Procurement Planning

1. Session: M1-2 Act [Section -11] Procurement Planning Rules [ Rule-15,16 & 17] CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

2. “Procurement” means the purchasing or hiring of Goods, or acquisition of Goods through purchasing and hiring, and the execution of Works and performance of Services by any contractual means Procurement Definition CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

3. Planning Procurement Planning requires a number of steps & options • Approaches to Planning • In order to stimulate thinking, to create options and to assist planning consider the following questions; • What is to be done? • When it is to be done? • How it is to be done? • Who is to do it? • What resources are required? • Who should know about it? If you plan , you will be in control of the situation, rather than having the situation in control of you CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

4. Procurement Planning Preparation of PP shall be mandatory for all PEs Procurement Planning should aim at attracting maximum competition for the benefits of the PE CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

5. Act and Rules Procurement Planning is regulated by: • Frequency • Approval • Publication • Splitting into packages/lots PPA 2006 • Nature & size of the Procurement • Source of funding • Limits & conditions • Forms PPR 2008 CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

6. Benefits of Procurement Planning Careful&detailedprocurement planning is essential for quality project execution Speeds up the procurement process & reduces project implementation delays Contributes to enhanced project quality & efficiency Reduces possibility of error & reduces subsequent work CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

7. Package, Lots & Methods PE decides Splitting/Assembling packages Applicability of the Procurement methods …considering the nature & size of the Procurement,by carefully reviewing the proposed Procurement activities & issues CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

8. …in the case of Goods PE takes into account the following when determining the method of Procurement & consolidating of Goods packages CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

9. …in the case of Works PE considers the following, in the case of determining the method of Procurement for Works CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

10. …in the case of Services PE considers the following, in the case of determining the method of Procurement for Intellectual & Professional Services CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

11. Procurement Methods Goods & related Services, Works & Physical Services Intellectual & Professional Services OTM Open Tendering Method LTM Limited Tendering Method TSTM Two-Stage Tendering Method RFQM Request for Quotation Method DPM Direct Procurement Method QCBS & FBS & Other Methods OSTETM One Stage Two Envlope Taking into account the thresholds CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

12. Splitting Procurement Object Four key terms Item A single article or unit in a list With an identified quantity … 1,2,3 etc Lot A multiple number of items grouped together Any number of items can form a lot CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

13. Splitting Procurement Object Package • A multiple number of Lots grouped together • Usually No package can have more than 5 lots (Cross discount) Contract Agreement through which the Item/Lot/ Package is purchased CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

14. Package/lot options Consider the following Procurement object as an example: Office equipmentconsistingof 36 items, namely 10 PC, 5 Printers, 1 Server, 4 Executive desks, 6 Office desks, 4 Executive chairs and 6 Office chairs One Package for One Contract Two Packages for Two Contracts Five Lots for Five Contracts CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

15. Packages Few & large or more & small Arguments in favour of • Grouping into large Procurement Packages • Benefits from economies of scale – achievement of economy & efficiency • Management aspects (PE’s capacity to manage the whole project) • Risk aspect (where failure of a sub-supplier may unduly affect critical path) • Benefits from participation of large international Tenderers • Splitting into small Procurement Packages • Time element (procurement items are needed at different times) • Business structure (some goods or services are not available from a single source) • Administrative costs of tendering CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

16. Do large packages improve participation or favour collusion among Tenderers? Does splitting items into small lots encourage maximum competition from local suppliers or facilitate Tenderers in ‘sharing the cake’? Packages Few & large or more & small What about competition? Answers to these questions depend on a careful analysis of the underlying market structure CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

17. Procurement Scheduling Process Seven Key Steps in preparing the Procurement Plan • List objects to be acquired under the Project or Programme, categorizing procurement into: • Goods • (raw materials, products, equipment and objects in solid, liquid or gaseous form, electricity & related services) • Works • (construction, reconstruction, site preparation, demolition, repair, maintenance or renovation railways, roads, highways or a building etc as well as physical services) • Services • (goods related services, physical services, or intellectual & professional services) CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

18. Procurement Scheduling Process • Consider time scale and determine target dates when each object of plant, equipment vehicles, fertilizers, books, works, services should be ready for use, within the overall project implementation framework • Identify interrelationships between the processing of these procurement objects • Decide on the content of individual Procurement Packages CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

19. Determine the procurement lead times for each package & schedule the target date for each event in the procurement process (taking administrative, manufacturing & construction delivery lag times into consideration) Prepare Implementation Schedule - Table, Bar Chart or List identifying key dates for each package (Gantt Chart) Develop a Monitoring System to ensure timely procurement decisions & implementation follow-up actions Procurement Scheduling Process CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

20. Key Issues Planning: • Classified by category such as Goods, Works and Services • Separate for Development Project and Revenue Budget • Total Procurement Plan for the entire project period in the Formats prescribed by the Government from time To time for DPP or TPP CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

21. Other Key Issues Planning: • PE updates the Procurement Plan for Development Project at each beginning FY • PE prepares annual Procurement Plan for Revenue Budget at each beginning FY • Updated annual Procurement Plan and Annual Procurement Plan requires approval of HOPE or AO • Formats prescribed in Part A, Part B, Part C, Part D, & Part E as applicable of Schedule V CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

22. Other Key Issues Planning: • PE arranges to publish the Procurement Plans on their notice boards, and where applicable in their websites & in the websites of the concerned Department or Directorate or organisations, bulletins and reports. • PE shall, for its own purposes, updates the Procurement Plan on a quarterly basis to accommodate delays, re- tendering & other unforeseen changes or constraints. • PE keeps CPTU posted online or off-line, if online is not possible, with the Procurement Plans, above the threshold specified in Schedule II (G/W-10 M,S/Phy.S- Tk.5 M), which shall be published on a regular basis in CPTU’s website as well. CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

23. Other Key Issues Planning: • PE shall not generally split a Project components with the intentionof avoiding either method or the approval of a higher authority • PE shall not usually split a package into more than five (5) lots for keeping cross - discounts application simple • PE shall take into account the following aspects for splitting single object of Procurement • the capacity of the local & international markets in submitting responsive Tenders • the convenience of implementation with due regard to geographical location of sites for potential Works contracts CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

24. Important HOPE or AO shall approve splitting smaller packages & lots on justifiable grounds Single object or Procurement split into more than one Package & Packages when split into more than one (1) Lot— Tenders for each of those packages or lots shall be placed for approval before theauthority competentto approve the sum totalof those packages or lots-- prior to the issuance of NOA for any one (1) of those packages or lots CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

25. Appendix I Formats FOR FUTHER READING ONLY CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

26. Total Procurement Plan for Development Project/Programme Schedule V – Part A in the Rules shows how to complete the Total ProcurementPlan, which identifies the packages for Goods, Works & Services that are required under the development project/programme. It identifies each Procurement package, giving it a unique code & considers the expected cost of the package (as per the DPP/TPP), as well as the anticipated dates when the Procurement package will be supplied. A separate Schedule, completed as shown in the next slides, should be provided for Goods, Works & Services. CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

27. Total Procurement Plan for Development Project/Programme Schedule Format Part A CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

28. Total Procurement Plan for Development Project/Programme Schedule Format Part B CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

29. Total Procurement Plan for Development Project/Programme Similar for Goods and Services (Works) CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

30. Annual Procurement Plan for Development & Revenue Budgets • Schedule V – Part B in the Rules shows how to complete the Annual Procurement Plan, while Part C, Part D and Part E prescribe the formats for Goods, Works and Services, respectively. • Time bound Procurement assists a Procuring Entity to effectively plan its Procurement requirements and is an important and useful tool used to monitor the progress of Procurement: • to ensure that it does not go astray; • to ensure that early problems with slippage can be dealt with promptly; and • can form a useful Annual Plan for Procurement. • A separate Schedule, completed as follows, should be provided for Goods, Works and Services. Also a separate schedule should be used for Development or Revenue Budget. CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop

31. Annual Procurement Plan for Development and Revenue Budgets Similar for Goods and Services (Works) CPTU-IMED (PPRP II) Three-Week Training on Procurement of Goods, Works & Services Fineurop