Beruflich Dokumente
Kultur Dokumente
KUMASI, GHANA
By
JONATHAN PARRY
Art And Built Environment, in partial fulfillment of the requirement for the degree of
MASTER OF SCIENCE
SEPTEMBER, 2018
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DECLARATION
I hereby declare that this research is my own work towards the award of a MSc. and that, to the best
of my knowledge, it contains no materials which have been accepted for the award of any other
degree at this university or elsewhere, except where due acknowledgment has been made in the text.
Signature: ...........................................................
Date: ..................................................................
Certified by
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ABSTRACT
According to the Ministry of Finance (2003), public procurement accounts for about fifty to
seventy percent of total public spending and accounts for about twenty-four percent of total
imports and fourteen percent of gross domestic product (GDP). Effective public procurement is
For this reason, governments have always considered procurement as the center of the country's
structural financial reforms. Cost control is also essential in the management of public sector
funds.
The aim of the study was to evaluate the effectiveness of public procurement in the management
and use of public funds in those areas where transparency and accountability exist. It should also
be examined whether procurement activities in the public sector offer good value for money and
control public spending and examine some of the challenges that procurement and related
personnel must face in the implementation of public procurement. The research concentrated on
officials from three departments. The sample size of 50 for the study. Questionnaires were
administered and the answers were analyzed with the help of charts and tables where necessary.
The study found that the public procurement system was transparent and accountable. The study
also found that public institutions have delayed their suppliers of goods and services that have
been delivered, which has influenced future projects or contracts. In terms of cost control and
cost-benefit ratios, the study concluded that, despite the monitoring and control of public
spending, public procurement activities do not offer good value for money.
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TABLE OF CONTENT
DECLARATION........................................................................................................................... ii
ABSTRACT ................................................................................................................................... ii
ACKNOWLEDGMENT ............................................................................................................. ix
DEDICATION............................................................................................................................... x
INTRODUCTION......................................................................................................................... 1
iii
2.1 FINANCE.............................................................................................................................. 7
2.4.2 Grants............................................................................................................................ 11
PROCUREMENT ....................................................................................................................... 25
2.14 ACCOUNTABILITY........................................................................................................ 33
METHODOLOGY ..................................................................................................................... 38
iv
3.1 RESEARCH AREA ............................................................................................................ 38
v
4.4.4 Levels of Approval for Procurement Activities ............................................................... 58
REFERENCE .............................................................................................................................. 75
APPENDIX .................................................................................................................................. 78
vi
LIST OF TABLES
vii
LIST OF FIGURES
viii
LIST OF ABBREVIATIONS
ix
ACKNOWLEDGMENT
I want to thank the Almighty God for giving me life and strength to carry out this research.
My sincere gratitude goes to my supervisor, Dr. Ernest Kissi for his guidance, constructive
criticisms, suggestions, and encouragement throughout the research process.
My special thanks go to Mr. Henry Osae Kwansah and Mrs. Jesse Osae Apeadu for their
immense assistance provided in terms of monetary, guidance, suggestions, and encouragements
throughout the course.
I also want to thank Mr. John Acquaye (former Contracts’ Manager, DUR) for his advice via
guidance and time while I worked under his tutelage. It was through his advice I pursued this
course and I am gainfully employed now.
To my friends and colleagues at Department of Urban Road, Head Office and Justmoh
Construction Limited (Justmoh Group) for holding me down when things were rough tough.
Another thanksgiving to my family who were prayerfully supporting while I go through this
course in life. I say thank you for having you around and wish everyone the best in the future.
Lastly, my sincere thanks go to all respondents who in various ways have helped to make my
research work complete.
May the almighty God richly bless you all.
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DEDICATION
This thesis is dedicated to all my loved ones especially in memory of my late colleague Godfred
Fianko. Who could not complete this Masters programme with the procurement class.
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CHAPTER ONE
INTRODUCTION
This chapter gives an outline of the research work and it focus with regard to the background to
the study and the statement of the research problem under review. The methodology adopted, the
relevance of the study, the objectives and area of the research are reviewed as well. All other
vital knowledge and sides of the organization of this study is presented in this research piece.
The Public procurement Authority in a recent interaction with stakeholders said that they have
equitable use of resources. It is known as Due Diligence and Value for Money Unit. The unit is
to examine the prices reasonableness of estimated values provided by the agencies for sole
sourcing and restricted tendering. It is in view of building their operating capacity to meet the
desires of the standard of operation and create fair use of the state funds in delivering their
The managing of the Public finance focuses on the following three words; Economy, efficiency
and effectiveness. Many problems exist in developing and transition countries that keep local
suppliers from taking advantage of the government marketplace. Utmost blame has always been
rewarded at the threshold of public procurement. It will stay there because they should know
their mandate better. Procurement is a system for procuring goods, labor and services from
suppliers and contractors to meet official needs in order to achieve organizational goals. It is a
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process that begins with the identifying of needs, the solicitation of estimates, the evaluation of
offers, the submission of orders, the receipt, storage, use and maintenance of goods and storage
Procurers must apply the essential principles of public procurement at their fingertips. This
involves compliance to the required standard of operations. Similarly, it involves applying the
stands on provision of good value for money (VFM) audit on all projects undertaking. This helps
in reducing wasteful expenditures.
There have been numerous discussions on the topic of public finance and it related activities that
have effect both direct and indirect on the state. The various state institutions cannot function
effectively without procurement activities been properly administered. To some extent it is the
life of the institution. Public procurement plays critical roles in the survival. Managing the
dependant on the achievement of the procurement actions; else, the limited monetary resources
are misused at the expense of the masses. A good management of public finances therefore
depends to a large extent on the efficiency of procurement and the maintenance of goods,
services and labor. If adequate measure are not taken it then tend to be abused rendering the
Despite the numerous benefits offered by structured public procurement for public finance
management, there appears to be much waste in our procurement system that entails the loss of
huge amounts of public money. Nketia-Asante (2009) noted that public institutions struggling to
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acquire goods and services are leading to inefficiencies, low productivity and potential loss of
The Public Account Committee (PAC) of the parliament of Ghana in their remarks said most
public institutions in general have mismanaged public funds through inefficient procurement
actions that has driven these institutions to spend more than expected to be issued to contractors.
Other results have been that some public bodies have purchased goods and services of inferior
quality, while others have canceled contracts of illegal contracts that have led to the payment of
large sums of money as debt of judgment. The numerous allegations that some state officials are
corrupt and collect bribes due to their biasness to some particular group of firms or individuals.
This in the large extent will trigger issues if the project is awarded any contractor and fails to
complete the work “All other things been equal”. It creates issues for the authorising entity.
Another procurement activity will have to be drawn for this same project which the first
The purpose of this research is to examine the effectiveness of government procurement actions,
management and use of public finances and to make suitable suggestions to advance these
activities in order to ensure the effective use of resources in the road industry. Consequently,
there is the need to focus more on the design of models and conceptual frameworks which rely
largely on sustainable procurement practice (Johnsen et al., 2016; Sulistio & Rini, 2015).
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1.4 AIM AND OBJECTIVES OF THE RESEARCH
The aim and objectives of the study is to find out the effectiveness of public procurement
i. To assess the causes of delays in the procuring process and their impact on management
of public funds
ii. To examined how effectively procurement activities are managed in relation to
iii. To evaluate the degree to which value for money is applied in managing the public funds.
i. Has the Procurement Act developed, strengthened and manage government expenditure
to appreciable level?
ii. Are the levels of approval and processes for procurement too lengthy?
iii. Does the company carry out a systematic assessment of total spend to regulate how
much is spent?
iv. How often are information public procurement published for the public?
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1.6 RESEARCH METHODOLOGY
Questionnaire will be administered to respondents to gather the needed information for the study.
The quantitative approach: descriptive study by the use of constructs generated at the exploratory
The Statistical Package for the Social Science (SPSS) was used in analyzing the data obtained
from the activity conducted.
procurement dealings
In this case too, the survey provided opportunities to eliminate or reduce difficulties
The survey was valuable for other scholars intending to do reading on procurement
There are many problems with management in public institutions. However, this study confines
itself to assessing the potential impact of public procurement on the management and usage of
state finance.
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1.9 STRUCTURE AND ORGANIZATION OF THESIS
It will be prudent to follow a chronological order. The research work is divided into five
chapters. The steps commence with chapter one. Chapter One presents background to the
research including, the problem statement, research questions, aim and objectives, the scope of
the dissertation, research methodology, justification and the research design. Chapter Two
presents a review of literature related to Public financial management, public finance, finance,
public procurement, value for money transparency and accountability. On the other hand,
Chapter Three discusses Methodology, which is the step by step approach which is to be used
in reaching the set target. These helps a reader to follow the work chronologically. This chapter
outlines, methods used and how data gathered can be used to make an informed idea to the going
concern. Chapter Four analyses the data gathered and discusses the results and finally, Chapter
five summarises the findings of the study, the major contributions to knowledge and
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CHAPTER TWO
REVIEW OF LITERATURE
2.0 INTRODUCTION
This stage of the research findings is the literature search and findings about the thesis. It
includes readings around public financial management, finance, public spending and
responsibility, public procurement, sole sourcing, transparency, value for money and
accountability. We shall consider the various definitions from the various books.
The procurement shall consider, inter alia, the definition of public procurement and procurement,
the cost-benefit ratio, the procurement issue, procurement issues, procurement reforms in Ghana
and single procurement. The relationship between procurement and public finance management
is also discussed. This chapter examines the variables associated with the research to provide a
2.1 FINANCE
Finances as defined is the provision of money when required. The finance role is the acquisition
of money and its actual use in the corporate sector (Paramasivan and Subramanian, 2009).
According to Griffin and Ebert (1999), finance is responsible for identifying the long-term
savings of an organization, raising funds for investment, managing the company's day-to-day
financial operations, and managing corporate risk. The funding is designed to ensure that an
organization has sufficient resources to manage the day-to-day operations of the business.
Financial controlling has to do with the verification the actual performance of the expenditure
related to the desired financial plans or results. Finance activities cut across all the key elements
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of the institution. These roles are very important in the life of every organization. These are
actions that affect the way in which funds are raised, how funds are used and invested to raise
profits.
Simpson et al, (2011). Plehn (1902) notes that public finances are related to how the state buys
and spends its revenues. It defines public finance as the science that deals with the statesman's
activity of procuring and using the material resources necessary for the fulfillment of the
respective state functions. Efficient liquidity management is very important in the public sector,
as governments and public institutions usually face the challenge of dealing with the few
resources available.
The provision of services and goods can be effective if a prudent public financial system exists.
Effective allocation and monitoring of resources enables better delivery of goods and services.
Unfortunately, there seems to be a waste of scarce resources in the public sector and this requires
sound public financial management. It will be explained below in the next paragraph.
Public Financial Management (PFM) can be described as the art of budgeting, spending and
political science, public administration and accounting has seen an invasion of advanced ideas
and improvements to address some of the ongoing challenges of public financial management.
In order to direct decision-making at the level of funding to the results that they can achieve,
many governments have introduced budgeting and performance management initiatives. In order
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to better understand the actual state of public finances and the underlying risks, some
governments have sought to broaden the scope and depth of accounting and tax accounting and
Frank (2006) was of the opinion that, effective public finance administration includes short and
long-term contemplations. In the face of rapidly changing economic conditions, public finance
officials have to balance their budgets in the short term. Effective public finance management
requires short and long-term concerns. In the short term, public finances need to balance their
The management of public finances therefore extended from the well-defined state budget to all
levels of government and the public sector, including public initiatives and public-private
partnerships.
The main purposes of public finance administration are a maintainable economic position, the
accurate distribution of resources and the effective delivery of public goods and services.
Ayitey (2012) also notes that in 1993, following an in-depth review of its state spending
structure, the government decided to set up an all-inclusive public finance reform program to
strengthen its public finances in order to reduce challenges financial management in the financial
management system of public institutions. The Public Finance Management Reform Program
(PUFMARP), came into operation in 1995. Its objective was to promote effective, efficient,
According to Shand (2005), donor funding agencies and other various partners across the globe
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To make efficient use of financial resources, the financial resources of the organization must be
carefully planned, organized, monitored and controlled. Public sector finance officers are in a
responsible spot and must for that reason perform well to guarantee accurate management and
In Ghana, the main means of funding for hospitals, schools, security, welfare, sanitation and
others are the central government and local governments. These public institutions charge for the
services provided. The various institutions have the task of raising funds for the financing of
projects and services for their citizens. Their task is to report to the public on the use made of the
funds raised by them. At the roads ministry, revenue is generated from the monies charged on the
Tax is the largest means by which state finance is accumulated. The state gains from the tax
quota charged which is from both direct taxes such as income tax, petroleum levy, corporate tax,
national health insurance levy, luxury vehicle levies, road tolls, capital gains tax and indirect
taxes such as VAT and excise duties. It is essential for the government to impose taxes on items
that are worth levied in order to raise the needed cash for its programmes. Local governments
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The government of Ghana is also referred as the central government. So, they can be used
interchangeably. They are also mandated to receive revenue from all public and private
institution by way of taxation. Tax is the biggest means by which public moneys are raised. The
then government collects tax revenues from direct taxes such as income tax, health insurance
contributions, corporation tax, capital gains tax and indirect taxes such as VAT and excise taxes.
Local governments increase revenues from taxes levied on local businesses. This is somehow
directed into the government funds. The financial resources are very limited and scarce, so it is
wise to manage and use them for the necessary work. This is also the reason why funds available
2.4.2 Grants
Grants come from diverse sources, several of which are related to public organizations. Global
growth collaborators such as the International Monetary Fund (IMF), the World Bank, the
African Development Bank. Governments and some public bodies such as hospitals, schools and
district assemblies must rightly obtain donations for development activities in recipient nations.
Regularly, funding is given if the government or public body is capable to provide its own
financial resources.
Every ministry, department or generally most public institutions have their mode or raising cash.
It will be said that in the road ministry it is only restricted to just some few which has to do with
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tender purchase, renewal and application of the classification under the ministry. These are very
Boapea, (2011) defines IGF as any money or moneys accruing to an organization from a source,
other than government, through the sole efforts of the institution in the performance of its
functions. Although this provides opportunity to public institutions to raise funds and spend on
developmental activities internally, some institutions are accused of using IGF to pay huge
bonuses and honorariums to staff often to the detriment of development (Boapea, 2011).
Public expenditure has a central responsibility to play in the acquisition and managing of the
financial resources of each institution. Lack of sufficient resources requires public institutions, in
particular, to plan, manage, control and control their spending patterns very well. Djurović-
Todorović and Djordjević, 2009, report that Public Expenditure Management (PEM) is an
According to Malcolm (1987), public spending represents all state budget expenditures,
including those relating to current expenses such as salaries, maintenance, interest and capital
expenditure such as: how, purchases of equipment owned by the school and government. The
management of public spending involves the allocation and efficient use of resources by
government policies.
For example, there is a general belief that it takes an average of six months for various
ministries, departments and agencies to pay off debts owed, even if the standard payment terms
should be one month. It is very likely that suppliers will charge higher commissions than usual to
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This idea is described by Antill et al. (1989), who said that if the delays are caused by the buyer
or buyer organization, the supplier will receive a reasonable reimbursement in terms of time and
costs. Suppliers take loans from banks and are required to pay back with interest. If payment is
not forthcoming it tends to be a burden on the suppliers which in tend leads to the high charge of
2.6 Bureaucracy
and no recent state would be able to function without bureaucracy due to the fact that it controls
the misuse of authority and controls the events and manners of the people in the organization.
However, according to Centre for financial and Management Studies, (2006), indicated that there
has been a number of amendment to the business activities conducted by the public sector. Strict
rules and bureaucratic system of doing business by employees had been changed to more flexible
subordinates and junior staffs to take decision with best practices and available information in
the interest of the institution. These information includes financial information and regulation
Therefore, the way in which public finances are managed has also changed significantly. In any
case it is not systems and guidelines which cause delay in the financial management set up. It is
perceived rather largely that people put in positions to ensure smooth running of the setup failed
to do so at times and only hide behind the guidelines leading to people having less trust in the
system.
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However, rules which form part of the bureaucratic system may become ends in themselves and
lead to inefficiency. The main concern about any bureaucratic system is delay or a perception of
it. In relation to procurement activities and management of public finance, delays may include
the extra time it takes to complete a procurement process. In several public institutions, aside
religiously following the laid down rules guiding procurement, there is a perception that
processes are intentionally delayed. Delays affect the results of procurement activities. Antill et
al, (1989), notes that if delays are caused by the buyer or purchasing organization, realistic and
just compensation are paid to the suppliers in both cost and time. They proposed a way to do this
compensation that because suppliers mostly borrow from banks to undertake contracts, changes
in interest rates and inflationary indicators must be used as a guide to pay reasonable and fair
compensation. Delays in the bureaucratic process in the management of public finance brings
extra financial obligation to the institution where they would have to pay much more than the
initial fees for goods and service. A good way of reducing the effect of bureaucracy is to ask for
longer validity periods as far as suppliers and contractor’s quotations are concerned and entering
into fixed price contracts which cannot be changed at least within the validity period. Unless
bureaucracies are checked they may not promote effective procurement activities as they lead to
high business cost and have a negative effect on public financial management.
2.7 PROCUREMENT
Procurement deals with identification of a need of the organization, sourcing, accessing and
managing the resources acquired in order to achieve the strategic objectives of the organization.
A good Public financial management requires good public procurement. This is because about
40-70% of the organization’s budget is typically used through procurement activities. Therefore,
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no good financial management can be achieved in a public institution without first effectively
The OECD (2007) “describes procurement as the purchase of goods and services by public or
private companies”. The bidder with the lowest price undertakes to supply the goods or services
offered. The main objective of an effective procurement policy is to promote efficiency, ie. H.
The choice of the supplier with the lowest price or, more generally, the best quality-price ratio. It
is therefore important that the procurement procedure is not hampered by practices such as
Selection of the supplier with lowest price is not always the prudent way to contract. A more
effective way of selection is what is termed the “lowest evaluated tenderer or supplier”. In this
sense a comprehensive evaluation process is conducted in which the buyer selects the most
suitable supplier based on predetermined criteria such as quality, delivery period, after sales
service, suppliers’ financial capabilities among others. Price becomes the last factor in most
cases and used to select one supplier over another after they have all been determined to be
Dobler and Burt, (1996) identifies eight steps in the procurement process:
Recognize, define and describe the needs. At this step, the user identifies the need to
satisfy a want. For example, the need for a new computer to replace an old
malfunctioning one. The need is described by spelling out the detailed technical and
functional specifications
Transmit the need. Transmission is done when the user requests the procurement
department to take steps to procure the need for them. In order words requisition is made
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Investigate, qualify and select the supplier. The supplier selection starts from examination
necessary, especially for the procurement of capital goods. After the detailed evaluation,
Prepare and issue the purchase order. At this stage, the purchaser places the order with
the supplier by preparing and issuing a purchase order or a contract award letter to the
supplier.
Follow up the order. This includes telephone calls, supplier visits, and email
step.
Receive and inspect the material. At this step, the supplier delivers the item or goods
requested for and checks to see whether they conform to the order specifications. The
order is also checked to detect any defaults. After this they are stored at the warehouse.
Audit the invoice. The invoice is checked against the order to confirm quantity and price
Close the order. The order closing step is the step at which the order has been accepted
and used and after sales service carried out. Normally the order is closed after the
warranty period has expired and any sales level agreement carried out.
In addition to Dobler and Burt’s eight steps, other steps may be; inviting quotations or proposals,
evaluating the proposals, seeking appropriate approvals before placing the order. The process of
procurement normally ends with not just closing the order but disposing off the goods so
acquired.
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Srinivasan, (1999) defines procurement as the function of purchasing goods, works and services,
and career that pursues to reconcile supply management events with organizational goals that go
development discipline, with the result that it expands its knowledge and realizes that it can
contribute much more to the organizational results than formerly thought”. Procurement manages
and control many external resources. Procurement is the commercial management procedure that
has to do with the management of these external resources, which are inserted into an
It guarantees that the external resources that an institution requires or possibly will require to run
into its calculated goals are identified, referenced, accessed, and controlled. The mission is to
discover prospects in the supply market and to device policies to provide the best likely result of
Procurement is the acquisition of goods, services or works at the best possible cost, in the right
quantity, at the right time, in the right place for the direct benefit or use of governments,
Procurement can be simplified by using the procurement cycle in explaining the process. It is
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Figure 2 1-The Procurement Cycle
The cycle of procurement is a general sequence the processes of procurement goes through.
First is the planning, which starts with the initiation, annual procurement planning requirements
and planning individual procurement requirements. It is the start of the cycle where needs are
sought and a plan is developed in order to fulfill that particular need. The planning should
include contract packaging, source of funding, average packaged cost, the methods of
Sourcing, which talks about methods of procurement and the supply sources. Methods of
procurement that we have are competitive, restricted, 2 – stage tendering, international, and
national, request for quotation or single sourced and sole sourcing. The supply sources include
registered suppliers, traded sources or websites and pre-qualification. There is also evaluation
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The third step is the contracting. The contracting reviews the notification of award and the
contract document. After a successful firm has been nominated as the best responsive and
notified as the winner will go up to sign the contract document to make legally binding for all.
The fourth is the contract management. It is done by selecting a contract manager to superintend
the project. He is also to allocate responsibilities and perform benchmarks to guide progress.
information. Should there be any case, it becomes a job for the contract management head to
resolve an issue to enable the project to continue without hitch. Under this step there are three
types of contract modification i.e. amendment, variation and termination. Another extended
explanation via a diagram has been cited for read. This shows the management of the contract
which has to do with managing relationships, risk management. Contract review and financial
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A diagram of the management of the contract.
Managing Relationships
The contract relationship over
time
Performance monitoring
Problem resolution
Contract review
Reviews over time
Correcting non compliance
Continuous improvement
Business targets
The fifth step is the storing. It involves in the inventory control and management and storage
requirement.
The sixth step is the distribution. It considers the distribution to end users in various locations,
use of regional stores and consider transport requirement and available infrastructure.
The seventh step is disposal. Disposal is doing away with things that are obsolete. Method of
disposal are transfer of other public entities, sale by public tender to the highest bidder, sale by
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The eight step is evaluation. It is the review of the performance of the procurement function.
Again, it is to access the compliance, efficiency, and effectiveness. It may include procurement
audits.
The Public Procurement Act, 2003 (Act 663) amended 2015 of Ghana, indicated that “the
acquisition of goods, works and services at the best possible total cost of ownership, in the right
quantity and quality, at the right time, in the right place for the direct benefit or use of
purchasing the goods and services which it needs to carry out its functions”. It is a phrase that
has been used in relation to activity in the English language in the European Union as it has be
i) Phase one talks about the services or goods that are supposed to be purchased and the time it
be must be purchase.
ii) The second phase of the procurement process deals with the contract placement for the
acquisition of the goods and services. This stage involves particularly the choosing of contract
partner and the contract terms on which the goods and services would be provided.
iii) The third phase of the procurement process is where the contract is administered for effective
contract performance.
The public procurement concept can be referred to all the three different phases of the
procurement processes. The second phase of the procurement process focuses generally on the
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regulatory rules public procurement as it is this stage that legal and regulatory issues becomes
very significant and important. Nevertheless all the three phases needed to be integrated looked
Moreover, Iloranta, (2008) stated that Public procurement activities can be categorized into three
groups. These are the strategic, tactic and operative categories. He considers the strategic
activities as planning and controlling operational activities as well as human resources. Tactical
aspects concern activities such as placing orders for goods and services and arranging
these categories by simply observing roles played by individuals in procurement. The categories
are often overlapping with single individuals involved in strategic, tactic as well as operational
activities.
According to Hunja (2001), many developing nations does not see the strategic impact of
managing public resources. They mostly see the management of public resources as a mere
process oriented. As a result, little focus and attention is been paid to ensure institutional
framework as well as policies and rules regulating the procurement system are adhered to in a
way that ensures the funds are use efficiently and economically that would ensure the general
public gets value for the money spent. This in recent time has change as a result of limited
budgetary allocation and the desire to fighting corruption in the public sector. Also, many
governments sees that it is possible to save huge sum of money through well organize system of
procurement. Again, it has be noticed by many leaders in developing nations that a well-
would increase confidence in how public money are used. As a result of these significance most
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developing nations had instituted reforms that would help make procurement system very
In Ghana it was realized that procurement plays a critical role in the advancement of the nation
and therefore the Public Procurement Act, Act 663(2003) and subsequently amended in 2015 to
regulate the processes of public procurement. Since 2003, almost all public institutions have
incorporated formal public procurement systems in their strategic plan to ensure that the best is
Public procurement “is the procedure by which an institution obtain goods and services from
public resources”. These comprise forecasting, lobbying quotes, awarding contracts and
managing contracts. In order for procurement goals to be achieve the principle of value for
purchasing officials make informed purchasing decisions. The role of procurement experts is
crucial to Ghana's economic development. It is in recognition of this fact that includes the object
of the procurement committee; “the professional development, promotion and support for
individuals engaged in public procurement and ensure adherence by the trained persons to ethical
standard”. Srinivasan, (1999) defines Public Procurement as the acquisition by public bodies,
such as government departments and municipalities of various goods, works and services that
they need for their activities, by making a contact with another entity be public or private. Given
transactions, varying from the purchase of stationary, office furniture, vehicles, insurance
services, technical services, consulting services, through to the acquisition of complex satellites
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and missiles, and the construction of hospitals, schools, roads, rails, power stations, airports and
the like. The procuring body must therefore have the legal powers to undertake the transaction,
obtain any relevant approval within the government hierarchy, and arrange the necessary
funding. This requires the enactment of Public Procurement Laws, to provide the legal
resources available and allocated to a particular project or procurement before an order is placed.
The more time it takes to pay suppliers for the goods delivered or services offered, the less
Odiambo and Kamau, (2003), defined public procurement as the purchasing, hiring or obtaining
by any other contractual means of goods, construction works and services by the public sector.
construction works and services with resources from state budgets, local authority budgets, state
foundation funds, domestic loans or foreign loans guaranteed by the state, foreign aid as well as
revenue received from the economic activity of state”. Their definition emphasizes the source of
funds that make procurement a public one. Public procurement is distinguished from
procurement in the private sector which although, in Ghana, most private businesses use the
Procurement as a guide to their activities, are not obliged to use compulsorily. According to
Roux De La Harpe, (2009) “Public procurement concerns at least three interest groups: firstly,
those who fund the activity, being government; secondly, those who benefit from and indirectly,
through the payment of taxes, fund the goods and services procured, namely the general public;
and lastly, those that supply the goods and services, namely private enterprise. The public’s
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interest in public procurement is twofold, namely the expenditure of its (the public’s) money, and
being the recipient of the benefits of the public procurement”. KPMG, (2014) states that public
procurement is the process by which goods, works and services financed in whole or in part from
Public procurement therefore can be seen to be the process of using public funds to acquire
goods and services for public institutions using formal public procurement guidelines to guide
the processes which usually start from requisition through to contract management and disposal
PROCUREMENT
Procurement in most cases forms the central part of the management of public expenditure.
Pretarious and Pretarious, (2009), stated “that a well-organised, efficient and transparent public
procurement system is a vital component of any sound PFM system and it transcends the budget
process from procurement planning to audit”. Public procurement activities have a direct effect
on how public fund is used because budgets are implemented mostly through the procurement of
goods, works and technical services for the benefit of the entire public. Pretorious and
Pretorious, (2009) further stated that public procurement had principles which include
principles contribute to improving the financial system’s integrity. Syquia, (2007) however said
the major obstacle is how to adopt these philosophies to the general conditions pertaining to
governance in a particular nation. This can be due to lack of will politically, lack of required
knowledge and the fact that the public institutions involved have complex issues. Sulaiman,
25
(2010), concluded by saying that PFM includes collection of funds from numerous involves both
collection of funds from various sources and its distribution through spending in the most
effective, efficient and economic manner, which is also known as Public Expenditure
Management (PEM). The management of public fund must include the cycle of the overall
budget process that consists of both “up-stream” (preparation and programming) and “down-
Agbesi, (2009) points out that procurement planning enables the identification of major
effective provision of public services often requires the coordinated delivery of materials and the
like, which the state purchasing apparatus must accomplish. It is difficult to imagine how a state
can deliver substantial improvements in the wellbeing for its citizens without a public
expenditure system that includes effective public procurement policies. This recognition
accounts in part for the growing interest in public procurement laws and practices and in the
feasibility and likely consequences of their reform. Agbesi continues that public procurement
should be an integral part of the overall financial management and public sector governance
system in a country. A well-structured system of procurement will provide data for the
formulation of budgets. Execution of budgets also needs procurement and financial management
as funds are needed to ensure timely allocations and payment to contractors and suppliers for
goods and services offered. Where there is no relationship between procurement activities and
budgeting, payments cannot be made on time leading to high cost of business and poor
26
Prior to the coming effect of the public procurement Act of Ghana in 2003, several public
institutions operated several procurement systems. It was largely believed that due to the lack of
structured procurement system, there was a lot of waste in the public sector as far as the
management and use of public funds are concerned. According to Suleiman, (2010), prior to the
reform programme for Public Financial Management in Ghana, many different rules were used
to guide procurement activities. Government and public officials struggled to identify which of
the rules to follow, due to lack of existing policy framework for public procurement, lack of
existing institutional arrangement, and the absence of a Central Body for Procurement. There
was also no structured legal framework to regulate public procurement. Complaints from
suppliers and contractors were mostly unresolved due lack of an independent appeals system.
The government of Ghana formed an oversight committee, therefore, to make proper design and
also coordinate the reform programme. In 2003, the public procurement act was enacted to end
the use of many different procurement guidelines used by various public institutions. Ten years
after its implementation alongside the financial Administration Act, the public still believes the
waste is still there if not worse than it used to be. Procurement reforms in Ghana were part of a
process of public institutions in Ghana. The purpose of the public procurement reform is to
promote national development through enhancement of harmonious relationship with other local
and international laws and regulations. Ministry of Finance, (2001), Anvuur et al, (2006), also
states that the procurement reform is to foster competition in public procurement processes;
27
The public procurement reforms were instituted mainly to make public sector procurement in
Ghana more transparent and ensure fairness among other things. It was expected that the
tendering process will be more open to the public and more information on procurement
activities will be provided to all interested parties. These activities include; advertising contracts
falling into appropriate thresholds, organizing public tender openings, posting of contract awards
and notifying tenderers on the outcome of tenders. Competition is very key in procurement and
the reforms also touch on completion so as to promote quality procurement and save resources
for development. The reform is also expected to build the capacity of local suppliers and
contractors as their confidence is boosted to bid for projects. Bribery and corruption, although
cannot be eliminated completely, the reform has an objective to reduce the likelihood of bribery
and corruption.
In order for effective public procurement to be practiced, public services and upright corporate
governance must be ensured. The public procurement industry of various countries spends a lot
the acquisition on the goods and services necessary to deliver public services. Government must
apply the highest professional standards when it spends this money on behalf of taxpayers, to
ensure it gets a good deal and to provide appropriate and necessary goods and services to the
quality required to meet user needs. The procurement process spans a life cycle from
identification of the need, through the selection of suppliers, to post-contract award management,
including disposal. There is a duty on procurers in central government to apply the key principles
of public procurement. These require the delivery of value for money (VFM), appropriate quality
and service to meet business needs, and appropriate governance (i.e. adherence to HM Treasury
28
Procurement in the public sector is subject to UK regulations transposing the EU public
procurement directives. These apply to the majority of purchases with a total value above a
certain threshold. Procurement below the threshold is not covered by the UK, but subject to the
principles of the EU Treaty. The contracting authorities must take on a strong human and
organizational commercial management, and in most cases the procurement activities must be
carried out by professionally trained personnel. The procurement approach and process must be
relevant and appropriate for what is being purchased, and the market must be able to provide it at
awarding contracts in line with value for money and the legal framework for public procurement.
They must contribute in particular to achieving the objectives and commitments. The sustainable
governance of the government and the government's Sustainable Procurement Action Plan.
Public authorities should also include social issues in procurement if they are relevant and
proportionate to the subject matter of the contract OECD, (2007), states that Public procurement
is a key economic activity of governments, accounting for a large proportion of Gross Domestic
Product worldwide. Effective procurement avoids mismanagement and waste of public funds.
Public procurement is the purchase of goods or services by the public sector and it generally
accounts for a large share of public expenditure in a domestic economy. Existing statistics
suggest that public procurement accounts, on average, for 15% of Gross Domestic Product
(GDP) worldwide, and is even higher in OECD countries where that figure is estimated at
approximately 20% of GDP. Through its public procurement policy, the public sector can affect
the structure of the market and the incentives of firms to compete more or less fiercely in the
long run. Procurement policy therefore may be used to shape the longer-term effects on
29
The primary objective of an effective procurement policy is the promotion of efficiency, i.e. the
selection of the supplier with the lowest price or, more generally, the achievement of the best
value for money. It is therefore important that the procurement process is not affected by
practices such as collusion, bid rigging, fraud and corruption. Anti-competitive conduct affecting
rules. Through bid-rigging practices, the price paid by public administration for goods or
services is artificially raised, forcing the public sector to pay supra-competitive prices. These
practices have a direct and immediate impact on public expenditures and therefore on tax payers’
resources. The successful delivery of public services and government projects, sound public
savings, and reducing corruption, reducing debt levels, competition and private sector
According to Sarfo, (2011), social impacts of public procurement include enhanced respect for
rule of law, improved social sector services, improved prospects of achieving other government
objectives, increased access by local market to government contracts, and enhanced reputation
for government institutions. Procurement has multi-dimensional importance which cuts across
Ayitey (2012) found that public procurement actions have increasingly gained access to
worldwide markets, increased contributor confidence in public systems, and improved donor
funding, grants and loans, and overseas direct investment in Ghana. Hunja, 2003, notes that the
effective, efficient and expert application of public procurement regulations can contribute to a
sound administration of public spending. Effective planning and execution of public procurement
activities can lead to a lot significant savings in the use of public funds. This is because it will
30
lead to buy the right quality at the right price at the right time and getting them delivered to the
right place.
Agbesi, (2009) also stated that public procurement has a direct impact on the following; the
successful delivery of projects and public services; sound public financial management by
achieving value for money in government expenditure; reducing corruption; and encouraging
Public sector institutions need good public procurement to enhance their development. A poor
procurement system however, results in, to a large extent, poor public sector development.
An active system of public procurement is vital for respectable governance. A bad procurement
scheme leads to greater costs for the government and the public. It interrupts the implementation
of the project, which increases costs more, leads to poor project implementation and interrupts
the provision of services to the recipients. Procurement difficulties also escalates the range for
corruption, create more grievances and increase worries about the truthfulness of the
procurement procedure. Poor procurement dismays good (national and foreign) firms from
tendering and robs the country of improved prices and goods, works and services (World Bank,
2000).
Value for money in public procurement cannot be over emphasized. Public institutions are
expected to obtain value for money in their purchases. “Value for Money in this case means this
is to secure a judicious, economic and efficient use of state resources at a reasonable cost”.
31
According to Ayitey, (2012), the idea of value for money not only affects the purchase price /
cost, but also considers the proficiency and usefulness of a procurement procedure. Procurement
experts must constantly advance their services and innovations, which are necessary to deliver a
higher value to the procuring entity. For this reason, public procurement workers need specific
skills and knowledge to make the procurement process efficient and effective, while public
institutions strive to motivate procurement workers in terms of pay and better working
conditions.
“The purpose of public procurement is to obtain the best value for money (BVFM) and to do this
it is important to consider the optimum combination of whole life cost (i.e. acquisition cost, cost
of maintenance and running costs, disposal cost) of a purchase and its fitness for purpose (i.e.
quality and ability to meet the contracting authority’s requirements)”. This description helps the
authorities to put together the procurement specification including economic, social and
environmental policy goals and objectives in the process of procurement. “Whole life cost
includes both quantifiable and non-quantifiable or intangible costs and benefits”. For the process
of procurement to attain the deserve value for money, the following ten guiding principles must
3. There should be fairness in the procurement lifecycle. The procurement authorities must
4. There should be efficiency and effectiveness in the procurement process to ensure there is
32
5. There should accountability in the responsibilities of the officials as well as proper record
keeping.
6. There should be confidentiality and information accuracy as well as the protection of the
regulatory framework
9. Transparency must be ensure in the process where all parties are equal information with
2.14 ACCOUNTABILITY
access to critical information needed is very minimal. A hall mark of public procurement and its
ability to ensure effective financial management is transparency and accountability. The Public
Procurement Authority seeks to make sure that these two principles are reinforced in public
sector procurement.
World Development Report, (2004), defines accountability as a relationship with five features.
The five features are finance, delegation, performance, information about performance and
enforceability. To ensure that these five features work well in the relationship, more than just
To a large extent, accountability plays a key role in effective use of financial resources in the
public sector. The government is the owner whilst the workers play a stewardship role. The need
to render accounts on the stewardship relationship may be a motivating factor for the public
33
institutions to manage these resources effectively. Accountability may be defined as a process of
provision of information by individuals, groups or institutions who have been delegated to act on
behalf of another in order for the other to have a fair knowledge of the state of affairs.
Accountability to a large extent reduces corruption and rather increases transparency and in the
2.15 TRANSPARENCY
parameters and decision-making criteria are disclosed publicly. Decisions on the processes and
contract awards are made available to the public giving appropriate reasons for the decisions
if;
terms upon which the procurement process are to be conducted and the criteria upon
which any decisions are to be made are properly documented and made widely available;
the eventual procurement award decision, and where appropriate, any intermediate
decisions, are made publicly available as are the reasons given for these decisions; and
It is possible to verify that the documented procedures and criteria were indeed applied.
Transparency exists where the rules for procurement are clearly documented and there is also a
clear means of certifying that the rules have been complied with. Transparency in procurement
can be improved through the capturing of key information in an electronic data base and the use
awards of contracts; the harmonising of procurement processes, procedures and methods within a
34
country; standardisation of procurement documentation; and the introduction of challenge
procedures in the form of adjudication where procurement processes, procedures and methods
Are comprehensively documented. The Public Procurement Authority of Ghana requires all
public entities to publish their procurement plans, tender opportunities and invitations and
contract awards on the authority’s website as a way of making public procurement as transparent
circumstances. It may not mean that every minute detail must be given to all prospective
tenderers. Abuse of discretion therefore may hinder the efforts of the tender process at achieving
transparency. Transparency must be incorporated into all stages of the procurement process
beginning with need identification and ending with contract execution and supervision.
should be generally accessible and available, rules and practices should be published, contracts
should be advertised, the criteria to be applied should be disclosed, and an opportunity should be
provided to determine whether or not the principles of the Act had been complied with. Public
confidence is greatly enhanced when the public perceive that transparency actually exists. The
more transparent the processes become, the more the public and especially potential suppliers
The Public Procurement Act, Act 663, states that a procurement entity may engage in single-
source procurement under section 41 with the approval of the Board, based on the following:
35
(a) Where goods, works or services are only available from a particular supplier or contractor, or
if a particular supplier or contractor has exclusive rights in respect of the goods, works or
(b) Where there is an urgent need for the goods, works or services and engaging in tender
circumstances giving rise to the urgency which is not the result of dilatory conduct on the part of
(c) where owing to a catastrophic event, there is an urgent need for the goods, works or technical
services, making it impractical to use other methods of procurement because of the time involved
(d) where a procurement entity which has procured goods, equipment, technology or services
from a supplier or contractor, determines that (i) additional supplies need to be procured from
that supplier or contractor because of standardisation; (ii) there is a need for compatibility with
existing goods, equipment, technology or services, taking into account the effectiveness of the
original procurement in meeting the needs of the procurement entity; (iii) the limited size of the
(e) where the procurement entity seeks to enter into a contract with the supplier or contractor for
research, experiment, study or development, except where the contract includes the production of
goods in quantities to establish commercial viability or recover research and development costs;
or
(f) Where the procurement entity applies this Act for procurement that concerns national
security, and determines that single-source procurement is the most appropriate method of
procurement.
36
(2) A procurement entity may engage in single-source procurement with the approval of the
Board after public notice and time for comment where procurement from a particular supplier or
69(2)(c)(i), and procurement from another supplier or contractor cannot promote that policy.
There seems to be abuse of this provision of the law with most public organizations preferring to
sole source rather than entering into competitive tendering procedures. It is in the light of this
that the office of the president of the Republic of Ghana has directed that with effect from March
1, 2014 all public institutions must obtain clearance from cabinet before forwarding their
requests to the PPA to obtain approval to use sole sourcing procurement method.
37
CHAPTER THREE
METHODOLOGY
3.0 INTRODUCTION
This chapter deals with the source of data, the area of research, research population, population
sample and procedures for sampling, collection of data and procedure and analysis of data
collected.
The public sector of Ghana contributes significantly to the growth of the country. The public
sector is given the responsibility of using scarce public resources efficiently for the benefit of all
citizens of the country. The research was conducted in Accra. Accra has a significant number of
public institutions particularly the Ministries. The research is biased to the roads sector where I
formally worked and could easily reach out and acquire the needed information. The study area
consisted of some public procurement stakeholders in the road sector. The institutions involved
are the Department of Urban Roads, Department of feeder roads and Ghana Highway Authority
The study used both primary and secondary sources of data. According to Obuobi, (2013)
Primary source of data includes interviews, questionnaires, surveys and observations as the
source of data on the other hand is one that the researcher is not a direct witness to but the data is
obtained from an existing data. This data has been already collected and made available from
38
other sources. Through the administration of questionnaire, respondents provided the primary
information. The data from the primary source provided a more accurate and reliable original
information which was relevant to the study on how effective procurement activities are to the
Secondary source of data unlike the primary source was obtained from already collected and
documented data. Sources included the internet, library, newspapers, articles and journals and
reports of other research. The secondary data was gathered in addition to the primary source
because they provided a guide to the researcher and also provided a good basis for comparison
purposes.
Zikmund, (1997) defines target population as the complete group of specific population elements
relevant to the study. Ayitey, (2012) also defines population as the totality of a well-defined
collection of individuals or objects that have a common, binding characteristics or traits. The
research targeted four public institutions in Accra Metropolitan Area. They are Department of
Urban Roads, Department of Feeder roads, Ghana Highways Authority and Ministry of Roads
and Highways. The study time was very limited and therefore was very impractical to undertake
the study on all members of the population. The study therefore targeted some people who are
involved in procurement and financial management in these public institutions. They included
procurement officers, store keepers, some divisional heads, quantity surveyors and entity tender
committee members. Altogether, the research looked at fifty people as respondents a further
study can increase the numbers to see whether the outcome matches the results of this study.
39
3.4 RESEARCH DESIGN AND INSTRUMENT
De Vaus, (2001) stated that a research design goes beyond being a simple work plan. It serves as
a tool that enables the researcher to make sure that the research questions are answered
unambiguously as possible using the evidence gathered. The study used explanatory research
design. Gay, (1990) states that explanatory research involves data collection so as to test
hypothesis and answer questions which concern the current status of the subject under study.
According to Yin, (1993), explanatory research provides an explanation for the causal
relationship concerning the cause and effect of a occurrence and explains the causal relationship
between the variables. Explanatory research is widely used by researchers across various
disciplines. It is particularly useful for social sciences researches. The researcher carried out an
auditors among others. Two factors were considered in designing the research. The type of
research question and the researcher’s knowledge on contemporary events in public procurement
and financial management were taking into consideration. To help the researcher in
The research primarily used questionnaire as its method of collecting data. Looking at the status
of the carefully selected respondents, questionnaire was considered the most appropriate means
of collecting data as the respondents were very busy officers and could also read and understand
a set of printed questions. By providing them with questionnaire it was expected that they could
use their own free time to complete the questionnaire without recourse to any guidance to be
40
provided by the researcher. Using questionnaire enabled the collection of data to be easier. Also,
it removed the inconvenience caused by conducting interviews with these set of respondents who
are considered to be very busy during the peak period of working time. Saunders, (2007) states
that survey is used for descriptive research and this enables the survey to scrutinize and deliver
explanation about relationship between variables; cause and effect relationship variables in
particular. Fifty (50) questionnaires were circulated to particular respondents in connection to the
study. 41 was retrieved. This gives an approximate percentage of 82 %. The questionnaires were
personally administered on the respondents by the researcher. They comprised both open ended
The researcher visited the various institution that was considered under the research as vital for
they study. The aim of the visit was to distribute the questionnaire to procurement officers, estate
officers, accountants and some key players necessary for the study. In order to encourage the
various officers to help the researcher in filling the questionnaire, they were provided assurance
that the responses obtained will be used purely for academic purposes. They were also assured of
confidentiality so that they may give their responses with no reservation. The respondents were
given one week to fill the questionnaire and afterwards a day was used to collect the responses.
On the day of collection, respondents who needed clarification on just one or two questions were
aided to complete the questionnaire. Prior to administering the questionnaire, a pre-test exercise
was carried out. The aim of the pre-test was to test the viability or otherwise of the data
collection method. In the process some few mistakes were detected and corrective actions
accordingly taken to put the questionnaires in good shape. Sarantakos, (1998) agrees to this
41
process when he explained that it helps the researcher to come to terms with the research
environment and delivers a chance to practice research in the actual condition before the main
survey.
This segment dealt with presentation of data, data examination and discussion of the analysis.
The results obtained were presented with the aid of graphs and tables. The research used both
qualitative and quantitative methods of analysis. Statistical Packages for Social Sciences (SPSS)
and Microsoft excel were the main computer data analysis packages used in analyzing the data
collected. Both excel and SPSS are easy to use for word processing. They also aid in making
pictorial presentations more accurate. The results obtained from the research were expressed in
percentage terms and a presentation was made with the aid of tables, pie charts and bar charts.
This typically related to closed ended question results. The results of open ended questions were
analyzed by making a complete list of all salient responses obtained and a consideration given
them according to their level of importance to the study. This provided general ideas to the
researcher with regards to the effects public procurement activities have on the management and
3.8 SUMMARY
In sum, this chapter detailed the needed elements for the suitable research methodology used to
address all research problems. The research philosophical positions that guided the research
instrumentation, data collection, and analysis were explained including the sampling size, frame
and techniques adopted for the study were explained. The outcome of the research result is
42
CHAPTER FOUR
4.0 INTRODUCTION
Presentation of research results, analysis and discussion of the data gathered through the
administration of questionnaires is the focus of this chapter. The study results are grouped under
transparency in procurement, some challenges in procurement, value for money and expenditure
control and delays in procurement. The responses obtained from Procurement personnel and
officers, accountants, entity tender committee members among others are presented and
discussed in this chapter. Where necessary, tables, percentages, pie charts and bar charts are used
Four organizations were used in this analysis. These were the Ministry of Roads and Highways,
Department of Urban Roads, Department of Feeder Roads and Ghana Highway Authority.
Looking at the size of these institutions, the Department of Urban Roads and Ghana Highway
In all, the researcher distributed a total number of fifty questionnaires to respondents carefully
selected from the four institutions. Out of the fifty, forty-one responded and provided valid
responses for the analysis. The table below shows the experience levels of the respondents as far
43
Table 4.1: Years of experience of respondents
11 - 20 95.1
7 17.1 17.1
21 - 30 100.0
2 4.9 4.9
Total 41 100.0 100.0
Field Survey - August, 2018
The table above shows that out of Forty-one respondents, 32 representing 78 percent responded
that they had 1-10 years of experience whereas seven and two representing 17.1 and 4.9 percent
responded they had 11-20 years and 21-30 years’ experience respectively. It is obvious from the
above that the respondents have appreciable number of years’ experience and therefore
The research asked respondents about their views on publication of procurement information,
opening and control mechanism and auditing in order to assess the extent to which transparency
exists.
The rate at which information on public procurement is made available to the public through
publication is a very important indicator of transparency in the procurement process. The study
sought to find out the frequency with which public institutions publish information on
44
procurement such as information on award of contract, procurement opportunities among others.
PUBLICATION OF PROCUREMENT
INFOMATION
50.0 47.1
38.2
40.0
30.0
20.0
11.8
10.0
2.9
0.0
Quaterly Every Six Month Yearly Every Two Years
From figure 1, sixteen respondents representing 47.1 percent indicated that their institution
publishes procurement information quarterly. 11.8 percent stated that information is published
semi-annually whereas 38.2 percent and 2.9 percent respectively responded that their institution
45
publishes information on public procurement yearly and bi-annually. Although the majority
responded that publication is made once in every quarter of the year, it is difficult to conclude
that transparency exists on this premise since this response constitutes less than 50 percent of the
responses obtained.
Competitive Tendering and International Competitive Tendering is very important for increasing
the intensity of competition and transparency in public procurement. The researcher sought to
find out the most frequently used medium used for the publication. The results are presented in
table 3 below.
National newspaper
and Local radio 1 2.4 2.6 100.0
stations
Total 41 100.0
Field Survey - August, 2018
46
As seen from the table above, 82.1% stated that procurement opportunities are advertised in the
national newspapers. 7.7% revealed that local radio stations were used for advertising
procurement opportunities where as 5.1% stated that both national newspapers and internet were
used. 2.6% each went for national newspaper and local radio stations and all of the above. The
results of this question show that procurement opportunities are were publicized thus improving
transparency. This confirms the importance of transparency which increases competition in the
procurement processes.
One of the most important indicators of transparency is the use of the required method for
procurement activities. The researcher sought to find out the frequently used method for procurement.
Cumulative
Frequency Percent Valid Percent Percent
Valid National
competitive
21 51.2 51.2 51.2
tendering
Price Quotation
16 39.0 39.0 100.0
Total 41 100.0 100.0
Field Survey - August, 2018
47
METHOD OF PROCUREMENT
Method of Procurement
60
51.2
50
39
40
30
20
10 7.3
2.4
0
National Competitive Sole Source Selective Tendering Price Quotation
Tendering
The results above indicate that the entities used national competitive tendering most frequently.
This is a god sign that transparency exists since national competitive tendering ensures that the
competition is opened to the general public or all interested and qualified suppliers. In all 51.2
percent reported that their institution used the national competitive tendering where as 39 percent
reported of using price quotation most often. Only 7.3 percent and 2.4 percent reported of mostly
using sole sourcing and restrictive tendering which are designed to relatively limit competition to
one or a few suppliers. Tas, (2008) stated that efficiency in procurement is improved in a
competitive environment and also promotes cost saving in public procurement thus helping the
48
4.3.4 Mode of Tender opening and Period of Tender opening
Another significant factor of transparency in public procurement is the way and manner tenders
are opened. The Public Procurement Act stipulates that tenders are opened immediately after
deadline for tender submission. It also states that they should be opened in the presence of
tenderers representatives who choose to attend. The researcher sought to find out if this provision
of the Act was adhered to. This is because adherence to the provision will promote transparency
and fairness in the competition. The results of this are presented in the tables 5 and 6 below.
1, 3%
3, 8%
33, 89%
49
Table 4.5: Method of Tender Opening
Cumulative
Frequency Percent Valid Percent Percent
Valid In the the presence
of tenderers or their
30 73.2 78.9 78.9
representatives
During Entity
Tender Committee
7 17.1 18.4 97.4
meetings
Privately by the
procurement Unit 1 2.4 2.6 100.0
Total 41 100.0
90
78.9
80
70
60
50
40
30
18.4
20
10 2.6
0
In the presence of tenderers or their During Entity Tender Committee Privately by the Procurement Unit
representatives meeting
50
Out of the 38 respondents for this question on the period for tender opening, 33 representing 82.9
percent responded that tenders were opened immediately after deadline whereas 8.1 and 2.7
percent respectively responded that tenders were opened two weeks and one month after receipt
respectively. This can be seen from figure 2 above. On the mode of opening of tenders, 78.9
percent responded that tenders were opened in the presence of tenderers or their representatives.
18.4 responded that they are opened at entity tender committee meetings where as 2.6 percent
also responded that they are privately opened by the procurement Unit. It is clear from the above
results that majority of tenders are opened instantly when it’s the submission deadline and in the
attendance of bidders or agents of tenderers. This enhances the transparency concept in public
procurement.
Control mechanisms and auditing of procurement activities are very key in public procurement.
Shand, (2005) put forward that internal regulation and assessing ensures that right utilization of
resources, value for money, avoidance of impropriety and deception minimization which are
required for effective financial management in public institutions. The results on control
mechanisms and auditing are presented in the tables below that is table 7 and 8.
51
Table 4.6: Control Mechanisms
Cumulative
Frequency Percent Valid Percent Percent
Valid Strongly Agree
16 39.0 40.0 40.0
Agree
20 48.8 50.0 90.0
Strongly Disagree
2 4.9 5.0 95.0
Disagree
2 4.9 5.0 100.0
Total
40 97.6 100.0
Missing Did not answer
1 2.4
Total 41 100.0
Field Survey - August, 2018
The table above indicates that 40 percent and 50 percent of the respondents strongly agreed and
agreed respectively that there are enough internal mechanisms of control whereas 5 percent each
strongly disagreed and disagreed that there are enough internal mechanisms of control. On the
52
point of regularly auditing procurement activities, 52.5 percent and 39 percent strongly agreed
and agreed respectively that procurement activities are regularly audited. 5 percent however
disagreed whereas the remaining 2.5 percent were uncertain. From the above it can be seen that
there are enough internal control mechanisms coupled with regular auditing of procurement
activities.
Periods for evaluation of tenders, approval levels for contract awards and general procurement
activities were examined to assess whether they cause delays in the procurement process.
Evaluation of tenders is one of the critical stages of the procurement process. It is the stage that
examines tenders or proposals from suppliers and make recommendations for possible contract
awards. The researcher wanted to find out how long the entities take to evaluate tenders from
53
Field Survey - August, 2018
From the above table, it can be seen that 71.1 percent responded that it takes the entity one to
three weeks to evaluate tenders. As compared to this, only 23.7 percent and 5.3 percent
responded that it takes one to three months and three months and above to conduct evaluations.
This result indicates that evaluation is not really a delay factor as it takes mostly three weeks to
complete evaluations.
The Public Procurement Act stipulates that entities shall obtain approval from relevant
committees and boards when the items to procure are estimated to cost more than GH¢5,000.00
for goods and GH¢10,000.00 for works. These include Entity Tender Committees, District
Tender Committees, Ministerial Tender Review Boards, and the Central Tender Review Boards.
This indicator sought out to find out how often the relevant bodies meet to approve evaluation
reports and recommendations for award of contracts and how often the institutions are able to
54
Total 41 100.0
Field Survey - August, 2018
55
ENTITY TENDER COMMITTEE MEETINGS
Entity Tender Committee Meetings
70 64.9
60
50
40
30 24.3
20
8.1
10
2.7
0
Once in a month Once every quarter Once every six month Once yearly
It is evident from the above table and figure that most Entity Tender Committees (ETC) meet
once in three months. Whilst the Act requires ETCs to meet once every quarter, this delays the
procurement process as it can take three months for an institution to get approval from its ETC
before awarding a contract or forwarding to the relevant Review Board. The table below
indicates how long it takes to seek approval from the appropriate Tender review Boards.
56
Table 4.10: Approval from Tender Review Boards
Six months
1 2.4 2.7 100.0
Total
37 90.2 100.0
Missing Did not answer
4 9.8
Total 41 100.0
Field Survey - August, 2018
59.5 percent responded that it takes them one to four months to obtain approval from the relevant
approval authority where as 34.1 percent indicated that it takes them less than a month to obtain
approval. 2.7 percent however said it takes them six months to obtain approval. This clearly
The researcher sought to find out whether procurement processes generally delay contract
57
Table 4.11:Delay of Contract Awards by Procurement Processes
Cumulative
Frequency Percent Valid Percent Percent
Valid Strongly Agree
12 29.3 29.3 29.3
Agree
10 24.4 24.4 53.7
Strongly Disagree
4 9.8 9.8 63.4
Disagree
14 34.1 34.1 97.6
Uncertain
1 2.4 2.4 100.0
Total 41 100.0 100.0
Field Survey - August, 2018
From the table 4.12 it can be seen that 29.3 percent and 24.4 percent of the respondents strongly
agreed and disagreed respectively that procurement processes delay contract awards whereas 9.8
percent and 34.1 percent strongly disagreed and disagreed respectively that procurement
processes delay contract awards. 2.4 percent however were uncertain. The above results indicate
The researcher sought to find out if the levels of approval are too lengthy. The lengthier they are
58
Table 4.12: Levels of Approval for Procurement Activities
Cumulative
Frequency Percent Valid Percent Percent
Valid Strongly Agree
9 22.0 22.5 22.5
Agree
24 58.5 60.0 82.5
Strongly Disagree
1 2.4 2.5 85.0
Disagree
6 14.6 15.0 100.0
Total
40 97.6 100.0
Missing Did not answer
1 2.4
Total 41 100.0
Field Survey - August, 2018
Whereas 22.5 percent strongly agreed that the levels of approval delay procurement activities, 60
percent answered that they agreed to the assertion that the levels are too lengthy. On the other
hand, 1 respondent representing 2.5 percent strongly disagreed that the approval levels are too
lengthy. 15 percent also disagreed that there are too lengthy levels of approval. From the above it
can be concluded that the levels of approval are too lengthy and this obviously causes delays in
The researcher also wanted to find out some of the challenges faced in carrying out procurement
activities. The indicators used were record keeping, period for payment to suppliers, market
59
4.5.1 Record Keeping
The researcher posed this question to find out if records on public procurement activities are well
kept.
Cumulative
Frequency Percent Valid Percent Percent
Valid Yes
40 97.6 97.6 97.6
No
1 2.4 2.4 100.0
Total 41 100.0 100.0
Field Survey - August, 2018
From the table above, it can be seen that 4 respondents out of 41 representing 97.6 percent
agreed that records on public procurement activities are well kept. Only one respondent
answered in the negative representing 2.4 percent. This reveals that record keeping is not a major
challenge as records are well kept by these institutions. Keeping records enhances auditing,
accountability and promotes transparency. It therefore implies that if public institutions keep
their procurement records well accountability and transparency will be promoted and ultimately
Payment to suppliers after contract execution was picked as one of the major challenges in public
procurement which have a telling effect on the management of financial resources in the public
institutions. The researcher sought to find out the period it takes these public institutions to
process and pay their suppliers their due after they have delivered their part of the contract. The
responses about the payment period are presented in the table below.
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Table 4.14: Period for Payment to Suppliers
Cumulative
Frequency Percent Valid Percent Percent
Valid Up to one month
4 9.75 41.5 41.5
Two to four
Months 34 82.93 46.3 87.8
Six months
2 4.88 7.3 95.1
A year and above
1 2.44 4.9 100.0
Total 41 100.0 100.0
Field Survey - August, 2018
30
20
10 7.3
4.9
0
Up to one Two to four Six months A year and
month months above
From the table above, 4 people representing 9.75 percent indicated that their suppliers are paid
within a month. 82.93 percent, that is 34 respondents, however, responded that their suppliers are
paid in a period of two to four months. Only two respondents and 1 respondent indicated that
their suppliers are paid in six months and one year and above respectively. The result is an
61
indication that it takes the institutions longer time to pay suppliers. Standard tender documents
indicate a payment period of thirty days but the institutions go beyond the thirty days.
One requirement for good procurement system and effective financial management is regular
market surveys. The study sought to find out if there were systems in place for the institutions to
conduct regular market surveys. The responses are indicated in the table below.
Cumulative
Frequency Percent Valid Percent Percent
Valid Yes
19 46.3 54.3 45.7
No
16 39.0 45.7 100.0
Total
35 85.4 100.0
Missing Did not answer
6 14.6
Total 41 100.0
Of the 35 who answered this question, as indicated in table 14 above, 45.7 percent responded
that there were no systems in place for regular market surveys. 54.3 rather responded that there
were systems in place to conduct regular market surveys. The 54.3 percent who responded in the
affirmative went on to indicate in the follow up question what the market survey does for the
institution. The overriding benefit of the regular market survey was that it helps in determining
the appropriateness of prices quoted by the institutions’ suppliers. It is however clear from the
results that the institutions have structured systems in place for regular market surveys and does
62
4.5.4 Expenditure Control
Rose and Lawton, (1994) put forward that control of budget involves the monitoring of actual
expenditure and income and comparing with planned expenditure and income regularly and
identifying and investigating variances to ensure balance budgets. Excessive spending or over
public institutions. The research sought to find out whether the institutions conduct regular
review on total expenditure to determine how much is spent on procurement of goods and
services.
As presented in the table above thirty-three respondents which represents 82.5 percent indicated
that the institutions conduct regular reviews on total expenditure in order to monitor and control
public expenditure. The remaining 17.5 percent out of the forty who answered this question
answered in the negative. This indicates that the institutions review and monitor their
expenditure in order to improve the management and use of public funds. The researcher also
asked if procurement plans are recorded against budget to identify any anomalies in recorded
63
64
Table 4.17: Record of Procurement Plans against Budgets
Total 41 100.0
Field Survey - August, 2018
The results from the table above indicates that whereas 78.4 percent responded in the affirmative
that procurement plans are recorded against budgets to identify anomalies, 21.6 percent indicated
that procurement plans are not recorded against budgets. This result goes to support the
majorities’ earlier view that expenditures are monitored and controlled in the institutions.
The researcher sought to find out whether structured public procurement activities reduce cost of
purchases undertaken by the entity. The table below provides the responses.
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Table 4.18: Structured Procurement Reduce Cost
From the table above, it can be seen that 26.8 percent and 2.4 percent strongly agreed and agreed
that structured procurement activities reduce cost of purchases. Respectively, however, 19.5
percent and 43.9 percent strongly disagreed and disagreed that the structured procurement
activities reduce cost of purchases. 3 people representing 7.3 percent, however, were uncertain.
This shows that structured procurement activities in these public institutions do not necessarily
Value for money is a very important factor in determining the effects public procurement
activities have on public financial management. The research sought to find out from the
respondents whether they agreed or disagreed to the fact that procurement activities ensure value
66
Table 4.19: Procurement ensures Value for Money
Disagree
8 19.5 19.5 95.1
Uncertain
2 4.9 4.9 100.0
Total 41 100.0 100.0
Field Survey - August, 2018
5%
19%
34%
Strongly Agree
Agree
Strongly Disagree
Disagree
Uncertain
5%
37%
67
The responses revealed that 34.1percent and 4.9 percent strongly agreed and disagreed
respectively to the fact that procurement activities ensure value for money. However, 36.6
percent and 19.5 percent strongly disagreed and disagreed to this fact. Two respondents
representing 4.9 percent stated they were not certain about this. From the above, it is clear that
majority do not believe that public procurement activities ensure value for money.
Financial resources are very scarce in most public institutions so it is important to save a lot of
government money and since the financial resources are mostly spent through procurement, the
researcher sought to find out if procurement activities in the public sector contribute to saving
government’s money.
Total 41 100.0
Field Survey - August, 2018
68
Government's money is saved through
procurement
26%
Yes
No
74%
From the table above, out of the thirty-five who responded, nine respondents representing 25.7
percent responded in the affirmative whereas twenty-six respondents representing 74.3 percent
responded in the negative. This indicates that a lot of government money has not been saved
The research also sought to find out if the Public Procurement Act, Act 663, has strengthened
and controlled government expenditure. The responses are indicated in the table below.
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Table 4.21: Procurement Act on Strengthening and Controlling Expenditure
As can be seen from the above table, 35 percent of the forty people who responded strongly
agreed to the fact that the public procurement Act has strengthened and controlled government
expenditure whereas 40 percent agreed to this fact. However, 22.5 percent disagreed with one
person responding uncertainty. It is therefore obvious that the majority believe the public
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CHAPTER FIVE
5.0 INTRODUCTION
The chapter five deals with the summary of the study, conclusions drawn from the study and
procurement.
The study set out to find the effects public procurement has on the management and use of public
funds in the road sector. The research was carried out not only to satisfy the requirements for the
award of a master’s degree but also to provide important information on public procurement and
public financial management to policy makers. After a careful analysis of the data obtained from
1. The study showed that the institutions mostly used National Newspapers as the medium
good revelation as public institutions are required by the Public Procurement Act to
2. The study also revealed that the institutions used National Competitive Tendering more
often than the other procurement methods. This improves the level of competition
3. Another revelation from the study is that most of the institutions had internal mechanisms
for control of procurement activities and also systems for auditing of procurement
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activities. Auditing and control are very important in procurement and they help in
4. On evaluation of tenders, the study revealed that most of the institutions spent between
one to three weeks to conduct evaluation and therefore it cannot be said that evaluation of
5. One significant delay in the procurement process was found to be seeking approval from
tender review boards. It takes the institutions a considerable number of weeks before the
appropriate tender review boards consider their recommendations for contract awards.
Entity Tender Committees meet once in every quarter and this means approval seeking
6. It was again shown from the study that the institutions had well-kept records on their
procurement activities although it was also found out that summaries from these records
auditing and transparency are improved through proper record keeping and making the
7. Another significant revelation from the study was the payment to suppliers after
execution of contract. Mostly, contractors and suppliers are not paid on time although one
would expect that the institutions would maintain a standard period of one month to do
8. The study also showed that most of the institutions’ procurement activities did not lead to
reduction in the cost of purchases and did not ensure value for money. Procurement
activities in these public institutions have therefore affected the management and use of
public funds negatively as they have not promoted cost efficiency and effectiveness.
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5.2 RECOMMENDATION
In order for public procurement to achieve its ultimate aim and have a positive effect on the
management and use of financial resources in public institutions, the following recommendations
were made:
i. The first recommendation is that the public institutions pay their suppliers promptly
after they have completed the execution of a job or after they have supplied the goods
or services. This will improve the suppliers or contractor’s ability to provide financial
sure funds are available for a particular project or purchase before placing orders.
ii. To fall stall the delays in obtaining approval from the various tender review boards, it
is recommended that the Tender Review Boards and Entity Tender Committees meet
once a month provided that there are requests before them for consideration. The
thresholds for procurement approval levels must also be reviewed to current values as
soon as possible to reduce the number of transactions that would require concurrent
iii. For procurement activities to lead to value for money and cost savings, the public
institutions must carry out extensive research on pricing and quality issues. Contracts
must not be awarded on initial price quoted by suppliers alone but the whole life cost
must be considered such as the cost of maintenance and after sales service provisions.
iv. Procurement officers and other officers related to the procurement process must be
given training on how to increase the level of efficiency in the procurement processes
73
in order to maintain a healthy financial management system. The speed with which
orders are processed is very critical and therefore must be encouraged throughout the
5.3 CONCLUSION
and use of funds in public institutions. The ministry that oversees the actions of its department
institutions researched in this study are just but a very few. For this reason, the Public
Procurement Act was introduced in 2003 and subsequently amended in 2015 to regulate
procurement activities in the public sector of the economy to ensure transparency, promote value
for money and regulate public expenditure. The researcher therefore carried on the research to
find out about some of the challenges in public procurement activities, the extent to which
transparency exists in public procurement, whether procurement ensures value for money and to
examine the causes of delays in the procurement process. Based on the findings of the research it
1. There is transparency in the procurement activities in the public institutions and this is
good for effective management and use of public funds. Value for money however, has
not been achieved on the expected level and this affects management and use of public
funds negatively.
2. Concerning public expenditure, procurement activities ensure that they are monitored and
74
i. Assessment of the ten years implementation of the Public Procurement plan 2003-
2013
ii. The relationship between public financial management and good governance
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Anvuur, A., Kumaraswamy, M. and Male, S. (2006) ‘Taking forward public procurement
reforms
Arrowsmith, S. (2010). Public procurement: Basic concepts and the coverage of procurement
Astbrink, G. and Tibben, W. (2013) ‘The role of public procurement in improving accessibility
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Ayitey F. K. (2012). Assessing the level of compliance with the public procurement act 2003,
(Act 663) in public entities in Ashanti region of Ghana. A Thesis submitted to the
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Nos. 1/3, pp.1–26.
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Procurment Act (ACT 663) in Ghana, Amsterdam, The Netherlands: Management and
PPAE- Bulletin. (2011). Building Relevant Skills for Public Procurement, Accra, Ghana: E-
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Pride, Hughes and Kapoor (2002). The Environment of Business, Harvest Publishing.
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APPENDIX
RESEARCH TOPIC:
BY
PARRY JONATHAN (BSc.)
SUPERVISOR:
DR. ERNEST KISSI
78
Preamble
My name is Parry Jonathan, Msc student from Department of Building Technology at Kwame
Nkrumah University of Science and Technology, Kumasi. This research is being conducted as
part of a Master’s degree dissertation. It is expected that this research will provide additional
knowledge on the effect procurement activities have on the management and use of public funds.
Anonymity is assured and responses will be treated with the utmost confidentiality they deserve.
Please provide the correct information by ticking in the appropriate box accompanying the
The implication of the findings is for the future development of the procurement and
construction management professions in Ghana and any information provided will be treated
with the highest confidentiality. I would like to convey my appreciation for your cooperation in
completing these questions. If you have any questions and contributions about this research,
Thank you in advance for your participation and assistance with this study.
Parry Jonathan
79
SECTION A: PERSONAL DATA
3. Through what medium are procurements falling within the threshold of National Competitive
4. On the average, how long are suppliers and contractors given to prepare and submit their bid
documents?
5. Which Procurement method is often used for procurements with regard to the Act?
7. If you answered yes to 6 above, about how many appeals are received per year?
80
8. What kind of appeals is usually received? ……………………………………………………
………………………………………………………………………………………………………
12. There are enough internal mechanisms of control? a. Strongly agree b. Agree
15. How long does it take your outfit to prepare a procurement plan?
a. One-week b. Between one and two months c. Between three and four months
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17. On the average, how long does your entity take to evaluate bids submitted by bidders?
a. Between one and three weeks b. Between One and three Months
d. once yearly
19. How long does it take your entity to obtain approval from the appropriate tender review
boards?
20. How long does it usually take the entity to pay suppliers?
above
e. Uncertain
22. If you agreed to 21 above what are some of the causes of the delay in procurement?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
23. The levels of approvals and processes for procurement are too lengthy?
e. Uncertain
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SECTION D: CONTROL OF EXPENDITURE
25. Is there a system in place for the procurement unit to undertake regular market surveys?
Yes No
..................................................................................………………………………………………
……………………...........................................................................................................................
26. Structured Public Procurement Activities reduce cost of purchases undertaken by the entity.
e. Uncertain
27. Procurement activities ensure value for money for the entity. a. Strongly agree
28. Through procurement the entity is able to monitor expenditure against the budget. a. Strongly
29. Through procurement a lot of government’s money has been saved? Yes No
30. Procurement Act has strengthened and controlled government expenditure. a. Strongly agree
31. Does the entity conduct regular review on total expenditure to determine how much is spent?
Yes No
32. Are procurement plans recorded against budgets to identify anomalies in recorded
expenditure? Yes No
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33. Please share with us any suggestions or comments you may have.
…………………………………………………………………………......................…………….
………………………………………………………………………………………………………
……….……………………………………………………………………………………………...
84