NEW GLOBAL VISION COLLEGE

HAWASSA CAMPUS

Project Procurement and Contract Administration

Muse Mude

DECEMBER 5, 2022
Hawassa, Ethiopia
 Executive summary
Project procurement management is among the ten knowledge areas that a project manager must
be familiar with for a successful implementation of a project work. Depending upon the specific
type of project being managed, over 50 percent of the total project cost can be attributed to parts,
supplies and services procured. For many high-technology projects, this procurement fraction
can
approach 90 percent. Most of the world telecom operators upgrade their procurement capabilities
to achieve best suppliers relation, to bring improved risk management, and to enhance fast
growth
Opportunities. Hence, this study is targeted to assess project procurement practice of Hawassa
poly technic college by addressing the process undergone namely: Procurement planning,
Solicitation Planning, Solicitation, Source Selection, Contract Administration and Contract
Closeout. The primary data was collected in the from interview approached for answering
questions related to planning procurement process and the secondary data obtained from the
company policy and procedure documents, project management working manual, reports,
process templates and magazines. Accordingly, the finding of the study reveals the company fail
to provide training related to project and project procurement, fail to arrange pre-proposal visit,
not considering suppliers risk management issue as evaluation criteria, week monitoring system
for products arrived at the project site and not gathering suppliers’ performance status report
from concerned stakeholders. Thus, a recommendation has been made under this study on what
actions should be taken in order to improve project procurement management practice of
Hawassa poly technic college.
Table of Contents
 CHAPTER ONE

1. Introduction
Projects now a day have great practice in private, government, NGOs and other forms of
organizations. It helps to find solutions for the existing problem, to provide new/improved
products, and also to win advantage of unexploited business opportunity. Unlike operations,
projects are characterized by uniqueness, complexities, non-repetitive, temporary life time with
constrained schedule, cost and performance. Such unique features require projects managed by
other forms of management called project management. Project management is the application of
knowledge, skills, tools, and techniques to project activities to meet the project requirements

(PMBOK, 2013). According to Beleiu et al. (2015), adequate use of project management
techniques is among the main factors influencing project success globally. Like other sectors,
application of project management is important on telecommunication sectors for the following
four main reasons (Sherif, 2006). First, regulatory and technological changes promoted
unbundling of telecommunication services. Second, its infrastructural projects take several years
and involve several thousands of individuals. Third, the forms of telecommunication services,
ranging from basic telephony using wireline or wireless access, to internet or broadband services.
Finally, new services must fit within an environment defined by already existing technical and
organizational legacies.

PMBOK (2013), Project procurement management is among the ten knowledge areas that a
project manager must be familiar with for a successful implementation of a project work. It is
needed to acquire products, services, and/or results needed for the project. Procurement systems
make a difference in project implementation, while poorly managed project procurement
relationships negatively with project performance. According to Kirai et al. (2016), Procurement
is the nerve center of performance in every institution which needs a tight system to be adopted
and followed. Many procurement activities suffer from neglect, lack of proper direction, poor co-
ordination, bureaucracy, lack of open competition and transparency, differing levels of
corruption and not having a trained and qualified procurement specialists who are competent to
conduct and manage the procurement process in a professional, timely and cost effective manner.

Week project procurement in Ethiopia resulted from insufficient planning, shortage of funds, and
timely inaccurateness of large procurement (Karlsson, 2011). Ethio telecom is one of the
dominant telecom industries in Africa having a vision to become world class provider of telecom
service. Since telecommunication is one of the prime support services needed for rapid growth
and modernization of various sectors of the economy as well as for attracting investment,
creating market opportunities, enhancing competitiveness and boosting regional economic
integration, the Ethiopian government has made huge investments to improve service quality,
coverage and institutional capacity in the telecom sector (NBE, 2017). Since the company is
responsible for such country wide contribution through its huge investments, it’s important to
assess the practice of project procurement of the company.

1.2. Background of the Company

Hawassa polytechnic is public TVET College established to offer technical and vocational
education and training for the local community through both formal and non-formal programs
aimed to provide morally up right and competent work force for industries. The Collage offer
training in three prioritized sectors each of them has many occupations namely: industry,
economic infrastructure, and hotel and tourism sectors.

As any TVET college of the country it has also a mission of producing competent workforce for
the industries to provide technical and technological support for the small and medium scale
enterprises to make them competitive in national and global markets.

To realize the vision through selected distinctive area of competence, the Collage needs to
upgrade existing facilities comparable with enhancing human capability. This physical
infrastructure includes additional workshops, classrooms, library, laboratory and maintaining the
existing workshop like Automotive Technology is taken in to consideration. As part to equip the
existing and additionally built practical workshops purchasing of tools, cutting age machineries
and equipment will also be needed to provide quality training which is the core to make the
college center of excellence in the region. Furthermore, there is a great need to have recreation
center for both trainee and trainers in the college compound and vehicle provision for the
cooperative training.

New Global Vision College Hawassa Campus Project Management Department has shown us
what project procurement and contract management in institutions is like, Hawassa Polytechnic
College was chosen for this question and I would like to explain that Hawassa Polytechnic
College is based on the findings.

1.3 Statement of the report

Effective procurement is critical for execution of projects successfully. Depending upon the
specific type of project being managed, over 50 percent of the total project cost can be attributed
to parts, supplies, and services procured, and for many high-technology projects, this
procurement fraction can approach 90 percent (Morris & Pinto, 2007). According to Wyman
(2013), most of the world telecom operators upgrade their procurement capabilities to achieve
best suppliers relation, to bring improved risk management, and to enhance fast growth
opportunities. They need to improve their procurement practice due to their purchasing portfolio
become increasingly diverse from simple items such as training material to a much wider array
of products such as computers, machines, maintenance and office machine on resale. Since
technologies are shift very rapidly, their procurement expected to look up compatible suppliers
that help them to be flexible and react quickly.

For example traditional TVET vendors have seen significant drops in their margins, due to
aggressive competition from new players, conducted a study to understand project management
in Ethiopia which conclude method of procurement management has big weakness and the lack
of adequate planning often causes problems in the production when materials, machines and
parts are delivered too late or not at all in Ethiopia, however, the study was on construction
companies. Other research was conducted on effective enterprises procurement management
impact in the implementation of successful public project by (Martha, 2015) but the study is on
the area of training institute of the country. The Major gap from the different studies is that they
do not cover up each process of the project procurement. Academic research are conducted on
Hawassa polytechnic college that covers areas such as supply chain management, sourcing staff
perception, foreign purchase practice, and supplier performance management but there is no
study on project procurement management of the company.
According to the gathered report from GTP meeting held on 2016, different project team
members of the studied company reveals that most of delay in projects occurs due to quality
problem of the purchased item, corruption, lack of adequate make/buy analysis and fail to deliver
the ordered items on time by the Sourcing and Facility Division of the college. Therefore, this
study has been initiated with the intention filling the gap between the practices of project
procurement management with that of the theoretical perspective of the knowledge area.

1.4 Basic Assessment Questions

The general question of this assessment was what are the practices of project procurement
management at Hawassa polytechnic college? Specifically the assessor answered the following
questions after collecting and analyzing the data.
a) Examine the extent in which project procurement theories and principles are being
utilized?
b) Observe and produce short note on inputs, techniques and output of the project
procurement planning?
c) Evaluate consideration given to the solicitation planning?
d) Discuss solicitation strategies?
e) Examine procurement risk management strategies?
f) Discuss the role of supply chain design in procurement effectiveness?
g) Highlight contract administration system of the organization at project office level?
h) Provide attainable recommendation helping in further improvement of procurement and
contract administration?

1.5 Objective of the report

The general objective of the study is to describe the practice of project procurement management
in Hawassa polytechnic college. While attempting to achieve the stated general objective, the
study was also specifically tries to achieve the following objectives:
To examine the project procurement planning practice in Hawassa polytechnic college.
To examine solicitation planning and solicitation practice of Hawassa polytechnic college.
To investigate source evaluation and selection practice in Hawassa polytechnic college.
To assess contract administration practice of Hawassa polytechnic college.
To examine contract closing out practice of Hawassa polytechnic college.
CHAPTER TWO
PROJECT PROCUREMENT AND CONTRACT ADMINISTRATION

2.1 Project Procurement and Contract Administration

Is the process of managing contracts related to Procurement and purchases made as a part of
legal documentation of forging work relationships with customers, vendors, or even partners.
2.2 Definition of Procurement and Project Procurement Management
2.2.1 Definition of Procurement
Procurement as the acquisition of goods and services by involving two parties customer who is
buying and supplier who is selling with different objectives who interact in a given market
segment.
2.2.2 Definition of Project Procurement Management
Project procurement management is one of the ten knowledge areas of project management that
includes the processes necessary to purchase or acquire products, services, or results needed
from outside the project team.
2.3 Project Procurement Management Process
The four processes of project procurement management namely plan procurement management,
conduct procurements, control procurements, and close procurements.
2.3.1. Procurement Planning
Define procurement planning as a process of determining the procurement needs of a project and
the timing of their acquisition and their funding such that met the projects need as required in an
efficient way
2.3.2. Solicitation Planning
It is the process of making plans leading to a solicitation of responses from sellers.
2.3.3. Solicitation
Solicitation is the process of requesting responses from sellers eventually resulting in
procurement.
2.3.4. Source Selection
Source selection process evaluates seller proposals, and ends with the issuance of a contract
award to a seller.

2.4.5. Contract Administration

Contract administration is a process of ensuring that the sellers’ performance meets contractual
agreement. Also referred it as control procurement process which is about managing
procurement relationships, monitoring contract performance, and making changes and
corrections to contracts as appropriate. It manages seller performance, and manages changes to
seller authorized scope
2.4.6. Contract Closeout
Settles all open contractual issues, claims and closes out each procurement.
 CHAPTER THREE
DISCUSSION OF FINDING

3.1. The practice of project procurement theories and principles in Hawassa poly
technic college.

The principle of public procurement regulates the management of public procurement, including
the establishment of a framework for implementing the code of conduct for all parties directly or
indirectly involved in the process of implementing public procurement. Each country basically
has its own principle of public procurement based on economic, political, and other
circumstances and conditions in the country. In Ethiopia, these principles are emphasized in
Public Procurement and Property Administration Agency Regulation of the democratic Republic
of Ethiopia PROCLAMATION NO. 649/2009 (The Ethiopian Federal Government Procurement and
Property Administration Proclamation No.649/2009 ) which stipulates 7 principles of procurement
implementation, including: efficient, effective, transparent, open, competitive, fair, and
accountable.

Efficiency can be seen as a situation where procurement can reduce losses or waste of resources,
but with these limitations, it is able to produce benefits and better output in terms of time, cost,
and energy. This principle requires that the government procurement process be proportional to
the values and risks of the project that underlie the activity, which is generally related to time
sensitivity and delay avoidance, meaning that with a minimum budget the quality of public
procurement results can be obtained. The effective principle can be interpreted productively,
namely the available resources obtaining goods and services that have the highest benefits. This
principle is a condition where the use of government procurement can achieve the desired
results.
3.2. Principles of Procurement
A. Accountability

Accountability is the last public procurement principle that we will address. Accountability in
public procurement essentially means to be responsible for our actions and decisions, and having
the obligation to report and/or answer to a designated oversight entity (and the public) on the
consequences of those actions and decisions osterreichische-apotheke.com. As public servants
procurement practitioners, and others involved in the public procurement process, are
accountable and thus exposed to sanctions as a remedy for any behavior that contravenes the
public procurement legal framework and principles. As we have seen in this college,
accountability, which is one of the procurement principles, is not fully implemented. As proof of
this, according to the research conducted by the college experts in 2014, as a discovery tile

B. Competitive Supply

Competitive sourcing begins with the process of familiarization with the entire market for
whatever it is that a project needs, on a local and global scale. That knowledge can be used to
figure out whether a product or material should be made in-house, sourced locally or sourced
internationally. The ‘strategic’ part of the approach comes from linking this decision to the
business’s objectives. Is the goal to lower costs dramatically, to increase quality, to improve
delivery time, etc . Once a decision is made around where to source, competitive sourcing
becomes about developing a network of providers, getting to know their various strengths and
weaknesses, being as clear as possible about requirements then beginning negotiations. The
benefit of the network, of course, is that it offers choice. Several suppliers can be used for a
similar purpose or, if only one supplier is being utilized and a supply network interruption
occurs, knowledge of the network immediately makes it clear as to who is the next-best
supplier. Public procurement must be carried out by competitive process unless specifically
justified in accordance with this Law or Government policy. Hawassa Polytechnic College's
competition provision is being implemented in a non-contemporary and non-modern way. And
this is losing confidence at the time of purchase. Therefore, the researcher has set the following
gaps

 There is less a full Conduct spend analysis.

  There is less conduct an analysis of local and global marketplaces
C. Consistency

Standardization ensures consistency through the entire procurement process — identifying

needs, detailing product specifications, establishing a budget, researching potential suppliers,
evaluating product options, and negotiating contracts and service level agreements. Ideally,
organizations should assign purchasing authority to an individual or committee that will work to
ensure that all purchases align with standards. With some extent in the college there is a good
consistency

D. Effectiveness

An effective procurement process involves in-depth understanding of requirements by all

business units, identifying the right supplier for meeting those requirements, periodically
evaluating supplier performance, and negotiating contracts that can provide the highest value at
minimum cost. There is a categories listed below to show the gap in Hawassa poly technic
College the effectiveness of procurement.

Good in practice Less in practice

Procurement Planning Negotiate and Sign the Agreement
Purchase Requisition or Indenting Release Purchase Order (PO)
Identify Suppliers Material Receipt and Quality Check
Float the RFQ Invoice Approval and Process Payment
Appraise the Quotes Maintain Records for Audit

E. Value for Money

Best value for money is defined as the most advantageous combination of cost, quality and
sustainability to meet customer requirements. In this context: cost means consideration of the
whole life cost. Quality means meeting a specification which is fit for purpose and sufficient to
meet the customer's requirements. There is a good one practice of value for money in Hawassa
poly technic college.

F. Fair-dealing

As Hawassa poly technic college Suppliers treated fairly and without unfair discrimination,
including protection of commercial confidentiality where required. Public sector entities should
not impose unnecessary burdens or constraints on suppliers or potential suppliers.

G. Integration

It is essential that these procurement solutions are integrated into other systems in the company,
such as accounting and financial systems. This allows procurement departments to capitalize on
multiple internal data sources and thus have a 360° view that enables them to improve their
performance. But this type of activity is not seen in the college

H. Integrity

The integrity of the procurement process assures confidence in the public procurement process.
According to the evidence there is no corruption or collusion with suppliers or other persons
involved in a procurement.

Finally there is a good practice of decision-making, Legality, Responsiveness and Transparency

3.3. Process inputs - techniques - outputs

Inputs 
  pm plan

 requirements documentation

 risk register

 activity resources requirements

 project schedule

 activity cost estimate

 stakeholder register

 OPA

 EEF

Techniques 

 make-or-buy analysis

 expert judgment

 market research

 meeting

  Data Gathering

 Data Analysis

 Source Selection Analysis

Outputs 

 procurement management plan

 procurement statement of work PSoW

 procurement documents

 source selection criteria

 make-or-buy decision
 change request

 update project documents

Knowledge Area Process Group Processes Inputs Tools & Outputs
Techniques

Project statement of work

Business case
Initiating Develop Project Charter Contract Expert judgment Project charter
Enterprise environmental factors
Organizational process assets

Project charter
Develop Outputs from planning processes Project management plan
Planning Expert judgment
Project Enterprise environmental factors
Management Organizational process assets
Plan

Deliverables
Project management plan Work performance information
Expert judgment
Direct & Manage Approved change requests Change requests
Executing Project
Project Execution Enterprise environmental factors Project management plan updates
management
Organizational process assets Project document updates
Project information system
Integration
Management Project management plan Change requests
Monitor & Performance reports Project management plan updates
Expert judgment
Control Project Enterprise environmental factors Project document updates
Work Organizational process assets
Monitoring
&
Controlling Project management plan
Change request status updates
Work performance information
Perform Expert judgment Project management plan updates
Change requests
Integrate Change control meetings Project document updates
Enterprise environmental factors
Change
Organizational process assets
Control
Expert judgment
Final p product, service, or result transition
Project management plan
Organizational process assets updates
Closing Close Project or Phase Accepted deliverables
Organizational process assets
3.4. solicitation planning
In the college the situation of Solicitation planning is widely implemented in the form of seeking
information, proposals, and quotations from suppliers. While solicitations can be verbal, quality
and consistency is enhanced if the process is formalized as a written or electronic document.

3.5. Solicitation strategies

There are strategies or tools that can use separately or in combination to achieve a successful
procurement in Hawassa poly technic college. They vary by industry, but here is a general
overview:

 Request for Information (RFI)

As noted in the previous section, RFIs are used to collect written information about the

capabilities of various vendors and suppliers. This helps shorten the list of suppliers that may be
able to fulfill your requirements. RFIs typically occur prior to the issuance of an RFP or RFQ,
helping to identify vendors who may be more likely to offer a successful bid on your contract.

 Request for Proposal (RFP)

RFPs are documents that solicit proposals from prospective bidders. They are often used when
the request requires technical expertise, specialized capability, or when the product or service
being requested does not yet exist. When you know you have a problem but don’t know how you
want to solve it, consider the RFP approach.

 Request for Quote (RFQ)

RFQs invite suppliers to bid on specific products or services. RFQ generally means the same
thing as IFB (Invitation for Bid). Information like payment terms or contract length may be
requested during the RFQ process. They are beneficial when you know what you want and which
companies are capable of providing it but you want more detailed pricing
information. RFQs may come after an RFP, allowing the shortlisted vendors to provide a more
detailed price quote.
3.6. The procurement risk management strategies
Procurement risk management is the process of identifying both internal and external risks to
your supply chain. Effective risk management demands eliminating situations that put your
organization at unnecessary, increased risk. It also involves finding solutions to mitigate both
internal and external and external risks.
The strategies of HPTC:-

 Having the budget to cover any unexpected expenses.

 Diversifying of suppliers and having secondary suppliers on standby

 Clear communication and evaluation of the project along with its procurement demands

 Improvement of procurement transparency. Which is moving away from manual

processes to automated procurement processes means more accountability and
transparency in purchasing.

 Choosing a single platform for communication and establish procedures for sharing
progress, meeting deadlines, and discussing any supply chain issues.

 Working with suppliers and tracking performance. Using a vendor management system,
that can rate suppliers and compare their performance over time.

 Venturing management systems. It allow to store all relevant data on vendors and
compare them to other competitors.

3.7. The role of supply chain design in procurement effectiveness

Supply chain effectiveness is an external standard of how well an organization is meeting the
demands of the various groups and organizations that are concerned with its activities. These
groups might include customers, partners, suppliers and vendors. To measure supply chain
effectiveness, it is important to look at not just what is going on within the walls of your own
company, but how this is ultimately impacting stakeholders.
 Recommendation and Conclusion

To determine whether the college has the necessary capacity and resources needed in the
procurement department to assist the college on its role of delivering quality teaching and
learning to its students was the final objective of the study. The evidence reveal that, just over
more percent of the reference revealed that there is sufficient capacity and resources to achieve
its organizational goals and objectives of delivery quality teaching and learning.

However, with such a slight majority of respondents indicating sufficient capacity and resources,
it is concluded that there is room for improvement in this area. It is further concluded that even
though the Hawassa poly technic college meets its supply chain and procurement management
objectives and requirements, it is encouraged to ensure that supply chain and procurement
management practitioners and officials involved in the supply chain and procurement
management processes are continuously sent for training to update themselves on any new
supply chain and procurement management developments.

These results also show that the supply chain and procurement management processes are
enabling function in teaching and learning where the college can effectively contribute in
promoting the vision of the Minister of skill and labour to capacitate and skill the youth of
Ethiopia through education so that they can have better opportunities in life. The MSL has set
enrolment targets to radically increase youth participation in TVET Colleges for them to be
skilled and be ready for the employment market. It is therefore crucial to address barriers to
access and to seek innovative ways to expand access to TVET Colleges. This will result in the
reduction of unskilled youth and labour in general.
 Recommendation
Based on these findings and conclusions, it was observed that Hawassa poly technic College has
in place the Bid Committee members appointed and SCM practitioners who are aware and
understand the SCM processes of the college. It was also observed that the Hawassa poly technic
College has a functioning SCM department responsible for the processing of all requisitions
from the different department since the Hawassa poly technic College has a centralized
procurement system.
The report have important implications for the implementation of the SCM strategy in the TVET
sector, as other TVET colleges in the Sidama region as well as those in other provinces in the
country could consider these findings; or even replicate the study elsewhere. For the SCM
practitioners, the study may assist them to learn and adopt the similar processes adopted by the
Hawassa poly technic College in implementing the SCM strategy and processes. Another
implication is for the SCM practitioners to attend SCM training on a regular basis so that they
keep up to date with any new development within the public sector procurement processes.

Another important implication of the study is that for any policy to be implemented effectively,
the staffing and resources need to be in place so that the policy would likely guarantee success.
In addition, this research study could be beneficial to SCM practitioners and can also be used for
self-empowerment. In fact, they may also use the recommendations made in this research for
continuous operational improvement within the college. Based on the positive feedback received
from the respondents, the following recommendations are made to assist the Hawassa poly
technic College and other TVET colleges to achieve excellence in their SCM systems:

 To improve on SCM internal controls,

 To ensure that its objectives are always achieved
 To continuously monitor the SCM system for achievement of legislative compliance at
all times,
 To provide on-going training to SCM committee members and as well as SCM
practitioners.
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