Procurement Planning and Service Delivery in Public Enterprises

COLLEGE OF BUSINESS AND MANAGEMENT SCIENCES

PROCUREMENT PLANNING AND SERVICE DELIVERY IN PUBLIC ENTERPRISES

CASE STUDY: SIRONKO TOWN COUNCIL

WOGUBE SANDE GEOFREY

07/U/5362/EXT

SUPERVISOR: MR. SATURDAY JOHN

A RESEARCH REPORT SUBMITTED TO MAKERERE UNIVERSITY IN PARTIAL FULFIMENTOF THE REQUIREMENTS FOR THE AWARD OF THE DEGREEOF BACHELOR OF COMMERCE OF

MAKERERE UNIVERSITY

June, 2011

1

DECLARATION

I Wogube Sande Geofrey declare to the best of my ability that this report is as a result of my own efforts and has never been submitted for any academic award to this university and any other university or institution.

Name:Wogube Sande Geofrey

Signature:…………………………………..

Date:………………………………….

APPROVAL

This research was carried out under my supervision on the topic “Procurement Planning and Service Delivery in Public Enterprises” and is now hereby ready for submission to the academic board of Makerere University, College of Business and Management Sciences.

Name of the Supervisor:Mr. Saturday John

Signature:………………………………

Date:……………………………...

DEDICATION

I dedicate this report to my beloved father Seth Gimogoi and my late mother Daphine Nagesa who have laid for me an academic foundation that has led me to this level and lastly to all my friends for their motivation and developmental ideas.

ACKNOWLEDGEMENT

My sincere gratitude to;

My research supervisor, Mr. Saturday John for his expert advice, guidance, support, and for awakening my enthusiasm for carrying out this study.

The respondents who took part in this study especially the staff from Sironko Town Council and other respondents, I salute them for their courage, commitment and pioneering spirit.

Everyone who assisted me through this study process, in particular Ayesiga for the statistical processing, and organizing of this report.

My classmates;Kate Komucunguzi,David Mula, Mateeka Hamiduand to all my brothers; Sam, Reuben, Herbert, Gerald and my sisters; Mary, Esther and Betty, my aunt Esther Nambozoand all the family members with whom we have shared great love and also helped me not to give up because of their inspiration moments.

Above of all to the Almighty God, whose blessings allowed me the privilege of completing this study in time. Without his compassion, generosity and love I can do nothing.

TABLE OF CONTENTS

DECLARATION

APPROVAL

DEDICATION

ACKNOWLEDGEMENT

TABLE OF CONTENTS

LIST OF TABLES

LIST OF ABBREVIATIONS

ABSTRACT

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

1.2 STATEMENT OF THE PROBLEM

1.3 PURPOSE OF THE STUDY

1.4 OBJECTIVES OF THE STUDY

1.5 RESEARCH QUESTIONS

1.6.0 SCOPE OF THE STUDY

1.6.1 Conceptual Scope

1.6.2 Geographical Scope

1.6.3 Time Scope

1.7 SIGNIFICANCE OF THE STUDY

CHAPTER TWO:

LITERATURE REVIEW

2.0 INTRODUCTION

2.1.0 PROCUREMENT PLANNING

2.1.1 Definition of Procurement Planning

2.2.0 Definition of Service Delivery

2.3.0 ROLES UNDER TAKEN BY THE PROCURING ENTITY.

2.4.0 Role of Citizens in Procurement Planning.

2.5.0 FACTORS AFFECTING SERVICE DELIVERY

2.6.0 Indicators of Quality Service Delivery

2.7.0 Relationship between Procurement Planning and Service Delivery

CHAPTER THREE:

METHODOLOGY

3.0 Introduction

3.1.0 Research Design

3.2.0 Study Population and Sample Size

3.3.0 Sampling Design and Procedure

3.4.0 Data Sources and Types.

3.5.0 Methods of Data Collection

3.5.1 Questionnaire Method

3.5.0 Measurement of Variables

3.5.0 Data Processing, Analysis and Presentation

3.6.0 Anticipated problems to the study

CHAPTER FOUR:

PRESENTATION AND INTERPRETATION OF FINDINGS

4.0 Introduction

SECTION A: RESPONDENTS’ DATA

4.1.1 Gender of the Respondents

SECTION B: ROLES UNDERTAKEN BY THE DIFFERENT STAKEHOLDERS

SECTION C: FACTORS AFFECTING SERVICE DELIVERY

SECTION D: RELATIONSHIP BETWEEN PROCUREMENT PLANNING AND

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.0 INTRODUCTION.

5.1.0 Summary of Findings

5.1.1 Summary on General Findings

5.1.2 Summary of Findings on the roles undertaken by different stakeholders

5.1.3 Summary of Findings on Factor Affecting Service Delivery.

5.1.5 Summary of Findings on Relationship between Procurement Planning and Service

5.2 Conclusion

5.3 Recommendations of the Study.

5.4 Suggested Further Research

REFERENCES

APPENDIX I: INTRODUCTORY LETTER

APPENDIX II: QUESTIONNARE

APPENDIX III: RESEARCH PROJECT SCHEDULE

APPENDIX IV: RESEARCH PROJECT BUDGET

LIST OF TABLES

Table 4.1: Showing Gender of the respondent

Table 4.2 Showing Respondents’ level of education

Table 4.3 Showing preparation of a multi annual work plan based on the approved budget.

Table 4.4 Showing Each Entity in the LG Defines its Procurement Requirements

Table 4. 5: Showing Dividing of Requirements Allocated to a Procuring entity.

Table 4.6: Showing Integration of the Diverse Decision and Activities.

Table 4.7: Showing the Accounting Officer’s Role

Table 4.8: Showing Citizens Assist the Town Council to decide on Services to be provided.

Table 4.9: Showing Citizens also Work With NGOs, CBOs and Political Parties to Develop Proposals.

Table 4. 10: Showing Evaluation of Potential Service Providers.

Table 4.11: Showing Corruption Hampers the Provision of Services

Table 4.12: Showing the Town Council Lacks Finances to Buy the Services.

Table 4.13: Showing getting the right service provider is a challenge.

Table 4.14: Showing Poor communication with communities in Sironko.

Table 4.15: Showing the Town Council Faces a Challenge of Limited Skilled Personnel.

Table 4.16 Showing Projects are done according to or as demanded by the People.

Table 4. 17: Showing Procurement Planning sets in motion the Process of Acquiring Services.

Table 4.18: Showing Procurement Planning Facilitates Efficient and Effective Service Delivery.

Table 4.19: Showing Procurement Planning achieves Maximum Value for Expenditures on Services.

Table 4. 20: Showing Relationship between Procurement Planning and Service Delivery.

Table 4.21: Showing Pearson Correlation between Procurement Planning and Service Delivery.

LIST OF ABBREVIATIONS

AIDSAcquired Immune Deficiency Syndrome

CBOsCommunity Based Organizations

HIVHuman Immune Deficiency Virus

LGLocal Government

NGOsNon Government Organizations

NSDSNational Service Delivery Survey

OECDOrganization for Economic Co-operation and Development

PPDAPublic Procurement and Disposal of Assets

ABSTRACT

This research studied the effect of procurement planning on service delivery in public enterprises,a case study of Sironko town Council.The findings of the study revealed that there is a strong positive relationship between procurement planning and service delivery. Most of the respondents strongly agreed with it.

Also the study undertook to examine the roles of different stakeholder in procurement planning and the following were found out; defining procurement requirements, dividing requirements allocated to a single procurement process into separate lots, integration of the diverse decision and activities, ensuring availability of sufficient funds to run the plans, developing of proposals and evaluation of potential service providers.Some factors were found to be affecting service delivery and these included the following corruption, lack of finances, the challenge of getting the right service provider, limited skilled personnel, also poor communication.

Data was collected using self administered questionnaires. The study used stratified and purposive sampling techniques to draw representative samples and 50 respondents were involved in the study.

The study also recommends the following;Corruption should be reduced by enforcing of strict rules and giving penalties, training the recruited workers,the procurement team should carryout research so as to find out a reliable service.

1

CHAPTER ONE

1.0 INTRODUCTION

This chapter includes the following; back ground to the study, statement of the problem, purpose of the study, objective of the study, research questions, scope of the study which includes the conceptual scope, geographical scope and time scope and finally the significance of the study.

1.1 BACKGROUND TO THE STUDY

According to PPDA Act (2003) "procurement" means acquisition by purchase, rental, lease, hire purchase, license, tenancy, franchise, or any other contractual means, of any type of works, services or supplies or any combination. Van Wheel (2005) definesprocurement planning as the process of determining the procurement needs and the timing of their acquisition and funding such that the entire operations are met as required in an efficient way. He adds that it generates power that propels the engine of the procurement process. Thus a mistake in procurement planning may culminate into diverse implications in the organization that may deter its progress.

In Uganda, procurement planning is part and parcel of the traditional planning already familiar in local governments: - notably, development planning and budgeting. The mandate for planning in local governments is derived from Regulation 62 of the Local governments (PPDA, 2006): user department prepare an annual work plan for procurement based on the approved budget, which shall be submitted to the procurement and disposal unit to facilitate orderly execution of annual procurement activities. It is also states that a procurement plan should be integrated into the annual sector expenditure program to enhance financial predictability, accounting and control over procurement budgets. The combined work plan for the procuring and disposing entity will include details of activities of works, services or supplies to be procured, a schedule of procurement requirements in order of priority, a statement of required resources supported by a schedule of the projected funding.

Article 190 of the Ugandan constitution states that district councils shall prepare comprehensive and integrated development plans incorporating the plans of lower level governments for submission to the National Planning Authority and Article 194 of the constitution mandates the central government to transfer funds in form of grants to local governments in order to implement decentralized services.

As part of the efforts to adopt a long term and strategic view of their procurement needs and management, most countries have resorted to turning to their annual procurement plans as a possible 'problem-solver.' However procurement plans are hindered by corruption which diverts decision-making and the provision of services from those who need them to those who can afford them (Langseth, Kato, Kisubi & Pope, 1997).

According to National Service Delivery Survey(2008), the government has the obligation to provide services to its citizens and to steer economic growth and development through the provision of public services. The public service is the main implementing machinery for national development programmes and specifically, the delivery of public services. It is therefore very important for the public service to monitor and evaluate the delivery of public services and to obtain feedback from service recipients, regarding their efficiency and effectiveness. The National Service Delivery Survey (NSDS) has been institutionalized byGovernment as a key instrument to that effect. Under the Public Service Reform Programme, surveys are conducted in the sectors of education, health, road infrastructure, water and sanitation, agriculture and governance among others.

In service delivery, the system of delivery must view tax payers as customers, this therefore calls for placing “a high priority on delivery of personalized efficient customer service (Mourney 1991).” He further noted thatattitudes exhibited by service providers employees and managers must be aimed at developing good working relations and ensuring that customers (tax payers/citizens) are handled well while being served.

Strengthening service delivery is a key strategy to achieve the Millennium Development Goals. This includes the delivery of interventions to reduce child mortality, maternal mortality, and the burden to HIV/AIDS, tuberculosis and malaria. Service provision or delivery is an immediate output of the inputs into the health sector, education sector among other sectors. Increased inputs should lead to improved service delivery and enhanced access to services. Ensuring availability and access to services is one of the main functions of a local government. Such services should meet a minimum quality standard (Development Assistance Committee 2005).

1.2 STATEMENT OF THE PROBLEM

Government of Uganda has put in place provisions to ensure the realization of her long term objective of improving the quality of life of its citizens. Substantial resources have been committed towards improving service delivery in areas such as infrastructure development and maintenance, rural development, human development and governance, among others. In particular, it is noted that households do not only need income but also require adequate community infrastructure such as schools, health facilities, clean water, roads, energy, security, law and order etc (National Service Delivery Survey 2008). The implementation of these interventions would be incomplete without proper procurement planning. Sironko Town Council has not been able to adequately provide these services to the citizens and this may be attributedto lack of proper procurement planning.

1.3 PURPOSE OF THE STUDY

The study aimed at establishing the impact of procurement planning on service delivery in Sironko Town Council.

1.4 OBJECTIVES OF THE STUDY

1. To examine the roles undertaken by the different stakeholdersduring Procurement Planningin Sironko Town Council.
2. To establish the factors affecting service delivery in Sironko Town Council.
3. To establish the relationship between Procurement Planning and Service Delivery.

1.5 RESEARCH QUESTIONS

1. What are the rolesundertaken by the different stakeholders duringProcurement Planning in Sironko Town Council?
2. What are the factors affecting Service Delivery in Sironko Town Council?
3. Is there any relationship between Procurement Planning and Service Delivery?

1.6.0 SCOPE OF THE STUDY

The proportion of the research covered the conceptual scope, geographical scope, and the time scope.

1.6.1 Conceptual Scope

The study focused on procurement planning which involved the roles undertaken during the procurement planning process, departments involved, andfactors affecting service delivery.

1.6.2 Geographical Scope

The research was carried out in Sironko Town Council.

1.6.3 Time Scope

The study covered a period of four months that is from February to June.

1.7 SIGNIFICANCE OF THE STUDY

1. The findings of the study will specifically help the local government of Sironko Town Council to revisit her procurement planning if they are to improve on service delivery.
2. The study will also help policy makers to formulate ways on how to improve the service delivery in the economy.
3. The study will also act as a basis for further research to other researchers in field of Public Service Delivery and procurement in Uganda

CHAPTER TWO:

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter discusses the opinions, findings from different authors, publications, magazines, websites, and all possible sources as a basis of foundation for this research study. It is divided into definition of the key variables and other parts are according to the research questions as seen below;

2.1.0 PROCUREMENT PLANNING

2.1.1 Definition of Procurement Planning

According to Agaba & Shipman, (2007), procurementplanning is the process used by companies or public institutions to plan purchasing activity for a specific period of time. This is commonly completed during the budgeting process. Each year, departments are required to budget for staff, expenses, and purchases. This is the first step in the procurementplanning process.

Economic commission of Africa (2003) defines procurement planning as the purchasing function through which organization obtain products and services from external suppliers. A good procurement plan will go one step further by describing the process you will go through to appoint those suppliers contractually. Whether you are embarking on a project procurement or organizational procurement planning exercise, the steps will be the same. First, define the items you need to procure. Next, define the process for acquiring those items. And finally, schedule the timeframes for delivery.

Procurement is thus one part of the commissioning process. It refers to a specific method of purchasing services which involves tendering for a contract. Sometimes it is more appropriate for a public body to fund a service through the provision of a grant, but then it will have less control over the precise outcomes to be delivered.

2.2.0 Definition of Service Delivery

Oboth (2001) noted that in as far as the Local Government Act, the constitution and any other statutes that are studied, there is no definition of the phrase (service delivery) either deliberately or ignorantly. However he said, Service is a system or arrangement that supplies public needs. Whereas delivery is periodical performance of a service. Therefore service delivery is a system or arrangement of periodical performance of supplying public needs.

Helmsing (1995) in his study defines service delivery as a deliberate obligatory decision by the elected or appointed officials to serve or deliver goods and services to the recipients.

Heskett (1987) defines service delivery as an attitudinal or dispositional sense, referring to the internationalization of even service values and norms.

2.3.0 ROLESUNDER TAKEN BY THE PROCURING ENTITY.

There is now very limited doubt among policy makers, managers, professionals and academicians about the role of public procurement planning in facilitating government operations in both developed and developing countries (Goh, Lau & Neo, 1999). Public procurement is increasingly recognized as a profession that plays a significant role in the successful management of public resources.

According to PPDA Regulations (2006), the following should be undertaken during Procurement Planning in local government in Uganda:

2.3.1Preparing a multi annual work plan

Each user department should prepare a multi-annual rolling work plan for procurement based on the approved budget, which is submitted to the procurement and disposal unit to facilitate orderly execution of annual procurement activities. A procurement plan is integrated into the annual and multi-annual sector expenditure programme to enhance financial predictability, accounting and control over procurement budgets. A procurement and disposal unit uses the combined work plan to plan, organize, forecast and schedule the procuring and disposing entity's procurement activities for the financial year, section 96 of the PPDA regulations(2006).

2.3.2Defining procurement requirements for an entity

It is the role of each entity in the local government to define its procurement requirements, identify all of the items they need to procure (Agaba & Shipman, 2007). Creating a sound financial justification for procuring them, listing all the tasks involved in procuring their services, scheduling those tasks by allocating timeframes and resources.Through a Procurement Plan template, the procuring entity can quickly and easily define its procurement requirements, the method of procurement and the timeframes for delivery (Basheka, 2008).

2.3.3Aggregation of Requirements for the Procuring Entity.