BSP 306

BBAMMKS 740521
BSP306: PRINCIPALS OF PURCHASING

2/8/2022
LECTURER: ELIJAH KARIUKI
Read the followig case study ;
One of the features of the construction industry over the last three décades or so, has been the
use of various procurement methods for projects such as management contracting, project
management and design and build. With the growth in the use of these methods, a number of
researchers have investigated the criteria for their selection and their performance in terms of
time, cost and quality. However, there is lack of reporting on the association between
procurement methods and the advanced related issues such as innovation and technology,
supply chain, Lean construction, buildability, sustainability and value management. Through
selected papers from well-known Academic journals in construction management, detailed
coverage of these issues is systematically reviewed with the aim to investigate the state of the
art and trends in procurement research. The outcome of the research may provide a platform
for both researchers and industrial practitioners to appreciate the latest developments and
trends in procurement method research.
In view of the above case, answer the questions that follow
QUESTION ONE
a). Explain the responsibility of the purchasing team in purchase planning (5 Marks)
Purchasing teams or departments arguably form the backbone of every corporation
irrespective of them being big or small. They are solely responsible for the procurement
process which means that they ensure that the supply of goods, production materials and
equipment is done in time so that a smooth production and sales process can take place. For
this good to be procured at the right time, in the right quantity and of the right quality, then
thorough purchase planning has to be carried out. So, what exactly is the mandate of the
purchasing team in purchase planning? This essay discusses these responsibilities briefly
hereafter.
i. Assessing the needs of the company
Before making any purchases, it is vital that the purchasing department knows before hand the
requirements of the company both at the present and in future to enable them have a strategic
plan on what to purchase in future. They can assess the needs by communicating with
department heads, regional managers and company leadership to determine what goods and
services they require. As explained above in the excerpt, they can also utilize latest trends in
analyzing the needs of the company through technology.
ii. Conducting Research on procurement procedure

Knowing the needs of a firm is one thing and knowing where to get them in the right quality,
quantity and timely is another. The procurement market is flooded with different procurement
options with all satisfying different procurement needs. This is the reason as to why
purchasing departments as mentioned above need to conduct researches on the best
procurement procedure possible that will satisfy their procurement procedures in the event
they shall need to make purchases.
iii. Comparing and negotiating prices

One of the primary tasks of a purchasing department is to find the most affordable ways to
supply their company. When researching suppliers, they can learn about the prices they
charge and compare them to similar organizations or markets to find the best rates. This
comparison as alluded above is driven by the supplier’s delivery in terms of cost, time and
quality. This helps them to keep a record of potential suppliers in the future.
iv. Developing strategies
No business or firms works without a strategy in place. To come up with the strategy or goal,
every department is involved in the strategizing including the purchasing department. The
purchasing department through contributing and also being informed on the goals can learn on
the future of the company and how it may affect the procurement requirements of the
business. This may involve the company switching to technology driven firm which means
that the purchase department will also have to shift to similar procurement procedures in
future purchases.
v. Product Testing
Product testing gives the purchase department a summary of what to expect about the product
and the supplier in the time they shall need to purchase and utilize the product. Product testing
then becomes an important factor for purchase planning as it gives them an overview of the
product before purchasing.
b). Explain the contents of contract award notification (5Marks)

A contract award notification is the means through which a firm formally advertises or
communicates to the recipient bidder that the contract award has been made. Its contents
include:
i. The name and contact details of the lead buying organization
ii. If applicable, joint procurement details that is if other organizations are involved
iii. The type of contract awarded. That is, is it goods or services?
iv. A description of the goods and services to be purchased
v. The date of awarding the contract
vi. Scope of the contract either by value or volume
vii. The estimated total value of the contract
viii. The Criteria against which the contract was awarded
ix. Details of winning supplier
x. Estimated start date and completion date of contract
xi. Geographical Area in which the contract is to be performed
QUESTION TWO
Describe the following types of evaluation
i) Comparative Evaluation (5 Marks)

Comparative evaluation is a procurement technique in which the buying organization
compares one bidder to another throughout the evaluation process and then makes
recommendation based on who is best suited to do the work and provide the firm with the best
value selections. Among its benefits is that it saves time and money as the firm can evaluate
and make decisions on a particular group of bidders and arrive at a decision more quickly.
They can also have an opportunity to engage the bidders in open discussions which gives
them a detailed overview of the proposals thus helping in arriving at the best decision
possible.
ii). Individual Evaluation (5 Marks)

Individual evaluation may be utilized after comparative evaluation has been carried out and
the best bidder selected or even still where the procurement procedure leads to one bidder for
example single tendering where invitation is sent to a single party. For this evaluation, once
the technical qualifications of the bidder satisfy the panel, the individual is requested to
submit a financial offer and a contract is negotiated thereafter. The procedure is far much
cheaper when used alone but then does not expose the firm to other better proposals that could
have been out there.
QUESTION THREE
a). Discuss the areas that the market researchers in procurement may be concentrated on
during the soliciting of a suppliers. (5 Marks)
Suppliers are critical in helping companies forge towards success. In order to find the right
ones, businesses then need to consider a number of critical factors that include:
i. Value for money
The main goal of every business is to always make profits. This means that they will always
strive to achieve value for money even when choosing suppliers. However, it is worth noting
that cheap suppliers don’t always represent the best value for money. It is therefore important
to strike a balance between cost, reliability, quality and service.
ii. Quality and Reliability

The quality and reliability of the supplier to consistently maintain the same quality is a major
area of focus as the customers associate poor quality with the firm and not the suppliers.
Equally, the suppliers needs not to let the firm down with late deliveries or faulty supplies as
they will still let the customers down.
iii. Speed and Flexibility

The window to be able to place small orders benefits the firm in helping them avoid tying up
too much working capital in stock. This then becomes a vital area of consideration as flexible
suppliers help the firm to respond to changing customer needs and sudden emergencies.
iv. Strong service and clear communication

Having clear communication procedures with your client is important in ensuring a good
working relationship with the supplier. From the initial briefing of contractual requirements,
continual feedback and routine meetings, the supplier should be able to communicate openly
and regularly.
v. Financial Stability
Finally, financial stability is always a crucial area of concern. It is worth always making sure
that your supplier has sufficiently strong cashflow to deliver what you want in time and in the
right quality.
b). Examine the importance of oral presentation during the supplier
evaluation process (5 Marks)
Oral presentation or rather referred to as face to face communication is significantly

invaluable when trying to forge a working relationship between supplier and the firm in the
evaluation process. Its importance includes:
i. Time and cost saving
Presentation through oral is arguably faster as the replies to inquiries are instant as opposed to
writing a mail or a letter to a person and waiting for reply. This helps in saving on time and
the costs that would have been incurred due o stopping production as you wait for a reply.
ii. Promotes a high level of transparency and understanding

Since communication through oral is interpersonal, a level of trust, clarity of ideas which
helps in each side understanding the other side quite well is achieved. This is because any
issue that needs clarification is replied instantly hence promoting transparency.
iii. Most secure form of communication

Unless in the instance where it is recorded, oral communication provides a channel to convey
critical issues and important information to both sides of the contract. This is as opposed to
written media which can be hijacked and the information known.
iv. Allows application of persuasive power

Persuasion is the process of convincing people to adopt an idea or a rationale. Through oral
presentation a firm can persuade the supplier on matters regarding cost discounts or achieving
competitive deals cheaply as changes in tone, pitch, voice can work towards this.
v. Flexibility
The famous saying that man is to err is ubiquitous in every part of our life even in the supplier
evaluation process. The fact that we are all susceptible to mistakes cannot be avoided and it is
for such a reason that oral presentations give flexibility to either party to correct him/herself
and make themselves clear.

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BBAMMKS 740521

BSP306: PRINCIPALS OF PURCHASING

In view of the above case, answer the questions that follow

ii. Conducting Research on procurement procedure

iii. Comparing and negotiating prices

b). Explain the contents of contract award notification (5Marks)

Describe the following types of evaluation

i) Comparative Evaluation (5 Marks)

ii). Individual Evaluation (5 Marks)

ii. Quality and Reliability

iii. Speed and Flexibility

iv. Strong service and clear communication

Oral presentation or rather referred to as face to face communication is significantly

ii. Promotes a high level of transparency and understanding

iii. Most secure form of communication

iv. Allows application of persuasive power

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