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The impact of non-compliance with Eskom procurement policies

Supply Chain Management (SCM) has an overwhelming impact on firms as it directly impacts on sales and costs. Therefore, it must be a core competency for any organization and thus SCM expertise is highly valued in organisations. Procurement of goods and services has a major impact on the successful execution of the project. Procurement can help the business, ensuring that all the goods and services they buy will be of the right quality, quantity and price, and they will be delivered ‘just in time’. The application of procurement policies and practices, using fair and open procedures, is crucial not only for attracting efficient contractors and suppliers, but also to safeguard the principle of accountability and the cost-effective use of funds. Before awarding a tender, there is a substantial amount of work to be undertaken by the project manager, contracts manager, end user, buyer, and authorising committees. Commitment from personnel involved in contract awarding is not adequate. Furthermore, the Eskom governance process sometimes contributes to delays in awarding a contract. before the enquiry and tender documentation is sent out to the suppliers on the tender list, the core team involved in the procurement process verifies that the enquiry is complete and correct. Should there be contractual or legal issues during the execution of the project in the form of say a contract that has been issued with unsuitable clauses, solving the problem becomes difficult. Contractors will sometimes use contract clauses to suit themselves, and take advantage of the employer, causing cost overruns due to the difficulties in managing the contract. Eskom’s commercial activities are governed by the Public Finance Management Act (PFMA) and Constitution of South Africa, which states that an organisation such as Eskom should have in place “an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive, and cost-effective.” This can eliminate irregularities in contracts, since they can have a serious economic impact, interfere with fair competition, and destroy confidence in the integrity and functioning of public administration Such irregularities may lead to costs overruns on projects where incompetent contractors are awarded a contract. Incorrect financial forecasting is a very serious issue, and needs to be addressed in order to help strengthen the cash flow and forecasting within Eskom. This research strategy is intended for quantifying observations of human behaviour, with the emphasis on exact measurements. The primary data for this study was generated through the administration of a structured questionnaire survey conducted among engineers, project managers, contract managers, and forensics personnel. The secondary data for the present study was gathered from literature in the form of open ended questionnaire from the same personnel. Poor commitment of buyers and chain approval meetings being shifted affect the delays in awarding of contracts. Lack of training of contract managers, absence of legal representative’s advice and squad checking meetings not being represented properly contributes to contracts being awarded with unsuitable clauses. Managers specifically forcing contracts to be awarded to a specific contractor, nepotism or favoritism, politics and contractor greediness, relate to irregularities in contracts. Lack of experience, revision of scope (unclarified scope), project delays, less effort being made when forecasting and unforeseen circumstances, such as strikes, and forces of nature, relate to incorrect financial forecasting. Continuous training and commitment of all personnel involved in the project environment is important, therefore Eskom personnel in the project environment should work as a team in an integrated way. Adequate time should be spent, and thorough checks made, to ensure that documents sent out for tendering conform to requirements. Involvement of all the supporting functions must be maximised. Code of ethics training and application is very crucial in the project environment, and the current governance policies should be adhered to by all stakeholders in the project.
Date January 2015
CreatorsMvelase, Thokozile Olivia
PublisherNelson Mandela Metropolitan University, Faculty of Engineering, the Built Environment and Information Technology
Source SetsSouth African National ETD Portal
Detected LanguageEnglish
TypeThesis, Masters, MSc
Format107 leaves, pdf
RightsNelson Mandela Metropolitan University

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