Chapter 2

Chapter 2
Procurement Planning
Plan
• A scheme, program, or method worked out beforehand for the
accomplishment of an objective
• A detailed scheme, method, etc., for attaining an objective
• A proposed, usually tentative idea for doing something
Planning
• The act or process of making or carrying out plans
• The planning process
 Identifies the goals or objectives to be achieved,
 Formulates strategies to achieve them,
 Arranges or creates the means required, and
 Implements, directs, and monitors all steps in their proper
sequence.
Procurement Plan
• A procurement plan defines
 What the organization intends to obtain: goods, works and services
 What the process would be
• Procurement planning is the process used by companies or institutions
to plan purchasing activity for a specific period of time.
• Procurement Planning initiates the Project
 It commences in advance
 Needs information and coordination from other departments
 May take long time if experience or expertise is lacking
Procurement Planning:
Vital questions asked when planning for procurement
What is to
buy?
When to How to
buy? buy?
Procurement
How Where to
much to buy?
buy?
At what price
to buy?
Importance of Procurement Plan/Planning
• Planning is key to successful implementation of any activity

• Procurement Planning is important because:
 It helps to decide what to buy, when and from what sources.
 It allows planners to determine if expectations are realistic;
particularly the expectations of the requesting entities, which
usually expect their requirements met on short notice and over
a shorter period than the application of the corresponding
procurement method allows.
 Since sufficient exercise is carried out in advance, it helps to
reduce confusion in procurement processes
Importance of Procurement Planning cont...
 It is an opportunity for all stakeholders involved in the

processes to meet in order to discuss particular procurement
requirements. These stakeholders could be the requesting
entity, end users, procurement department, technical experts,
and even vendors to give relevant inputs on specific
requirements.
 It permits the creation of a procurement strategy for procuring
each requirement that will be included in the procurement plan.
Such strategy includes a market survey and determining the
applicable procurement method given the requirement and the
circumstances.
 It helps to address in advance the probable weakness, delay
and check points during procurement processes
 Planners can estimate the time required to complete the

procurement process and award contract for each requirement.
This is valuable information as it serves to confirm if the
requirement can be fulfilled within the period expected, or
required, by the requesting entity.
 The need for technical expertise to develop technical
specifications and/or scope of work for certain requirements
can be assessed, especially where in-house technical capacity
is not available or is non-existent.
 Planners can assess feasibility of combining or dividing
procurement requirements into different contract packages.
 The Procurement Plan is the product of the procurement

planning process. It can be developed for a particular
requirement, a specific project, or for a number of requirements
for one or many entities in the public or private sectors.
• The Procurement Plan is important because:
 It lists all requirements expected to be procured over a period
of time.
 From it the procurement schedule is developed, which
establishes the timelines for carrying out each step in the
procurement process up to contract award and the fulfillment of
the requirement.
 It enhances the transparency and predictability of the
procurement process.
 It allows for the consolidation of similar requirements under
one contract or the division of a requirement into several
contract packages for economies of scale.
 From the number of requirements on the procurement plan, the
procuring entity can determine beforehand any need for
additional staffing, including external assistance for the
purpose of completing all procurement requirements listed on
the procurement plan.
 It allows for the monitoring of the procuring process to
determine how actual performance compares with planned
activities, and thus to alert the pertinent departments and adjust
the procurement plan accordingly.
Procurement plan cont…
Two types of procurement plan:
a) Master procurement plan
b) Annual procurement plan
Master procurement plan (MPP)
• For a project to be operated for more than one year or procurement valued at an
amount in excess of one hundred million rupees master procurement plan shall be
prepared
• The master procurement plan shall contain following matters:
 Type, quantity and tentative estimated value of procurement
 Method of procurement
 Where procurement is broken up into lots or a package for maximizing
competition, provisions relating thereto,
 Tentative number of contracts to be made for the completion of overall
procurement proceedings and major activities that to such procurement
proceedings,
 Matters relating to prequalification proceedings, if required, for procurement,
 Tentative time schedule for procurement proceedings,
 Such matters as may be determined from time to time by the PPMO to be
included in the master procurement plan
• MPP shall be approved by secretary of the public entity,
• MPP shall be updated in every financial year
Annual procurement plan (APP)
• If it is necessary to make procurement valued at an amount exceeding
one million rupees a year, annual procurement plan shall be prepared.
• In so preparing the procurement plan, it shall be prepared also based on
the master procurement plan, if any.
• APP shall be prepared along with estimated annual program and budget
for the forthcoming financial year, and shall be sent to following offices:
 Pertinent higher office
 Ministry of finance
 National planning commission (If required)
 Donor agency (Only if funded by donor)
Annual procurement plan (APP) cont…
• After receipt of approved annual program and budget, the APP shall be revised and shall
be sent to following offices:
 Pertinent higher office
 Treasury and account comptroller office
 Public procurement monitoring office
 Donor agency (Only if funded by donor)
• APP shall be approved by chief of public entity
• Following matters shall be set in APP:
 Description relating to the type of procurement,
 Possible package of procurement,
 Time schedule for procurement proceedings,
 Method of procurement,
 Type of contract to be entered into,
 Such matters as my be determined by PPMO time to time to be included in the APP
• Time schedule shall specify the period of time for the completion of following acts:
 Preparation of specification for procurement of goods,
 Preparation of cost estimate
 Document preparation
 Publication of notice of invitation
 Evaluation
 Acceptance
 Entering into contract
 Commencement of work and
 Completion of work
• While specifying time, following matters shall be taken into account:
 Minimum time required for stated activity as specified in PPA and PPR
 Time required for bidders to prepare tender
 Public holiday
 Work load and available manpower
 Time required to take concurrence from donors if required
• APP shall be revised in following situations:
 In case of non availability of budget or delay for budget to be available
 If additional budget would be available
 If there is delay in approval from pertinent higher office
 If all bids have to be cancelled
 If program is revised
• while preparing APP it shall be ensured that adequate time is allocated for whole process
• Suggestion shall be taken and contribution shall be obtained from all concerned persons
within the organization as per requirement
Planning and initiation of individual requirements
(Steps in procurement planning)
• Determine individual requirement
• Develop procurement strategy
• Determine what is to be procured; goods, works….
• Packaging / lot size determination
• Identify specification
• Decide on Quality Assurance Program
• Decide who shall handle Procurement
• Determine procurement agency capacity
• Decide on type of contract
• Decide on method of procurement
• Schedule the activities
• Design monitoring system
Steps in procurement planning
Identify individual requirements
 Capital Goods, plant and machinery
 New Construction
 Service being procured for the first time
 Recurring demand of goods / services
 Maintenance of works etc.
Develop strategy for procurement
• It’s difficult to talk about procurement planning without mentioning procurement strategy,
• Procurement strategy is developed in conjunction with and during the procurement planning phase
Steps in procurement planning (Strategy cont…)
• Procurement strategy is a key factor in determining the most appropriate procurement method given the
complexity and monetary value of the requirement, and market availability.
• While procurement planning deals with “when”, procurement strategy looks at “what”, “how”, “where”
and “why”; which need to be decided before the ‘when”.
 What to buy?
 Why buy it?
 How to buy it?
 What purpose does it serve?
 What’s the objective of the purchase?
Steps in procurement planning (strategy cont…)
 How much does it cost?
 Where can it be sources?
 How many sources are available?
 What’s the risk?
 What’s the benefit?
 What’s the cost?
• But even after a preliminary procurement plan is developed, there are still further strategic questions that need to be
answered, such as:
 Is the expected contract award date realistic given the procurement method?
 Does the procurement process need expediting?
Steps in procurement planning (strategy cont…)
 Are there opportunities for packaging requirements in order to purchase in bulk?
 What are the monetary or strategic advantages/disadvantages of grouping requirements?
 Are there any dependent requirements?
• The above list of questions is not exhaustive.
• A procurement strategy can be developed for one requirement or a group of requirements.
• The extent of the strategy developed is dependent on the level of risk and monetary value of the
requirement.
• The strategy that is developed has to take into consideration the principles like economy and
efficiency.
Steps in procurement planning cont…
• Packaging / lot size determination
 Size of package / size of lots, based on usage / market perspective, chances of competition
 Single Contract / Multiple Contract
 Installment Supply
• Identifying specification requirement
 Is there standard specification or not
 Develop new specification if required, generally for new items / technology / projects
 Hire consultant if organizational capacity is lacking
• Quality assurance
 Decide on system to be followed
 Sampling Method to be adopted
 Stage inspection / Pre-dispatch Inspection / Consignee Inspection
 Identify testing laboratories
 Decide if third party Inspection be adopted
 Define system for dealing with rejections
• Who shall handle Procurement
 Organization / Department itself
 Other government department / Central Procurement Organization, if any
 Outside Agency
• Capacity of procuring agency
 Institutional set up and systems
 Record keeping
 Past experience
 Competence and track record
 Staffing and training of staff
• Scheduling activities
 List every activity of the procurement process
 Estimate time required for each activity
 Allow for slippages
 Calculate total time and match with actual need
 Adjust scheduling if necessary
• Monitoring
 Design monitoring system /Develop critical path, etc
 Design Reporting Schedule / submission of reports etc
 Regular review of schedule based on feed back.
• Use standard format for preparing MPP and APP
Exercise on master procurement plan
 Methods of using MPP standard format
• cf=a= (Fiscal year) : Current fiscal year
• dGqfno/ljefu/cfof]hgf/sfof{no (Ministry/Department
/Project/office) : To be stated concerned Ministry, Department,
Project or office
• ah]6 pklzif{s g+ (Budget subtitle no) : Budget subtitle no.
of concerned procurement
• l;=g+ (S.N) : Serial numbers of procurement activities
• vl/bsf] ljj/0f (Description of procurement) : Name of
procurement activities
• vl/b ljlw (Procurement methods) : one of the followings
 Construction : ICB, NCB, Sealed quotation, Direct purchase,
Force account, User’s committee
Exercise on MPP cont…
 Goods : ICB, NCB, Sealed quotation, Direct Purchase
 Consulting service : Open EOI, Proposals from standing list,
Direct purchase
• cg'dflgt /sd (Estimated amount) : State estimated amount
• Kofs]h ;+Vof (No. of package) : State NO. of packages
• ;Demf}tfsf] lsl;d (Type of contract) : One of the followings
 Construction : Unit rate, Lump sum, cost reimbursement, Time
and materials rate, Design and build, Management,
Performance based maintenance, Piecework
 Goods : Supply of specific goods, Framework work, Multi year,
Design/supply/erection, Turn-key
Exercise on MPP cont…
 Consulting services : Lump sum, Time based, Performance
based remuneration, Percentage, Indefinite delivery
contract
• aflif{s vl/b (Annual procurement) : Expected
expenditure in different years
 If running projects have to be included in MPP, actual
expenditures of past years and planning expenditures of
futures years have to be mentioned.
• s}lkmot (Remarks) : If clarification is to be made on any
matters, it should be mentioned in this column.
• At the end of standard format, concerned officials have to
sign mentioning position and date
Exercise on APP (Works and Goods)
 Methods of using APP standard format
• dGqfno/ljefu/cfof]hgf/sfof{no M ;DalGwt
;fj{hflgs lgsfo ;Fu ;DalGwt dGqfno, ljefu, cfof]hgf,
sfof{no pNn]v ug]{
• ah]6 pklzif{s g+ (Budget subtitle no) : Budget subtitle
no. of concerned procurement.
• a:t', lgdf{0f sfo{sf] ljj/0f (Description of goods,
works) : Name of procurement activities (With packages if
any)
• of]hgdf pNn]lvt ldlt (Specified date in plan) : Nothing
to be mentioned (According to planned and exact mentioned
here, planned and exact dates in other columns have to be
Exercise on APP (Works and Goods) cont…
• nfut cg'dfg :jLs[t ldlt (Cost estimate approval date) :
Estimated time of approval of cost estimate after approval
• cg'dflgt nfut (Estimated cost) : State estimated cost
• Kofs]h ;+Vof (No. of package) : State NO. of packages
• ;Demf}tfsf] lsl;d (Type of contract) : One of the
followings
 Construction : Unit rate, Lump sum, cost reimbursement,
Time and materials rate, Design and build, Management,
Performance based maintenance, Piecework
 Goods : Supply of specific goods, Framework work, Multi
year, Design/supply/erection, Turn-key
• af]nkq jf b/efpkq ;DaGwL sfuhft (Bid or sealed
quotation documents) : Specify separate dates of preparation and
approval of bid documents or sealed quotation documents.
• bft[ lgsfoaf6 ;xdlt lng] ldlt (Date of concurrence from
donor agency) : If concurrence is required from donor agency,
specify estimated date of concurrence from donor agency
• af]nkq/k|:tfj (Bid documents/Proposal) : Specify separately
the estimated date of invitation, opening and completion of
evaluation of bid or prequalification proposal
• bft[ lgsfoaf6 ;xdlt lng] ldlt : As specified earlier
• af]nkq :jLs[ltsf] cfzo / :jLs[lt ldlt (Letter of intent and
acceptance date) : Date of issuing of letter of intent
• s/f/ ;Demf}tf ug]{ ldlt (Contract agreement date) :
Specify estimated date of making contract agreement
• sfo{ cf/De ug]{ ldlt (Work initiation date) : Specify
estimated date of initiation of work
• sfo{ k'/f ug]{ ldlt (Work completion date) : Specify
estimated date of work completion
• 7]s]bf//cfk"lt{stf{ (Contractor/Supplier) : Specify name
of contractor/supplier, contract number and contract amount after
agreement
• At the end of standard format, concerned officials have to sign
mentioning position and date
Exercise on APP (Consulting service)
 Methods of using APP standard format
• dGqfno/ljefu/cfof]hgf/sfof{no M ;DalGwt ;fj{hflgs
lgsfo ;Fu ;DalGwt dGqfno, ljefu, cfof]hgf, sfof{no
pNn]v ug]{
• ah]6 pklzif{s g+ (Budget subtitle no) : Budget subtitle no.
of concerned procurement.
• ljj/0f/k/fdz{bftfsf] k|sf/ (Description/Type of
consultant) : Specify work requiring consulting service and type
of consultant e.g. environment, legal, engineering ...
• of]hgdf pNn]lvt ldlt (Specified date in plan) : Nothing to
be mentioned (Planned and exact dates in other columns have to
Exercise on APP (Consulting service) cont…
• sfo{If]qut zt{ tof/L / :jLs[lt ldlt (TOR
preparation and approval date) : Estimated date of approval
of TOR
• nfut cg'dfg tof/L ldlt (Cos estimate preparation
date) : Estimated date of approval of cost estimate
• cg'dflgt nfut (Cost estimate) : Specify tentative cost
estimate
• 5gf}6 ljlw (Method of selection) : Specify Proposal
selection method (QCBS, QBS, LCS or FBS)
• ;+lIfKt ;"lrsf] nflu ;"rgf k|sfzg ug]{ (Notice
publication for short listing) : Estimated date of publication
of notice for short listing (If service is going to be taken from
consultants contained in standing list, nothing have to be
mentioned)
• ;+lIfKt ;"lrsf] d'NofÍg u/L k|ltj]bg lbg] (Evaluation
for short listing and reporting) : Specify the estimated date of
reporting of result after evaluation for short listing (Nothing has
to be mentioned incase of standing list)
• ;+lIfKt ;"lrsf] :jLs[lt ldlt (Approval date of short
listing) : Estimated date of approval date of short listing (Date of
preparation of standing list has to be mentioned incase of service
from standing list)
• k|:tfj ;DaGwL sfuhft :jLs[t ug]{ ldlt (Approval
date of RFP documents) : Specify estimated approval date of
RFP documents.
• k|:tfj ;DaGwL sfuhft k7fpg] ldlt (Soliciting date of
proposal) : Estimated date of soliciting proposal from
consultants contained in shortlist
• k|:tfj k|fKt ug]{ clGtd ldlt (Last date of obtaining
proposal) : Estimated last date of obtaining proposals
• k|fljlws k|:tfjsf] d'NofÍg / :jLs[lt ug]{ ldlt
(Technical proposal evaluation and approval) : Estimated date
of approval of technical proposal after evaluation.
• cfly{s k|:tfjsf] d'NofÍg ug]{ ldlt (Evaluation date
of financial proposal) : Estimated date of approval of financial
proposal after evaluation.
• k|:tfj :jLs[ltsf] hfgsf/L lbg] ldlt (Date of informing
acceptance of proposal) : Estimated date of issuing of letter of
intent of acceptance
• ;Demf}tfsf] lsl;d (Type of contract) : Lump sum, Time
based, Performance based remuneration, Percentage, Indefinite
delivery contract
• k/fdz{bftfsf] gfd (Name of consultant) :
Specify name of consultant only after selection
• ;Demf}tf ug]{ ldlt (Agreement date) :
Estimated date of making agreement
• ;Demf}tf gDa/ (Agreement number) : Specify
agreement number only after agreement
• sfo{ z'? ug]{ ldlt (Work initiation date) : Specify
estimated date of initiation of work
• sfo{ ;DkGg ug]{ ldlt (Work completion date) :
Specify estimated date of work completion
• At the end of standard format, concerned officials have to
sign mentioning position and date
1) Office “A” intends to procure in fiscal year 2075/76 as
follows. Prepare MPP and APP of office “A” as per
requirement.
Description Tentative cost Duration
a) Generator Rs. 4 million within FY
b) Computer Rs. 0.9 million within FY
c) Canal construction Rs. 20 million 2 Years
2) Office “B” intends to procure in fiscal year 2075/76 as
follows. Prepare MPP and APP of office “B” as per
requirement.
a) Supervision consultant RS. 20 million 3 Years
b) Road construction Rs. 500 million 3 Years
c) Furniture Rs. 0.8 million within FY
3) Office “C” intends to procure in fiscal year 2075/76 as
follows. Prepare MPP and APP of office “C” as per
requirement.
a) Building maintenance Rs. 1.6 million within FY
b) Furniture Rs. 1.1 million within FY
c) Software consultant Rs. 5 million 2 years
4) Office “D” intends to procure in fiscal year 2075/76 as
follows. Prepare MPP and APP of office “D” as per
requirement.
a) Medicine Rs. 100 million within FY
b) Surgery equipment Rs. 90 million within FY
c) Lab maintenance Rs. 1.9 million within FY
Any Question?

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Chapter 2

• Planning is key to successful implementation of any activity

 It is an opportunity for all stakeholders involved in the

 Planners can estimate the time required to complete the

 The Procurement Plan is the product of the procurement

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