In procurement management, economy and efficiency may be identified as: Whether the planning has been appropriate and procurement has been executed as planned;
Economy & Efficiency:
In procurement management, economy and efficiency may be identified as:
- Whether the planning has been appropriate and procurement has been executed as planned;
- Whether the procurement is made in a timely and cost efficient manner
- At a more “economic” level, the principle can also be used to identify whether the correct or best procurement strategies have been used to minimize waste and benefit from economies of scale
- At a policy level, the principle may be used to analyze the efficiency of transactions and of the system as a whole to determine whether this can be optimized further.
- Transparent procurement management process provides clarity and certainty for all stakeholders and;
- improves procurement by increased participation of suppliers leading to higher value for money and;
- enhances the stakeholders’ confidence in fairness of procurement management process
- “Accountability” is also often an explicit objective of national procurement systems, and the transparency provisions reinforce this accountability.
Value for Money:
The principle of Value for Money signifies:
- Procurement procedure is carried out with the least waste (in terms of cost and time) and as much benefit as possible
- Goods and services are not homogenous, i.e. that they differ in quality, durability, longevity, availability and other terms of sale
- Contracting authorities should purchase the optimum combination of features that satisfy their needs
- Fairness is a concept that generally requires identical situations to be treated in the same way or different situations not to be treated in the same way, and it requires the identical treatment of identical people.
- It implies that contracting authorities will not take into account the different abilities or difficulties faced by individual suppliers/contractors but will judge them purely on the results of their efforts
- “Competition” operates as a discovery procedure by allowing different suppliers to communicate the prices at which goods and services are available on the market
- Keeping competition fair (or maintaining a “level playing field”) is a key concern for achieving efficient and economic procurement results
Impact of managerial levers…
- centralized vs. decentralized procurement
- aggregating vs. disaggregating procurement
- costing types