Performance Audit On Traditional Procurement System In The Construction Of Countryside Clinics In Lesotho

  1. Introduction:

The traditional procurement system has been defined as an organized process and procedure for clients to obtain construction projects (Ashworth, A. and Hogg, K. 2007).[1] Majority of Government (GOL) funded projects are procured using this system (GOL, 2007)[2], which procedurally requires the design documents to be fully completed before construction commences. GOL projects are miserably failing to comply with this requirement. Projects are tendered with incomplete or provisional documents. This tendency affect project delivery processes and hence project performance (IDA project no. P075566 – LSO, 2011)[3]. Projects experience cost and time overruns and poor quality after completion. It is observed that quantity of additional works (variations) issued at some point in construction is a significant indication of the problem. The system performs well and benefits the clients, when its conventional modus operandi has been followed, requiring design documents to be fully completed before tendering and construction commence.

An independent evidence-based investigation will be performed, which examines and reports on whether the procurement procedure has been correctly used and whether communities have benefited from the acquisition and provision of the facilities.

Keywords: Traditional procurement system, Construction of countryside Clinics; Performance audit: cost and time overruns; poor quality.

  1. Background / Review of the Literature:

The traditional procurement system has been modelled from British construction industry and has remained the most popular and suitably used method in acquiring construction projects in Lesotho regardless of their size. According to (RICS, 2003 data)[4], in Britain the traditional system is used at 43% of construction projects and only used for very small projects. Because the building process is not an individual’s activity, the best practice in construction delivery process begins with the appointment of effective project team. The team is trusted with preparation of the project owner’s brief. To be considered successful, building process has proper steps that have to be followed and performed.

The project procurement team:

Whoever is building must first form a team responsible for action planning and identification of ways to achieve project delivery on time, within budget and of good quality. The team comprises client, consultants, contractors and other stakeholders; with a task of safeguarding the interest of the public (O’Reilly, 1987)[5].

Client: A client is the project owner or an investor generally referred to as government, private organizations or individuals; all with an interest in the building of a facility. The Client is responsible for initiation of the brief. Barrett and Stanley (1999)[6] defined the briefing process as “the process running throughout the construction project by which means the client’s requirements are progressively captured and translated into effect”.
Consultants: These are a team of professionals: architect, engineers, surveyors, health, safety and environment, etc, charged with tasks of managing the building designs and construction processes. They are similarly contracted to advice on best practice and to design the facility required by the client. They are expected to manage, organize the project delivery process and to provide taxpayers with good and cost effective facility (GSA, 2014)[7]. They are generally carrying the responsibility of turning the brief into tangible drawings.

Contractors: Contractors represent the construction team that includes sub-contractors, suppliers and construction workers (skilled and unskilled). The team is fundamentally responsible for the management and delivery of the building construction process that meet project obligation.

Stakeholders: These are public authorities charged with responsibility of overseeing compliance of the statutory controls: building permits, planning control and environmental management. They are important members of the building team even though reports rarely mention the vital role they play in the building process.  In the traditional system they have no contractual link with clients yet they have a direct involvement in the project delivery through the architect Fig. 1 below.

The procurement arrangement:

In Lesotho like in most countries; the delivery process operates in contractual relationships between the client and the consultants, the client and contractors separately. The consultants and contractors are the main contributors and play an important role in the delivery of projects. The traditional arrangement portrayed in figure1 below; is identified by the separation of design from construction functions (Seeley, I.H. 1997)[8] and the unique requirement for all the organizations to have contractual relationship with the client, yet the line of action, communication and information flow occur only through the project team leader – the architect.

This setup has been criticized for disregarding and bypassing other professions in that it does not allow them a direct communication with the client.

The complaint is that this supply chain relationship has an influence on project performance (Meng, X. 2011)[9] which often results in increased costs particularly on public sector projects; where bureaucratic procedures often delay the process.      The delivery process and information flow often take a much longer time to reach the intended parties.  Another important observation is that the system totally ignores and excludes other stakeholders; with public interests and yet they play a significant role in granting building permits and planning controls to the project.  These are Fig. 1 Local Authorities commonly known also as (Boroughs). Researchers have critically pointed out that without stakeholders’ involvement projects can be frustrated and completely stalled (Oladinrin, Olatunji and Hamza, 2015)[10].

The procurement practice:

Because construction projects are funded from public funds, GOL is therefore under an obligation to look for value for money in acquiring professional services. GOL is expected to manage resources more carefully to avoid expenses and time delays. The delivery processes must be efficiently organized (Boisclair, F. 2008).[11] Procurement Manual speaks of this intent and contains advices on the appointment procedure (GOL, 2007). However, there is a common misconception of the regulations on the part of procurement officers; when procuring building construction services. They belief that in pursuit of value for money, the client is best served by the cheapest offer (CIC, 1993)[12]. The argument is that cheapness may not often benefit the client. The approach may appear to show savings at the beginning and later become costly in construction and in maintenance after occupation and in use. Value for money is not about the lowest initial offer but the need to ensure the delivering of a better service or getting a better return for the same cost, time and effort (HEFCE, 2011)[13].

In majority of cases projects are regarded successful by clients when they meet their strategic objectives (Richards, Bowen, Root and Akintoye 2005).[14] The traditional measurement for project success is determined in achievement of the expected and needed value once it is delivered and in use.

  1. Research Objective:

The traditional procurement system is historically referred to as the competitive tender contract (Turner, A. 1990)[15], which allows all organizations in a free market to tender for a price for the provision of services to the client. Competition for contracts in the building construction is excessive and very demanding. Overcapacity, motivated by the ease of entry into this business, frequently encourages abnormally low offers, below the level required to cover costs. The objective of this study is to encourage competition not by offering low cost but by also encouraging competition on quality of services and hence on the end product. The study will try to encourage improvement in regulations in other to discourage entry into the market by opportunists (CEC. 1997)[16]. The intention is again to sensitize GOL on the need for education and development of small construction companies and to view it as an investment worth taking.

Most importantly, the study will view the future trends associated with building procurement processes and attempt to recommend the most appropriate methods and best practices. It will also emphasize on the participation of other stakeholders whose roles are slightly overlooked and less respected. The study will not forget the critical and huge roles played by the human resource (skilled and unskilled labour) support structures of the building construction. Their important contributions in the building process will be highlighted.

An independent evidence-based investigation will be performed, which examines and reports on whether the procurement procedure has been correctly used and whether communities have benefited from the acquisition and provision of the facilities.

This report analyses the causes of the regularly observed poor performance in project delivery processes. A database already available in government offices together with a questionnaire survey will be used to explore the performance on public funded countryside clinics in terms of cost, time and quality management during design and construction processes.

In addition to the questionnaire, practicing construction professionals and members of the community will be interviewed to provide a deeper insight into the study.  Judgement is therefore required in determining whether the communities have satisfactorily benefited from the lowest offer in procurement of construction services or not. The traditional procurement system has been used with defaults. This only measures the cost, quality and timelines to complete the facilities and whether together they constitute good value.

The study hypothesizes that:

  • Clients are not benefiting from the lowest offers;
  • The traditional procurement process has not been correctly used.

This study is intended to find out whether the lowest offer is capable of producing a desired result? Whether the client is indeed getting the benefit and the quality expected?

Clients benefit from facilities that matches their expectations; in terms of getting a well designed and serviceable facility (functionality) (CEC. 1997).

  1. Method and Design:

The study will identify the key indicators of project performance primarily through a comprehensive literature review and questionnaires and interviews of practicing firms, community members and authorities in Lesotho. Problems and hardships will be identified and possible solutions will be recommended. Opportunities and threats, strengths and weaknesses will be studied. The correction and improvement methods will be proposed.

Data will be collected from recently constructed countryside clinics in Lesotho and will be analysed to arrive at a conclusion. The descriptive statistics will mostly be used as indicative analysis to assist in determining the appropriate analysis of information data. For example, if the distribution is unknown non-measurable test or tools are used. The method also helps to identify the existence of outliers in a data.

Analysis of data based on the collection of information from questionnaires and interviews:

A number of statistical analyses will be made using statistical products and services solutions (SPSS) will be carried out. And the results which quantitatively assess the effect of the traditional procurement procedure and the award of tender to the lowest offer have on project performance.

  • Sample and Population: These are statistical tools used to describe data or information. A large group

of data is identified as population and a small portion is named a sample which is easy to use and to handle, regarded as a fair representation of the larger portion is tested.

  • Inferential statistics (Black, K. 2012)[17]: If a researcher gathers data from a sample and uses the statistics generated to reach conclusions about the population from which the sample was taken, the statistics are inferential statistics. The data gathered from the sample are used to infer something about a larger group. Inferential statistics are sometimes referred to as inductive statistics because they provide conclusions and judgments. The use and importance of inferential statistics continue to grow.
  • Quantitative data is numerical. It is acquired through counting or measuring. Majority of data in the research paper will be countable and measurable. Measurement of central tendencies: Average, median, mode, etc. They are used to measure the central figures, the middle numbers and the most frequently appearing figures in the data. Descriptive statistics methods will be used to measure central tendencies and dispersions

Mean (arithmetic mean) an average, for ungrouped data, the mean is computed by summing the data values and dividing by the number. This statistic will be used to determine whether majority of clinics are constructed within the budget and timelines and the quality of services and team provided. How many clinics has GOL procured within one financial year to try to find out how quick and flexible the traditional procurement is it?

Median: the middle value, for ungrouped or raw data is the middle value of an ordered array of numbers) is a measure of central tendency. It represents the value for which 50% of observations are lower and 50% are higher. Put simply, it is the value at the centre of the sorted / ordered observations.

Mode: (another measures of central tendency) is calculated from a set of discrete numerical values. The mode represents the most frequently occurring value in a data set. A data set may have more than one mode.

Population variance is the variance of the entire population and is denoted by “σ2” while sample variance is the variance of a sample space of the population; and is denoted by “S2”.

Standard deviation is the square root of variance. Standard deviation is a measure of how precise the mean of a population or sample is. It is used to indicate trends in the elements in a given data set with respect to the mean, i.e., the spread of these elements from the mean.

Measurement of dispersion: To describe this spread, a number of statistics are available to us, including the range, quartiles, absolute deviation, variance and standard deviation

Dispersion: consists of standard deviation, variance, range (minimum, maximum) and standard error;

The statistics here will reveal and display dispersion or spread of data around the mean. It will assist with the information of the range, minimum and maximum numbers of clinics facilities are constructed.

Distribution which consist of kurtosis and skewness;

Kurtosis: A measure of the extent to which observations cluster around a central point. For a normal distribution, the value of the kurtosis statistic is 0.

Skewness: A measure of the asymmetry of a distribution. The normal distribution is symmetric, and has a skewness value of zero. A skewness value more than twice its standard error is taken to indicate a departure from symmetry.

Outliers: A value varies greatly from the rest of the data set. (Values that “lie outside” the other values)

Coefficient of variations (CV) : A statistical measure of dispersion or distribution of data series around the mean. It is the ratio of standard deviation to the mean) or expected return. Hypotheses Testing:

P value is a statistical measure that helps determine whether or not the hypotheses made are correct.

P values are used to determine whether the results of the experiment are within the normal range of values for the events being observed. Usually, if the P value of a data set is below a certain pre-determined amount (like, for instance, 0.05), scientists will reject the “null hypothesis” of their experiment – in other words, they’ll rule out the hypothesis that the variables of their experiment had no meaningful effect on the results. Today, p values are usually found on a reference table by first calculating a chi square value.

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