AN ANALYSIS OF THE PROCUREMENT REFORMS ACT AS A TOOL FOR COST SAVINGS AND ACCOUNTABILITY IN NNPC


AN ANALYSIS OF THE PROCUREMENT REFORMS ACT AS A TOOL FOR COST SAVINGS AND ACCOUNTABILITY IN NNPC    

ABSTRACT:

This research work has seriously analyzed procurement reforms act as tool for cost savings and accountability MKRPIC. Where the data was collected and used for the compilation of this research. An introduction was made which comprises the statement of general problem, the background of the subject matter, objectives of the study and the significance of the study. Existing literature on procurement reforms act, determination of needs, some purchasing objectives, purchasing practice and techniques, some management function were also discussed and reviewed. Random Sampling method was used as the basis of this study. A sample size of 39 out of total populations of 130 was selected. The research work shows that procurement reforms act n NNPC is always influenced or rather ineffective. The study recommends that due process should be complied with in order to enhance cost savings and accountability in NNPC. Also total commitment of the entire staff of NNPC.

TABLE OF CONTENTS

Title    -    -    -    -    -    -    -    -    -    -    -    i

Approval    -    -    -    -    -    -    -    -    -    -    ii

Declaration    -    -    -    -    -    -    -    -    -    iii

Dedication    -    -    -    -    -    -    -    -    -    -    iv

Acknowledgment    -    -    -    -    -    -    -    -    v

Abstract    -    -    -    -    -    -    -    -    -    -    vi

Table of Contents    -    -    -    -    -    -    -    -    vii

CHAPTER ONE: INTRODUCTION

1.1    Background of the Study    -    -    -    -    -    -   

1.2    Statement of the Problem    -    -    -    -    -    -   

1.3    Objectives of the Study    -    -    -    -    -    -   

1.4    Significance of the Study    -    -    -    -    -    -   

1.5    Scope of the Study    -    -    -    -    -    -    -   

1.6    Research Questions    -    -    -    -    -    -    -   

1.7    Definition of Terms    -    -    -    -    -    -    -   

CHAPTER TWO: LITERATURE REVIEW

2.1    Procurement    -    -    -    -    -    -    -    -   

2.2    Evolution of Nigeria’s Publication Procurement Act 1    -   

2.3    Objectives of Bureau for Public Procurement    -    -   

2.4    Functions of Bureau for Public Procurement    -    -    -   

2.5    Procedures for Bureau for Public Procurement    -    -   

2.6    Benefits of Bureau for Public Procurement    -    -    -   

2.7    Negotiation as a Tool for Cost Savings    -    -    -    -   

2.8    Techniques of Negotiation    -    -    -    -    -    -   

2.9    Procurement Practice and Cost Savings    -    -    -   

2.10    Why is Sound Public Procurement so Important    -    -   

CHAPTER THREE: RESEARCH METHDOLOGY

3.1    Area of Study    -    -    -    -    -    -    -    -   

3.2    Research Design    -    -    -    -    -    -    -   

3.3    Population of the Study    -    -    -    -    -    -   

3.4    Sample and Sampling Procedure    -    -    -    -    -   

3.5    Instruments for Data Collection    -    -    -    -    -   

3.6    Administration of the Instruments    -    -    -    -   

3.7    Techniques for Data Collection    -    -    -    -    -

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1    Presentation of Results or Data Analysis    -    -    -       

CHAPTER FIVE: DISCUSSIONS, CONCLUSION, SUMMARY AND RECOMMENDATIONS

5.1     Summary of Procedure    -    -    -    -    -    -   

5.2    Discussion of Findings    -    -    -    -    -    -   

5.3    Conclusion    -    -    -    -    -    -    -    -    -   

5.4    Implication of Findings    -    -    -    -    -    -   

5.5    Recommendation    -    -    -    -    -    -    -   

5.6    Suggestion for Further Studies    -    -    -    -    -   

Bibliography    -    -    -    -    -    -    -    -    -   

Appendix    -    -    -    -    -    -    -    -    -    -   

CHAPTER ONE:

INTRODUCTION -

In the past, huge sums of government money have been siphoned through the processes     of contract awards. A major thrust of this administration therefore, is the acceptance of Procurement Reforms Act as a tool for embracing transparency, competition, fairness, integrity, openness and value for money in the procurement reforms Act and seek the support of all governance for the implementation of the scheme in various ministries and government parastatals.

The researcher intends to analyze on procurement reforms Act as a tool for cost savings and accountability in Kaduna Refining Petrochemical Company (NNPC) considering the several abuses to rules and standards in the award and execution of contracts. These abuses are in the form of over-invoicing, inflation of contract costs, proliferation of white elephant projects, poor project delivery, overpayment as well as manipulations of the processes leading to the award of contracts.

The Nigerian National Petroleum Corporation is in the business of refining Crude oil into valuable petroleum and petrochemical products and manufacturing and packaging products efficiently. And the way and manner in which procurement practices are carried out is of great concern to the researcher.

The edifice is a process plant designed to run steadily with minimum operating costs so as to make profit. In order to achieve this notable objective, it is imperative that replenishment drives are made to ensure that operational spare parts are readily available in the warehouse.

Since over seventy percent (70%) of the company’s expenditure is in the area of materials procurement. It is with this realization in mind that several efforts have been made by both corporate and the subsidiaries management to control and regulate materials management activities, especially in the area of procurement of materials in order to save cost and enhance company’s operations. In this project the terms procurement and purchasing would be used interchangeably.

1.1    Background of the Study

The researcher developed interest to write on this topic because of personal interest in procurement reforms act and persona interaction with some staff who work in the procurement department under the umbrella of material management department (MMD) in Nigerian National Petroleum Corporation (NNPC).

The researcher got an insight into the procurement activities of the company the company and the problems facing them and therefore feels that it would be of great benefit to the company to conduct a detailed study into its purchasing departments with the aim of identifying the problems and after necessary suggestions toward the solution of such problems for effective and efficient operations of the company, Nigerian National Petroleum Corporation (NNPC).

1.2    Statement of the Problem

The Material Management Department (MM) of the NNPC Ltd operates in an integrated form to make materials available in the warehouses because the spare parts are stored.

“JUST IN CASE” for timely maintenance intervention or as the need may arise.

However, NNPC has taken a back seat in the implementation of the provisions of the Procurement Refining Act. Also, the statement of the general problem is the non-adoption of the Procurement Refining Act in NNPC Ltd.

And over the years there have been incessant cases where critical material needed for maintenance intervention and other requests, are either over-stocked, under-stocked or out of stock. The scenario depicts the existence of procurement deficiencies in the area of planning, replenishing, coding and inventory control which affects plant sustainability in NNPC Ltd. Besides 2008 annual stock taking in NNPC revealed the available materials to the value of N8 billion which could be used for other purposes.

1.3    Objectives of the Study

The study is geared towards achieving the following objectives:

⦁    Outline the risks associated with non-implementation of the provisions of the procurement Act in NNPC Ltd.

⦁    Determine the impact of the non-implementation of Procurement Reforms Act to the organization.

⦁    Examine the factors responsible for the non-implementation of the Act in KRP Ltd.

⦁    Suggest or proffer solutions to the problems.

1.4    Significance of the study

The benefits derivable under this study can be seen below:

⦁    It serves as a guide for the organization in which the researcher as chosen as a case study i.e. NNPC.

⦁    It is meant for students for are willing to embark on further studies in this perspective.

1.5    Scope of the Study

The scope of this research work shall be limited to Nigerian National Petroleum Corporation particularly the department under the umbrella of material management department.

The researcher also aimed at analyzing the procurement reform act as a tool for cost savings and accountability in NNPC.

Also, comparative notes shall be made where necessary with other department within NNPC.

1.6    Research Questions

i)    What are the risks associated with the non-implementation of Procurement Reforms Act in NNPC?

ii)    How does the non-implementation of the Procurement At affect the organization?

iii)    What are the factors responsible for the non-implementation of the Procurement Reform Act?

iv)    What are the remedies for solving these problems?

1.7    Definition of Terms

⦁    Procurement: Means purchasing and/or supplies.

⦁    Supplier: This is the term used to describe a seller of goods or items in a given place.

⦁    Inventory: This refers to the list of goods or items in a given place.

⦁    Quotation: Is a list showing the prices of items.

⦁    Purchase Order: It is an order in a printed firm to transmit the company’s requirement to supplies.

⦁    Negotiation: Is a term used to arrive at a final and reasonable price.

⦁    Specification: This is the information by the buyer to supplier indicating descriptions dimension and analysis performance of a product.

⦁    Public Procurement: Means the acquisition by means of goods, works or services.

⦁    Efficiency: Means the ability to minimize the use of resources in achieving organization’s objectives i.e. doing the right thing.

⦁    Effective: Means producing the result that is wanted or intended.

⦁    Due Process: Is a mechanism for ensuring strict compliance to rules and procedures that should guide contract award.

⦁    BMPIU: Budget Monitoring and Price Intelligent Unit. This is the unit tasked with implementing Nigeria’s public procurement reform programmes.

DISCUSSIONS, CONCLUSION, SUMMARY AND RECOMMENDATIONS

This chapter summarizes the entire work to bring out the findings, arrive at a conclusion and make feasible recommendations to management.

5.1    Summary of Procedure

Arising from data analysis, non implementation of procurement reform act and its deficiencies were identified, them effects, consequences the factors contributing to the non implementation of the system and the strategies for resolving these problem were addressed especially the issues of planning, monitory, replenishment, cost saving and accountability the findings of this study are that:

⦁    Replenishment  drive is ineffective

⦁    Understanding exist

⦁    Communication gap exist

⦁    Materials requirement planning is ineffective

⦁    Subjectivity or persona interest exist

⦁    Good working culture is lacking staff training adequate lack of professionalism;

⦁    Ineffective computerization.

5.2    Discussion of Findings

The onus or duty of making materials available in NNPC and to monitor their movement lies with procurement and stock control department. However, over the years this function has not been performed adequately resulting in cases of understocking, stockout and even obsolesce. Thus, Udoh (1997) reported that due to irregular and unreliable supply of Desorbent, the NNPC lost up to N1.67 billion (expressed in 1996 naira values) in directly collectible revenue from loss of Linerar Aikly/Benzee (LAB) Sales alone.

5.3    Conclusion

In the light of the above findings, the following conclusions are made first, normal replenishment should be encouraged to eliminate emergency purchases, secondly, procurement of material should be strict done on the basis of procurement reforms act. In addition, inventory control unit is imperative if the organization is to ensure cost savings and accountability.

Moreover, the provision of sufficient and modern working tool slice computers and internet facility are not less significant. The level of skills of procurement staff must be enhanced through sufficient training and professionalism.

5.4    Implications of the Findings

The outcome of this study attests to the fact that non implementation of procurement reform act contributes to lack of material required, low cost savings and accountability to enhance the company in the following ways; strategic buying is not observed, inventory control is not done at all and so material purchasing department and the stock control department under the umbrella of material management department (MMD) normal replenishment is overshadowed by emergency purchases because the purchase request status are not raise in time and if raise are affected by long procurement cycle, material are not planned for to guarantee availability and cost effectiveness, accountability and understaffing as wee as working culture all influence the efficiency of procurement reform act as a tool for cost savings and accountability in NNPC.

5.5    Recommendations

Arising from the above findings and conclusion, it is recommended that the management of NNPC should:

⦁    Enhance an sustain replenishment drives to discourage emergency purchase which deplete revenue base and or cost savings.

⦁    Encourage the use of annual materials to avoid understocking or overstocking.

⦁    Establishment inventory control unit to monitor material in the system.

⦁    Provide desirable adequate and modern working tools for utmost performance.

⦁    Complete the computerization exercise so that all MMD transactions would be done online.

5.6    Suggestions for Further Studies

During the course of this research, the researcher came across some interesting areas that require further study.

However, the scope of this study with not allow the researcher to delve into this areas. In the light of this, the researcher is recommending that further study should be undertaken into the following areas:

⦁    Tendering: Is the presentation of terms and conditions of contract before execution.

⦁    Roles of Procurement Units: Is responsible for the procurement of goods, services ad works.

⦁    The Due Process Compliance, Review and Certification Process: This commences the review process by assigning the task to the designated term within the unit.

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AN ANALYSIS OF THE PROCUREMENT REFORMS ACT AS A TOOL FOR COST SAVINGS AND ACCOUNTABILITY IN NNPC



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