the effect of procurement practice on project performance

its about the effect of procurement practice on project performance

1. Amhara Leadership Academy School of Leadership and Political Economy Project Management Department Title :- THE EFFECT OF PROCUREMENT PRACTICE ON PROJECT PERFORMANCE IN THE CASE OF ROAD CONSTRUCTION IN BAHIR DAR CITY ADMINISTRATION BY: BELAY TADELE ADVISOR: AMARE MABRIE (ASSISTANT PROFESSOR) July, 2024 Bahir Dar, Ethiopia 1

2. Presentation outline Background of the study Statement of the problem Objective of the study Research Questions Significance of the study Conceptual Framework of the study Research methodology Result and discussion Conclusion Recommendation 2

3. Aputo (2017) evaluated the influence of procurement functions on project performance in non-governmental organizations in Nairobi County, Kenya, and discovered that procurement functions have a favorable effect on project performance. Zulu (2020) focused on a critical examination of procurement management practices and their impact on the success of construction projects, revealing that procurement management techniques have the ability to successfully contribute to the success of construction projects. 3 1. Back ground of the study

4. CONT……'D Edlawit Solomon (2020) evaluated the effect of procurement practice on project performance the case of Information Network security Agency in Ethiopia. The study, however, revealed that procurement planning has effect on project performance. In addition; Shimelis (2020) conducted a research with title “Effect of Procurement Practices on Performances of Public Organizations (The Case of Essera Woreda in Dawro Zone South West Ethiopia)”. His finding shows that procurement planning; procurement methods, procurement transparency, staff competency and contract management had significance effect on the performances of the organizations. 4

5. CONT……'D However there is no research conducted on the effect of procurement practice on project performance in Bahir Dar city administration. This study was try to assess the effect of procurement practice on road construction project performance in case of Bahir Dar city. 5

6. 2. Statement of the problem Historically, most organization in developing countries have been known for their poor performance and corruption, resulting from non-adherence to processes and procedures, poor resource utilization, poor personnel management and training, inadequate payment and benefits as noted by ( Magutu et al.,2013). In addition, procurement departments face problems of availability of on-time information relating to the procurement procedure, its inputs, outputs, resource consumption and results. As a result, the department unable to determine their efficiency and effectiveness. This problem requires establishment of clear procurement procedures and performance standards (Knudsen, 2009). 6

7. Agreeably Mamiro (2010) in his findings underscores these facts and concludes that one of the major setbacks in project procurement is poor procurement planning and management of the procurement process which include needs that are not well identified and estimated, unrealistic, budgets and inadequacy of skills of procurement staff responsible for procurement. Additionally, Kakwezi and Nyeko (2010) argue that procurement performance is not usually measured in most organization as compared with the human resource and finance functions. They ( Kakwezi and Nyeko , 2010) conclude in their findings that failure to establish performance of the procurement function can lead to irregular and biased decisions that have costly consequences to any public procuring entity. 7 CONT……'D

8. Therefore, to solve these problems and realize the ambitions explicitly discussed in the above, the researcher motivated to conduct detail study on "the effect of procurement practice on project performance in the case of road construction in Bahir Dar City Administration". 8 CONT……'D

9. Research gap Even though there are researches carried out on procurement practices and organizational performance, however, most of them were done in different countries focus on different aspects other than procurement practices and organizational performance. In addition, it was evidenced from the above mentioned studies that the procurement process still fail in many public entities especially in Amhara region. As far as the researcher’s knowledge, there is no research conducted on the effect of procurement practice on road construction project performance in Bahir Dar city administration. This study is therefore prepared to fill the existed gap on the assessment of the effect of procurement practice on road construction project performance in case of Bahir Dar city administrations. 9

10. 3. Objectives of the study General objective:- The main objective of this study was to examine the effect of procurement practice on project performance in the case of road construction in Bahir Dar city administration. Specific objectives:- To assess the employees perception on the existing procurement practice of Bahir dar city road construction projects. To analyze the relationship between the procurement practice with the performance of projects in the case of road construction in Bahir Dar city administration To investigate the procurement practice that highly influences the performance of the projects in the case of road construction in Bahir Dar city administration. 10

11. The study will try to answer the following research questions for the study: How do employees perceive the existing procurement practice of Bahir dar city road construction projects? What is the relationship between procurement practice and project performance of road construction project at Bahir Dar city administration? Which procurement practice highly influence the project performance of road construction project at Bahir Dar city administration? 11 4. Research questions

12. 5. Significance of the study As well it serves as an input for the Procurement and Supply department of the project office and the projects as whole. The study finding will give brief information about the level of procurement practices of Bahir Dar road construction projects. The research findings, helps other researchers who wants to undertake the same study. 12

13. 6. Conceptual Framework of the study Figure 2.1 Conceptual Model ( Source:- adapted fromKaplan2005 and as moderated by the researcher by review of literature) 13 procurement control procurement planning procurement staff competency procurement monitoring Project Performance procurement ethics

14. Research approach:- this study uses both qualitative and quantitative (mixed) research approach. Research Design:- descriptive and explanatory design was employed. Target Population:- 168 employees working road construction project in Bahir Dar City administration are the target population of this study. Sample size and sampling techniques:- To determine the sample size, the researcher was use Yemane’s statistical instrument formula. 14 7. RESEARCH METHODOLOGY

15. n = Therefor , Sample size (n) = 118 Hence, 118 respondents have chosen by a simple random sampling method. In addition to the above, 7 leaders of Bahir dar road construction projects were selected as a sample for interview by purposive sampling techniques. Thus a total of 125 Employees were selected by both Random and purposive sampling methods for conducting this research. 15 CONT……'D

16. Source of data collection Methods of data collection, analysis and presentation Source of data collection:- the necessary data for this study was collected from both primary and secondary sources. Data collection method:- used to questionnaire for quantitative data & also interview for qualitative data. Methods of data analysis:- used to Pearson’s correlation, multiple linear regression model with SPSS version 26 & Microsoft excel to examine the relationship between independent & dependent variables. Methods of presentation:- tables, charts & grapes aids to effectively communicate the findings and insight from the study. 16

17. Response Rate:- The sample size of this study was 118 employees of Bahir dar city road construction projects. However, 3 questionnaires were found not correctly filled by the respondents and discarded from analysis. Hence 115 Questionnaires were used for data analysis techniques. . 17 8. Result and discussion

18. Background Group Frequency Percentage Gender Male 87 75.7% Female 28 24.3% Age Less Than 25 Years 2 1.7% 26 - 35 Years 71 61.7% 36 - 45 Years 22 19.1% 46 - 55 Years 20 17.5% Above 55 Years 0% Marital Status Single 63 54.8% Married 48 41.8% Divorced 4 3.4% Widowed % 18 Demographic Characteristics of Participants Table 4.1 Gender, age and Marital status of Respondents Source: Own Survey Data

19. For example , a total of 115 participants involved in this study. T he majority 71(61.7%) of the participants were in the age range of 26-35 Years. The second majority 22(19.1%) of the participants were in the age range of 36-45 Years of age. This shows that most of the respondents are at young age stage and had good exposure. 19 CONT……'D

20. Background Group Frequency Percentage Educational Status 12th Completed or Below 3 2.6% Diploma 15 13% Degree 74 64.4% 2nd degree and above 23 20% Service Year in The project Less Than 5 Years 34 29.6% 6-10 years 69 60% 11-15 Years 12 10.4% 16 - 20 years 0% above 20 Years 0% Level of responsibility Office heads 7 6.1% Team leaders 15 13% Expert 42 36.5% Engineer 12 10.4% Project team member 9 7.8% Others 30 26.2% 20 Table 4.2 Education status, work experience and responsibility of Respondents Source: Own Survey Data

21. For example, as you see the educational level the majority of 74(64.4 %,) participants were having educational qualification of Degree and Only 3(2.6%) of the respondent were having educational level of 12 th completed or below. This shows the majority of the participants are well educated and easily understand the effect of procurement practice. 21 CONT……'D

22. Table 4.3:- The Aggregated Mean and Standard Deviation of the variable PP, PM, PC, PE and PSC 22 Descriptive Statistics N Minimum Maximum Mean Std. Deviation PP 115 1.13 3.88 1.9391 0.53685 PC 115 1.33 4.89 2.3063 0.60386 PM 115 2.09 4.55 3.3802 0.57767 PE 115 1.13 3.88 2.2332 0.58528 PSC 115 1.60 4.20 2.6904 0.53851 Valid N (listwise) 115 CONT……'D The level of procurement practice in Bahir dar city road construction projects

23. As table 4.3 depicts, most of the respondent do strongly disagree or disagree on the PP, PC, PE and PSC practice. This shows that the PP, PC, PE and PSC practice of Bahir Dar city administration road construction projects is low. However, the level of PM is moderate (PM Mean = 3.3802, SD = 0.57767). 23 CONT……'D

24. Correlation result on the relationship between procurement practices and project performance Table 4.4:- Correlation of the independent variable (PP, PM, PE, PC and PSC) and the dependent variable (PPER). 24     PP PC PM PE PSC PPER PP Pearson Correlation 1           PC Pearson Correlation .747 ** 1         PM Pearson Correlation 0.166 .208 * 1       PE Pearson Correlation .507 ** .635 ** 0.138 1     PSC Pearson Correlation 0.104 .211 * 0.108 0.152 1   PPER Pearson Correlation .572 ** .630 ** .423 ** .519 ** .284 ** 1 **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

25. In order to see the relationship of independent variables with the dependent variable, Pearson’s correlation analysis was employed. As you seen in table 4.4, procurement practice has strong positive relationship with project performance of Bahir Dar City road construction projects. 25 CONT……'D

26. This research finding strengthens the finding of Kabega and Waren (2016) conducted in Rwanda. Kabega and Warren (2016) conducted research on the effect of procurement practices on performance of public projects in Rwanda a case study of Bug sera district office construction project. The relationship between the variables was established by using of Spearman‟s correlations. The finding indicated that there is a significant relationship between Public Procurement practice and the performance of construction project. The researcher concluded that Public Procurement practices have highly contributed to positive Performance of construction projects. The finding of this study is also supported by the research of Lonsamo A (2020) who reveals that there is a significant positive relationship between procurement practices and project performance. 26 CONT……'D

27. Regression Analysis Tests of assumptions for Multicollinearity , normality, linearity, Homoscedasticity and independence of residuals was presented before the linear regression result presented. 27

28. Result of Multiple linear regression analysis Overall Regression Model To assess the influence of the procurement practice on project performance of Bahir Dar road construction projects, multiple linear regression analysis was computed. Table 4.5: The Influence of Predictor Variables (PP, PM, PC, PE and PSC) on Project performance (PPER): Model Summary 28 Model Summary b Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson 1 . 741 a . 549 . 528 . 51322 1.269 a . Predictors: (Constant), PSC, PP, PM, PE, PC b . Dependent Variable: PPER

29. As shown in the table 4.5 the value of R = 0.741 and the value of adjusted R square is 0.549. This implies 54.9% of the project performance of Bahir Dar road construction projects clearly depends on the independent variables. while remaining 45.1% is determined by other factors which are not stated in this study. 29 CONT……'D

30. Agyemang (2019) in his research on effect of procurement practice on organization performance in Accra, Ghana also finds that inventory management, procurement monitoring, procurement controls, procurement planning, and training workforce collectively accounted for 55.7% positive variance in performance of private universities in Accra (R-square=0.557). Hence the study finding of this research is similar with the research of Agyemang (2019). 30 CONT……'D

31. B) The regression ANOVA Result Table 4.6: The Regression ANOVA 31 ANOVA a Model Sum of Squares Df Mean Square F Sig. 1 Regression 34.904 5 6.981 26.503 . 000 b Residual 28.710 109 . 263 Total 63.614 114 a . Dependent Variable: PPER b . Predictors: (Constant), PSC, PP, PM, PE, PC

32. According to table 4.6, the model reveals a statistically significant relationship between Project performance(PPER) and predictor variables, with F = 26.503, p < 0.01. In other words, the model was statistically significant. This means the independent variables have high influence Project performance (PPER) of Bahir Dar city Road construction projects. But it does not mean that all independent variables have equally significant correlation with project performance. 32 CONT……'D

33. C) Regression Coefficient Beta Table 4.7: Regression Coefficient –Beta result 33 Model Unstandardized Coefficients Standardized Coefficients t Sig.   B Std. Error Beta   1 (Constant) -.704 .332 -2.117 .037   PP .303 .130 .226 2.327 .022   PC .315 .136 .255 2.313 .023   PM .361 .082 .292 4.425 .000   PE .194 .090 .179 2.145 .034   PSC .171 .076 .148 2.239 .027   a . Dependent Variable: PPER

34. The table 4.7 shows that, all the predictor variables, i.e. PP, PC, PE, PSC and PM made a statistically significant prediction in predicting the dependent variable, project performance with B = -0.734, t= -2.117, and p=0.037 < 0.05 which specifies the beta coefficient is positive and statistically significant at 0.05 level. According to table 4.7 above, the Beta value for predictor variable, PM was 0.361. This implies that this predictor variable (PM) made the first strong positive and statistically significant influence in explaining or predicting the dependent variable project performance. 34 CONT……'D

35. The rest PC(0.315), PP(0.303), PE(0.194) & PSC(0.171) made the second, the third, the fourth and the fifth strong positive influence respectively in predicting the dependent variable. This finding supports some empirical studies (Li et al., 2006; Hughes & Jonathan, 2010; Cummings & Qiao , 2013) as their research depicts that PM, PC, PP, PE, and PSC have positive influence on project performance . 35 CONT……'D

36. 9 . CONCLUSION Despite the importance of procurement practice for the project performance, the perception and level of procurement practice of Bahir Dar city road construction projects is weak. The city administration has poor practice of PP, PC, PE & PSC. However, the level of PM practice of city is moderate. Due to this the city administration road construction project performance is affecting. Bahir Dar city road construction project Procurement practices have a very strong relation with the project performance. A total of 54.9% of the project performance of Bahir Dar road construction projects clearly depends on the independent variables. while the remaining 45.1% is determined by other factors which are not stated in this study. This means PP, PC, PM, PE, and PSC have high influence of road construction project performances of the city. PM made the first strong positive and statistically significant influence in explaining or predicting the dependent variable project performance following PC, PP, PE, and PSC respectively 36

37. 10. Recommendation Providing a procurement planning training to the procurement experts helps to eliminate risks because the trained personals are able to make better . The public organizations in the case area should take a responsibility to improve developing a procurement plan by integrating it into the organization annual budget. The procurement ethics practice of the city road construction project is below the expected once. This has its own influence on the project performance. Therefore, the researcher recommends that the independent bodies such as the Audit Bureau, work in collaborations with the Bahir Dar city Audit Bureau and the Anti-corruption commission. the city administrators need to periodically control and monitor all the procurement practices for the effectiveness of the road construction processes. It will be very good if they are able to form a committee for it and follow the works. 37

38. Thank you very mach 38