Recommendations
The procurement authority should adapt fixed-price lump-sum contracts where cost over-runs are met solely by the contractor in case of any. Introducing this new direction in the procurement and bidding world will be fundamental to protecting taxpayers from such risks. Armstrong and Sambamurthy (2006) assert that risk-sharing between the public and the contracts is mandatory and not a favor extended to the public by the contractors.
With an equitable spread of risk, it would be expected that the contractors will be more responsible in their execution of duties and that the public is cushioned against these risks. Sticking of this mode also ensures that there are no-cost overruns as the cost of the project is known beforehand. Therefore careful planning on the side of the contractor allows the public to benefit as in most cases such lump-sum contracts are completed earlier than scheduled which is also shown in the assignment extract.
The procurement authority should be quick in introducing an effective cost-benefit analysis of all projects. As is the case with many investment options available to private investors, the most beneficial or the option with the highest returns and the smallest risk is chosen. To help arrive at this crucial balance would be carrying out cost-benefit analysis tests and evaluations on earmarked projects (Armstrong and Sambamurthy, 2006).
To give more support to the cost-benefit analysis and evaluation and credibility of the whole procurement process, the analysis and evaluations should be conducted regularly to all existing contracts. Any anomalies and discrepancies from the expected should be effectively addressed.
By grouping procurements according to their value gives more breathing space and a better environment for SMEs in the contracting industry. When pooled in the same league, these small entities will not be locked out by the bog players whose operating costs are theoretically lesser than the SMEs as they are favored by economies of scale. In such groups of less monetary value, the requirements in the cost-benefit appraisal should be a bit relaxed. This approach will include identification and carefully quantified analysis of all the relevant project costs and benefits including indirect costs
The procurement authority should avoid extending contracts without tendering as it locks out competition though there might be exceptional cases (Thong, 2006). By introducing stringent measures to handle defaulters, the public and will enjoy better services from the public will enjoy better services from government and result in more respect for PPP’s and the government’s ability to compete with the private sector in excellent service and product delivery. Additionally, it might to some extent help in creating the right incentives for providers and especially the SME’s and new players. It is also in this regard concerning the length of contracts that it would be recommendable that the length of contracts is proportionate to the value of the contract.
Facilitating healthy competition for public sector contracts by encouraging the growth of contracting enterprises- SMEs as a vital part in almost every commercial and non-commercial sector is driving the general growth of almost all major developing and developed economies. As such, the facilitation of the growth of small players in the public procurement industry will prudently help widen the reach of this sector and the general performance of the economy.
Thong (2006) stresses that an uninhibited flow of information regarding contracts and tendering deals should be ensured to facilitate transparency and accountability to the public and for a fair playground that gives equal opportunities to the big and small players alike. There have been ardent calls in recent years by the public and the small players for the Government’s facilitation of uniform opportunity to compete for public sector contracts among the large and small contractors.
The formation of government tenders’ websites might not be enough apparently. It seems that setting up branch websites that cater for a specified region or district would help in “unearthing” some relatively very small procurement offers that would serve very well as orientation avenues and familiarisation detours of new entrants. Presumably, this would be targeting the SME sector where the number of supplier registrations has in the last four years increased tenfold. Such unbundled tendering and procurement systems can be easily advanced and upgraded to include suppliers receiving notices regarding tenders that are applicable to them (Thong, 2006).
Additional specialized training for the state employees and state agencies. This will span the areas of procurement, project management, and project appraisal, including ensuring the application of the analytical tools available for project evaluation.
Allocation of more resources in the state procurement authority to increase efficiency and competence:- In the case of realizing the real value for money in procurement and delivery, it requires that the employees in that department are fully knowledgeable in their field of work (George and Valacich, 2007). Therefore, it would seem that there need to be permanently employed specialists in those departments
Conclusion
Planning in PPP’s must be guided by projections and estimations which show that there will be unanimous benefits to all stakeholders in the targeted projects and in our case the Airport Link, Northern Busway, and Airport Roundabout Upgrade projects. This is supported by the concern of the procurement code of conduct was in the UK government’s policy; all public procurement decisions should be and as a requirement based on value for money.
The optimum value for money, therefore, is a wholesome valuation of the whole project. Not only is the public interested in seeing where their tax cuts are directed but also receiving enough compensation for it as a right from the government and as a buyer. Therefore the contractor should always ensure that he/she applies all the ideas used in wooing customers in delivering services and products to the public, eg. The public is right to expect marketing and promotion of public services and products offered by the government through contractors (Thong, 2006).
It is essential that the infrastructure required to underpin this development is also put in place to ensure that the value for money aspect is further strengthened by a superior quality that will last the longest time possible in that by being handled by PPP it will not only spread the risk but also develop unique coordination to this particular project that will minimize risk and keep within allowed over-runs.
The evolution of PPP and PSC is prompted by conventional public skepticism about incompetence in the delivery of public service by the government. Thus, as a way out of the quagmire, the idea of a joint venture between the public and the private players was born which developed into Public and Private Partnerships (Thong, 2006).. The marriage of the two helped further pinpoint the weaknesses of bundling of procurements which closes competition and denies the client a wider variety in choice of partners and product/service variability.
The role of the government in facilitating economic growth and development should also be focused on ensuring that the social welfare of the public is not violated as is maintained at the highest level at all times. , therefore, the government through the procurement authority should ensure that the projects being funded serve the best interest of the public and are not biased towards a special interest group or organization. For instance, it should be verified that the construction of the Airport link or any of the projects is not influenced by other ideas other than improving the transport system for the entire region and public.
The importance of this is because public investment in capital or current projects is a form of ‘contract’ between the State and the society on behalf of taxpayers. It is essential for the State and its agencies to deliver cost-effective projects that will benefit its citizens and facilitate socio-economic growth and development. Faced with the role of ensuring that this value of money “gospel” reaches the target group is the procurement authority.
Grimsey and Lewis (2004) assert that Competition creates an environment that encourages bidders to be innovative in their design solutions and efficient in service delivery. Again Gaynor (2005) says that competition is a catalyst for technologic innovation and adoption in service/product delivery that enhances quality and speed of delivery a very vital concept in the procurement and delivery process. A procurement authority should thus, though not exclusively as some special cases may warrant a different approach, always seek to encourage competition among bidders by seeking to obtain the best value for money (Thong, 2006). Nevertheless, quality should not be compromised by cost.
The key objective here is obtaining the optimum value for money. However, this should not be allowed to act as a bottleneck to the public service and there is no intention of encouraging a risk indisposed society. Rather the process is aimed to allow people to play an active role in public service delivery and to do so within a structure that will recognize and encourage best practices. This can be summarized as that the way UK citizens demand efficient public service, the same way they should expect from the private sector as customers hence the name PPP (Hitt and Brynjolfsson, 2005).
To conclude on this it can be said that value for money in any procurement and contracting deals involving the public should also be accompanied by transparency and accountability to ensure that the value for money aspect is all-inclusive in that it also takes care of fair competition in order to allow SME’s to participate fully.
References
Gaynor, S., Michael, S., and Chung-ki, M. (2007), Firm Characteristics in tendering and procurement, (London, Prentice Hall).
Thong, James, (2006), An Integrated Model of project management and procurement in small business, (New Jersey, Mettle).
Hitt, L. and Brynjolfsson, E. (2005). “Productivity, Profit and Consumer Welfare In Public Procurements”, MIS Quarterly.
George, F. and Valacich, J., (2007), Modern Procurement Analysis and Design 2nd Edition, (Massachusetts, Addison-Wesley).
Armstrong, C. and Sambamurthy, V., (2006), “Healthy competition in government procurements and tenders”, Information Systems Research.