Procurement Professionalization in the new World Bank Procurement - - PowerPoint PPT Presentation

Procurement Professionalization in the new World Bank Procurement Framework

2016

World Bank – Facts and Figures

• Multilateral Development Bank
• Most Government’s represented
• Bank funds over 1,800 investment projects in 172 countries
• Procurement portfolio worth about US$44 Billion in total
• Annual procurement’s circa US$15 to $20 Billion
• New modernized Procurement Framework based on

feedback from 5,000 people around the World

• Great Apps for finding information
• 225 procurement staff in 72 countries support projects

2

Core Procurement Principles

Value for money Economy Integrity Fit for purpose Efficiency Transparency Fairness

3

Key changes

• Core principles, rather than extensive rules
• Emphasize:
• Problem solving – meeting the real need
• Managing risks – getting ready to fix problems
• Commercial edge – getting a good deal over the long term
• Incentivizing performance – motivating people to do a good job
• Focusing on results – getting the right solution
• Building tri-partite partnership (client, contractor, bank)
• Early focus on strategy and planning to engage business
• Justify the most fit for purpose procurement approach
• Project Procurement Strategy for Development
• Achieve value for money

Developing the right procurement strategy

PPSD (Project Procurement Strategy for Development)

Developing the right procurement strategy

• Development
• bjectives
• Task team
• Borrower team
• Project Concept

Note

• Current approach,

working or not? Why?

• Operating context i.e.

Fragile Conflict States

• Market analysis
• Capability, capacity &

practice (resilience)

• Competitive tension
• Suppliers /

Contractors

• Supply chain
• Market management
• Strategy options
• Evaluation against
• rganizational

requirements

• Comparative risk

assessment

• SWOT
• Options appraisal
• Detailed description
• f preferred option
• Implementation risk

assessment

• Procurement route to

market

• Contract

management provisions

6

Generating and evaluating procurement

• ptions

Organization’s Needs

Development Objectives Stakeholder Objectives Procurement Objectives

Procurement Options:

In-house or Buy Service or asset Work packaging Collaboration Cross project opportunity Value chain integration Supply chain integration Risk allocation Type & terms of contract Type of specification VFM & Whole life cost Incentive mechanisms Relationship Conditioning

Market

Capability, capacity & practice Competitive tension Suppliers/Contractors Supply chain Market management

Existing Procurements

Strengths & Weaknesses Opportunities & Threats

Test Input Input Input Input Input

7

Thinking about market dynamics

Goal: To gain a common understanding of the current supply

market in order to be able to clearly:

• Identify the type of market and the nature of the competition
• Know the factors influencing the market and how they may change it
• Describe the nature of competition
• Assess Borrowers previous experience in getting VfM and their impact
• n the market
• Know who the key players are and their plans for the future
• Define current best practice pricing methods and benchmarks

Output:

• A clear understanding of the target market and its dynamics
• A set of ideas for how value for money will be achieved
• How opportunities/risk will be managed at different procurement stages

(Prequalification through to Contract Management)

• How suppliers/contractors will be motivated to bid/innovate
• How the Borrower will incentivize suppliers/contractors to perform

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How do contractors regard you?

High

DEVELOP CORE NUISANCE

HARVE ST

Low Low % of Revenue Attractiveness

The Supplier’s view of the client?

• Nuisance

Supplier gives minimum attention and seeks to withdraw

• Develop

Supplier nurtures relationship, performs very well and provides incentives for growth

• Harvest

Supplier seeks short term advantage, no long term potential

• Core

Supplier seeks strategic, long term customer relationship

High

9

• What is a good result?
• How will value for money be

achieved?

• How will opportunities/risk be

managed at different procurement stages:

• Prequalification
• Specification
• Evaluation
• Contract Management
• How will suppliers/contractors be

motivated to bid/innovate?

• How will you incentivize

suppliers/contractors to perform?

• Determine the right procurement

arrangements:

• World Bank in full
• Other MDB/bilateral
• Borrower’s arrangements (APA)
• Will the procurement use (for

example)?:

• Request for Bid, or Proposal
• International/National
• Pre/post qualification
• Special conditions of

contract

• Framework agreements
• Reverse auctions
• Competitive dialogue
• Value engineering
• Best & Final Offer
• Negotiation
• How will the bid be costed?
• Lump sum
• Target fee
• Schedule of rates
• Time based
• Performance based
• How will responses be

evaluated?

• Substantially responsive/Lowest

evaluated cost

• VfM rated criteria
• Contract Management approach:
• Risk management
• Monitoring of costs, key

performance indicators, milestones and deliverables

• Contract variations

Strategic approach to procurement activities Outputs

Project overview

• Project Development

Objectives

• Key result indicators
• Statement of

requirements

• Project components

For all projects:

• Procurement Plan
• Summary PPSD for inclusion in the Project

Appraisal document

Operational Context

• Governance (FCS,

Legal & regulatory factors)

• Economic factors
• Sustainability aspects
• Technology factors

Market Research

• Market identification and

segmentation

• Previous experience
• Market capability, nature
• f competition
• Current practice, pricing

methods, benchmarks

Where needed:

• Procurement Risk Management Plan
• Contract Management Plan

Client capability

• Experience and capacity

in this procurement

• Level of any support

required to do the procurement and manage contracts

PPSD sections

10

Procurement Professionalization

Rigid rules to core principles

Professional Procurement is key

• Regulations are a guide, with many choices
• Analyzing, strategizing and options appraisal is critical
• Justify the right procurement approach:
• Operating context
• Risk
• Market dynamics
• Capacity
• Judgement needs professionals in order to live
• Getting the right result needs judgement
• Emphasis on building professional procurement quickly

12

Conclusions

Conclusion

• Large and diverse procurement portfolio
• Support some of the World’s most complex procurements
• All countries are different, so procurement needs to be fit

for purpose

• Fit for purpose doesn’t work with rigid rules
• Core principles guide us
• Project Procurement Strategy for Development directs us
• Proportional approach, based on risk and value
• Professional procurement is key to success
• Build more market confidence to get the right bidders
• Work together to deliver development results

14

Setting the right procurement approach based on risk, operating context and market dynamics gets the best results, but only if there are confident procurement professionals in place to do it Key message

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Procurement Professionalization in the new World Bank Procurement Framework

2016