Designing and Implementing E-procurement
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CHAPTER ONE: Background Study
The project is designing and implementing e-procurement on business-to-business transactions, it first identifies current procurement process and explores how to implement procurement that involves mainstay drivers and problems of e-procurement system usage and investigate the effect on the performance of the Ministry in terms of e-government and transparency in the Federal Ministry of Science and technology. The solution essentially involves in creating all the requirement details/ specs, of a tender to be floated electronically, in parameterized form; so that subsequent evaluation & comparative chart preparation exercises could be automated to a large extent.
The term procurement can be referred to as the buying of tangible and intangible merchandise for organizations which can be executed through agency or company. Procurement is not an event. It is a process and signifies a continuing relationship between the government and its suppliers. Procurements are always taken as an important task in the government environment and always handled in a strictly secured and controlled manner (Dunleavy, 1994). According to Nwokak, et al. (2007) procurement is also one of the sectors that remains insulated against any process improvements. At the moment, it is been recognized world over, that Information and Communication Technology (ICT) can eliminate the existing bureaucratic problems and make the government's performance more resourceful, easily reached and clear as crystal, besides being cost-effective.
The procurement process in the Ministry of science and technology (www.fmst.gov.ng)is a complex process that starts and ends in a cycle. Procurement cycle starts from Raising of the requirements for an item or a service and ends only after settlement of supplier payments as shown in the diagram below.
The Concept of E-Procurement
Electronic Procurement can describe as purchasing order that release a communication over the internet through authorized internet seller catalogue. E-procurement is the electronic purchase of goods and services for an organization; Turban et al. (2006) from an easy phrase, electronic purchase can be described as procedure to purchase tangible and intangible merchandise by the use of internet for a company or institution. For example, within Nigeria, the majority of companies in the petroleum Industries, United Parcel Service, Plc.(Ups) Federal Express Plc (Fedex), communication industries etc are some of the few organizations that practice e-procurement in material purchase (Nwokak et al, 2009). The reason is so, because the industries have advanced and developed their technology usage of e-procurement keeping up with the changes in the business environment as it pertains to information and technology. Furthermore, electronic procurement or merchant trade is the business-to-consumer (B2C) or company-to-company (C2C) acquisition as well as trade of tangible and intangible goods by electronic means and various information and network system, like the Enterprise Resource Planning (ERP) and Electronic Data Interchange (EDI) (Nwokak et al, 2009). Electronic procurement systems permit competent and valid user to search for buyer or seller of tangible as well as intangible merchandise. No matter which method, buyer or seller may as well state the outlay and request for bidding. Dealings can then be welcomed.
Other Concepts in E-procurement
- The traditional auction is a Forward Auction. It is a process through which a seller offers an item for auction, and prospective buyer competes with one another other for acquisition. By doing this, the price continue to move up upon the time nobody will be able to go up further.
- In the reverse auction, several dealers of a product vie for the trade of one single purchaser. In such a way the price moves downward.
- There are 3-4 flavours of reverse auction, called as: English Auction, Dutch auction, Sealed Bid Auction etc.
How it works
- There is no contact or conciliation with the bidders during the auction.
- The Buyer also watches the progress of bidding from his office. Identities if bidders are available to him.
- In reverse auction competition is high; bidders get tempted to bid lower and lower to clinch the deal, until they are unwilling to go any further.
- At the conclusion the lowest bidder emerges as winner of the auction.
- To Buyers:
- Significant reduction in cost due to Dynamic Bidding process. Inefficiencies in the supply chain reduce.
- With real time competition, suppliers are on their toes
- It is an effective way of measuring and assessing price discovery and making the negotiation process an easy effort. Often used along with Tendering.
- To Vendors:
- Ensures Savings in marketing cost / distributor margins
- Facilitates flexibility in pricing decision.
- Transparency increases
- Allows vendors to assess their pricing power from close quarters of competition.
Commonly available modes for effecting EMD/ Fee/ other payments electronically, from within a software Application, are: -
- Online payment through Credit cards/ Debit cards or
- Direct Account Debit (using Gateway for Internet Banking)
- Depending on the actual need and usage constraints, the appropriate mode could be chosen and integrated into the s/w application.
- Credit cards could conveniently be integrated for use if the payment amounts involved are not substantial.
- For all other cases where payment amounts could be heavy, payments through Direct Debits from concerned accounts, using Internet Banking is the only alternative.
Scope of E-procurement solution to the Ministry
- Purchasing of all kinds of goods and services, works etc.
- Types of Tenders - Open, Limited, Expression of Interest
- Hybrid Mode of Operation
- Electronic and Paper Based Bid Submission (Initial Stages of Implementation)
- Mode of Payments (Tender Fee, EMD)
- e-Payment, as well as
- Conventional Payment Modes (DD etc.)
The Importance of Procurement
The purchasing of merchandise, works, and services has a main effect on the efficient execution of an assignment. To a great degree the quality, cost, and judicious achievement of a task determined on the supervision and managing of purchase of materials needed. Use of articulated policy and practice, considered by unbiased, just, and transparent measures, is vital, not only to create reliable and steady market that will be capable to catch the fancy of competent contractor and supplier, but also to uphold the paradigm of accountability and the cost-efficient use of civic treasury.
The importance of procurement in delivering key aims and mission of the ministry, and as a result the procurement of merchandise, facility and services is of strategic significance to the Ministry:
- It has an undeviating force on the Ministry's general overheads, and price of service prerequisite to public.
- Can have direct effect with delivery of its services by Ministry's.
- Can have direct effect on the accomplishment of business, department and service mission.
- It provide the system to deliver key plan objective, together with sustainability, corporate work environment, egalitarianism and cost-effective improvement.
- It operate in multifaceted dog matic structure that should be followed.
Benefits of E-Procurement to Ministry of Science and Technology.
For years, improvement to purchase has been attempted, frequently by means of information technology. The concrete opportunity for development today lies in the use of e-procurement, the electronic process of obtaining goods and services for an organization Nwokak et al, (2009). They further to ascertain that by automation and reformation the thorough and arduous routine of obtain task, purchase professional will have the opportunity to pay more attention, on other tactical purchase, in order to achieve these set of objectives:
- Growing the efficiency of purchase agent (by giving enough period as well as decreasing the work stress)
- Reducing the procure price by merchandise homogeny reverse auctions, quantity price cut, and also through purchase consolidation.
- Getting better information stream and organization (for example supplier information and price).
- Reducing or elimination of the purchase through unqualified vendors, in that way eliminating nonconformist buying.
- Getting better the disbursement procedures and savings due to expedite disbursement (for seller)
- Ensure just in time delivery always
- Slash order-fulfilment and handling period through the use of computerization
- Reduce skill as well as instruction need of purchase agent.
- Reduce numeral figure of supplier
- Reformation of purchase procedure, creating it easy, better and speedy (may involve authorize)
- Requests to carry out purchase on their desktop, bypassing purchasing unit.
- Reformation of account statements and difference of opinion decision
- Reduce organizational handing out expenditure for each bid a s to a great extent of 90%
- Getting fresh supplier and vendor that will be able to provide goods and services quicker and more so,
- More cost effective due to better sourcing.
- Integrate budgetary measures in purchase procedure.
- Reduction or elimination of individual error in trade or transport procedure
- Monitor as well as regulate exchange activities.
The various benefits are listed below
Electronic purchase enable purchaser to process transaction through internet. For instance, an internet-base transacts means through which things can be chosen mostly from an identified catalogues and submit for authorization.
The device can be connected in same direction of the backside part of ERP structure for access, imbursement of invoice, and arrangement of organization information. Electronic procedures (together with computerization of p-card purchase) lead to immense period saving as well as effectiveness owing to:
- universal, computerized process incorporate finest tradition as well as eliminate needless actions;
- electronic processing enable affiliation with supplier, which speed purchase phase period and facilitate contractor feat improvement; and
- better data correctness, which minimize order in accuracy as well as provide the necessary base for enhanced supervision from side to side control and scrutiny.
A lot of instances in a company, conformity and unconventional expenditure is an important problem - not for the reason that workers intentionally procure outside of favoured arrangements, but to a certain extent through be short of knowledge. Electronic purchases address this from side to side apparatus such as catalogues and benchmark order procedures and authorized process.
Conformity will be achieved owing to:
- easy and speedy request-to-pay procedure together with a easy to use interface and pre-source catalogues modified to the needs of different client;
- easy and speedy tactical source procedure with benchmark purchase process and apparatus, without difficulty accessing information
- Electronic purchase structure, the only purchase method obtainable.
Management Information Benefit
This statement analyze the important of data's cost centre, commodity codes, etc. is hard coded in opposition to the user significantly reduce code error and provide extremely exhaustive as well as effortlessly available data. This is very important information to make the rule of the monetary revenue of tactical source. A successful e-procurement performance will give high value, complete management information and will reverse the need for data warehousing or resource heavy data mining, by David Eakin (2002).
The capability to display to your supplier that you are using e-procurement as an apparatus to make sure final user do respect their union significance will augment ability to bargain along the prices through:
- Better improved capture and as a result, trustworthiness of expenditure information; and
- Better assurance that costs volume can be assured from better conformity with the structure, hence allow degree price breaks and discount to achieve.
These include the capacity to improve management of business cash flow as well as control the proficient imbursement of supplier because of the further rationalized procurement procedures giving additional suitable and precise information to the accounts payable department. Possible benefit includes limited staff a "hard" benefit only if improvement can bring about head count decrease) and brings down expenditure on postages as well as stationeries.
Throughout negotiations the procurement manager can further credibly guarantee the supplier a level of prompt payment, which was not possible prior to e-procurement. David Eakin (2002). However, the electronic invoice benefit is frequently unexamined and uncared for.
- Reduction in Procurement & Contracts cycle time
- Cost Reduction
- Efficient & streamlined Procurement Processes
- New Supplier Discovery
- Close Monitoring of Activities/ Vendor Performance
- Rich MIS and Analytics
- New Improved Image
- Standardized formats and Uniform tendering practices
- Increased visibility/ Less artificial barriers
- Increased business opportunities,
- Greater degree of transparency
- Cycle time reduction in participation and award of Contract
- Supplier Enablement and Ease of Participation
For high-value items, purchasing personal in the Ministry spends most of their work period on procurement activities. These functions involve developing relationship with considered supplier, negotiating prices as well as terms, qualifying supplier, and bringing out suppliers certification as well as evaluation. When buyer is occupied in the midst of information of lesser things (especially MROs), they have less period to adequately engage in the purchase of the high - value item. Other problems can happen in traditional purchase. These include delay in paying a lot for hasten order. Purchase inadequacy is nonconformist exchange, (impromptu procurements of merchandise needed hurriedly, unintentionally at non-pre-negotiated soaring price. The conventional purchase procedure, as discuss over, is therefore ineffective. In other to avoid a repeat of this event, the ministry needs to re-engineer the process of purchasing, by carrying out of new purchasing models in general, through the introduction of electronic purchase. From this stage, we shall gaze at what e-procurement means in B2B market.
The issues are summarized below:
- Lack of a general Public Procurement Policy. Nigeria lack up to date regulation on Public Procurement and enduring supervision and supervise purchase entity.
- Transparency in Procurement Act, The finance Control and Management Act, 1958, jointly with Financial policy which sets basic regulations for managing public expenses have gap, deficiency as well as defective execution of existing set of laws on procurement (for example, inadequate in the arrangement for controlling and supervision) which make opportunity for unethical behaviour.
- Lack of model bidding documents and contract documents -because of inflations, inadequate and regularly adjustment to threshold of the favourable limit of the Tenders' Board, their approval were regularly gnarled consequential in abuse, top amongst include is split of contract.
- Complicated procedures for approvals, bidding and payments.
- There is a large number of tenders' board that are alleged by the private sector as a source of delay as well as non intelligibility. Furthermore, those tenders' board appear to encompass inadequate mandate amid power to choose contracted faction active through the permanent Secretary as well as Minister/ Commissioner.
- Inadequate skilled resources.
- There is no centralized system of registration of suppliers.
- Delays in making payments to suppliers who's Procurement are sometimes executed through staffs that substantially lack the required experience.
E-government procurement is the collaborative purchase of tangible and intangible merchandise by the civic division using electronic methods at every stage ensuring transparency and efficiency. Ideally, it covers the full 'life cycle of procurement'. The intention is to automate, possibly, the whole purchasing processes, along with tender offer submission as well as payment from supplier; in an automated computerized concurrent situation .E-procurement could resolve many of the constraints/ delays of traditional procurement. In David Eakin (2002).Summary, e-Procurement is the business-to-business buying and selling of supplies and services online. The e-procurement helps both the buyers and the suppliers to decrease the cycle time, needless paper work, waiting in long queues and at the same time maintain the simplicity in the entire process. David Eakin, (February, 2003).
Which are to:-
- Reduce cycle times of procurement
- Increase supplier access to ensure wider participation
- Reduce costs of procurement through competitive bidding and Reverse Auctioning
- Remove cartelisation by supplier groups (Reverse Auctioning)
- enhance transparency in the procurement procedure
- Almost complete elimination of paperwork, for speedy and efficient functioning
Inefficient function In the Ministry is because of:
- Lack of a general civic procurement policy
- Lack of consistency in enforcing procurement practice & procedures
- Low competence - labour-intensive process
- call for of intelligibility in procurement leading to fraud & pilferage of the treasury
- unethical practice by suppliers
- Cartel creation Influence selection by bribing unit personnel
- Advances in electronic procurement by the use of safe internet-enabled means have not being used in an extensive method
Approach to a Procurement Solution
Before looking for an e-Procurement solution, a relook on existing procurement procedures/ practices is essential: -
- 'As Is' Analysis, Re-engineering for optimized processes
- Optimization/ reduction in process-flow steps
- Uniformity/ standardization in formats/ practices/ procedures
- Organization wide use of 'unified item-codification structure'
- Automation of Processes
Critical Determinants of a procurement Solution
- Good authentication - Role based access
- Security, Secrecy (of bids) - Signing, Encryption
- Ease of Use, Tender Templates, e-Payment integration etc.
- Integrated Document Management features, Good Analytics
- Good Audit trail/ traceability features - Access for Financial Audit, Legal and RTI needs
- Good Archival & Retrieval features/ policy - Safe and secure
Probing for seller so as to get and contrast supplier and product occasionally can be in reality awfully time-consuming and expensive. Most Ministries as a way out invite sellers to fulfill orders and create market place. Procurement is used to refer to the purchase of goods and services for an organization, (Martin et. al., 2001).
Federal Ministry of Science and Technology (FMST) are among of the important parastatals of the Federal Government. The major term of office is providing access to technology for the Majority of Nigerian Populace. The ministry is made up of 8 (eight) departments. The Department of Administration and Supply within the Ministry is responsible for:
- Planning, management and entirely documenting the procedure to purchase both tangible and intangible merchandise.
- use of active Continuing Service Agreement for products to attain program needs;
- management, soliciting and contract award procedures is done prudently and unprejudiced method that is fair and treat every potential vendor and bidder;
- ensures that contract for good, service as well as building is planned to offer the most excellent value to government;
- ensures that every ministry acquisition and disposal is unswerving with guidelines, appropriate legislature as well as trade agreement;
- Declare products excess as soon as their utilization to the ministry has finished.
The department is therefore responsible for procurement of goods and services in the Ministry.
The Nature and Scope of E-Procurement
According to Nwokak et al, (2009) different methods are employed to procure goods and services by companies depending on what and where they buy, the quantities needed, how much money is involved, and more.
They further mentioned some important procurements method to comprise the listed below:
- To buy from an internal buyer's catalogue in which company-approved vendor's catalogues, including agreed upon prices, are aggregated. This approach is used for the implementation of desktop purchasing, which allows the requisitions to order directly from vendors, bypassing the procurement department.
- Buy directly from manufacturers, wholesalers, or retailers from their catalogues and possibly by negotiation. Frequently, a contract implements such a purchase.
- Buy from the catalogue of an intermediary (e-distributor) that aggregates seller's catalogues.
- Conduct biding or tendering (a reverse auction) in a system in which suppliers compete against each other. This method is used for large-ticket items or large quantities.
- To buy at private or public auction sites in which the organization participates as one of the buyers.
- Collaborate with suppliers to share information about sales and inventory, as to reduce inventory and stock -outs and enhance just-in-time delivery (Turban et al 2006).
- Join a group-purchasing system that aggregates participants demand, creating a large volume. Then, the group may negotiate prices or initiate a tendering process.
The Procurement Process
Procurement cycle starts from Raising of the requirements for an item or a service and ends only after settlement of supplier payments.
By Category of Goods & Services
- Civil Contracts
By Nature of Procurement
- Rate Contract & Catalogue Buying
- Auctions, Reverse Auctions
By Size / Volume of procurement
- High Values, low volumes
- Low values, High Volumes
By Portfolio of services needed
- Requisition, Bid Process
- Evaluation, Award, PO
- Supply, Quality check, Inventory Management
- Payment, Accounting, Audit
- MIS, EIS
The traditional procurement process has been widely criticized as an ineffective procurement method because it often involves time and cost overrun (Dunleavy, 1994). Yet the method is still being widely used in Nigeria most especially for the procurement in Ministry of Science and technology.
Inefficiencies in Traditional Procurement Management
According to Nwokak et al (2009) precisely 80% of organizations' purchase item, especially for Maintenances, Repairs as well as Operating items (MROs), constitutes 20- 25 percent of the total purchasing values. Furthermore, Nwokak; Ozuru&Ugoji (2009) affirmed that a portion of corporate buyers' time is spent on non-value-added activities such data entry, correcting errors in paper work, expediting delivery or solving quality problems. For high-value items, purchasing personal spend a great deal of time and effort on procurement activities. These activities include qualifying suppliers, negotiating prices and terms, building rapport with strategic suppliers, as well as carrying out supplier evaluation and certification (Nwokak et al, 2009). If buyers are busy with details of the smaller items (usually MROs), they do not have enough time to properly deal with the purchase of the high -value items. Other inefficiencies also may occur in conventional procurement. These range from delays to paying too much for rush orders. Procurement inefficiency is maverick buying, (unplanned purchase of items needed quickly, often at non-pre-negotiated high prices. The traditional procurement process, as discussed above, often is therefore inefficient (Mills, 1996). In order to correct this situation, the ministry needs to reengineer their procurement systems, implementation of new purchasing models and in particular, introduce e-procurement. At this juncture, we will look at what e-procurement is in a B2B marketplace.
Issues in Ministry Procurement
- Lack of a common Public Procurement Policy: Nigeria lacks a modern law on Public Procurement and Permanent oversight and monitor purchasing entities.
- Lack of model bidding documents and contract documents -due to inflation and lack of regular adjustments on the thresholds of the approving limits of the Tender Boards, their authorization were constantly being eroded resulting in abuses, prominent among which is splitting of contracts.
- Complicated procedures for bidding, approvals and payments.
- That there was proliferation of tender boards which were perceived by the private sector as sources of delays and non transparency. In addition, these tender boards appeared to have limited mandates with powers to decide contracts de facto resting with the permanent Secretary and the Minister/ Commissioner.
- Lack of skilled resources.
- No centralized system of registration of suppliers.
- Delays in making payments to suppliers that Procurement is often carried out by staff who substantially lack relevant training.
Not until June 2008 was the procurement bill recently signed into law, previously there was no Federal or state law governing the practice of public procurement in Nigeria. With the advent of the new law, a number of challenges with regards to transparency, accountability and good governance in the area of contracts and procurement of supplies and services by government. In Nigeria it is pertinent to note that e-procurement is not prominently featured in law, this project sets out to make e-procurement prominently featured.
With the advent of digital technology and globalisation, Nigeria as a third world country needs to be aware of the challenges and opportunities with regards to the e-procurement process. Furthermore, this project seeks to classify the meaning as well as the benefits of the E-procurement process in Nigeria. This project will also highlight the challenges in transforming Nigeria into a transparent and corrupt-free business environment and also ways of overcoming the challenges of adopting e-procurement in Nigeria. (E-Public Procurement in Nigeria: Some Lessons from EU, 2009)
Investigation of Security Issues
E-procurement platform transacts confidential procurement data and is exposed to several security threats. Agencies world over face threats to their online e-procurement and usually desist from sending sensitive information over the Internet for security reasons. The growing number of cyber crimes has added doubts regarding the reliability of the Internet. Security measures such as authentication and encryption are therefore employed while passing sensitive information between companies. Another major issue concerning e-procurement is the type of goods that are procured through the online medium. Companies usually prefer to source smaller, inexpensive goods such as office stationery (Miller, 2006). Larger complex orders that usually take weeks or months for negotiation are done in the traditional manner but this can be addressed by employing a combination of security features and security best practices which result in reduced threat of data loss, leakage or manipulation.
Security and secrecy of tender data is of paramount importance as the portal handles sensitive procurement transactions of departments and has foreseen the security concerns.
Security mechanisms provide a secure communication interface, mainly for the exchange of documents between procurement authorities and Economic Operators. Standards constituting adequate and acceptable security need to be provided for the implementation of services during each stage of the procurement process.
Importance of Security in e-procurement
Security is one of the major factors restricting the growth of e-procurement. Without proper security measures this could lead to the loss or corruption of sensitive information on e-procurement. Security breach could also lead to fraud and financial loss, also includes misappropriation of funds and revealing of sensitive information (The Economist, 1995). This project outlines various security issues faced by e-procurement in Nigeria and possible solutions that can be implemented to reduce such risk. (NATIONAL E-PROCUREMENT PROJECT SUPPLEMENTARY GUIDANCE NOTES, 2004)
The major objectives measured for the creation of a safe environment include the following:
- Verification: guarantees that the service is only available to users with a confirmed identity.
- Agreement: guarantees that authenticated users can only contact services or data matching their task and access rights.
- Confidentiality: guarantees that the data exchanged between the person requesting it and the provider cannot be intercepted or accessed by a third non-authorised party.
- honesty: guarantees that data exchanged among the person requesting it and the contributor has not been tampered with by a third non-authorised party.
- Non repudiation: guarantees that the sender of the message cannot reject, at a shortly point in time, that he/she sent it.
Accordingly, following stringent security measures are already implemented in the system to ensure that transactions on e-procurement portal happen in the most secured manner:
- Physical security of Data Centre. Entry to the Data centre is with Bio metric smart cards, round the clock CCTV monitoring and under strict personal supervision of Data Centre personnel.
- Web security through 128 bit Secured Socket Layer (SSL) Technology from client end to server for secured passage of data.
- Fire walls, intrusion detection system, online virus check, up to date antivirus system, online OS patches to prevent malicious attacks.
- Network monitoring system to monitor the service levels of the site.
- Sound back up methods for storing data.
- Comprehensive Audit Logs of all events that are taking place on the platform.
- Access controls, sharing of functions between system administrator and data base administrator
- Third party security audit of e-procurement system. M/s. PWC has conducted security audit in pilot phase (2003) and has expressed that security is uncompromising. APTS is in the process of finalizing security consultant for taking up another third party security audit of the system at the earliest.
- Encryption of sensitive data (price bids). Public Key Infrastructure is implemented through Digital Certificates issued by third party certifying Agency (TCS) in compliance to IT Act.
- The sensitive data (Price bids) submitted by the bidder travels from the client machine to the server through 128 bit Secured socket layer and is encrypted with the Buyer's Digital certificate at the server side using TCS control tools. The data (price bid) is stored in encrypted format in the database and cannot be viewed in readable format by anyone including the database administrator prior to decrypting the bid by the buyer with his private
User registration and user authentication
These two functional requirements are related to the process for registering users to the e-procurement system, as well as for identifying users when they access the e-procurement system. The technical implementation followed for these two functional requirements are closely related.
- User credentials: when users access the system, they must authenticate themselves using a combination of email, username, password, and/or other personal information (i.e. Personal Identification Number, etc.).
- Digital certificate (software): an e-procurement system may require the use of digital certificates in order for users to be authenticated. Digital certificates are issued by an official Certification Authority (CA), and may be issued to a person.
- PKI infrastructure (hardware): this solution, similar to software digital certificates, also involves digital certificates. However, in this instance user digital certificates are stored in smart cards.
Security of e-procurement system is essentially an amalgamated output of Security of Infrastructure, Application and Management. Security is importance because without proper security measures loss or corruption of sensitive information can occur. Security breach could also lead to fraud and financial loss, misappropriation of funds and revealing of sensitive information Non-repudiation. Security involves Authentication, Authorisation, Confidentiality, and Integrity. Security is necessary to ensure safety of the data, users information and minimize issues already highlight above. Security can be implemented in hardware and Software, and on individuals using Policies.
Analysis of the data Collected from the Ministry
The data gathering are made up of phases divided into phase actions
- (Research design) Research objectives and scope, collected and literature review.
- (Data collection) Collected questionnaires from the Ministry staff
- (Data analysis) Data were divided and conceptualized
Research design and source for data
The prerequisites for e-procurement in the Ministry are the study of the functions and structures of the individuals or groups responsible for the procurement in Ministry. A survey was used to map current practices of procurement and collect data on the antecedents and consequences of e-procurement method. A questionnaire was sent to all Staff of the Ministry Science and technology and Suppliers. A total of 30 usable questionnaires were completed and returned for a response rate of approximately 65.7%. Measuring the impact of the implementation of the e-procurement solution, various variables such as adaptability, relationship with suppliers, change in the range of suppliers, participation of suppliers, impact on small and medium suppliers, change in transparency, human interface factor, change in cost-savings to both government and suppliers, speed of implementation of the projects constituted the basis for data collection. The data was collected, classified, tabulated and analyzed. The number of transactions completed, value of the transactions i.e. Estimated Contract Value (ECV), percentage of discount given to the government, average bids per tender, average tender evaluation time, number and value of electronic tenders completed in all the departments, and so on, were studied.
Nature of data collected
Data Collection from Primary Sources:
Primary data refers to the information being collected which originated from sources obtained from the author own analysis. Example of primary data is results collected from the questionnaires, interview, observations, sampling and etc. During the phase 1 and phase 2 of the progress of the research paper, which consists of literature review, scope and limitations of the project and project methodology, 30 % of the information is from primary data where the data being gathered are from the author own analysis.
This is due to the reason that most of the information gathered in literature review is from the reference books, magazines, journals and newspapers. The author's own perception only occupies a very limited percentage in phase 1 of the project. From the delivery of research methodology and project scope and limitations, 80% of the data is primary data because the information obtained is from the author's own experiences throughout the project. From the analysis of the author, the author observed every problems or limitations she faced and documents the findings inside the project.
However, during the phase 3 and phase 4 of the research paper which contains the analysis section where 90% of the data being collected are from primary data because results would be collected from the conduction of questionnaires and interview to gain the users perceptions and opinions for the suggested solutions.
According to Pabedinskaite & Elskyte in the Basic of Research conducted at Vilnius Gediminas University, said that questionnaires are an inexpensive way to gather data from a potentially large number of respondents. Often they are the only feasible way to reach a number of reviewers large enough to allow statistically analysis of the results. A well-designed questionnaire that is used effectively can gather information on both the overall performance of the test system as well as information on specific components of the system. If the questionnaire includes demographic questions on the participants, they can be used to correlate performance and satisfaction with the test system among different groups of users. Pabedinskaite & Elskyte, (2007)
Data Collection from Secondary Sources
Secondary data refers to the information collected from secondary sources such as books, journals, newspaper, internet sources and etc which is not collected from the research methodology being conducted by the author. In the literature review chapter, 70% of the information is gained from the secondary data because the author needs a lot of information from secondary sources as a reference to produce the delivery. On another hand, reference about how to design a good screen design is obtained from the secondary sources as well which are from reference books and internet sources.
From interviews and multiple discussions done with the staff of the Ministry, it was found that the Ministry faces multiple problems during procurement. Deficiencies in the manual procurement process were analyzed and are enumerated below.
- Delays in issue of tender schedules to suppliers: There were delays in preparing the schedules of tenders in physical forms because of constraints like lack of stationery items in the ministry. Because of this, bidders were not in a position to receive the tender document on the specified dates which results in putting the bidders under pressure.
- Formation of cartels hinders competition: Information about all the bidders can be gathered from the ministry by competitors or participating bidders. This information encourages the participating bidders to lobby for formation of Syndicates or Cartels and bid for the tender for higher quotations to the disadvantage of government departments.
- Physical threats to bidders: Sometimes the genuine bidders were physically threatened and prevented from submitting their bids. The bidder or his agent had to risk their physical safety for submitting the bids in the tender box placed in the office. These incidents were drawing the attention of media, affecting the reputation of government's functioning.
- Tender Boxes at Multiple locations: To counter the menace of physical threats to bidders by the Contractor's Cartels, the government departments had resorted to keeping the tender boxes at multiple locations.
- Manual movement of tender files: For the purposes of evaluation, the bid documents are manually transported across the administrative hierarchy. The transportation of bid documents manually and using surface mail is a time consuming activity. Additionally, the possibility of bid details being tampered or lost, while the documents are physically transported across the administrative hierarchy, could not be avoided.
- Delays in finalization of tenders: Red tapism, lack of transparency, manual movement of files across the administrative hierarchies involved in the tender process, were all resulting in inordinate delay in finalization of tenders. Typically, tenders for major projects used to take longer tender process time ranging from 90 days to 150 days and these delays were contributing to cost and time overruns for the projects.
- Human interface at every stage: The manual system exposed the departmental personnel to the bidders at every stage of the process beginning with the Sale of tender schedules, Issue clarifications, bid submission, bid evaluation and so on. This continued human interface has introduced subjectivity, favouritism and other undesirable elements in tender processes.
- Lack of Transparency: Often times, a tender may have two or three bidders. But only one of them would be the real bidder the rest two being dummies, leading to forceful acceptance of the bid by the government. Lack of transparency is seen in the manual procurement process, right from tender publication, sale of tender schedules, and issue of clarifications to bidders, bid evaluation. Besides, even the departments were unwilling to share the information, which became the main cause for the bidders, media, and citizens, to lose confidence in the system.
Interpretation of Questionnaire
A lot of the staff working in the Ministry find the traditional method of procurement very tedious, as it requires a lot of filing of papers from various company tenders. The traditional process includes:
- Filing of various tender documents
- Manual record management
- No accurate quality of data
- Long period of time for order and delivery of products
For this reasons the Ministry of Science and Technology would require an E-procurement system in order to make their procurement process more transparent, cost effective and efficient.
About 40% of the respondents believe there is no strong policy that translates into regulations, guidelines on Procurement which are made available to the supplier and the buyer. 20% of the respondents believe that the policies are not clear and should not be implemented, while another 20% believe that it has totally been changed from the previous policies.
70% of the respondents agree that procurement planning to measure the feasibility of risk of proposals approved by the ministry. 10% of respondents feel the planning details are not carried out properly. 10% believe the feasibility conducted is not valid, while 10% feel there is no feasibility carried out.
All the respondents are in agreement that there is no strategy implemented to improve the procurement process in the Ministry.
70% of respondents believe that a model for developing and supporting E-procurement system should be developed. While 30% are not confident that it will be implemented effectively.
With an online procurement system 80% of the respondents want information like tenders made available to the public. While 20% don't really care.
All the respondents would like the details e.g. price of contracts awarded to the companies to be made available for public view.
All the respondents would like the information to be available for free
80% of the respondents would like the details of the various registered companies made available to the public for free, while 20% don't mind paying a fee.
All the respondents would like to be able to download electronic documents made available for users
All the respondents agree that the system requires some confidentiality of information. In other words it should be secure.
All the respondents want the system to be connected to other office system like asset management or finance.
80% of the respondents would prefer that no propriety hardware or software be a prerequisite for the suppliers to access the system, except the use of internet, 20% don't care.
After completing this chapter, the author now has an in depth understanding on procurement problems in the Ministry and is better equipped to apply solutions to problems of the Ministry in the coming chapters.
While the use of in depth case studies of e-Procurement in the Ministry would ideally have suited our purpose, time and financial restrictions limited our study to use multiple case studies by literature survey to identify major cases in order to allow us to come up with a set of solutions.
The author is limited by the short time constraint where every phase of the project needs to be completed on time and submitted to the supervisor. Procurement process usually takes a long time between 90 to 150 days but during the time, the project phase does not grant the author enough time to conduct full observation.
Financial is also another limitation so not enough funds to travel round and conduct research on the prizes of items and services outside the Ministry. Also visitation of the Ministry daily for observation of procurement by the author incurred huge cost and limited the study to specific days where important decision would be taken.
E-procurement is the new technology and not yet being documented in books, which caused the author to find it difficult to find any books regarding to the e-procurement technology. The author also having problems in searching for the criteria to measure suitability because there is no common criterion can be used for the measurements. Thus, different books have its own criteria to follow to determine the suitability.
The author gained the information on e-procurement technology. By carrying out this research method, the author can collect a lot of useful information that relates to the project topic. Besides that, the author uses several searches engines to search for the necessary information such as YAHOO, GOOGLE, BING and others.
There might be someone who does not have much experience and may deliver the wrong information or interpretation to the end-users. Due to this problem encountered, the author tries to search for information from the international journal sites.
Besides the research paper, the author also need to complete other projects or assignments from other subjects within the short time frame, the author need to gather sufficient information from other sources in order to deliver the quality work for the research paper.
Interview enabled face-to-face and direct interaction between the author and the interviewee so that the fact from the interview can be jotted down in that time to maintain accuracy of data.
By doing this project, the author chooses to limit the project scope to identify whether e-procurement would bring about efficiency and transparency in ministry of Science and Technology. In order to gather feedback from public perceptions, the sample sizes of questionnaire are limited to 30 samples because if sample size less than 10, the results collected might not be accurate to be documented as findings. However, the author found that sample size more than 30 would create difficulty and complexity in analysis part of the research paper.
The author would only prefer questionnaires and interview are chosen because identification of users' perceptions are important for determine which technology are appropriate to act as strategic promotion strategy. The author needs to ensure that all the distributed questionnaires must be collected back. Interview is needed because opinions from a specific branded company about what are the steps they would take if they want to adopt the most appropriate technology. The most appropriate technology would be determined by conducting questionnaire. Their opinions enabled the author to produce the intended framework that is applicable to all Ministries. On the other hand, interview is needed in order to evaluate the framework designed by the author. The author had performed a very simple experimentation in order to determine and compare the time of connectivity between computer and mobile to Internet. Observation is not the author's choice due to the reason that observation is not appropriate to be used to measure e-procurement Sometimes, the data collected from the observation might be wrong without conducting the questionnaires and the author would found that what the author see might not be true for the analysis from just observing the situation or examples provided.
SUGGESTIONS TO THE MINISTRY
The scenario e-procurement in Ministry of Science and technology shows that in order to tap the full potential of e-procurement, an interaction of the different applications is needed, making the presented 'enabling technologies' such as bar coding systems and EAI important pieces of the overall architecture. Nevertheless, significant benefits can also be achieved by gradually implementing a respective system. However, from the point of view of sustainable cost-savings, it is arguable why a Ministry has to manage all the analyzed tasks on its own (istart, 2009). In future, most benefits in supply management will certainly emerge through the centralization of procurement and logistics by intensification of the collaboration between the Ministry (e.g. buying syndicates) and through outsourcing of certain activities to the supplier (e.g. vendor managed inventories). However, this will cause new problems and will need advanced knowledge of both, managerial and technical nature. Therefore the authoris of the opinion that major organizational changes are needed in the future.
Critical Success Factors of e-Procurement
- Effective Procurement Policy & Reform
- Process re-engineering to transform government procurement
- Sound legislative and regulatory framework
- Well-designed Business Model
- Adequate participation and commitment from participants
- Effective Communication Strategy to disseminate benefits
- Strategies for adoption of buyers & suppliers
- Flexible systems for meeting requirements of all agencies
- Effective Training and Change Management plan
- Developing effective skill-base in new procurement methodologies
- Open standards based, interoperable technology infrastructure
TOOLS AND TECHNIQUES
The solution that is proposed for Ministry is to develop an electronic procurement web site. However, before deciding on a solution, it is important to seriously evaluate the tools and techniques to use before actually adopting it0
The tools available will go a long way in assisting the author to determine which type of solution to provide. The tools include but not limited to Visual Studio 2010 beta 1, .net 3.5,C#, ASP 4.Net, PHP, AJAX, SQL azure Server, the application will be deployed on Windows Azure.
Features of Tools to be used
Microsoft's dynamic Server Pages is a server-side technology for dynamically-generated web pages that is sold as an addition to Internet Information Server and Personal Web Server and captures many functionalities normally required by web developers into objects to give them easy to access. msdn, (2005).
REASONS FOR USING ASP
ASP scripts help developers to ward off from simple delivery problems keeping in mind what the users want since it depends on the server instead of the user and all the work done before the HTML is sent to the browser. ASP is a sort of interpreted technology. The system is from the web server. If a web page is required, the ASP runtime loads the system into the memory, transforming it, and then translates it into machine language (binary language) enabling the machine to understand. Related links can be loaded by integrating server-side scripting code (including database access) with HTML and client-side code. Programming ASP websites is made less difficult by a variety of built-in objects, such as a cookie-based session object that maintain variables from page to page.
There are two major benefits to ASP, the first is security and the second is its compatibility with mobile devices such as phones and PDA's.
Microsoft SQL Azure Database is a cloud-based relational database service built on SQL Server technologies. It provides a highly available, scalable, multi-tenant database service hosted by Microsoft in the cloud. SQL Azure Database helps to ease provisioning and deployment of multiple databases. Developers do not have to install, setup, and repair or manage any software. High availability and fault tolerance is built-in and no physical administration is required msdn, (2005).
REASONS TO USE SQL AZURE:
SQL AZURE CAN BE USED TO:
- Build scalable, custom web applications, which is especially a need for small to mid-size businesses, hobbyist, and start-ups
- Build packaged line-of-business applications, which is attractive to traditional, SaaS ISVs and custom developers
- Build corporate departmental applications
- Consolidate multiple data sources in the Cloud and enable secure access from multiple locations, desktop and/or devices
- No need to install or patch software or other physical administration
- Automatic high availability and fault tolerance
- Simple provisioning and deployment of multiple databases
- Scale databases up or down based on business needs
- Integration with SQL Server and tooling including Visual Studio
- Support for T-SQL based familiar relational database model
Visual studio.Net is a programming environment that provides advanced development tools, which include, database functionality, debugging features, and various innovative features creating gutting edge applications across a variety of platforms. Visual studio enables us to use the client-side and server-side frameworks to easily build client-centric web applications that integrate with the data provider. Visual Studio includes several programming languages ASP.NET, Visual Basic, Visual C++ and Visual C# (Tech Target,2009).
.NET Compact Framework
Use .NET Compact Framework to build applications for Windows CE-based devices. The Web page designer in Visual Studio2010 has been enhanced for greater CSS compatibility, includes additional support for HTML and ASP.NET mark-up snippets, and features a redesigned version of IntelliSense for Java Script. Visual Studio2010 includes technologies let you seamlessly deploy Web applications. One of these technologies is the IIS Web Deployment Tool. Devon, (2009).Web deployment features in Visual Studio2010 include the following major areas:
- Web packaging
- Web. Configuration Transformation
- Database deployment
- One-Click Publish for Web applications
The Main principle of the UML is to communicate the Object orientation, where it describes everything in terms of objects, and the relationship between these objects, and the way objects respond to events or activities, we see the graphical representation of how these objects are deployed.
Objects Oriented Design (OOD)
Is mainly used for preparation of a system and interacting objects for the reason of solving problems with your software. Object Oriented Design contains an item which captures data and procedures grouped together indicating an entity. This follows the description of the class based subset of object oriented design, which excludes approaches where objects are not obtained by the instance of a class but by the prototype of other objects.
Object Modelling Technique (OMT)
Is a process that deals with object oriented development in the analysis and design phase. It illustrates the static relationship between classes and objects in a system.
The object model describes the structure of objects in the system their identity, their relationship to other attributes, objects and their operations. The object model shows the real-time environment and how the system interacts or is divided in the overall decomposition of the system. It is the graphical representation of class diagrams containing object classes and their relationships.
Unified Modelling Language (UML)
Is a word that can be used to model systems, in order to improve readability. It captures the capability of a system using notations. UML is an object oriented analysis and design language. The Unified Modelling Language is a diagram language for specifying, constructing, and documenting the artefacts of systems. You can use UML with all processes, all through the development of a lifecycle, across various performance technologies. Throughout the years there have been insignificant modifications made to the language.
Rich Picture Diagram (RPD)
according to V. Ryan 'Rich( 2001-2009) Picture is the first stage in the design process, when you start designing the theme is placed in the centre of the page and link words are positioned around it. This can be seen on the example below, a rich picture for the theme Clock Design. These link words should be related to the centre theme and they will help you think of points that you must consider when trying to solve the design problem. V. Ryan (2001-2009) The Diagram below shows the activities of the actors of the system, the activities of the admin and the user is displayed in this picture as it depicts the real life scenario.
Use case Diagram -
Use case are used in analyzing a project in order to identify system functionality that separate the system into actors and use cases. Actors represent roles that can or are played by users of the system. These users can be humans or computers. Use case describes the behaviour of the system when one of these actors sends a particular stimulus. It describes the nature of the stimulus that triggers the use case; the inputs from and outputs to other actors, and the behaviour that transfer the inputs to outputs. Engineering Notebook, (1998). In E-procurement, the role of the user is to sign in or sign up; if he or she is not signed in they would only have access to public available information. Furthermore he or she is limited to certain functionalities like calling for tender or tendering a project, the user can only sign up and view tenders available. Whereas a registered Company user can register and submit tenders and the admin can add or delete a project and send tenders. (Functional requirements for conducting Electronic Public Procurement under the EU framework, January 2005)
Use case description
A Use case description is a description of a system's behaviour as it responds to a request that originates from outside of that system. In other words, a use case describes "who" can do "what" with the system in question. The use case technique is used to capture a system's behavioural requirements by detailing scenario-driven threads through the functional requirements.
Activity diagram is a UML diagram that is used to model a process. It models the actions or behaviours that are performed by the system, the situation which coordinate the actions, the order in which they are carried out in a specific fashion. Activity Diagram is the graphical representation of the activities and actions of the various actors as they are used to show the overall flow. Activity diagram is dynamic showing the activity and event as the actor performs a function. Below are the diagrams showing the flow of the proposed system
Ideal Object model
The Ideal model is developed during the investigation phase of the development of a life cycle and it describes an ideal system that would complete the entire requirement identified by the use case. It shows the various activities of the system and the actors that out the command for the activities to be executed.
The diagram above is a database design depicting E-procurement system. The database design produces a detailed model of the database; it also describes parts of the design of an overall database system. A perfect database design contains attributes for each entity. It is the logical design of the database structure where all the data or information of the system is stored. However, database design is not just used for designing or storing data alone, but it can also be used to create forms and queries used as part of the overall database application.
Class Diagram -
Class diagram depict the classes of the system, the relationship between them, and the operations and attributes in the class. It is a graphical representation used in object oriented design to show the classes of objects in the system.
Functional Decomposition Diagram
Storyboard is a graphical representation of how the system interface will be. It gives the user a picture of how the interface will be designed.
System Coding and Implementation Report
This chapter is very important as it shows the different achievements and issues encountered by the author. The author will document how system functions by giving a complete account of all the software installed, and how the various coding are implemented to make it a functioning system. The author will show various coding that have been implemented for the functions of the interface. The problems and solutions proffered during the development of the system will also be discussed.
During the installation of SQL server management studio 2008, the author had some difficulties as she found that it was not compatible with Microsoft Visual studio 2008. Visual Studio 2008 could only connect with the SQL server management studio 2005. The author had then had to downgrade the computer operating system form Windows 7 to Vista Basic in order SQL server 2005 to run.
System Development Activities
The installation of the software used in developing the system is paramount. The author chose Microsoft Visual studio 2008 and SQL server management studio 2005 to develop the system. In order to deploy a fully functional system there are a number of dependencies involved. For instance, .NET based applications require a specific version of the .NET framework and common language runtime to run. In the case of database applications specific versions of the software drivers to connect to the software to the database are required. The author had to purchase these software's from vendors.
Operating System Installation
The author had to install the following software: Vista Basic Operating system, Microsoft Visual studio 2008 and SQL server management studio 2005. The system development also required the installation of other necessary software like the System architect used for the drawing of the UML diagrams and the Adobe photo shop used to create the images for the system.
Development Tool Installation
The first software the author installed was the operating system which serves as the platform for which o
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