The Cost Effects Of Framework Agreements The Case Of Public Procurement And Property Disposal Service (pppds)

is paper deals with the cost effect assessment of framework agreements for the Federal government ofrnEthiopia, Public procurement and property administration agency (PPPDS). The savings were assessedrnin terms of the three synergy benefits of economies of volume/scale, process and information & learning.rnT he descriptive research method is considered most appropriate and chosen as the study is aboutrnd emonstrating the cost effects of centralized framework procurements.rnThe questionnaire prepared to assess the PPPDS status in achieving the economies of learningrnand information is administered to all procurement and contract administration processes staffs.rnJudgmental sampling is used in selecting the category and type of items in assessing therneconomies of volume. Items from the two categories, stationery and sanitary items are selected forrnprice comparison. The potential price savings are estimated by comparing the agreement prices tornmarket prices. The average estimated volume savings of stationary and sanitary items is found to be 5rnand 19 percent respectively. The results evidenced that there is significant cost savings as a result ofrnconsolidated/pooled procurement. The PPPDS volume saving assessment report was also reviewed andrnfound out that CSA price index was used for price comparison and the reported savings differsrnsubstantially from the results found in this study. However, it is concluded that moving to the frameworkrnagreement arrangement brought a volume saving for the government.rnThe administrative/process cost savings also assessed by comparing the structural changes happened onrnthe public bodies before and after the introduction of the framework agreements. The assessment showsrnthat there is no structural change on the procurement functions of the public bodies after the introductionrnof the framework procurement arrangement. Although the framework arrangement frees and reduces thernpublic bodies’ workload, it doesn’t fully free them in a predictable. Achievement of the economies ofrninformation and learning benefit is reflected through the improvement of the systems, accumulation ofrnprocess knowledge, and usage of standardized applications/software and sharing of the availablernknowledge and experience. It was found out that PPPDS has qualified staffs with mixed of experiencesrnbut has not started the journey to reap the benefit of economies of information and learning.rnPPPDS is recommended not to return some procurement back to the public bodies as a reason of higherrntender prices, it is unrealistic to expect lower prices in lower volume which is not attained by thernconsolidated/higher volume through the framework arrangement. The PPPDS is also recommended tornincrease its scope of contract administration part from order placement to order receipt & distribution tornfree the public bodies’ procurement in a predictable manner and bring the reduction of administrationrncost. Since CSA price index doesn’t ensure the comparison was made between similar products inrnreporting volume savings, it is recommended that PPPDS to use market price data for making volumernsaving assessments. It is also the researcher’s recommendation to PPPDS to start the journey of thernachievement of the economies of information and learning.rnKey Words: Frame Work Agreement; Centralization; Hybrid Procurement; Economies of Volume;rnPrices; Process economies; Savings; Tendering

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