Red flags in project procurement

Development management projects (and not only) often involve procurement. Goods, works and services are necessary for the achievement of a change supported by the project.  Usually, procurements are managed by project managers. In some organisations, project managers are assisted by specialised procurement services.

Procurements of goods, services and works differ by scope and complexity and require different control structures. Procurements serve the purpose of accountability to donors and the principles of the open competition. Procurement policies shall offer a fit-for-purpose framework and value-for-money spent.

To prevent damages from ill managed procurements – financial and reputational – there are a number of checks to be made and safeguards to be put in place before and during the procurement. Check your organisation’s rules and procedures on that. This will help prevent any eventual red flags, such as single bidding, for example, or unusually big differences between bids.

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Each project cycle requires a number of checks in place for a transparent and fraud free procurement. Here is a selection of some, from my experience and the experience of a number of teams I worked with:

A. Needs identification:

  • Include a wide variety of stakeholders in the needs identification and selection to prevent capture and undue influence from certain entities;
  • Put in place or revisit your conflict of interest policy;
  • Protect confidential information and prevent insider trading.

B. Publication:

  • Design merit based appraisal criteria;
  • Choose the financial and other criteria wisely;
  • Publish the tender with clear appraisal criteria, procedures and terms;
  • Ensure the publicity of the tender to a wide public;
  • Give sufficient time for tendering;
  • Be clear about the documents required to be submitted in support of the tender;
  • Do not split contracts to avoid the competition/tendering.

C. Evaluation of the tender:

  • Follow with rigour the established criteria as published;
  • Ensure the members of the evaluation group are free of conflict of interest; manage the conflict of interest;
  • Document the evaluation process;
  • Get the approval of the tender board to contract the winning bidder(s).

D. Implementation:

  • Monitor the contractor’s obligations through reports and invoices audit;
  • Prevent and/or avoid substantial renegotiations of contractual terms;
  • Perform on-site visits to confirm the quality and quality of works, services and goods.

There is also the evaluation and audit stage, which might not be in the direct and immediate project manager’s realm. Yet, the project manager needs to remain alert, in particular, if/when any of the above stages give rise to red flags.

 

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