IFAD Supervision Training 2012 Final_procurement

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PROJECT SUPERVISIONPROJECT SUPERVISION

A training programme for those involved in project supervisionA training programme for those involved in project supervision

AN OVERVIEW OF REVISED IFAD PROCUREMENT

GUIDELINES

Starting-up the Project: Project Planning and Budgeting

Procurement at Start-Up

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National Procurement Assessment

• Overarching assessment• carried out during the design

(Ref. III.C - IFAD Procurement Guidelines)

Need to understand Rationale for these changes

Background

In the context of an evolving business model at IFAD (Paris Declaration (2005), Direct Supervision (2007) Accra Agenda for Action (2008), Busan (2011), etc….)

Procurement is the Borrower/ Recipient responsibility

IFAD has a fiduciary responsibility



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Fundamental ChangesRevised General Conditions

New Financing Agreement & Role of LTBRevised Procurement Guidelines & Handbook

New Supervision Modalities – change of roles! Concept of “Entry into Force” – linked to approved first AWPB & PP (+ any additional specific withdrawal conditions) Simplification – Procurement Schedule deleted from FA and standard texts are shifted to GC (remedies, etc) Update of Terminologies with elements of flexibility



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Fundamental ChangesProcurement Guidelines



Greater emphasis on… Procurement Principles Eligibility Importance of Procurement Plan & Contracts Register Use of National Procurement Systems Default position for ICB

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Use of National Procurement Systems

Definitions 4 pillars Assessment – types and tools

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What is meant by:Use of National Procurement

Systems? (1)

By show of hands, how many have worked with or assessed national procurement

systems?

-How did you do it?-Were you satisfied with the results? Why?

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What is meant by:Use of National Procurement

Systems? (2)

Donors satisfied with a countries’ own set of procurement rules and procedures that could be used to administer donor-

financed procurement and reduce transaction costs.

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Definitions Paris & Accra: national arrangements and

procedures for procurement …

WB: a country’s legal and institutional framework, consisting of its national, sub-national, or sectoral implementing institutions and applicable laws, regulations, rules and procedures

AfDB: country systems as public management and accountability systems for managing the public resources of a country

DFID: “Putting aid on budget”

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Some quoted gaps

Harmonization & Alignment: “When it comes to using country systems…DFID considers country systems as default position, EC on the other hand

budgetary support, MCC use country system where possible, US Government consider use of

country system as an exception rather than a routine practice…..”

GMF paper 2008

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4 pillars

Procurement Operations and

Markets



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Procurement PlanNo standard format

Most important elements: Simple but comprehensive!

Description of procurement items by component and type i.e. Civil Works, Goods, Services.. Quantity/ Unit Cost & Estimated Cost Procurement Method Prior Review Requirement Schedule by bidding process – Notice to Award of contract Responsible Entity

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Procurement Plan (an integral part of the AWPB)

Desired Features

1. Ideal Structure

2. Coherence with project objectives and annual work plan

3. Financial estimates in line with annual budget and overall funds allocation

4. Procurement methods in line with regulatory framework

5. Realistic timing and scheduling of procurement activities

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• Ideal Structure

The plan covers 18 months (12 mths for successive plans) and shows for each procurement action: the loan category, financing rate, procurement method, estimated cost, quantities, IFAD review requirement, and anticipated timeline for the entire process.

Procurement actions are presented by project component and properly identified and referenced.

Procurement actions are grouped according to categories (goods/works/services) for each component.

Within each category, procurement actions are grouped into coded lots or packages for increased competition, efficiency and better prices.

Starting-up the Project: Procurement Review of Procurement Plan (1) (refer to checklist)

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• Coherence with project objectives and annual work plan

Procurement actions are relevant to project objectives.

Nature and quantity of goods/works/services are consistent with design (detailed cost tables).

Nature and quantity of goods/works/services are consistent with activities in the annual work plan.

• Financial estimates in line with annual budget and overall funds allocation

Estimated costs for each procurement action are reasonable and current.

Cost estimates are properly reflected in the annual budget. Cost estimates are within overall project funds allocation (by

expense category).

Starting-up the Project: Procurement Review of Procurement Plan (2)

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• Procurement methods in line with regulatory framework Use of National Regulations to the extent they are

consistent with IFAD Procurement Guidelines

• Realistic timing and scheduling of procurement activities Anticipated timeline for each procurement action

(from preparation of bidding documents to signature of contract) is realistic

Anticipated delivery dates of goods/works/services are consistent with physical targets as per the AWPB

Starting-up the Project: Procurement

Review of Procurement Plan (3)

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D. SUPERVISING PROJECT D. SUPERVISING PROJECT IMPLEMENTATIONIMPLEMENTATION

i.i. Project Planning and BudgetingProject Planning and Budgetingii.ii. Procurement Procurement iii.iii. Financing AdministrationFinancing Administrationiv.iv. Financial Management Financial Management v.v. The Supervision MissionThe Supervision Missionvi.vi. Mid-Term Review; Extension of Mid-Term Review; Extension of

Completion DateCompletion Date

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Agenda

A. Introducing Project Supervision

B. The Financing Agreement & General Conditions

C. Starting-up the Project

D. Supervising Project Implementation

i. Project Planning and Budgeting (AWPB)

ii. Procurement

iii. Financing Administration

iv. Financial Management

v. The Supervision Mission

vi. Mid-Term Review; Extension of Completion Date

E. Closing the Financing (Loan/Grant)

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Supervising Project Implementation

Introduction

After start-up and setting up all project systems to ensure efficient implementation and development impact, project follows its AWPB and begins to…

1. Purchase goods and services (procurement)…

2. Use funds and other resources from the IFAD financing, government, co-financiers (if applicable) and project beneficiaries (funds administration)…

3. . . .and for which financial management systems are set up.

4. All this is supervised by IFAD at HQ and in the field, beginning considerably before the mission leaves for the field.

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• Problems and success are a shared concern of all stakeholders (beneficiaries, Govt, co-financiers, IFAD) >> Set up relationship with stakeholders to work as a team.

• This collaborative approach will ensure high

SPN and implementation quality.

• Primary role of IFAD – assist and facilitate implementation, while ensuring fiduciary responsibilities.

• Within results-based COSOP, maximize synergies, partnerships, knowledge management and innovation.


General Principles (1)

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• Monitor progress of the projects against targets, development objectives and indicators.

• Monitor procurement and disbursement of funds.

• Review effectiveness of financial management system.

• Review compliance with FA covenants/overall GC.


General Principles (2)

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General Principles (3) • Assess risks and problems to successful

implementation and sustainability, and offer practical solutions.

• Review the continued relevance of the project to the recipient country, the beneficiary, and IFAD development priorities; modify if appropriate.

• Assess implementation quality, safeguard adherence and IMPACT! Do not loose sight of IMPACT on rural poor.

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D. SUPERVISING PROJECT D. SUPERVISING PROJECT IMPLEMENTATIONIMPLEMENTATION

i. Project Planning and i. Project Planning and BudgetingBudgeting

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Supervising Project Implementation: Project Planning and Budgeting

Learning Objectives

How are the subsequent years’ AWPBs different from the first year?

What elements complete a AWPB?

What is the AWPB’s typical format?

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Annual Work Plan and Budget – Additional Elements

From Project Year 2, the consolidated AWPB will contain the following additional key elements:

Introduction (as explained for start-up) but including the following:

• Physical progress made in the previous year, including quantitative data.

• Financial progress in the previous year, including cost overruns and savings, and analysis of flow of funds from financiers.

• Procurement performance.

• Constraints and problems from previous year, and recommendations to resolve them.

• Lessons learned and rationale for the activities proposed.

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• Consolidation of e.g., validated Village/ Community Development Plans into project AWPB

Plus:

• Inputs for PMU and implementing agencies (investment + recurrent)

• Contract costs of service providers/ TAs

• Project specific inputs


Annual Work Plan and Budget

Typical Inputs from Year 2

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Project Planning and Budgeting

Conclusion - Question to Ask Ourselves: (for discussion)

Apart from good supervision and review, what are the contextual factors that contribute to a good AWPB?

Not necessarily linked to the poverty levels of the country or the general capacity of national institutions.

What could it be then?

(i) Degree of influence donors may have on specific institutional processes and procedures of implementing agencies?(i) Project Manager or Project institutional arrangements?(ii) Technical Assistance?(iii) Country Programme Manager, ICO, CPMT?(iv) Other factors?

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1. You have the criteria and standards to be applied in your review and supervision of the quality of the AWPB.

2. You have also contributed with your own experience in the AWPB review; collectively now you have identified some of the most common factors that affect quality.


Word of conclusion – (1)

The importance of a good AWPB cannot be over-emphasized – it is not just about procedures or about timeliness!

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Word of conclusion – (2)

What are the implications for the supervision and review process?

• Your style, intensity and focus of supervision will vary in time and context depending on how these factors play in the particular project you are supervising and how it evolves over time (development effectiveness.) Examples – change in Project Manager, Institutional changes; etc

• Monitoring the evolution of those factors in your checklist may help you anticipate any problems or constraints and take timely preventive and corrective action - It is an Art!

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D.D. SUPERVISING PROJECT SUPERVISING PROJECT IMPLEMENTATIONIMPLEMENTATION

ii. Procurementii. Procurement

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Agenda

A. Introducing Project Supervision

B. The Financing Agreement & General Conditions

C. Starting-up the Project

D. Supervising Project Implementation

i. Project Planning and Budgeting (AWPB)

ii. Procurement

iii. Financing Administration

iv. Financial Management

v. The Supervision Mission

vi. Mid-Term Review; Extensions of PCD

E. Closing the Financing (Loan/ Grant)

F. Special Issues

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What are IFAD’s role and responsibility in procurement for projects?

What are the tasks involved in procurement supervision?

How is procurement supervision conducted?

Supervising Project Implementation: Procurement

Learning Objectives

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• Inefficient or ineffective procurement may have serious consequences:

expected project results and impacts not achieved.

delays in project implementation. higher cost of implementation.

• Procurement is a sensitive activity: can be conducive to corruption and

fraud. complexity of certain procurement

actions. combined use of national & IFAD

regulations / guidelines.


Introduction

Purchasing goods, services and works (procurement) is a critical element of project implementation. . .


Overriding Principle!

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Procurement Cycle

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Procurement Process

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Importance of Strategic PlanningEnsures:

•Financier policies are followed•Procurement contributes to meeting project objectives•Align with best practice in procurement•Achieve best value for money•Manage risks


Procurement Planning

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Identification of Need Needs or Wants?

Categories: Projected Requirements Interim Requirements One-off/ emergency requirements

Module F1 – IFAD Procurement Handbook


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SpecificationsSupervising Project Implementation: Procurement

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Drivers for Specs Functional Performance Technical


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Tendering Process

Formation of Bid Evaluation Committee; N-O by I FAD

Prepare Specifications and tender documents (Advertisement/ I TBs/ RFPs/ RFQs as applicable)

Key

I TB –Invitation to Bid

RFP – Request for Proposal

RFQ –Request for Quotation

Bid Evaluation and draft contractI FAD Prior Review and No-Objection (if

required)

Contract Award to best evaluated bid

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• Different methods (ranging from International Competitive Bidding to Direct Contracting) are used for the different categories of procurement depending on nature, amount and other criteria - guiding principle being economy and efficiency.


Procurement Methods


Common Procurement Methods

• International Competitive Bidding (ICB): for high value requirements. (1)

Advertise in widely circulated newspapers, local representatives, Embassies, UN Development Forum

Pre-qualification Public bid opening Bid evaluation based on

point scoring system (technical + financial)

• National Competitive Bidding (NCB): for public procurement in Borrower’s country (2)

Advertise in local newspapers (note: foreign suppliers may bid)

Same

Same

Same

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Supervising Project Implementation: ProcurementCommon Procurement MethodsInternational Shopping (3): short-list at least three

reputable suppliers in at least two member countries of IFAD

issue ITB to the short-listed suppliers

receive bids in original form (not faxed)

bid evaluation based on lowest cost for compliant offers

sign contract

Local Shopping (4): prepare specifications

and request for quotations

short-list at least three reputable suppliers

issue request for quotations to the short-listed suppliers

Same

Same

Direct Contracting (5): Extension of/ addition to an existing contract Standardisation of goods with existing project assets

Note: Competitive process is not required.


Common Procurement Methods

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Difference Between Procuring Goods and Works and Selecting Consulting Services . . .

GOODS, WORKS AND TECHNICAL SERVICES

CONSULTING SERVICES

Product based Knowledge based

Open competition Selective competition

Public bid opening Non-public bid opening of technical offers

Public opening of financial proposals

Price is a major factor Quality is a major factor

Detailed specification Terms of Reference

(general work program)

Single-stage procedure Two-stage procedure

Negotiations rarely Negotiations usual


Goods & Works vs. Consulting Services

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• Procurement rules and procedures applicable to a particular project come from different sources: IFAD General Conditions National procurement rules &

regulations IFAD Procurement Guidelines IFAD Procurement Handbook Project design report

• Applicable rules, methods, prior review thresholds and procedures are specified in the Letter to the Borrower.


Regulatory Framework

Must adhere to regulatory framework . . .

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PMU has overall responsibility forProcurement• Procurement planning (in line with

project objectives and AWPB).

• Preparation and issuance of bidding documents and invitation to bid.

• Opening and evaluation of offers.

• Negotiation, award and signature of contract.

• Monitoring of contract execution (technical and financial/administrative).

• Delivery of goods/works/services.

• Payment.


Role of Borrower/PMU in Procurement

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IFAD’s Fiduciary responsibility:

• Proper use of funds: IFAD must ensure its financing are used only for intended purpose: specifically CPM and ICO.

• Economy and efficiency requirements in project implementation in general and procurement in particular: IFAD must ensure contract awards result from a competitive process.

• IFAD must ensure equity, integrity, transparency and good governance in procurement process.

• Concept of “no objection”.

Supervising Project Implementation: ProcurementImportance of Procurement Supervision by IFAD

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CPM must ensure:

• coherence of procurement actions with project objectives, AWPB and procurement plan, and timing within project implementation period.

• funds availability: cost of procurement must not exceed funds allocated in financing agreement and annual budget.

• transparency and equity: procurement must be conducted in compliance with applicable rules and procedures.

• best value for money: procurement must be the result of a competitive process.

- IFAD staff must maintain neutrality and impartiality. - Flexibility is a must – but know rules and regulations.


Role of IFAD in Procurement Supervision

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• A complete financial and administrative procedures manual (Implementation/ Operations Manual)

• A well-prepared start-up workshop with a technical sessionThe technical session should include discussions about the importance of quality submissions, frequent causes of delays, timing issues …

• A ‘procurement table’ summarizing procure-ment methods, appli-cable rules and prior review requirements as provided in the loan agreement


Key Tools for Successful Procurement Supervision (1)

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• Assessment of procurement capacity at the national/project level.

• Training of relevant PMU and national partners in all aspects of procurement

• Procurement expertise at national/project level (complemented by on-going capacity building).

• Procurement expertise at IFAD level (procurement specialist to assist CPM in supervision).


Key Tools for Successful Procurement Supervision (2)

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Under the responsibility of the CPM (assisted by a procurement expert)Prior review procedures:

Review of procurement plans. Review of pre-qualification of bidders. Review of bidding documents Review of procurement progress reports.

Ex-post review procedures: - As part of the review of WA’s

- During field supervision As part of the review of statements of expenditure. Review of procurement progress and processes (technical and

financial/administrative). Identification of issues and constraints. Coaching of national and/or PMU staff. Issuance of recommendations for improvement.


Different Levels of Procurement SPN

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I. Review of pre-qualification of bidders (where applicable)(for large/complex works or expected significant time/cost savings => need advanced procurement skills).

Prior to issuance of invitations to pre-qualify, IFAD reviews: draft advertisement and invitation to pre-qualify. draft pre-qualification documents, including pre-qualification

questionnaire and evaluation criteria and methodology.

After borrower’s evaluation of bidders’ submissions, IFAD reviews: draft evaluation report. list of pre-qualified bidders and statement of their qualifications. reasons for excluding any applicant from pre-qualification.


Prior Review Procedures (1) (refer to workflow 1. & checklists)

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II. Review of procurement of goods and works.

Prior to issuance of invitations to bid, IFAD reviews: conformity of procurement with applicable rules/procedures,

approved AWPB/procurement plan and funds availability. draft bidding documents, including invitation to bid,

instructions to bidders, technical specifications, evaluation criteria, contractual conditions.

proposed composition of the bid evaluation committee (for comments).

After borrower’s evaluation of bidders’ submissions, IFAD reviews: minutes of public bid opening. bid evaluation report, including evaluation and comparison of

bids and award recommendation. evidence of individual evaluations by each committee member draft contract.


Prior Review Procedures (2)

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III. Review of procurement of consulting services.

Prior to issuance of request for proposal (RFP), IFAD reviews: conformity of procurement with applicable rules/procedures,

approved AWPB/procurement plan and funds availability. draft RFP, including instructions to consultants, terms of reference,

selection method and evaluation criteria, shortlist of consultants, cost estimate, contractual conditions.

After borrower’s evaluation of technical proposals, IFAD reviews: technical evaluation report, including description of the process,

summary of scores and award recommendation. technical scores/ranking given to each consultant on each evaluation

criterion. scores given by each evaluation committee member. copy of proposals, if requested by IFAD.



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III. Review of procurement of consulting services using the following methods: (Handbook Module H3)

Quality and cost-based selection (QCBS) Quality based selection (QBS) Selection under a fixed budget (FBS) Least-cost selection (LCS) Single-Source selection (SSS)

After borrower’s evaluation of financial proposals, IFAD reviews: (Handbook Module L)

minutes of public bid opening. account of adjustments made to prices of the proposals and

determination of the evaluated price. final evaluation report and award recommendation.

(The above review step is not applicable for quality-based selection, selection based on consultants’ qualifications, single source selection or individual consultant selection).

In all cases, IFAD reviews and provides No-Objection to the negotiated draft contract.



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Supervising Project Implementation: ProcurementExample of Weights for Consultant Evaluation Criterion

EVALUATION CRITERION: POINTSConsultants / firms specific experience 5 - 10Methodology 20 - 50Key personnel (general qualificationsadequacy for the assignment) 30 - 60Transfer of knowledge 0 - 10Participation by nationals 0 - 10TOTAL 100

– Could be divided into sub-criteria, but should be kept to the essential

– For training - high points on key Personnel– Points may be adjusted for specific circumstances

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At HQ or Field

Post-award review of procurement actions

PMU makes available to IFAD all bidding documents, evaluation reports, award recommendations, signed contracts, updated contract record, payment files and individual contract monitoring forms.

IFAD reviews conformity of procurement with applicable rules/procedures, project objectives, approved AWPB/procurement plan and funds availability.


Ex-Post Review Procedures (1) (refer to checklist)

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Ex-Post Review Procedures (2)

The supervision mission team also:

assesses the physical and financial progress of procurement actions and the quality of final products (through site visits for works, review of consultants’ reports, review of the contract monitoring forms, etc.).

identifies procurement issues and constraints.

briefs/coaches borrower and/or PMU staff on procurement issues.

issues recommendations for improvement (e.g. training of staff, fielding of implementation support missions, streamlining of workflows, …).

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Supervising Project Implementation: ProcurementFrequent causes for delay in procurement (1)

Lack of procurement plan or inadequate/incomplete procurement plan

Poorly designed and/or unrealistic AWPB

Imprecise and ambiguous terms or documents for the bid evaluation method and selection criteria

Absence of confidentiality at various stages of the bid evaluation process and/or selection of winning bid

Failure to justify rejection of bids or non-selection of a competitive bid

Political interference in the procurement process

Corruption, fraud, conflicts of interest and miss-procurement

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Supervising Project Implementation: ProcurementFrequent causes for delay in procurement (2)

Poor qualification of evaluation committee members

Lack of procurement capacity at borrower and/or project level

Poor understanding of IFAD procedures at borrower and/or project level

Confusion between national procedures and IFAD guidelines/loan agreement procedures

Cumbersome procedures and bureaucracy for approval of procurement documents at borrower level

Long delays in issuance of no-objections by IFAD

Long response time by IFAD to queries from PMU

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Supervising Project Implementation: ProcurementMonitoring of Procurement at HQ

Several source documents for monitoring procurement .

AWPB and updated procurement plan

Results of prior reviews and ex-post reviews at HQ

Supervision mission reports

Progress reports

Based on monitoring results, follow-up on issues and problems identified.

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Supervising Project Implementation: ProcurementMonitoring of Procurement at HQ

Requirements

A conformed copy of each and all awarded contract to be financed from the loan proceeds – in part or in full – must be submitted to IFAD on their signature or before disbursement.

Form C-10 of LDH (Register of contracts) Form C-11 of LDH Contract Monitoring Form

CMF Guide.xlsx

Contracts RegisterContract Monitoring Form

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Supervising Project Implementation: ProcurementProcurement in Project Completion Process

• To ensure that all goods are delivered/works completed/services rendered by the project completion date: Closely review and monitor the final procurement plan

and progress reports during the last year of the project Take measures to facilitate completion of physical

execution of contracts Cancel activities that cannot be executed within the

completion date

• Ensure that only contracts executed by project completion date are paid

• Ensure that procurement files are complete and obtain missing documents from project

• Report on lessons learned and make recommendations for future projects

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Message

Good procurement means continuous reforms in all procurement systems, well established and new ones.

Professor Khi Thai , Ph.D., Director, School of Public Administration &

Interim Director, School of Criminology & Criminal Justice

Florida Atlantic University

IFAD Supervision Training 2012 Final_procurement

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