COLLEGE OF BUSINESS AND ECONOMICS

By

Girma Geremu

Major Advisor: Dr. Asefa B.

Co- Advisor: Legese.B

March,2024
Bule Hora, Ethiopia

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Declaration
In the under signed, declare that the thesis proposal work entitled Factors Affecting Procurement
Performance of Public Higher Education Institutions: The Case of Bule Hora University and it has been
carried out by me under supervision of Dr. Asefa B. and CO-Advisor Legese B. (MA) University for
Partial fulfillment of Masters of Art (MA) in Logistics and Supply Chain Management.
Name: Girma Geremu
Signature

Date:

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APPROVAL SHEETS
BULE HORA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF LOGISTICS
AND SUPPLY CHAIN MANAGEMENT

This is to certify that, this thesis prepared by proposal entitled “Factors Affecting Procurement
Performance of Public Higher Education Institutions: The Case of Bule Hora University.” and
presented in fulfillment of the requirements for the MA Degree of Logistics and Supply Chain
Management Department course team complies with the regulation of the university and meets the
accepted standards with respect originality and quality.
Approved by Board of Examiners:
Internal Examiner signature date

Major Advisor signature date

Co- Advisor signature date

Chairperson signature date

Department head signature _ date

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 Lists of Acronyms and Abbreviation

EPPA Ethiopia Procurement and Property Administration

CPAR Country Procurement assessment Review

ICT Information Communication Technology

MOE Ministry of Education

MOFED Ministry of Finance and Economic Development

OECD Organization Economic Cooperation Development

OGC Office of Government Commerce

PPA Public Procurement and Property Administration Agency

PPCC Public Procurement Capacity and Capability

ROI Return on Investment

SPSS Statistical Package of Social Science

USAID United States Agency for International Development

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Contents
Declaration ..................................................................................................................................................... i
APPROVAL SHEETS ......................................................................................................................................... i
Lists of Acronyms and Abbreviation .............................................................................................................. i
Abstract ........................................................................................................................................................ iv
CHAPTER ONE ............................................................................................................................................... 1
INTRODUCTION ............................................................................................................................................. 1
1.1 Background of the Study ......................................................................................................................... 1
1.2 Statement of the Problem ...................................................................................................................... 5
1.3 Basic Research Questions ....................................................................................................................... 7
1.4 Objectives of the Study ........................................................................................................................... 7
1.4.1 General objective ................................................................................................................................. 7
1.4.2 Specific objectives ................................................................................................................................ 7
1.5 Significance of the Study ......................................................................................................................... 7
1.6 Scope of the Study .................................................................................................................................. 8
1.7. Operational Definitions .......................................................................................................................... 8
1.8. Organization of the Study ...................................................................................................................... 9
CHAPTER TWO ............................................................................................................................................ 10
REVIEW OF RELATED LITERATURE .............................................................................................................. 10
2.1 Theoretical Literature Review ................................................................................................................. 10
2.1.1 Transaction Cost Theory .................................................................................................................... 10
2.1.2 Traditional Purchasing Theory ........................................................................................................... 10
2.2. Definition of Public Procurement ........................................................................................................ 10
2.3. Principles of Public Procurement ......................................................................................................... 11
2.4.1 Procurement Planning ....................................................................................................................... 13
2.4.2 Staff Competency............................................................................................................................... 13
2.4.3 Resource Allocation ........................................................................................................................... 14
2.4.4 Procurement Procedure .................................................................................................................... 16
2.4.1 Need Identification ............................................................................................................................ 16
2.4.2 Planning and Specification of Goods or Services Required ............................................................... 16

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2.4.3 Sourcing, Awarding, and Supplier Management ............................................................................... 16
2.4.4. Steps in the Sourcing Process ........................................................................................................... 17
2.4.5 Placing Orders and Contracting ......................................................................................................... 17
2.4.6 Progressing/Expediting ...................................................................................................................... 17
2.4.7 Delivery and Return ........................................................................................................................... 18
2.4.8 Payment ............................................................................................................................................. 18
2.4.9 Records of procurement documents ................................................................................................. 18
2.5 Challenges in public procurement ........................................................................................................ 18
2.6 Procurement Performance ................................................................................................................... 21
2.7 Conceptual Framework ......................................................................................................................... 22
CHAPTER THREE .......................................................................................................................................... 23
RESEARCH METHODOLOGY ........................................................................................................................ 23
3.1 Introduction .......................................................................................................................................... 23
3.1. Research Design ................................................................................................................................... 23
3.2. Source of Data...................................................................................................................................... 24
3.3 Target Population.................................................................................................................................. 24
3.4 Sampling Method .................................................................................................................................. 24
3.5 Sample Size ........................................................................................................................................... 25
3.6 Method of Data Collection .................................................................................................................... 26
3.7 Method of Data Analysis ....................................................................................................................... 26
3.8 Model Specification .............................................................................................................................. 26
3.8.1Assumptions of Multiple Linear Regressions ...................................................................................... 27
3.9 Validity and Reliability........................................................................................................................... 28
3.9.1 Validity Test........................................................................................................................................ 28
3.9.2 Reliability Test .................................................................................................................................... 28
3.10. Ethical Consideration ......................................................................................................................... 29
CHAPTER FOUR ....................................................................................................................................... 30
WORK PLAN AND BUDGET .......................................................................................................................... 30
4.1 Work Plan .............................................................................................................................................. 30
4.2Research Budget Breakdown ....................................................................................... 31_Toc161635829
REFERNCES ..................................................................................................................................................... i
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Abstract
Public procurement is a key tool to the overall achievements of development goals such as
reducing poverty and providing health, infrastructure, education and other services hence
immensely contribute to best utilization of public resources. The limited public resources should
be properly managed to get the most out of these resources. Despite its importance, limited
scientific research has been undertaken to examine the factors that affect procurement
performance in public institutions in the case of higher public institutions. This study aimed to
examine factors that affect procurement performance in public higher institutions a case of Bule
Hora University. Specifically, the study will examine the variables procurement planning,
resource allocations, staff competency and procurement procedures that affect the performance
of procurement. The study will be conducted through a descriptive design of research. The study
employed purposive sampling technique to select the respondents. The sample size of the study is
365 respondents from academic and administrative staffs who currently working at management
position and have direct relationship with procurement activities.

Key Words: Procurement Performance, procurement planning, staff competency, resource

allocation, procurement procedures.

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 CHAPTER ONE

INTRODUCTION
The first chapter the Introduction parts introduction, Background of the study, Statement of the
Problem, Objective of the study, research Question, Significance of the study, and Scope of the
study, Organization of the study.

1.1 Background of the Study

Public procurement has become an issue of public attention and debate, and has been subjected
to reforms, restructuring, rules and regulations. Public procurement refers to the government
activity of purchasing the goods and services needed to perform its functions (Weik &
Walgenbach, 2016).

(Kipkemoi, 2017) have defined public procurement as the purchase of commodities and
contracting of construction works and services if such acquisition is effected with resources from
state budgets, local authority budgets, state foundation funds, domestic loans or foreign loans
guaranteed by the state, foreign aid as well as revenue received from the economic activity of the
state. Public procurement thus means procurement by a procuring entity using public funds
(Musau, 2015).

Procurement is a crucial element in the working functions of any state as it is used for purchasing
of goods and services in the right quality, from the right source and at the right price all to meet a
specific need. Every government has the obligation to provide essential services to its citizens
through public procurement. Public procurement has its origins in the fiduciary obligation of
government administrations to deliver goods, infrastructure and services to the population of a
country or a specific geographic region, city or town (Mulongo & Aila, 2021).It is an important
function of government for several reasons. The sheer magnitude of procurement outlays has a
great impact on the economy and needs to be well managed. Indeed, in all countries in the world,

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estimates of the financial activities of government procurement managers are believed to be in
the order of 10% – 30 % of GNP (Mebrate & Shumet, 2024).

Procurement works like a pivot in the internal supply chain process turning around requests into
actual products/commodities or services to fulfil the needs (Swift & Morris, 1932). (Muhanji &
Nagri, 2015) further argue that procurement serves three levels of users and these are the internal
customer, programs in response to emergencies and on-going programs, and prepositioning of
stocks, for both internal customers and program needs. In the entire world, every business
organization depends on conversion of inputs (goods/services) into outputs both tangible and
intangible that must be put in place in an effective logistical system to ensure its operations run
effectively and efficiently. According to (Wahu et al., 2015), the basic principles of good
procurement practice include accountability, where effective mechanisms must be in place in
order to enable procuring entities spend the limited resources carefully, knowing clearly that they
are accountable to members of the public; competitive supply, which requires the procurement
be carried out by competition unless there are convincing reasons for single sourcing; and
consistency, which emphasizes the equal treatment of all bidders irrespective of race, nationality
or political affiliation. (Alasfar, 2022) concludes that an efficient public procurement system is
vital to the advancement of all countries and is a concrete expression of their national
commitments to making the best possible use of public resources. Non-adherence to standardized
procurement processes culminates in poor co-ordination within various departments and
enhances presence of leakages of financial resources, which turns out to be costly component to
the whole management process of the procurement function (Musau, 2015).

In developing countries, public procurement is increasingly recognized as essential in service

delivery (Mebrate & Shumet, 2024), and it accounts for a high proportion of total expenditure.
For example, public procurement accounts for 58% in Angola, 40% in Malawi and 70% of
Uganda‘s public spending (Wittig, 1999; Government of Uganda, 2006) as cited in Basheka and
Bisangabasaija (2010).Public procurement laws and rules have been considered as one of the
most important pillars of a sound procurement system (Thai, 2009). Procurement laws and rules
lead to procurement efficiency or inefficiency depending on the type of government and
environment within which the system is operated. In a country where no government democracy
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exists, the procurement system cannot be transparent and integral (Organization for Economic
Corporation and Development (OECD, 2006). According to American Bar Association (2000), a
sound public procurement system needs to have good procurement laws and regulations.

According to the World Bank (2006) a Public procurement system is said to be well functioning
if it achieves the objectives of transparency, competition, economy, fairness and accountability
Furthermore, in developed as well as developing countries, a sound procurement system has to
accomplish two sets of requirements which are the management and policy requirements. The
procurement management requirements normally include quality, timeliness, and cost,
maximizing competition and maintaining integrity. The procurement policy requirements
normally include economic goals for example preferring domestic or local firms, environmental
protection or green procurement social goals which include assisting the minority, youth and
women owned business concerns and international trade agreements. It is therefore very difficult
for policy makers and public procurement practitioners to make an optimal decision as there are
always tradeoffs among these goals (Thai et al, 2005). A study by the World Bank (2003a)
reported that about 50-70% of the national budget (after personal emoluments) is procurement
related. Therefore an efficient public procurement system could ensure value for money in
government expenditure, which is essential to a country facing enormous developmental
challenges.

The role of the procurement function in organizations has received and continues to receive
increasing attention as the years go by. Procurement enhances efficiency and competitiveness
among other benefits but to realize these benefits, it is imperative to look at the strategic factors
that affect the performance of the procurement function (Swift & Morris, 1932).

During the last two decades public procurement has undergone profound changes. Policy
makers, academics and practitioners alike share the broad view that public procurement has
evolved from a clerical signoff-ridden set of activities to a strategic tool that can enhance
efficiency in public organizations, regulate markets and promote sustainable development,
(Kenneth and Brian, 2006). According to (ABEBE, 2021), public bodies have always been big
purchasers, dealing with huge budgets. Mahmood, (2010) also reiterated that public procurement

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represents 18.42% of the world GDP. A fully functioning police service is vital for maintenance
of peace, provision of security, and enforcement of a country’s law. The weakening global
economic conditions are forcing organizations to reinvent their relations with customers and
suppliers alike. Thus, costs must be lowered throughout the procurement process by focusing on
value addition. Bottlenecks must be removed and performance measurements focus on total
system efficiency and equitable reward distribution to key players in the process; to achieve win-
win situations. The working principle is to create customer satisfaction at the end point of
delivery and continuous improvement of process. Procurement performance has been attracting
great attention from practitioners, academicians and researchers due to poor performance.
Government as a sovereign power is distinguished from commercial contracting process. In most
cases, Government acts in the best interest of the public; to strive to guarantee transparency,
accountability and facilitate easy access to information(Wahu et al., 2015).

Sound public procurement policies and practices are among the essential elements of good
governance (World Bank, 2005). (Okong‘o & Muturi, 2017) notes that irregular procurement
activities in public institutions provide the biggest loophole through which public resources are
misappropriated. In some cases, tenders are awarded to firms either through single sourcing or
manipulation of bids; and worse still, full payments have often been made for projects that fail to
take off or are abandoned half way. Still in other cases, tenders are awarded to uncompetitive
bidders through irregular disqualification of the lower bidders.

Despite the fact that there are various studies that focus on procurement performance in other
countries, it seems there is no known study that has been conducted on factors affecting
procurement performance in Ethiopian universities, mainly Bule Hora University. In addition,
studies undertaken on factors affecting procurement performance did not pay attention to
collecting data from user departments. This study will fill both geographical and population
gaps. This motivated the researcher to undertake a study on factors affecting the procurement
performance of public institutions, mainly Bule Hora University.

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1.2 Statement of the Problem
Procurement practices are a set of activities undertaken by an organization to promote effective
management of its supply chain (Chimwani et al., 2014). It is the foundation for private firm’s
success. Its proper practices lead to competitive purchase and getting quality materials. The main
goals of procurement are related with quality, financial and technical risks reduction, creating
integrity in the organization and safeguarding from competition (Okinyi, 2016). Procurement is
vital to organizations and its strategies have become part of a business success. It boosts
efficiency and competitiveness and to realize these, it is vital to give emphasis about the strategic
factors that affect the performance of the procurement function(Nzau & Njeru, 2014).

The government is the main provider of essential services such as health, education, defense
andinfrastructure. This is done through procurement function, making it to be very important,
and the sheer magnitude of procurement outlay has a great impact to the economy and needs
to be well managed(Muema, 2021).
In a developed or developing country, employees who work on public procurement have and will face
always many challenges. Some of them are lack of employee’s competency in the area of procurement
profession, using IT in procurement activities is very minimal, and preparing procurement plan is very
poor. Each country has its own economic, social, cultural and political environment, and each country’s
public procurement experts face different types of challenges, or the same types of challenges but at
different levels from their counterparts in other countries (Kule, 2016).

Internal and external forces are influencing the ability to recognize the procurement goal.
Relations among different elements like professionalism, staffing levels and budget resources,
organizational structure whether centralized or decentralized, procurement regulations, rules,
guidelines, and internal control policies, all have impact on the performance of the procurement
function and needs consideration (Alasfar, 2022).

For the development of African countries it is vital to have efficient public procurement system
and tangible commitments should be exerted to make the best possible use of public resources
(Haile, 2017). In the public sector procurement performance caused financial loss due to delivery
of poor quality work materials, loss of value for money and inflated prices. Decrease in
Profitability of private sector adds up due to poor procurement performance (Juma, 2010).
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According to (Alasfar, 2022), in the private sector, poor procurement performance is the problem
for its growth and it becomes the causes for delay in delivery, increase defects, and delivery of
low quality goods or no delivery at all. In the private sector poor procurement performance has
been a problem because of traditional procurement procedures, incompetent staff, poor
coordination of procurement activities, failure to embrace e-procurement, absence of quality
assurance policies and proper regulations (Nzau & Njeru, 2014). Activities of procurement
usually suffer from neglect, poor co-ordination, lack of open competition and transparency.
Corruption may also occur in the various processes of procurement. It is common to observe lack
of trained and qualified procurement specialists who are competent to conduct and manage
procurements in various private companies. Inflexible and bureaucratic systems of procurement
contribute to contract delays, increased costs and lack of fair competition, all of which affect the
procurement process and performance negatively(Alasfar, 2022). Different challenges drawn
from internal and external factors in the organizations affect public sector procurement.
Attracting and retaining talent in the procurement space is among the top concerns for companies
already dealing with the current complex pricing pressures (Kwasi Boateng Adjepong &
Augustine Anane, 2022).

According to Dale (2010), procurement is still realized as supplement rather than essential to
business operations in most organization. As a result, in the public sector this affects the level of
resource allocation and investment to procurement function. The influence of certain factors on
procurement performance has been in focus for years, together with their impact on the overall
organizational efficiency. Poor procurement performance is usually due to incompetent staff,
traditional procurement procedures and poor coordination of procurement activities and lack of
proper regulations(Yussuf, 2004).

Despite the fact that there are various studies that focus on procurement performance in other
countries, it seems there is no known study that has been conducted on factors affecting
procurement performance in Ethiopian universities, mainly Bule Hora University. In addition,
studies undertaken on factors affecting procurement performance did not pay attention to
collecting data from user departments. This study will fill both geographical and population

6
gaps. This motivated the researcher to undertake a study on factors affecting the procurement
performance of public institutions, mainly Bule Hora University

1.3 Basic Research Questions

1. What is the influence of procurement planning on procurement performance of Bule Hora
University?
2. What is the influence of resource allocation on procurement performance of Bule Hora
University?
3. What is the influence of staff competency on procurement performance of Bule Hora
University?
4. What is the influence of procurement procedures on procurement performance of Bule Hora
University?
1.4 Objectives of the Study
1.4.1 General objective
To assess factors that affect procurement performance of public institution (the case of Bule
Hora University)

1.4.2 Specific objectives

1. To assess the influence of procurement planning on procurement performance of Bule Hora
University
2. To examine the influence of resource allocation on procurement performance of Bule Hora
University
3. To investigate the influence of staff competency on procurement performance of Bule Hora
University
4. To examine the influence of procurement procedures on procurement performance of Bule
Hora University

1.5 Significance of the Study

This study is believed to help for the clear understanding of the procurement performance at
Bule Hora University. The result of the study serves various purposes. Mainly public higher

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education institutions will be benefit from it by using the information from the study to work on
areas which are important to improve the performance of procurement process by applying the
recommendations, which would help to save significant amount of public resource that
otherwise, will be wasted.
From academicals perspective, it is hoped that it will supply the basic data for further in depth
study. For student researcher, this study helps to fulfill requirement of MA in logistics and
supply chain management.

1.6 Scope of the Study

Geographically, the study will conducted in Bule Hora University which is located in Oromia
Region, 467 KM far from Addis Ababa and far 1km from center of city.

Conceptually, the study intends to examine procurement management and Performance of

construction projects in Bule Hora University. Specific emphasis is on procurement
performance in terms of procurement planning, resource allocation, staff competency and
procurement procedures and how the factors affecting the procurement performance at
higher education institutions the case of Bule Hora University.
Methodologically, this study will use both descriptive and explanatory research design. The
time of the study is 2024 G.C.

1.7. Operational Definitions

1. Procurement planning
Procurement planning is the purchasing function through which organizations obtain products
and services from external suppliers
2. Staff Competency

Staff competency is the application of knowledge and skills, performance delivery, and the
behavior required to get things done very well.
3. Resource allocation
Resource allocation is the process of determining the best way to use available assets or
resources in the execution of a given project.
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4. Procurement Procedures
Procurement procedures provide guidance to staffs what to follow in the execution of
activities put constraints on behavior and show how the procurement function should work
to achieve strategic objectives

1.8. Organization of the Study

The study organized into five chapters. Each chapter has its own subunits. The first chapter
outlines include the introductory part consists of background of the study, statement of problem,
research questions, objectives of the study, significance of the study, scope of the study, and
Operational definitions. The second chapter deals with review of literature it includes; theoretical
literature review, empirical literature review, and conceptual framework of the study. The third
chapter emphasized on methodology of the study, this includes research design, the research
approach, target population and, sampling method, sample size, data sources and collection
techniques and data analyses. Chapter four deals with discussion and analysis of data finally, the
fifth chapter deals with the summary of findings, conclusion, recommendations and suggestion
for further study.

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 CHAPTER TWO
REVIEW OF RELATED LITERATURE

2.1 Theoretical Literature Review

2.1.1 Transaction Cost Theory

(Grover & Malhotra, 2003), in their well-cited study, conducted an extensive investigation on the
application of transaction cost theory in supply chain management. In their empirical study of
1000 purchasing managers, Grover and Malhotra (2003) conclude that transaction cost theory
applies to organizational supply chain management in four facets: effort, monitoring, problem,
and advantage. However, transaction cost theory is primarily concerned with the direct economic
factors in organizations and hence fails to address some important aspects of the operation of the
organizational supply chain, including personal and human relations among other actors in the
supply chain.

2.1.2 Traditional Purchasing Theory

According to Timothy (2012) traditional purchasing encompasses a 9-step process from product
research to posting the expense in the general ledger. It usually involves a central procurement
department, accounts payable and a central receiving department. The logical flow of purchasing
steps according to this theory is: Research products; Create requisition; Requisition approval;
Purchase order; Supplier creates sale order; Receipt of goods; Supplier invoice received; paying
supplier; and Posting expense to the general ledger.

2.2. Definition of Public Procurement

Public procurement: It is a process of identifying and obtaining goods and services. It includes
sourcing, purchasing and covers all activities from identifying potential suppliers through to
delivery from supplier to the users or beneficiary. It is favorable that the goods/services are
appropriate and that they are procured at the best possible cost to meet the needs of the purchaser
in terms of quality and quantity, time, and location (Compliance & Practices, n.d.). Public
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procurement is a process, which the governmental entity hiring or purchasing works, goods and
services from other parties Michael and Juanita, (2006). It includes starting from very small
items (for example, stationary, puncher, office furniture, detergent, toner and others) to very
complex items (for example aircraft, railway, boiler, transformer and others) and it helps to attain
the need of public entity to carry out its duties. Tony, (2011) states that public procurement is
acquisition of works, goods and services by public entities, whether under formal contractor or
not and it ranges from the purchase of routine supplies or services to formal tendering and
placing contracts for large infrastructural project. According to (Monczka et al., 2009)
procurement can be defined as “…the acquisition, whether under formal contract or otherwise of
goods, services and works from third parties by contracting authority. “ Procurement is referred
to as acquisition of goods, services, capabilities and knowledge required by businesses, from the
right source, the right quality, in the right quantity, at the right price and at the right time to
maintain and manage a company’s main and support actions (Giunipero et al. 2006). According
to Mangan et al (2008), procurement is a process of identifying and obtaining goods and
services. It includes sourcing, purchasing and covers all actions from identifying potential
suppliers to delivery to the recipient.

2.3. Principles of Public Procurement

There are a number of principles of public procurement that can be identified that are shared by
some most, principles most or many systems of public procurement. These principles are
implemented through various means of legal and regulatory rules on conducting public
procurement procedures are one of these means(Rushton et al., n.d.). The twelve procurement
principles which guide public procurement listed below.

1. Accountability
Effective mechanisms must be in place in order to enable Departmental Accounting Officers and
their equivalents in other public bodies, to discharge their personal responsibility on issues of
procurement risk and expenditure.
2. Competitive supply

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Procurement should be carried out by competition unless there are convincing reasons to the
contrary.
3. Consistency
Suppliers should, all things being equal, be able to expect the same general procurement policy
across the public sector.
4. Effectiveness
Public bodies should meet the commercial, regulatory and socioeconomic goals of government
in a balanced manner appropriate to the procurement requirement.
5. Efficiency
Procurement processes should be carried out as cost effectively as possible.
6. Fair-dealing
Suppliers should be treated fairly and without unfair discrimination, including protection of
commercial confidentiality where required. Public bodies should not impose unnecessary
burdens or constraints on suppliers or potential suppliers.
7. Integration
In line with the NI Executive's policy on joined-up government, procurement policy should pay
due regard to the Executive's other economic and social policies, rather than cut across them.
8. Integrity
There should be no corruption or collusion with suppliers or others.
9. Informed decision-making
Public bodies need to base decisions on accurate information and to monitor requirements to
ensure that they are being met.
10. Legality
Public bodies must conform to the European Union and other legal requirements.
11. Responsiveness
Public bodies should endeavor to meet the aspirations, expectations and needs of the community
served by the procurement.
12. Transparency
Public bodies should ensure that there is openness and clarity on procurement policy and its
delivery.
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2.4. Factors Affecting Procurement Performance
The following are major factors affecting procurement performance.

2.4.1 Procurement Planning

Procurement planning is the purchasing function through which organizations obtain products
and services from external suppliers (Burt et al, 2004). A procurement plan defines and
documents the details of purchases from suppliers needed for a particular department.
According to Basheka (2008), procurement planning is the major function that sets the stage for
successive procurement activities. Likewise, James (2004) describes that the principles of
planning can be implemented in an atmosphere of complete harmony. He further states that, as a
function, procurement planning endeavors to answer the questions as to what one wants to
procure; when to procure it; where to procure them from; when the resources be available; the
methods of procurement to be used; how timely procurement or failure will affect the user of the
items; the procuring and disposing entity; efficiency in the procurement process; and the people
to be involved in the procurement.
Peter (2012) states that good procurement plan should describe the process in detail to appoint
pertinent suppliers contractually. At the beginning, the items needed to procure are defined, and
then the process for acquiring those items is expounded in detail. Finally the timeframe for
delivery is scheduled. Moreover based on (Jama & Mohamud, 2024), procurement planning is
important due to the following reasons: it helps to decide what to buy, when and from what
sources; it allows planners to determine if expectations are realistic; particularly the expectations
of the requesting entities, which usually expect their requirements met on short notice and over a
shorter period than the application of the corresponding procurement method allows; it is an
opportunity for all stakeholders involved in the processes to meet in order to discuss particular
procurement requirements.

2.4.2 Staff Competency

Staff Competency in Procurement Process Armstrong &Baron (1995) explain that competency is
the application of knowledge and skills, performance delivery, and the behavior required to get
things done very well. Besides competency indicates adequacy of knowledge and skills that
13
enable someone to act in various situations (Aketch & Karanja, 2013). According to Russell
(2004), absence of adequate knowledge in procurement matters, may end up with serious
consequences including breaches of codes of conduct. According to Banda (2009), many
organizations do not have staff with the right competence critical to good procurement process
management. As a result considerable and continuous investment is incurred in training and
development (Sultana, 2012) and there is a need for extensive external training for human
resources to be able to improve and contribute to the efficiency of organizations (Appiah, 2010).
Moreover, Saunders (1997) advises that multiskilling offers employees with a variety of skills
and should be developed extensively. Hence, all employees need broad and continuous education
and training. Leenders and Fearon (2002) noted that qualifications are crucial for value-based
management which requires employees to assess and improve processes while contributing to
team performance. Baily et al, (2005) suggested that the existence of top-down objectives with
related performance measures, and process guidelines link individual or group performance to
the firm’s goals and expectations of upper management which require good qualifications. Banda
(2009) stated that many organizations lack competent staffs with the proper knowledge for good
procurement process management. He further noted that authorities should give greater emphasis
for developing competence to adopt best practice more widely. According to Berger &
Humphrey (2007), a procurement function that is carried out professionally is the core of
delivery of any service on value for money principle. Furthermore, Sultana (2012) stated that in
order to sustain economic growth and effective performance, it is important to optimize the
contribution of employees to the aims and goals of the organizations. Therefore, competence can
ensure that the benefits of new products and services are brought to the attention of the right
person in the organization(Sollish & Semanik, 2007).

2.4.3 Resource Allocation

According to PPRA (2007), the budget is submitted to the responsible financial organization for
review and the final budget is scheduled to the Parliament for approval. The Public Financial
Management Reform Programmed of Tanzania focuses on improving the financial management
in the government including resource mobilization, budgeting and accounting(Almeida et al.,
2016).
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According to Burke and Modarresi (2000) as sighted in (Thogori and Mwangi, 2015), resource
allocation occupies a leading place among the special tools of management employed to direct
and control the affairs of large and multifarious organizations. A budget is a basic tool in public
procurement performance. In this regard it serves as a tool future procurement process and
controlling the use of scarce financial resources in the accomplishment of organizational goals.
Interventions have made in Tanzania it possible for the government to eliminate budget deficit
and to ensure fiscal stability resulting in higher economic growth and lower inflation. The
integrated financial management system (IFMS) supported with information technology has
helped to ensure that there is no commitment before budgetary approval (PPRA, 2007). The
financial and economic tasks are concentrated operational through the administrative process that
comprises four major interrelated phases of work (Premchand, 2004). First an allocation system
under which expenditure is controlled by release of funds is put in place. Secondly there is
supervision of the acquisition of goods and services to ensure value for the money spent. Thirdly
an accounting system that records organizations‟ transactions and provides a framework for an
analysis of their implications is implemented.
The final phase involves a reporting system that permits a periodic appraisal of the actual
implementation of policies. Budget implementation is public expenditure policy and therefore
the manner in which public expenditure is managed will definitely effect on the implementation
of the budget (Baily, 1990).
Effective Public Financial Management (PFM) systems are required to maximize the efficient
use of resources, create the highest level of transparency and accountability in government
finances and to ensure long-term economic success. Recent literature emphasized the importance
of sound PFM systems to service delivery, poverty reduction and the achievement of the
millennium development goals (MDGs) (Pretorius & Pretorius, 2008). Various reasons such as
delay in release of funds, stringent donor conditions and lengthy procurement procedures have
been used to explain the variances (Glenngard and Maina, 2007), in their study concluded that
the gap between allocated funds and actual expenditures in the context of donor funds is largely
due to a slow release of funds and poor procurement system, which causes delays in spending.

15
2.4.4 Procurement Procedure
(Mylona & Development, n.d.) Points out that the procurement process can be wrapped into
three steps. These are need identification, planning and specification of goods or services
required, and sourcing, awarding, and supplier management to facilitate timely delivery.

2.4.1 Need Identification

Procurement is done to desire to accomplish a specific task. Given that resources are always
scarce, the task to be accomplished should be important to an organization Nakamura, (2004)

2.4.2 Planning and Specification of Goods or Services Required

Once the needs have been identified, the procurement department should develop or
communicate a plan on how to deliver the service or goods required. The plan must be developed
in collaboration with the other functions within the organization, so that it is integrated into the
organizations strategy and therefore provided for adequately Shaw, (2010). To be able to
purchase the right goods or services, the specifications of what the organization needs must be
clear. These specifications are used to communicate to the supplier what is needed and what
should be supplied. It is therefore important to have clear, precise and accurate specifications.
Most organizations have standard specifications for the most regularly procured items and
services such as medical and construction Shaw, (2010). Thai, Araujo, Carter and Callender
(2005) provide that a specification is a detailed description of the design, the service, or
materials. It describes in detail the requirements to which the supplies or services must conform.
The basic requirement of a good specification is to clearly identify the service or product to
stakeholders. The specifications must be clear to all parties. That is the user, procurement and the
supplier. Factors to consider in specifying a product include physical attributes, technical
specification, and intended use(Jama & Mohamud, 2024).

2.4.3 Sourcing, Awarding, and Supplier Management

Hinson and McCue (2004) say that sourcing is the process of identifying sources of supply that
can meet the organizations immediate and future requirements for goods and services. The
sourcing process adopted will depend on the situation and on the time available to carry out
16
sourcing. For instance, in a sudden on-set emergency the need to respond quickly to the
emergency will mean there will be limited time to gather sourcing information and approve
suppliers; therefore, an organization may make use of existing suppliers.

2.4.4. Steps in the Sourcing Process

 Market Enquiry
The process of inviting and evaluating tenders or quotations will vary depending upon an
organization’s own internal procedures.
 Evaluation and Awarding
The evaluation of tenders and awarding of contracts to suppliers is an important phase of the
procurement process Maurer, (2004). It is the process that determines the actual quality,
reliability, delivery, etc. of the goods and services.

2.4.5 Placing Orders and Contracting

After evaluating and awarding of tender, the next step in the process involves placing orders for
the goods or services with the supplier, or establishing contracts which need to be sent to
suppliers. In emergency situations the approval levels and limits are adjusted, based on an
approved process, to speed up the process of acquiring goods and services. Under normal
circumstances, the approval processes may be more elaborate. The orders establish contractual
relationships between the organization and the supplier (Sollish & Semanik, 2006).

2.4.6 Progressing/Expediting
Once the order is placed and the supplier has confirmed receipt and agreed to the contract terms
and conditions, the role and the amount of work that staff in procurement have to undertake will
be affected by the performance of the suppliers Bovis, (2007). It is necessary therefore, for the
procurement staff to monitor the progress of orders and the performance of the suppliers. The
continuous monitoring enables the organization to pick out break-down points in the system and
quickly identify solutions (Storey et al., 2006).

17
2.4.7 Delivery and Return
Lewis and Roehrich (2009) argue that procurement only facilitates delivery through expediting
for timely delivery and trouble-shooting returns. The physical receipt and inspection of goods
takes place at the delivery point. In addition, whoever is responsible for accepting delivery and
inspecting the goods should understand the procedure to follow in the event that there are any
problems or discrepancies. For certain goods or commodities an independent inspection
company may be used to check the quality of the goods (Storey et al., 2006).

2.4.8 Payment
When goods or services are received and accepted into stock, procurement then facilitates
payment of the supplier by providing necessary documentation to Finance Department. Orders
are normally generated in procurement, as the goods are delivered in the warehouses and
transported to final distribution points; additional documents are generated in the process to
support transactions. All these documents are finally consolidated to support vendor
payments(SUMA Project, 2000).

2.4.9 Records of procurement documents

According to the proclamation (2009), public bodies shall have to maintain records and
documents regarding their public procurement, the record shall include; A brief description of
the procurement, the invitation to bid, the name and addresses of suppliers that submitted bids,
the evaluation criteria stipulated and a summary of the evaluation and comparison of bids,
Information on the proceeding of any decision rendered where a complaint against a
procurement process is lodged and the ground for using a procurement procedure other than open
bidding(Emmett & Stuart, 2005).

2.5 Challenges in public procurement

Thai, (2009) noted that Challenges in public procurement can be divide internal and external
challenges.
A. Internal challenges
18
 Public procurement practitioners have always walked on a tight rope. Their ability to
accomplish procurement objectives and policies is influenced very much by internal forces
including: i) Interactions between various elements of the public procurement systems,
various officials and organizations in the three branches of government, and various actors
and sub-agencies within a department or executive agency and actors and organizations
external to sub-agencies; ii) Types of goods, services and capital assets required for an
agency's missions; iii) Professionalism or quality of procurement workforce; iv) Staffing
levels (e.g., ratio of procurement practitioners to contract actions) and budget resources; v)
Procurement organizational structure such as the issue of centralization vs. decentralization;
vi) Procurement regulations, rules and guidance; and vii) Internal controls and legislative
oversight.
B, External challenges
Thai pointed that Public procurement practitioners have always faced challenges imposed
upon by a variety of environment factors including market, legal environment, political
environment, organizational environment, and socio-economic and other environmental
factors.
I. Market Environment
Market conditions have a great influence on public procurement practitioners‟ effort to
maximize competition. Moreover, the market determines whether or not socio-economic
objectives of procurement are accomplished, whether or not a governmental entity can fulfil its
needs; the timeliness of fulfilment; and the quality and costs of purchased goods, services and
capital assets. As there are different levels of economic growth among countries in the world,
market conditions are very favorable in industrialized countries, while they may be unfavorable
in developing countries. Also as markets become more and more globalized through regional
and international trade agreements and treaties, public procurement practitioners face a greater
challenge. In addition to compliance with their governments‟ procurement laws and policies and
international trade requirements as mentioned above, they face additional challenges including
communication, currency exchange rates and payment, customs regulations, lead-time,
transportation, foreign government regulations, trade agreements, and transportation(Jama &
Mohamud, 2024).
19
ii. Legal Environment
Apart from public procurement regulations and rules, the legal environment refers to a broad
legal framework that governs all business activities including research and development
(regulations dealing with safety and health of new products), manufacturing (safety and health
regulations at workplace and pollution control), finance (regulations dealing with disclosure of
information), marketing (regulations dealing with deceptive advertising, disclosure of product
characteristics), personnel (regulations dealing with equal opportunity for women and
minorities), and contracts. Indeed, most aspects of contracts--public or private-- such as contract
requirements, disputes, and breach of contract are governed under the same contract law. In
developing and particularly transitional countries, where legal systems are not comprehensive,
government contracts may need detailed provisions(Jama & Mohamud, 2024).
iii. Political Environment
In a democracy many individuals, groups, and organizations in the private sector including trade
associations, professional associations, and business firms or companies (commonly known as
interest groups) are actively involved in all aspects of the public procurement system. Having
various interests, objectives and beliefs, interest groups are involved in the public procurement
system in several ways such as lobbying legislative bodies to pass or alter procurement statutes,
influencing implementation of these statutes, and influencing budget authorization and
appropriations processes.
Normally, a government program that is eventually adopted is a compromise among different
views of interest groups, policy makers and management. In this democratic environment, there
are cases of a strong coalition of policy makers, bureaucrats and interest groups in their effort to
get their programs adopted.
iv. Social, Economic, and Other Environment Forces
While some countries impose social policies on their public procurement practices (such as a
policy placing a fair proportion of government acquisitions with woman/minority-owned small
business, or economically disadvantaged areas), most governmental entities --be it a developed
or developing country or federal, state, and local governments-- use their large procurement
outlays for economic stabilization or development purposes by preferring national or local firms
over firms from other countries or other geographic locations. Public procurement practitioners
20
may be in a favorable economic environment or market (with many competing tenderers in their
country or local areas) or an unfavorable economic environment (where competition hardly
exists). This environment would have a great impact on their practices as they may face an
imperfect competitive market.
v. Other Environmental Forces
The public procurement system is also influenced by culture and technology. In a culture where
giving gifts is a common public relation practice, it is difficult to distinguish between gifts and
bribes. Moreover, rapidly advanced technology has forced public procurement to (a) adopt new
procurement methods, such as the use of e-signature and purchase cards; and (b) be
knowledgeable in many aspects and considerations of how to procure information technology

2.6 Procurement Performance

Smith and Conway (1993) identified seven key success factors which influence procurement,
namely: a clear procurement strategy, effective management information and control systems,
development of expertise, a role in corporate management, an entrepreneurial and proactive
approach, co-ordination and focused efforts. Furthermore, Ombaka (2009) outlined that effective
procurement process is one which utilizes good practices by avoiding corruption.
Evaluation of suppliers before selecting them can significantly improve the performance of the
procurement function in carrying out its mandate (Martin, 2004).
Private enterprises evaluate suppliers before awarding contracts to supply different goods,
services or carry out works. Choy and Lee (2002) stated that supplier selection consists of a five
phase process: the realization of the need for a new supplier, determination and formulation of
decision criteria; prequalification; final supplier selection and monitoring of the supplier
selection. Similarly, Van (2006) stated that there is a link between procurement process,
efficiency, effectiveness and performance.
Performance is a key driver for competitiveness and for improvement of quality of services.
Assessment of procurement performance helps organizations to reduce cost, enhance
profitability, assured supplies, quality improvements and competitive advantage. However,
Batenburg and Versendaal (2006) noted that use of inappropriate means can be a barrier to
change and may lead to a deterioration of procurement operations. Migai (2010) also describes
21
that a number of private sector organizations are losing out because of their failure to develop
quality preventive and quality assurance models within the supply chain.

2.7 Conceptual Framework

Independent variable

Procurement Planning Procurement Performance

Resources Allocation

Staff Competency

Procurement Procedures

22
 CHAPTER THREE
RESEARCH METHODOLOGY

3.1 Introduction
This chapter presents the research methodology used in the study to answer the
research questions. Accordingly, the chapter comprises research approach and design,
data collection methods, sample design, target population, sample size, measurements
of the study variables, data analysis, reliability and validity of the data and ethical
considerations.

3.1. Research Design

The main objective of the study is to assess factors affecting procurement performance of Bule
hora university. The study will use both descriptive and explanatory type research designs
considering the purpose of the study and the natures of the phenomena.

Descriptive research design used to explain the set of conditions as it is present as such. The
main feature of this method is that the scientist does not have direct control over the variables; he
can only report what is happening or what has happened(Downs, 1990). Hence, descriptive
research design will be used to describe circumstances of factors affecting procurement
performance. Also, descriptive design used to describe demographic characteristics of target
population of the study.

Explanatory research design will be used to explain effect of independent variables on

dependent variables(Bougie &Sekaran,2010).In this study explanatory type of research design
will be applied, since it attempts to describe the factors affecting procurement performance of
Bule hora university.

The quantitative research and qualitative approach will be used. Quantitative data will be
gathered from coffee supply chain participants through close ended questionnaire. Qualitative
data will be collected in the form of interview and observations. The questionnaire will be
prepared in English and translated into Amharic and Afan Oromo language for clear

23
understanding of questionnaire by respondents. Data collection will be assisted by local
enumerators.

3.2. Source of Data

Study will use both primary and secondary type of data. This study will focus on primary data,
which collected through use of open ended and close ended questionnaire, interview and
observation. Secondary data will be collected from annual report and published journals.

3.3 Target Population

The study population of study is Bule Hora University teaching and administrative staff

Number
1 Teaching Staff 1644
2 Administrative Staff 2466
3 Total 4110

3.4 Sampling Method

(Sekaran, 2003) argue that a sample can be defined as a subset of the population. Moreover,
(Buchanan & Bryman, 2007) define it as the segment of the population that is selected for
investigation. Sampling technique can be probability and non-probability sampling. A
probability sampling is a sample in which each element within the population has an equal, or at
least a known, probability of being selected within the sample. , (Buchanan & Bryman,
2007)define probability sampling as the sample that has been selected using random selection so
that each unit in the population has a known chance of being selected.

In probability sampling, as a result of the fact that all the units within the population have the
same probability of being included in the sample, (Bryman & Cramer, 2002)argue that it is
generally assumed that probability sample will be a more representative sample of the population
and that is the main aim of using it to reduce the sampling error and to keep it to a minimum. In
contrast, a non-probability sampling contains some procedures that do not include random
sampling at some stage in the process.

24
Within the same line, (Buchanan & Bryman, 2007)define non- probability sampling as a sample
that has not been selected using the random selection method, this implies that some units in the
population are more likely to be selected than others.

According to(Sekaran, 2003)non-probability samples can be divided into convenience sampling,

quota sampling and purposive (judgmental) sampling.

Hence, for the purposes of conducting this research study, probability (random) sampling
technique is preferable, and desirable because of this type of sampling technique are more likely
to produce a representative sample, reduce the sampling error, and enable estimates of the
sample’s accuracy. Because of this type of sampling technique are more likely to produce a
representative sample, reduce the sampling error, and enable estimates of the sample’s accuracy.

Among a random probability sampling, random sampling will be used.

3.5 Sample Size

The sample size is determined from the total population 4,110 members who are involved in
teaching and adiminstration. The research is will be conducted with 5 percent marginal error and
95 percent confidence interval and none response rate of 5 percent. Based on this assumption, the
actual sample size for the study is determined using (Yemane, 1970) methods of sample size
determination formula to reach at the required sample size. The motive behind using this formula
is that it provides the appropriate sample size by clearly applying the possible variation that
exists among coffee supply chain in the study areas.

n= 𝑵/ 𝟏+(𝒆)𝟐

4,110/1+4,110 (0.05)2 =365

Proportion Allocation

Number Proportion
1 Teaching Staff 1644 146
2 Administrative Staff 2466 219
3 Total 4110 365

25
3.6 Method of Data Collection
In order to collect data both self-administered open ended and close ended questionnaire will be
prepared in English and will be translated into Amharic and Afan Oromo.
In preparing the questionnaire, a five-point Likert scale provided in order to get the responses
from respondents. Also, observation will be undertaken at the operations.

3.7 Method of Data Analysis

In order to analyze the data, the two sets of Statistics: Descriptive and Inferential statistics will
be used. Descriptive statistics includes frequency; percentage, mean and standard deviation.
Pearson correlation will be utilized to examine the relationship that exists between the
independent and dependent variables and also between the in dependent variables to each other.
In addition, multiple regression analysis used to know the effect of each independent variable to
the dependent variable. Statistical Packages for Social Sciences (SPSS) version 26 used to
present data in tables in order to show the summary of questionnaire. The data obtained from
interview and observation will be analyzed qualitatively.

3.8 Model Specification

Multiple linear regression will be used to determine impact of lean supply chain practices on
coffee supply chain performance and Pearson correlation coefficient by using the Statistical
Package for Social Sciences (SPSS) version 26 package.

The following regression model is formulated with four independent variables and one
dependent variable.

Y= β0 + β1pp1 + β2ra2 + β3sc3 + β4pp4 + £

Where: b1, b2, b3, b4………Slope

Y = Procurement Performance

β0 = is standardize regression coefficient

26
pp1= Procurement Planning

ra2=Resources Allocation

sc3=Staff Competency

pp4 =Procurement Procedures

ε = Error term

3.8.1Assumptions of Multiple Linear Regressions

Before, measuring effect of the independent variables on dependent variables, the following
multiple regression assumptions will be tested.
1. Normality
In order to check the normality of data, normality assumption of skewness and kurtoisis were
used because sample size for the study were below 200.Skew is the tilt in distribution on the
other hand, kurtoisis is the peakedness of data distribution. A common rule –of-thumb test for
normality, skewness and kurtoisis should be with in +1 and -1 when normality is critical.
Normality will be checked by kurtoisis and skewness.
2. Homoscadicity
The assumption of homoscedasticity refers to equal variance of errors across all levels of the
independent variables. Homoscedasticity can be checked by visual examination of a plot of the
standardized residuals by the regression standardized predicted value.
3. Linearity
Linearity defines the dependent variable as a linear function of the independent variables.
Multiple regressions can accurately estimate the relationship between dependent and independent
variables when the relationship is linear in nature.
4. multi-collinearity
Multi-co linearity is statistical phenomena in which two or more independent variables in
multiple regression models are highly correlated. Multi-co linearity will be tested by tolerance
and variance inflation factor (VIF).

27
3.9 Validity and Reliability

3.9.1 Validity Test

Validity is the extent to which a test measures what it claims to measure. It is vital for a test to be
valid in order for the results to be accurately applied and interpreted.
1. Content Validity
Content validity ensures that the measures include an adequate and representative set of items
that tap the concept. To put it differently, content validity is a function of how well the
dimensions and elements of concepts have been delineated.
Some studies reveal that content validity is calculated by using cross-loading and it refers to that
the value of the measured variable should be higher than other study variables in the same rows
as well as columns (Chin, 1998b; Hair Jr, 2010). Similarly, current study will use cross -loading
value in order ensure content validity of concepts.
2. Convergent Validity
Convergent validity established when the scores obtained with two different instruments
measuring the same concepts are highly correlated.
Factor loadings, Composite reliability, and average variance extracted will be used in order to
ensure convergent validity. Factor loadings should be greater than 0.50, AVE values also must
be greater than 0.50, and CR value should be higher than 0.60. The value of Cronbach’s alpha
must be higher than 0.60 as suggested by Fornell & Larcker (1981).
3. Discriminant validity
Discriminant validity established, based on theory, two variables are predicted to uncorrelated,
and scores obtained by measuring them are indeed empirically found to be so.

3.9.2 Reliability Test

According to Ang (2014:176), reliability is defined as the degree to which measures are free
from errors and therefore yield consistent results. In this study, reliability is will be ascertained
through using three indices, namely, Cronbach's alpha value, the composite reliability value, and
item-to-total correlation.
1. Cronbach’s alpha
28
The Cronbach alpha (α) coefficient was originally developed by Lee Cronbach in 1951 and
refers to the assessment of the internal consistency of construct items or scales and is usually
stated in values confined between 0 and 1 (Tavakol & Dennick 2011:53). One of the main
advantages of using the Cronbach alpha as a reliability psychometric test resides on its level of
objectivity, especially in providing statistical references that are subjected to very few questions
(Yang & Green 2011:377). As such, as suggested by Fornell and Larcker (1981:39) and
Nunnally (1978:1), Cronbach alpha thresholds should be equal to or greater than 0.7 for a
measurement instrument to be regarded as meeting the internal consistency level
2. Composite reliability
Composite reliability has been found to be an alternative tool also aimed at examining internal
consistency of research constructs (Peterson & Kim 2013:6). It can be ascertained through the
following formula, as recommended by Fornel and Lacker (1981):
(CR): CRη= (Σλyi) 2 / [(Σλyi) 2 + (Σεi)] 102
Composite Reliability = (square of the summation of the factor loadings) / {(square of the
summation of the factor loadings) + (summation of error variances)}.

3.10. Ethical Consideration

All the research participants included in this study will be informed appropriately about the
purpose of the research and their willingness and consent will be secured before the
commencement of the distribution of the questionnaire. Regarding the right to privacy of the
respondents, all participants were briefed about the aim of the research, and respondents gave
their full consent.

29
 CHAPTER FOUR
WORK PLAN AND BUDGET

4.1 Work Plan

Table. 3.5. Research work plan break down
Task to performed Nov Dec Jan Feb Mar Apr May June

Title selection and submissions 

Problem identify formulation  

Proposal development   
Proposal submission 
Proposal defense 
Questionaries’ developments and 
Data Collection
Data coding, editing and 
interpretation and Data analysis

Thesis paper working and editing  

First and Final Submission of draft 

thesis

Presentation of the thesis 

Source: Own Competition (2024)

30
4.2Research Budget Breakdown
Table 4.2. Research budget specification
O Item Unit Quantity Unit Total Remark
price price

1 Computer No 1 14,000 14,000

2 Computer Pad 3 150 450

paper

3 Pen each 2 50 50

4 Binder No 1 20 20

5 Flesh 32 GB 1 450 450

6 Cost of printing Pc 500 5 2500

Total 17,470.00

31
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