Procurement risk management in digital entrepreneurship and ecosystem development (DEIED) project (a World Bank funded project)

Abstract

Public procurement is one of the government activities most vulnerable to corruption. In addition to the volume of transactions and the financial interests at stake, corruption risks are exacerbated by the complexity of the process, the close interaction between public officials and businesses, and the multitude of stakeholders. Public institutions as well as state-owned enterprises need to procure goods, services and works to carry out their responsibilities and duties. The total volume of public procurement, which is the government activity of purchasing goods, services and works, accounted for 12% of GDP and 29% of general government expenditure in OECD countries amounting to EUR 4.2 trillion in 2013. The share of public procurement at the subnational level represents 63% of the general government procurement in OECD countries. From the above data it is clear that most risk prone area of public activity is the public procurement. An initiative has been undertaken to develop a procurement risk management framework in a World Bank funded project of Bangladesh Hi-Tech Park Authority (BHTPA), which will also fulfill the reporting obligation of Master in Procurement and Supply Management (MPSM) under BIGD of BRAC University, Bangladesh. The name of the project is: Digital Entrepreneurship and Innovation Eco-System Development (DEIED) Project. The project is the 4th component of Private Investment and Digital Entrepreneurship Development (PRIDE) Project of World Bank. The component 1, 2, and 3 are implemented by Bangladesh Economic Zone Authority (BEZA) of Prime Minister Office. The DEIED component is consist of large, medium and small types of procurement packages of Goods, Works, Non-consulting and Consulting Services. As per the World Bank procurement risk ranking, the project is ranked as “Highly Risk” Project. vii The report covers the introduction about the project in the chapter 1, review of related literature in the chapter 2, procurement risk management framework of DEIED project in the chapter 4, way forward in the chapter 4 and all other related information in Appendix. The review of literature stated that there are huge procurement risks in public procurement throughout the world, out of which mostly in the African countries due to lack of risk management framework in the organizations and projects. Based on the information a procurement risk management framework has been developed in DEIED project in line with The World Bank Operation Risk Management Framework and Procurement Risk Management Framework of ADB. The procurement risk management framework of DEIED project consist of context of risk, risk identification, analyzing the risk, developing risk management framework, implementation strategy of the framework and monitoring the risk management framework. The risk management framework also consists of business continuity plan and disaster response plan. A list of identified risks in DEIED project with risk rating, consequences and their management strategy has been incorporated in appendix.