6/9/2018

Definition
• Procurement planning is the process of
identifying and consolidating
requirements and determining the
timeframes for their procurement with
the aim of having them as and when
Er. Satya Narayan Shah they are required.
B.Sc. In Mechanical Engineering (India) • A good procurement plan will describe
MS in Manufacturing Engineering & Management (UK)
the process in the identification and
Email: er.snshah@gmail.com
Cell : 9851004366 selection of
May, 2018
suppliers/contractors/consultants.
Er. Satya Narayan Shah 2
1

The Terms The Terms

Sourcing: Procurement:
– Identification and vetting of suppliers, is a • the process of selecting vendors, establishing
function that occurs prior to procurement. payment terms, strategic vetting, selection,
– Put reliable, affordable suppliers in place the negotiation of contracts.
for the procurement.
p q
• Procurement is concerned with acquiring g
– tasked with assessing purchasing needs, (procuring) all of the goods, services, and
building sourcing plans, conducting market works.
research, identifying and evaluating • Procurement is, essentially, the overarching
suppliers, and selecting the most suitable or umbrella term within which purchasing can
supplier or suppliers for the need. be found.
3 Er. Satya Narayan Shah 4

The Terms The Typical Procure to Pay Cycle

Purchasing: • Steps usually involved:
• as the transactional function of procurement with the – Identification of Requirement
following activities – Authorization of Purchase Request
– Final Approval of Purchase Request
a) Purchase Order Acknowledgement
– Procurement
b) Advance Shipment Notice – Identification of Suppliers
c) Goods Receipt – Inquiries
d) Invoice Recording – Receipt of the Quotation
e) 3 Way Match-matching three documents - the invoice, – Negotiation
the purchase order, and the receiving report – Selection of the Vendor
– Purchase Order Acknowledgement
• Payment to Supplier – Advance Shipment Notice
• Purchasing rely on the judgment of procurement – Goods Receipt
– Invoice Recording
• Purchasing is concerned with budget and cost
– 3 Way Match
control. 5
– Payment to Supplier 6

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Planning
Planning Process includes three major
components:

1. Information: A collection of facts Legal Backing

from which conclusions may be
drawn
2. Deliberation: Discussion of all
sides of a question, Careful
consideration
3. Instruction:A message describing
how something is to be done
Er. Satya Narayan Shah 8

Procurement Procedure
Procurement Plan
 Master Procurement Plan to be
• Formation procuring Unit -PPA -7(3)
Prepared- PPA (clause 6), PPR (clause
• Formation Evaluation Committee-PPA -71
• Preparation of procurement Plan/strategy PPA -6;
7)
PPR- 7,8 – for a period of more than one year or in
• Preparation
P ti off Estimate
E ti t (Rs.
(R 100,000.00
100 000 00 excluding
l di making a procurement of an amount
works)-PPA (5) exceeding one hundred million Rupees
• Preparation of Bid document annually (Ten Crores).
• Opening of Bids • The master procurement plan to be approved
• Evaluation of bids by the secretary of the Public Entity.
• Award of the contract • To be up dated each fiscal year.
9
• Completion/Termination of the contract

Importance of Procurement Planning (1) Importance of Procurement Planning (2)

• It helps to decide what to buy, when and from what
sources.
• 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.
• An opportunity for all stakeholders involved in the
processes to discuss about procurement requirements.
Stakeholders- the requesting entity, end users,
procurement department, technical experts, and
even vendors to give relevant inputs on specific
requirements.
Er. Satya Narayan Shah 11
• It 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.
• Planners 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.
Er. Satya Narayan Shah 12

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Importance of Procurement Planning (3) Importance of Procurement Planning (4)

• The need for technical expertise to develop technical
specifications and/or scope of work for certain
requirements can be assessed, especially where in-
house technical capacity is not available or is non-
existent.
• Planners can assess feasibility of combining or
dividing procurement requirements into different
contract packages.
• The 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. 13
• From 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
fulfilment of the requirement.
• It allows for the consolidation of similar requirements
under one contract or the division of a requirement
q
into several contract packages for economies of scale.
• From 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. 14

Importance of Procurement Planning (5) Factors Affecting Procurement Planning

• It allows for the monitoring of the procuring • Market Analysis
process to determine how actual – strong understanding of the market dynamics,
performance compares with planned availability etc
activities, and thus to alert the pertinent • Spend Analysis
departments and adjust the procurement – visibility of spend data-accurately analyse the
plan accordingl
accordingly. goods
d and d services
i th
thatt h
have b
been hi
historically
t i ll
• It enhances the transparency and procured.
predictability of the procurement process. – analysis will disclose issues concerning spend
visibility, contract compliance and control.
• Needs Analysis
– It is important to identify the ‘need’ and not the
Er. Satya Narayan Shah 15
‘want’. 16

Procurement Plan (need analysis)

NEED ANALYSIS
The following questions should be answered
PPR 5 Ka • what is the procurement aiming to achieve?
• मालसामान,  िनमाणर्  कायर्  र  सेवाको  • Do we really need to purchase, or can the need be met in
another way?
िववरण  वीकृत गन ुर् पन: (१) साविजर्नक  • Can the quantity or scale of the goods, works or services be
िनकायको  प्रमुखले  कुनै  मालसामान,  reduced whilst achieving the same service delivery?
• Can alternative goods or service be used to meet this need?
ि
िनमाणर्
 र् कायर् र् वा  सेेवा  खिरद 
ि गन ुर् अिघ 
ि • Can the works, goods, service be specified to have improved

ऐनको दफा ४ बमोजीमको  पेसीिफकेशन,  sustainability outcomes, including being able to serve a useful

purpose after its initial use?
योजना,  नक्शा,  डीजाइन,  िबशेष  • What information is available regarding sustainably-preferable

आवशयकता  वा  अ य  िववरण  तयार  गन  ुर्

options for this purchasing requirement? Where can more
information be obtained about suitable alternatives?

वा गराउनु पनछ ।  • what happens to the product at the end-of-life?

• how does this procurement impact upon our (environmental/
Er. Satya Narayan Shah 17
social) objectives and policies?

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Content of Procurement Plan (1) Content of Procurement Plan (2)

1. Key project information 2. Sourcing plan
• objectives and plan to achieve them • the type of procurement approach (eg open
• an outline of what's being procured and the costs process or direct sourcing)
involved • how suppliers or providers and their
• planned approach to meet the Principles of Public proposals will be evaluated and what due
P
Procurement t (eg
( transparent,
t t fair
f i to
t all,
ll gett the
th right
i ht diligence will be conducted
supplier or provider and the best outcome) and the
Government Rules of Sourcing • a written document detailing your strategy for
• governance arrangements and approvals processes approaching the supplier or provider
• key stakeholders and your plan for engaging with community.
them
• links to agency's procurement strategy. 19 Er. Satya Narayan Shah 20

Content of Procurement Plan (3) Content of Procurement Plan (4)

4. Contract information
3. Exclusions and exceptions
• a description of the contract that will be used
• a record of any exclusions or exemptions
• how the contract will be delivered and its completion
to the Government Rules of Sourcing, date
giving specific justification for the • how the contract will be managed during delivery.
pp
approach
5 Risks
5. Ri k and d IIntegrity
t it
• evidence of an approved formal exemption • the risks associated with the project and how they will
from an independent senior manager if be managed.
your proposed approach proposes a • how the probity process will be managed.
departure from your agency’s own 6. Timetable
procurement policy. • a realistic step-by-step timetable for the procurement
Er. Satya Narayan Shah 21 process 22

Procurement Plan Procurement Planning and Budget Linkage:

Legal Reference {PPR 8 (5)}
• Annual Procurement Plan to be Prepared-
PPR (clause 8)- The chief of the Public Entity shall, after
receiving the approved program and budget of
– In the cases where a Public Entity requires to make
procurement of an amount exceeding one million the current fiscal year, have to revise
Rupees annually. accordingly the annual procurement plan
prepared pursuant to this Rule and approve it
• Annual procurement plan to be attached with
and send one copy each of such plan to
the annual program and budget of the next
– its superior office,
fiscal.
– Treasury and Controller Office, and
• The annual procurement plan to be revised – Public Procurement Monitoring Office.
and sent to its superior office, Treasury/
Controller Office and PPMO. 23

4

Procurement Plan Deliverables
The Procurement Plan should include five
key Steps. The Procurement Steps are
• Requirement Step
• Requisition Step
• Solicitation - Selection Step
• Contract Administration Step
• Contract Closeout Step
Er. Satya Narayan Shah
Requisition Step
• Verify that necessary specifications have
been provided.
• Prepare solicitation package (e.g. Bill of
quantity, IFB, Bid document, RFP etc.)
• Review by procurement team and, with
final approval of the IFB, RFP by Agency
Procurement Officer, send for publication
to news papers /e-procurement system.
Contract Administration Step
• Interpret specifications.
• Ensure that quality of the product or service is
maintained.
• Manage product warranties.
• Manage sub-contractors
sub contractors (if required by the
contract).
• Direct change management;
• Resolve contract disputes;
• Completion of the project;
• Terminate the contract;
• Manage contract risk associated with the project 29
6/9/2018
Requirement Step
• Conduct market analysis to gain awareness of
the products / services that are available for
purchase.
• Perform a make vs. buy analysis.
• Estimate investment costs of the Procurement.
• Based on the Procurement Plan, obtain
authorization to proceed from appropriate
agency/ departments.
• Create a Project Procurement Teams
(Procurement Unit, Bid evaluation Committee,
etc.)
25 26
Solicitation - Selection Step
• Issue the solicitation document (Bid,
RFP).
• Answer questions received from vendors
in a public forum (Pre-bid meeting based
on instructions published in IFB
IFB, RFP)
RFP).
• If necessary, prepare for vendor product
demonstrations, or oral presentations.
• Receive and Evaluate Proposals (by
Project Procurement Team)
27 28
Contract Closeout Step
• Verify product and services meet acceptance
criteria.
• Complete fiscal activities:
– Approve final payment (notify appropriate
accounts payable office),
– Update
U d t projectj t and
d activity
ti it records,
d
– Close purchase order (notify appropriate
procurement office),
– Update contract file.
• Notify all the stakeholders, if required.
• Archive contract files/documents.
30
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Procurement Plan cf=j=M‐ 2068.69

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 Master Procurement Plan

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ah]^ pkzLif{s g+=M‐ 337 142—4

 shall contain, the following matters:-

jflif{s vl/b -?=xhf/df_

klxnf] jif{ bf]>f] jif{ t]>f} jif{ rf}yf} jif{ kfrf} jif{
cf=j=0^&÷^* cf=j=068÷69 cf=j=069÷70 cf=j=070÷71 cf=j=071÷72

• Type, quantity and tentative estimated cost,

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vl/b Kofs]h ;Demf}tfsf]
l;=g+= lgdf{)f sfo{, k/fdz{ ;]jf, /sd - s}lkmot
lgsfosf] ;+Vof lsl;d
cGo ;]jf_ ?=nfvdf_
k|s[lt cg';f/

• Procurement method, ;"v]{t—h"Dnf ;8s of]h

] gf -
lv8\sLHo'nf— h"Dnf ;8s v08 ls=dL=

• Slice or package for maximizing competition, 1

!@^±$$) b]lv !#^±$^) ;Dd_
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NCB 15000 9 PsfO{ b/ 1862 660275 670290 167573

• Tentative numbers of contracts,

• Pre-qualification proceedings (if required), b«i^JoM of] kmf/fd ;fj{hlgs vl/b cg'udg sfof{noaf^ kl/dfh{g÷;+Zff]wg ePdf ;f]xL adf]lhd kl/jt{g x'g] % .

• Tentative time-table of proceedings, tof/ ug]{ clws[t sfof{no k|d'v ljefuLo k|d'v÷dGqfnosf] ;lrj

b:tvt b:tvt b:tvt

• Any other matter as directed by PPMO kb kb of]hgf k|dÚv kb

ldlt ldlt ldlt

32

vl/b u'? of]hgf

Procurement Plan
• Annual Procurement Plan to be Prepared- PPR
(clause 8)-
l;=g+= vl/bsf] ljj/0f vl/b ljlw cg'dflgt Kofs]h ;D´f}tfsf]
-dfn;fdfg÷lgdf{0f -vl/b lgsfosf] /sd ;+Vof lsl;d – the following matters shall have to be stated
sfo{÷k/fdz{ ;]jf, k|s[lt cg';f/_ -?= • The types of procurement,
cGo ;]jf_ nfvdf_
! @ # $ % ^ • Possible package of procurement,
• Time
Ti ttable
bl off procurementt proceedings,
di
aflif{s vl/b – such as Preparation of specification, cost estimate,
klxnf] bf];|f] aif{ cf=a= === t];|f] aif{ rf}yf] aif{ kfFrf} aif{ s}lkmot bidding documents, notice for invitation, evaluation,
aif{ cf=a= === cf=a= === cf=a= === Acceptance, contract, commencement, and completion.
cf=a=
=== • Procurement method,
& * ( !) !! !@ • Types of contracts, and
• Any other matter as directed by PPMO 34

Procurement Planning Contents Procurement Planning Contents

• Time table of procurement proceedings • Time table of procurement proceedings
should include the following: should include the following:
– Specifications preparation (for the – Evaluation of sealed quotation, pre-
procurement of goods),
qualification proposal, bid or proposal for
– Cost estimation of procurement,
consultancy y service,,
– Preparation of sealed quotation form,
form bidding
documents or documents relating to proposal – Approval of sealed quotation, pre-
for pre-qualification or request for proposal qualification proposal, bid or request for
(RFP) for consultancy service, proposal for consultancy service,
– Publication of a notice for invitation to sealed
quotation, pre-qualification proposal, bid or – Endorsement of Contract,
request for the proposal of consultancy – Commencement of the job, and
services,
– Accomplishment of the job

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 6/9/2018

Procurement Plan Contents Procurement Plan Contents

Activities Details
1. S No 2. Description of Works & Contract 
ID No.
Project Details
3. Prior/ Post Review 4. PP Status
Title: Procurement Plan (PP) for Civil Works [Period 
5. Cost Estimate (NRs  Million) 6. Method of Procurement
between September 2010‐February 2012] 7. Proc. procedure: GoN or WB? 8. Bid document to WB
Project Name & ID: Road Sector Development Project 
Project Name & ID: Road Sector Development Project 9 WB’ NOL Bid D
9. WB’s NOL to Bid Doc 10 Bid  Invitation
10. Bid I i i
Additional Financing     RSDP, AF 11. Public Opening of Bids 12. BER & Award Recommendation 
Loan/Credit/Grant No.:  to WB
Executing Agency: Department of Roads, MOPPW 13. WB’s NOL to Award  14. Contract Signing
Implementing Agency: Department of Roads,  Recommendation
15. Completion date of the  16. Procurement at center/ district
Babarmahal, Kathmandu
contract
37 38
17. Remarks

Consequences of Lack of
a:t'÷lgdf{0f sfo{sf] aflif{s vl/b of]hgf
Procurement Planning
Annual
Procurement Plan

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lgdf{0f pNn]lvt cg'dfg t nfut ljlw÷ ;+Vof
sfo{sf] ldlt :jLs[t k|lqmof
sf]
lsl;d
b/efpkq
;DaGwL
lgsfo
af6 • Delays in project
implementation
ljj/0f ldlt ;xdlt
sfuhft
lng] ldlt

tof/L :jLs[lt
ldlt ldlt • Inappropriate
pp p procurements
p
! @ #
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bft[
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^
s/f/
&
s/f/
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sfo{ k'/f 7]s]bf/÷cfk"lt{stf{
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• Use of inappropriate
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procurement methods and
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procedures
• Increased packaging costs
!@ !# !$ !% !^ !& !* !( @) @! @@
Er. Satya Narayan Shah 40

 Good planning is 80% of the

task completed
 Poor or no planning manifests
iin iinefficiencies
ffi i i iin th
the
procurement function
 Failing to plan is planning to
fail