key factors. The online procurement software may also easily
connect with your current infrastructure to further improve productivity. (Procurify, 2022)
10- Integration with existing software - As was previously noted, the best e-procurement software solutions
may work in tandem with your current BPA tools. Numerous providers of online procurement software also
provide tools to manage capital projects and simplify financial operations. To facilitate the rollout of the e-

32. 32
procurement solution, you may choose a single vendor to offer all the necessary software components.
(Procurify, 2022)
But there are some cons must be taken in consideration when using E- Procurement as below-
1- Technical glitches - E-portals may become sluggish and unresponsive at any moment if they are used for
routine data and work saving. This occurs most often just before the tender submission deadline, when an
overwhelming number of potential bidders attempt to enter the site all at once. (aavenir, 2022)
2- Micromanagement - Features for in-depth data analytics and categorization are available in e-procurement
applications. Though the wide variety of customizations available is appealing, it also poses a risk of
becoming obsessive. It's possible that the platform's reporting efficiency may suffer due to the excessive
quantity of fields. Finding the right degree of personalization for your business is the answer. (Procurify,
2022)
3- Time-consuming approval chains - Having granular understanding has its advantages and disadvantages.
It may slow down your company's review process, causing reviewers to spend more time going through
procurement information before passing them on. Therefore, removing such roadblocks is crucial to
preventing the approval process from being stalled. (Procurify, 2022)
4- Not ideal for direct materials - Indirect products like office supplies that may be ordered from a catalogue
perform particularly well for e-procurement. Investing in them will provide a healthy return. When it comes
to direct service or material purchases, however, e-procurement may not be the best option. As a result, you
shouldn't use it to negotiate purchases as part of really pricey arrangements. (Procurify, 2022)
5- Supplier onboarding problems - Online procurement software may be difficult for more seasoned suppliers
to learn. As a result, it may be challenging for small firms to keep their catalogues and other information on
the site up to date. This means that, to get the most out of e-procurement, you need to work with suppliers
that are also tech-savvy. (Procurify, 2022)

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3.4 Explain the various risks associated with e-tendering.
Preventing and Dealing with Fraud When Buying or Using Electronic Commerce The procurement department plays
a vital role in an organization's efficiency. The ability to successfully procure goods and services is fundamental to
every company's ability to produce, operate, and continue in business. Organizational supply purchase and disposal
include the same inherent risk of fraud as any other business activity. (e-procurement, 2022)
Procurement managers must consider these risks and work out ways to lessen them before they cause serious
problems for the company. E-procurement, sometimes known as online shopping, has introduced new dangers. In
this article, you'll learn about the most common buying risks and the steps that managers may take to mitigate them.
(e-procurement, 2022)

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Risk statement How to Mitigate the Risk
Poor Internal System
To prevent mistakes and fraud, procurement must
have a transparent and foolproof internal structure.
There are open channels of communication, a system
of checks and balances, and a well-defined audit
procedure built into the system. For fraud to flourish,
any of the aforementioned safeguards must be absent
or inadequate. (e-procurement, 2022)
In order to mitigate the consequences of this risk,
businesses need to establish transparent procurement
procedures and a centralized procurement management
system. Having an independent auditor may also assist in
determining whether or not a company is adhering to the
established protocol for making purchases. (e-
procurement, 2022)
Cyber Security Risk
The threat presented by cybercriminals is significant,
especially now that many businesses are shifting
their procurement processes online. Hackers may get
access to tender information held in an organization's
systems and use the information to skew the
procurement process in favour of a certain bidder. In
addition, hackers might sabotage the whole
purchasing procedure, resulting in postponed goods
delivery and halted operations. (e-procurement,
2022)
Companies should invest in hacker-proof e-procurement
platforms to lessen the likelihood of cyber assaults on
procurement procedures. The online casino Unibet, for
example, has a strong online infrastructure in place to
ensure the security of its customers' wagers. in Having a
backup of your bid data is an excellent way to fend off
hackers. The use of authentic security software and
firewalls is also recommended to keep hackers out. (e-
procurement, 2022)

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Risk statement How to Mitigate the Risk
Conflict of Interest
The procurement process might be jeopardized
when there is a conflict of interest between
suppliers and procurement managers. The
possibility of being dealt a bad hand simply cannot
be disregarded in situations when tensions are high.
Genuine procurement makes every effort to get the
required supplies promptly and cheaply. Since
there is a conflict of interest, I highly doubt this will
happen. (e-procurement, 2022)
The procurement manager should stop making secret
agreements with vendors. A potential conflict has to be
identified and disclosed. Furthermore, rather than relying
on a single person or office, procurement procedures
should be exposed to many levels of decision making. (e-
procurement, 2022)
Attacks by computer viruses and worms will
cause the loss of all files.
Create backup of files for all data and the capability to
retrieve data as needed
To reduce the risk of cyber-attacks on procurement
processes, organizations ought to invest in hacker-proof e-
procurement systems. Just like the online casino Unibet,
which has invested in a great online system to make it safe
to place your bets. in Having back up data for bids is also
a great strategy of throwing the hackers off track. Investing
in genuine security software and firewalls will also keep
hackers at bay.
Unreliable internet and electrical power supply will
affect the processes completion and completing
Plan for the process and share a guide in case of troubles
about les what would be done.
The supplier's lack of confidence in the process
makes him reluctant to enter the competition
Implement conferences with the supplier and explain the
platform and the advantages and disadvantages to the
suppliers.
To mitigate this risk, organizations need to come up with
clear procurement channels and a centralized procurement
system. Having an independent auditor also helps in
evaluating compliance with the laid down procedure of
purchasing.

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Task 4. Understand the risk management process in procurement and contract management.
4.1 Evaluate the risk management factors that impact on procurement and contract management.
Procurement is a crucial department for businesses that want to save money while stocking up on necessities.
Managing the risks associated with purchasing products and services for a business. Analysis of the internal and
external business environment is essential for effective risk management since it reveals and allows for the mitigation
of both opportunities and threats. Some typical hazards in purchasing and methods to counteract them are outlined
below.
1- Unstable Prices
When a company deals with commodities whose prices are prone to wide swings, such swings are likely to have
repercussions on the company's output and revenue. When the demand for a company's product is very elastic,
charging a premium reduces profit margins. Products like crude oil, gasoline, and other petroleum products, as well
as fresh fruits and vegetables and precious metals like gold, tend to have fluctuating costs.
Rather of shifting the burden of pricing fluctuation onto customers, businesses should keep a reserve fund to use in
these situations. Having a solid working connection with suppliers may also increase the likelihood of securing long-
term supply contracts at stable rates. Without the uncertainty, long-term planning is made easier. (procureport, 2022)
2- Fraud In Procurement
Procurement decision-makers inside an organization run the danger of putting their own interests ahead of the
company's. It's possible for the company to overpay for or waste money on unnecessary supplies. Complex internal
controls may prevent this from happening. A buy request should always be the first step in the procurement process,
once the necessity for the item has been determined and the funds have been allocated. Also, it's important to have
a defined chain of command in place so that everyone knows who to go to with questions about who is accountable
for what purchases. (procureport, 2022)
3- Lack of Proper Needs Assessment
Before the start of each budget cycle, businesses should do a thorough evaluation of their whole scope of
procurement requirements. Having a thorough understanding of all the necessary expenses is essential when creating
a budget. What the company requires at the present time may be anticipated with the use of historical data and an

37. 37
analysis of the current situation. Consequently, it is crucial to do a requirements assessment. You won't have to
worry about buying things that are too soon to become outdated. It may also prevent different departments from
buying the same things when sharing would be more cost-effective. (procureport, 2022)
4- Improper Contract Management
Management of contracts include everything from negotiating terms with a vendor to winding down the relationship
between the two parties. Analysis of performance in light of the contract requirements is a significant portion of the
labor involved in contract management. Large projects with various suppliers and a need for a specialist to verify
the quality of work may increase the complexity of contract administration. Additionally, administration may
become more difficult because of the volume of documentation involved.
The best method for keeping track of contracts is to use dedicated software designed for that purpose. It is one of
the top instruments for minimizing dangers in the supply chain. All communication may be maintained in the
software's repository, together with tracked changes and alerts for significant project milestones. A violation of
contract may be more easily identified with the use of contract management software. (procureport, 2022)
5- Poor Supplier Performance
The possibility of subpar work from suppliers is a danger in almost every industry. This danger, however, diminishes
as trust between the buyer and the dealer deepens. It is advisable to obtain references and samples of previous work
from new vendors. Prior to awarding a sizable contract, some businesses would test potential vendors' capabilities
or hold a bidding war among them. The contract winner is ultimately determined by how well they perform after
given the job.
It is feasible to employ a consultant to help with the screening of suppliers when a company has the resources to do
so internally. (procureport, 2022)
6- Slow Internal Process
Procurement attempts will be hampered by the complications that arise from slow internal procedures. First,
stockouts or shortages might impede manufacturing or other vital duties if purchase requisitions were processed
slowly. The possibility of losing early payment discounts from suppliers due to slow invoice processing is real.
When bills aren't paid in a timely manner, it may strain relationships with vendors.
Tasks that are routine and repetitive within an organisation may be automated, which may increase efficiency and
precision. The automated software used to process invoices may do a three-way match on hundreds of documents,

38. 38
highlighting those that seem to be fraudulent or incorrect. It's also a method of tightening up internal controls in your
organization's purchasing operations. (procureport, 2022)
7- Talent Shortages
Procurement experts are in great demand because of how the modern economy operates. Therefore, if a company
fails to provide its employees with satisfactory working circumstances, it may have a high turnover rate. Companies
need to find strategies to retain employees without just paying them more. Extremely high wages could not be
sustainable if they drive up procurement prices to unmanageable levels. More long-term success may be achieved
by providing decent working conditions and other non-monetary incentives.
A knowledge bank may help ensure that the loss of key employees does not devastate a company's ability to function.
(procureport, 2022)
8- Inaccurate Forecasts
The ability to predict customer demand, inventory levels, and other external business considerations is crucial.
Accurate forecasts allow businesses to take advantage of demand spikes and prevent extra expenses due to delivery
delays. It is ideal to use real-time data for forecasting purposes. Companies that collect sufficient sales data may
employ AI modelling for forecasting. The reliability of these models is enhanced by their capacity to include a wide
range of inputs. (procureport, 2022)

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4.2 Evaluate frameworks of risk assessment in relation to procurement.
▪ To keep consistency throughout the risk management process and to avoid having to develop each
subsequent assessment from scratch, the procurement risk framework explains how the results of earlier risk
assessments are used as inputs for later risk assessments.
▪ Delays in a project can be prevented with good risk management.
▪ Risks may be reduced via the procurement risk framework, which lays out how those risks will be evaluated
and what treatments will be available.(Procurement Risk Framework: Guidance Note on Procurement, 2021)
▪ The procurement risk framework details the processes involved in identifying, assessing, and managing risks
at the national and sector/agency levels, as well as how those risks feed into the process of doing the same at
the project level.(Procurement Risk Framework: Guidance Note on Procurement, 2021)
▪ After identifying risks, the framework underscores the need of treating and managing them, as well as the
fact that risk management is a continual process.
▪ As hazards evolve and new ones emerge, it is essential that assessments and interventions be regularly
revised.

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Figure 5The Procurement Risk Framework.(Procurement Risk Framework: Guidance Note on Procurement, 2021)
▪ The procurement risk framework is based on the following principles:
(i) The process of risk management serves as the primary organizing principle.
(ii) It is applicable on a variety of levels inside organizations and entities.
(iii) It is relevant throughout the whole process of acquiring goods and services.
(iv) It's never-ending and ripples all the way through the buying process.
(v) After a risk has been identified, it must be managed.
(Procurement Risk Framework: Guidance Note on Procurement, 2021)
▪ Procurement Risk Framework Structured around the Risk Management Process
Figure 6 The Risk Management Process (Procurement Risk Framework: Guidance Note on Procurement, 2021)

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Inputs required to identify risks at each step of the procurement cycle are shown in Figure 3 of the procurement risk
framework. These factors are considered to help pinpoint potential dangers at each phase. The next step is to evaluate
potential dangers. From the perspective of probability and repercussions. The results of a thorough risk analysis are
action plans designed to lessen the impact of identified threats. The mitigating measures are implemented by the
measures themselves.
put in the hands of the right person so they may take the necessary steps. It is important to keep tabs on the mitigating
measures to make sure they are really being put into action and that they are having the desired impact. Finally, risk
assessments need to be revised when risks evolve, or new hazards emerge.(Procurement Risk Framework: Guidance
Note on Procurement, 2021)
▪ The Procurement Risk Framework Applies at Different Organizational/Entity Levels
Countries, industries/agencies, and individual projects may all benefit from the procurement risk framework. The
several kinds of risk assessment shown in Figure 5 below are carried out at various points in the procurement process.
Table 1 Applicability of Risk Management Tools to Organizational/Entity Level.
(Procurement Risk Framework: Guidance Note on Procurement, 2021)

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▪ The Procurement Risk Framework Applies throughout the Procurement Cycle
✓ Preferably, the procurement risk framework is established before the national partnership plan is drafted
(CPS). At this point, risks are identified at the national and industry/government agency levels and compiled
into a CSPRA. The CSPRA evaluates the integrity and openness of public procurement systems, as well as
the laws and regulations that regulate them, the institutions responsible for managing them, the procedures
and practises of the procurement market, and so on.
✓ The PPRA is conducted at the procurement planning stage and takes into account project-specific risks in
addition to more in-depth supplier market data. You may learn more about the PPRA procedure by reading
the Strategic Procurement Planning Guidance Note. The PPRA is an integral aspect of the Comprehensive
Purchasing Strategy (SPP).
(Procurement Risk Framework: Guidance Note on Procurement, 2021)
▪ The Procurement Risk Framework Is Continuous and Cascades through the Procurement Cycle.
✓ The PPRA is conducted at the procurement planning stage and takes into account project-specific risks in
addition to more in-depth supplier market data. You may learn more about the PPRA procedure by reading
the Strategic Procurement Planning Guidance Note. The PPRA is an integral aspect of the Comprehensive
Purchasing Strategy (SPP).
✓ In turn, the CSPRA, along with other pertinent background information, is used as an input in the first project
procurement risk assessment conducted during the project’s conception phase.
✓ Procurement planning stage inputs to the PPRA include the CSPRA and the concept stage project
procurement risk rating, as well as an analysis of the strengths and weaknesses of the procuring entity, a
review of its previous procurement experience, an assessment of the market, and proposed packaging and
procurement arrangements. The final product is the SPP, which contains the PPRA as well as a procurement
risk register and strategy for the project.
✓ The CMP is used for risk management throughout the contract implementation process, and it receives
information from the procurement strategy and procurement risk registry.
✓ Focus is narrowed and hazards from earlier stages are filtered out if they aren't relevant to the present
evaluation in the procurement risk framework's subsequent stages. For instance, only those risks in the
CSPRA that affect the project are assessed for inclusion in the PPRA, shifting the emphasis from nation and
sector to agency and project.

43. 43
(Procurement Risk Framework: Guidance Note on Procurement, 2021)
▪ Risks Must Be Managed after Identification
✓ This guideline note emphasizes the need of taking additional measures beyond just identifying and analyzing
risks. Successful risk mitigation strategies must be devised and put into place if hazards are to be reduced to
an acceptable level. Managing and monitoring the implementation process is essential to ensuring that the
measures are really put into effect.
✓ Documenting mitigation efforts in a risk assessment document allows for their monitoring and management.
✓ The process of managing risks is ongoing. It's possible that after the first risk assessment, either the existing
hazards may shift, or new ones will emerge. To ensure risks are properly managed, the risk assessment must
be revised in response to changing circumstances or new information on hazards, as well as at strategic times
throughout the procurement process.
✓ Risks identified in the PPRA and throughout procurement planning are handled from the time of bid
submission through contract award and into execution, as shown in Figure 7.
Figure 7 Risk Management through Planning, Bidding, and Implementation.

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(Procurement Risk Framework: Guidance Note on Procurement, 2021)
✓ Procurement arrangements, such as the procurement approach, contract structure, contract terms, and
performance metrics, are chosen to mitigate risks indicated in the PPRA. The PPRA and any related risk
registry should keep track of who is responsible for taking what actions to reduce risks.
✓ Bid answers may reveal new information about the project's risks or mitigation strategies, therefore it's
important to update the PPRA and risk register accordingly as bidding proceeds. Clarifications to bids may
result in unanticipated changes to requirements and bidder structures, necessitating new strategies to lessen
impact on project delivery.
✓ Incorporating the revised PPRA's pertinent risks into the CMP along with mitigation measures and action
owners is the next step after bid review and contract award. Any additional risks (and countermeasures) that
are important to the contract's execution should be addressed in the CMP. The borrower must then use the
monthly and quarterly reports for the project to track the risks and mitigation activities outlined in the CMP
to make sure they are being taken and are having the desired impact. To accomplish this goal, it is
recommended that the CMP risk register be reviewed often at contract management meetings with the
contractor (s). The risk registry must be updated to reflect any changes to hazards or the discovery of any
new concerns.
(Procurement Risk Framework: Guidance Note on Procurement, 2021)
▪ Risk Assessment and Treatment
• Risk assessment involves the following steps:
(i) estimating the likelihood of the risk being realized,
(ii) estimating the consequence of the risk being realized,
(iii) determining the risk rating, and
(iv) prioritizing risks for treatment
✓ Use the risk probability table, which has categories ranging from "Rare" to "Almost Certain," to determine
how likely it is that the risk will really occur. If you want to know how likely it is that a certain danger will
really happen, you should give it a number between 1 and 5.
✓ Estimating the impact of the risk occurring, from “Insignificant” to “Severe,” may be done using the risk
consequence table. The potential for an impact to have a negative effect on the organization’s ability to meet
its core procurement principles of economy, efficiency, fairness, transparency, quality, and value for money,
as well as any additional procurement objectives stated in the organization’s procurement principles, is taken
into account when assigning a severity rating.

45. 45
✓ Each potential outcome of a risk should be assigned a rating between 1 and 5, with 5 being the biggest
possible consequence.
✓ Once the risk probability and risk consequence scores have been calculated, the risk rating may be calculated
using the risk rating matrix. One example of a substantial danger is one with a probability score of 4
("Likely") and a consequence score of 3 ("Moderate").
✓ Treatment priorities should then be established based on the assessed risks. There should be a focus on
addressing the "High" and "Substantial" hazards first and foremost, but therapies to reduce the "Moderate"
and "Low" risks should be examined as well.
Table 2Risk Likelihood(Procurement Risk Framework: Guidance Note on Procurement, 2021)
Table 3Risk Consequence(Procurement Risk Framework: Guidance Note on Procurement, 2021)

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Figure 8 Risk Rating Matrix(Procurement Risk Framework: Guidance Note on Procurement, 2021)
Figure 9 Risk Rating Key(Procurement Risk Framework: Guidance Note on Procurement, 2021)
✓ Following assessment of the risks, each risk should be treated in one of the
four ways described in Figure 10: “avoid,” “reduce,” “transfer,” or “accept.
✓ For example, if a country has an underdeveloped procurement system, the World Bank might require that
any contracts supported in whole or in part by a loan or grant from the Bank or by funds managed by the
Bank utilize the Bank's standard papers as a kind of mitigation.
✓ The expenses and effort required to execute risk mitigation measures should be proportional to the benefit
they provide in terms of lowering the risk. Some "High" risks may need allocating more resources to them
and developing a more tailored strategy for dealing with them.

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Figure 10 Risk Treatment Options(Procurement Risk Framework: Guidance Note on Procurement, 2021)

48. 48
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