A critical analysis on inefficiencies in procurement process in roads and highways

Abstract

This research focuses on the inefficiencies in public sector procurement process with reference to Roads and Highways Department civil work contracts. Roads and Highways Department (RHD) has responsibilities for the construction, repair and maintenance works of highway network of the country. This requires efficiency in procurement process which ensures a much higher Value for Money (VFM). The goal of this thesis was to identify the inefficiencies in the procurement process, sources of these inefficiencies and to find the probable solutions. For this purpose the trend and amount of inefficiencies have been quantified from primary data collected from the working divisions of RHD. The practicing professionals of RHD have been interviewed through a questionnaire and from their opinions the major parameters of inefficiencies have been identified and their suggestions about improving efficiencies have been congregated. Deviation as high as 29.306 percent from the engineer‘s estimate as well as dispersion of up to 22.081 percent indicate scattered values of bidding, inefficiency, lack of consistency and manipulation in the procurement cycle of RHD. From the qualitative interview the major parameters of inefficiencies have been identified which include Collusion, outdated rate schedule, undue political pressure, corruption, the contractors‘/suppliers‘ tendency to bid well below the estimated value as well as the tendency of RHD procurement practitioners to award the contract only to the lowest bidders, lack of contractor database, lack of knowledge about supply market, lengthy Bureaucratic process and lack knowledge about PPR-2008 among Officials and Bidding Community. Due to time and budget constraints, the correlations of major parameters could not be quantified and was kept qualitative. The recommendations to improve efficiency in the procurement practices include reducing political influence, widespread practice of e-Government procurement, incentives to the officials, avoid the tendency to award the contract to the lowest bidder, evaluate the market at regular basis to update the rate schedule, zero tolerance about quality, arranging in house training, preparation of handbook of procurement, establishing a separate cell to provide critical solutions, reward mechanism for contractors, decentralization of delegation of powers, database of the contractors, shortening of the long bureaucratic system, performance based contract or flexible rate contract, omission of arithmetic errors and more specific Instruction to Tenderers (ITT) or Tender Data Sheet for quick evaluation.