INFLUENCE OF PROCUREMENT MANAGEMENT PROCESS ON PERFORMANCE .
International Journal of Logistics and Procurement Management 1(7): 134-145, 2017 SERIAL PUBLISHERS, 2017www. serialpublishers.comINFLUENCE OF PROCUREMENT MANAGEMENT PROCESS ON PERFORMANCE OFDONOR FUNDED PROJECTS IN KENYA(A CASE OF AFRICA DEVELOPMENT BANK IN KENYA)KOECH Josephine Cherono1, Dr. MWANGANGI Patrick21Master Student: Jomo Kenyatta University of Agriculture and Technology (JKUAT),2Lecturer: Jomo Kenyatta University of Agriculture and Technology (JKUAT)Abstract: Procurement management process is a practice used by most organizations yet not followed tothe later by many organizations. Procurement management is the systematic approach used for buying allthe goods and services needed for a company to stay sustainable. Donor organizations and developmentagencies view projects as important vehicles to achieving their stipulated objectives and targets. Thegeneral objective of the study is to establish the influence of procurement management process onperformance of donor funded projects in Kenya. The specific objectives of the study include to establishthe influence of procurement planning on performance of donor funded projects in Kenya, to identify theinfluence of solicitation process on performance of donor funded projects in Kenya, to establish theinfluence of source selection on performance of donor funded projects in Kenya, to identify the influenceof contract administration on performance donor funded projects in Kenya. The study was confined toAfrican Development Bank projects in Kenya.The researcher was a descriptive survey design to carryout the study. The study population for this research comprised of 24 projects African DevelopmentBank funded projects and the targeted population was 144 persons comprising of project managers,procurement officers, implementation specialists, technical experts and task managers, working indifferent capacities of the projects. The study used purposive sample to pick 6 respondents from each ofthe 24, giving a sample of 144 respondents. A questionnaire was used to collect data from therespondents. The researcher will use drop and pick method to collect data. A pilot study was conductedto pretest the validity and reliability of instruments for data collection. The collected data was analysedusing descriptive and inferential analysis. Data from questionnaire will be coded and logged in thecomputer using Statistical Package for Social Science (SPSS).The study further adopted regressionanalysis to determine the relationship among the variables. The study found that procurement planning,sollicitation, source sélection, contract administration influenced procurement management process asper regression analysis. The coefficient of determination R2 0.644 shows the predictive power of themodel and in this case 64.4% of variations in the procurement management processes is explained by theindependent variables. The adjusted coefficient of determination R2 shows the predictive power whenadjusted for degrees of freedom and sample size. In this case, after the adjustments 61.8% of thevariations in the procurement management process is explained by the independent variables. The studyconcludes project management process is poorly handled in procurement system during theimplementation of the donor funded projects. However the study also concludes that open solicitation isused mostly compared to other solicitation methods; there is transparency in the solicitation process. Thestudy mainly recommends Timely completion of donor funded projects should be achieved by enhancingtransparent procurement management process, employing monitoring and evaluation technique.Completion time of projects should be improved which will enhance the project management process.Key words: Procurement Planning, Solicitation Process, Source Selection, Contract Administration
Koech Josephine Cherono, International Journal of Logistics and Procurement Management 1(7): 134-145, 2017135IntroductionSound public procurement policies and practices are among the essential elements of good governance(KIPPRA, 2006). Donor organizations and development agencies consider projects as a vital vehiclesto achieving their stipulated objectives and targets. Over the last half century, donor funding hasemerged as a dominant strategy for alleviating poverty in the third world. Not coincidentally, duringthis time period major international institutions, such as the United Nations, World Bank, andInternational Monetary Fund gained prominence in global economic affairs (Hjertholm & White,2013). In Kenya, the Public Procurement Oversight Authority (PPOA) is the body charged withensuring that procurement procedures established under the Public Procurement and Disposal Act 2005are complied with. The body also monitors the procurement system and reports on its overallfunctionality. Other functions of the body include initiating public procurement policy, as well asassisting in the implementation and operation of the public procurement system by: preparing anddistributing manuals and standard tender documents, providing advice and assistance to procuringentities, as well as developing, promoting and supporting training and professional development ofstaff involved in procurement (PPOA, 2015).According to Mamiro (2010), poor management of procurement processes has been cited as a likelycause of poor performance in donor-funded projects. The World Bank (2005) for instance indicatesthat at the close of the Kenya Urban Transport Infrastructure Project (KUTIP), out of the 21 workscontracts scheduled for implementation under the project, 14 contracts were completed, three contractswere 94%-99% complete, and two contracts were 62%-65% complete while two contract packageswere never implemented due to the suspension of the financing.In Kenya, one of the projects funded by the African Development Bank under the name of EducationIII have not been able to complete a classroom block for Kamukunji Secondary School in Nairobi.Some contributing factors cited were poor procurement planning and management of the projects. Acase of Lamu Coal Project has also not taken off due to failure by the government to agree with thelocal community on resettlement to allow for project implementation. Delays related to lack of propercontract administration are also cited as a cause of the slow progress during the first two years of theKenya Development Learning Centre Project (World Bank, 2007b). The African Development Bankreports show that, the average solicitation time for goods and works in 2008 was 14.1 months while forconsultancy service was 15.8 months (AfDB, 2009). However, the overall solicitation time hascontinued to drop since 2005, from 17.8 months in 2005 to 16.4 months in 2006, then to 12.4 monthsin 2010 and lastly to 11.8 months in 2011 (AfDB, 2011).The Kenyan government and development organizations such as the African Development Bank havecontinued to invest in the smooth implementation of projects in Kenya in order to alleviate poverty andimprove the living standards of the public at large. The performance of these projects is the majorproblem as they are not successful due to influence of procurement management process. In spite ofhaving various studies undertaken on procurement problems by various writers, there are still gaps thatneed to be addressed. This study, thus sought to establish the influence of procurement managementprocess on performance of donor funded projects in Kenya.
Koech Josephine Cherono, International Journal of Logistics and Procurement Management 1(7): 134-145, 2017136The study was guided by the following specific objectives:1. To establish the influence of procurement planning on performance of donor funded projects inKenya.2. To identify the influence of solicitation process on performance of donor funded projects inKenya.3. To establish the influence of source selection on performance of donor funded projects inKenya.4. To identify the influence of contract administration on performance donor funded projects inKenya.Conceptual FrameworkA conceptual framework is an analytical tool with several variables and contexts (Diamond, 2010). Itis used to make conceptual distinctions and organize ideas. The dependent variable in this study isprocurement management process while independent variables are the procurement planning,solicitation, source selection and contract administration. The following is a conceptualization of thevariables of the study.Procurement Planning Utilization of resources Need Specifications Time framesSolicitation Procurement method Preparation of documents Time restrictionsSource Selection Quality Technical capacity PriceProject Performance Cost minimization Scope Timely deliveryContract Administration Internal controls Contract timelines Costs IncurredIndependent VariablesFigure 1: Conceptual FrameworkLiterature ReviewDependent VariableAs a general planning principle, Chandra (2010) asserts that unlike small projects that involve fewactivities, complex projects that go beyond a certain threshold level of magnitude should proceed on
Koech Josephine Cherono, International Journal of Logistics and Procurement Management 1(7): 134-145, 2017137the basis of a sound formal planning platform without which there may be chaos. Sound formalplanning provides the basis for organizing the work on the project and allocating responsibilities toindividuals. Brown and Hyer (2010) asserted that in general planning includes identifying the purpose,defining the scope, determining customer requirements (user needs), identifying tasks (keyprocurement activities), estimating time (delivery schedules for goods and services) and cost, assigningresponsibilities and other activities.Mamiro (2010) points out that one of the major setbacks in public procurement is poor planning andmanagement of the procurement process which include needs that are not well identified andestimated, unrealistic budgets and inadequacy of the skills of staff responsible for procurement. Whenplanning is properly conceived and implemented, it can serve as an important mechanism forextracting, distributing and allocating resources (James, 2004). According to Rumbaugh, (2010), theprocurement methods available to an organization vary widely and depend on the product, costestimate, and availability of sources. The cost determines whether it is a micro-purchase, simplifiedacquisition procedures, sealed bid, or negotiated procurementSupplier selection is the process by which firms identify, evaluate, and contract with suppliers. Thesupplier selection process deploys a tremendous amount of firms financial resources. In return, firmsexpect significant benefits from contracting with suppliers‟ offering high value. Suppliers have beenacknowledged as the best intangible assets of any business organization (Muralidharanet al. 2012).According to Tahririet al., (2012), “supplier selection problem has become one of the most importantissues for establishing an effective supply chain system.” Indeed, supplier selection and evaluationrepresents one of the significant roles of purchasing and supply management functions.According to Meredith and Mantel (2012), the key things to be planned, monitored and controlled aretime (schedule), cost (budget) and scope (performance). The prescribed public sector procurement planformat has already discussed above exhibits the first two as very prominent features. It is useful toperceive the control process as a closed-loop system, with revised plans and schedules (if warranted)following corrective actions. According to Brown and Hyer (2010), monitoring refers to any trackingsystem from a simple checklist to sophisticated dashboard style approaches, for identifying variancesfrom the original plan. They advance the argument that as part of the planning process, a project teamshould agree on the appropriate approach for monitoring key performance indicators (KPIs) during thelife of the project. On the other hand, Brown and Hyer (2010) define the concept of project control asthe set of processes, decisions, and actions involved in responding to project variances. Project controlthus portends a project change management process for deciding when changes are appropriate andwhen to stay the course.Materials and methodsThis study used descriptive research design. The study population for this research was all projectsdone by ADB in Kenya and the targeted population was 24 project persons working in differentcapacities of the projects. These include the procurement officer, task manager, Implementationspecialist, Technical expert and Project manager. To make a representative size for a descriptive study;the research target 144 respondents from the population. The respondents were issued with aquestionnaire which they filled and submitted. Purposive sampling was used to pick the sample.According to Siegel (2010), purposive sampling is used when the researcher is keen on some particular
Koech Josephine Cherono, International Journal of Logistics and Procurement Management 1(7): 134-145, 2017138characteristic of the sample. In this case, the study used purposive sample to pick 6 respondents fromeach of the 24 projects based on their involvement in the procurement process during the project. Therespondents consisted of the task manager, project manager, implementation specialist, procurementofficer, and technical expert in each of the 24 projects, giving a sample of 144 respondents.Questionnaires were used to collect data from the respondents. The study determined the datacollection approach largely by identifying the type of information needed (Saunders 2011).Cooper andSchindler contend that this is influenced by investigative questions that must be answered by the studyand the desired data type for each question. This is because of simplicity in the administration andscoring of items as well as data analysis (Gronhaug, 2005).The study utilized quantitativequestionnaire that were developed for generating information on key variables of interest from thetargeted respondents in this study. The questionnaire were self-administered and distributed to therespondents and reasonable time given before they were collected. The completed questionnaires weresorted and cleaned of errors.Pilot test was done with the purpose of detecting any weakness and finding out ifthe questionnaires are clear to the respondents. The research instrument was administered to twelve randomlyselected staff who were selected for the actual study.The collected data was analysed using descriptive and inferential analysis. Descriptive statisticsprovide for meaningful distribution of scores using statistical measures of central tendencies,dispersion and distribution (Kothari, 2004).Data from close ended questions in the questionnaire were coded and entered into the computer usingStatistical Package for Social Science (SPSS).The multiple regression models below;Y β0 β1X1 β2X2 β3X3 β4X4 εWhere Y is the procurement management processes, β0is constant and ε is the error term of the model.X1 Procurement planningX2 SollicitationX3 Source sélectionX4 contract administrationResults and DiscussionsProcurement planning influence on donor funded projects in KenyaThe study sought to establish the influence of procurement planning on performance of donor fundedprojects in Kenya. The study established that project team uses a procurement plan (Mean 3.73).Further the study found that procurement plan clearly shows the methods to be used in theprocurement(3.69), there are increased number of projects completed on time due to adherence toprocurement plan(mean 3.01), resources are utilized due to procurement planning There is improvedperformance as a result of procurement planning(3.89). The findings indicated that to moderate extentall what is in the procurement plan is procured (2.89). Finally the findings indicated that budget in theprocurement plan is followed to the later (Mean 3.72).
Koech Josephine Cherono, International Journal of Logistics and Procurement Management 1(7): 134-145, 2017139Table 1: Procurement planningStatementsMeanThe project team uses a procurement plan3.73StdDev.0.732Procurement plan clearly shows the methods to be used in the procurement3.690.637There are increased number of projects completed on time due to adherence toprocurement planResources are utilized due to procurement planning3.010.664.000.63There is improved performance as a result of procurement planningAll what is in the procurement plan is procured on timeBudget in the procurement plan is followed to the later3.892.893.720.420.350.26Solicitation process influence on performance of donor funded projects in Kenya.The study sought to identify influence of solicitation process on performance of donor funded projectsin Kenya. The findings from the study indicated that the solicitation documents are always clear mean 3.53. The study further found that open solicitation is used mostly compared to other solicitationmethods (Mean 3.37); there is transparency in the solicitation process(Mean 3.64). Bidders havefreedom to ask questions during the solicitation process(Mean 3.89), pre-Bid meetings are conductedfor all solicitations(Mean 3.80).Table 2: Solicitation processStatementsMeanThe solicitation documents are always clear3.53StdDev.1.13Open solicitation is used mostly compared to other solicitation methods3.371.31There is transparency in the solicitation process3.641.15Bidders have freedom to ask questions during the solicitation process3.890.67Pre-Bid meetings are conducted for all solicitations3.800.91Source selection on performance of donor funded projects in Kenya.The study sought to establish influence of source selection on performance of donor funded projects inKenya. The study established that there is availability of there is effective contract monitoring andcontrol systems (Mean 3.97). The study also found that both parties to the contract abide by thecontract to a great extent, breach of contracts lead to legal action (Mean 3.77). The study also foundthat there is necessary capacity amongst the project team for contract administration (Mean 4.23).Finally, the study found that there is contract closure at the end of a project (Mean 4.01); there aremitigation measures in place for the continuity of contracts (Mean 3.87).
Koech Josephine Cherono, International Journal of Logistics and Procurement Management 1(7): 134-145, 2017Table 3: Source selectionStatementsAvailability of effective contract monitoring & control systems140Mean3.97Std.1.09Parties abide to the contract3.771.10Breach of contracts leads to legal action4.000.75There is necessary capacity amongst the project team for contractadministrationThere is contract closure at the end of a project4.230.624.010.75There are mitigation measures in place for the continuity of contracts3.870.23Contract administration Influence performance of donor funded projects in Kenya.The study sought to influence of contract administration on performance of donor funded projects inKenya. The study findings indicated that there is availability of there is effective contract monitoringand control systems(Mean 3.97). The findings indicate that both parties to the contract abide by thecontract (Mean 3.77), breach of contracts lead to legal action (Mea 4.01), there is necessary capacityamongst the project team for contract administration (Mean 4.23). There is contract closure at the endof a project; there are mitigation measures in place for the continuity of contracts (Mean 3.87).Table 4:Contract administrationStatementsAvailability of effective contract monitoring & control systemsMean3.97Std.1.09Parties abide to the contract3.771.10Breach of contracts leads to legal action4.000.75There is necessary capacity amongst the project team for contractadministrationThere is contract closure at the end of a project4.230.624.010.75Ther
INFLUENCE OF PROCUREMENT MANAGEMENT PROCESS ON PERFORMANCE OF DONOR FUNDED PROJECTS IN KENYA (A CASE OF AFRICA DEVELOPMENT BANK IN KENYA) KOECH Josephine Cherono1, Dr. MWANGANGI Patrick2 1Master Student: Jomo Kenyatta University of Agriculture and Technology (JKUAT), 2Lecturer: Jomo Kenyatta University of Agriculture and Technology (JKUAT) Abstract: Procurement management process is a practice .
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