Strategic Procurement Planning: Guidance Note on Procurement

This guidance note aims to assist borrowers in developing a procurement strategy and procurement plan for projects financed in whole or in part by an ADB loan or grant, or by ADB-administered funds. Effective and strategic procurement planning helps ensure that fit-for-purpose procurement approaches are developed to achieve value for money and the project’s development objectives. The note enables borrowers to take a flexible approach to developing a procurement strategy and procurement plan, applying tools and techniques widely used across public and private sector organizations to provide the necessary intelligence to make sound procurement decisions.

A Re-Analysis of EU’s COVID-19 Vaccine Procurement Strategy in View of the An-Ticipated Cost-effectiveness of Vaccination

Aim The EU has received criticism for being slow to secure COVID-19 vaccine contracts in 2020 before the approval of the first COVID-19 vaccine. The purpose of this study is to retrospectively analyze the EU’s COVID-19 vaccine procurement strategy. To this end, the study retrospectively determines the minimum vaccine efficacy that made vaccination cost-effective from a societal perspective in Germany before the clinical trial announcements in late 2020. The result is compared against the expected vaccine efficacy before the announcements. Methods Two strategies were analyzed: vaccination followed by complete lifting of mitigation measures and a long-term mitigation strategy. A decision model was constructed using, e.g., information on age-specific fatality rates, intensive care unit costs and outcomes, and herd protection threshold. The base-case time horizon was 5 years. Cost-effectiveness of vaccination was determined in terms of costs per life year gained. The value of an additional life year was borrowed from new, innovative oncological drugs, as cancer reflects a condition with a similar morbidity and mortality burden in the general population in the short term as COVID-19. Results A vaccine with 50% efficacy against death due to COVID-19 was not clearly cost-effective compared to a long-term mitigation strategy if mitigation measures were planned to be lifted after vaccine rollout. The minimum vaccine efficacy to achieve cost-effectiveness was 40% in the base case. The sensitivity analysis shows considerable variation around the minimum vaccine efficacy, extending above 50% for some of the input variables. Conclusions This study shows that vaccine efficacy levels expected before clinical trial announcements did not clearly justify lifting mitigation measures from a cost-effectiveness standpoint. Hence, the sluggish EU’s procurement strategy still appeared to be rational at the time of decision making.

PUBLIC PROCUREMENT STRATEGY FOR THE POST-CONFLICT TERRITORIES

The article is dedicated to the need to develop and approve a Public Procurement Strategy for the Donetsk region, which will envisage the use of procurement not only for current purchase of goods, works or services, but also for implementation of additional ‘horizontal’ goals in creation of employment opportunities, environmental protection and support for small and medium-sized enterprises, taking into account the peculiarities of post-conflict recovery processes. It is emphasized that currently there are no strategic approaches to the use of public procurement in solving complex problems of Donetsk region development, which is manifested in the following: 1) strategic development goals of Donetsk region are not related to public procurement, i. e., no connection has been established between them; 2) no specific goals have been set for the public procurement itself, and there is no vision for the development of procurement in the Donetsk region. It is suggested that these problems could be solved by the Public Procurement Strategy for the Donetsk region, which would envisage goals for the strategic use of public procurement. It is proved that this Strategy will: 1) promote the recognition and understanding by contracting authorities of public procurement as a potential means of addressing important issues of regional or city development and strengthen the role of procurement in these processes; 2) allow business entities to better plan their activities; 3) ensure consistency of strategic goals of the region’s development with national priorities, including sustainable development. The vision of public procurement development is defined. The goals of the Donetsk Region Development Strategy for the period up to 2027, in the implementation of which public procurement can play an important role, are defined as well. Additionally, the goals of the draft Public Procurement Strategy are coordinated with the Donetsk Region Development Strategy.

Market Survey Strategy for Sharp Well Economic: A Case Study of Well Planning in Deepwater Exploration Indonesia

A deep-water well is one of the high profile project which is closely related to a high cost project. One of the key success prior starting the project is by conducting the cost estimation (Owner Estimate). For a typical new operation with limited offset data, market survey is one of the way to have the base cost estimation. Performing a market survey for estimating owner estimate prior to perform tender process and also a need for a basis of well cost is critical step in calculating economic of the well or investment decisions during well planning. Many approaches to perform the market survey and sometimes people customize them in order to fit with the purpose. This paper is trying to exercise some of the market survey methodology options and also to describe the impact to the selection of procurement strategy and maturation of cost estimation. The market survey methodology will be presented in details for each options. Experiences while estimating long lead items (LLI) and drilling services costs for a deep-water exploration drilling well were exercised here. The outcomes were compared and assessed. Nevertheless, literature reviews are also performed to enrich understanding and better judgment when estimating the cost. By performing a comprehensive market survey, we have successfully determined the current market condition and accurate cost estimation, which plays crucial roles in the decision making process for the best procurement strategy. Additionally, with the selective and progressive method in the market survey, it has narrowed down the bias cost data, especially for some of the major drilling services contract. The method on the market survey has established also an advantage in the remuneration strategy which leads to a cost saving in the project and also helps to fit in the project timeline.

EFFECTS OF JUST-IN-TIME PROCUREMENT STRATEGY ON ORGANIZATION PERFORMANCE OF FOOD AND BEVERAGE MANUFACTURING FIRMS IN NAIROBI COUNTY, KENYA

Purpose: The objective of this study was to investigate the effects of Just-in-time procurement strategy on organization performance of food and beverage manufacturing firms in Nairobi County. Methodology: The study adopted a causal research design. To collect primary data the respondents answered questions administered to them through questionnaires. The unit of observation consisted of the Heads of Procurement, Production, Sales and Finance of the food and beverage manufacturing firms located in Nairobi County as listed by Kenya Association of Manufacturers in 2019. The sample size was 83 heads of department. Face validity was used to determine the accuracy of the study instrument while test re-test method was used to determine the reliability. The completed questionnaires were analysed with the aid of Statistical Package for Social Sciences. Data was analysed using descriptive and inferential statistical techniques. Findings: From the study findings Just-in-time (JIT) procurement strategy (β=0.689, t=3.469, p=0.001) had a positive effect on organization performance of food and beverage manufacturing firms. The value of adjusted R2 was 0.167 indicating that there was variation of 16.7 percent on organization performance due to changes in JIT procurement at 95 percent confidence interval. Conclusion: The study concluded that JIT Procurement strategy has a positive effect on organization performance of food and beverage manufacturing firms in Nairobi County. The overall effect of JIT Procurement strategy on organization performance was 68.9%. The study therefore accepted the alternative hypothesis that JIT procurement strategy has significant effect on organization performance of food and beverages manufacturers in Nairobi County. Unique contribution to theory, practice and policy: Food and beverge manufacturing firms in developing countries should consider implementing JIT Procurement strategy. This will ensure that they purchase the optimal level of items when needed to avoid keeping unnecessary inventory which ties up money and at the same time ensure that there is no shortage so that the customers have to wait. Policy makers in the food and beverage manufacturing sector should consider developing policies to promote JIT Procurement strategy in this industry. Further research should be conducted focusing on the service sector to investigate the effect of JIT Procurement strategy on organization performance for comparison.

Infrastructure Elements for Smart Campuses: A Bibliometric Analysis

Sustainable development can be attained at a microlevel and having smart campuses around the world presents an opportunity to achieve city-wide smartness. In the process of attaining smartness on campuses, the elements requiring attention must be investigated. There are many publications on smart campuses, and this investigation used the bibliometric analysis method to identify such publications produced over the last decade. A matrix of 578 nodes and 3217 edges was developed from 285 publications on smart campus construction and procurement. Fifteen cluster themes were produced from the bibliometric analysis. The findings revealed that China contributed 48.4% of all published articles on the smart campus. The findings presented a framework from the cluster themes under the four broad infrastructure areas of building construction or repurposing, technology and IT network, continuous improvement, and smart learning and teaching management. The implications of the findings identified that IT project management, traditional procurement strategy, and standard forms of contracts such as the New Engineering Contract (NEC) and the Joint Contract Tribunal (JCT) are applicable in the procurement of smart cities.

Implementing Sustainable Procurement Strategy in the Oil and Gas Sector

The considerable environmental concerns and limited resources have prompted oil and gas companies to incorporate effective sustainable practices into their procurement strategy. This study aims to assess and prioritise critical internal and external organisational factors, and innovative capabilities, and their respective sub-criteria for the implementation of sustainable procurement (SP). Analytical hierarchy process (AHP) is employed to prioritise the main factors and subfactors that can critically affect the implementation of SP strategies in the context of the UAE's oil and gas companies. Data were collected through a survey wherein 10 senior executives in procurement departments of two oil and gas companies reveal the internal factors are the highest and innovation capability is the lowest ranked criterion. Leadership is the highest ranked sub-criteria of internal factors, while ethical and ecological environment as the most prioritised one in external factors. Technology adoption is to be the most important sub-criteria amongst innovation capabilities.