Chapter 2 Procurement Planning Plan A scheme program

Chapter 2 Procurement Planning

Plan • A scheme, program, or method worked out beforehand for the accomplishment of an objective • A detailed scheme, method, etc. , for attaining an objective • A proposed, usually tentative idea for doing something Planning • The act or process of making or carrying out plans • The planning process ü Identifies the goals or objectives to be achieved, ü Formulates strategies to achieve them, ü Arranges or creates the means required, and ü Implements, directs, and monitors all steps in their proper sequence.

Procurement Plan • A procurement plan defines üWhat the organization intends to obtain: goods, works and services üWhat the process would be • Procurement planning is the process used by companies or institutions to plan purchasing activity for a specific period of time. • Procurement Planning initiates the Project üIt commences in advance üNeeds information and coordination from other departments üMay take long time if experience or expertise is lacking

Procurement Planning: Vital questions asked when planning for procurement What is to buy? When to buy? How to buy? Procurement How much to buy? Where to buy? At what price to buy?

Importance of Procurement Plan/Planning • Planning is key to successful implementation of any activity • Procurement Planning is important because: üIt helps to decide what to buy, when and from what sources. üIt allows planners to determine if expectations are realistic; particularly the expectations of the requesting entities, which usually expect their requirements met on short notice and over a shorter period than the application of the corresponding procurement method allows. üSince sufficient exercise is carried out in advance, it helps to reduce confusion in procurement processes

Importance of Procurement Planning cont. . . üIt is an opportunity for all stakeholders involved in the processes to meet in order to discuss particular procurement requirements. These stakeholders could be the requesting entity, end users, procurement department, technical experts, and even vendors to give relevant inputs on specific requirements. üIt permits the creation of a procurement strategy for procuring each requirement that will be included in the procurement plan. Such strategy includes a market survey and determining the applicable procurement method given the requirement and the circumstances. üIt helps to address in advance the probable weakness, delay and check points during procurement processes

Importance of Procurement Planning cont. . . üPlanners can estimate the time required to complete the procurement process and award contract for each requirement. This is valuable information as it serves to confirm if the requirement can be fulfilled within the period expected, or required, by the requesting entity. üThe need for technical expertise to develop technical specifications and/or scope of work for certain requirements can be assessed, especially where inhouse technical capacity is not available or is nonexistent. üPlanners can assess feasibility of combining or dividing procurement requirements into different contract packages.

Importance of Procurement Planning cont. . . üThe Procurement Plan is the product of the procurement planning process. It can be developed for a particular requirement, a specific project, or for a number of requirements for one or many entities in the public or private sectors. • The Procurement Plan is important because: üIt lists all requirements expected to be procured over a period of time. üFrom it the procurement schedule is developed, which establishes the timelines for carrying out each step in the procurement process up to contract award and the fulfillment of the requirement. ü It enhances the transparency and predictability of the procurement process.

Importance of Procurement Planning cont. . . üIt allows for the consolidation of similar requirements under one contract or the division of a requirement into several contract packages for economies of scale. üFrom the number of requirements on the procurement plan, the procuring entity can determine beforehand any need for additional staffing, including external assistance for the purpose of completing all procurement requirements listed on the procurement plan. üIt allows for the monitoring of the procuring process to determine how actual performance compares with planned activities, and thus to alert the pertinent departments and adjust the procurement plan accordingly.

Procurement plan cont… Two types of procurement plan: a) Master procurement plan b) Annual procurement plan Master procurement plan (MPP) • For a project to be operated for more than one year or procurement valued at an amount in excess of one hundred million rupees master procurement plan shall be prepared • The master procurement plan shall contain following matters: üType, quantity and tentative estimated value of procurement üMethod of procurement

Procurement plan cont… üWhere procurement is broken up into lots or a package for maximizing competition, provisions relating thereto, üTentative number of contracts to be made for the completion of overall procurement proceedings and major activities that to such procurement proceedings, üMatters relating to prequalification proceedings, if required, for procurement, üTentative time schedule for procurement proceedings, üSuch matters as may be determined from time to time by the PPMO to be included in the master procurement plan • MPP shall be approved by secretary of the public entity, • MPP shall be updated in every financial year

Procurement plan cont… Annual procurement plan (APP) • If it is necessary to make procurement valued at an amount exceeding one million rupees a year, annual procurement plan shall be prepared. • In so preparing the procurement plan, it shall be prepared also based on the master procurement plan, if any. • APP shall be prepared along with estimated annual program and budget for the forthcoming financial year, and shall be sent to following offices: üPertinent higher office üMinistry of finance üNational planning commission (If required) üDonor agency (Only if funded by donor)

Procurement plan cont… Annual procurement plan (APP) cont… • After receipt of approved annual program and budget, the APP shall be revised and shall be sent to following offices: üPertinent higher office üTreasury and account comptroller office üPublic procurement monitoring office ü Donor agency (Only if funded by donor) • APP shall be approved by chief of public entity • Following matters shall be set in APP: üDescription relating to the type of procurement, ü Possible package of procurement, üTime schedule for procurement proceedings,

Procurement plan cont… Annual procurement plan (APP) cont… üMethod of procurement, üType of contract to be entered into, üSuch matters as my be determined by PPMO time to be included in the APP • Time schedule shall specify the period of time for the completion of following acts: üPreparation of specification for procurement of goods, üPreparation of cost estimate üDocument preparation üPublication of notice of invitation üEvaluation üAcceptance

Procurement plan cont… Annual procurement plan (APP) cont… üEntering into contract üCommencement of work and üCompletion of work • While specifying time, following matters shall be taken into account: üMinimum time required for stated activity as specified in PPA and PPR üTime required for bidders to prepare tender üPublic holiday üWork load and available manpower üTime required to take concurrence from donors if required

Procurement plan cont… Annual procurement plan (APP) cont… • APP shall be revised in following situations: üIn case of non availability of budget or delay for budget to be available üIf additional budget would be available üIf there is delay in approval from pertinent higher office üIf all bids have to be cancelled üIf program is revised • while preparing APP it shall be ensured that adequate time is allocated for whole process • Suggestion shall be taken and contribution shall be obtained from all concerned persons within the organization as per requirement

Procurement plan cont… Planning and initiation of individual requirements (Steps in procurement planning) • Determine individual requirement • Develop procurement strategy • Determine what is to be procured; goods, works…. • Packaging / lot size determination • Identify specification • Decide on Quality Assurance Program • Decide who shall handle Procurement • Determine procurement agency capacity • Decide on type of contract • Decide on method of procurement • Schedule the activities • Design monitoring system

Procurement plan cont… Steps in procurement planning Identify individual requirements üCapital Goods, plant and machinery üNew Construction üService being procured for the first time üRecurring demand of goods / services üMaintenance of works etc. Develop strategy for procurement • It’s difficult to talk about procurement planning without mentioning procurement strategy, • Procurement strategy is developed in conjunction with and during the procurement planning phase

Procurement plan cont… Steps in procurement planning (Strategy cont…) • Procurement strategy is a key factor in determining the most appropriate procurement method given the complexity and monetary value of the requirement, and market availability. • While procurement planning deals with “when”, procurement strategy looks at “what”, “how”, “where” and “why”; which need to be decided before the ‘when”. üWhat to buy? üWhy buy it? üHow to buy it? üWhat purpose does it serve? üWhat’s the objective of the purchase?

Procurement plan cont… Steps in procurement planning (strategy cont…) üHow much does it cost? üWhere can it be sources? üHow many sources are available? üWhat’s the risk? üWhat’s the benefit? üWhat’s the cost? • But even after a preliminary procurement plan is developed, there are still further strategic questions that need to be answered, such as: üIs the expected contract award date realistic given the procurement method? üDoes the procurement process need expediting?

Procurement plan cont… Steps in procurement planning (strategy cont…) üAre there opportunities for packaging requirements in order to purchase in bulk? üWhat are the monetary or strategic advantages/disadvantages of grouping requirements? üAre there any dependent requirements? • The above list of questions is not exhaustive. • A procurement strategy can be developed for one requirement or a group of requirements. • The extent of the strategy developed is dependent on the level of risk and monetary value of the requirement. • The strategy that is developed has to take into consideration the principles like economy and efficiency.

Procurement plan cont… Steps in procurement planning cont… • Packaging / lot size determination üSize of package / size of lots, based on usage / market perspective, chances of competition üSingle Contract / Multiple Contract üInstallment Supply • Identifying specification requirement üIs there standard specification or not üDevelop new specification if required, generally for new items / technology / projects üHire consultant if organizational capacity is lacking

Procurement plan cont… Steps in procurement planning cont… • Quality assurance üDecide on system to be followed üSampling Method to be adopted üStage inspection / Pre-dispatch Inspection / Consignee Inspection üIdentify testing laboratories üDecide if third party Inspection be adopted üDefine system for dealing with rejections

Procurement plan cont… Steps in procurement planning cont… • Who shall handle Procurement üOrganization / Department itself üOther government department / Central Procurement Organization, if any üOutside Agency • Capacity of procuring agency üInstitutional set up and systems üRecord keeping üPast experience üCompetence and track record üStaffing and training of staff

Procurement plan cont… Steps in procurement planning cont… • Scheduling activities üList every activity of the procurement process üEstimate time required for each activity üAllow for slippages üCalculate total time and match with actual need üAdjust scheduling if necessary • Monitoring üDesign monitoring system /Develop critical path, etc üDesign Reporting Schedule / submission of reports etc üRegular review of schedule based on feed back. • Use standard format for preparing MPP and APP

Exercise on master procurement plan Ø Methods of using MPP standard format • cf=a= (Fiscal year) : Current fiscal year • d. Gqfno/ljefu/cfof]hgf/sfof{no (Ministry/Department • /Project/office) : To be stated concerned Ministry, Department, Project or office ah]6 pklzif{s g+ (Budget subtitle no) : Budget subtitle no. of • • concerned procurement l; =g+ (S. N) : Serial numbers of procurement activities vl/bsf] ljj/0 f (Description of procurement) : Name of • procurement activities vl/b ljlw (Procurement methods) : one of the followings ü Construction : ICB, NCB, Sealed quotation, Direct purchase, Force account, User’s committee

Exercise on MPP cont… ü Goods : ICB, NCB, Sealed quotation, Direct Purchase ü Consulting service : Open EOI, Proposals from standing list, Direct purchase • cg'dflgt /sd (Estimated amount) : State estimated amount • Kofs]h ; +Vof (No. of package) : State NO. of packages • ; Demf}tfsf] lsl; d (Type of contract) : One of the followings ü Construction : Unit rate, Lump sum, cost reimbursement, Time and materials rate, Design and build, Management, Performance based maintenance, Piecework ü Goods : supply of specific goods, Framework, Multi year, Design/supply/erection, Turn-key

Exercise on MPP cont… ü Consulting services : Lump sum, Time based, Performance based remuneration, Percentage, Indefinite delivery contract • aflif{s vl/b (Annual procurement) : Expected expenditure in different years ü If running projects have to be included in MPP, actual expenditures of past years and planning expenditures of futures years have to be mentioned. • s}lkmot (Remarks) : If clarification is to be made on • any matters, it should be mentioned in this column. At the end of standard format, concerned officials have to sign mentioning position and date

Exercise on APP (Works and Goods) Ø Methods of using APP standard format • cf=a= (Fiscal year) : Current fiscal year • d. Gqfno/ljefu/cfof]hgf/sfof{no M ; Dal. Gwt ; fj{hflgs lgsfo ; Fu ; Dal. Gwt d. Gqfno, ljefu, cfof]hgf, sfof{no p. Nn]v ug]{ • ah]6 pklzif{s g+ (Budget subtitle no) : Budget subtitle no. • • of concerned procurement. l; =g+ (S. N) : Serial numbers of procurement activities a: t', lgdf{0 f sfo{sf] ljj/0 f (Description of goods, works) : • Name of procurement activities (With packages if any) of]hgdf p. Nn]lvt ldlt (Specified date in plan) : Nothing to be mentioned (According to planned and exact mentioned here, planned and exact dates in other columns have to be mentioned)

Exercise on APP (Works and Goods) cont… • nfut cg'dfg : j. Ls[t ldlt (Cost estimate approval date) : • • • Estimated time of approval of cost estimate after approval cg'dflgt nfut (Estimated cost) : State estimated cost Kofs]h ; +Vof (No. of package) : State NO. of packages ; Demf}tfsf] lsl; d (Type of contract) : One of the followings ü Construction : Unit rate, Lump sum, cost reimbursement, Time and materials rate, Design and build, Management, Performance based maintenance, Piecework ü Goods : supply of specific goods, Framework, Multi year, Design/supply/erection, Turn-key

Exercise on APP (Works and Goods) cont… • af]nkq jf b/efpkq ; Da. Gw. L sfuhft (Bid or sealed quotation • documents) : Specify separate dates of preparation and approval of bid documents or sealed quotation documents. bft[ lgsfoaf 6 ; xdlt lng] ldlt (Date of concurrence from donor • agency) : If concurrence is required from donor agency, specify estimated date of concurrence from donor agency af]nkq/k|: tfj (Bid documents/Proposal) : Specify separately • the estimated date of invitation, opening and completion of evaluation of bid or prequalification proposal bft[ lgsfoaf 6 ; xdlt lng] ldlt : As specified earlier

Exercise on APP (Works and Goods) cont… • af]nkq : j. Ls[ltsf] cfzo / : j. Ls[lt ldlt (Letter of intent and acceptance • date) : Date of issuing of letter of intent s/f/ ; Demf}tf ug]{ ldlt (Contract agreement date) : Specify • estimated date of making contract agreement sfo{ cf/De ug]{ ldlt (Work initiation date) : Specify • estimated date of initiation of work sfo{ k'/f ug]{ ldlt (Work completion date) : Specify • estimated date of work completion 7]s]bf//cfk"lt{stf{ (Contractor/Supplier) : Specify name of • contractor/supplier, contract number and contract amount after agreement At the end of standard format, concerned officials have to sign mentioning position and date

Exercise on APP (Consulting service) Ø Methods of using APP standard format • cf=a= (Fiscal year) : Current fiscal year • d. Gqfno/ljefu/cfof]hgf/sfof{no M ; Dal. Gwt ; fj{hflgs lgsfo ; Fu ; Dal. Gwt d. Gqfno, ljefu, cfof]hgf, sfof{no p. Nn]v ug]{ • ah]6 pklzif{s g+ (Budget subtitle no) : Budget subtitle no. of • • concerned procurement. l; =g+ (S. N) : Serial numbers of procurement activities ljj/0 f/k/fdz{bftfsf] k|sf/ (Description/Type of consultant) : • Specify work requiring consulting service and type of consultant e. g. environment, legal, engineering. . . of]hgdf p. Nn]lvt ldlt (Specified date in plan) : Nothing to be mentioned (Planned and exact dates in other columns have to be mentioned)

Exercise on APP (Consulting service) cont… • sfo{If]qut zt{ tof/L / : j. Ls[lt ldlt (TOR preparation and • approval date) : Estimated date of approval of TOR nfut cg'dfg tof/L ldlt (Cos estimate preparation date) : • Estimated date of approval of cost estimate cg'dflgt nfut (Cost estimate) : Specify tentative cost • estimate 5 gf}6 ljlw (Method of selection) : Specify Proposal • selection method (QCBS, QBS, LCS or FBS) ; +l. If. Kt ; "lrsf] nflu ; "rgf k|sfzg ug]{ (Notice publication for short listing) : Estimated date of publication of notice for short listing (If service is going to be taken from consultants contained in standing list, nothing have to be mentioned)

Exercise on APP (Consulting service) cont… • ; +l. If. Kt ; "lrsf] d'NofÍg u/L k|ltj]bg lbg] (Evaluation for short • listing and reporting) : Specify the estimated date of reporting of result after evaluation for short listing (Nothing has to be mentioned incase of standing list) ; +l. If. Kt ; "lrsf] : j. Ls[lt ldlt (Approval date of short listing) : • Estimated date of approval date of short listing (Date of preparation of standing list has to be mentioned incase of service from standing list) k|: tfj ; Da. Gw. L sfuhft : j. Ls[t ug]{ ldlt (Approval date of RFP • documents) : Specify estimated approval date of RFP documents. k|: tfj ; Da. Gw. L sfuhft k 7 fpg] ldlt (Soliciting date of proposal) : Estimated date of soliciting proposal from consultants contained in shortlist

Exercise on APP (Consulting service) cont… • k|: tfj k|f. Kt ug]{ cl. Gtd ldlt (Last date of obtaining proposal) : • Estimated last date of obtaining proposals k|fljlws k|: tfjsf] d'NofÍg / : j. Ls[lt ug]{ ldlt (Technical proposal • evaluation and approval) : Estimated date of approval of technical proposal after evaluation. cfly{s k|: tfjsf] d'NofÍg ug]{ ldlt (Evaluation date of financial • proposal) : Estimated date of approval of finiancial proposal after evaluation. k|: tfj : j. Ls[ltsf] hfgsf/L lbg] ldlt (Date of informing acceptance • of proposal) : Estimated date of issuing of letter of intent of acceptance ; Demf}tfsf] lsl; d (Type of contract) : Lump sum, Time based, Performance based remuneration, Percentage, Indefinite delivery contract

Exercise on APP (Consulting service) cont… • k/fdz{bftfsf] gfd (Name of consultant) : Specify name of consultant only after selection • ; Demf}tf ug]{ ldlt (Agreement date) : Estimated date of making agreement • ; Demf}tf g. Da/ (Agreement number) : Specify • agreement number only after agreement sfo{ z'? ug]{ ldlt (Work initiation date) : Specify • estimated date of initiation of work sfo{ ; Dk. Gg ug]{ ldlt (Work completion date) : Specify • estimated date of work completion At the end of standard format, concerned officials have to sign mentioning position and date

1) Office “A” intends to procure in fiscal year 2070/71 as follows. Prepare MPP and APP of office “A” as per requirement. Description Tentative cost Duration a) Generator Rs. 4 million within FY b) Computer Rs. 0. 9 million within FY c) Canal construction Rs. 20 million 2 Years 2) Office “B” intends to procure in fiscal year 2070/71 as follows. Prepare MPP and APP of office “B” as per requirement. Description Tentative cost Duration a) Supervision consultant RS. 20 million 3 Years b) Road construction Rs. 500 million 3 Years c) Furniture Rs. 0. 8 million within FY

3) Office “C” intends to procure in fiscal year 2070/71 as follows. Prepare MPP and APP of office “C” as per requirement. Description Tentative cost Duration a) Building maintenance Rs. 1. 6 million within FY b) Furniture Rs. 1. 1 million within FY c) Software consultant Rs. 5 million 2 years 4) Office “D” intends to procure in fiscal year 2070/71 as follows. Prepare MPP and APP of office “D” as per requirement. Description Tentative cost Duration a) Medicine Rs. 100 million within FY b) Surgery equipment Rs. 90 million within FY c) Lab maintenance Rs. 1. 9 million within FY

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