Challenges of Implementing Procurement Contracts- Experiences

from Uganda

A presentation at the PSPTB Annual Conference held in Arusha-TZ- December 7-8, 2015,

By Dr. Levi Kabagambe

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Presentation Agenda

1. Introduction2. Procurement contracts management (PCM):

The logic3. The producer of results ?4. The challenges and way forward : Insights

from Uganda.

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President launches 103 KM road (est.USD 36 Million)

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A: Introduction Procurement contracts are useless if not implemented

• Implementation is the sum total of the activities and choices required for the execution of a contract.

• It is putting into action the plan.

A good contract without effective implementation is likely not to succeed. Likewise, a poor contract with effective implementation will not succeed either.

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After all…1.“Great execution beats great strategy 99% of the time. ”

Tom Peters

2.“Strategy is 10 per cent vision and 90 per cent execution.”

Percy BarnevikChairman of ABB

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B: The logic in contract management?

Contract management is a process that enables both parties to a contract to meet

their obligations in order to deliver the objectives of the contract.

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Who produces results?

Contract m

anager

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The contract manager : Producer of results

MISSION of CM…to obtain the services as agreed in the contract and achieve value for money.

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Contract manager...

Referred to as the “intelligent customer” and should know:1.The contract;2.The customer and the consumer of the service!!3.The providers business and what is being provided

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D: The challenges: Insights from Uganda.

1. Achieving goal congruence among stakeholders– Political leadership (service delivery) – Entity (budget absorption)– Beneficiary (solution at whatever cost!)– Contract manager (high risk area, deliver

the contract; Could seek personal benefits!)– Contractor /provider (Max. savings)

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2. Risk allocation and transfer

This is implemented through contract terms + negotiations

Remains a challenge to most entities!!

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Risk allocation and transfer

Important: Insert negotiation clauses for this purpose

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3. Crafting a coherent strategy

How should a procurement be delivered? – PPP? – Force account, or through? – Tender invitations?

Often the right one is not adopted!

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4. Incompetence

…inability to do a job to a satisfactory standard Incompetence in execution of procurement

contracts in most entities is real! –Poor planning and budgeting–Weak contract implementation LOGO; –Poor risk identification and allocation, etc

Unlike misconduct, incompetence is not considered to be the employee's fault… something has to be done!

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5. Lack/Poor monitoring & supervision

• Supervise (in Latin, supervidere)– super-, meaning “over”, and – videre, meaning “to see.”

• When you supervise a project, it means:– you oversee the project, managing the people working

on it;– Plan what needs to be done;– assigning the work, and making sure it gets done

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monitoring & supervision

– Monitor comes from Latin monere, “to warn.” “observe without directing/instructing: warn someone that some activity is not proceeding according to plan”

– A supervisor is always human; a monitor may be a human being or a machine

– Poor monitoring /supervision characterize most procurement contracts in sub-Saharan Africa!

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Some experiences from Uganda

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Scenario 1: Quality of contractors?• The Uganda National Roads Authority (UNRA)

commission of inquiry revealed that a 53 KM (Pakwach-Nebbi road) upgrading from gravel to tarmac (Aprox. USD 6.7 M) delivered no VfM!– Standard : Road was to last 20 years ( wef 2005)– Actual: after just 9 years, the road is in a worse state

than it was before the upgrade– Findings: unqualified (unregistered) engineers were

used. It is to be reworked

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Scenario 2: lack of due diligence?• 2011: Eutaw Construction Limited, allegedly a

subsidiary of Eutaw Construction Inc., a Mississippi-based entity, presented a winning bid of USh165 billion (approx.:USD 66 million).

• 2014: The 3 year project was officially commissioned by the president

• The probe: Eutaw Construction Limited did not exist; it was a "briefcase" company; instead it had subcontracted the project (100% Vs. 30%) to Chongqing International Construction Corporation (CICO) illegally !!

• Length : 74km road, project cost has escalated by over 50% to UGX250 billion

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Scenario 3: conflict of interest?

• A national road project cost about USD 80 million.

• A consulting firm (for the road project) now under probe, sponsored the project manager for training abroad (at $14,500).

• The road has started collapsing hardly 2 years after the works ended!!

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Former Minister of Works, blamed for causing UGX 130bn (about USD 50 Million) loss in a road construction project. He instead blamed it on the entity that had sourced cheap consultants!!

• Scenario 4: Who does what & when ?

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Scenario 5: Shoddy work , inappropriate technology or poor implemention?

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Lessons

1. Clear procurement strategy required

2. Management style- “Management by walking around (MBWA) seem to work!! You need to be on ground!

3. Clear systems Communication, reporting, change orders and approval process, etc

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4. Skills are critical. Let skills drive staff to be hired; not vice versa!

• Tasks define jobs; Jobs define skills required; Skills define staff. Hire and deploy the right people!!• design a robust incentive scheme for staff Otherwise, providers will pay them at your cost!

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5. Set super-ordinate goals

– Let both STAFF and PROVIDERS know what the entity stands for

– Reward compliant behaviour– Punish ( severely) any deviant behavious)– Providers should know that shoddy work is

not your definition!! Rwanda is well known for this value!in 30 days, TZ has demonstrated it!I HOPE THE REST HAVE HEARD!

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Any questions?

Thanks you for listening

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