ADDIS COLLEGE

School of Postgraduate Studies

Faculty of Technology

Department of Project Management

Course Title: - Project Logistics and Contract Administration

Individual Assignment – 01

Prepared By:

Melkam Simegn, ID No. GSR/2020/2014

Submitted to Demelash H.

(Ass. Professor)

January 20, 2024

 Assignment, Procurement and Contract Administration

A. Article Review

Title: - Determinants and constraints to effective procurement contract

management in Uganda: a practitioner’s perspective

1. Summary

This study attempted to examine the determinants and constraints of effective contract
administration and its implications on service delivery since public procurement authority
has persistently reported low compliance levels as far as contract management is concerned
in Uganda. The statistical analysis made by the research has revealed that Significant
predictors of determinants for effective contract management were: clear definition of
processes and having in place contract management plans, appropriate methods of
capturing key lessons from contract management process, accurate definition of roles and
having a knowledgeable contract manager. While the major constraints were found to be:
lack of political will to monitor contracts; inadequate capacity and lack of integrity. As
per the paper these findings offer a useful foundation for policy and practical improvement in
this important area in Uganda.

2. Introduction

The goal of public procurement is to provide the required goods, services and works to the
public. However, the existing literature indicates to several challenges in contract
management. Millions of dollars get wasted in Uganda due to numerous obstacles and
challenges in the procurement process of which contract management takes part.

It is suggested that on average, 65% of the central government recurrent non-wage is

expended on procurement related items in Uganda.

It is also found that public procurement has always been a big part of the developing
country’s economy accounting for an estimated 9 to 13% of the developing nation’s gross
domestic product (GDP) and is therefore an area that warrants careful management.
 Several theories explain the determinants and obstacles to effective contract management
among which include; ethics, availability of skilled personnel and organizational influences
among others. Organizational challenges in contract management draws lessons from
organizational theory. On the other hands, proponents of transaction cost theory. It is argued
that costs arise because it is often impossible to have complete contracts.

Generally, when a procurement contract is well defined and planned, the principal (entities)
and agents (suppliers) find it easy to meet needs of each other in an efficient way resulting
into timely execution of the contract.

3. Objective
 The general objective of the study was to offer a useful foundation for policy and
practical improvement in this important area in Uganda
 The specific objective of the study was to examine the determinants and constraints of
effective contract management and its implications on service delivery

4. Conclusion
The conclusion of the article showed that corruption is one of the greatest obstacles to
successful contract management and contends that enterprises should do more to prevent
fraud by actively evaluating and estimating the obstacles that maybe encountered in the
process of execution and that these measures should be closely supported by ongoing
monitoring.
In addition, the following major constraints were also exhibited in the findings of the study

1 lack of political will to monitor contracts

2 lack of capacity in contract management and monitoring of various stakeholders
3 lack of integrity in the contract management process
4 lack of reliable, less costly dispute resolution mechanisms
5 Flexibility with regulations
6 ambiguous cost overrun due to inflation.
These findings raise a number of implications at a theoretical, managerial and policy level if
contract management is to be improved.
 In conclusion the study argued that, for effective contract management, procurement staff
needs to offer technical advice to the accounting officers on the appropriate contract
management framework and the kind of people that ought to be in charge. That is, other than
defining processes and formulating a clear contract management plan, designing appropriate
methods of capturing key data and lessons from contract management process.

Generally, the study concluded that all stakeholders have a critical role and this has to be
integrated into annual plans of each entity. The Regulatory Authority and the public entities
especially user department should work together to improve contract management through
capacity building. This can be done through taking procurement skills assessment and
training staff through refresher courses, workshops, seminars and conferences where staff
meet and share experiences.

5. The implementation of the article conclusion in Ethiopian context

Many studies conducted in Ethiopia regarding procurement contract management shows that
insuring transparency and accountability is still at the middle of a road. The studies also
emphasize on the fact that strengthening the capacity of the Public Procurement Agency’s
workforce, making the legislation more comprehensive; work with different stakeholders like
the civil society organizations and the media on insuring transparency and combating
corruption is very crucial. Hence, this study applies immensely to Ethiopians current status in
the subject matter under this study.
B. Potential differences between commercial and government project procurements
and contract administration support by practical example.

The study discusses potentially, government (public) project procurements are less monitored
and properly managed to sufficiently avoid the constraints listed above for successful and
efficient execution of projects. Several theories explain the determinants and obstacles to
effective contract management among which include; ethics, availability of skilled personnel
and organizational influences and making sure these determinants are fulfilled is
comparatively difficult due to size and complexity in the public sector.

For example:- let us take an example of road construction project in Somali regional state,
Gode city. The Client (the Public Body) is the SRS Urban development construction bureau
and the Contractor Amel General Contractor. Due to the incompleteness of the Works
Contract between the Client and the Contractor, unspecified matters such as Starting point of
Price adjustment, releasing installments of advance payment and required works that are
forgotten to be included initially (Variation of works), came across as a challenge resulting
in cost overrun and interruption of execution of construction works. In this example, we can
observe that in the Procurement stage the competing contractor were not provided with
complete document incorporating required conditions of contract and complete workload of
the project, which caused the contract management stage very difficult and very vulnerable to
opportunism and corruption. Evidently, a 63million worth of streetlight installation had to be
added on a 389million project and 6more months on the contract period.
C. How project procurement risks will be mitigated through contract performance
metrics, insurance or how procurement and contracts are coordinated with
project scope, budget, and schedule?

Specifically on road construction sector government bodies such as Ethiopian Roads

Administration and Addis Ababa City Roads Authority utilizes their procurement sections to
procure works and service contracts with Contractors and Consultants for design,
construction and consultancy works. In relation, risks in project procurement mostly are
mitigated through Contract Administration parameters and coordination between the
procurement and the administration process, in such the following methods: -

 Introducing a pattern of interpretation order of the parts of contract procured and to be

utilized for contract administration.

Eg. Interpretation order in the standard biding document (Public Procurement

Agency) is
1. Contract Agreement
2. Addendums
3. Particular Condition of Contract
4. General Condition of Contract
5. Standard Specification
6. Bill of Quantity.
 Putting in place mechanisms to manage any openings or discrepancies from
procurement stage in the contract administration documents.

Eg. Variation of works, reference general standard contract documents and technical
standard documents to be used jointly.
D. The transaction cost approach

Procurement system provides an avenue for bringing together various service providers in a
construction project, and for identifying and fulfilling the priority needs of the client for
procuring the building or facility. Thus, it is critical that by making the right choice of a
procurement system at the onset would indirectly ensure successful project delivery with
satisfaction by all parties involved.

In this review paper, dominantly procurement and contract administration of construction

projects are referred to set perspective of analysis.

And, three of the influential perspectives for analyzing construction management are
reviewed - socio-technical systems; organization and environment; and project management -
and it is suggested that in spite of their considerable usefulness, they contain no framework
for analyzing the inevitable differences in interest between the different firms who are
members of the project coalition. An alternative approach is then presented - the transaction
cost approach - which, it is suggested, does allow these differences to be analyzed. In
conclusion, the dynamics of the contracting system are assessed in terms of the contradiction
between construction firms’ responses to the uncertainties inherent in the project, and those
deriving from the contracting system itself.
E. Capability Approach

The capability approach is a broad normative framework for the evaluation and assessment
of individual well-being and social arrangements, the design of policies, and proposals about
societal change. It can be used to empirically assess aspects of an individual’s or groups’s
well-being, such as inequality or poverty. It can also be used as an alternative to mainstream
cost-benefit analysis, or as a framework to develop and evaluate policies, ranging from
welfare state design in affluent societies, to development policies by governments and non-
governmental organizations in developing countries.

Scholars such as (Brandolini and D’Alessio), considering the underlying substantial

incompleteness of this approach and its underspecified nature, discuss the operationalization
issue mainly in terms of the methods and procedures that might be used to make possible its
concrete application. And as Atkinson and Bourguignon (2000, p. 49) write, ‘the challenge
which this raises is to translate this concept into one which can be implemented in empirical
analysis of distributional issues. There is a scope for a great deal of future research’.