COLLEGE OF FINANCE, MANAGEMENT AND DEVELOPMENT

DEPARTMENT OF PUBLIC PROCUREMENT AND ASSET

MANAGEMENT

Factors Affecting the Performance of Public Procurement: The

Case of Addis Ababa City, Gulele Sub-City Administration

BY

WOSSENE MESELE TIREFA

ID.No-ECSU1704121

A Thesis proposal Submitted to the Department of Public Procurement and Asset

Management, College of Finance, Management and Development, Ethiopian Civil
Service University, in Partial Fulfillment of the Requirement for the Award of a Masters
Degree in Public Procurement and Asset Management.

Master of Art (MA)

Advisor

Baynesagn Asfaw (Dr.)

 February 06, 2019

Addis Ababa, Ethiopia

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 Approval

The undersigned certify that have read and here by recommended to Ethiopian Civil
Service University to accept the research proposal submitted by “Assessment of Factors
Affecting the Performance of Public Procurement: The Case of Addis Ababa City, Gulele
Sub-City Administration ” in particle fulfillment of the requirement for the award of a
Master’s Degree in Public procurement and Asset Management (PPAM).

Declared by Confirmed by
Name: Wossene Mesele Advisor: Baynesagn Asfaw (Dr.)

Signature________________ Signature __________________

Date____________________ Date____________________

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 LIST OF TABLES

Table 3.1 Target population of the study and sample size Selected from Each selected
public sectors ……………………………...…………………………..…….56

Table 3.2 Key Informants (for face to face interview) from selected public sectors and
public procurement and property management support core processes team
leaders .............................................................................................................57

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 LIST OF FIGURES

Figure 1.1 Gulele Sub-City Boundary…………………………………………….…….11

Figure 2.1 Conceptual Framework of the Study …..........................................................46

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 LIST OF ACRONYMS

COSO   Committee of Sponsoring Organizations of the Treadway Commission

CPAR Country Procurement Assessment Report

CSA Central Statistics Agency

EPAR Ethiopian Procurement Assessment Report

EU European Union

FDRE Federal Democratic Republic of Ethiopia

FPPPAA Federal Public Procurement and Property Administration Agency

GDP Gross Domestic Product

ICT Information Communication Technology

INTOSAI International Organization of Supreme Audit Institutions

MOED Ministry of Education

OECD Organization for Economic Co-operation and Development

PPA Public Procurement and Property Administration Agency

PPAM Public Procurement and Asset Management

SBD Standard Bidding Document

SDGs Sustainable Development Goals

SPSS Statistical Package for Social Science

UNCITRAL United Nations Commission on International Trade Law

UNDP United Nation Development Programme

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 Table of Contents
CHAPTER ONE..................................................................................................................1
INTRODUCTION...............................................................................................................1
1. Introduction........................................................................................................1
1.1. Background of the study...........................................................................................2
1.2. Statement of the Problem..........................................................................................6
1.3. Research Objective....................................................................................................9
1.3.1. General objective.........................................................................................................9
1.3.2. Specific objectives.......................................................................................................9
1.4. Research questions....................................................................................................9
1.5. Significance of the Study........................................................................................10
1.6. Scope and Limitation of the Study..........................................................................10
1.7. Description of the study Area..................................................................................11
CHAPTER TWO...............................................................................................................12
LITERATURE REVIEW..................................................................................................12
2.1. Introduction.............................................................................................................12
2.2. Theoretical framework............................................................................................12
2.2.1. Institutional Theory...................................................................................................13
2.2.2. Technology, Organization and Environment Theory.................................................13
2.2.3. The Legitimacy Theory.............................................................................................14
2.3. Definition of public procurement............................................................................15
2.4. Public procurement vs private procurement............................................................16
2.5. Principles of public procurement............................................................................18
2.5.1. Economy (Value for Money).....................................................................................19
2.5.2. Competitiveness........................................................................................................19
2.5.3. Effectiveness.............................................................................................................20
2.5.4. Transparency.............................................................................................................21
2.6. Procurement performance.......................................................................................21
2.7. Procurement challenges and consequences of poor procurement performance......22
2.7.1. Internal challenges.....................................................................................................23
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 2.7.2. External challenges...................................................................................................23
2.8. Procurement performance in public sectors............................................................26
2.9. Key purchasing variables........................................................................................32
2.9.1. The Right Quality......................................................................................................32
2.9.2. The Right Quantity....................................................................................................32
2.9.3. The Right Time.........................................................................................................33
2.9.4. The Right Price.........................................................................................................33
2.9.5. The Right Supplier....................................................................................................34
2.10. Procurement performance indicators...............................................................34
2.11. The legal and regulatory frameworks governing the Ethiopian public
procurement.............................................................................................................37
2.11.1. Public procurement reforms in Ethiopian..................................................................37
2.12. Empirical review of the related literatures.......................................................39
2.12.1. Studies in Ethiopia....................................................................................................40
2.12.2. Similar studies in other countries..............................................................................42
2.13. Research Gaps.................................................................................................43
2.14. Conclusion and summary of literature review.................................................44
2.15. Conceptual Framework....................................................................................45
CHAPTER THREE...........................................................................................................47
RESEARCH METHODOLOGY......................................................................................47
3.1. Introduction.............................................................................................................47
3.1.1. Research Philosophy.................................................................................................47
3.2. The Research Approach..........................................................................................48
3.3. Research Design......................................................................................................49
3.4. Research Techniques...............................................................................................50
3.5. Sample Design.........................................................................................................51
3.5.1. Target population......................................................................................................52
3.5.2. Sampling Frame........................................................................................................53
3.5.3. Sampling Unit...........................................................................................................53
3.5.4. Sampling Technique..................................................................................................53

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 3.5.5. Sample Size...............................................................................................................55
3.6. Data Collection Instruments....................................................................................58
3.6.1. Primary Data.............................................................................................................58
3.6.2. Secondary Data.........................................................................................................58
3.7. Data Analysis and Interpretation.............................................................................58
3.8. Ethical Consideration..............................................................................................59
3.9. Validity and Reliability...........................................................................................60
Refereneces........................................................................................................................61
Appendixes
Appendix I:Time frame work and budget plan
Time break down of thesis work
Budget requirement for the study
Appendix II
Appendix III
Appendix IV
Appendix V
Appendix VI

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 CHAPTER ONE

INTRODUCTION

1. Introduction
Globally, public procurement is gaining prominence as a profession that plays a key role
in the successful management of public resources. A number of countries have become
increasingly aware of its significance but an area which more vulnerable to corruption
and have thus made an effort to integrate procurement into a more strategic view of
government efforts (Samson et al., 2016). (Mahmood, 2010) mentioned that corruption is
disastrous to the sound functioning of any government department. Corruption has been
an intractable problem in many developing countries; especially where it has become
systematic to the point, where many in government have a stake. It diverts decision-
making and the provision of services from those, who need them to those, who can afford
them. However, as part of the efforts to adopt a long term and strategic view of their
procurement needs, most countries have resorted to using their annual procurement plans
as a possible problem solver (Samson et.al., 2016). Particularly, in developing countries
government’s capability is measured by its well managed and performing the public funds
to alleviate poverty, enhancing government credibility (Word Bank, 2012).

Besides, the fiduciary obligation to deliver goods and services to the constituents of the
particular government administration, public procurement addresses a wide range of
objectives (Uyarra, 2009). It has been used by governments to achieve socio-economic
objectives such as stimulating economic activity; protecting national industries from
foreign competition; improving the competitiveness of certain industrial sectors; and
remedying national disparities (Bolton, 2006). Consequently, developed and developing
countries have need for a well-functioning public procurement system. This is
particularly true for developing countries, where procurement usually accounts for a high
proportion of total expenditure (Development Assistance Committee, 2003).

In the public sector, procurement function is the main source of service delivery to the
citizens of a country, yet constraints affect its performance. Such constraints are related
1
with internal and external forces like professionalism, staffing levels and budget
resources, organizational structure whether centralized or decentralized, procurement
regulations, rules, guidelines, internal control policies and corruption (Kim, 2013).
Therefore, Poor public procurement performance is a major hindrance to procuring
entities growth since it causes the delay of delivery, increase of defects, delivery of low
quality goods or non delivery at all (Gordon & Murray, 2009) and it is vital to give
emphasis about the strategic factors that affect the performance of the procurement
function (Senait et.al., 2016).

The influence of certain factors on procurement performance has been in focus for years,
together with their impact on the overall organizational efficiency. Poor procurement
performance is usually due to incompetent staff, traditional procurement procedures and
poor coordination of procurement activities, lack of ICT utilization and lack of proper
regulations (Hamza et.al, 2017). Despite the fact that there are various studies that focus
on procurement performance in other countries, it seems there is no enough study that has
been conducted on factors affecting procurement performance in public organization of
Ethiopia. This will be prompted the researcher to conduct the study in Addis Ababa City,
Gulele Sub-City administration with a view to establish factors affecting procurement
performance.

1.1. Background of the study

Throughout the world, public procurements are very important components in the
delivery of services and functioning of various departments of the government
institutions. It is essential on the government to ensure that goods and services are
provided efficiently to the public. It is obvious that the public sector comprises of
government departments and public institutions, such as a roads and transport services,
communication systems and health services etc. These organizations supply goods and
services to the public) and are supplied through public procurement (Uyarra, 2009). The
public procurement procedures are crucial for this to be achieved. All goods and services
for public use should be guided by the public procurement requirement (Roodhooft &
Abbeele, 2006).
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Public procurement is described as an “overall process of acquiring goods, civil works
and services which includes all functions from the identification of needs, selection and
solicitation of sources, preparation and award of contract, and all phases of contract
administration through the end of a services’ contract or the useful life of an asset” (Thai,
2009). According to Ethiopian Proclamation No.649/2009, “Procurement means
obtaining goods, works, consultancy or other services through purchasing, hiring or
obtaining by any other contractual means; and public procurement mean procurement by
a public body using public fund".

In addition, 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 , appropriate quality
and service to meet business needs, and appropriate governance. These apply to the
majority of procurements with a total value over a specified threshold. Contracting
authorities need to deploy strong personal and organizational commercial leadership, and,
in most cases, procurement activities need to be led by professionally trained staff. The
procurement approach and procedure must be relevant and appropriate for what is being
purchased, and the market must be able to provide it at an affordable price (McAdam,
2010).

In every country that is administered in a democratic policy needs to be accountable

in its use of public money and in providing effective, efficient and economical
service delivery (Mlinga, 2009). Public procurement is not only key to government
service delivery but also a tool that can be used to drive economic, environmental and
social development (Mlinga, 2009). This is due to in developing countries it accounts for
a high proportion of total expenditure. For example, public procurement accounts for
60% in Kenya, 58% in Angola, 40% in Malawi and 70% of Uganda’s public spending
( Basheka & Bisangabasaija, 2010). Public procurement has a major impact on national
economy of Ethiopia, more than 60% of the total public expenditure and 14 % of the
GDP has been spent through public procurement in a year (PPA Annual Report, 2014). It
3
is a huge amount of money that public bodies spent via public procurement. Efficiently
and effectively handling this size of procurement outlay has been a policy and
management concern as well as a challenge for governments.

Procurement performance and organization performance are intricately and inextricably

intertwined. Procurement function was and is still an area that consumes substantial
amount of resources in any country’s economy (Agaba & Shipman, 2007). This is why it
is important to maximize on effective and efficient management of the procurement
function in an entity (Samson et al., 2016). Effective and efficient public procurement
systems are essential for the realization of SDGs such as maintaining a fast growing
economy, but unfortunately, procurement systems in many developing countries are
particularly weak and serve to spend scarce domestic and foreign resources (OECD,
2005).

It is critical to note that most government procurement policies, reforms guidelines and
regulations (world over) have been customized from World Bank revised procurement
guidelines 2017 (World Bank, 2017). Developing countries in one way or another have
reformed their public procurement regulations (Patrick, 2010). African countries have
already taken a number of steps to improve their public procurement systems. However,
ensuring efficiency, accountability and transparency in undertaking the national, regional
and international public procurement process is challenging (Gizachew, 2012).

Likewise, the Government of Ethiopia has already begun implementing major reform
programs since 2009. To establish an efficient and effective procurement practice, the
government of Ethiopia made proclamation on public procurement and property
administration in 2009. The Federal Government of Ethiopia Procurement and Property
Administration Proclamation No 649/2009 was enacted by parliament replacing the
previous law. The law led to the establishment and operation of the Federal Public
Procurement and Property Administration Agency (FPPPAA) and the independent
Complaints Board. The law also emphasizes best practices including value for money,
non discrimination, transparency and accountability as the major principles of public

4
procurement in Ethiopia. Following this proclamation a number of trainings have been
conducted to acquaint the procuring personnel on procurement issues, methods,
procedures. However the procurement practices failed to be as efficient as expected to
achieve the best value for money (Yirga, 2011).

Despite Government efforts to improve the procurement system, it is still marred by sub
optimal works, inadequate quality of goods and services. Improper implementation of
recommended performance standards results in unnecessarily high operation costs,
uncoordinated business activities, inability to achieve domestic policy goals, and failure
to attract and retain professionals. Suppliers complain about the capability of public
sector buyers (Samson et.al., 2016). In reality, for any organization to change its focus
and become more competitive, performance is a key driver to improving quality of
services. They also noted that the use of inappropriate means can be a barrier to change
and may lead to deterioration of procurement operations (Batenburg & Versendaal,
2006).

Organizations which do not have performance means in their processes, procedures, and
plans experience lower performance and higher customer dissatisfaction and employee
turnover (Boniface et al., 2014). This was agreed by Juma (2010) & Okinyi & Muturi
(2016), who added that poor procurement performance in the public procuring entities
has been a problem due to lack of compliance to procurement regulations, lack of
adherence to procurement procedures, contract management, lack of professionalism in
undertaking procurement activities and lack of transparency in tendering process.
Dejen’s (2014) findings also indicate that procurement planning, employee competency,
information technology, procurement process, procurement follow up mechanism and
organizational structure highly affect the performance of procurement function and
resource allocation or budget allocation affect the procurement process at minimum level.

All the challenges and factors need attention since they could influence the performance
of the procurement function. Therefore, it is essential to investigate the problem through
scientific research and to suggest appropriate remedies for the identified problems and fill

5
this research gap by examining factors such as procurement plans, competency of staff,
utilization of information communication technology and internal control more
specifically at Gulele Sub-City administration.

1.2. Statement of the Problem

According to Chimwani et.el. (2014), public procurement is a key to government service
delivery and has been one of the vital departments in any organization. It contributes
tremendously to the organizational efficiency and effectiveness (Snider & Rendon, 2001).
When the delivery of services is constrained or becomes ineffective, it affects the quality
of life of the people and nation’s development process (Arrow, 2010). Still public
procurement faces a lot of challenges since many individuals i.e citizens don’t know the
importance of public procurement and how important it is for them to do what they are
supposed to do like pay taxes to enable the public procurement (Nyambura & Mwangi,
2015).

The procurement of goods and services by government agencies enable governments to

deliver public services and fulfill other tasks. Procurement systems have a significant
impact on the efficiency of the use of public funds and, more generally, on public
confidence in government and on good governance. The attainment of value for money,
public access to information on government contracts, and fair opportunities for suppliers
to compete for government contracts, are all essential requirements of an efficient
government procurement system (OECD, 2003).

Nonetheless, most developing countries are facing a problem of rapid changes in

procurement requirements. The changes are impacting pressure on how the procurement
function performs its internal and external processes and procedures in order to achieve
its objectives. The ability to realize procurement goals is influenced by internal forces
and external forces. Interactions between various elements, professionalism, staffing
levels and budget resources, organizational structure whether centralized or
decentralized, procurement regulations, rules, guidelines, and internal control policies, all

6
need attention and influence the performance of the procurement function ( Gattiker &
Carter, 2000).

The implementation of public procurement law contributes and plays a great role for the
successful operations of public organization. In most public organizations now a days, the
procurement of goods, works and services take a significant percentage of expenditures
or huge financial outflows (John, 2007). Consequently, little effort was expended to
ensure that the policies and rules and the institutional framework governing the
procurement system were maintained in a manner that ensured that public funds were
used in the most efficient and economic way and that the system delivered the best value
for money. Recently many developing countries have therefore instituted making the
procurement system more transparent and efficient and at increasing the accountability of
public officials (Sue & Martin, 2003).

Despite Government efforts to improve the procurement system, poor procurement

performance is a major hindrance to procuring entities growth since it causes the delay of
delivery, increase of defects, delivery of low quality goods or non-delivery at all (Gordon
& Murray, 2009). Likewise Gunasekaran (2008) pointed out that there are various
studies that focus on procurement performance. Many procurement activities suffer from
neglect, lack of direction, interference, poor co-ordination, lack of open competition and
transparency, differing levels of corruption and most importantly not having a staff of
trained and qualified procurement specialists, who are competent to conduct and manage
such procurements, in a professional, timely and cost effective manner. Inflexible and
bureaucratic systems of procurement contribute to contract delays, increased costs and
lack of fair competition, all of which affect the procurement process and performance
negatively.

Another study by Okinyi & Muturi (2016) and Mamiro (2010), points out that poor
procurement performance in the public has been a problem due to academic
qualifications and experience, contract management and procurement planning process,
which include needs that are not well identified and estimated, unrealistic budgets and

7
inadequacy of skills of procurement staff, traditional procedures and inability to embrace
electronic procurement, poor coordination of activities, lack of quality assurance policies
and lack of proper regulations greatly influence the efficiency of procurement process in
public institution. Their study also disclosed that lack of expertise, political interference,
weak institutional structures, inability to implement; monitor policies and laws are the
most significant factors affecting procurement performance in the public sectors.

The Ethiopian Procurement Assessment Report (EPAR) carried out by the World Bank in
2012, had identified deficiencies in the public procurement system to include “loose legal
framework, lack of codified procedures and regulations, weak capacity of procurement
staff, and unclear institutional and organizational arrangements for processing
procurement and decision-making in award of contracts”. In Ethiopia, More project
works are being affected due to the lack of effective procurement process, which is the
main cause of insufficient service delivery in all public sectors (Anteneh, 2015).
Furthermore, according to Gizachew (2012), the Ethiopian public sector working
program mostly extended to the coming years, due to the lack of effective procurement.
These can be expressed as goods/services or works not being procured on time because
the work programs affected by procurement planning i.e. incomplete procurement plan,
urgent/unplanned procurement requisitions and lack of technology usage in the
procurement process influenced the procurement performance (Getahun, 2015; Abebe,
2017).

Zegeye (2015), in his study entitled “ Factors Affecting Procurement Performance of

Public Higher Education Institutions: The Case of Jimma University”, described in his
findings that procurement staffs competencies and ICT utilization affect procurement
performance. To illustrate, most of the personnel who were employed in the procurement
department were not properly trained and lacked skills required to run the procurement
processes using computers. On the other hand, having unskilled and inexperienced staff is
the turnover rate of skilled and experienced staff is high due to low salary and benefit.
Similarly, another study by Abebe (2017) disclosed procurement staffs competencies
affect procurement performance of PPPDS in the sense that inexperienced staff carry out
8
duties unprofessionaly. In the organization were procurement planning, staff
qualification, procurement procedures and utilization of ICT positively affect
procurement performance at PPPDS.

In spite of having various studies undertaken on procurement performance in public

procurement, there are still gaps that need to be addressed. The key notable gaps
identified for this study include: effects of planning; influence of staff competency to
handle procurement functions; effects of implementation of Information Technology (IT)
and internal control. This prompted the researcher to conduct the study in Gulele Sub-
City Administration with a view to establish factors affecting procurement performance.

1.3. Research Objective

1.3.1. General objective

The general objective of this study is to assess the factors that affect procurement
performance in Addis Ababa City, Gulele Sub-City Administration.

1.3.2. Specific objectives

The specific objectives of the study are as follows:

1. To determine the effect of procurement planning on the procurement Performance;
2. To ascertain the extent to which competency of staff influences the performance of
procurement;
3. To assess how utilization of information communication technology (ICT) affect the
performance of the procurement function;
4. To analyze the effect of internal control on procurement performance;

1.4. Research questions

The study attempts to address the following research questions;
1. How does procurement planning affect the performance of the procurement function?
2. How does staff competency affect the performance of the procurement?

9
3. How does utilization of information communication technology (ICT) affect the per-
formance of the procurement?
4. What is the effect of internal control on the public procurement performance?

1.5. Significance of the Study

The findings of this research will help Gulele Sub-City Administration to identify the
factors that affect procurement performance and to fix the problem with remedial action.
It is also expected that from the findings of this study, Gulele Sub-City Administration
will put in place appropriate measures to improve procurement performance levels.
Similarly, it provides the researcher an opportunity to compare the academic theory with
the actual procurement practice at the ground and gain deep knowledge in the concepts of
Public procurement performance. This study will serves as a reference for other
researchers who are interested in conducting studies on related issue. In addition, the
study will be important to procurement professionals in various public sectors since it
will add a body of knowledge to factors affecting procurement performance. The issues
which will be addressed in this research seek to improve public procurement practices as
part of their strategic plan for the achievement of best value for public money. The
decisions given based on the research will also be important to improve overall public
procurement performance.

1.6. Scope and Limitation of the Study

The limitation of the study will be lack of sufficient secondary data or research
documents on related topics in the study area.

The outcome of this study will be based on sample from a single organization i.e. Gulele
Sub-City Administration. Due to constraints in terms of time and cost it will not to
consider samples from other public organizations. Therefore, it will be difficult to
generalize the findings to other similar organizations. Nevertheless the result will shed
some light on the nature of procurement activities among different units of the
organization.

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The scope of the study will be delimited to the procurement activities of Gulele Sub-City
Administration, taking as a case, specifically on the factors that affect procurement
performance such as procurement plans, staff competency, utilization of ICT and internal
control. The subject of the study is only Gulele Sub-City Administration public
procurement practices. The study will also measure the performance of procurement
activities of Gulele Sub-City Administration in terms of the five rights of purchasing.

1.7. Description of the study Area

The study will be conduct in Gulele Sub-City , which is one of the 10 sub cities of Addis
Ababa, the capital of Ethiopia. The Sub-City is located 9º 3’ 46.8" N 38º 44’ 36.96" E in
northern suburb of the city, near the Mount Entoto and Entoto Natural Park. It borders
with the sub cities of Kolfe Keranio, Addis Ketema and Yeka.

Based on the 2007 Census conducted by the Central Statistical Agency of Ethiopia (CSA),
the Sub-City has a population of 267,624, of whom 129,396 are men and 138,228
women. This Sub-City has an estimated density of 100 people per square kilometer. The
Sub-City of Gulele has an estimated area of 80,000 square kilometers. Since the main
purpose of the study is to assess the factors that affect procurement performance in
Gulele Sub-City Administration, the researcher found the Gulele sub-City triggering area
to be under scrutiny. This is because the sub-city is under institutional reform and
constructing different infrastructures for the public. So, the Sub-City has many problems
in their procurement performance.

Fig. 1.1 Gulele Sub-City boundary

(Source: From GIS)
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 CHAPTER TWO

LITERATURE REVIEW

2.1. Introduction
Hart (2018) defines the literature review as the selection of available documents, both
published and unpublished, on the topic (in this case, public procurement performance)
which contains information, ideas, data and evidence written from a particular standpoint
to fulfill certain aims or express certain views on the nature of the topic and how it is to
be investigated, and then the effective evaluation of these documents in relation to the
research proposed.

Likewise, the key concepts of this study will be reflected in the background information
and statement of the problem. Subsequently, this chapter will be reviews these concepts
and their relationships. The review will also include describing links among the concepts
as provided by relevant theories. Empirical studies relating to the study variables will be
reviewed as they form a basic ground of the study. Furthermore, the review is
summarized in the form of a conceptual framework. The chapter will end by highlighting
the critiques and gaps emanating from the reviewed and documented literature.

2.2. Theoretical framework

Defee et al., (2010) asserts that, good research should be grounded in theory. There are
several theories and models that explain and describe the way public procurement
operates. This study will be dwell on three theories namely the Institutional Theory,
Technology, Organization, and Environment Theory and Legitimacy Theory. They are
capable of explaining factors affecting procurement performance and specify the relation
of independent variables to one another. Generally, they explain rationale association of
the selected factors and procurement performance. These theories were adopted
considering subsequently will be used in developing the conceptual framework for this
study.

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2.2.1. Institutional Theory
This theory is one of the traditional approaches which are used to examine components of
public procurement. The theory adopts a sociological perspective to explain
organizational structures and behavior (Dunn & Jones, 2010). Scott (2004) suggests that
there are three pillars of institutions namely regulatory, normative and cultural cognitive.
The regulatory pillar focuses on the use of rules, regulations and procedures as basis for
compliance. The normative pillar on the other hand deals with norms and value with
social obligation as the basis of compliance. The cultural cognitive pillar rests on shared
understanding (common beliefs, symbols shared understanding). Adopting from this
theory, all public entities in Ethiopia are guided by rules and regulations with the
respective laws and the attendant regulations and guidelines governing the public
procurement processes and activities. The theory therefore supports the first independent
variable of this study i.e., procurement planning. The institutional theory highlight that
procedures must be observed in order to ensure that all the stakeholders involved in the
procurement exercise obtain fair treatment. The procedures include from planning for the
required procurement over a given period up to payment and post contract performance.
If the institution follows the procedures then the procurement and supply chain
performance will be increased (Meyer & Rowan, 1977).

Furthermore, procurement performance can be enhanced if training for procurement staff

is emphasized. The current changes in business environment calls for highly and
professionally trained procurement staff in order to deal with the complexities in the
supply market. According to Carr & Smeltzer (2000), for procurement to be at a strategic
level, professionals need to poses a set of skills and competency. Once again, the theory
will be supports the second independent variable of the study namely staff competency.

2.2.2. Technology, Organization and Environment Theory

The Technology, Organization and Environment theory was developed in 1990 by

Tornatzky & Fleischer. It identifies three aspects of an organization that influences the
process by which it adopts and implements technological innovation. This three aspects
13
are;- technological context, organizational context, and environmental context.
Technological context describes both the internal and external technologies relevant to
the organization. This includes current practices and equipment internal to the
organization, as well as the available technologies external to the organization.
Organizational context refers to descriptive measures about the organization such as
scope, size, and managerial structure. Environmental context is the arena in which a
organization conducts its business dealings with the suppliers (Matasio, 2017).

2.2.3. The Legitimacy Theory

Dowling and Pfeiffer (1975) defined legitimacy theory as a condition or status which
exists when an entity’s value system is congruent with the value system of the larger
social system of which the entity is a part. However, when a disparity subsists between
the two value systems, there is a threat to the entity’s legitimacy (Guthrie et al., 2007).

The legitimacy theory states that the organization is responsible for disclosing its
practices to the stakeholders, especially to the public and justifies its existence within the
boundaries of society (Wilmshurst & Frost, 2000). Witting (1999) argues that public
procurement is a process within a political system, as such public officials responsible for
the procurement processes and decisions are accountable to representatives of the public
whose money is spent. From this theory, the perceived legitimacy of public procurement
rules has been identified as one of the prerequisites of public procurement compliance
behavior.

Legitimacy of public procurement achived by auditability in the organizations. It

incorporates aspects of governance which emphasizes effective internal controls, capable
processes and competent personnel. The internal controls refers to the objective of
enforcing internal control policies to ensure compliance with laws and regulations,
monitoring procedures to assess enforcement and reporting material weaknesses (Rendon
& Rendon, 2015).

14
Borrowings from the legitimacy theory, one of the functions of the public organizations
are controlling the procurement activities to monitor and report on the performance of
public procurement system of the organizations. Subsequently, the procurement laws
require that reports on compliance audits conducted in the procuring entities be published
and being open for public debate. The theory will be useful to supports the fourth
independent variable of the study namely internal control.

2.3. Definition of public procurement

Public procurement described as an “overall process of acquiring goods, civil works and
services which includes all functions from the identification of needs, selection and
solicitation of sources, preparation and award of contract, and all phases of contract
administration through the end of a services’ contract or the useful life of an asset”
(UNDP, 2010).

Arrow smith (2010) defines public procurement as a government’s activity of purchasing

the goods and services needed to carry out its functions. As for Arrowsmith (2010), the
concept of public procurement can be described in three phases; (1) determining which
goods or services are to be bought and when (procurement planning), (2) the process of
placing a contract to acquire those goods or services which involves, in particular,
choosing who is to be the contracting partner and the terms on which the goods or
services are to be provided and (3) the process of administrating the contract to ensure
effective performance. In order to illustrate the diversity of public procurement, Arrow
smith (2010) argues the transactions of procurement can be categorized in three types:
Goods - supplies or products, which can either be simple items such as office furniture,
or very complex items such as missiles or tanks. Works - primarily construction,
involving building roads, railways, bridges and government buildings. Services -
emphasizes on manual services such as maintenance of government buildings, cleaning
of roads, professional services such as architects or engineers for construction, legal
services or consultancy services.

15
According to the Ethiopian Federal Government Procurement and Property
Administration Proclamation (2009), procurement means obtaining goods, works,
consultancy or other services through purchasing, hiring or obtaining by any other
contractual means; and public procurement mean procurement by a public body using
public fund.
Therefore, all are discussed more about the conceptual frameworks & the applications of
public procurement in their own way. Generally, public procurement defined by different
authors differently but conceptually all definitions contain have the same meaning and
function, i.e. it is the acquiring of goods, services and works at the right quality, in the
right quantity, from the right sources, at the right time, place and price through pre-sated
rules, regulations and standards openly with aiming value for money in order to achieve
an organizational objectives.

2.4. Public procurement vs private procurement

In both public and private sector procurement goods and services have to be acquired,
and in both there are good reasons to strive for the best deal in obtaining the required
goods and services. However, despite these similarities, it is well accepted that public
procurement is quite different from procurement in the private sector (Johnson &
Duberley, 2003). It is, however, recognized by Knight et al. (2007) that there are a
number of unique aspects in public sector procurement, characterized by high levels of
public disclosure and sheer magnitude of resources devoted to public procurement
compels attention. The public sector represents about 40-50% of many of the world’s
economies in terms of spending on providing services and procuring from the private
sector. Countries such as Singapore spend approximately 18% of its economy, whilst
other developing countries spend up to 80%.

Although not dissimilar in terms of principle as both have to acquire goods or services,
they are in fact very different (Knight et al., 2007). Thai (2009) suggests that the core
difference between public and private sector procurement is the relationship between
both parties. Similarly, Walker & Brammer (2009) stated that the nature and context of

16
public sector purchasing differs from commercial practice because, as well as both being
concerned with reducing costs and achieving value, public sector buyers have the
additional task of achieving social, environmental and other benefits in their purchasing
to fulfill the responsibilities of government to society. When comparing public and
private sector procurement, it appears that the demands on public procurement are greater
and more highly varied than those on the private sector.

Knight et al. (2007) has grouped the various demands that differentiate public and private
procurement thus: external demands, internal demands, demands originating from
context, demands on process and multiple roles for the public organization itself. He
mentions that, the external demands are those of transparency, integrity, accountability
and exemplary behavior, because a government is expected to set an example, not only in
terms of ethical standards, but in terms of efficiency and effectiveness of their own
operations.

Where, to a large degree, private organizations are permitted to invoke whatever criteria
they like and use whatever control procedures they see fit to govern the outflow of money
to suppliers, the public sector operates under the constraints of having to behave
rationally and fairly, as good custodians of public money (Newman , 2003). Knight et al
(2007) mentions that, as well as the external demands that face public procurement,
internal demands in a public organization also differ from that of the private procurement
organization; public organizations have different goals at the same time, some of which
may be conflicting such as good sewage systems or road works.

Public organizations also have political goals; an official may have been elected on a
platform of these particular goals. Clearly, stakeholders in public procurement are many:
citizens, taxpayers, the electorate, elected officials, management, and procurement
officials, all of which have different objectives and agenda. Whilst public procurement
buys goods or services for themselves, they are also buying for the citizen that they are
expected to serve. The suppliers in this case are also citizens, taxpayers and the
electorate. Public procurement is budget driven, i.e., the budget determines what can and
17
cannot be procured. These budgets are open and the public thus changing supplier-buyer
relationships drastically from private procurement. The demands on the process of public
procurement fit very tightly within strict limits that are imposed by legal procedures and
legislation, such as EU rules or local political choices. Given these differences it seems
justified to state that public sector procurement is more complex than private sector
procurement (Knight et al., 2007).

According to Snider (2006), procurement may have more of a strategic character in the
private sector than in the public sector and it is the difference in the tactical and strategic
role of procurement that is attributable to the difference between public and private
procurement. Public and private procurement more or less share many objectives, such as
achieving value for money and guaranteeing an efficient procurement process. Up until
recently, it was assumed that only public procurement included social and environmental
objectives but this is not necessarily the case and, with corporate social responsibility, the
private sector has become increasingly focused on promoting social and environmental
objectives (Arrowsmith, 2010).

In summary, it seems justified to state that public sector procurement is more complex
than private sector procurement. All of the demands mentioned above are faced by public
procurement practitioners in addition to those imposed on private sector procurement.
Public procurement is a challenging subject to work on and it should be developed further
to deal adequately with these complexities (Knight et al., 2007).

2.5. Principles of public procurement

According to Reza and Behzad (2017), it is generally accepted that the primary objective
of public procurement is an economic one, namely to obtain value for money. Its
secondary objective is to further the government’s socio-economic policies. To best
achieve these objectives the procurement system must in its practical application comply
with certain principles or objectives. Tajarlou & Darabad (2017) mentioned the broad
principles applicable to public procurement, which are common to the Model Law and
the Government Procurement Agreement , can be extracted:
18
 1. Economy, including value for money;
2. Competitiveness;
3. Effectiveness;
4. Transparency
They are also often referred to as goals or requirements. These principles are achieved
through specific provisions in the public procurement systems.

2.5.1. Economy (Value for Money)

Synonymous with efficiency, value for money, and commercially reasonable price, the
principle of economy emphasizes the need to manage public funds with care and due
diligence so that prices paid for goods, services and works are acceptable and represent
good value for the public funds expended on them. As public procurement is an
economic activity, the principle of economy is the first principle that will be discussed
(Trepte, 2006). Economy is concerned with minimizing the cost of resources acquired or
used, having regard for the quality of inputs. Efficiency is concerned with the relationship
between the outputs of services and the resources used, while effectiveness is concerned
with the achievement of targets, not only in terms of quantity but also quality (Curtis et
al., 1998)

The means by which value is to be achieved is a source of much debate. Economy

efficiency through competition can reduce cost and improve quality (Domberger &
Jensen, 1997). The economic object of public procurement is to obtain the best product at
the best price. This is often referred to as the achievement of value for money that to
ensure that the lowest price is obtained the widest possible competition by potential
suppliers is necessary, and the principle of competition will therefore have a direct
influence on the principle of economy (Arrow smith, 2009).

2.5.2. Competitiveness
In public procurement systems, competition is seen as a way to obtain the best value as
an outcome, which is an objective of public procurement systems. Competition is more
accurately seen as a means to achieve other public procurement goals. Individuals and
19
private companies may not talk or think in terms of competition, though they are more
likely to talk and think about process for choosing contractor as “shopping round” or
conducting market research (Schooner et al., 2008). Allison (2013) indicates that, the
principle of competition is said to be intertwined with cost-effectiveness and involves the
achievement of value for money the principle of competition in procurement is in essence
an economic one which could safely have been dealt with under the principle of
economy. It is a core feature of the procurement process, in particular with regard to the
methods of procurement.

According to Trepte (2006), competition, as an economic principle, will ensure that

suppliers will offer the best product at the best price to win the competition. It overlaps
with the other principles mentioned, for instance that of effectiveness in that it is
generally accepted that effective competition will enhance the process. As public
procurement takes place in the open market the principle of competition entails that an
opportunity is given to a sufficient number of suppliers in the open market to offer their
goods or services to the procuring entity on a competitive basis. The purpose of such
competition is to obtain the best product at the best price through the most cost-effective
process.

2.5.3. Effectiveness
To ensure that all of the principles applicable to public procurement are achieved, in
particular value for money, the procurement system must be effective. Effectiveness can
be defined as productiveness with relation to the costs of the procurement process. An
effective public procurement system will allow suppliers to provide satisfactory quality,
service and price within a timely delivery schedule. The basic tenet of public
procurement is straightforward: acquire the right item at the right time, and at the right
price, to support government actions (Tajarlou, & Darabad, 2017).

The dictionary meaning of efficiency is productive use of resources, i.e., the ability to do
something well or to achieve a desired result without wasted energy or effort. This is

20
about ensuring value for money. Public procurement has to be practiced based on
ensuring value for money. Driven by considerations of value for money, governments
have put increasing efforts into rationalizing and increasing efficiency of procurement.
There has been recognition that procurement officials need to be equipped with adequate
tools for improving planning and management and that their decisions need to be well
informed so as to enhance efficiency in procurement (OECD, 2007).

2.5.4. Transparency
Transparency means decision taken and their enforcement is done in a manner that
follows procedures (Osafo, 2003). It also means that information is freely available and
directly accessible to those who will be affected by the decisions and their enforcement.
Efficiency in public is an important issue in cases where public procurement account for
a large portion of economic activity. However in theory, transparency could mean
visibility within an agency (Schooner et al., 2008).

The concept of transparency is important in public procurement regimes and is mentioned

as one of the principle factor of the Model Laws and information on the public
procurement process must be made available to all public procurement stakeholders:
contractors, suppliers, service providers, and the public at large, unless there are valid and
legal reasons for keeping certain information confidential. This large volume of
procurement related transactions provide a fertile ground for breeding corruption
(Tajarlou, & Darabad, 2017). Since Corruption thrives under darkness, transparency is
the remedy to the darkness. Thus, a transparent procurement process is a key for ensuring
good economic governance in the country (Neupane et al., 2012).

2.6. Procurement performance

Procurement performance covers a number of quality and quantity-enhancing
benchmarks, which narrows down transaction costs, time spent, and the quality and
quantity of goods delivered. Based on their analysis on the performance of public
procurement officers, procurement performance entails high returns on investment,

21
reduced transactional costs, faster delivery of services and supplies, delivery of high
quality purchases, and streamlined supply chains (Odhiambo &Kamau, 2003).

According to Van Weele (2006), procurement performance starts from purchasing

efficiency and effectiveness in the procurement function in order to change from being
reactive to being proactive to attain set performance levels in an entity. Performance
provides the basis for an organization to assess how well it is progressing towards its
predetermined objectives, identifies areas of strengths and weaknesses and decides on
future initiatives with the goal of how to initiate performance improvements.
Procurement performance is not an end in itself but a means to control and monitor the
procurement function. For any organization to change its focus and become more
competitive, performance is a key driver to improving quality of services. Van Weele
(2006) concludes that, there is a link between procurement process, efficiency,
effectiveness and performance.

Furthermore, procurement performance has to do with the proper management of

procurement activities. The management of procurement activities narrows down to the
basic functions of the human resource departments of hiring best procurement
management talent, subjecting this top talent to on-the-job training and development,
rewarding and motivating this top talent through competitive salaries, benefits and career
progression (Bianchi et al., 2010)

2.7. Procurement challenges and consequences of poor procurement

performance

An effective public procurement system is essential for good governance. A poor

procurement system results in high costs to government and the public in general. It
delays project implementation which further increases costs, leads to poor project
execution performance and delays the delivery of benefits to the beneficiaries.
Procurement problems also increase scope for corruption, generate more complaints and
raise concerns about the integrity of the procurement process (Adu Sarfo, 2011).

22
Thai (2009) noted that, Challenges in public procurement can be divide into internal and
external challenges.

2.7.1. Internal challenges

Public procurement practitioners have always walked on a tight rope. Their ability to
accomplish procurement objectives and policies is influenced very much by internal
forces including:

 Interactions between various elements of the public procurement systems, various of-
ficials and organizations in the three branches of government, and various actors and
sub-agencies within a department or executive agency and actors and organizations
external to sub agencies;
 Types of goods, services and capital assets required for an agency's missions;
 Professionalism or quality of procurement workforce;
 Staffing levels (e.g., ratio of procurement practitioners to contract actions) and budget
resources;
 Procurement organizational structure such as the issue of centralization vs. decentral-
ization;
 Procurement regulations, rules and guidance; and
 Internal controls and legislative oversight.

These were confirmed by Asante (2017), who found that procurement selection criteria of
cost, time, quality and lack of monitoring have effects on procurement performance.
Similarly, the non- compliance to laid down procedures in procurement results in weak
management in the different units and creates loss of financial resources and does not
make the venture cost effective (Knight et al. 2007).

2.7.2. External challenges

Thai pointed that public procurement practitioners have always faced challenges imposed
upon by a variety of environment factors including market, legal environment, political

23
environment, organizational environment, and socio-economic and other environmental
factors.

2.7.2.1. Market Environment

Market conditions have a great influence on public procurement practitioners effort to
maximize competition. Moreover, the market determines whether or not socio-economic
objectives of procurement are accomplished, whether or not a governmental entity can
fulfill its needs; the timeliness of fulfillment; and the quality and costs of purchased
goods, services and capital assets (Thai, 2009). According to Mckie (1970), public
procurement especially of high value items operates in market condition where
competition is distorted. It is large buyer large supplier situation with barriers to entry
thus, competition is not perfect.

2.7.2.2. Legal Environment

Apart from public procurement regulations and rules, the legal environment refers to a
broad legal framework that governs all business activities including research and
development (regulations dealing with safety and health of new products), manufacturing
(safety and health regulations at workplace and pollution control), finance (regulations
dealing with disclosure of information), marketing (regulations dealing with deceptive
advertising, disclosure of product characteristics), personnel (regulations dealing with
equal opportunity for women and minorities), and contracts. Indeed, most aspects of
contracts, public or private, such as contract requirements, disputes, and breach of
contract are governed under the same contract law. In developing and particularly
transitional countries, where legal systems are not comprehensive, government contracts
may need detailed provisions. This is supported by Asante (2017), who found that,
enormous funds are lost every year because public procurement policies are poorly
managed. In view of this , public sector workers need to be properly managed to make
sure that compliance to important regulations, policies and procedures are achieved.

24
2.7.2.3. Political Environment
In a democracy many individuals, groups, and organizations in the private sector
including trade associations, professional associations, and business firms or companies
(commonly known as interest groups) are actively involved in all aspects of the public
procurement system. Having various interests, objectives and beliefs, interest groups are
involved in the public procurement system in several ways such as lobbying legislative
bodies to pass or alter procurement statutes, influencing implementation of these statutes,
and influencing budget authorization and appropriations processes (Thai, 2009). The role
of political head is important in public procurement and public procurement strategy
(Murray, 2009). There is direct and indirect role of politician in award of contract (Knight
et al., 2007). Any attempt to reform public procurement is always constrained by political
interference (Pegnato, 2008). The bureaucrats therefore required to understand the
different between political interference and political mandate (Murray, 2009). However,
the role of politician is taken in negative sense as serving their self-interest (Haruta and
Radu, 2010).

2.7.2.4. Social and Economic Environment

While some countries impose social policies on their public procurement practices (such
as a policy placing a fair proportion of government acquisitions with woman/minority
owned small business, or economically disadvantaged areas), most governmental entities
be it a developed or developing country or federal, state, and local governments use their
large procurement outlays for economic stabilization or development purposes by
preferring national or local firms over firms from other countries or other geographic
locations. Public procurement practitioners may be in a favorable economic environment
or market (with many competing tenderers in their country or local areas) or an
unfavorable economic environment (where competition hardly exists). This environment
would have a great impact on their practices as they may face an imperfect competitive
market.

Thai (2001) confirmed that the fundamental principles of good procurement practice
involve accountability, where effective mechanisms must be in place in order to enable
25
procuring bodies to use the limited resources cautiously and competitive supply requires
that the public procurement should be carried out by competition unless there are
convincing reasons for single sourcing and reliability, which lay emphasis on the equal
treatment of all bidders regardless of their race, nationality or political affiliation.

2.7.2.5. Other Environmental Forces

The public procurement system is also influenced by culture and technology. In a culture
where giving gifts is a common public relation practice, it is difficult to distinguish
between gifts and bribes. Moreover, rapidly advanced technology has forced public
procurement to (a) adopt new procurement methods, such as the use of e-signature and
purchase cards; and (b) be knowledgeable in many aspects and considerations of how to
procure information technology.

Asante (2017) identified that customer orientation, strategic supplier partnership, level of
information sharing, quality of information sharing, coordination and communication
among various stakeholders such as the procurement unit, finance, budget, works and
planning are major factors to ensure effective public procurement performance.

Achieving efficiency in public procurement is an ambitious task, as procurement faces

numerous challenges, especially due to the market structure, the legal framework and the
political environment that procurers face. Procurement performance should be based on
total cost, quality, and enhancement of competitiveness of suppliers using best
procurement practice.

2.8. Procurement performance in public sectors

Smith & Conway (1993) identified seven key success factors which influence
procurement, namely; a clear procurement strategy, effective management information
and control systems, development of expertise, a role in corporate management, an
entrepreneurial and proactive approach, co-ordination and focused efforts. communicate
among others is fundamental, communicate the key success factors to all levels of the
organization and set out a procurement strategy to achieve continuous improvement in
26
value for money. This should be based on total cost, quality, and enhancement of
competitiveness of suppliers using best procurement practice.

There is a need to have coherent methods of performance in the procurement function in

public entities. Basing on financial performance and neglecting non-financial
performance cannot improve the procurement operations because only partial
performance is considered. Realization of procurement goals is influenced by internal and
external forces. Interactions between various elements; professionalism, staffing levels
and budget resources, procurement organizational structure, regulations, rules, and
guidance, and internal control policies, all need attention and influence procurement
performance (Lardenoije et al., 2005).

Batenburg & Versendaal (2006) noted that, use of inappropriate means can be a barrier to
change and may lead to deterioration of procurement operations. Organizations which do
not have performance means in their processes, procedures, and plans experience lower
performance and higher customer dissatisfaction and employee turnover. Measuring
procurement performance yields benefits to organizations such as cost reduction,
enhanced profitability, assured supplies, quality improvements and competitive
advantage. Improvement to a public organization procurement performance can be
realized through reduced costs and wider choice availed.

The following are major factors affecting procurement performance. These are:

2.8.1.1. Procurement planning and procurement performance

Procurement planning is the purchasing function through which organizations obtain
products and services from external suppliers (Burt et al, 2003). According to Basheka
(2008), procurement planning is one of the primary functions of procurement that sets the
stage for successive procurement activities with a potential to contribute to the success of
public institution’s operations and improved service delivery. Likewise, James (2004)
describes that the principles of planning can be implemented in an atmosphere of
complete harmony. He further states that, as a function, procurement planning endeavors
27
to answer the questions as to what one wants to procure; when to procure it; where to
procure them from; when the resources be available; the methods of procurement to be
used; how timely procurement or failure will affect the user of the items; the procuring
and disposing entity; efficiency in the procurement process; and the people to be involved
in the procurement.

Peter (2012) states that good procurement plan should describe the process in detail to
appoint pertinent suppliers contractually. At the beginning, the items needed to procure
are defined, and then the process for acquiring those items is expounded in detail. Finally
the timeframe for delivery is scheduled. Moreover based on Quentin (2003), procurement
planning is important due to the following reasons: 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; it is an opportunity for all stakeholders
involved in the processes to meet in order to discuss particular procurement requirements.

2.8.1.2. Staff competency and procurement performance

Armstrong & Baron (1995) explain that, competency is the application of knowledge and
skills, performance delivery, and the behavior required to get things done very well.
Besides competency indicates adequacy of knowledge and skills that enable someone to
act in various situations (Aketch & Karanja, 2013).

According to Russell (2004), absence of adequate knowledge in procurement matters,

may end up with serious consequences including breaches of codes of conduct.
Furthermore, Banda (2009) mentioned many organizations do not have staff with the
right competence critical to good procurement process management. As a result
considerable and continuous investment is incurred in training and development (Sultana,
2012) and there is a need for extensive external training for human resources to be able to
improve and contribute to the efficiency of organizations (Appiah, 2010).

28
Moreover, Saunders (1997) advises that multi skilling offers employees with a variety of
skills and should be developed extensively. Hence, all employees need broad and
continuous education and training. Leenders & Fearon (2002) noted that, qualifications
are crucial for value-based management which requires employees to assess and improve
processes while contributing to team performance. Cousins (2003) stressed that, with the
ever increasing popularity of purchasing partnership philosophy, organizations must take
a closer look at the educational levels of procurement staff. With procurement’s perceived
movement from a clerical service to a strategic business function, the caliber of staff in
terms of training, education and skills must increase to fulfill its strategic potential. The
author asserted that employees need to learn new skills for improving work performance.

According to Berger & Humphrey (2007), a procurement function that is carried out
professionally is the core of delivery of any service on value for money principle.
Understanding is what allows an employee to become an innovator, initiative taker, and
creative problem solver in addition to being a good performer on the job. They list
benefits of training as improved productivity, quality, safety and health, communication
and better teamwork. Therefore, competence can ensure that the benefits of new products
and services are brought to the attention of the right person in the organization (Goetsch
& Davis, 2006).

2.8.1.3. Information communications technology and procurement

performance
Technology is the change or integration of means of processing a product or service from
what is perceived not be a good version to a better one. It can also be said to be a change
of system or way of operation from inefficient or manual to automatic operations
(Barsemoi, 2014).

Saunders (1997) reckoned that, personnel in procurement are, in a sense, information

processors. They receive, analyze, make decisions and distribute information in order to

29
manage the flow of goods and services in the supply chain. ICT is an enabler for
information sharing which organizations in the procurement system can use for
eliminating bloated inventory levels caused by cumulative effect of poor information
cascading up through a supply chain.

(Barsemoi, 2014) study notes that, unless one remembers that technology is a tool and
that one needs to know how to use it, for it to be productive, the money that spend on
technology will never appear to be wasted. According to the study, the emergence of
internet technologies has changed the way that governments and organizations operate.
These studies point out that the one thing to always remember about technology is that it
is a tool to assist in getting sourcing and procurement related activities done in the
organization. According to Adaval & Monroe (2002), information technology is
relatively cheap and flexible technology which not only has held significant importance
for communication in society, but also for the development of the interplay between one
procurement units of an organization to another.

2.8.1.4. Internal control and procurement performance

Internal control is an integral part of the management process by which an organization
governs its activities and operations to effectively and efficiently accomplish its mission.
The purpose of control processes therefore is to support the organization in the
management of risks and the achievement of its established and communicated
objectives. If the control system is ineffective, then the management system will also be
ineffective (Rendon, & Rendon, 2013).

The significance of public procurement is far reaching and affects many different areas of
an economy (Wittig, 1999). Rendon, & Rendon, (2015) research findings suggest that,
public organizations are not emphasising procurement internal controls in their workforce
competencies, which may be contributing to an increased vulnerability for procurement
fraud. Therefore, the need to put measures in place to ensure that public procurement
yields maximum benefits to the public cannot be overemphasized. Internal control of

30
public procurement activities has been identified as one of the means of making public
procurement to achieve desired expectations (Mapesa and Kibua, 2006).

According to Rendon, & Rendon (2015), public procurement organizations are charged
with ensuring that their contracts are satisfying customers’ needs in terms of value for
money and that their procurement activities are conducted with the highest levels of
integrity, accountability and transparency. Organizations need competent personnel,
capable procurement processes, and effective internal controls, i.e., auditability, in
performing their procurement duties and achieving their procurement mission. Effective
control starts from the top management level. Unless management leads by example to
demonstrate their organization commitment to safeguard procurement integrity and
uphold ethical values, employees are not likely to commit to or comply with the ethical
code and standards (COSO, 2013).

Applying appropriate mechanisms to monitor and control the whole public procurement
process will reduce opportunities for integrity breaches. These include clear chains of
responsibility in the procurement process, segregation of duties and authorization,
systematic recording, internal controls, reporting tools and checks. Progress and costs of
procurement should be monitored and published, independent oversight, evaluation and
audit should be conducted (including real-time controls) and identified irregularities
should be sanctioned. Mechanisms and protection to whistleblowers should also be
established (INTOSAI task force on public procurement audit, 2016).

In pursuing auditability in its procurement operations, public organization should

incorporate training on internal controls and fraud awareness in its procurement
competencies. This training should include an understanding of internal control
components and how they should be implemented in each procurement process area.
More importantly, the procurement workforce should understand the relationship
between ineffective internal control components and the resulting fraud vulnerabilities
within each procurement process area (Rendon, & Rendon, 2015).

31
2.9. Key purchasing variables
According to Baily et al., (2005), there are four important purchase variables in supply
management. They are right quality, quantity, time and price/cost.

2.9.1. The Right Quality

Quality is a difficult concept to define. It is said a good quality is what customers validate
to be good enough. In corporate world, there is a saying that perfection is like infinite.
The effort towards great quality is defined by minimizing the wastes and bringing out the
best possible outcomes. During a certain operational time, every company has its own
standards for any input products or services. However, this is a constant and consistent
task since the attitude of improvement is a must for the field of quality (Baily et al.,
2005).

According to Baily et al. (2005), buyers should make it clear on these two points: (1)
Quality of design or specification: have we specified the right material for the job and
have we communicated our requirements to our supplier in a clear and unambiguous
way? This is performance quality. (2) Conformance quality: has the supplier provided the
material in accordance with our specification? The answer is established after the
inspection.

2.9.2. The Right Quantity

Baily et al. (2005) mentioned that, the decision on buying quantities from purchase
department affects directly to stock and warehouse division. Stock control is a policy on
which items should be kept in stock and in what quantities. So that, it is easy to make a
buying decision on when to buy and what quantity it is needed. Additionally, there is
always a minimum inventory level of every item, which is set by the organization to
avoid sudden variations. Thus organizations have to set a strong communication among
purchase, production and stock departments in order to effectively purchase the right
quantity of goods and services.

32
According to Bail et.al (1998), ordering policies used by purchasing include: blanket
order which group many small requirements together for contracted purposes; period
contracts stating an estimated total quantity for the period and agreed price in conjunction
with call off order which states delivery date and quantity; period contracts which specify
a series of delivery dates and quantities; reorder level methods of stocks control whenever
the stock of an individual item is down to a quantity called reorder level (order point) and
order is initiated to obtain more stock and the economic order quantity etc.

2.9.3. The Right Time

Time is a critical variable to manage in a supply chain. In purchasing, it goes closely with
the responsiveness of production demand which is a result from customer demand. The
cost of time is sometimes more expensive than the actual cost of materials. A company
could increase its competitiveness through improving its responsiveness to customer
demand when it arises.(Baily et.al, 2005).

A must-to-have objective in purchasing is on-time delivery. The main role of purchase

department is to convince and negotiate with suppliers to deliver the goods and services
as the agreement was set earlier. Most of the purchasing orders take lead time. Another
job of purchase department is to communicate thoroughly and effectively with customer
department about lead time of each item so that they can communicate clearly with
customers. Proactive purchasing now emphasizes expediting more than ever. Expediting
means actions that assist and accelerate any process. It is a proactive approach rather than
a reactive problem solving (Baily et. al , 2005).

2.9.4. The Right Price

As Baily et.al (2005) mention in their book, Purchasing Principles and Management,
there are four main factors that influence the price of a product:

1. Market competition
2. Value defined by customers
3. Organizational strategy and
4. Production and operation costs
33
The three first factors are intangible ones and are monitored by external forces.
Production and operation costs are tangible and are monitored by how well a company
manufactures and operates. Some companies opt to save costs of production or
purchasing to increase profits instead of up selling products. Saving costs in purchase
department takes proper strategies and co-operation with suppliers. In effective and solid
partnerships with main suppliers, the actual costs drop approximately 30-40% according
to Baily et.al (2005).

2.9.5. The Right Supplier

The supplier have a strong enough financial base/financial capacity and competency (the
supplier, its people or its process competent and has adequate man-power to handle the
order). The supplier in a position to honor the commitment without much follow- up Bail
p. et al (2005).

2.10. Procurement performance indicators

Performance measurement system should save the purpose of identifying success,
identifying whether customer needs are met, understanding of processes, identifying
bottlenecks, identifying wastes, identifying problems, improvement opportunities,
providing factual decision, enabling progress, tracking progress, facilitating a more open
and transparent communication and co-operation (Gunasekaran et al., 2008).

From the public procurement point of view, performance measurement is about seeking
to answer the fundamental question of whether the procurement process and decisions
ultimately deliver in accordance with the procurement objectives set (Mlinga,2007).
Baily et.al (2005) assert that the key variables for any procurement are Right Quality,
Right Quantity, Right Time, Right Source and Right Price/Cost. It is on the basis of these
variables that the procurement objectives of any entity are derived.

According to Van Weele (2006) purchasing performance is considered to be the result of

two elements: purchasing effectiveness and purchasing efficiency. According to Takim,
and Akintoye (2002), efficiency measures correspond to the strong management and
internal organizational structures (adhere to schedule, budget and specification) and
34
effectiveness measures refer to user satisfaction and the use of the purchased material.
Lardenoije et.al (2005) mentions that performance provides the basis for an organization
to assess how well it is progressing towards its predetermined objectives, identifies areas
of strengths and weaknesses and decides on future initiatives with the goal of how to
initiate performance improvements. This means that purchasing performance is not an
end in itself but a means to effective and efficient control and monitoring of the
purchasing function.

According to the Organization Economic Cooperation Development (OECD) (2014),

experience in working with public procurement shows that a sound procurement system.
These sound procurement system includes: procurement rules and procedures; effective
institutions to conduct procurement; appropriate electronic tools; human resources to plan
and carry out procurement processes; and competent contract management. However, in
February 2013, The Working Party of the Leading Practitioners on Public Procurement
(they assisting the OECD Public Governance Committee in developing policy guidance )
asked the OECD to help developing a set of indicators to measure the performance of
public procurement systems and their evolution over time. And thus, four areas for the
development of indicators were identified:
1. Efficiency of the public procurement cycle:
Such as, use of contracting mechanisms; uptake of e-procurement; use of e-procurement
per contracting mechanism or per low/high value procurements; savings; savings using
framework agreements with second-stage competition; efficiency of the public procure-
ment unit; level of unsuccessful public procurement processes; reasons for unsuccessful
public procurement processes and public procurement award time (OECD, 2014).

According to Martin & Ronald (1995), regardless of the quality and effectiveness of the
service provided by the contracting office, it is universally considered important that the
service be provided efficiently as possible. They suggest that such measures as the total
number and dollar amount of contracts awarded, the number and value of contracts
awarded per specialist, the total cost of the contracting operation, the cost of the
contracting operation as a percentage of total award value and as a percentage of the

35
agency budget, and the amount of overtime incurred. Efficient procurement, therefore, is
a necessity and is encouraged and promoted by the International lending agencies such as
the World Bank (Arrowsmith, 2003).

2. Openness and transparency of the public procurement cycle:

such as, promoting competition: procurement procedure; promoting competition: number
of bids; increasing the supplier base and transparency of public procurement information
(OECD, 2014).

According to Raymond (2008), transparency in government procurement will provide an

assurance for both domestic and foreign investors that contracts will be awarded in a fair
and equitable manner.
In all markets, a lack of transparency in the sense of absence of information on rules and
practices could operate as a barrier to trade and may affect foreign suppliers more than
local ones (Arrowsmith, 2003). These rules would also ensure that goods and services are
obtained at the most economic prices and thus lead to a reduction in costs. Similarly
Rege (2001) mentioned that the most important benefit of transparent and open
procedures is the impact which their adoption may have on the level of corruption in
countries where it is widespread. Therefore, transparency promotes trust by allowing
stakeholders to see and judge the quality of government actions and decisions (Raymond,
2008).
3. Professionalism of the public procurement workforce:
such as, number of public procurement officials according to the value and number of
contracts and unsuccessful processes; and level of trained public procurement officials
(OECD, 2014).

Develop professionalism in procurement at all levels. Enhance the skills and knowledge
of officers handing procurement activates. Training to be provided to all managers and
staff involved in procurement activity, thereby increasing efficiency (Martin & Ronald,
1995).
4. Contract performance management:

36
such as, are suppliers delivering the right thing? are suppliers delivering at the right
moment? and are there delays in payment? (OECD, 2014). Procurement benchmarking
therefore is the effort to measure performance of a supplier of goods or services on the
basis of quality price and timely delivery (Raymond, 2008).

2.11. The legal and regulatory frameworks governing the Ethiopian

public procurement

2.11.1. Public procurement reforms in Ethiopian

Following the downfall of the Derg regime, the country promulgated a new public
procurement regulation. After the coming into effect of the new constitution in 1995,
Federal Democratic Republic of Ethiopian (FDRE) government drafted a new public
procurement laws and regulations; namely “The Federal Government of Ethiopia the
Financial Administration Proclamation 57/1996” and “the Council of Ministers Financial
Regulations 17/1997”. However, these rules and regulations were not made on the basis
of internationally recognized public procurement legal documents such as the
UNCITRAL Model Law on procurement of goods, works and services (World Bank,
2012).

In 1996 major civil service reform introduced in Ethiopia which is the Civil Service
Reform Program. One of the Civil Service Reform Program was Business Process Re-
engineering. The reform resulted many changes in the public procurement arena, among
which it include the preparation of new public procurement rules and regulation
(Government Procurement Proclamation and Directive). Based on the result of Business
Process Re-engineering; coordination and consolidation of procurement guidelines under
a single set of rules and regulation; improving organizational structure of public
procurement and building the capacity of procuring entities; laying a fertile ground for
competition and good governance in Public procurement system; creating a conducive
environment for consistency, transparency and accountability at all level of public

37
procurement. Inline with this procurement personnel of procuring entities have been
trained for proper implementation of procurement rules and regulation as part of the
effort to build the capacity of public bodies.Farthermore, Standard Bidding Documents
(SBDs) were prepared and disseminated for all type of procurement to simplify the
procurement activity and to make it consistent across the board (Yirga, 2011).

2.11.1.1. The Ethiopian Federal Government Procurement and

Property Administration Proclamation
Having the objective to achieve better transparency, efficiency, fairness and impartiality
in public procurement and to enable the utilization of the large sum of public money
spent on procurement in a manner that ensures greater economy and efficiency, the
Federal Democratic Republic of Ethiopian (FDRE) government established a public
procurement proclamation under proclamation 649/2009 (The Ethiopian Federal
Government Procurement and Property Administration Proclamation, 2009).

According to World Bank’s CPAR (2012), significant public procurement policy reforms
have been made in Ethiopia. Previously public procurement was regulated with financial
proclamations, not recognizing public procurement as a separate legal area with separate
legal needs. A specific procurement law, the public procurement proclamation, was
introduced and in its latest revision from 2009 contains all the essential features of a
modern procurement law.

The fifteen chapter new public procurement proclamation has established an independent
public procurement control and oversight organ i.e. the Ethiopian Public Procurement
and Property Administration Agency (PPA). The regulation describes the basic
procedures of public procurement. Also, the different methods of public procurement and
international procurement are clearly featured. The proclamation in addition, has
introduced for the first time electronic procurement and established a board which
reviews complaints on public procurement.

38
2.11.1.2. Institutional framework of public procurement in Ethiopia
Prior to September 2009, there were no clearly defined central procurement oversight and
policy body with the functions of (i) devising procurement policy, (ii) preparing and
disseminating standard bidding documents and contracts suitable for different types of
procurement, (iii) monitoring compliance with procurement laws and regulations, (iv)
addressing issues of integrity and transparency, and (v) providing an adequate complaint
mechanism to address grievances from contractors and suppliers. In addition, there were
no specialized institutions capable to assess the training needs of procurement staff and
ensure continued capacity building. There were also a shortage of experienced
management and procurement staff capable of handling international procurement (PPA,
2014).

According to Yirga (2011), before the implementation of the Business Process Re-
Engineering, Public Procurement and Property Administration were separate functions
under the Minister of Finance and Economic Development. Since, following the
promulgation of the new proclamation and the implementation of the Business Process
Reengineering study the two departments merge in September 2009 under Proclamation
649/2009 and form the Ethiopian Public Procurement and Property Administration
Agency. Afterwards, PPA is in place and functioning it is able to perform reasonably, and
is starting to take its place as the key player in the formulation of public procurement
policies and monitoring current practices.

2.12. Empirical review of the related literatures

Various studies have been conducted on what actually influences the performance of
public procurement and well documented (Kiage, 2013; Ngwili & Susan, 2013; Amayi &
Ngugi, 2013; Kioko & Were, 2014; Shiundu & Rotich, 2014; Nyambura & Mwangi,
2015; Asante, 2017; Okinyi & Muturi, 2016; Belay, 2016; Hamza et.al, 2017; Abebe,
2017). However, for the purpose of this study, the review of empirical literature will be
done in line with the specific research questions and the hypothesized variables. My

39
review will be focuses on the methodologies adopted, variables used to assess the
performance, major findings and recommendations made. As suggested by Mugenda
(2008), such detailed knowledge of what has been done by other researchers has helped
us to avoid unnecessary and unintentional duplication, and more importantly helped us to
form a framework within which our findings were interpreted.

2.12.1. Studies in Ethiopia

Zegeye (2015) conducted a study on procurement performance in public higher
institutions a case of Jimma University. The objectives of the study were giving a better
insight about the factors i.e. procurement planning, resource allocations, staff
competency, information technology, procurement process and procurement follow-up
mechanisms that hinders public procurement performance in Jimma University. The
study was conducted through a descriptive research design. To analysis the data the
researcher uses descriptive statistics and narrative summary analyses.

His findings indicate that: Firstly, culture of preparing annual procurement plan among
users of the University was very poor. This directly affects the performance of the
procurement. The results further revealed that the department’s prepared annual
procurement plans and that the procurement plans were prepared and the goals set
participatory. Secondly, staff competencies at procurement unit affect greatly the
efficiency of procurement function. The main problem of having unskilled and
inexperienced staff is that, the turnover rate of skilled and experienced staff is high in
public institution due to low salary and benefit. Thirdly, the level of ICT skills among
staffs influence procurement performance to a very high extent. Fourthly, there is no way
of procurement follow up mechanisms. As a result, delay in delivery of items and will
yield customer dissatisfaction or users of the procurement unit.
Zegeye (2015) recommends that, public organizations should strive to strengthen their
procurement plan and make a good culture so as to ensure successful implementation of
their organizational plan and to achieve their organizational goals and objectives. Thus,
procurement plan must be fully integrated with the strategic plan and budget of the public

40
administration. ICT should embrace Information Communication Technology for the
purpose of enhancing efficiency, effectiveness and transparency. Regarding employee
competency, the top management should develop retention mechanism of existing
qualified and to attract qualified employees.

Hamza et.al (2017) conducted a study on factors affecting procurement performance in

Awassa Textile Share Company. The main objective of the study was examining the
impacts of staff competency, procurement procedure and resource allocation on
procurement performance. Descriptive research design and quantitative and qualitative
data analysis was used in executing the study. The study revealed that staff competence
and resource allocation were the most related factors affecting procurement performance.
Staff competence factor was measured in terms of training, motivation, procurement
negotiation skills, creativity, interpersonal and analytical skills and deployment of staff
based on their skills. In comparison, procurement planning was the least related factors
affecting procurement performance. As a result, the researcher recommended that
relevant staffs to procurement be involved in the process of plan preparation. To put it
(more) simply, preparation of annual procurement plans is participatory, frequently
reviewed so as to improve on the company’s performance. Correspondingly, it is
worthwhile that staffs be adequately trained and sensitized in order to boost the skills and
competency levels required by staffs involved in the procurement process. The company
would benefit if the management (at the top and middle level), support the procurement
department by allocating more resources and encourage trainings to improve the skills
and knowledge of the procurement staff.

Similarly, Abebe (2017) conducted a research on examining the factors that affect public
procurement performance in public procurement and Property Disposal Services. The
study used descriptive research design including descriptive and inferential data analysis
techniques. The main problems identified in the organization were procurement planning,
staff qualification; procurement procedures and utilization of ICT positively affect
procurement performance at PPPDS. Abebe (2017) recommends that, procurement plans
41
shall prepare on time with complete information by end users. Federal organizations shall
also minimized urgent/unplanned requisitions as well as should strengthen and ensure
successful implementation of their organizational plan to achieve their organizational
goals and objectives. Procurement plan must be fully integrated with the strategic plan
and budget of the public administration. In addition, the company should enhance its
employee’s competence as a way of achieving service delivery as a means of improving
procurement performance. This can be achieved by creating awareness through training
on the following aspects of procurement; state of the order up to date and also those
employees had superior knowledge in entire procurement process. Likewise company
should enhance the utilization of ICT in the entire business process which is inter-linked
to procurement.

2.12.2. Similar studies in other countries

Ngwili and Susan (2013) were conducted a research on factors affecting efficiency of
Procurement functions at the Public Institutions in Kenya. The study established that
existing legal framework and organizations culture affects the efficiency of the public
procurement function. Factors like political influence, fairness in awarding procurement
contracts, adherence in procedures, bureaucracy and corruption affect the efficiency of
the public procurement function at the public institution in Kenya. From the findings the
study concludes that staff competencies affect greatly the efficiency of procurement
function. Hence, employees need to acquire core competencies like knowledge, skills,
experience and abilities to enhance public procurement function efficiency in public
institutions. The study also concluded that supplies branch did not embrace modern
technology in the procurement function. Hence it implies that those public institution in
Kenya not using ICT in the procurement function do not benefit from its advantages of
reduced cost of holding stock, reduced paper work, increases transaction effectiveness,
increases quality of goods and services, reduced lead times and improved quality of
decision making. The study also found out that proper procurement records management
helps in giving authentic and reliable information and has an impact in procurement
function efficiency.

42
Similarly Stephen (2013) conducted a research on the determinants of Procurement
Performance at the Ministry of Education (Kenya). The study focused on problems of the
Ministry of Education (MOED) system of Kenya is in a bad state and the heavy
investment is not yielding commensurate returns. The study found out that, performance
of procurement in the MOED is largely influenced by the following determinants:
stakeholders, resource dependency, leadership style and technology. Finally the
researcher recommends Managers should be focused on mainly absorbing certain
resources or expertise staff within the organization to overcome dependency on external
resources. In this study the research didn't mention the role of procurement planning,
organizational structure, procurement follow-up mechanisms and skilled manpower in
facilitating the procurement activity in the study area.

Similarly, Kioko & Were (2014) assessed the factors affecting the public procurement
function at the public institutions in Kenya. The study adopted descriptive research
design with semi structured questionnaires as the key data collection instrument. The
study found that procurement staff competencies, legal framework, institutional culture
and information communication technology (ICT) had a positive effect on the efficiency
of the procurement function in public entities in Kenya.

2.13. Research Gaps

Evidences from the reviewed empirical literature show that most of the studies conducted
on performance of the public procurement focused on compliance organizational
structure, procurement planning, employees competency and utilization of ICT but did
not explain the effect of internal control on performance of the procurement function. For
example, a study by Ngwili & Susan (2013) on factors affecting efficiency of
procurement functions at the Public Institutions in Kenya found that legal framework,
organizations culture and staff competencies affects the efficiency of the public
procurement function, most of procurement proceedings in the procuring entities don’t
comply with the legal framework requirements fully. Nevertheless, the study did not
demonstrate the effect of such non- compliance on performance of the procurement
function in terms of its ability to achieve the departmental objectives. In the same way,
43
Hamza et.al. (2016) conducted a study on factors affecting procurement performance in
Awassa Textile Share Company found that staff competence and resource allocation were
the most related factors affecting procurement performance. However, the study didn't
mention the role of internal control in facilitating the procurement activity in the study
area.

In short, many of the previous studies on performance of procurement function in the

public entities have, to a large extent, concentrated on the process with little emphasis on
objectives. All studies have failed to explain for example, the effect of procurement
planning and internal control in the performance of the procurement department in terms
of timely availability of quality goods, works and services at the right cost. Hence,
attainment of the procurement objectives, i.e., on time delivery, high quality and
reasonable prices/ cost of the procured items, in most cases is neglected. The reviewed
empirical studies tend to generalize procurement performance by assessing it in terms of
efficiency, effectiveness and value for money of the procurement function, but at the
same time have failed to clearly define these terms. This study therefore will be intended
to fill the observed gaps that shall suffice to answer the research questions in an attempt
to assess the factors affecting procurement performance in Gulele Sub-City
Administration.

2.14. Conclusion and summary of literature review

The central focus of this study will be on factors that affect performance of the
procurement function in Gulele Sub-City Administration. As required by the best practice
and indeed in academic research, related literatures will be reviewed to shade light on
theoretical and empirical evidences of the study topic under investigation. Specifically,
the topic will be draw attention on what literature will be considered; what content and
context of theories will be considered and what empirical evidences are needed for
justification of the research framework (conceptual model) under consideration.

The study will be grounded by three theories. The theories adopted will be Institutional
Theory; Technology, Organization, and Environment theory; and Legitimacy Theory.

44
From the theories and empirical evidences the conceptual framework consisting of
independent and dependent variables will be developed. Four independent variables,
namely procurement planning, staff competency, utilization of information
communication technology in the procurement process and internal control in the
procurement process will be discussed. The dependent variable discussed in the study
will be procurement performance of Gulele Sub-City administration assessed in terms of
achievement of the procurement objectives (that is, timeliness, quality and cost).

From the reviewed theoretical and empirical literature, it is evident that a number of
studies on public procurement performance have been conducted both in developed as
well as in developing countries. Most of the studies however, failed to explain the
relationship among the variables so as to show the share of each independent variable on
procurement performance. The reviewed theories and practices from Ethiopia, Africa and
beyond therefore, provided the rationale for the research hypotheses that will be tested to
show the interface of the variables in responding to the research questions.

2.15. Conceptual Framework

Conceptual framework is a set of broad ideas and principles taken from relevant fields of
inquiry and used to structure a subsequent presentation. It is formed of patterns of
concepts and their interconnections (Colin, 2010). According to Boniface et.al (2014), a
conceptual framework is a research tool intended to assist a researcher to develop
awareness and understanding of the situation under scrutiny and to communicate this. It
is used in research to outline possible courses of action or to present a preferred approach
to an idea or thought.

In view of the foregoing literature, in particular the theories, the following conceptual
framework will be developed to examine the effect of some variables on performance of
the public procurement function at the administration level. Specifically, the study will be
conceptualized that procurement planning, staff competency, utilization of information
communication technology and internal control in the procurement process will be the
four independent variables whereas procurement performance of the administration in

45
terms of achievement of the procurement efficiency and effectivness (that is, timeliness,
quality and cost) as dependent variable. Figure 2.1 below presents the conceptual
framework of the study.

Independent variables Dependent variable

Procurement planning

Staff competency Procurement performance

Efficency
ICT utilization
Effectivness
Internal control

Figure 2.1: Conceptual framework of the study

CHAPTER THREE

RESEARCH METHODOLOGY

3.1. Introduction
This chapter covers the methodology and techniques underlying the execution of this
particular study. Specifically, it consists of research design, target population, sampling

46
frame, determination of sample size and sampling techniques; data collection procedures
and analysis. Furthermore, the chapter will be described how the data will be processed,
analyzed and presented. Finally, the data validity and reliability have also been described
in this chapter.

3.1.1. Research Philosophy

Easterby-Smith et.al (2004) emphasizes the importance of understanding the
philosophical issues in clarifying research design. The relationship between theory and
data is an issue that has been hotly debated by philosophers for many centuries.
Understanding philosophical issues clarifies research design, which will work, which will
not and will also help in identifying designs that may be part of the researcher ’s past
experience.

The two traditions, mentions Easterby-Smith et.al (2000), are social constructivism
(phenomenology) and positivism. Although it is possible to draw up a comprehensive list
of assumptions and methodological implications associated with positivism and
constructivism, it is not possible to identify any philosopher who subscribes to all aspects
of both positions. The positivism paradigm is based on the assumption of objectivity, i.e.,
a single reality exists about a social phenomenon which can be understood using
quantifiable facts obtained by adopting quantitative data collection and analysis methods.
On the other hand, the constructivist paradigm implies that an objective reality does not
exist since all realities are socially constructed (Bryman & Bell, 2003). Hence,
researchers are interested to collect general information and data from a sample and
generalize from sample to population through statistical probability, unlike
constructivism (phenomenology) generalize from one setting to another through
theoretical abstraction. In this study the positivist philosophy will be adopted due its
relevance and advantage.

O’Leary (2004) advocates that the Positivists aim to test a theory or describe an
experience through observation and measurement in order to predict and control forces

47
that surround us. The positivism philosophy helps a researcher collect all facts and
figures that are related with the research issue through general sources (Saunders et.al,
2003).

The positivists view involves: the observation of real world facts or phenomena, the
formulation of explanations for phenomena using inductive processes, the generation of
predictions about real world phenomena using previously formulated explanations and
deductive processes and the attempted verification of these predictions through
systematic, controlled experimentation or observation. Many philosophers thus believe
that positivism is the foundation and rationale for most management research (Johnson &
Duberley, 2000). So that, this study will be adopted the positivist philosophy based on the
fact that in order to empirically establish relationship between the variables, hypotheses
will be formulated and tested and findings generalized. The study will be guided by
objectivity and will not able to influence the results of the study.

3.2. The Research Approach

There is no single research methodology that is intrinsically better than the other hence,
the need for a combination of research methods to facilitate improvement in the quality of
research (Obiri, 2016). Therefore, this study will be conducted by a Mixed Research
design – Qualitative and Quantitative Research Designs. In collecting quantitative data,
the survey method will be employed by the use of structured questionnaires. The choice
of this approach was dual; first it is capable of yielding quantitative information that can
be summarized through statistical analyses and secondly, the survey method is an
effective tool for getting cause- and- effect relationships and hence is the most frequently
used in almost all disciplines (Ghauri & Gronhaug, 2005).

According to Kothari (2004), the mixed research design central premise is that the use of
quantitative and qualitative approach in combination provides a better understanding of
research problems than either approach alone. Therefore, mixed method research
approach will be helped in improving the accuracy of findings, providing a fuller and

48
more complete picture of the issue that will be studied, developing the analyses and also
aid to sampling, etc which makes it better than single one.

Qualitative research method focused on the importance of observation, the need to reveal
the hidden areas and the value of subjective human interpretation in the evaluation
process (Annells, 1996). The qualitative approach in this study will be focused on
detailing the results of the quantitative phase and describing factors affecting public
procurement performance in more depth. quantitative method is a means for testing
objective theories by examining the relationship among variables. Data collected is
number and statistics. The data is based on precise measurements and the final report will
be statistical report with correlations, comparisons of means and statistical significance of
the findings (Kothari, 2004).

Therefore, the researcher will be deemed a survey method a convenient design in

accommodating the variability associated with the diverse nature of the respondents and
the activities they are engaged in. For qualitative data, the interview guide and personal
observations will be used to collect in-depth information that supplemented data obtained
from the open and closed ended self administered questionnaires measured on the 5-point
Likert type of scales comprising strongly disagree to strongly agree. This in-depth
information will be provided the researcher with detailed insight on what actually
determines the performance of public procurement and property administration core
process in Gulele Sub-City administration.

3.3. Research Design

Kothari (2004) stated that the research design is the conceptual arrangement within which
the research conducted; it constitutes the blueprint for the collection, measurement and
analysis of data. Research design facilitates study efficiency and yielding maximal
information (Boniface et.al, 2014). In general terms, the research design is considered as
a program to guide the research in the collection, analysis and interpretation of observed
facts.

49
This study will be conducted by a descriptive and explanatory research type or design.
This design was appropriate because it gave an opportunity for one aspect of a problem to
be studied in-depth with minimal expenditure of effort, time and money (Kothari, 2005).
He asserts that, descriptive research included surveys and fact finding inquiries in order
to describe the state of affairs as it is. Therefore, this design will be attempts to identify,
examine and describe situations/issues related with the characteristics of independent
variables (factors affecting procurement performance) and dependent variables
(procurement performance) in Gulele Sub-City administration.

Similarly, explanatory research involves collecting data in order to test hypothesis or to

answer questions concerning the current status of the subject of the study (Gay, 1990).
Yin (1993) also stated that, explanatory research explains causal relationship between
cause and effect of a phenomenon. In order to understand the concept of procurement
performance, explanatory research will be used to explain the topic factors affecting
public procurement performance in Gulele Sub-City since it attempts to describe the
relationship between independent (factors affecting procurement performance) and
dependent variables (procurement performance).

3.4. Research Techniques

The main data collection instruments of the research will be questionnaires and structured
interviews. The primary data sources will be respondents from selected public
organizations. It will be collected by distributing questionnaire; interviewing key
informants and through personal observation. The rationality for using questionnaires
was that it is a convenient way for the researchers to create an opportunity and for the
respondents to oversee the questions and that it was easy to handle and interpret the
results. The questionnaires will be consisted structured and unstructured questions that
will be answered by the process owners, procurement officers, public sector employees
and registered suppliers at Gulele Sub-City administration. The researcher will be used
personal interview with head of the sectors offices. This is because personal interview is
flexible in nature and manageable in controlling the respondents’ conditions. The research

50
will also be considered observations as primary data. Yin (2011) describes an observation
as followed, “an invaluable way of collecting data because what you see with your own
eyes and perceive with your own sense is not filtered by what others might have self-
reported to you”. Moreover, observations have been performed in order to create a
holistic view of public procurement, procurement process and how performance
measures are applied within Gulele Sub-City administration.

The main secondary data sources will include available documents that help to
understand the factors affecting the performance of public procurement. Books, reviewed
articles, official annual reports, government proclamations and regulations are included in
this category.

3.5. Sample Design

A sample design is a definite plan determined before any data are actually collected for
obtaining a sample from a given population (Kothari, 2004). likewise, Saunders et al.
(2007) mentioned that, sample design provide a range of methods that enable a researcher
to reduce the amount of data need to collect by considering only data from a subgroup
rather than all possible cases or elements because in research work it is difficult to
consult all the population that is under the study. Therefore, taking representative sample
must be important to save time and important resources to conduct the study effectively
and efficiently.

The study will be adopted the five sampling steps of Malhotra et al., (2006); these steps
are closely interrelated and relevant to all aspects of the research. Those are identified
target population, determine the sampling frame, select sampling techniques, determine
the sample size and execute the sampling process.

3.5.1. Target population

The whole set of the universe from which a sample taken is called the population
(Saunders et al, 2007). This has been supported by Mugenda & Mugenda (2003) who
showed that, target population represents all cases of people or organizations which
51
possess certain characteristics from which a sample is taken and the researcher ultimately
would like to generalize the results of the study. The population of the study generally
consists of set of individuals, objects, cases, organizations, or events having certain traits,
characteristics or attributes of interest to study. Since this research will be carried out in
response to procurement performance problems facing Gulele Sub-City administration,
then the study identified selected sectors and participant suppliers to be the target
population.

There are 33 sectors and 3 public procurement and property management support core
processess in Gulele Sub-City Adminstration. Hence, due to the difficulty of covering all
the total existing public sectors, the researcher will be obliged to minimize its target
population for investigation by focusing on respondents from public procurement and
property management support core processess and only on 5 selected public sector that
are expected to be used as a representative of other sectors. These are public sectors
located in Gulele Sub-City administration and which spend a huge amount of the
government money through the procurement process. Similarly, selected suppliers which
are directly or indirectly involved in procurement process of the administration will be
chosen as a target population.

The study targeted this population because their contributions in the public procurement
and property management support core processess enable a clear assessment of the
factors affecting procurement performance in Gulele Sub-City administration. Therefore,
from this population the researcher felt that the findings will be reasonably being
generalized.

3.5.2. Sampling Frame

Sampling frame also known as source list or sampled population, refers to a list of
ultimate sampling entities; it is a physical representation of the target population and
comprises all the units that are potential members of the sample (Mugenda, 2008;
Kothari, 2011). In this study our sampling frame will be a list of all selected public

52
procurement property management support core processes, public sectors and participant
suppliers in 2018.

3.5.3. Sampling Unit

The researcher will have to decide one or more of sampling that he has to select for his
study Kothari (2004). The sampling unit of this study will be heads and employees of
public procurement and property management support core processes and selected sectors
(i.e. Public service and human resource development office, finance and economic
development office, small and micro enterprise devlopment office, land development and
management Office and Urban development and construction office); and selected
participant suppliers.

3.5.4. Sampling Technique

In regarding to selection of respondents, the researcher used both probability and non-
probability sampling Saunders et.al (2007). The sampling technique in the study will be
included non-probability sampling technique which is purposive sampling or judgmental
sampling method. In this type of sampling, items for the sample are selected deliberately
by the researcher; his choice concerning the items remains supreme. In other words,
under non-probability sampling the organizers of the inquiry will be purposively chosen
from the particular units of the universe which will be typical or representative of the
whole (Kothari, 2004).

Additionally, the researcher used probability sampling technique which is simple random
sampling method. According to Kothari (2004), random sampling ensures the law of
statistical regularity which states that if on an average the sample chosen is a random one,
the sample will have the same composition and characteristics as the universe. This is the
reason why random sampling is considered as the best technique of selecting a
representative sample.

Out of the 33 public sectors located in Gulele Sub-City administration their procurement
interest fulfilled by three public procurement and property management support core
53
processes; five public sectors will be selected purposively. The reasons for choosing them
were as follows:
 The Small and Micro Enterprise Devlopment Office, Public Service and Human
Resource Development Office, Land Development and Management Office and Urban
Development and Construction Office was selected because they spend huge amount of
money on public procurement relative to other sector offices.
 The Finance and Economic Development Office were selected because they are
the regulatory bodies to the procurement system of the administration.
 Ten out of twenty (50%*20) by simple random sampling from participant
suppliers in 2018 will be selected to get the information about the procurement
performance of the administration.

These sectors will be selected purposively, because the researcher believed in the fact that
the study will be used a sample of selected sectors which are homogenous in their
activities and respondents who are concerned experts having experience, know-how and
insight in the process. In addition, concerned heads of the sectors are key informants to
the researcher and it is believed that this contributes to reliability and accuracy of data.

Therefore, simple random sampling was employed to select the respondents from the
selected sample public sectors. However, public procurement and property management
support core processes employees were selected by purposive sampling. From the
selected public sectors the heads of the sectors; selected public sectors employees; public
procurement and property management support core processes employees will be
selected as the sampling units. Because the researcher believed that they will good
prospects for required information as they are the main stake holders in the procurement
process of the procuring entity. Similarly, the participant suppliers in 2018 will also be
selected purposively by taking recorded data from public procurement and property
management support core processes because they are part of the system and in order to
ensure the validity and reliability of the data given by the employees of the public sectors.

54
Correspondingly, respondents from those selected participant supplier’s will be selected
by purposive sampling.

3.5.5. Sample Size

Sample size refers to the number of items to be selected from the universe to constitute a
sample. Sampling sizes depend on the types of research design being used, the desired
level of confidence in the result, the amount of accuracy wanted and the characteristic of
the population of interest (Kothari, 2004). He also suggested that, an optimum sample is
one which fulfills the requirements of efficiency, representativeness, reliability and
flexibility. While deciding the size of sample, researcher must determine the desired
precision as also an acceptable confidence level for the estimate.

According to Kothari (2004), in order to determine the sample size of the population
which is less than 10,000, the sample size is calculated by using the following formula;
the researcher determine the sample size for population less than 10,000 with 95% level
of confidence and 0.5% errors.

Based on the above condition, the target population, and the simple random sample used
for this study is depicted in table 3.1 the data were taken from the Human Resource
Department of the Gulele Sub City Administration.

Sample size is calculated based on below formula (Kothari, 2004);

Where, p = estimated characteristics of target population = 0.5

n = sample size,

z = 1.96 (critical value for 95% confidential level)

e = standard error = 5%
55
 N= total population = 109
n= 186

To calculate the number of respondent from each selected public sectors, the sample size
distributed for each selected public sectors by using simple proportional calculations.
Number of respondent for selected public sectors

= No. each public sectors staffs xn

Total no. of all selected public sectors staffs

To make it clear, the sample size in each public sector is illustrated as follows:

Table 3.1: Target population of the study and sample size Selected from Each selected
public sectors

No. Selected Target Sample size per Method of selection

population sectors
sectors

1 Public service and human 120 62 [(120/361)*186] Simple random sampling

resource development office

2 Finance and economic 30 16[(30/361)*186] Simple random sampling

development office

3 small and micro enterprise 90 46[(90/361)*186] Simple random sampling

devlopment office

4 land development and 102 52[(102/361)*186] Simple random sampling

management Office

5 Urban development and 19 10[(19/361)*186] Simple random sampling

construction office

Total 361 186

7 Public procurement and property 25 13 (50%*25) Purposive sampling

management support core

56
 processes

8 Selected suppliers 20 10 (50%*20) Purposive sampling

Total sample size 406 209

Source: Human resources department of the Gulele Sub-City administration.

Therefore, the total sample size is 209, which will draw from sample populations.

Table 3.2: Key Informants (for face to face interview) from selected public sectors and
public procurement and property management support core processes team leaders

No Offices Key informants Method of selection

1 Selected public sectors head 5 Purposive sampling
2 public procurement and property 4 Purposive sampling
management core and support core
processess team leaders
Total 9

There will also be 9 key informants from selected public sectors and public procurement
and property management support core processes in terms of responsible teams who are
directly or indirectly engaged in public procurement process.

3.6. Data Collection Instruments

In order to achieve the objective of the study, it is necessary to collect both qualitative
and quantitative data. There are two types of data, namely primary and secondary data.
Researcher might use either both or one of the types of data depends on the research type
and data collect by researcher Saunders et.al, (2007). For this research, researcher will be
used both primary and secondary data.

57
3.6.1. Primary Data
According to Malhotra & Birks (2006), primary data are originated by a researcher for
the specific purpose of addressing the problem at hand. Therefore, the primary data
sources will be including data gathered by distributing questionnaires, conducting
interviews and observations. An interview will be use for manager of selected sectors and
procurement department and the questionnaire will be use to collect data from
procurement staffs, employees of user sectors and selected participant suppliers.

3.6.2. Secondary Data

The secondary data will be collected for this study including key public procurement
publications and literature on the subject, i.e. organizational reports, government
documents, relevant legislation, administrative rules, policies and procedures and other
researches on the stated research title.

3.7. Data Analysis and Interpretation

According to Kombo and Tromp, (2011), the data analysis procedure includes the process
of packaging the collected information putting in order and structuring its main
components in a way that the findings can be communicated easily and effectively.

After the relevant data will be collected and appropriate data will select the next step will
be checking and converting the data into tables that is appropriate and easy for analysis
and interpretation. The close-ended questions in the data will analyze by using Statistic
Package for Social Sciences (SPSS) or Microsoft Excel and Open-ended questions will
use by coding for the issues raised to make the finding effective.

The collected data will be analyze by using descriptive statistics including measures of
central tendency (e.g. mean) measure of distributional shape (i.e., skewness), inferential
analysis (e.g. correlation, multiple logistic regression) and will be present in the form of
graphs, tables and percentages by using Statistic Package for Social Sciences and
Microsoft Excel to get detail analysis because tabulation makes the data orderly and
easier for presentation and statistical analysis.

58
To further understand the relationship between the variables, multiple logistic regression
analyses will be carried out. In addition variables will be regressed using a model and all
coefficients interpreted. The model took this formula (O'Connell, 2006):

= β0 + β1 χ1i + β2 χ2i + β3 χ3i + β4 χ4i +

Dependent Variable = 1, if ith procurement performance

0, otherwise

Independent variables (χ1 is procurement planning, χ2is staff competency, χ3 is utilization

of ICT and χ4 internal control)

β0 = the constant

β1, β2, β3, and β4 are the regression coefficients of the independent variables (factors)

є = error term

3.8. Ethical Consideration

Each discipline should have its own ethical guidelines regarding the treatment of human
research participants (Vanderstoep & Johnston, 2009). Research ethics deal with how we
treat those who participate in our studies and how we handle the data after we collect
them. The researcher kept privacy (that left any personal questions), anonymity
(protecting the identity of specific individuals from being known) and confidentiality or
keeps the information confidential (Saunders et.al, 2007). Accordingly, the questionnaire
will be distribute to voluntary participants and will have a clear introduction and
instruction parts regarding the purpose of the research.

59
3.9. Validity and Reliability
Statistical validity also used to measure the validity of the research though use of correct
statistical procedure and instruments (Neuman, 2007). The researcher first will be tried to
address related and extensive literature to have complete data on the research topics. This
comprehensive approach helps to ensure face and content validity of the survey
instrument.

Researcher will be reviewed an extensive literature to develop questions for the survey.
Moreover, to insure the statistical validity of the study, the researcher will be collect
quantitative data using survey questioner and analysis the data using correct statistical
instruments like descriptive statistics, inferential statistics, correlation and regression
analysis to see the relationship of the variable and reach concrete conclusion.

60
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74
 Appendixes

Appendix I:Time frame work and budget plan

Time break down of thesis work

S.N Activities Time Table Accomplishment from November 2018 – June 2019

Nov.. Dec. Jan. Feb. Mar. Apr.i May June July

1. Proposal Work .... b l
1.1 First preliminary consultation for proposal x
1.2 Preparation and writing of thesis proposal x x
proposal
1.3 Developing data tools x
1.4 Submission of draft thesis proposal x
1.5 Submission of final thesis proposal x
2 Data collection
2.1 Field work and data collection x
3. Paper work
3.1 Data analyzing and interpreting x x x
3.2 Submission of first thesis draft to adviser x
3.3 Submission of second thesis draft to adviser x
(Correction and Modification)
3.4 Submission of final Thesis x
Thesis defense x
 Budget requirement for the study

No. Types of service or material Unit Quantity Unit price(Br) Total price(Br)
1 Stationeries
1.1 A4 size paper Packet 2 150.00 300.00
1.2 Writing pad Pieces 2 30.00 60.00
1.3 CD-RW Pieces 5 15.00 75.00
1.4 Stapler Pieces 1 110.00 110.00
1.5 Pen (red and blue) No. 10 6.00 60.00
A Sub-Total 605.00
2 Secretarial services
For proposal and thesis paper
2.1 Typing and printing 1st draft proposal pages 45 3.50 157.50
2.2 Printing final proposal pages 45 1.00 45.00
2.3 Binding proposal (draft & final) Bind 2 20.00 40.00
2.4 Typing and printing of questionnaires Pages 4× 35 3.50 490.00

2.5 Typing and printing 1st draft paper pages 100 3.50 350.00
2.6 Printing final research paper pages 5 × 100 1 500.00
2.7 Photocopies (1 draft -1 & final paper -1)
st
pages 2×100 0.75 150.00
2.8 Binding research paper (total 6) Bind 6 30.00 180.00
B Sub-Total 1,912.50
3 For Books and internet services
3.1 To photocopy necessary books for the research pages 400 0.75 300.00
3.2 Broadband internet services (2hrs for each 30 days) Minute 3600 0.50 1,800.00
C Sub-Total 2,100.00
4 Equipment costs
4.1 Flash disk (8GB) Pieces 1 350 350.00
4.2 Laptop Rent (2 months) No. 1 1000 2,000.00
D Sub-Total 2,350.00
5 Per diem and Transportation costs
5.1 Estimated transportation cost Day 10 100 1,000.00
5.2 Data collectors’ Allowance(6) Day 4x10=60 150 9,000.00
Sub-Total 10,000.00
E Contingency 10% 1,696.75
Grand total (A+B+C+D+E) 18,664.25
 Appendix II
Ethiopian Civil Service University

College of Finance, Management and Development

Department of Public Procurement and Asset Management

Questionnaires for public procurement and property management support core processes
employees

On the Assessment of Factor Affecting the Performance of Procurement: The Case of Addis Ababa
City, Gulele Sub-City Administration

Dear respondent,

Dear Sir/Madam,

My name is Wossene Mesele, a Masters student in Ethiopian Civil Service University Department
of Public Procurement and Asset Management (PPAM), supervised by Dr. Baynesagn Asfaw. As
part of the requirement for the award of the Masters Degree, I am expected to undertake a
research study on assessing factor affecting the performance of procurement: The case of Addis
Ababa city, Gulele sub-city administration. Therefore, I humbly request for your participation in
this study to fill the questionnaires attached below. Your opinion is extremely important in this
study and I promise that you the research results will be used for academic purposes only and will
be treated with maximum confidentiality. Thank you for your time and be blessed.

You may tick (√) and choose where applicable or give a brief explanation where necessary. If you
need any clarification or information contact me by: Mob. No. 0922579964 or by E-mail:-
wossenmesele@gmail.com
Thank you in advance for your cooperation!
PART I: General Information

1. Which public office are you working?

Public procurement and property management support core processes

Public service and human resource development office

Finance and economic development office

Small and micro enterprise development office

Land development and management office

Urban development and construction office

2. Gender:
Male Female
3. What is your age?
18 – 30 41 – 60

31 – 40 Above 60

4. What is your highest level of education?

Certificate First Degree

Diploma Master’s Degree and above

Other (Specify) ………………………………………………..

5. Your general work experiences (in years)

Less than 2 years 11 – 15 years

3 -5 years 16 – 20 years

6 – 10 years Above 20 years

6. What is your profession?

Management Engineering

Economics Procurement
Other specify________________________
7. What is your current position or title in this organization?, Please, write your position here
__________________________
8. How long have you been worked as procurement professional?
Less than 2 years 6 – 10 years

3 -5 years Above 11 years

PART II: Below are statements describing effect of procurement planning on procurement
performance in Gulele Sub-City administration. Please indicate by ticking the extent to which you
agree or disagree with each statement as applied to your organization.
9. Have you ever been involved in procurement planning?
Yes No
10. How often, do the public bodies/user departments mostly sent their requirement to your
organization?
Monthly Quarterly Bi annually Any time as need arise
11. Does procurement department regularly use the procurement plan as management and
monitoring tools?
Yes No
12. Do you think procurement planning of your organization prepared in comprehensive way with
sufficient detail to produce realistic quantification of needs, quality product/service/works,
achievable lead time for delivery and accurate cost estimate?
Yes No
13. Do you think all public sectors/user departments prepare their departmental procurement plans
as input to the annual procurement plan of the whole organization?
Yes No
14. Do public sectors/user departments are raised their procurement need on time?
Yes No
15. Does the procurement plan prepared through involvement and participating of all sector
offices/user departments?
Yes No
16. Does the procurement department circulate approved/updated procurement plan for all public
bodies/user departments?
Yes No
 17. Does the procurement department procure goods/services/works based on user department’s
procurement plan?
Yes No

No Procurement planning related questions Strongly Disagree Neither agree Agree Strongly
. disagree nor disagree agree

18. Procurement activities of the organization

are guided by annual procurement plan.

19. Consolidated procurement plan of the

organization approved by responsible
authority before starting the procurement
process.

20. Technical issues, financial and

implementation constrains are taken in to
account in estimating lead-time for each
procurement stage during procurement
planning process.

21. My department use market or other source

of data to estimate cost/price in the
procurement plan.

22. My department updated/revised

procurement plan when necessary.

23. My department evaluates and reports the

effectiveness of the procurement planning
in terms of achieving goals, procurement
method used, delivery time and cost
saving.
24. Procurement planning can facilitate
procurement activity according to user
need and helps the organization to achieve
value for money.

25. Urgent/unplanned requisition is a major

challenge to the organization procurement
performance.

26. Does the procurement department announce his annual procurement plan as required by
directives after procurement plan is finalized on the organization notice board or appropriate
media?
Yes No
27. Does the materials procured matches with the sectors/user departments plan and specification?
Yes No
28. What do you suggest/recommend to minimize the effect of poor procurement planning and
implementation in the organization procurement performance?

…………………………………………………………………….……………………………….......………………………
…………………………………………………………
PART III: Below are statements describing effect of staff competency on procurement
performance in Gulele Sub-City administration. Please indicate by ticking the extent to which you
agree or disagree with each statement as applied to your organization.

29. Have you received on job training on procurement law and procurement process?
Yes, it was sufficient training No
Yes, but I need more training I do not need training
If your answer is ‘Yes’, please list them?

.............................................................................................................................................................
...................................................................................................................................
30. Do you think that staff training improves procurement performance of the organization?
Yes No
No. Staff competence related questions Strongly Disagree Neither agree Agree Strongly
disagree nor disagree agree

31. The procurement activity is conducted by

competent procurement staffs.

32. Employees at procurement department have the

relevant education background related to
procurement.

33. All procurement staffs apply public

procurement principles in the procurement
process.

34. My department has motivation schemes which

enhance procurement staff performance.

35. My department deploys its staff based on skills,

competence and ability.

36. All procurement staffs have the ability to

understand users need and suppliers’ capacity.

37. What is your level of experience in performing the following procurement tasks?

No. None Poor Fair Good Excellent

37.1. Preparing bidding document
37.2. Receiving and opening tended
37.3. Evaluating tenders
37.4. Preparing evaluation report
37.5. Writing meeting minute
37.6. Negotiating contract
 38. In your own opinion, how can the management increase competency of the procurement staff
in your department? Please specify.
………………………………………………..…………………………….......................................................……
……………………………………………………………………
PART IV: Below are statements describing effect of information communication technology
utilization on procurement performance in Gulele Sub-City administration. Please indicate by
ticking the extent to which you agree or disagree with each statement as applied to your
organization.

No. Information communication technology Strongly Disagree Neither agree Agree Strongly
utilization related questions disagree nor disagree agree

39. All employees at procurement unit effectively

use the IT platforms.

40. Information Communication Technology

enhanced information flow between
procurement department and user departments/
suppliers’.

41. The uses of Information Communication

Technology have support to reduced paper
work in procurement department.

42. Information Communication Technology have

play role to increase quality goods/service
delivery performance in Gulele Sub-City
Administration.

43. Information Communication Technology has

speed up the procurement process of the
organization by lowering costs and increasing
productivity.
 44. Information Communication Technology
utilization improves procurement performance
of the organization.

45. In your own opinion, how can the management apply information technology to increase pro-
curement performance in your department? Please specify.
………………………………………………………………………………………………………

PART V: Below are statements describing effect of internal control on procurement performance
in Gulele Sub-City administration. Please indicate by ticking the extent to which you agree or
disagree with each statement as applied to your organization.

46. Does effective internal control system is able to prevent/detect fraud and errors?
Yes No
47. How do you rank the internal control system of the public procurement in your organization?
Very effective somewhat effective
Quite poor Very poor
48. Does Internal Audit Unit conducts regular reviews and analysis of the departmental total pro-
curement expenditure to identify trends on how much is spent, on what and with which sup-
pliers to improve the procurement performance?

Yes No
49. Does the Internal Audit Unit provides timely information to enable management action and
for improving procurement performance?
Yes No
50. Does an employee are provided opportunity to suggest improvements in the way things are
done regarding internal control implementation procurement process?
Yes No

No. Internal control related questions Strongly Disagree Neither agree Agree Strongly
 disagree nor disagree agree

51. My organization clearly established chain of

responsibility together with specific mechanisms
to monitor public procurement processes to
facilitate effective and efficient accomplishment
of the organization’s objectives.

52. My department conducts extensive training

programs for its Employees with regards to
internal control implementation.

53. My department assesses and monitors its

performance over time through evaluation and
feedback whether they are working to perfection.
54. There is an established mechanism to handle
complaints from potential suppliers in a fair and
timely manner.

55. There is compulsory anti-fraud and ethics training

for employees holding corruption prone positions
on a regular basis (on an annual basis).

56. Effective internal control system and regular

procurement audit systems improves
procurement performance.

57. In your own opinion, how can the management apply internal control system to increase pro-
curement performance in your department? Please specify.
……………………………………………………………………………………………………………………
.......................................................……………………………………
 PART VI: Below are statements describing Gulele Sub-City administration public procurement
performance related questions with regard to five R’s. Please indicate by ticking the extent to
which you agree or disagree with each statement as applied to your organization.
No. Procurement performance rating with regard to Very poor Neither good Good Very
five R’s poor nor poor good

A. With Right Quality

B. At Right Time

C. At Right Price

D. From the Right Source

E. Right Quantity
 Appendix III
Ethiopian Civil Service University

College of Finance, Management and Development (CFMD)

Department of Public Procurement and Asset Management

Questionnaires for public sectors/user department employees

On the Assessment of Factor Affecting the Performance of procurement: The Case of Addis Ababa
City, Gulele Sub-City Administration

Dear respondent,

Dear Sir/Madam,

My name is Wossene Mesele, a Masters student in Ethiopian Civil Service University Department
of Public Procurement and Asset Management (PPAM), supervised by Dr. Baynesagn Asfaw. As
part of the requirement for the award of the Masters Degree, I am expected to undertake a
research study on assessing factor affecting the performance of procurement: The case of Addis
Ababa city, Gulele sub-city administration. Therefore, I humbly request for your participation in
this study to fill the questionnaires attached below. Your opinion is extremely important in this
study and I promise that you the research results will be used for academic purposes only and will
be treated with maximum confidentiality. Thank you for your time and be blessed.

You may tick (√) and choose where applicable or give a brief explanation where necessary. If you
need any clarification or information contact me by: Mob. No. 0922579964 or by E-mail:-
wossenmesele@gmail.com
Thank you in advance for your cooperation!
PART I: General Information

1. Which public office you work?

Public procurement and property management support core processes

Internal auditor office

Finance and economic development office

Education office

Health office

Urban development and construction office

2. Gender:
Male Female
3. What is your age?
18 – 30 41 – 60

31 – 40 Above 60

4. Marital Status
Single Widowed

Married Divorced

5. What is your highest level of education?

Certificate First Degree

Diploma Master’s Degree and above

Other (Specify) ………………………………………………..

6. Your general work experiences (in years)

Less than 2 years 11 – 15 years

3 -5 years 16 – 20 years
 6 – 10 years Above 20 years

7. What is your profession?

Management Engineering

Economics Procurement
Other specify________________________
8. What is your current position or title in this organization?, Please, write your position here
__________________________

PART II: Below are statements describing effect of procurement planning on procurement
performance in Gulele Sub-City administration. Please indicate by ticking the extent to which you
agree or disagree with each statement as applied to your organization.
9. Have you ever taken training about how to prepare procurement planning?

Yes No
10. Have you ever attended any seminar or workshop on the public procurement directives?
Yes No
11. Are you familiar with the public procurement systems of the Sub-City?
Yes No
12. Does your office prepare its procurement plans as input to the annual procurement plan of the
whole organization?
Yes No
13. Does your office prepared and submit procurement plan to procurement department in
comprehensive way with full specification on time?
Yes No
14. Does your office raise its procurement need on time?
Yes No
15. Do you think your office adequately plan its budget for the procurement items that are going
to be procured?
Yes No
16. Does the procurement plan of your office prepared through involvement and participation of
all employees?
 Yes No
17. Does the procurement department circulate approved/updated procurement plan for all public
bodies/user departments?
Yes No
18. Does the procurement department procure goods, works and services match with your
procurement plan and specification?
Yes No

If your answer is ‘No’, what is the reason?

.............................................................................................................................................................
...................................................................................................................................

No. Procurement planning related questions Strongly Disagree Neither agree Agree Strongly
disagree nor disagree agree

19. The procurement activities of my office

are guided by annual procurement plan.

20. Procurement department of the

organization reviews the gap of
procurement requirements received
from public bodies before preparing
consolidated procurement plan.

21. The overall procurement plan of the

Sub-City prepared through involvement
and participation of all sector
offices/user departments.

22. Procurement plan of my office updated

and revised when necessary.

23. Procurement department circulate

approved and updated procurement plan
 for all public bodies/user departments.

24. My office evaluates and reports the

effectiveness of the procurement
planning in terms of achieving goals,
procurement method used, delivery
time and cost saving.

25. Procurement plan helps my office to

achieve its objective.

26. Urgent/unplanned requisition is a major

challenge to the organization
procurement performance.

27. Procurement department announce his

annual procurement plan on the
organization notice board.

28. Procurement planning improves

procurement performance.

29. What do you suggest/recommend to minimize the effect of poor procurement planning and
implementation in the organization procurement performance?
………………………………………………..……………………………
.......................................................…………………………………………………………………
PART III: Below are statements describing effect of staff competency on procurement
performance in Gulele Sub-City administration. Please indicate by ticking the extent to which you
agree or disagree with each statement as applied to your organization.

No. Staff competence related questions Strongly Disagree Neither Agree Strongly
 disagree agree nor agree
disagree

30. The procurement activity of the organization is

conducted by competent procurement staffs.

31. Employees at procurement department have the

relevant education background related to
procurement.

32. The organization deploys procurement staffs

based on skills, competence and ability.

33. Giving training for staffs improves

procurement performance.

34. Procurement department employees have the

ability to understand users need and suppliers’
capacity.

35. Staff competency (Skill and Experience)

improves procurement performance.

36. In your own opinion, how can the management increase competency of the employees in
procurement department? Please specify
………………………………………………..…………………………….......................................................……
……………………………………………………………………
PART IV: Below are statements describing effect of information communication technology
utilization on procurement performance in Gulele Sub-City administration. Please indicate by
ticking the extent to which you agree or disagree with each statement as applied to your
organization.

No. Information communication technology Strongly Disagree Neither Agree Strongly

utilization related questions disagree agree nor
 disagree agree

37. Procurement department efficiently utilize

Information Communication Technology.

38. All employees at procurement unit effectively

use the ICT platforms.

39. Information Communication Technology has

speed up the procurement process of the
organization.

40. The use of Information Communication

Technology has support to reduced paper work
in procurement department.

41. Information Communication Technology have

play role to increase quality goods/service
delivery performance in Gulele Sub-City
Administration?

42. ICT utilization improves procurement

performance.

43. In your own opinion, how can the management apply information technology to increase pro-
curement performance in your department? Please specify
……………………………………………………………………………………………………………………
.......................................................……………………………………

PART V: Below are statements describing effect of internal control on procurement performance
in Gulele Sub-City administration. Please indicate by ticking the extent to which you agree or
disagree with each statement as applied to your organization.

44. Does effective internal control system is able to prevent/detect fraud and errors?
Yes No
 45. How do you rank the internal control system of the public procurement in your organization?
Very effective somewhat effective
Quite poor Very poor
46. How do you rank the organization internal audit team’s contribution for the procurement per -
formance?
Very high High Moderate Low Very Low
47. Does Internal Audit Unit conducts regular reviews and analysis of the departmental total
procurement expenditure to identify trends on how much is spent, on what and with which
suppliers to improve the procurement performance?
Yes No
48. Does the Internal audit department have independent authority and objective to conduct
procurement audits and investigation?
Yes No
49. Does the Internal Audit Unit provides timely information to enable management action and
for improving procurement performance?
Yes No
50. Does all employees have sufficient knowledge of internal control procedures applicable to
their duties?
Yes No

No. Internal control related questions Strongly Disagree Neither Agree Strongly
disagree agree nor agree
disagree

51. Effective internal control system and regular

procurement audit systems improves procurement
performance.

52. My office assesses and monitors its performance

over time through evaluation and feedback whether
they are working to perfection.
53. There is established mechanism in place to prevent
risks in the public procurement processes.

54. The procurement department implement a system of

“checks and balances” in procurement planning,
source selection and contract administration phases.

55. How do you rate (evaluate) the procurement performance of the organization based on five
rights of purchasing?
No. Procurement performance rating with regard to Very poor Neither good Good Very
five R’s poor nor poor good

55.1 With Right Quality

55.2 At Right Time

55.3 At Right Price

55.4 From the Right Source

55.5 Right Quantity

56. How do you rank the following activities in the order of their impact on the performance of
procurement activities of Gulele Sub-City administration? Please put your rank from 1 up to
6 based on the level of their impact.

No. Factors which have impact on the procurement Rank (1 - 6)

performance of Gulele Sub-City
 56.1 Lack of procurement planning

56.2 Lack of employee competency (Skill and Experience)

56.3 Inefficient utilization of Information Technology (IT)

56.4 Lack of procurement internal control system

56.5 Corruption

56.6 Length procurement process

Appendix IV
Ethiopian Civil Service University

College of Finance, Management and Development (CFMD)

Department of Public Procurement and Asset Management

Questionnaires for suppliers

Dear respondent,
Dear Sir/Madam,

My name is Wossene Mesele, a Masters student in Department of Public Procurement and Asset
Management (PPAM), supervised by Dr. Baynesagn Asfaw at Ethiopian Civil Service University,
Addis Ababa. As part of the requirement for the award of the Masters degree, I am expected to
undertake a research study on assessing factor affecting the performance of procurement: The case
of Addis Ababa city, Gulele sub-city administration. Therefore, I humbly request for your
participation in this study to fill the questionnaires attached below. Your opinion is extremely
important in this study and I promise that you the research results will be used for academic
purposes only and will be treated with maximum confidentiality. Thank you for your time and be
blessed.

You may tick (√) and choose where applicable or give a brief explanation where necessary. If you
need any clarification or information contact me by: Mob. No. 0922579964 or by E-mail:-
wossenmesele@gmail.com
Thank you in advance for your cooperation!

PART I: General Information

1. Gender:
Male Female
2. What is your age?
18 – 30 41 – 60

31 – 40 Above 60
3. What is your highest level of education?

Certificate First Degree

Diploma Master’s Degree and above

Other (Specify) ………………………………………………..

4. How long have you been in the work?

1-3 years 4-6 years
7-9 years 10 years and above
5. What is your business type__________________________________

PART II: Below are statements describing effect of procurement planning on procurement
performance in Gulele Sub-City administration. Please indicate by ticking the extent to which you
agree or disagree with each statement as applied to your organization.
6. Is the organization procurement process are competitive?
Yes No
7. Have you ever attended any seminar or workshop on the public procurement directives?
Yes No
8. Are you familiar with the public procurement systems of the Sub-City?
Yes No
9. Are you aware of any mechanism for feed back or compliant handling system?
Yes No

10. Did have any complaint to pass to the concerned body?

Yes No
If yes, what was your complaint? Was your complaint addressed effectively?

.............................................................................................................................................................
...................................................................................................................................

11. Does the procurement activities of Gulele Sub-City administration guided by annual
procurement plan?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
12. Does the bidding document prepared by procurement department contains all necessary
information that helps potential suppliers to prepare responsive bid and to ensure level playing
field?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
13. Does the procurement department allowed sufficient time to bidder to obtaining bid
documents and preparing responsive bids?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
14. Does the Sub-City administration has good supplier relationship?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
15. Does the organization procurement department announce winner of the bidding on the
organization notice board or appropriate media.
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
16. Does appropriate contract monitoring systems and procedures in place by the organization to
monitor delivery, verify quantity, quality and timelines as per contract document?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree

17. Does procurement planning improves procurement performance of the organization.

Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
18. What do you suggest/recommend to minimize the effect of poor procurement planning and
implementation in the organization procurement performance?
………………………………………………..……………………………
.......................................................…………………………………………………………………
PART III: Below are statements describing effect of staff competency on procurement
performance in Gulele Sub-City administration. Please indicate by ticking the extent to which you
agree or disagree with each statement as applied to your organization.
19. Does procurement activity of the organization is conducted by competent procurement staffs?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
20. Does employees at procurement department have the relevant education background related to
procurement?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
21. Do you think the organization deploys procurement department employess based on skills,
competence and ability?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
22. Does gving training for employees improves procurement performance?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
23. Does procurement department staffs have the ability to understand suppliers’ capacity?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree

24. Does procurement department staff competency (Skill and Experience) improves procurement
performance.?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
25. In your own opinion, how can the management increase competency of the employees in pro-
curement department? Please specify
………………………………………………..…………………………….......................................................……
……………………………………………………………………
PART IV: Below are statements describing effect of information communication technology
utilization on procurement performance in Gulele Sub-City administration. Please indicate by
ticking the extent to which you agree or disagree with each statement as applied to your
organization.
26. Does procurement department efficiently utilize Information Communication Technology?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
27. Do you think all employees at procurement unit effectively use the IT platforms?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
28. Do you think Information Communication Technology has speed up the procurement process
of the organization?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
29. Does Information Communication Technology has support to reduced paper work in
procurement department?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
30. Does Information Communication Technology have play role to increase quality
goods/service delivery performance in Gulele Sub-City Administration?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
31. Does efficient Information Communication Technology utilization by the organization
improves procurement performance?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
32. In your own opinion, how can the management apply information technology to increase pro-
curement performance in your department? Please specify
……………………………………………………………………………………………………………………
.......................................................……………………………………

PART V: Below are statements describing effect of internal control on procurement performance
in Gulele Sub-City administration. Please indicate by ticking the extent to which you agree or
disagree with each statement as applied to your organization.

33. Does effective internal control system is able to prevent/detect fraud and errors?
 Yes No
34. Does effective internal control system and regular procurement audit systems improves
procurement performance?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
35. Does the procurement department implement a system of “checks and balances” in
procurement planning, solicitation planning, source selection and contract administration
phases?
Strongly disagree Disagree Neither agree nor disagree
Agree Strongly agree
36. How do you rate (evaluate) the purchasing performance of Gulele Sub-City procurement
department based on five rights of purchasing?

No. Purchasing performance Very poor poor Neither good nor poor Good Very good

36.1 With Right Quality

36.2 At Right Time

36.3 At Right Price

36.4 From the Right Source

36.5 Right Quantity

37. How do you rank the following activities in the order of their impact on the performance of
procurement activities of Gulele Sub-City administration? Please put your rank from 1 up to 6
based on the level of their impact.

No. Factors which have impact on the procurement Rank (1 - 6)

performance of Gulele Sub-City administration.

37.1 Lack of procurement planning

37.2. Lack of employee competency (Skill and Experience)

37.3. Inefficient utilization of Information Technology (IT)

37.4. Lack of procurement internal control system

37.5 Corruption

37.6. Length procurement process

 Appendix V
Interview guides for procuring entity

1. Does the public procurement activities of the organization are guided by annual procurement
planning? Has your entity been able to implement its annual procurement planning fully? If
No, what are the common challenges?
2. Does procurement planning prepared in a way that ensure prudent economic decision, open up
market opportunities and avoid/reduce emergency procurement?
3. Do you think that all user departments have enough knowledge in procurement planning and
cost estimation? If no what are the reasons?
4. How do you examine, the general communication system with user departments? Is there
written communication procedure? Do you think this communication is effective? If no what
are the reasons?
5. Does the procurement department procured goods at right time, right quality, with right quan-
tity, right price from the right source? If no what are the reasons?
6. Are procurement department staffed with appropriate professions and capable individuals to
handle all type of procurement throughout procurement process? If no what are the major
reasons?
7. Is there any code of ethics and conduct for all those involved in the procurement processes
and decisions?
8. Does procurement staff gets continues training with procurement law and rules? If Yes what
are they?
9. Does the procurement department efficiently equipped with all the necessary automated/com-
puterized materials to add value on procurement process and enhance the services by lowering
costs and increasing productivity? If no what are the major reasons?
10. Is there any mechanism for evaluating the supplier performance in relation to price, quality
and delivery?
11. Does the procurement department maintain and regularly update list of qualified suppliers,
contractors and consultants? How the department updated market information on commonly
procured goods, service and works?
12. Is there regular procurement audit system to carry out procurement/contract management
audits? Can you explain how it is done? By whom? If so what was the major findings?
13. What score did your department obtain during the last procurement audit by the internal audit?
What are the major reasons for the achieved score ( please explain)
14. Do you think the internal control system established by organization is effective? If yes, state
your reason?
15. Do you have any procurement complaint review system? If yes, do you think it is effective?
16. What are the common complaints from user departments and suppliers concerning the
functioning of the procurement department? Are they directly related to the poor procurement
performance of the department? (please explain)
17. Does appropriate contract monitoring systems and procedures in place by the organization to
monitor delivery, verify quantity, quality and timelines as per contract document? If Yes what
are they?
18. Is the procurement department regularly evaluating performance of its procurement process?
If yes, in what way?
19. What measures should be taken to improve the public procurement performance of the
organization? explain it briefly.

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 Appendix VI
Interview guides public bodies/user departments

1. Does the public procurement activities of the organization are guided by annual procurement
planning. Has your entity been able to implement its annual procurement planning fully? If
No, what are the common challenges?
2. Do you think that your office have enough knowledge in procurement planning and cost
estimation? If no what are the reasons?
3. Does the procurement department circulate approved/updated procurement plan for all public
bodies/user departments?
4. Does the procurement department procured goods at right time, right quality, with right quan-
tity, right price from the right source and matches with your office plan and specification? If
no what are the reasons?
5. Is there close consultation mechanism with procuring entity during procurement planning? If
no what are the reasons?
6. Does your office ask urgent/unplanned requisition? If Yes, what are the reasons?
7. Does the procurement department staffed with appropriate professions and equipped with all
the necessary automated/computerized materials to process procurement activities? If no what
are the major reasons?
8. Do you think the internal control system established by organization is effective?
9. Does the procurement department have any procurement complaint review system? If yes, do
you think it is effective?
10. How do you observe the performance of the procuring department in terms of efficiency, cost,
time of delivery, quality and quantities of goods, services and works procured? Explain it
briefly.
11. How do you examine, the general communication system with procurement department? Is
there written communication procedure? Do you think this communication is effective? If no
what are the reasons?
12. What do you suggest for further improvement and ensure public procurement performance of
the organization? Explain it briefly.