ETHIOPIAN CIVIL SERVICE UNIVERSITY

COLLEGE OF FINANCE, MANAGEMENT, AND DEVELOPMENT

DEPARTMENT OF PUBLIC PROCUREMENT AND ASSET
MANAGEMENT

Factors Affecting Public Procurement Performance: The Case of

Addis Ababa City, Gulele Sub-City Administration

BY

WOSSENE MESELE TIREFA

ID.No-ECSU1704121

Advisor

Baynesagn Asfaw (Ph.D.)

A Thesis Submitted to Ethiopian Civil Service University, College of Finance,

Management and Development, Department of Public Procurement and Asset
Management, Graduate Program in Partial Fulfillment of the Requirement for the Award
of a Masters Degree in Public Procurement and Asset Management.

May 2019

Addis Ababa, Ethiopia

 DECLARATION

I, Wossene Mesele Tirefa, I.D ECSU1704121, do hereby declare that the submission of
this thesis entitled “Factors Affecting Public Procurement Performance: The Case of
Addis Ababa City, Gulele Sub-City Administration” is the true findings of my own
researched work presented towards an award of Masters in Public Procurement and Asset
Management and that, to the best of my knowledge, it contains no material previously
published by another person nor submitted to any other University or institution for the
award of degree. However, references from the work of others have been clearly stated.

Student Name & ID Signature Date

Wossene Mesele (ECSU1704121) _______________ ____________

CERTIFICATION
This to certify that Wossene Mesele has carried out his thesis work on the topic entitled
“Factors Affecting Public Procurement Performance: The Case of Addis Ababa
City, Gulele Sub-City Administration” under my guidance and supervision.
Accordingly, I hereby assure that his work is appropriate and standard enough to be
submitted for the award of Master of Arts degree in Public Procurement and Asset
Management.

Name of Advisor Signature Date

Dr. Baynesagn Asfaw _______________ _________________

i
 APPROVAL

The undersigned certify that they have read and hereby recommend to the Ethiopian Civil
Service University to accept the Thesis submitted by Wossene Mesele Tirefa and
entitled “Factors Affecting Public Procurement Performance: The Case of Addis
Ababa City, Gulele Sub-City Administration” in partial fulfillment of the requirements
for the award of a Masters Degree in Public Procurement and Asset Management
complies with the regulations of the Ethiopian Civil Service University and meets the
accepted standards with respect to originality and quality.

Name of Supervisor ……………….………………… Signature………………….

Date………………………

Name of Internal Examiner ………………………… Signature…………. ……..

Date……………………...

Name of External Examiner ………………………….. Signature…………. ……..

Date……………………....

Name of Head of Department ………………………. Signature………………….

Date…………………...

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 ACKNOWLEDGMENTS

First and foremost, I wish to express my deepest appreciation to my Almighty God who
is indeed the beginning of knowledge for the accomplishment of this study. Especially, I
am indebted to thank my research Advisor Dr. Baynesagn Asfaw for his guidance,
detailed supervision, useful suggestions, encouragement and constructive criticisms in all
stages of this research work. To me, he was not only a supervisor but also a mentor. I
thank you so much indeed.

Furthermore, I owe special thanks to the Management of Gulele Sub-City administration

in Addis Ababa for sponsoring me to pursue this study. My heartfelt gratitude is to Mr.
Jemal Mezegebe, Mrs. Hayate Bushera, and Miss Rumiya Aliyi. It is their support and
encouragement that made this study possible and a success. I also acknowledge the
generous and technical assistance provided by Dr. Emmanuel Gabreyohannes. To all of
you, kindly receive my profound gratitude and remain blessed.

Very special thanks are to my family for their encouragement, prayers and above all
patience during the entire period of my study. Thank you for understanding that nothing
is permanent in this world, not even my absence. I am really proud of you and God bless
you abundantly! Finally, I regret expressing the impossibility of mentioning all those who
in one way or another have contributed to the success of this study. Finally, I wish to
thank my friends especially group discussion members for their support. I, therefore,
wish to thank ALL those who have contributed to the accomplishment of this research
work. May God bless you abundantly and give you peace that surpasses all
understanding.

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 Table of Contents
DECLARATION............................................................................................................. i
CERTIFICATION ........................................................................................................... i
APPROVAL ................................................................................................................... ii
ACKNOWLEDGMENTS ............................................................................................. iii
LIST OF TABLES ...................................................................................................... viii
LIST OF FIGURES ....................................................................................................... ix
LIST OF APPENDIXES .................................................................................................x
LIST OF ABBREVAITIONS AND ACRONYMS ........................................................ xi
DEFINITION OF KEY TERMS ................................................................................... xii
CHAPTER ONE............................................................................................................ 14
INTRODUCTION ......................................................................................................... 14
1. Introduction..................................................................................................14
1.1. Background of the Study ..................................................................................... 14
1.2. Statement of the Problem ..................................................................................... 16
1.3. Research Objective .............................................................................................. 18
1.3.1. General Objective .................................................................................................. 18

1.3.2. Specific Objectives ................................................................................................ 19

1.4. Research Hypothesis ........................................................................................... 19

1.5. Justification and Significance of the Study........................................................... 19
1.5.1. Justification of the Study ........................................................................................ 19

1.5.2. Significance of the Study........................................................................................ 20

1.6. Scope of the Study ............................................................................................... 21

1.7. Limitation of the Study ........................................................................................ 21
1.8. Organization of the Thesis ................................................................................... 22
CHAPTER TWO ........................................................................................................... 23
LITERATURE REVIEW .............................................................................................. 23
2.1. Introduction ......................................................................................................... 23
2.2. Theoretical Framework ........................................................................................ 23
iv
 2.2.1. Institutional Theory ................................................................................................ 24

2.2.2. Technology, Organization and Environment Theory ............................................... 25

2.2.3. The Legitimacy Theory .......................................................................................... 26

2.3. Definition of Public Procurement ........................................................................ 26

2.4. Public Procurement vs Private Procurement......................................................... 27
2.5. Principles of Public Procurement ......................................................................... 29
2.5.1. Economy (Value for Money) .................................................................................. 29

2.5.2. Competitiveness ..................................................................................................... 30

2.5.3. Effectiveness .......................................................................................................... 31

2.5.4. Transparency.......................................................................................................... 31

2.6. Procurement Performance .................................................................................... 32

2.7. Procurement Challenges and Consequences of Poor Procurement Performance ...33
2.7.1. Public Procurement Challenges: Internal Factors .................................................... 33

2.7.2. Public Procurement Challenges: External Factors ................................................... 34

2.8. Procurement Performance in Public Sectors......................................................... 36

2.9. Key Purchasing Variables .................................................................................... 40
2.9.1. The Right Quality................................................................................................... 40

2.9.2. The Right Quantity................................................................................................. 41

2.9.3. The Right Time ...................................................................................................... 41

2.9.4. The Right Price ...................................................................................................... 41

2.9.5. The Right Supplier ................................................................................................. 42

2.10. Procurement Performance Indicators ............................................................ 42

2.11. The legal and Regulatory Frameworks Governing the Ethiopian Public
Procurement ........................................................................................................ 45
2.11.1. Public Procurement Reforms in Ethiopian .............................................................. 45

2.12. Empirical Review of the Related Literature .................................................. 47

2.12.1. Studies in Ethiopia ................................................................................................. 47
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 2.12.2. Similar Studies in Other Countries ......................................................................... 50

2.13. Research Gaps .............................................................................................. 51

2.14. Conclusion and Summary of Literature Review ............................................ 51
2.15. Conceptual Framework ................................................................................ 52
CHAPTER THREE ....................................................................................................... 54
RESEARCH METHODOLOGY ................................................................................... 54
3.1. Introduction ......................................................................................................... 54
3.1.1. Research Philosophy .............................................................................................. 54

3.1.2. The Research Approach ......................................................................................... 55

3.1.3. Research Design..................................................................................................... 56

3.1.4. Research Techniques .............................................................................................. 57

3.1.5. Sample Design ....................................................................................................... 58

3.2. Source of Data .....................................................................................................64

3.2.1. Primary Data .......................................................................................................... 64

3.2.2. Secondary Data ...................................................................................................... 65

3.3. Data Collection Procedures and Instruments ........................................................ 65

3.3.1. Questionnaire ......................................................................................................... 67

3.3.2. Interview ................................................................................................................ 69

3.3.3. Documents and Other Field Data ............................................................................ 69

3.4. Data Analysis and Presentation ............................................................................ 70

3.4.1. Descriptive analysis ............................................................................................... 71

3.4.2. Inferential analysis ................................................................................................. 71

3.5. Validity and Reliability........................................................................................ 73

3.6. Research Ethics ...................................................................................................74
3.7. Operationalization of Research Variables ............................................................ 75
CHAPTER FOUR ......................................................................................................... 76
RESEARCH ANALYSIS, FINDINGS, AND DISCUSSIONS ...................................... 76

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 4.1. Introduction ......................................................................................................... 76
4.2. Pilot Study........................................................................................................... 76
4.3. Reliability and Validity Test ................................................................................ 77
4.3.1. Reliability Test ....................................................................................................... 77

4.3.2. Validity Test .......................................................................................................... 78

4.4. Descriptive Statistics ........................................................................................... 78

4.4.1. Response Rate ........................................................................................................ 78

4.4.2. Demographic Data ................................................................................................. 80

4.4.3. Procurement Performance of Gulele Sub-City Administration ................................ 82

4.4.4. Measures of procurement Factors Affecting Procurement Performance................... 85

4.5. Inferential Analysis ............................................................................................. 97

4.5.1. Analysis of Assumptions of Binary Logistic Regression ......................................... 98

4.5.3. Spearman correlation coefficient .......................................................................... 104

1.4.3. Binary Logistic Regression Analysis .................................................................... 106

4.6. Chapter Summary .............................................................................................. 123

CHAPTER FIVE ......................................................................................................... 124
SUMMARY OF FINDINGS, CONCLUSIONS & RECOMMENDATIONS .............. 124
5.1. Introduction ....................................................................................................... 124
5.2. Summary of Findings ........................................................................................ 124
5.3. Conclusions ....................................................................................................... 129
5.4. Recommendations ............................................................................................. 131
5.5. Areas for Further Research ................................................................................ 133
REFERENCES ............................................................................................................ 134
APPENDICES ............................................................................................................. 147

vii
 LIST OF TABLES

Table 3.1: Sampled Population………………………....…...………………….....…….60

Table 3.2: Target population, sample size, sampling techniques and method of data
collection………………………....……….……………….....……..……………63

Table 3.3: Key Informants (for face to face interview) from selected public sectors and
public procurement and property administration support processes process owners..64

Table 4.1: Reliability Test Result of variables…....………………........…..……………67

Table 4.2: Response Rate of Public Entities…….……………….....……….…………..79

Table 4.3: Response Rate of Questionnaire………....…………….....……..……...……79

Table 4.4: Respondents Profile……………..…….…...………….....……..……………80

Table 4.5: Gulele Sub-City Administration Procurement Performance (Evaluated by Five

Right of Purchase) ………………………....…………….....……..……………83

Table 4.6: Statement Related to Effects of Procurement Planning on Procurement

Performance at Gulele Sub-City Administration. ………………………...……86

Table 4.7: Statement Related to Effects of Staff Competency on Procurement

Performance at Gulele Sub-City Administration. …………………………...…89

Table 4.8: Statement Related to Effects of ICT Utilization on Procurement Performance

at Gulele Sub-City administration ………………....……....…..………......……91

Table 4.9: Statement Related to Effects of Internal Control on Procurement Performance

at Gulele Sub-City administration……...…………..…………………..………..94

Table 4.10: Respondents Percentage Score on the Impact of Indicators on the

Procurement Performance of Gulele Sub-City Administration ………………....96

Table 4.11: Detection of Multicollinearity Based on Collinearity Statistics…………100

viii
Table 4.12: Detection of Multicollinearity Based on Colinearity Diagnostics (Eigen
Values and Condition Index) ……………………………………………..…....102

Table 4.13: Average Factor Loadings of factors …………………………………....…104

Table 4.14: Variables in the Equation……………………………………….........……108

Table 4.15: Variables Not in the Equation Table for Block 0………………….…...…108

Table 4.16: Classification Table for Block 0…………………...……....……...………109

Table 4.17: Omnibus Tests of Model Coefficients……………………………….……110

Table 4.18: Model Summary of Variable Relationship…………………...……...……110

Table 4.19: Classification Table for Block 1……………………………...……...……112

Table 4.20: Hosmer and Lemeshow Test…………………….…………...……………113

Table 4.21: Significance of Regression Coefficients (Variables in the Equation)……115

Table 4.22: Categorical Variables Coding…………………………..........……………117

LIST OF FIGURES

Figure 2.1: Conceptual Framework of the Study ….........................................................53

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 LIST OF APPENDIXES

Appendix 1A: Questionnaire for procurement officers (English) ………………….…147

Appendix 1B: Questionnaire for user department employees (English) ………...……153

Appendix 1C: Interview guide for procurement process owners………………...……158

Appendix 1D: Interview guide for public sector office heads…………………………159

Appendix 1E: Data collection duration………………………………………..………160

Appendix 1F: Interview details………………………………………………………..161

Appendix 1G: Research Variables, Indicators, and Variable Measurement……...…..162

Appendix 2A: Rotated component matrix of variables including dependent variable...163

Appendix 2B: KMO and Bartlett’s Tests……………………………………...………164

Appendix 2C: Spearman Rank Correlation Coefficient (Spearman correlation matrix)165

Appendix 2D: Detection of Multicollinearity Based on Collinearity Statistics ……...165

Appendix 2E: Detection of Multicollinearity Based on Colinearity Diagnostics (Eigen

Values and Condition Index)……...………………………...…...……….166

Appendix 2F: Letter of Introduction and Research Clearance Permit………...………166

x
 LIST OF ABBREVAITIONS AND ACRONYMS

AICPA American Institute of Certified Public Accountants

CPAR Country Procurement Assessment Report
CSA Central Statistics Agency
EPAR Ethiopian Procurement Assessment Report
EU European Union
FDRE Federal Democratic Republic of Ethiopia
FPPPAA Federal Public Procurement and Property Administration Agency

GDP Gross Domestic Product

ICT Information Communication Technology
INTOSAI International Organization of Supreme Audit Institutions
KMO Kaiser-Meyer- Olkin
2LL 2 Log Likelihood
LR Likelihood Ratio

MOED Ministry of Education

OECD Organization for Economic Co-operation and Development
PPA Public Procurement and Property Administration Agency
PPAM Public Procurement and Asset Management
PPPDS Public Procurement and Property Disposal Services
SBD Standard Bidding Document

SDGs Sustainable Development Goals

SPSS Statistical Package for Social Science
UNCITRAL United Nations Commission on International Trade Law
UNDP United Nation Development Programme
VIF Variance Inflation Factor

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 DEFINITION OF KEY TERMS

In this study, unless otherwise stated, the operational definitions for the key terms and
concepts used are as follows:

Procurement: Procurement is defined as obtaining goods, works, consultancy or other

services through purchasing, hiring or obtaining by any other contractual means (The
Ethiopian Federal Government Procurement and Property Administration
Proclamation, 2009).

Procurement Performance: Procurement performance is defined by how ‘well’ its

process is conducted and how ‘good’ the outcome is. It covers a number of quality and
quantity-enhancing benchmarks, which narrows down transaction costs, time spent, and
the quality and quantity of goods delivered (Sabine et al., 2009).

Procurement planning: is an annual event and future needs to procure goods and
services for the organization to meet its strategic goals. The procurement plans must be
approved together with the budget estimates in the context of long-term strategic
development plans and multi-year demand planning (Aberu, 2017).

Staff competency: is the application of employee’s knowledge and skills, performance

delivery, and the behavior required to get things done very well (Armstrong & Baron,
1995)

ICT utilization: is the usage of information communication technology in accessing,

receiving, storing, transferring, processing and sending ideas, perception, and
information through computer and telecommunication facilities in the procurement
process (Kiage, 2013).

Internal control: comprises the plan of organization and all of the coordinate methods
and measures adopted within a business to safeguard its assets, check the
accuracy and reliability of its accounting data, promote operational efficiency,
and encourage adherence to prescribed managerial policies (AICPA, 1998)

xii
 Abstract

The purpose of this study was to assess the factors affecting public procurement
performance in Addis Ababa City, taking a case of Gulele Sub-City administration. To
achieve this objective, we employed purposive and random sampling with a sample of
177 respondents using questionnaires and 9 respondents using a structured interview.
The interview survey was conducted in 3 public procurement and property administration
support processes, and 6 user departments in the administration that spent a huge
amount of money through the procurement process in the year 2010 E.C. Both
descriptive and inferential methods of analysis were used. The study was driven by the
Institutional Theory, Technology, Organization and Environment Theory, and Legitimacy
Theory. The findings of the study indicate that all independent variables found to be
statistically significant and positively affects (influences) the whole procurement
performance of the administration. Procurement planning and staff competency were the
highest significant factors affecting public procurement performance, ICT utilization and
internal control respectively. The study has established that procurement performance in
the administration is poor in terms of achievements of the procurement objectives. In
addition, the study has revealed that there was no proper linkage between demands to the
budget, unplanned purchasing, fraud and corruption were other factors that the hinder
procurement performance of the administration. Thus, managers should exert its
strategic effort on the most significant factors and are the pressing issue for the sub-city
administration to improve the procurement performance.

Key words: Procurement Planning, Staff Competency, Information Communication

Technology Utilization and Internal Control.

xiii
 CHAPTER ONE

INTRODUCTION

1. Introduction
1.1. Background of the Study
Throughout the world, public procurements are very important components in the
delivery of services and the functioning of various departments of government
institutions. It is essential for the government to ensure that goods and services are
provided efficiently to the public. It is obvious that the public sector comprises of
government departments and public institutions, such as roads, communication systems
and health services, etc. These organizations supply goods and services to the public and
are supplied through public procurement (Uyarra & Flanagan, 2010).

In every country that is administered in a democratic policy needs to be accountable in its

use of public money and in providing effective, efficient and economical service delivery.
Public procurement is not the only key to government service delivery but also a tool that
can be used to drive economic, environmental and social development (Mlinga, 2009).
This is due to in developing countries it accounts for a high proportion of total
expenditure. For example, public procurement accounts for 60% in Kenya and 70% of
Uganda’s public spending (Basheka & Bisangabasaija, 2009). Public procurement has a
major impact on the national economy of Ethiopia, more than 60% of the total public
expenditure and 14% of the GDP has been spent through public procurement in a year
(Dubale, 2014). It is a huge amount of money that public bodies spent via public
procurement. Efficiently and effectively handling this size of procurement outlay has
been a policy and management concern as well as a challenge for governments.

Procurement performance and organization performance are intricately and inextricably

intertwined. Procurement function was and is still an area that consumes a substantial
amount of resources in any country’s economy (Agaba & Shipman, 2007). This is why it
is important to maximize effective and efficient management of the procurement function

14
in an entity (Samson et al., 2016). Effective and efficient public procurement systems are
essential for the realization of Sustainable Development Growth (SDGs) such as
maintaining a fast growing economy, but unfortunately, procurement systems in many
developing countries are particularly weak and serve to spend scarce domestic and
foreign resources (OECD, 2005). It is critical to note that most African countries have
already taken a number of steps to improve their public procurement systems. However,
ensuring efficiency, accountability and transparency in undertaking the national, regional
and international public procurement processes are challenging (Abebe, 2012).

Likewise, the Government of Ethiopia has already begun implementing major reform
programs since 2009. To establish an efficient and effective procurement practice, the
government of Ethiopia made proclamation on public procurement and property
administration in 2009. The Federal Government of Ethiopia Procurement and Property
Administration Proclamation No 649/2009 were enacted by parliament replacing the
previous law. The law led to the establishment and operation of the Federal Public
Procurement and Property Administration Agency (FPPPAA) and the independent
Complaints Board. The law also emphasizes best practices including value for money,
nondiscrimination, transparency, and accountability as the major principles of public
procurement in Ethiopia. Following this proclamation, a number of pieces of
training have been conducted to acquaint the procuring personnel on procurement issues,
methods, and procedures. However, the procurement practices failed to be as efficient as
expected to achieve the best value for money (Tesfahun, 2011).

Despite Government efforts to improve the procurement system, it is still marred by

suboptimal works, inadequate quality of goods and services. Improper implementation of
recommended performance standards results in unreasonably high operation costs,
uncoordinated business activities, inability to achieve domestic policy goals, and failure
to attract and retain professionals. Suppliers complain about the capability of public
sector buyers (Samson et al., 2016). In reality, for any organization to change its focus
and become more competitive, performance is a key driver in improving the quality of
services (Batenburg & Versendaal, 2006).
15
Organizations that do not have performance means in their processes, procedures, and
plans experience lower performance and higher customer dissatisfaction and employee
turnover (Chimwani et al., 2014). This was agreed by Okinyi & Muturi (2016) and Juma
(2010), who added that poor procurement performance in the public procuring entities
has been a problem due to lack of compliance to procurement regulations, lack of
adherence to procurement procedures, contract management, lack of professionalism in
undertaking procurement activities, lack of internal control policies, corruption and lack
of transparency in tendering process. Therefore, poor public procurement performance is
a major hindrance to procuring entities growth since it causes the delay of delivery,
increase of defects, delivery of low-quality goods or non delivery at all (Gordon &
Murray, 2009) and it is vital to give emphasis about the strategic factors that affect the
procurement performance (Hamza et.al., 2016).

In Addis Ababa like other parts of Ethiopia, the influence of certain factors on
procurement performance has been in focus for years, together with their impact on the
overall organizational efficiency. All the challenges and factors need attention since they
could influence procurement performance. Despite the fact that there are various studies
that focus on procurement performance in other countries, it seems there is not enough
study that has been conducted on factors affecting procurement performance in public
organizations of Ethiopia. Therefore, this was prompted the researcher to conduct the
study in Addis Ababa City, Gulele Sub-City administration to investigate the problem
through scientific research and to suggest appropriate remedies for the identified
problems and fill this research gap by examining factors such as procurement plans, staff
competency, information communication technology utilization and internal control.

1.2. Statement of the Problem

According to Chimwani et al., (2014), public procurement is a key to government service
delivery and has been one of the vital departments in any organization. It contributes
tremendously to organizational efficiency and effectiveness (Snider & Rendon, 2012).
When the delivery of services is constrained or becomes ineffective, it affects the quality
of life of the people and the nation’s development process (Arrowsmith, 2010). Still,
16
public procurement faces a lot of challenges since many individuals i.e. citizens don’t
know the importance of public procurement and how important it is for them to do what
they are supposed to do like pay taxes to enable the public procurement (Nyambura &
Mwangi, 2015).

Nonetheless, most developing countries are facing a problem of rapid changes in

procurement requirements. The changes are impacting pressure on how the procurement
function performs its internal and external processes and procedures in order to achieve
its objectives. The ability to realize procurement goals is influenced by internal forces
and external forces. Interactions between various elements, professionalism, staffing
levels, and budget resources, organizational structure, procurement regulations, rules,
guidelines, and internal control policies, all need attention and influence the performance
of the procurement function ( Gattiker & Carter, 2010).

Recently many developing countries have thereof instituted making the procurement
system more transparent and efficient and at increasing the accountability of public
officials (Arrowsmith et al, 2011). Gunasekaran (2008) pointed out that there are various
studies that focus on procurement performance. Many procurement activities suffer from
neglect, lack of direction, interference, poor coordination, lack of open competition and
transparency, differing levels of corruption, Inflexible and bureaucratic systems, and
most importantly not having a staff of trained and qualified procurement specialists, who
are competent to conduct and manage such procurements, in a professional, timely and
cost-effective manner affect the procurement process and performance negatively.

Another study by Okinyi & Muturi (2016) and Mamiro (2010), points out that poor
procurement performance in the public has been a problem due to academic
qualifications and experience, contract management and procurement planning process,
which include needs that are not well identified and estimated, unrealistic budgets and
inadequacy of skills of procurement staff, traditional procedures and inability to embrace
electronic procurement, poor coordination of activities, and lack of proper regulations
greatly influence the efficiency of procurement process in public institution. Their study

17
also disclosed that lack of expertise, political interference, weak institutional structures,
inability to implement monitor policies and laws are the most significant factors affecting
procurement performance in the public sectors.

In Ethiopia, more project works are being affected due to the loose legal framework, lack
of an effective procurement process, weak capacity of procurement staff, unclear
institutional and organizational arrangements for processing procurement and decision-
making in award of contracts, which is the main cause of insufficient service delivery in
all public sectors (Getahun, 2015). Furthermore, according to Aberu (2017) & Bekele
(2015), the Ethiopian public sector working program mostly extended to the coming
years, due to the lack of effective procurement. These can be expressed as goods/services
or works not being procured on time because of the work programs affected by
procurement planning i.e. incomplete procurement plan, urgent/unplanned procurement
requisitions, lack of procurement staff competency, and lack of technology usage in the
procurement process influenced the procurement performance of public entities.

In spite of having various studies undertaken on procurement performance in public

procurement, there are still gaps that need to be addressed such as the previous studies
were not clearly explain the influence level (contribution) of procurement planning, staff
competency, ICT utilization on procurement performance, and they did not consider the
effect of internal control on public procurement performance. Similarly, they measure the
procurement performance of public entities by focusing on the process with little
emphasis on achievement of procurement objectives. This prompted the researcher to
conduct the study in Gulele Sub-City Administration with a view to establishing factors
affecting procurement performance.

1.3. Research Objective

1.3.1. General Objective

The general objective of this study is to assess the factors that affect public procurement
performance in Addis Ababa City, Gulele Sub-City Administration.

18
1.3.2. Specific Objectives

The specific objectives of the study are as follows:

1. To examine the effect of procurement planning on procurement performance;
2. To determine the extent to which staff competency influences the procurement
performance;
3. To assess how information communication technology (ICT) utilization affect the
procurement performance;
4. To ascertain the effect of internal control on procurement performance;

1.4. Research Hypothesis

This study was guided by the following null hypotheses that were subjected to statistical
tests to determine their validity and therefore alignment to the research objectives. These
were:-
1. H01: Procurement planning has no significant effect on procurement performance.
2. H02: Staff competency has no significant effect on procurement performance.
3. H03: Information communication technology (ICT) utilization has no significant
effect on procurement performance.
4. H04: Internal control has no significant effect on procurement performance.

1.5. Justification and Significance of the Study

1.5.1. Justification of the Study

In almost all developing countries, public procurement constitutes the largest domestic
market (Akech, 2015). Further Aketch (2015) asserts that, depending on how it is
managed, the public procurement system can thus contribute to the economic
development of these countries. Performance assessment will give a critical evaluation of
the performance of the entity in all crucial departments of procurement (Harrison, 2015).
Several studies have acknowledged that public sector procurement activities have
problems such as poor performance in delivering of goods, service and works at the right
time ,quantity, price, quality and supplier that could be linked to lack of procurement
plans, staff competency, lack of ICT utilization, political interference and unrealistic
19
budget (Aberu, 2017; Abebe, 2012 & Mamiro, 2010). The underperformance of public
sectors as noted by the various researchers mentioned has informed the call to this study.

Specifically, the study is justified by the following reasons: A few of the previous
empirical studies on the performance of procurement in the Ethiopian public entities
conducted on central or agency level. Unfortunately, no research is found regarding the
factors that affect the procurement performance of public entities in Addis Ababa city
specifically at the Sub-City administration level. Hence, this study assessed public
procurement performance at the Sub-City administration levels using some of the
baseline indicators and establishing a relationship among the factors. More importantly,
this study is significant for the city administration as well as the Sub-City administration,
for scholars or academicians for making further research or other movements. It is in this
premise that this research was carried out by providing a new case that may fill the gap
and will open a new door for all concerned to think about the matter. In addition,
conducting such research in this specific area was interesting too.

1.5.2. Significance of the Study

This research aims at studying into the factors affecting the performance of the
procurement function in Gulele Sub-City administration. The outcomes of this study are
in the form of managerial implications which will be useful to the top leadership as well
as politicians, both at the sub-city and city administration levels in Ethiopia, of the
benefits that will accrue from improved procurement performance in the public sector.
The findings of this research would be a reliable one for Gulele Sub-City Administration
to identify the shortcomings in the procurement performance and to fix the problem with
remedial action by ensuring full implementation and compliance with the existing
procurement law, regulations, procedures and instructions.

Furthermore, the study will be important to procurement professionals in various public

sectors since it will add a part of knowledge to factors affecting procurement
performance in public entities. According to Arrowsmith & Hartley (2002), despite its
desirability and economic importance, the field of public procurement still is under-
20
researched area compared to other fields such as economists, lawyers, and other social
scientists. For scholars or academicians, this study may, therefore, used as a base for
future empirical studies in this area in developing countries.

1.6. Scope of the Study

This study restricted itself to the assessment of factors affecting procurement
performance in the Gulele Sub-City administration. Specifically, the study examined the
effects of procurement planning, determined the effects of staff competence, assess the
effects of ICT utilization, and ascertain the effects of internal control on the procurement
performance of the administration. However, due to the time and financial constraints,
the subjects of the study only account for a limited proportion of the total public sector
offices in the Gulele Sub-City administration focused on public sector offices which
spent a larger share of the administration annual budget through the procurement process.

The sampled population for this study was 3 public procurement and property
administration support processes and 6 selected public sector offices. The selected 9
entities were out of 36 public entities that were spent a large amount of money through
the procurement process in the year 2010 E.C. The sampled (9) public entities are from 3
different pools. The results of the study, therefore, shall be adequate to conclude the
procurement performance of the Gulele Sub-City administration. In this research,
suppliers were not covered. The study, therefore, proposes that future studies should
involve outside respondents from the key stakeholders such as suppliers, service
providers and contractors who are involved in the procurement process and therefore
affect and affected by the procurement performance of the administration.

1.7. Limitation of the Study

The sample for this study consisted of the entities that were spent a large amount of
money through the procurement process in the 2010 E.C. Obviously, this limited the
scope of the study for not investigating entities other than those spent a large amount of
money under investigation. Further studies, therefore, should not confine themselves to
specific public sector offices as it was the case in this study and encompasses all public

21
sector offices in the administration as its subjects. Similarly, the study restricted on four
predictors (independent variables) namely procurement planning, staff competency, ICT
utilization, and internal control. The study also measures procurement performance
(dependent variables) of the administration in terms of the five rights of purchasing.
Certainly, this limited the scope of the study from investigating on other indicators and
factors affect the procurement performance of the Gulele Sub-City administration. It is,
therefore, suggested that further studies be conducted in the administration so as to
establish other indicators and factors that influence procurement performance.

On the other hand, it is hardly ever possible to get all relevant information from
concerned respective public entities due to the organization bureaucratic response to the
researcher, and individual refusal to cooperate to fill the questionnaire, unavailability of
the key personnel, and delay on the response for the questionnaires. Besides, the lack of
research studies and the availability of sufficient current literature in country context on
the subject of factors of procurement performance in public entities are some limiting
constraints.

1.8. Organization of the Thesis

In addition to the preliminary page, this research paper consists of five chapters. The first
chapter was introductory parts incorporated the introduction, background of the study,
statement of the problem, research objectives, research hypotheses, justification and
significance of the study, the scope of the study, limitation of the study, and organization
of the study. The second chapter describes the detailed review of related works of
literature with regard to the procurement performance and the variables which affect the
procurement performance. The third chapter expresses the research methodology which
was used in the research incorporated the research philosophy, research approach,
research design, research technique, sample design, data collection procedures and
instruments, data analysis and interpretation, ethical considerations, and validity and
reliability of the research. The fourth chapter is research findings and discussions of the
research findings and finally, the last chapter describes the conclusions and
recommendations of the study followed by the references and appendixes.
22
 CHAPTER TWO

LITERATURE REVIEW

2.1. Introduction
Hart (2018) defines the literature review as the selection of available documents, both
published and unpublished, on the topic (in this case, public procurement performance)
which contains information, ideas, data and evidence written from a particular standpoint
to fulfill certain aims or express certain views on the nature of the topic and how it is to
be investigated, and then the effective evaluation of these documents in relation to the
research proposed.

The chapter starts with the theoretical framework. This chapter reviews key concepts and
their relationships of this study as are reflected in the background information and
statement of the problem. The review also includes describing links among the concepts
as provided by relevant theories. Then empirical studies relating to the study variables
have also been reviewed as they form a basic ground of the study. Furthermore, the
review is summarized in the form of a conceptual framework. The chapter ends by
highlighting the critiques and gaps emanating from the reviewed and documented
literature.

2.2. Theoretical Framework

Good research should be grounded in theory (Defee et al., 2010). A theory is a set of
interrelated concepts, definitions, and propositions that present a systematic view of
events or situations by specifying relations among variables in order to explain and
predict events or situations (Glanz et al., 2008). According to Flynn & Davis (2014) and
Thai (2009), there are several theories and models that explain and describe the way
public procurement operates such as the Principal-Agent Theory, Institutional Theory,
Technology, Organization and Environment Theory, Legitimacy Theory, General System
Theory, Theory of Auctions & Competitive Bidding, Contract Theory, and The Four
Pillars Model. However, this study resides on three theories namely the Institutional
Theory, Technology, Organization, and Environment Theory, and Legitimacy Theory.
23
Because, they are capable of explaining factors affecting procurement performance and
specify the rationale association of the selected factors and procurement performance.
Generally, these theories were used in developing the conceptual framework for this
study.

2.2.1. Institutional Theory

This theory is one of the traditional approaches which are used to examine components of
public procurement. The theory adopts a sociological perspective to explain
organizational structures and behavior (Dunn & Jones, 2010). Scott (2004) suggests that
there are three pillars of institutions namely regulatory, normative and cultural-cognitive.
The regulatory pillar focuses on the use of rules, regulations, and procedures as a basis
for compliance. The normative pillar, on the other hand, deals with norms and values
with social obligation as the basis of compliance. The cultural cognitive pillar rests on
shared understanding (common beliefs, symbols shared understanding). Adopting from
this theory, all public entities in Ethiopia are guided by rules and regulations with the
respective laws and the attendant regulations and guidelines governing the public
procurement processes and activities. The theory, therefore, supports the first
independent variable of this study i.e., procurement planning. The institutional theory
highlight that procedures must be observed in order to ensure that all the stakeholders
involved in the procurement exercise obtain fair treatment. The procedures include
planning for the required procurement over a given period up to payment and post
contract performance. If the institution follows the procedures then the procurement and
supply chain performance will be increased (Meyer & Rowan, 1977).

Furthermore, procurement performance can be enhanced if training for procurement staff

is emphasized. The current changes in the business environment call for highly and
professionally trained procurement staff in order to deal with the complexities in the
supply market. According to Carr & Smeltzer (2000), for procurement to be at a strategic
level, professionals need to poses a set of skills and competency. Once again, the theory
supported the second independent variable of the study namely staff competency.

24
2.2.2. Technology, Organization and Environment Theory
The Technology, Organization and Environment theory was developed in 1990 by
Tornatzky & Fleischer. It identifies three aspects of an organization that influences the
process by which it adopts and implements technological innovation. These three aspects
are: - technological context, organizational context, and environmental context. The
technological context describes both the internal and external technologies relevant to the
organization procurement performance. This includes current practices and equipment
internal to the organization, as well as the available technologies external to the
organization. Organizational context refers to descriptive measures about the organization
such as scope, size, and managerial structure. An environmental context is an arena in
which an organization conducts its business dealings with the suppliers (Matasio, 2017).

According to Basheka (2009), procurement processes are to be computerized to the

extent possible in order to integrate the operations between Procurement Units and the
potential beneficiary of the services. This will speed up routine transactions and
communications within and outside the procuring entity. These include: communication
to and from suppliers using telephones, emails, interactive website including tenders and
procurement information sharing; communicating with internal users on emails,
telephones and electronic notice boards; instituting process automation and simplification
using Enterprise Resource Planning systems; and automation of internal procurement
process controls such as approvals, payments, confirmation of receipt of products and
services, tracking of procurement process deliverables and so on. Hence, when
institutions and governments recognize the strategic importance of information
communication technology in public procurement process, procurement performance of
public entities can be easily improved (Amemba et al., 2013). Technology, Organization,
and Environment theory was therefore relevant and useful in our study in that it assisted
the researcher in explaining and showing the effect of ICT on the procurement
performance of the administration.

25
2.2.3. The Legitimacy Theory
Dowling and Pfeiffer (1975) defined legitimacy theory as a condition or status which
exists when an entity’s value system is congruent with the value system of the larger
social system of which the entity is a part. However, when a disparity subsists between
the two value systems, there is a threat to the entity’s legitimacy (Guthrie et al., 2007).
The legitimacy theory states that the organization is responsible for disclosing its
practices to the stakeholders, especially to the public and justifies its existence within the
boundaries of society (Wilmshurst & Frost, 2000). Witting (1999) argues that public
procurement is a process within a political system, as such public officials responsible for
the procurement processes and decisions are accountable to representatives of the public
whose money is spent.

The legitimacy of public procurement achieved by audibility in the organizations, it

incorporates aspects of governance that emphasize effective internal controls, capable
processes, and competent personnel. The internal controls refer to the objective of
enforcing internal control policies to ensure compliance with laws and regulations,
monitoring procedures to assess enforcement and reporting material weaknesses (Rendon
& Rendon, 2015). Borrowings from the legitimacy theory, one of the functions of the
public organizations are controlling the procurement activities to monitor and report on
the performance of the public procurement system of the organizations. The theory will
be useful to supports the fourth independent variable of the study namely internal control.

2.3. Definition of Public Procurement

Public procurement described as an “overall process of acquiring goods, civil works and
services which includes all functions from the identification of needs, selection and
solicitation of sources, preparation and award of contract, and all phases of contract
administration through the end of a services’ contract or the useful life of an asset”
(UNDP, 2010).

Arrowsmith (2010) defines public procurement as a government’s activity of purchasing

the goods and services needed to carry out its functions. Similarly, according to the

26
Ethiopian Federal Government Procurement and Property Administration Proclamation
(2009), procurement means obtaining goods, works, consultancy or other services
through purchasing, hiring or obtaining by any other contractual means; and public
procurement means procurement by a public body using the public fund.

Therefore, all are discussed more the conceptual frameworks & the applications of public
procurement in their own way. Generally, public procurement defined by different
authors differently but conceptually all definitions contain have the same meaning and
function, i.e. it is the acquiring of goods, services and works at the right quality, in the
right quantity, from the right sources, at the right time, place and price through pre-sated
rules, regulations, and standards openly with aiming value for money in order to achieve
an organizational objectives.

2.4. Public Procurement vs Private Procurement

In both public and private sector procurement goods and services have to be acquired,
and in both, there are good reasons to strive for the best deal in obtaining the required
goods and services. However, despite these similarities, it is well accepted that public
procurement is quite different from procurement in the private sector (Johnson &
Duberley, 2000). It is, however, recognized by Knight et al. (2012) that there are a
number of unique aspects in public sector procurement, characterized by high levels of
public disclosure and sheer magnitude of resources devoted to public procurement
compels attention. The public sector represents about 40-50% of many of the world’s
economies in terms of spending on providing services and procuring from the private
sector. Countries such as Singapore spend approximately 18% of its economy, whilst
other developing countries spend up to 80%.

Although not dissimilar in terms of principle as both have to acquire goods or services,
they are in fact very different (Knight et al., 2012. Walker & Brammer (2009) suggests
that the nature and context of public sector purchasing differs from commercial practice
because, as well as both being concerned with reducing costs and achieving value, public
sector buyers have the additional task of achieving social, environmental and other

27
benefits in their purchasing to fulfill the responsibilities of government to society. When
comparing public and private sector procurement, it appears that the demands on public
procurement are greater and more highly varied than those on the private sector.

Knight et al. (2012) have grouped the various demands that differentiate public and
private procurement thus: external demands, internal demands, and demands originating
from context, demands on the process and multiple roles for the public organization
itself. He mentions that the external demands are those of transparency, integrity,
accountability and exemplary behavior because a government is expected to set an
example, not only in terms of ethical standards but in terms of efficiency and
effectiveness of their own operations. Where, to a large degree, private organizations are
permitted to invoke whatever criteria they like and use whatever control procedures they
see fit to govern the outflow of money to suppliers, the public sector operates under the
constraints of having to behave rationally and fairly, as good custodians of public money
(Larson, 2009). Knight et al (2012) mentions that, internal demands in a public
organization also differ from that of the private procurement organization; public
organizations have different goals at the same time, some of which may be conflicting
such as good sewage systems or road works.

Public organizations also have political goals; an official may have been elected on a
platform of these particular goals. Clearly, stakeholders in public procurement are many:
citizens, taxpayers, the electorate, elected officials, management, and procurement
officials, all of which have different objectives and agenda. Whilst public procurement
buys goods or services for themselves, they are also buying for the citizen that they are
expected to serve. The suppliers are also citizens, taxpayers, and the electorate. Public
procurement is budget driven, i.e., the budget determines what can and cannot be
procured. These budgets are open and the public thus changing supplier-buyer
relationships drastically from private procurement. Given these differences, it seems
justified to state that public sector procurement is more complex than private sector
procurement (Knight et al., 2012).

28
According to Snider (2006), procurement may have more of a strategic character in the
private sector than in the public sector and it is the difference in the tactical and strategic
role of procurement that is attributable to the difference between public and private
procurement. Public and private procurement more or less share many objectives, such as
achieving value for money and guaranteeing an efficient procurement process. Up until
recently, it was assumed that only public procurement included social and environmental
objectives but the private sector has become increasingly focused on promoting social
and environmental objectives (Arrowsmith, 2010).

In summary, it seems justified to state that public sector procurement is more complex
than private sector procurement. All of the demands mentioned above are faced by public
procurement practitioners in addition to those imposed on private sector procurement.
Public procurement is a challenging subject to work on and it should be developed further
to deal adequately with these complexities (Knight et al., 2012).

2.5. Principles of Public Procurement

According to Domberger & Jensen (1997), it is generally accepted that the primary
objective of public procurement is an economic one, namely to obtain value for money.
Its secondary objective is to further the government’s socio-economic policies. To best
achieve these objectives the procurement system must in its practical application comply
with certain principles or objectives. Tajarlou & Darabad (2017) mentioned the broad
principles applicable to public procurement, which are common to the Model Law and
the Government Procurement Agreement, can be extracted: Economy, including value for
money; Competitiveness; Effectiveness and Transparency. They are also often referred to
as goals or requirements. These principles are achieved through specific provisions in the
public procurement systems.

2.5.1. Economy (Value for Money)

Synonymous with efficiency, value for money and commercially reasonable price, the
principle of economy emphasizes the need to manage public funds with care and due
diligence so that prices paid for goods, services and works are acceptable and represent

29
good value for the public funds expended on them. As public procurement is an
economic activity, the principle of economy is the first principle that will be discussed
(Trepte, 2004). The economy is concerned with minimizing the cost of resources
acquired or used, having regard for the quality of inputs. Efficiency is concerned with the
relationship between the outputs of services and the resources used, while effectiveness is
concerned with the achievement of targets, not only in terms of quantity but also quality
(Curtis et al., 1998)

The economic object of public procurement is to obtain the best product at the best price.
This is often referred to as the achievement of value for money that to ensure that the
lowest price is obtained the widest possible competition by potential suppliers is
necessary, and the principle of the competition will, therefore, have a direct influence on
the principle of the economy (Arrowsmith, 2009).

2.5.2. Competitiveness
In public procurement systems, competition is seen as a way to obtain the best value as
an outcome, which is an objective of public procurement systems. Competition is more
accurately seen as a means to achieve other public procurement goals. Individuals and
private companies may not talk or think in terms of competition, though they are more
likely to talk and think about the process for choosing a contractor as “shopping around”
or conducting market research (Schooner et al., 2008). Allison (2013) indicates that the
principle of competition is said to be intertwined with cost-effectiveness and involves the
achievement of value for money the principle of competition in procurement is, in
essence, an economic one which could safely have been dealt with under the principle of
economy. It is a core feature of the procurement process, in particular with regard to the
methods of procurement.

According to Trepte (2004), competition, as an economic principle, will ensure that

suppliers will offer the best product at the best price to win the competition. It overlaps
with the other principles mentioned, for instance, that of effectiveness in that it is
generally accepted that effective competition will enhance the process. As public

30
procurement takes place in the open market the principle of competition entails that an
opportunity is given to a sufficient number of suppliers in the open market to offer their
goods or services to the procuring entity on a competitive basis. The purpose of such
competition is to obtain the best product at the best price through the most cost-effective
process.

2.5.3. Effectiveness
To ensure that all of the principles applicable to public procurement are achieved, in
particular value for money, the procurement system must be effective. Effectiveness can
be defined as productiveness in relation to the costs of the procurement process. An
effective public procurement system will allow suppliers to provide satisfactory quality,
service, and price within a timely delivery schedule. The basic tenet of public
procurement is straightforward: acquire the right item at the right time, and at the right
price, to support government actions (Tajarlou, & Darabad, 2017).

The dictionary meaning of efficiency is a productive use of resources, i.e., the ability to
do something well or to achieve the desired result without wasted energy or effort. This is
about ensuring value for money. Public procurement has to be driven by considerations
of value for money; governments have put increasing efforts into rationalizing and
increasing the efficiency of procurement. There has been a recognition that procurement
officials need to be equipped with adequate tools for improving planning and
management and that their decisions need to be well informed so as to enhance efficiency
in procurement (OECD, 2007).

2.5.4. Transparency
Transparency means a decision was taken and their enforcement is done in a manner that
follows procedures (Sarfo, 2011). It also means that information is freely available and
directly accessible to those who will be affected by the decisions and their enforcement.
Efficiency in public is an important issue in cases where public procurement accounts for
a large portion of economic activity. However, in theory, transparency could mean
visibility within an agency (Schooner et al., 2008).

31
The concept of transparency is important in public procurement regimes and is mentioned
as one of the principal factors of the Model Laws and information on the public
procurement process must be made available to all public procurement stakeholders:
contractors, suppliers, service providers, and the public at large, unless there are valid and
legal reasons for keeping certain information confidential. This large volume of
procurement-related transactions provides a fertile ground for breeding corruption
(Tajarlou, & Darabad, 2017). Since Corruption thrives under darkness, transparency is
the remedy to the darkness. Thus, a transparent procurement process is key for ensuring
good economic governance in the country (Neupane et al., 2012).

2.6. Procurement Performance

Procurement performance covers a number of quality and quantity-enhancing
benchmarks, which narrows down transaction costs, time spent, and the quality and
quantity of goods delivered. Based on their analysis on the performance of public
procurement officers, procurement performance entails high returns on investment,
reduced transactional costs, faster delivery of services and supplies, delivery of high-
quality purchases, and streamlined supply chains (Odhiambo &Kamau, 2003).

According to Van Weele (2010), procurement performance starts from purchasing

efficiency and effectiveness in the procurement function in order to change from being
reactive to being proactive to attain set performance levels in an entity. Performance
provides the basis for an organization to assess how well it is progressing towards its
predetermined objectives, identifies areas of strengths and weaknesses and decides on
future initiatives with the goal of how to initiate performance improvements. For any
organization to change its focus and become more competitive, performance is a key
driver in improving the quality of services. Van Weele (2010) concludes that there is a
link between the procurement process, efficiency, effectiveness, and performance.

Furthermore, procurement performance has to do with the proper management of

procurement activities. The management of procurement activities narrows down to the
basic functions of the human resource departments of hiring best procurement

32
management talent, subjecting this top talent to on-the-job training and development,
rewarding and motivating this top talent through competitive salaries, benefits and career
progression (Bianchi et al., 2010)

2.7. Procurement Challenges and Consequences of Poor Procurement

Performance

An effective public procurement system is essential for good governance. A poor

procurement system results in high costs to the government and the public in general. It
delays project implementation which further increases costs, leads to poor project
execution performance and delays the delivery of benefits to the beneficiaries.
Procurement problems also increase the scope for corruption, generate more complaints
and raise concerns about the integrity of the procurement process (Sarfo, 2011).

Thai (2008) noted that public procurement is influenced by internal and external forces
including the following:

2.7.1. Public Procurement Challenges: Internal Factors

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: 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; Types of goods, services and capital assets
required for an agency's missions; Professionalism or quality of procurement workforce;
Staffing levels (e.g., ratio of procurement practitioners to contract actions) and budget
resources; Procurement organizational structure such as; procurement regulations, rules
and guidance; and Internal controls and legislative oversight. These were confirmed by
Asante (2017), who found that the majority of practitioners involved in public
procurement lacked requisite professional expertise and knowledge of the law governing
the practice. This, therefore, places them at a disadvantage in ensuring that the
achievement of good procurement is professionalism.
33
2.7.2. Public Procurement Challenges: External Factors
Thai (2008) pointed that public procurement practitioners have always faced challenges
imposed upon by a variety of environmental factors including the market, legal
environment, political environment, organizational environment, and socio-economic and
other environmental factors.

2.7.2.1. Market Environment

Market conditions have a great influence on public procurement practitioners’ efforts to
maximize competition. Moreover, the market determines whether or not socio-economic
objectives of procurement are accomplished, whether or not a governmental entity can
fulfill its needs; the timeliness of fulfillment; and the quality and costs of purchased
goods, services and capital assets (Thai, 2009). According to Mckie (1970), public
procurement, especially of high-value items, operates in a market condition where
competition is distorted. It is a large buyer large supplier situation with barriers to entry
thus, competition is not perfect.

2.7.2.2. 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, manufacturing, finance, marketing, personnel, 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. This is supported by Asante (2017), who found that
enormous funds are lost every year because public procurement policies are poorly
managed. In view of this, public sector workers need to be properly managed to make
sure that compliance with important regulations, policies, and procedures are achieved.

2.7.2.3. Political Environment

In a democracy, many individuals, groups, and organizations in the private sector
including trade associations, professional associations, and business firms or companies

34
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 the implementation of these statutes, and influencing budget
authorization and appropriations processes (Thai, 2009). The role of the political head is
important in public procurement and public procurement strategy (Murray, 2009). There
is a direct and indirect role of a politician in the award of contract (Knight et al., 2012).
Any attempt to reform public procurement is always constrained by political interference
(Pegnato, 2008). The bureaucrats therefore required to understand the difference between
political interference and political mandate (Murray, 2009). However, the role of a
politician is taken in a negative sense as serving their self-interest (Haruta & Radu, 2010).

2.7.2.4. Social and Economic Environment

While some countries entail social policies on their public procurement practices, most
governmental entities are 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 may be in a
favorable economic environment or an unfavorable economic environment. This
environment would have a great impact on their practices as they may face an imperfectly
competitive market. Thai (2001) confirmed that the fundamental principles of good
procurement practice involve accountability, where effective mechanisms must be in
place in order to enable procuring bodies to use the limited resources cautiously and
competitive supply requires that the public procurement should be carried out by
competition unless there are convincing reasons for single sourcing and reliability, which
lay emphasis on the equal treatment of all bidders regardless of their race, nationality or
political affiliation.

2.7.2.5. 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
35
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.

2.8. Procurement Performance in Public Sectors

Hamza et.al (2017) 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, coordination and focused efforts. Communicate among others is
fundamental, communicate the key success factors to all levels of the organization and set
out a procurement strategy to achieve continuous improvement in value for money. This
should be based on total cost, quality, and enhancement of competitiveness of suppliers
using the best procurement practices.

There is a need to have coherent methods of performance in the procurement function in

public entities. Basing on financial performance and neglecting non-financial
performance cannot improve the procurement operations because only partial
performance is considered. The realization of procurement goals is influenced by internal
and external forces. Interactions between various elements; professionalism, staffing
levels, and budget resources, procurement organizational structure, regulations, rules, and
guidance, and internal control policies, all need attention and influence procurement
performance (Lardenoije et al., 2005).

Batenburg & Versendaal (2006) noted that the use of inappropriate means can be a
barrier to change and may lead to deterioration of procurement operations. Organizations
that do not have performance means in their processes, procedures, and plans experience
lower performance and higher customer dissatisfaction and employee turnover.
Measuring procurement performance yields benefits to organizations such as cost
reduction, enhanced profitability, assured supplies, quality improvements and

36
competitive advantage. Improvement to a public organization procurement performance
can be realized through reduced costs and wider choice availed.

The following are major factors affecting procurement performance. These are:

2.8.1.1. Procurement Planning

Procurement planning is the purchasing function through which organizations obtain
products and services from external suppliers (Burt et al, 2003). According to Basheka
(2009), procurement planning is one of the primary functions of procurement that sets the
stage for successive procurement activities with the potential to contribute to the success
of public institution’s operations and improved service delivery. 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.

Moreover based on Hamza et al. (2017), 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.

2.8.1.2. Staff Competency

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 the adequacy of knowledge and skills that enable someone
to act in various situations (Aketch & Karanja, 2013). According to Russell (2004), the
absence of adequate knowledge in procurement matters may end up with serious
consequences including breaches of codes of conduct. Furthermore, Banda (2009)
37
mentioned 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 et al., 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, Roberta et al. (2014) advise that multi-skilling offers employees a variety of
skills and should be developed extensively. Hence, all employees need broad and
continuous education and training. Leenders & Fearon (2001) noted that qualifications
are crucial for value-based management which requires employees to assess and improve
processes while contributing to team performance. Cousins & Spekman (2003) stressed
that, with the ever-increasing popularity of purchasing partnership philosophy,
organizations must take a closer look at the educational levels of procurement staff. With
the procurement’s perceived movement from a clerical service to a strategic business
function, the caliber of staff in terms of training, education, and skills must increase to
fulfill its strategic potential. Therefore, competence can ensure that the benefits of new
products and services are brought to the attention of the right person in the organization
(Goetsch & Davis, 2006).

2.8.1.3. Information Communications Technology

Technology is the change or integration of means of processing a product or service from
what is perceived not be a good version to a better one. It can also be said to be a change
of system or way of operation from inefficient or manual to automatic operations
(Barsemoi, 2014). Roberta et al. (2014) reckoned that personnel in procurement are, in a
sense, information processors. They receive, analyze, make decisions and distribute
information in order to manage the flow of goods and services in the supply chain. ICT is
an enabler for information sharing which organizations in the procurement system can
use for eliminating bloated inventory levels caused by the cumulative effect of poor
information cascading up through a supply chain.

38
Barsemoi (2014) notes that, unless one remembers that technology is a tool and that one
needs to know how to use it, for it to be productive, the money that spends on technology
will never appear to be wasted. According to the study, the emergence of internet
technologies has changed the way that governments and organizations operate. These
studies point out that the one thing to always remember about technology is that it is a
tool to assist in getting sourcing and procurement related activities done in the
organization. According to Adaval & Monroe (2002), information technology is
relatively cheap and flexible technology which not only has held significant importance
for communication in society, but also for the development of the interplay between one
procurement units of an organization to another.

2.8.1.4. Internal Control

Internal control is an integral part of the management process by which an organization
governs its activities and operations to effectively and efficiently accomplish its mission.
The purpose of control processes, therefore, is to support the organization in the
management of risks and the achievement of its established and communicated
objectives. If the control system is ineffective, then the management system will also be
ineffective (Rendon, & Rendon, 2013).

The significance of public procurement is far-reaching and affects many different areas of
an economy (Wittig, 1999). Rendon, & Rendon, (2015) research findings suggest that
public organizations are not emphasizing procurement internal controls in their workforce
competencies, which may be contributing to an increased vulnerability for procurement
fraud. Therefore, the need to put measures in place to ensure that public procurement
yields maximum benefits to the public cannot be overemphasized. Internal control of
public procurement activities has been identified as one of the means of making public
procurement to achieve desired expectations (Mapesa and Kibua, 2006). According to
Rendon, & Rendon (2015), public procurement organizations are charged with ensuring
that their contracts are satisfying customers’ needs in terms of value for money and that
their procurement activities are conducted with the highest levels of integrity,
accountability, and transparency. Organizations need competent personnel, capable
39
procurement processes, and effective internal controls, i.e., auditability, in performing
their procurement duties and achieving their procurement mission.

Applying appropriate mechanisms to monitor and control the whole public procurement
process will reduce opportunities for integrity breaches. These include clear chains of
responsibility in the procurement process, segregation of duties, and authorization,
systematic recording, internal controls, reporting tools, and checks. Progress and costs of
procurement should be monitored and published, independent oversight, evaluation, and
audit should be conducted (including real-time controls) and identified irregularities
should be sanctioned. Mechanisms and protection to whistleblowers should also be
established (INTOSAI, 2016). In pursuing auditability in its procurement operations,
public organizations should incorporate training on internal controls and fraud awareness
in its procurement competencies. This training should include an understanding of
internal control components and how they should be implemented in each procurement
process area (Rendon & Rendon 2015).

2.9. Key Purchasing Variables

According to Baily et al., (2005), there are five important purchase variables in supply
management. They are the right quality, quantity, time, price/cost and supplier.

2.9.1. The Right Quality

Quality is a difficult concept to define. It is said a good quality is what customers validate
to be good enough. In the corporate world, there is a saying that perfection is like infinite.
The effort towards great quality is defined by minimizing the wastes and bringing out the
best possible outcomes. During a certain operational time, every company has its own
standards for any input products or services. However, this is a constant and consistent
task since the attitude of improvement is a must for the field of quality (Baily et al.,
2005). According to Bailey et al. (2005), buyers should make it clear on these two points:
(1) Quality of design or specification: have we specified the right material for the job and
have we communicated our requirements to our supplier in a clear and unambiguous
way? This is performance quality. (2) Conformance quality: has the supplier provided the

40
material in accordance with our specifications? The answer is established after the
inspection.

2.9.2. The Right Quantity

Bailey et al. (2005) mentioned that the decision on buying quantities from the purchasing
department affects directly to stock and warehouse division. Stock control is a policy on
which items should be kept in stock and in what quantities. So, it is easy to make a
buying decision on when to buy and what quantity it is needed. Additionally, there is
always a minimum inventory level of every item, which is set by the organization to
avoid sudden variations. Thus organizations have to set strong communication among
purchase, production and stock departments in order to effectively purchase the right
quantity of goods and services.

2.9.3. The Right Time

Time is a critical variable to manage in a supply chain. In purchasing, it goes closely with
the responsiveness of production demand which is a result of customer demand. The cost
of time is sometimes more expensive than the actual cost of materials. A company could
increase its competitiveness by improving its responsiveness to customer demand when it
arises (Baily et al., 2005). A must-to-have objective in purchasing is on-time delivery.
The main role of the purchasing department is to convince and negotiate with suppliers to
deliver the goods and services as the agreement was set earlier. Most of the purchasing
orders take lead time. Another job of the purchasing department is to communicate
thoroughly and effectively with the customer department about the lead time of each item
so that they can communicate clearly with customers. Proactive purchasing now
emphasizes expediting more than ever. Expediting means actions that assist and
accelerate any process. It is a proactive approach rather than reactive problem solving
(Baily et al., 2005).

2.9.4. The Right Price

As Baily et al. (2005) mention in their book, Purchasing Principles, and Management,
there are four main factors that influence the price of a product. These are market

41
competition; value defined by customers; organizational strategy, and operation costs.
The three first factors are intangible ones and are monitored by external forces.
Production and operation costs are tangible and are monitored by how well a company
manufactures and operates. Some companies opt to save costs of production or
purchasing to increase profits instead of up-selling products. Saving costs in the
purchasing department take proper strategies and co-operation with suppliers. Ineffective
and solid partnerships with main suppliers, the actual costs drop approximately 30-40%
according to Baily et al. (2005).

2.9.5. The Right Supplier

The supplier has a strong enough financial base/financial capacity and competency (the
supplier, its people or its process competent and has adequate manpower to handle the
order) in a position to honor the commitment without much follow up (Baily et al., 2005).

2.10. Procurement Performance Indicators

Performance measurement system should save the purpose of identifying success,
identifying whether customer needs are met, understanding of processes, identifying
bottlenecks, identifying wastes, identifying problems, improvement opportunities,
providing factual decision, enabling progress, tracking progress, facilitating a more open
and transparent communication and co-operation (Gunasekaran et al., 2008). From the
public procurement point of view, performance measurement is about seeking to answer
the fundamental question of whether the procurement process and decisions ultimately
deliver in accordance with the procurement objectives set (Mrope, 2018). Baily et al.
(2005) assert that the key variables for any procurement are Right Quality, Right
Quantity, Right Time, Right Source and Right Price/Cost. It is on the basis of these
variables that the procurement objectives of any entity are derived.

According to Van Weele (2010), purchasing performance is considered to be the result of

two elements: purchasing effectiveness and purchasing efficiency. According to Takim
& Akintoye (2002), efficiency measures correspond to the strong management and
internal organizational structures (adhere to schedule, budget, and specification) and

42
effectiveness measures refer to user satisfaction and the use of the purchased material.
Lardenoije et al. (2005) mention that performance provides the basis for an organization
to assess how well it is progressing towards its predetermined objectives, identifies areas
of strengths and weaknesses and decides on future initiatives with the goal of how to
initiate performance improvements. This means that purchasing performance is not an
end in itself but a means to effective and efficient control and monitoring of the
purchasing function.

According to the Organization Economic Cooperation Development (OECD) (2009),

experience in working with public procurement shows that a sound procurement system.
This sound procurement system includes: procurement rules and procedures; effective
institutions to conduct procurement; appropriate electronic tools; human resources to plan
and carry out procurement processes; and competent contract management. Hence,
OECD develops a set of indicators to measure the performance of public procurement
systems and their evolution over time. And thus, four areas for the development of
indicators were identified:

1. The efficiency of the public procurement cycle:

Such as, use of contracting mechanisms; uptake of e-procurement; use of e-procurement
per contracting mechanism or per low/high value procurements; savings; savings using
framework agreements with second-stage competition; efficiency of the public
procurement unit; level of unsuccessful public procurement processes; reasons for
unsuccessful public procurement processes and public procurement award time (OECD,
2009). According to Martin & Ronald (1995), regardless of the quality and effectiveness
of the service provided by the contracting officer, it is universally considered important
that the service is provided as efficiently as possible. They suggest that such measures as
the total number and dollar amount of contracts awarded, the number and value of
contracts awarded per specialist, the total cost of the contracting operation, the cost of the
contracting operation as a percentage of total award value and as a percentage of the
agency budget, and the amount of overtime incurred. Efficient procurement, therefore, is

43
a necessity and is encouraged and promoted by the international lending agencies such as
the World Bank (Arrowsmith, 2003).

2. Openness and transparency of the public procurement cycle:

Such as promoting competition: procurement procedure; promoting competition: number
of bids; increasing the supplier base and transparency of public procurement information
(OECD, 2009). According to Raymond (2008), transparency in government procurement
will provide an assurance for both domestic and foreign investors that contracts will be
awarded in a fair and equitable manner. Therefore, transparency promotes trust by
allowing stakeholders to see and judge the quality of government actions and decisions.

In all markets, a lack of transparency in the sense of absence of information on rules and
practices could operate as a barrier to trade and may affect foreign suppliers more than
local ones (Arrowsmith, 2003). These rules would also ensure that goods and services are
obtained at the most economical prices and thus lead to a reduction in costs. Similarly,
Rege (2001) mentioned that the most important benefit of transparent and open
procedures is the impact which their adoption may have on the level of corruption in
countries where it is widespread.

3. The professionalism of the public procurement workforce:

Such as a number of public procurement officials according to the value and number of
contracts and unsuccessful processes; and the level of trained public procurement
officials (OECD, 2009). Develop professionalism in procurement at all levels enhance
the skills and knowledge of officers handing procurement activates. Training to be
provided to all managers and staff involved in procurement activity, thereby increasing
efficiency (Martin & Ronald, 1995).

4. Contract performance management:

Such as, are suppliers delivering the right thing? Are suppliers delivering at the right
moment? And are there delays in payment? (OECD, 2009). Procurement benchmarking,
therefore, is the effort to measure the performance of a supplier of goods or services on
the basis of quality price and timely delivery (Raymond, 2008).
44
2.11. The legal and Regulatory Frameworks Governing the Ethiopian Public
Procurement

2.11.1. Public Procurement Reforms in Ethiopian

Following the downfall of the Derg regime, the country promulgated a new public
procurement regulation. After the coming into effect of the new constitution in 1995, the
Federal Democratic Republic of Ethiopian (FDRE) government drafted new public
procurement laws and regulations; namely “The Federal Government of Ethiopia the
Financial Administration Proclamation 57/1996” and “the Council of Ministers Financial
Regulations 17/1997”. However, these rules and regulations were not made on the basis
of internationally recognized public procurement legal documents such as the
UNCITRAL Model Law on procurement of goods, works and services (World Bank,
2012).

In 1996 major civil service reform introduced in Ethiopia which is, the Civil Service
Reform Program. One of the Civil Service Reform Program was Business Process Re-
engineering. The reform resulted in many changes in the public procurement arena,
among which it includes the preparation of new public procurement rules and regulations
(Government Procurement Proclamation and Directive). Based on the result of Business
Process Re-engineering; coordination and consolidation of procurement guidelines under
a single set of rules and regulation; improving organizational structure of public
procurement and building the capacity of procuring entities; laying a fertile ground for
competition and good governance in Public procurement system; creating a conducive
environment for consistency, transparency and accountability at all level of public
procurement. In line with this procurement personnel of procuring entities have been
trained for proper implementation of procurement rules and regulations as part of the
effort to build the capacity of public bodies. Furthermore, Standard Bidding Documents
(SBDs) were prepared and disseminated for all types of procurement to simplify the
procurement activity and to make it consistent across the board (Tesfahun, 2011).

45
2.11.1.1. The Ethiopian Federal Government Procurement and Property
Administration Proclamation
Having the objective to achieve better transparency, efficiency, fairness and impartiality
in public procurement and to enable the utilization of the large sum of public money
spent on procurement in a manner that ensures greater economy and efficiency, the
Federal Democratic Republic of Ethiopian (FDRE) government established a public
procurement proclamation under proclamation 649/2009 (The Ethiopian Federal
Government Procurement and Property Administration Proclamation, 2009).

According to the World Bank’s CPAR (2012), significant public procurement policy
reforms have been made in Ethiopia. Previously public procurement was regulated with
financial proclamations, not recognizing public procurement as a separate legal area with
separate legal needs. A specific procurement law, the public procurement proclamation,
was introduced and in its latest revision from 2009 contains all the essential features of
modern procurement law. The fifteen chapters’ new public procurement proclamation has
established an independent public procurement control and oversight organ i.e. the
Ethiopian Public Procurement and Property Administration Agency (PPA). The
regulation describes the basic procedures of public procurement. Also, the different
methods of public procurement and international procurement are clearly featured. The
proclamation, in addition, has introduced for the first time electronic procurement and
established a board that reviews complaints on public procurement.

2.11.1.2. Institutional Framework of Public Procurement in Ethiopia

Prior to September 2009, there were no clearly defined central procurement oversight and
policy body with the functions of (i) devising procurement policy, (ii) preparing and
disseminating standard bidding documents and contracts suitable for different types of
procurement, (iii) monitoring compliance with procurement laws and regulations, (iv)
addressing issues of integrity and transparency, and (v) providing an adequate complaint
mechanism to address grievances from contractors and suppliers. In addition, there were
no specialized institutions capable to assess the training needs of procurement staff and

46
ensure continued capacity building. There was also a shortage of experienced
management and procurement staff capable of handling international procurement
(Dubale, 2014).

According to Tesfahun (2011), before the implementation of the Business Process Re-
Engineering, Public Procurement and Property Administration were separate functions
under the Minister of Finance and Economic Development. Since following the
promulgation of the new proclamation and the implementation of the Business Process
Reengineering study the two departments merge in September 2009 under Proclamation
649/2009 and form the Ethiopian Public Procurement and Property Administration
Agency. Afterward, PPA is in place and functioning, it is able to perform reasonably, and
is starting to take its place as the key player in the formulation of public procurement
policies and monitoring current practices.

2.12. Empirical Review of the Related Literature

Various studies have been conducted on what actually influences the performance of
public procurement and well documented (Aberu, 2017; Asante, 2017; Hamza et.al,
2017; Okinyi & Muturi, 2016; Nyambura & Mwangi, 2015; Kioko & Were, 2014;
Shiundu & Rotich, 2014; Amayi & Ngugi, 2013; Kiage, 2013). However, for the purpose
of this study, the review of empirical literature was done in line with the specific research
objectives and the hypothesized variables. My review focuses on the methodologies
adopted, variables used to assess the procurement performance, major findings and
recommendations made. As suggested by Mugenda & Mugenda (2003), such detailed
knowledge of what has been done by other researchers has helped us to avoid
unnecessary and unintentional duplication and more importantly helped us to form a
framework within which our findings were interpreted.

2.12.1. Studies in Ethiopia

Bekele (2015) conducted a study on procurement performance in public higher
institutions a case of Jimma University. The objectives of the study were given a better
insight about the factors i.e. procurement planning, resource allocations, staff

47
competency, information technology, and procurement process that hinder public
procurement performance in Jimma University. The study was conducted through a
descriptive research design. To analysis, the data the researcher uses descriptive statistics
and narrative summary analyses.

His findings indicate that: Firstly, the culture of preparing an annual procurement plan
among users of the University was very poor. This directly affects the performance of the
procurement. The results further revealed that the department’s prepared annual
procurement plans and that the procurement plans were prepared and the goals set
participatory. Secondly, staff competencies at the procurement unit affect greatly the
efficiency of the procurement function. The main problem of having unskilled and
inexperienced staff is that the turnover rate of skilled and experienced staff is high in a
public institution due to low salaries and benefits. Thirdly, the level of ICT skills among
staff influences procurement performance to a very high extent. Fourthly, there is no way
of procurement to follow up mechanisms. As a result, delay in delivery of items and will
yield customer dissatisfaction or users of the procurement unit.

Bekele (2015) recommends that public organizations should strive to strengthen their
procurement plan and make a good culture so as to ensure successful implementation of
their organizational plan and to achieve their organizational goals and objectives. Thus, a
procurement plan must be fully integrated with the strategic plan and budget of the public
administration. ICT should embrace Information Communication Technology for the
purpose of enhancing efficiency, effectiveness, and transparency. Regarding employee
competency, the top management should develop a retention mechanism of existing
qualified and to attract qualified employees.

Hamza et al. (2017) conducted a study on factors affecting procurement performance in

Awassa Textile Share Company. The main objective of the study was examining the
impacts of staff competency, procurement procedure and resource allocation on
procurement performance. Descriptive research design and quantitative and qualitative
data analysis were used in executing the study. The study revealed that staff competence

48
and resource allocation were the most related factors affecting procurement performance.
Staff competence factor was measured in terms of training, motivation, procurement
negotiation skills, creativity, interpersonal and analytical skills and deployment of staff
based on their skills. In comparison, procurement planning was the least related factors
affecting procurement performance. As a result, the researcher recommended that
relevant staff to procurement be involved in the process of plan preparation. To put it
(more) simply, preparation of annual procurement plans is participatory, frequently
reviewed so as to improve on the company’s performance. Correspondingly, it is
worthwhile that staff be adequately trained and sensitized in order to boost the skills and
competency levels required by staff involved in the procurement process. So, the
company supports the procurement department by allocating more resources and
encourages training to improve the skills and knowledge of the procurement staff.

Similarly, Aberu (2017) conducted research on examining the factors that affect public
procurement performance in public procurement and property disposal services. The
study used descriptive research design including descriptive and inferential data analysis
techniques. The main problems identified in the organization were procurement planning,
staff qualification; procurement procedures and utilization of ICT positively affect
procurement performance at PPPDS. Aberu (2017) recommends that procurement plans
shall prepare on time with complete information by end users. Federal organizations shall
also minimize urgent/unplanned requisitions as well as should strengthen and ensure
successful implementation of their organizational plan to achieve their organizational
goals and objectives. In addition, the company should enhance its employee’s
competence as a way of achieving service delivery as a means of improving procurement
performance. This can be achieved by creating awareness through training on the
following aspects of procurement; state of the order up to date and also those employees
had superior knowledge in the entire procurement process. Likewise, the company should
enhance the utilization of ICT in the entire business process which is inter-linked to
procurement.

49
2.12.2. Similar Studies in Other Countries
Kioko & Were (2014) was conducted research on factors affecting the efficiency of
procurement functions at the Public Institutions in Kenya. The study adopted a
descriptive research design with semi-structured questionnaires as the key data collection
instrument. The study established that the existing legal framework and organization
culture affects the efficiency of the public procurement function. Factors like political
influence, fairness in awarding procurement contracts, adherence in procedures,
bureaucracy, and corruption affect the efficiency of the public procurement function at
the public institution in Kenya. From the findings, the study concludes that staff
competencies affect greatly the efficiency of the procurement function. Hence, employees
need to acquire core competencies like knowledge, skills, experience, and abilities to
enhance public procurement function efficiency in public institutions. The study also
concluded that supplies branch did not embrace modern technology in the procurement
function.

Similarly, Amemba et al. (2013) conducted a research on the determinants of

procurement performance at the ministry of education (Kenya). The study focused on
problems of the Ministry of Education (MOED) system of Kenya is in a bad state and the
heavy investment is not yielding commensurate returns. The study found out that, the
performance of procurement in the MOED is largely influenced by the following
determinants: stakeholders, resource dependency, leadership style, and technology.
Finally, the researcher recommends Managers should be focused on mainly absorbing
certain resources or expertise staff within the organization to overcome dependency on
external resources. In this study, the research didn't mention the role of procurement
planning, organizational structure, procurement follow-up mechanisms and skilled
manpower in facilitating the procurement activity in the study area.

Shiundu & Rotich (2014) conducted a study on the factors influencing the efficiency of
procurement systems at the City Council of Nairobi focusing on procurement employees.
A descriptive survey was adopted and since the population was not very large, a census
approach was adopted of all 63 procurement officers and data was collected using a
50
questionnaire. Findings indicated that employee competence, information technology,
records management and management style influenced procurement efficiency at the
council. The study recommended, among other things, enhancing procurement staff
skills; adoption of e-procurement system and maintaining a good record keeping culture
to ensure comprehensive statistics on the value of goods, services and works procured.

2.13. Research Gaps

Evidence from the reviewed empirical literature shows that most of the studies conducted
on the performance of the public procurement focused on compliance organizational
structure, procurement planning, employee’s competency and utilization of ICT but there
was no specific independent variable addressing on the effect of procurement internal
control in the procurement performance of public entities. Likewise, they were not clearly
explaining the influence level (contribution) of procurement planning, staff competency,
ICT utilization on procurement performance.

In addition, many of the previous studies on the performance of procurement function in

the public entities have, to a large extent, concentrated on the process with little emphasis
on objectives. However, they tend to generalize procurement performance by assessing it
in terms of efficiency of the procurement function, but at the same time have failed to
clearly define these terms. Even though so many prior scholarly researches are conducted
on the various aspects of procurement performance to the knowledge of the researcher
there is no research that studies the factors affecting procurement performance by making
the researches case study at the Sub-City administration level. So as per the researcher
level of understanding it is a crucial time to undertake research on the topic to assess the
factors that affect public procurement performance in the Gulele Sub-City administration
and to fill the observed gaps that shall suffice to answer the research hypotheses.

2.14. Conclusion and Summary of Literature Review

The primary focus of this study was on factors that affect procurement performance in
Gulele Sub-City administration. As required by the best practice and indeed in academic
research, related literature was reviewed to shed light on theoretical and empirical

51
evidence of the study topic under investigation. Specifically, the topic focus on what
literature to be considered; what content and context of theories to be considered and
what empirical evidences are needed for justification of the research framework
(conceptual model) under consideration.

The study was grounded by three theories. The theories adopted were Institutional
Theory; Technology, Organization, and Environment theory; and Legitimacy Theory.
From the theories and empirical evidence, the conceptual framework consisting of
independent and dependent variables was developed. Four independent variables, namely
procurement planning, staff competency, ICT utilization in the procurement process, and
internal control in the procurement process were discussed. The dependent variable
discussed in the study was the procurement performance of the Gulele Sub-City
administration assessed in terms of achievement of the procurement objective or
effectiveness (that is, timeliness, quality, quantity, cost, and suppliers).

From the reviewed theoretical and empirical literature, it is evident that a number of
studies on public procurement performance have been conducted both in developed as
well as in developing countries. The reviewed theories and practices from Ethiopia,
Africa and beyond, therefore, provided the rationale for the research hypotheses that were
tested to show the interface of the variables in responding to the research hypotheses.

2.15. Conceptual Framework

The conceptual framework is a set of broad ideas and principles taken from relevant
fields of inquiry and used to structure a subsequent presentation. It is formed of patterns
of concepts and their interconnections (Colin, 2010). According to Chimwani et al.
(2014), a conceptual framework is a research tool intended to assist a researcher to
develop awareness and understanding of the situation under scrutiny and to communicate
this. In view of the foregoing literature, in particular, the theories, the following
conceptual framework was developed to examine the effect of some variables on the
performance of the public procurement function at the administration level. Specifically,
the study was conceptualized that procurement planning, staff competency, ICT

52
utilization, and internal control in the procurement process were the four independent
variables discussed. Whereas, procurement performance of the administration in terms of
achievement of the procurement effectiveness as the dependent variable. Figure 2.1
below presents the conceptual framework of the study.

Independent variables Dependent variable

Procurement planning
Participation in planning, Adherence to
procurement plan, User need identification,
Approved plan circulation, Procurement plan

Staff competency
Competent staff, Staff profession, Procurement
principles, Staff recruitment, personal ability
Procurement
ICT utilization Performance
ICT implementation, ICT skill, Information
flow, Benefit from ICT, Procurement process Effectiveness (5 Rs)

Internal control
Fraud/corruption detection, Regular review &
analysis, Timely information, Training,
Assessing & monitoring performance

Figure 2.1: Conceptual Framework of the Study Developed by the Researcher

53
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1. Introduction
According to Ghauri et al. (1995), research methodology can be conceived as a system of
rules and procedures. Such rules and procedures are important in research for the
purposes of reasoning i.e. a specific logic to acquire insights; inter-subjectivity i.e.
reporting how the researcher has obtained the findings, and communication i.e.
reporting in a manner to enable others to replicate or criticize.

This chapter describes the methodology applied in this study. Specifically, it consists of
research philosophy, research approach, research design, research technique, sample
design, data collection procedures, and instruments. Furthermore, the chapter describes
how the data were processed, analyzed and presented. Finally, ethical considerations and
data validity and reliability have also been described in this chapter.

3.1.1. Research Philosophy

Easterby-Smith et al. (2004) emphasize the importance of understanding the
philosophical issues in clarifying research design. The relationship between theory and
data is an issue that has been hotly debated by philosophers for many centuries. In
deciding how to undertake a research study, a researcher has to be clear about
philosophical assumptions and related paradigms informing his/her field of study. A
paradigm is a belief collection or worldview which guides researchers, who agree on the
same worldview, to decide what to study, how to study and how to interpret their
research findings (Guba & Lincoln, 1994).

The two traditions, mention Easterby-Smith et al. (2000), are social constructivism and
positivism. The positivist paradigm is based on the assumption of objectivity, i.e., a
single reality exists about a social phenomenon that can be understood using quantifiable
facts obtained by adopting quantitative data collection and analysis methods. According
to Saunders & Thornhill (2009), the positivism philosophy helps a researcher collect all

54
facts and figures that are related to the research issue through general sources. On the
other hand, the constructivist paradigm implies that objective reality does not exist since
all realities are socially constructed (Bell et al., 2018). Hence, researchers are interested
to collect general information and data from a sample and generalize from the sample to
the population through statistical probability, unlike constructivism (phenomenology)
generalize from one setting to another through theoretical abstraction. So, in this study
the positivist philosophy was adopted due to its relevance, advantage and in order to
empirically establish a relationship between the variables, hypotheses were formulated
and tested and findings generalized.

3.1.2. The Research Approach

There is no single research methodology that is intrinsically better than the other hence,
the need for a combination of research methods to facilitate improvement in the quality of
research (Agnes & Reginald, 2019). According to Kothari (2004), the mixed research
method central premise is that the use of the quantitative and qualitative approach in
combination provides a better understanding of research problems than either approach
alone. Therefore, a mixed method research approach will be helped in improving the
accuracy of findings, providing a fuller and more complete picture of the issue that will
be studied, developing the analyses and also aid to sampling, etc which makes it better
than a single one. The quantitative approach involves the generation of data in a
quantitative form that can be subjected to rigorous quantitative analysis in a formal and
rigid fashion (Kothari, 2004). A qualitative approach to research is concerned with
subjective assessment of attitudes, opinions and behavior which focused on the
importance of observation, the need to reveal the hidden areas and the value of subjective
human interpretation in the evaluation process (Annells, 1996; Kothari, 2004).

Therefore, this study adopted a qualitative and quantitative approach in accommodating

the variability associated with the diverse nature of the respondents and the activities they
are engaged in. In collecting quantitative data, the survey method was employed by the
use of self-administered questionnaires. The choice of this approach was dual; first, it is
capable of yielding quantitative information that can be summarized through statistical
55
analyses and secondly, a survey method is an effective tool for getting cause- and- effect
relationships and hence is the most frequently used in almost all disciplines (Ghauri &
Gronhaug, 2005). The qualitative approach in this study was focused on detailing the
results of the quantitative phase and describing factors affecting public procurement
performance in more depth. For qualitative data, the interview guide was used to collect
in-depth information that supplemented data obtained from the closed and open-ended
self-administered questionnaires measured on the 5-point Likert type of scales
comprising strongly agree to strongly disagree. This in-depth information was provided
the researcher with detailed insight on what actually determines the performance of
public procurement in the Gulele Sub-City administration.

3.1.3. Research Design

Kothari (2004) stated that the research design is the conceptual arrangement within which
the research is conducted; it constitutes the blueprint for the collection, measurement, and
analysis of data. Research design facilitates study efficiency and yielding maximal
information (Chimwani et al., 2014). In general terms, the research design is considered
as a program to guide the research in the collection, analysis, and interpretation of
observed facts (Ghauri & Gronhaug, 2005).

This study was conducted by a descriptive and explanatory research design. This design
was appropriate because it gave an opportunity for one aspect of a problem to be studied
in-depth with minimal expenditure of effort, time and money (Kothari, 2004). A
descriptive research design is used to obtain information concerning the current status of
the phenomena and to describe "what exists" with respect to variables or conditions in a
situation (Creswell, 2003). He asserts that descriptive research included surveys and fact-
finding inquiries in order to describe the state of affairs as it is. Therefore, this design
attempts to identify, examine and describe situations/issues related to the characteristics
of independent variables (factors affecting procurement performance) and dependent
variables (procurement performance) in the Gulele Sub-City administration. According to
Creswell (2003), descriptive research is a method of collecting information by

56
administering a questionnaire or interviewing to sample of individuals. In this research,
questionnaire and interview schedule was used to collect primary data from respondents.

Similarly, explanatory research involves collecting data in order to test the hypothesis or
to answer questions concerning the current status of the subject of the study (Gay, 1997).
Noor (2008) also stated that explanatory research explains the causal relationship
between the cause and effect of a phenomenon. In order to understand the concept of
procurement performance, explanatory research was used to explain the topic factors
affecting public procurement performance in the administration since it attempts to
describe the relationship between independent (factors affecting the performance of
public procurement) and dependent variables (procurement performance).

3.1.4. Research Techniques

The main data collection instruments of the research were self-administered
questionnaires and structured interviews. The primary data sources were respondents
from selected public sectors. It was collected by distributing questionnaires and
interviewing key informants. The rationality for using questionnaires was that it is a
convenient way for the researchers to create an opportunity and for the respondents to
oversee the questions and that it was easy to handle and interpret the results. Both close-
ended and open-ended questionnaires were prepared and translated into the Amharic
language for the ease of the respondents. The questionnaires were answered by the
selected procurement officers and public sector office employees at Gulele Sub-City
administration. The researcher has used a personal interview with process owners and
head of the public sector offices. This is because a personal interview is flexible in nature
and manageable in controlling the respondents’ conditions. The main secondary data
sources will include available documents that help to understand the factors affecting the
performance of public procurement. Books, reviewed articles, official annual reports,
government proclamations, and regulations are included in this category.

57
3.1.5. Sample Design
A sample design is a definite plan determined before any data are actually collected for
obtaining a sample from a given population. The researcher would adopt a procedure in
selecting a sample (Kothari, 2004). likewise, Saunders & Thornhill (2009) mentioned
that, sample design provides a range of methods that enable a researcher to reduce the
amount of data need to collect by considering only data from a subgroup rather than all
possible cases or elements because in research work it is difficult to consult all the
population that is under the study. Therefore, taking a representative sample must be
important to save time and important resources to conduct the study effectively and
efficiently.

For this research, in order to select an appropriate and representative sample from the
target population and to make the findings more accurate, the researcher structured the
sample design that comprises the five sampling steps of Malhotra et al. (2006); these
steps are closely interrelated and relevant to all aspects of the research. Those are
identified target populations, determine the sampling frame, select sampling techniques,
determine the sample size and execute the sampling process.

Target Population
The sampling process comprises of several stages. The first stage is defining the target
population. A population can be defined as all people or items (unit of analysis) with the
characteristics that one wishes to study. The unit of analysis may be a person, group,
organization, country, object, or any other entity that you wish to draw scientific
inferences about (Bhattacherjee, 2012).

Gulelle Sub-City is one of the ten administrative sub-cities in Addis Ababa City
Administration, which have many obstacles in procurement performance. Because of this
and due to matters of convenience, the researcher selected Gulelle Sub-City as a study
area. The target populations for this research were public procurement and property
administration support process and public sector offices which are found in the Gulele
Sub-City administration. In the administration there are around 36 public sectors

58
categorized in three (3) pools, while all of them spend government money through the
procurement process (Gulelle Sub-City administration, 2011 E.C.). Due to time and
resource constraints, and difficulty of covering all the total existing public sector, the
researcher was decided to select a relatively small sample of public entities for the
assessment of factors affecting public procurement performance in the administration
focusing on respondents from only three public procurement and property administration
support process and six public sector offices that are expected to be used as a
representative of other sectors. The sampling was made based on procurement volume,
hence limiting the sample too large spending entities. Furthermore, it was considered
important to include different types of public sector offices. Therefore, from this
population, the researcher felt that the findings can reasonably being generalized.

Sampling Frame
The sampling frame is also known as the ‘Source list’ from which sample is to be drawn.
It contains the names of all items of a universe. If the source list is not available, the
researcher has to prepare it. Such a list should be comprehensive, correct, reliable and
appropriate. It is extremely important for the source list to be as representative of the
population as possible (Kothari, 2004).

For the purpose of this study, our sampling frame consisted of all selected public
procurement support processes and public sector offices that spent a huge amount of the
money through the procurement process in the year 2010 E.C. The researcher was
believed that they are heterogeneous in their activities and will good prospect for the
required information as they are the main stockholders in the procurement process of the
administration. At the same time to ensure the validity and reliability of the data given by
the procurement support processes staff. With these criteria, the following nine public
entities were chosen. The sampled population in each pool was as follows; Chief
Executive pool (3), Land Development Management Pool (3) and Public Service Pool
(3).

59
 Table 3.1: Sampled Population

Category of the Pool Count Selected Public Entities

3 Public Procurement and Property Administration Support Process
Chief Executive Finance and Economic Development Office
Small and Micro Enterprise Development Office
Land Development 3 Public Procurement and Property Administration Support Process
Management Construction Office
Tenure Administration Transitional Period Service Project Office
3 Public Procurement and Property Administration Support Process
Public Service Public Service and Human Resource Development Office
Education Office
Total 9

Source: Developed by Researcher from Purposive Sampling, April 2019

Sampling Unit
A decision has to be taken concerning a sampling unit before selecting the sample.
Sampling unit may be a geographical one such as state, district, village, etc., or a
construction unit such as a house, flat, etc., or it may be a social unit such as family, club,
school, etc., or it may be an individual. The researcher will have to decide one or more of
such units that he has to select for his study (Kothari, 2004). The sampling unit of this
study was employees and process owners of public procurement and property
administration support processes, and selected public sector office employees and Heads.

Sampling Technique
According to Kothari (2004), sampling techniques are techniques used to select a sample
from the target population. The sample of this research was selected and approached by
the use of both probability sampling techniques and non-probability sampling techniques.
The probability sampling technique which is the simple random sampling was used to
select representative and unbiased sample respondents from selected public sector offices
60
and the non-probability sampling technique that is purposive sampling was used to select
informants (process owners/Heads) from procurement support processes and public
sector offices. Likewise, purposive sampling was used to select all procurement staffs
from public procurement support processes, because according to Kothari (2004), it
needs to be emphasized that when the universe is a small one, it is no use resorting to a
sample survey. When all items are covered, no element of chance is left and the highest
accuracy is obtained.

Sample Size
Sample size refers to the number of items to be selected from the universe to constitute a
sample. Sampling sizes depend on the types of research design being used, the desired
level of confidence in the result, the amount of accuracy wanted and the characteristic of
the population of interest (Kothari, 2004). He also suggested that an optimum sample is
one which fulfills the requirements of efficiency, representativeness, reliability, and
flexibility.

According to Cochran (1977), in order to determine the sample size of the population
which is less than 10,000, first calculate the desired sample size when the target
population is large, preferably greater than 10,000. For reasonable sample sizes, the
critical values from the t-distribution and the standard normal distribution are
approximately equal, that is, t z. Thus, the formula can be written as:

Where,

= the desired sample size

P = the proportion in the target population estimated to have the characteristics being
measured = 0.5
-value at 5% level of significant = 1.96

standard marginal error (precision) or the level of statistical significant = 0.05

61
Therefore,

According to Cochran (1977), to calculate the sample size; if n0/N (i.e. 384/404 = 0.95) >
0.05, then the required sample is calculated by using the following formula:

Where, n = Sample size,

P = the proportion in the target population estimated to have the characteristics being
measured = 0.5

-value at 5% level of significant = 1.96

Standard marginal error (precision) or the level of statistical significant = 0.05

N= Total population = 404

In order to ensure that each selected public sectors have equal proportions of being
chosen, the proportional allocation was used as indicated in Table 3.2 below. Generally,
this approach was more applicable to this research because it has higher statistical
efficiency and it is much easier to carry out (Mrope, 2018).

Number of the respondent for = No. each public sectors staffs xn

selected public sector offices Total no. of all selected public sectors staffs

For selected public sector office respondent is calculated from the remaining 149 sample
size after reduction of thirty-nine (39) procurement officers and nine (9) key informant
62
 respondents.

Table 3.2: Target Population, Sample Size, Sampling Techniques and Method of Data
Collection

No Target Population Target Sample Size Sampling Method of Data

Population Techniques Collection

1 Finance and economic 44 18 [(44/356)*149] Simple random Questionnaires

development office

2 Small and micro enterprise 50 21 [(50/356)*149] Simple random Questionnaires

development office

3 Construction office 51 22 [(51/356)*149] Simple random Questionnaires

4 Tenure administration 91 38 [(91/356)*149] Simple random Questionnaires

transitional period service
project office

5 Public service and human 89 37 [(89/356)*149] Simple random Questionnaires

resource development office

6 Education office 31 13 [(31/356)*149] Simple random Questionnaires

Total 356 149

7 Chief executive public 14 14 Purposive Questionnaires

procurement and property
administration support processes

8 Land development management 12 12 Purposive Questionnaires

public procurement and property
administration support processes

9 Public service public 13 13 Purposive Questionnaires

procurement and property
administration support processes

Total 39 39

Total 395 188

Source: Developed by Researcher from Random and Purposive Sampling, April 2019

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 Table 3.3: Key Informants (for face to face interview) from Selected Public Sectors and
Public Procurement and Property Administration Support Processes Process Owners

No Offices Key informants Method of selection

1 Selected public sector office heads 6 Purposive sampling
2 Public procurement and property 3 Purposive sampling
administration support process,
process owners
Total 9

Source: Developed by Researcher from Purposive Sampling, April 2019

Thus, a total of 188 respondents were selected and served with the questionnaires. For the
face to face interview, 9 key informants were purposively selected from the same selected
public sectors and public procurement support processes. These are the key players in the
procurement process of the Gulele Sub-City administration.

3.2. Source of Data

Data refers to known facts or things used as a basis for the interference of reckoning’
(Collis & Hussey, 2003). According to Creswell (2003), using more than one data
collection instrument strengthens and gives credibility to the study. There are two types
of data, namely primary and secondary data. The researcher might use either or one of the
types of data depends on the research type and data collected by the researcher (Saunders
& Thornhill, 2009). In this regard, the data to be gathered for the study was from the
primary and secondary data sources. This approach was used because it revealed issues
that could not be raised in using only one data source.

3.2.1. Primary Data

According to Malhotra et al. (2006), primary data are originated by a researcher for the
specific purpose of addressing the problem at hand. Therefore, the primary data was
obtained directly from respondents through self-administered questionnaires and
interviews. The questionnaires and interviews were consisted of structured questions and
64
interviews respectively to be answers by the selected respondents. The primary data
provided first-hand information to this study about the assessment of factors affecting
public procurement performance and other issues necessary for this research.

3.2.2. Secondary Data

Secondary data means data that are already available i.e., they refer to the data which
have already been collected and analyzed by someone else (published or unpublished).
When the researcher utilizes secondary data, then he has to look into various sources
from where he can obtain them (Kothari, 2004). For this research purpose, secondary data
was obtained from a literature review collected from written theses, journal papers,
textbooks, newspapers, and literature on public procurement performance written by
different scholars. Similarly, manuals, directives, proclamation and annual reports related
to procurement activities were used. The aim of the secondary source was to interpret,
offer commentary, analysis and draw conclusions about events described in primary
sources.

3.3. Data Collection Procedures and Instruments

This is referred to as the set of rules that must be followed to ensure that data collection
tools are applied perfectly and resourcefully (Mrope, 2018). According to Mugenda &
Mugenda (2003), the validity and reliability of the data are functions of the quality of the
tools used in collecting information. In order to ensure that the validity and reliability of
the data were achieved, the choice of appropriate data collection tools and the application
of proper data collection techniques were adhered to.

The survey-based assessment of factor affecting public procurement performance: the

case of Addis Ababa, Gulele Sub-City administration was focused on a selected number
of independent variables (factors) and dependent variable (procurement performance
indictor’s) developed based on the review of related literature and taking into
consideration their relevance to the current administration context. This study effectively
started in October 2018. Before field data collection, the first semester (2018/2019) was
used for the preliminary review of the general scope literature (theoretical, empirical and

65
methodological), and to develop the problem statement and tentative research questions.
Generally, was used for the preparation of research proposal and field data collection.
Preceding the data collection, two structured questionnaires (i.e. for procurement officers
and public sector office employees) and structured interview guides (i.e. for process
owners and public sector office heads) had been developed. The researcher undertook the
field data collection and all related research activities alone.

Primary data were collected by the researcher for the purpose of this study, from 5th
March to 5th April 2019. This was after being issued with Research Clearance Permit by
Ethiopian Civil Service University and an introductory letter from the Department of
Public Procurement and Asset Management, College of Finance, Management and
Development (A copy of the research clearance permit letter is included in Appendix 2F).
The introductory letter reassures respondents that all the information given was treated
with a lot of confidentiality and no information collected in this study was used for any
other purpose than stated above. Given the nature and sensitivity of this research, the
researcher was first formally requested via an official written letter presented to the Chief
Executive Officer of Gulele Sub City administration to granting of access for field work
and data collection and then issued with an approval letter marked public procurement
and property administration support processes, and selected public sector offices are the
host department or offices.

After getting permission from the Chief Executive Officer of the administration, the field
data collection took place during three research-site visits over a period of 1 month in
total. Visit 1 took place in the period March 5 – March 8, 2019 (4 days). In visit 1 the
researcher was able to successfully request field access and undertook preliminary
documents collection at the chief executive office, and public procurement and
administration support processes. Visit 2 took place in the period March 11 – March 28,
2019 (14 days). In visit 2 the researcher distributes and collects questionnaires from
selected respondents and it was the longest of the three visits in which the major part of
the field data collection was undertaken. Visit 3 took place in the period March 29 –
April 05, 2019 (6 days), and the researcher undertook in-depth interviews with process
66
owners and public sector office heads. The researcher spent a total of 24 workdays in the
research field, disseminating and collecting questionnaires, interviewing and collecting
documentary evidence. As shown in Appendix 1E, the visited public entities and the
respective number of workdays spent in each site.

According to Creswell (2003), using more than one data collection instrument
strengthens and gives credibility to the study. This approach was used because it revealed
issues that could not be raised in using only one data collection instrument. In this regard,
to achieve the objective of this study, it is necessary to collect both primary and
secondary data. To collect primary and secondary data the researcher used different data
collection instruments namely; self-administered questionnaires, interviews, and a review
of documents.

3.3.1. Questionnaire
According to Creswell (2003), the standardized wording and structured questions of the
questionnaire provide higher reliability in the data that is practically able to be obtained
by interview and allow respondents to give much of their opinions pertaining to the
research problem. Self-administered questionnaires were the main data collection
instrument used in this study. Most of the questions in the questionnaire were developed
from the review of related literature and composed of statements addressing each of the
study variables. The questionnaires were comprised of close-ended and a few open-ended
questions, and translated into the Amharic language to get the required primary data from
respondents. Open-ended questions allow the respondents to provide detail information,
feelings attitude, and understanding of the subject. On the other hand, a close-ended
question makes ease for the respondents to respond (Dubale, 2013).

To make it easier for respondents to answer the questionnaire, the questionnaires were
prepared in the form of Likert-Scale type (showing respondents agreement or
disagreement) by constructing into a five-point scale where the lowest scale represents
strongly agree and the highest scale represent strongly disagree (Likert, 1932). The
questionnaires distributed to the respondent are organized in to six parts; part I of the

67
questionnaire contained general information (i.e. gender, age, level of educations,
experience, and profession) on respondents, while part II contained effect of procurement
planning on procurement performance, part III contained effect of staff competency on
procurement performance, part IV contained effect of ICT utilization on procurement
performance, part V contained effect of internal control on procurement performance,
finally part VI contained procurement performance indicators and recommendation on
how to improve public procurement performance of the administration.

The questionnaires were distributed to the procurement officers and employees of the
public sector office. But, the questions are slightly different for procurement officers and
public sector office employees according to their profession, responsibility and
depending on the type of information the researcher wanted to elicit from that entity.
However, most of the questions were common to procurement officers and public sector
office employees.

A total of one hundred eighty-eight (188) questionnaires were distributed. From those
questionnaires, thirty-nine (39) for procurement officers and one hundred forty-nine
(149) for public sector office employees were distributed. In distributing and collecting
the questionnaires, the Drop and Pick method were applied. Cell phone calls were also
used in communicating and reminding the selected respondents on the questionnaires
distributed to them. The researcher also made some follow-ups to some of the offices,
especially, the public procurement and property administration support processes, and
finance and economic development, to elicit additional information and obtain evidence
to confirm some responses given to some of the questions. Thus, out of one hundred
eighty-eight (188) questionnaires distributed, one hundred eighty-two (182)
questionnaires were returned; representing ninety-seven percent (97%) were returned.
However, from one hundred eighty-two (182) returned questionnaires 5 questions were
removed because the questionnaires are partially completed (Incomplete) and irrelevant.
Therefore, one hundred seventy-seven (177) which is 95 % questionnaires were ready for
interpretation of the factors affecting procurement performance data. The questionnaires
are attached in appendix 1A and appendix 1B.
68
3.3.2. Interview
The main reason for conducting structured interviews is to understand how individuals
construct the reality of their situation, formed from the complex personal framework of
beliefs and values which they have developed over events in their world (Easterby-Smith
et al., 2004). Hence, to support the data obtained through questionnaires the researcher
was used interview guides to gather information from process owners and public sector
office heads. Interviews were conducted using structured questionnaires as a guide to the
researcher when asking questions structured. This method was effective and facilitated
easy communication between the researcher and the interviewee. It also afforded an
opportunity to ask probing questions as a follow-up to answer that the researcher would
consider unsatisfactory or unconvincing (Harrison, 2015).

The researcher was able to conduct 9 face-to-face interviews with public procurement
and property administration process owners, and public sector office heads who were
selected through purposive sampling. All participants were willing to interview and
interview sessions were conducted in the Amharic language, and then translated to
English. The recording of interview conversations took place, through brief memo-taking
during conversation and summarizing the conversations immediately after the
conversation. Structured interview guides for process owners and public sector office
heads are attached in appendix 1C and 1D respectively. As shown in Appendix 1F, the
number of participants in pre-arranged interviews and participant official positions, and
their organization. As shown in Appendix 1F, totally the researcher was conducted 145
minutes in-depth interview with process owners and public sector office heads. The
shortest interview was about 20 minutes [with Education office head, 05-April-2019, and
the longest was about 35 minutes [with Chief executive public procurement and property
administration support process owner, 02-April-2019]. On average interview, duration
was 27 minutes.

3.3.3. Documents and Other Field Data

Secondary data were used to enrich information obtained from primary sources. The
researcher was collected different types of documentary materials, read/reviewed and
69
included in this study. Some of the documents examined were public procurement and
property administration support processes, and public sector offices procurement plan
and annual budget, annual report, public procurement proclamation 249/2009 and
procurement directive and procurement guidelines. Documentary evidence was useful
because it provided the initial understanding of the practices and issues about factors
affecting public procurement in the administration, and was a resource for triangulating
with questionnaires response and interview response.

3.4. Data Analysis and Presentation

As a mixed research method study and the adoption of a positivist paradigm, it was not
surprising to expect quantitative and qualitative data collection and analysis. Therefore,
the selection of appropriate data analysis and presentation cannot be overemphasized.
According to Mugenda & Mugenda (2003), data analysis is the process of cleaning and
summarizing data so that it becomes information that can be easily interpreted, findings
can be communicated easily, and conclusions made to support decision-making. In this
study the units of analysis were the public procurement support processes, and public
sector offices and units of inquiry were the procurement officers, public sector office
employees, procurement process owners, and Head of sector offices all of whom are fully
involved and knowledgeable in the procurement processes and decisions of the entity.

Once the relevant raw data were on hand, before analysis, first the data were checked for
completeness and consistency and finally, the raw data were edited, coded, classified and
entered into the computer for processing. The data obtained from the questionnaire and
interview schedule were subjected to both descriptive and inferential analysis techniques.
Thereafter, generate relevant frequency, percentages, tables, and statistical associations to
facilitate the interpretation of the result. The data gathered from the interview and other
secondary sources would be organized thematically and presented in a narrative way of
analysis. Finally, the data were interpreted and summarized in order to reach into
conclusions and forward possible management recommendations. The analysis was done
with the aid of Statistical Package for Social Sciences (SPSS) software version 24 and

70
Microsoft Excel. The analysis used both descriptive and inferential analyses as explained
below.

3.4.1. Descriptive analysis

According to Kothari (2004), descriptive statistics concern the development of certain
indices from the raw data. Descriptive statistics based on the data obtained through the
questionnaire were used to obtain preliminary findings that informed further analysis.
Such descriptive analysis provided simple summaries of the characteristics of the sample
such as measures of central tendency, frequencies, and percentages, among others.
Therefore, with the quantitative data collected through the closed-ended questionnaire, a
descriptive statistical analysis method was used. As a result, the data on selected
questions were presented by using tables with explanations to analyze the relationship
between variables and to aid the reader in understanding the paper. Data obtained from
open-ended questions were also be analyzed together with the closed-ended questions to
triangulate the responses gathered via the survey questionnaire in general. However, the
descriptive analysis does not show the relationship among variables and influence that
each variable may have on the response variable and hence the need for inferential
analysis.

3.4.2. Inferential analysis

According to Kothari (2004), inferential analysis is concerned with the various tests of
significance for testing hypotheses in order to determine what validity data can be said to
indicate some conclusion or conclusions. It is also concerned with the estimation of
population values. The study employed Spearman correlation coefficients and Binary
Logistic Regression Model to test the research hypotheses formulated for this study.

3.4.2.1. Model Specification

According to Maxwell (2009), the logistic regression model or the logit model as it is
often referred to be a special case of a generalized linear model and used to predict the
relationship between predictors (our independent variables) and a predicted variable (the
dependent variable) where the dependent variable is binary. It is common practice to

71
assume that the outcome variable, denoted as Y, is a dichotomous variable having either a
success or failure as the outcome. As such, the logistic regression model developed is
used to predict the probability of the dichotomous dependent (response) variable
(Procurement Performance) in the administration, using the 4 independent categorical
variables in the study (Procurement planning, Staff competency, ICT utilization, and
internal control) measured using a five-point Likert scales ranging from strongly agree
(1), agree (2), neutral (3), disagree (4) to strongly disagree (5) as responses from
respondents.

Since our response variable (dependent variable) is dichotomous (it is coded '1'= High
procurement performance, if not '0' = Low procurement performance), we cannot use the
usual OLS estimations. This is so because the strict assumptions in OLS will be violated
when the dependent variable is not continuous variable. For instance, the basic
assumptions of the dependent variable to be normally distributed cannot hold in a
dichotomous dependent variable (Maxwell, 2009). Thus, we need to transform the usual
equation to linear, using log transformation. Therefore, the Binary Logistic Regression
Model, which was used to estimate the relationship between the dichotomous dependent
variable (Procurement Performance) and the categorical independent variables of the
study. Then the equation for Binary logistic regression was formulated as follows.
O'Connell, 2006 gave the general expression for the logistic regression model as:

= α + β1χ1 + β2χ2 + ………. + βpχp +

Where, Li = - logs of odds ratio/logit , α = intercept of the regression, βp =

coefficients for each independent variable, χp = each independent variable and = error
term. From this general logit model, the following were derived and applied for this
specific study.

Li = = α + β1χ1 + β2χ2 + β3χ3 + β4χ4 +

Where;

72
Dependent Variable, Y= = 1, if High Procurement Performance, p(Y=1) = Yi
0, otherwise, p(Y=0) = 1 - Yi

Where, α = intercept of the regression; β1, β2, β3, and β4 = are the regression coefficients
of the independent variables (Procurement planning, Staff competency, ICT utilization,
and internal control); Independent variables: χ1 = Procurement Planning, χ2 = Staff
Competency, χ3 = ICT Utilization, χ4 = Internal Control; є = Error term.

In order to appropriately consider all factors that are believed to affect the level of
procurement performance, factor analysis was used to select those significant variables
which impact procurement performance, while at the same time removing those variables
which have a lesser impact. After these factors were identified for our model, the logistic
regression procedure was used. The likelihood ratio test was used to test the overall
logistic regression model of the study. That is, this test is used to see whether there is an
improvement in the fit that explanatory variables make compared to the constant only
model (null model). And its significance was tested, using a chi-square statistic at p (α)
value of 5% or lower. The Wald statistic was used to test the significance of each
predictor variable to test whether they were important for predicting procurement
performance. And the Level of confidence used is 95 percent.

3.5. Validity and Reliability

According to Mugenda and Mugenda (2003), validity is the accuracy and meaningfulness
of inferences, which is based on research results. It is the degree to which results obtained
from the analysis of the data actually represent the phenomenon under study and,
reliability refers to the consistency or dependability of a measurement technique and it is
concerned with the consistency or stability of the core obtained from a measurement
technique over time and across settings or conditions. The reliability test has been done to
check whether the consistency or stability of the score obtained from a scale used on the
questionnaire is measuring as it needed to measure (Cronbach, 1951).

73
Mckinnon (1988) identified four threats to the validity and reliability of field-based
research studies. The threats identified are the potential for artificial responses from
participants, researcher’s bias due to background experience, limitation to data access,
and the complexities and limitations of the human mind. In the current study, the
researcher deployed different strategies and tactics to solve identified threats and to
enhance field study validity and reliability. To ensure validity and reliability the
researcher used very simple language in designing the questionnaires. The simplicity of
the questionnaire was to avoid ambiguity and to make sure that the questions were
understood by the respondents. The researcher was also spent substantial time in the field
work; apply appropriate researcher’s behavior during fieldwork, willingness to listen to
participants, memo writing as accurate as possible reviewed an extensive literature to
prepared carefully self-administered questionnaires and interview questions, and asking
the right questions. To validate the research instruments, the researcher was used
comments and guidance provided by the research supervisor and other experts in the field
of procurement which is great and valuable inputs.

Cronbach's alpha a coefficient of reliability that gives an unbiased estimate of data was
used to test the reliability of the answered questionnaires. Similarly, factor analysis was
used to test the validity of the data. The results of the reliability and validity test for this
study have been presented and discussed in Chapter Four.

3.6. Research Ethics

According to Saunders & Thornhill (2009), research ethics deal with how we treat those
who participate in our studies and how we handle the data after we collect them. The
researcher kept privacy (that left any personal questions), anonymity (protecting the
identity of specific individuals from being known) and confidentiality or keeps the
information confidential.

Before writing the thesis, the researcher considered the ethical issues that can be
anticipated and described in the study. In understanding the importance of ethics in
academic writing, all ethical issues were observed in this study. From the beginning and

74
prior to visiting the surveyed organization, an introduction letter was obtained from the
Ethiopian Civil Service University Management with a view to introducing the
researcher. The letter served a very useful purpose as it was clearly stated that the
information that was asked was purely for academic purposes and asks full cooperation
of the concerned public bodies throughout the work time. Moreover, in an introduction
section of the questionnaire, it was stated that the respondents and information provided
shall remain anonymous during and after the study. Respondents were therefore asked to
disclose their personal names anywhere in the questionnaire document. In connection
with the interview part, all participants have informed the same information as in the case
of the questionnaires and got their approval. In relation to secondary data, the sources are
properly stated, the authors are properly acknowledged, the bibliographies and reference
materials are put in the appropriate place. Generally, in this study, ethics and
confidentially were observed from the preparation of the instruments, actual data
collection, analysis, and interpretations.

3.7. Operationalization of Research Variables

The operationalization of study variables is all about measurement of phenomena, which
answers the research objectives and show concepts, variables, and variables
measurement. Therefore, the researcher clearly indicates the operationalization of
research variables in Appendix 1G.

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 CHAPTER FOUR

RESEARCH ANALYSIS, FINDINGS, AND DISCUSSIONS

4.1. Introduction
The main objective of the study was to assess the factors that affect public procurement
performance in Addis Ababa City; Gulele Sub-City administration. Accordingly, the
research hypotheses established based on the literature reviews have been already
discussed in chapter three. Thus, to answer the research hypotheses posed in this study,
data have been collected and analyzed with both descriptive and inferential statistics.

This chapter presents the results of the data analysis according to the research
methodology discussed in chapter three. First, it presents the descriptive statistics of the
sample. The descriptive analyses focus on: the data collected on factors affecting the
performance of procurement (independent variables) are presented as descriptive
statistics, statistical distribution, and the discussion. Secondly, inferential analysis of
respondent’s data collected regarding public procurement key performance indicators and
the data of the study’s independent variables namely; procurement planning, staff
competency, ICT utilization, and internal control relationship between procurement
performances are presented and discussed. At last, a detailed discussion on research
hypotheses, in light of prior studies, were also presented.

4.2. Pilot Study

In order to assess the reliability of the instruments of the study (questionnaires) and the
validity of the data to be collected, a pilot study was conducted prior to the main study.
As suggested by Mrope (2018), a pilot study is an excellent way to determine the
feasibility of the study and enabled the researcher to adjust any observed weaknesses in
the data collection tools before the actual survey was conducted.

The pilot study was conducted in four public entities selected randomly. The researcher
distributed a total of 16 questionnaires to four public entities and only 12 were filled in
and returned. After the pilot testing, the instruments were modified by incorporating

76
 respondents’ views and observations as appropriate. An example of such improvement is
the randomizations of the variables and their associated questions to avoid bias and long
statements with and /or conjunctions were rectified as appropriate.

4.3. Reliability and Validity Test

Reliability and validity are the essential criteria for assessing the accuracy and precision
of the quantitative aspects of the research.

4.3.1. Reliability Test

According to Creswell (2003), reliability means that scores from an instrument are stable
and consistent. Scores should be nearly the same when researchers administer the
instrument multiple times at different times. According to Cronbach (1951), Cronbach’s
alpha is the most common reliability coefficient which estimates internal consistency by
determining how all items on a test related to all other items and to the total test internal
coherence of data. In this study, the Cronbach’s alpha reliability coefficient expressed as
a coefficient between 0 and 1 was used. The closer Cronbach’s alpha coefficient is to 1.0
the greater the internal consistency of the items in the scale. According to the rules of
thumb, the value of reliability alpha of > 0.7 and composite & overall reliability > 0.60 is
acceptable. The following Table 4.1 presents the composite reliability of each variable
and the overall reliability.

Table 4.1: Reliability Test Result of Variables

Variable Cronbach's Alpha No. of Items Conclusion

Procurement Planning .867 5 Reliable
Staff Competency .873 5 Reliable
ICT Utilization .854 5 Reliable
Internal Control .807 5 Reliable
Procurement Performance .861 5 Reliable
Overall Scale Reliability .853 25 Reliable
Source: SPSS 24 Statistics, April 2019

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Thus, the composite and overall reliability of the research data found above fulfill the
criteria of greater than 0.60. On the basis of the reliability test, it was supposed that the
scales used in this study were reliable to capture the constructs and could fairly represent
the opinions of other respondents.

4.3.2. Validity Test

Validity has to do with how accurately the data obtained in the study presents the
variables of the study (Mugenda and Mugenda, 2003). If such data is a true reflection of
the data variables, the inference based on such data will be accurate and meaningful.
Validity can be checked by a correlation matrix approach in SPSS. If the minimum
correlation between the items of the same construct is significant, in that case, convergent
validity is achieved (Hair et al., 1998). Another stringent convergent validity check is if
the average extraction of factors is greater than 0.5. It was assessed by making
exploratory factor analysis and then examining whether the items in the rotated
component matrix loads distinctly on each unobserved variables. Since the average factor
loading is greater than 0.5 and the items load distinctly on each unobserved variables,
both convergent and discriminate validity is achieved here in this study (See Appendix
2A). Therefore, the research instruments which have been used for this study are valid.

4.4. Descriptive Statistics

4.4.1. Response Rate
This study was conducted in 9 public entities sampled from 36 entities that spent a large
amount of money through procurement activities during the previous financial years, that
is, 2010 E.C and thus can be considered as a fair representation of the target population.
The response rate of selected public entities was very good as 9(100%) out of 9 public
entities were responsive. Furthermore, in an attempt to gather quantitative data, one
hundred 188 questionnaires were distributed and 182 questionnaires were returned;
representing 97% were returned. However, from 182 returned questionnaires 177 which
are 95% questionnaires were ready for interpretation of the factors affecting procurement
performance data. According to Mugenda & Mugenda (2003), a response rate of 50% is

78
adequate, 60% is good and 70% and above is very good. The recorded response rates of
100% and 97% (for public entities and respondents respectively) in this study were very
good and therefore adequate for analysis.

The recorded response rate was admirable response which was due to consistent data
collection, where the researcher personally administered questionnaires by delivering to
the respondents physically and waited for respondents to fill, and in most of the cases, the
researcher would make calls and send messages to confirm when to pick the
questionnaire once duly filled and this took a period of 1 month (March-April). The
response rate demonstrates a willingness by respondents to participate in the study and to
some extent gave confidence to the researcher on the accuracy of the information
provided. The response rate is shown in Table 4.2 and Table 4.3.

Table 4.2: Response Rate of Public Entities

Category of Public Target Response Response Rate

Entity Population
Chief Executive Pool 3 3 100%
Land Development 3 3 100%
Management Pool
Public Service Pool 3 3 100%
Total 9 9 100%

Source: Developed by Researcher from Field Survey, April 2019

Table 4.3: Response Rate of Questionnaire

Category of Sample Questionnaire Questionnaire Return Rate

Disseminated Returned
Public procurement and 39 38 98%
property administration
support process staff
Selected public sector 149 144 97%
office staff
Total 188 182 97%

Source: Developed by Researcher from Field Survey, April 2019

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 4.4.2. Demographic Data
In the questionnaire (see Appendix 1A & 1B), part I was designed to capture some basic
demographic details of the respondents involved in this study. The demographic profile
of surveyed respondents is based on selected variables describing level of education,
professional qualification, and general working experience. The objective of the selected
profile is not only to have a basic descriptive understanding of the survey respondents but
also to gain an insight into their ability to make ‘expert’ evaluative opinion. Thus, the
demographic data of respondents were summarized in Table 4.4 here below and the
frequencies and percentages are calculated and described.

Table 4.4: Respondents Profile

Responses
Demographic Questions Frequency Valid Percent
Diploma 40 22.6
Level of Education Bachelor’s degree 127 71.8
Master’s Degree and above 10 5.6
Total 177 100%
Management 46 26.1
Accounting 25 14.2
Economics 16 9.1
Professional Engineering 49 27.8
qualification
Procurement and supply management 2 1.1
Other 38 21.6
Total 177 100%
Less than 5 years 55 31.1
5-10 years 62 35.0
Working experience 11-15 years 37 20.9
16-20 years 13 7.3
Above 20 years 10 5.6
Total 177 100%
Source: Field Survey Result, April 2019

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To start with the level of education of respondents as indicated in Table 4.4, from a total
of 177 valid respondents, 40(22.6%) of the respondents are Diploma holders, whereas
127(71.8%) had attained Bachelor’s Degrees and 10(5.6%) are holders of the Master’s
Degrees. Emanating from the above findings it is evident that most of the respondents
had a Bachelor’s Degree and above, which means that they were well educated and they
could understand and provide valid and reliable information for this research. This result
is in concurrence with previous studies that suggested that failing to understand and give
a proper reply to the underlying concept of each question by respondents is very minimal
since they have a high level of education (Aberu, 2017; Bekele, 2015, Kiage, 2013).

In the second place, with regard to the professional qualification, the findings show that
46(26.1%) of the respondents were management graduates, 25(14.2%) of the respondents
were accounting graduates, 16(9.1%) of respondents were economics graduates whereas
49(27.8%) are engineering graduates, procurement and supply management graduates
accounts only 2(1.1%) and the remaining 21.6 %( 38) was other field graduates. Here, the
findings indicate that the majority of the respondents have professional qualifications
necessary to understand and answer the questions found in the questionnaire. Therefore,
respondents were able to comment on issues related to the procurement performance of
the administration and also were able to provide reliable answers to the questions.

In the third place, with regard to working experience, the study also shows that
55(31.1%) of respondents have below five years of experience, 62 (35.0%) of them have
from five up to ten years of experience, 37(20.9%) of the respondents have eleven up to
fifteen years of work experience, 13 (7.3%) respondents have experienced from sixteen
up to twenty years and the remaining 10(5.6%) of the respondents have more than twenty
years’ experience. This shows that majority of the respondents have more than five years
of work experience. In general, from this figure, we understand that the information
obtained from them is reliable or dependable since they have good know-how and
experience about the concept of procurement performance. In other word, the study had
actually used the right respondents whose opinions fairly represent others in the target
population. As propounded by Samson et al. (2016), respondents with high working
81
experience assist in providing reliable data on the sought problem since they have
technical experience on the problem being investigated by the study.

4.4.3. Procurement Performance of Gulele Sub-City Administration

The procurement performance of the Gulele Sub-City administration was a dependent
variable of this study. As defined by Sabine et al. (2009), procurement performance is
about seeking to answer the basic question of ‘how well the procurement process is and
how good the procurement outcome is’. In assessing the procurement performance of the
Gulele Sub-City administration, therefore, the researcher was considered procurement
objectives/effectiveness of the procured goods, works, and services.

4.4.3.1. Level of Achievement of the Procurement Objectives (Effectiveness)

regarding Five Right of Purchase
According to the proclamation NO.649/2009 of the Ethiopian Federal Government Public
Procurement and Property Administration (EFGPPA), the primary objective of public
procurement is achieving maximum value for money in procurement i.e. ensures
economy, efficiency, and effectiveness. Hence, the study sought to establish the extent to
which the administration has achieved the procurement objectives (Effectiveness)
measured in terms of quality, time, quantity, price and source. The five Right of
Purchasing, was also used by previous studies by Aberu (2017) and Bekele (2015). The
key results of the two studies indicated that to a great extent timely delivery, right quality,
and right quantity are important measures of the performance of public entities compared
to the others. In this study, respondents were asked to rate on the extent to which their
public procurement and property administration support processes provides availability
of the required goods, works and services the right quality, right time, right quantity, right
price and right source and thereby contributing to the achievement of the administration
strategy. The results of selected indicators are indicated in Table 4.5 below.

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Table 4.5: Gulele Sub-City Administration Procurement Performance (Evaluated by 5Rs)

Description Frequency Valid Percent

Very good 9 5.1
Good 31 17.5
Right Quality Neutral 25 14.1
Poor 90 50.8
Very poor 22 12.4
Total 177 100.0
Very good 11 6.3
Good 20 11.4
Right Time Neutral 33 18.8
Poor 94 53.4
Very poor 18 10.2
Total 176 100.0
Very good 15 8.5
Good 31 17.6
Right Quantity Neutral 27 15.3
Poor 90 51.1
Very poor 13 7.4
Total 176 100.0

Source: Field Survey Result, April 2019

Results of the findings as depicted in Table 4.5 indicate that, 112(63.3%) of the
respondents were answered that the quality of goods, service, and works procured by
public procurement and property administration support processes is poor, whereas
40(22.6%) of the respondents were answered good and 25(14.1%) respondents answered
neutral. From the descriptive frequency and percentage analysis, it can be concluded that
the majority (63.3%) of the respondents agreed that the quality of procured goods,
services and works were poor.

With respect to the availability of the required goods, works and services on time,
112(63.6%) of the respondents indicated that availability of the required goods and
services on time and according to the procurement plan were poor. On the other hand,
31(17.6%) of them were answered good and the remaining 33(18.8%) of the respondents
answered neutral. Therefore, from the above result, one can conclude that the majority
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(63.6%) of the respondents agreed that public procurement and property administration
support processes were not delivered goods and services at the right time. Likewise, there
have been remarkable differences between the contractual time and completion time with
regards to construction and works projects.

Moreover, with regard to the procurement of goods, service, and works at the right
quantity, 103(58.5%) of the respondents were answered procured goods, service and
works at the right quantity has been poor, whereas 46(26.2%) answered good and
27(15.3%) of them answered neutral. Therefore, from the response, the majority (58.5%)
of the respondents agreed that procurement support processes were procured goods,
services and work below the required quantity. Accordingly, one can conclude that the
administration procurement performance was poor regarding delivering the right quantity
of goods, services and works to the user departments.

From the above descriptive analysis, it can be concluded that the procurement
performance of the administration was poor. Generally, procuring goods, services, and
works at the right time, with the right quality and quantity are the three indicators that
greatly described poor procurement performance of the administration with a percentage
of 63.6%, 63.3%, and 58.5% respectively. The results would suggest that in order to
ensure good procurement performance in the procurement process, there should be
evidence of three and closely related practices within the administration public
procurement and property administration support processes; - procuring goods, services,
and works at the right time, with right quality and quantity.

These results were supported by the opinion gathered through the face to face interviews
with heads of surveyed public sector offices and procurement process owners. They
revealed that, delay in supply, poor quality, procuring below the required quantity of
goods, services, and not on time completion of works projects to a great extent have been
caused by delays in availability of funds from the city administration, lack of market
assessment and, lack of proper knowledge, skills and capacity staffs are the major

84
problem. All these have been translated into inefficiency and ineffectiveness of the
procurement function.

The above findings concur with a study conducted by Bekele (2015) who conducted a
study on Factors Affecting Procurement Performance of Public Higher Education
Institutions: The Case of Jimma University. He found that there is a delay in the release
of funds from the treasury to entities and such delays of funds hinder the smooth
implementation of the annual procurement plans with its associated consequences mainly
not on time availability of the required goods, works or services. He also found that this
problem is highly related to a lack of competitive supplier selection in the procurement
process, lack of proper contract management and hence inefficient procurement
outcomes. Indeed, this result is in agreement with the previous studies by Mrope (2018);
Aberu (2017) and Chimwani et al. (2014) who found that procuring goods, services and
works at the right time, with right quality, and with right quantity is a critical aspect in
ensuring that procurement is conducted in a manner that maximizes competition and
achieves economy, efficiency, transparency and value for money among others.

4.4.4. Measures of procurement Factors Affecting Procurement Performance

The study conceptualized four independent variables that were thought to best explain the
performance of the procurement activities in the Gulele Sub-City administration. The
variables procurement planning, staff competency, ICT utilization, and internal control in
the procurement process were used. In this section, the researcher has asked five
questions for each of these variables to the respondents to indicate the extent to which
they agree or disagree with the statement relating to the effect of procurement planning,
effect of staff competency, effect of ICT utilization, and effect of internal control on
procurement performance in the administration as shown underneath. Responses were
ranked using a 5- point Likert Scale from Strongly Agree to Strongly Disagree (1 =
Strongly Agree, 2 = Agree, 3 = Neutral, 4 = Disagree and 5= Strongly Disagree).

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 4.4.4.1. The Effect of procurement planning on the Procurement
Performance of Gulele Sub-City administration
This was the first objective of the four specific objectives of the study. In this objective,
the study intended to examine the effect of procurement planning on the procurement
performance of the Gulele Sub-City administration. This variable was measured by
determining questions including participation in preparing procurement plan, adherence
to procurement plan, user need identification, approved/updated procurement plan
circulation to the concerned public sector offices, and procurement needs submission by
user departments. The subsequent descriptive analyses on the selected questions were
conducted based on table 4.6 below.

Table 4.6: Statement Related to Effects of Procurement Planning on Procurement

Performance at Gulele Sub-City Administration.

No. Procurement Planning Questions Scale Frequency Valid Percent

Procurement plan prepared through Strongly Agree 10 7.9
1 involvement of concerned Agree 30 19.2
employees and public sector offices. Neutral 27 10.7
Disagree 77 41.8
Strongly Disagree 33 20.3
Total 177 100.0
2 Procurement activities of the Strongly Agree 10 5.6
administration are guided by annual Agree 12 6.8
procurement plan. Neutral 15 8.5
Disagree 86 48.6
Strongly Disagree 54 30.5
Total 177 100.0
3 Procurement plan of the Strongly Agree 12 6.8
administration identify materials as Agree 26 14.7
per the user departments need. Neutral 22 12.4
Disagree 89 50.3
Strongly Disagree 28 15.8
Total 177 100.0

Source: Field Survey Result, April 2019

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Results from Table 4.6 above reveal that majority 110(62.1%) of the respondents
disagreed that the procurement plan prepared through the involvement of concerned
employees and public sector offices, whereas 40(22.8%) of the respondents were agreed
and 27(15.1%) of the respondents were neutral. This result reveals that the administration
procurement plan was not participatory. Similarly, majority 140(79.1%) of the
respondents disagreed that in Gulele Sub-City administration procurement activities are
guided by the annual procurement plan, while 22(12.4%) of the respondents agreed and
15(8.5%) of the respondents were neutral. This shows that more than half of the
respondents were of the opinion that the procurement activities of the administration were
not guided by an established annual procurement plan.

As regards’ to procurement plan of the administration identify materials as per the user
departments need question, majority 117(66.1%) of the respondents disagreed, 38(21.5%)
of the respondents were agreed, and 22(12.4%) of the respondents were neutral. The
finding from this result indicates that the administration procurement plan did not identify
materials as per the user departments need. As regards’ to procurement plan of the
administration identify materials as per the user departments need question, majority
117(66.1%) of the respondents disagreed, 38(21.5%) of the respondents were agreed, and
22(12.4%) of the respondents were neutral. The finding from this result indicates that the
administration procurement plan did not identify materials as per the user departments
need.

In summary, all of the five questions in this variable demonstrated that procurement
planning has the greatest effects on public procurement performance in Gulele Sub-City
administration because according to responses the majority of the respondents were
disagreed on each question. Meanwhile, from the above descriptive analysis, the three
factors that mostly contribute to influencing the procurement planning and procurement
performance are; procurement activities of the administration are not carried out
according to the set plan, inadequacy of procurement plan in terms of identifying
materials as per the user departments need, and lack of preparation of procurement plan
through involvement of concerned employees and stakeholders. These results were also
87
supported by the opinion gathered through the face to face interviews with heads of
surveyed public sector offices and procurement process owners. The descriptive would
argue that, in order for the administration procurement activities are effective, more
efforts should be exerted on procurement activities of the administration to carry out
according to the set plan.

This result is in line with the previous studies by Hamza et al. (2016); Getahun (2015)
and Mamiro (2010) who found that guiding procurement activities using annual
procurement plan is a critical aspect in ensuring that procurement is conducted in a
manner that maximizes competition and achieves economy, efficiency, transparency and
value for money. Similarly, Mamiro (2010) and Basheka, (2009) stated that departments
prepared annual procurement plans and submit their procurement need on time plans; that
procurement plans were based on user needs and the goals set participatory. Similarly,
the procurement department should circulate the approved plan to the user departments
on time.

4.4.4.2. The Effect of Staff Competency on the Procurement Performance of

Gulele Sub-City Administration

Determination of the effect of staff competency on the procurement performance of

Gulele Sub-City administration was the second objective of the study. In order to achieve
the stated objective, respondents were asked questions on; competent procurement staff,
procurement staff profession, application of procurement principles by procurement staff,
procurement staff recruitment, and personal ability to understand users need and
suppliers’ capacity. The subsequent descriptive analyses on the selected questions were
conducted based on Table 4.7 below.

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 Table 4.7: Statement Related to Effects of Staff Competency on Procurement
Performance at Gulele Sub-City Administration.

No. Procurement Planning Questions Scale Frequency Valid Percent

Procurement activity of the Strongly Agree 7 4.0
1 administration is conducted by Agree 27 15.3
competent procurement staffs Neutral 7 4.0
Disagree 100 56.5
Strongly Disagree 36 20.3
Total 177 100.0
2 Employees at procurement support Strongly Agree 5 2.8
processes have the relevant Agree 25 14.1
education background related to Neutral 7 4.0
procurement. Disagree 97 54.8
Strongly Disagree 43 24.3
Total 177 100.0
All procurement staffs have the Strongly Agree 7 4.0
3 ability to understand users need and Agree 34 19.2
suppliers’ capacity. Neutral 27 15.3
Disagree 84 47.5
Strongly Disagree 25 14.1
Total 177 100.0

Source: Field Survey Result, April 201

According to Table 4.7 above, the majority 136(76.8%) of the respondents disagreed on
the statement that in Gulele Sub-City administration the procurement activity is
conducted by competent procurement staffs, 34(19.2%) of the respondents were agreed,
and the remaining 7(4.0%) of the respondents were neutral. The findings above indicate
that in the Gulele Sub-City administration the procurement activity was not conducted by
competent procurement staff. Regarding the question employees at procurement support
processes have the relevant education background related to procurement, more than have
of 140(79.1%) of the respondents disagreed that procurement staffs have the relevant
education background related to procurement, whereas 30(16.9%) and 7(4.0%) of the
respondents agreed and neutral respectively on the statement related to procurement staff
profession. This indicates that the procurement staffs at procurement support processes
89
do not have a relevant educational background related to procurement which is the major
reason for poor procurement performance of the administration.

On the other hand, more than half 109(61.6%) of the respondents disagreed that
procurement staffs have the ability to understand users need and suppliers’ capacity,
41(23.2%) of the respondents were agreed, and 27(15.2%) of the respondents were
neutral. With these results, the study fairly ascertains that most of the procurement staff
has no ability to understand users need and supplier’s capacity.

In summary, all of the five items of questions in this variable demonstrated that staff
competency having the greatest effects on public procurement performance of the
administration. Cumulatively, this suggests that the administration procurement functions
are not conducted by competent procurement staffs, because most of the respondents
disagreed on each question. Therefore, the key results of the study indicated that lack of
professional qualification, lack of competent procurement staffs, and inability of
procurement staffs to understand users need and suppliers’ capacity are the major reasons
for poor procurement performance of the administration.

These findings were also supported by views given by heads and process owners during
the face to face interviews. According to the interviewed respondents, if the procurement
process is managed by well trained and professionally qualified personnel, then the levels
of familiarity with regulations, rules, and procedures will be high with associated
compliance with codes of conduct and ethics, all leading to sound procurement practices
and increased organizational performance. The above descriptive analysis would suggest
that in order to ensure staff competency in the procurement support processes, the
administration should be haired procurement staffs having professional qualifications and
skills.

These results are in agreement of the findings in the studies conducted by Bekele (2015);
Kioko & Were (2014) which established that individuals must possess a range of
personal competencies along with task-specific competencies to perform procurement
activities effectively and efficiently. They suggested that staff competency greatly affects
90
 the performance of the procurement function in the public institution. While this is
further supported by the findings revealed in previous studies conducted by Aberu (2017)
and Samson et al. (2016) who suggested that the performance of the procurement
function in any organization requires that the individuals handling the procurement
activity should have the necessary professional qualifications and competency so as to be
able to secure value for money for their employers and play their role of intermediaries
between the user and the supplier.

4.4.4.3. The Effect of ICT Utilization on the Procurement Performance of

Gulele Sub-City Administration

The third objective of this study was to assess the effect of ICT utilization on the
procurement performance of the Gulele Sub-City administration. In order to achieve the
stated objective, respondents were asked questions related to the level of ICT utilization
in the procurement support processes such as; ICT implementation, procurement staff
ICT skill, information flow between the procurement department and user departments/
suppliers, benefit from ICT, and use of ICT in the procurement process. The subsequent
analyses on the selected questions were conducted based on table 4.8 below.

Table 4.8: Statement Related to Effects of ICT Utilization on Procurement Performance

at Gulele Sub-City administration

No. Procurement Planning Questions Scale Frequency Valid Percent

The administration has embraced Strongly Agree 9 5.1
1 ICT in its procurement processes. Agree 16 9.0
Neutral 19 10.7
Disagree 103 58.2
Strongly Disagree 30 16.9
Total 177 100.0
2 All employees at procurement unit Strongly Agree 8 4.5
effectively use the IT platforms. Agree 26 14.7
Neutral 18 10.2
Disagree 92 52.0
Strongly Disagree 33 18.6
Total 177 100.0
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 The use of ICT has eased the Strongly Agree 10 5.6
3 procurement process of the Agree 28 15.8
administration by lowering costs and Neutral 24 13.6
increasing productivity. Disagree 89 50.3
Strongly Disagree 26 14.7
Total 177 100.0

Source: Field Survey Result, April 2019

Based on the results as indicated in Table 4.8 above, the majority 133(75.2%) of the
respondents disagreed that the administration has embraced ICT in its procurement
processes, whereas only 25(14.1%) of the respondents were agreed and 19(10.7%) of the
respondents were neutral. This indicates that there is no automated Information
Communication Technology in the procurement support processes to facilitate
procurement activities. So, from this study, one can conclude that procurement support
processes were making little use of Information communication technology in their
public procurement function. On the other hand, the majority 125(70.6%) of the
respondents disagreed on the statement that all employees at procurement support
processes effectively use the IT platforms and 34(19.2%) of the respondents were agreed.
However, 18(10.2%) of the respondents were neutral. Therefore, this shows that
employees at procurement support processes don't have the skills to use the IT platforms
effectively.

Furthermore, the majority 115(65%) of the respondents disagreed that the use of ICT has
eased the procurement process of the administration by lowering costs and increasing
productivity, the remaining 38(21.5%) of the respondents were agreed and 24(13.5%) of
the respondents were neutral. From the above finding, we can conclude that in Gulele
Sub-City administration ICT has not speed up the procurement process by lowering costs
and increasing productivity.

In general, all of the five questions in this variable produced negative responses
indicating their relevance and applicability in relation to the chosen variable. This means
the respondents agreed that factors related to ICT utilization having affects on public
92
procurement performance in the administration because the majority of the respondent
disagreed on each question. Therefore, lack of ICT implementation, lack of staff ICT
skill, and lack of use of ICT in procurement process are the major factors for poor ICT
utilization and procurement performance in the administration The findings are in
agreement with responses during the interview with process owners and public sector
heads who admitted that poor ICT implementation and utilization is the major obstacle to
conduct procurement functions of the administration. From these findings, it can fairly be
argued that the procurement performance of the administration influenced by the level of
ICT utilization in the procurement support processes.

Similarly, the findings are similar to previous studies by Mrope (2018) several factors
affecting the performance of procurement in the public entities are related to a lack of
ICT utilization in the procurement process. Bekele (2015) and Aberdeen (2005)
recommends that government officials and elected leaders have increasingly come to
realize that public agencies must utilize ICT in order to enhance the procurement
processes in the public sectors. Procurement professionals should identify and implement
technology that aides the procurement process and supports the overall strategy of the
organization. The technology should create measurable results including, reduced
transaction costs, improved process efficiency, increased contract compliance, improved
transparency, reduced cycle times, improved inventory costs, and can also increase
supplier access to bid opportunities which can result in increased competition.

4.4.4.4. The Effect of Internal Control on the Procurement Performance of

Gulele Sub-City Administration
The fourth objective of this study was to ascertain the effect of internal control on the
procurement performance of the Gulele Sub-City administration. In order to achieve the
stated objective, respondents were asked questions related with the level of internal
control in the public procurement and property administration support processes such as;
fraud/corruption detection, conducting regular review & analysis, providing timely
information, conducting training with regards to internal control implementation, and

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 assessing & monitoring procurement performance. The subsequent descriptive analyses
on the selected questions were conducted based on table 4.9 below.

Table 4.9: Statement Related to Effects of Internal Control on Procurement Performance

at Gulele Sub-City administration

No. Procurement Planning Questions Scale Frequency Valid Percent

The administration effective internal Strongly Agree 17 9.6
1 control system is able to Agree 24 13.6
prevent/detect fraud and errors. Neutral 21 11.9
Disagree 71 40.1
Strongly Disagree 43 24.3
Total 176 100.0
2 Internal audit unit conducts regular Strongly Agree 12 6.8
reviews and analysis of the Agree 21 11.9
departmental total procurement Neutral 16 9.0
expenditure. Disagree 88 49.7
Strongly Disagree 40 22.6
Total 177 100.0
Procurement support processes Strongly Agree 12 6.8
3 assesses and monitors its Agree 34 19.2
performance over time through Neutral 19 10.7
evaluation and feedback whether Disagree 76 42.9
they are working to perfection. Strongly Disagree 36 20.3
Total 177 100.0

Source: Field Survey Result, April 2019

From Table 4.9 above, the majority 114(64.8%) of the respondents disagreed on the
statement that internal control system in Gulele Sub-City administration able to
prevent/detect fraud and errors, 41(23.3%) of the respondents were agreed, and
21(11.9%) of the respondents were neutral. This indicates that the internal control system
isn’t able to prevent/detect fraud and errors in the procurement activities as shown by a
percentage of 64.8%. Similarly, the majority 128(72.3%) of the respondents disagreed
that the internal audit unit conducts regular reviews and analysis of the departmental total
procurement expenditure. However, 33(18.7%) and 16(9.0%) of the respondents were

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agreed and neutral respectively. This result shows that the internal audit unit doesn’t
conduct regular reviews and analyses of the departmental total procurement expenditure.

Moreover, the majority 112(63.3%) of the respondents disagreed on the statement that
procurement support processes assess and monitor its performance over time through
evaluation and feedback whether they are working to perfection and 46(26.0%) of the
respondents were agreed. On the other hand, only 19(10.7%) of the respondents were
neutral. This shows that procurement support processes don’t assess and monitors its
performance over time through evaluation and feedback whether they are working to
perfection.

In summary, most of the respondents disagreed on all items of questions in this variable
demonstrated that internal control has the greatest effects on public procurement
performance. Cumulatively, this suggests that factors related to internal control having
the greatest effects on public procurement performance in Gulele Sub-City
administration, because all disagreement percentage was greater than 50%. Hence, the
lack of conducting regular review & analysis, fraud/corruption, and lack of assessing &
monitoring procurement performance are having the greatest effects on public
procurement performance in the administration. The descriptive would argue that, in
order for the administration procurement activities are effective, more efforts should be
exerted on internal control of the administration.

The findings are in agreement with responses during the interview with heads of public
sector offices and procurement process owners who admitted that management of the
procurement process should very much concern with efficiency and effectiveness; they
control the performance of procurement function to achieve this. It is very important to
assess how well the procurement process has gone, identify any weakness or problems
and needed action to prevent it from future occurrence. This result is in agreement with
the previous studies by Getahun (2015) and Kebede (2011) who found that internal
control is a critical aspect in ensuring that procurement is conducted in a manner that
maximizes competition and achieves economy, efficiency, transparency and value for

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money. They also suggested that public entities should conduct formal procurement
evaluations or audits to access their performance. This implies that the existing internal
control system of the administration is not adequate in terms of achieving procurement
objective (effectiveness) and influences its procurement performance.

4.4.4.5. Summary of Combined Respondents’ Assessment on Level of Impact

of Factors on the Procurement Performance

According to Table 4.10 below, 43(24%) of the respondents agreed and 134(76%) of the
respondents disagreed that the administration had a procurement plan. Similarly, 43(24%)
of the respondents agreed and the majority 134(76%) of the respondents disagreed that
the administration had a competent procurement staff. Again, 46(26%) of the respondents
were agreed that the administration had ICT utilization in the procurement function and
the remaining 131(74%) of the respondents disagreed. Furthermore, 55(31%) of the
respondents were agreed that the administration had an internal control system in the
procurement activities but the majority 122(69%) of them disagreed. Finally, 75% of the
respondents were agreed (code = 0) that the administration procurement performance was
low, however, the rest 25% (code = 1) of the respondents disagreed.

Table 4.10: Impact of factors on the Procurement Performance of the Administration

N Marginal Percentage
PPP Low 132 74.6%
High 45 25.4%
PP Agree 43 24.3%
Disagree 134 75.7%
SC Agree 43 24.3%
Disagree 134 75.7%
ICTU Agree 46 26.0%
Disagree 131 74.0%
IC Agree 55 31.1%
Disagree 122 68.9%

Source: SPSS 24 Output, April 2019

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As shown in Table 4.10 above, from the five factors (i.e. procurement planning, staff
competency, ICT utilization, and internal control), the researcher identified the major
factors of procurement performance by ranking the percentage value of the respondents.
The high percentage indicated that the independent variable has the greatest influence on
the procurement performance of the administration. Therefore, procurement planning and
staff competency are the two procurement factors that greatly affect the procurement
performance of the administration with a percentage of 76. This is closely followed by
ICT utilization with a percentage of 74 and internal control within the procurement
support processes is ranked the lowest with a percentage of 69. In short, all factors were
not received support from a majority of the respondents. In other word, lack of
procurement planning, staff competency, ICT utilization, and internal control were to a
large extent affects the procurement performance of the administration.

Overall a majority (75%) of respondents answered the administration procurement

performance was low. The presented descriptive analysis would suggest that in order to
ensure procurement performance in the administration, there should be evidence of four
and closely related practices within the administration public procurement and property
administration support processes; - good procurement plans, competent staff, automated
procurement system, and effective internal control system. Binary Logistic regression
analysis was employed to predict that whether the administration had procurement plans,
staff competency, ICT utilization, and internal control system in its procurement
activities or not to predict the probability whether the administration procurement
performance was high or not.

4.5. Inferential Analysis

To formulate a suitable model to evaluate the relationship between the public
procurement factors and procurement performance in Gulele Sub-City administration, the
study carried out an inferential analysis that involved Spearman Correlation Coefficient
and Binary Logistic Regression analysis and then fitting the data in the binary logistic
regression model to determine whether it’s valid. The aim of the inferential analysis is to

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make conclusions out of the data between the independent and dependent variables.
Assumptions of binary logistic regression and analyses of the data are presented below:

4.5.1. Analysis of Assumptions of Binary Logistic Regression

Logistic regression analysis uses maximum likelihood estimation to predict group
membership. However, to interpret the results of the prediction of group membership
with precision and accuracy, a preliminary analysis of the cleaned dataset was conducted
to observe if the assumptions of logistic regression were met (Krystle, 2015). According
to Park (2013), in order for our analysis to be valid, our model has to satisfy the
assumptions of logistic regression. When the assumptions of logistic regression analysis
are not met, we may have problems, such as biased coefficient estimates or very large
standard errors for the logistic regression coefficients, and these problems may lead to
invalid statistical inferences.

Therefore, before I can use my model to make any statistical inference, I need to check
the underlying assumptions involved in logistic regression. Some of the assumptions are:
First, logistic regression requires the dependent variable to be discrete mostly
dichotomous. Second, since logistic regression estimates the probability of the event
occurring (P(Y=1)), it is necessary to code the dependent variable accordingly. That is
the desired outcome should be coded to be 1. Third, the model should be fitted correctly.
It should not be over-fitted with the meaningless variables included and it should not be
under fitted with meaningful variables not included. Fourth, logistic regression requires
each observation to be independent and should have little or no multicollinearity. Fifth,
whilst logistic regression does not require a linear relationship between the dependent and
independent variables, it requires that the independent variables are linearly related to the
log odds of an event. Lastly, logistic regression requires large sample sizes because
maximum likelihood estimates are less powerful than ordinary least squares used for
estimating the unknown parameters in a linear regression model (Park, 2013).

Altogether, in this study, the researcher was focused on the detection of multicollinearity
problems among the explanatory variables by focusing on few collinearity diagnostics

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commonly used in binary logistic regression and Kaiser–Meyer–Olkin (KMO) &
Bartlett’s Tests of sampling adequacy. Using the above diagnostics the researcher was
eliminated the consequences of multicollinearity and rectify the binary logistic regression
model to draw valid statistical inferences regarding the regression parameters.

4.5.1.1. Multicollinearity Assumption

Multicollinearity is a statistical phenomenon in which predictor variables in a logistic
regression model are highly correlated. It is not uncommon when there are a large
number of covariates in the model. There are certain reasons or causes to occur
multicollinearity. It is caused by an inaccurate use of design variables; it is caused by the
inclusion of a variable which is computed from other variables in the equation;
multicollinearity can also result from the repetition of the same kind of variables; it
generally occurs when the variables are highly and truly correlated to each other (Midi et
al., 2013). The existence of collinearity inflates the variances of the parameter estimates
and consequently incorrect inferences about relationships between explanatory and
response variables. The diagnostic tool considered primarily for identifying
multicollinearity is; the pairwise coefficients of a simple correlation between the
predictor variables but not sufficient. Much better diagnostics are produced by linear
regression with the option tolerance, VIF, Eigen values, condition indices, and variance
proportions. For moderate to large sample sizes, the approach to drop one of the
correlated variables was established entirely satisfactory to reduce multicollinearity
(Field, 2009). Therefore, for this research multicollinearity assumption was checked by
the spearman correlation coefficient, Collinearity Statistics, and Egein values.

A. Assumption Test using the Spearman Correlation Coefficient

The correlation matrix presented in Appendix 2C is obtained from the SPSS output and
the correlation coefficients among the explanatory variables can be used as the first step
to identify the presence of multicollinearity. Based on the general rule of thumb is that if
a simple correlation coefficient is greater than 0.8 or 0.9 then multicollinearity is a
serious problem. However, if the correlation coefficients among predictors are below <

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0.9, there is no substantial correlation between predictor variables so there is no
multicollinearity problem (Field, 2009).

Therefore, the simple correlation coefficients between four independent variables of

procurement planning, staff competency, ICT utilization, and internal control are not
substantially correlated i.e. all are below 0.90 and indicated them as bold in Appendix
2C. These low correlation coefficients signify the absence of multicollinearity between
the independent variables so that it is able to obtain unique estimates of the regression
coefficient.

B. Assumption Test using Collinearity Statistics

Examining the correlation matrix may be helpful but not sufficient. It is quite possible to
have data in which no pair of variables has a high correlation, but several variables
together may be highly interdependent. Much better diagnostics are produced by linear
regression with the help of tolerance and its reciprocal, called a variance inflation factor
(VIF) (Midi et al., 2013). According to Mary (1990), as a rule of thumb, a tolerance close
to 1 indicates that there is little multicollinearity, whereas a value close to zero suggests
that multicollinearity may be a threat i.e. a tolerance of 0.1 or less. Correspondingly, the
variance inflation factor shows us how much the variance of the coefficient estimate is
being inflated by multicollinearity and showing whether the predictors are correlated or
not. Mary (1990) also suggests that like tolerance there is no formal cutoff value to use
with VIF for determining the presence of multicollinearity. To interpret the value of VIF
the following rule is used, values of VIF exceeding 10 are often regarded as indicating
multicollinearity, but in weaker models, which is often the case in logistic regression;
values above 2.5 may be a cause for concern. Thus, both tolerance and VIF has appeared
intolerance and VIF column as part of the SPSS output. (See Appendix 2D for the detail).

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 Table 4.11: Detection of Multicollinearity Based on Collinearity Statistics

Collinearity Statistics
Explanatory variables Tolerance VIF
Procurement Planning .896 1.116
Staff Competency .917 1.091
ICT Utilization .989 1.012
Internal Control .936 1.069

Source: SPSS 24 Statistics Output, April 2019

The SPSS output in Table 4.11 above gives the collinearity statistics value of Tolerance
and Variance Inflation Factor (VIF). In this table, we observe the high tolerance for the
variables procurement planning, staff competency, ICT utilization, and internal control
which is close to 1. Similarly, the variance inflation factor (VIF) corresponding to the
explanatory variables is very close to 1 which is less than 2.5. Using these collinearity
statistics the researcher concluded that the data almost certainly indicates the absence of
collinearity problems. Therefore, there was no multicollinearity problem.

C. Assumption Test using Colinearity Diagnostics (Eigen Values and Condition

Indices)
Sometimes Eigen values for the scaled condition indices and the variance proportions for
each predictor will be referred to examine as multicollinearity diagnostics. If any of the
Eigen values in the output are much larger than others then the uncentered cross-product
matrix is said to be ill-conditioned, which means that the solution of the regression
parameters can be greatly affected by small changes in the predictors or outcome. These
values give us some idea as to how accurate our logistic regression model is? If the Eigen
values are fairly similar then the derived model is likely to be unchanged by small
changes in the measured variables (Midi et al., 2013).

The condition index is another way of expressing these Eigen values and represents the
square root of the ratio of the largest Eigen value to the Eigen value of interest. When
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there is no collinearity at all, the Eigen values, condition indices or condition number will
all equal unity. Eigen values close to zero indicate a multicollinearity problem and
condition indices will be increased. There are no hard and fast rules about how much
larger a condition index needs to be indicated collinearity problems. An informal rule of
thumb is that if the condition index is 15, multicollinearity is a concern; if it is greater
than 30, multicollinearity is a very serious concern (Midi et al., 2013). (See Appendix 2E
for the detail).

Table 4.12: Detection of Multicollinearity Based on Colinearity Diagnostics (Eigen

Values and Condition Index)

Dimension Eigen value Condition Index

1 4.213 1.000
2 .300 3.745
3 .223 4.345
4 .185 4.778
5 .079 7.291

Source: SPSS 24 Statistics Output, April 2019

The SPSS output of this study was exhibited in Table 4.12 as collinearity diagnostics. It
was observed that all Eigen values were not close to zero which indicates the absence of
multicollinearity problem. Similarly, the largest condition index was 7.291, which is
below the range of our rules of thumb (i.e. 7.291 is less than 15). Using this collinearity
diagnostic the researcher was concluded that the data almost certainly indicates the
absence of collinearity problems. Therefore, there was no multicollinearity problem.

4.5.1.2. Kaiser–Meyer–Olkin (KMO) and Bartlett’s Tests of Sampling

Adequacy
The KMO value indicates the sampling adequacy of the data while it is also referred to as
a measure of sampling adequacy (MSA). In the data set, KMO statistic shows the
variables, correlation which has the ability to explain the other variables (Kaiser, 1958).

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Jibril (2017) in his research points out the threshold values for sampling adequacy below
0.50 as “Unacceptable”, 0.50 – 0.59 as “Miserable”, 0.60 – 0.69 as “Acceptable”, 0.70 –
0.79 as Good, 0.80 – 0.89 as “very good” and 0.90 or higher as “Marvelous”. In this case,
the value of KMO is 0.829 (82.9%) indicating that the sample was adequate and each
factor contains sufficient items for making groups in factor analysis. Bartlett’s Sphericity
test, on the other hand, was used to test the null hypothesis that the variables in the
population (as opposed to the sample which provided the data) are uncorrelated and the
null hypothesis was rejected at 1 percent level of significance (p-value < 0.01) to allow
proceed with factor analysis. Hence, the probability value of Bartlett’s test of Sphericity
is 0.000, which indicates that the correlation between the variables is adequate at a 1%
level of significance and is sufficient for factor analysis as shown in Appendix 2B.

Furthermore, according to Park (2013), while sample sizes is a key consideration in

logistic regression and required large sample sizes, minimum sample sizes of 100 have
been recommended for models which contain five or fewer independent variables with
one or more dependent variables. Therefore, the sample size of this study was 197 which
are adequate in order to evaluate the logistic regression model.

4.5.2. Factor Analysis

The general objective of this study was to assess the factors that affect procurement
performance in Addis Ababa City, Gulele Sub-City Administration. In assessing the
factors, four independent variables were measured using a 5 -point Likert scale and the
dependent variable were discrete (dichotomous). Furthermore, each of the four predictors
(independent variables) consisted of five questions each. Since there were four
independent variables and within every five questions, the researcher conducted factor
analysis. According to Field (2009), factor analysis is a statistical technique that is used
for data reduction. Therefore, the reason to apply this test is to reduce a large number of
items and factors into smaller numbers, and reduced results are then used for other
analysis such as binary logistic regression analysis to determine which of those items and
factors should be retained for further analysis by examining whether the factor loading of

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each item and the average factor loading is greater than 0.5 and 0.7 respectively (Hair et
al., 1998). Hence, items factor loading ranges from 0.672 to 0.863 and average factor
loading of variables ranges from 0.748 to 0.800, which satisfy the minimum criteria and
they are significant for further binary logistic regression analysis and there is no violation
of the assumption of communalities.

This study originally has 25 questionnaire items, which was reduced to 20 items. For
example, two items from each of procurement planning and internal control and one item
from ICT utilization were reduced. These 20 items, were retained since they met
essentially significant levels of convergent validity. On the basis of the analysis, the
researchers then grouped the 20 items into four factors. According to Hair et al. (1998),
for all items, the eigenvalues must be greater than 1.0 whereas less than 1.0 eigenvalues
are insufficient for the logistic regression. In this study, the eigenvalue for all items is
greater than one; this is well above the threshold. Table 4.13 below provides the average
factor loading of factors influencing procurement performance. Thus, the results of the
extraction of components are reported in Appendix 2A.

Table 4.13: Average Factor Loadings of factors

Independent Variable Factor Scores

Staff Competency 0.800
Procurement Planning 0.794
ICT Utilization 0.791
Internal Control 0.748

Source: SPSS 24 Statistics Output, April 2019

4.5.3. Spearman correlation coefficient

As the researcher was mentioned earlier, the study was used the Spearman correlation
coefficient technique to analyze the degree of relationship between two variables
(independent and dependent). The independent variables of this study; procurement
planning, staff competency, ICT utilization, and Internal control; the procurement

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performance of the Gulele Sub-City administration was the dependent variable in this
study.

Furthermore, based on the results (Appendix 2C) of the Spearman correlation coefficients
was interpreted by the guideline suggested by Taylor (1990); he mentioned that the
Spearman rank correlation coefficient shows the relationship and direction between the
predictor and outcome variable. Accordingly, labeling system exist to roughly categorize
r values where correlation coefficients (in absolute value) which are < 0.29 are generally
considered to represent low or weak correlation, 0.30 to 0.49 is moderate correlations,
above 0.50 to 1.0 shows strong or high correlation; while the positive and negative sign
tells us the direction of their relationship. In brief, the researcher has tested the Spearman
correlation between the dependent variable (Procurement performance) and independent
variables (Factors) as follow as:

From the table of Spearman correlation coefficients (Appendix 2C), there is a significant
direct (or positive) relationship between procurement planning and procurement
performance at the 1% level of significance (p-value = 0.000 < 0.01 and r s = 0.584). The
straightforward interpretation of these results is that as the level of preparing the
procurement plan increases, the procurement performance of the administration increases
too. The researcher also found that, there is a significant direct (or positive) relationship
between staff competency and procurement performance at the 1% level of significance
(p-value = 0.000 < 0.01 and r s = 0.564) and therefore, if adequacy of knowledge and
skills of procurement staffs is high the procurement performance of the administration is
also high.

Similarly, based on the results as shown on the table of Spearman correlation coefficient
(Appendix 2C), there is a significant relationship between ICT utilization and
procurement performance of the administration at the 1% level of significance (p-value =
0.009 < 0.01 and rs = 0.453). This implies that ICT utilization has an effect on the
procurement performance of the administration. Moreover, the table of Spearman
correlation coefficients (Appendix 2C) revealed a p-value = 0.002 < 0.01 and rs = 0.535.

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Statistically, the results suggest that there is a significant direct (or positive) relationship
between internal control and procurement performance at the 1% level of significance.
Based on these results, it can fairly be argued that as the level of internal control in
procurement support processes involved in the procurement process increases, the level
of performance of procurement in the administration increases accordingly.

Altogether; procurement planning, staff competency, ICT utilization, and internal control
have a significant direct (or positive) relationship with procurement performance at the
1% level of significance. This indicated that procurement planning, staff competency;
internal control and ICT utilization are the main public procurement core factors that
have the most significant effect (impact) towards the performance of the procurement
function in the administration. These findings are in agreement with the previous findings
by Aberu (2017); Samson et al. (2016); Kassie (2014); Kioko & Were (2014); and
Kebede (2011). Therefore, if the procurement planning, staff competency, internal
control, and ICT utilization is high the procurement performance is also high, and
therefore goods, services, and works are delivered to public entities with right qualities, at
right time, with right quantities and from right suppliers at the right price.

1.4.3. Binary Logistic Regression Analysis

Logistic regression can be used to determine the categorical probability of an event
occurring given a select number of continuous and categorical variables. However,
logistic regression analysis does not require that the distribution of independent variables
in the model follow normal distribution so logistic regression is the recommended
statistical procedure when these variables are used (Sharma, 1996).

Under this study, it is important to carry out a statistical analysis which would
incorporate more than one predictor variable at a time. As a result, the binary logistic
regression model was used to determine the effect an increment of each independent
variable (factors) on how likely the binary variable (procurement performance) decision
is to take value 1 (high procurement performance) as opposed to value 0 (low
procurement performance). The results of the analysis concerning the binary logistic

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regression model are presented in the subsequent sections. In presenting the binary
logistic regression results, the following four types of information should be included: a)
overall evaluation of the logistic model; b) goodness-of-fit statistics; c) statistical tests of
individual predictors; and d) an assessment of the predicted probabilities (Park, 2013).

A. Overall Evaluation of the Logistic Regression Model

The regression outputs of the SPSS Version 24 have been discussed on with the
conventional two methods in the following ways. The first method of the Binary Logistic
Regression analysis of the study is called Block 0: Beginning Block in SPSS. Block 0
assesses the usefulness of having a null model, which is a model with no explanatory (i.e.
Procurement planning, Staff competency, ICT utilization, and internal control) variables.
Similarly, Block 1: Method = Enter shows the results after the addition of the
explanatory variables selected (i.e. Procurement planning, Staff competency, ICT
utilization, and Internal control). Therefore, logistic regression compares this model of
ours with a model including all predictors to determine whether the latter model is more
appropriate.

Block 0: Beginning Block

In this section, the SPSS output of Table 4.14 below summarizes the model (Variables in
the Equation), and at this stage, this entails quoting the value of the constant (α), which is
equal to -1.076. If we exponentiate both sides of this expression we find out our predicted
odds (Exp (β)) = 0.341. That is, the predicted odds of the respondents agree on high
procurement performance is 0.341. Since 45 of our respondents agree on high
procurement performance and 132 agree on low procurement performance of the
administration, our observed odds are 45/132 = 0.34. Similarly, the significance of the
models with the only constant is 0.000 which is less than the level of significance of 0.01
(i.e. p < 0.01). This statistics tells us that the null model is significant and should be
rejected.

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 Table 4.14: Variables in the Equation

B S.E. Wald df Sig. Exp(B)

Step 0 Constant -1.076 .173 38.864 1 .000 .341

Source: SPSS 24 Statistics Output, April 2019

Table 4.15: Variables Not in the Equation Table for Block 0

Score df Sig.
Step 0 Variables PP(1) 23.457 1 .000
SC(1) 19.846 1 .000
ICTU(1) 5.965 1 .015
IC(1) 11.312 1 .001
Overall Statistics 43.455 4 .000

Source: SPSS 24 Statistics Output, April 2019

Once the prediction power of the null model and its significance level is identified, the
next important thing to do is checking the significance of predictors that not included in
the null model. The table labeled ‘variables not in the equation’ Table 4.15 above tells
us that the residual chi-square statistic is 43.46 which are significant at p < 0.01 (it labels
this statistic Overall Statistics). This statistic tells us that the coefficients for the variables
not in the model are significantly different from zero – in other words, that the addition of
one or more of these variables to the model will significantly affect its predictive power.
If the probability for the residual chi-square had been greater than 0.05 it would have
meant that forcing all of the variables excluded from the model into the model would not
have made a significant contribution to its predictive power. Indeed, this result is
statistically significant that is the p-value (sig.) of each independent variable is all found
to be less than 0.05. This suggests that we should include all of the chosen independent
variables in our binary logistic regression model. Therefore, the researcher concludes that
adding the predictors to the model has significantly increased our ability to predict the

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procurement performance in Gulele Sub-City administration and improves the model.
Furthermore, the Block 0 output is for a model that includes only the intercept which
SPSS calls the constant (i.e. all predictor variables are omitted). When only the constant
was included -2LL = 200.698. This represents the fit of the most basic model to the data.

According to the Classification Table for Block 0 (Table 4.16) below, given the base
rates of the two decision options either to predict that the procurement performance was
high or low. In this study, there were 132 respondents were agreed that the procurement
performance of the administration was low and only 45 who were disagreed. Therefore, if
SPSS predicts that every respondent was agreed that the procurement performance of the
administration is low then this prediction will be correct 132 times out of 177 (i.e.
132/177 = 75% approx.). However, if SPSS predicted that every respondent was agreed
that the procurement performance of the administration is high, then this prediction
would be correct only 45 times out of 117 (i.e. 45/177 = 25% approx.). As such, of the
two available options, it is better to predict that the procurement performance of the
administration was low because this results in a greater number of correct predictions.
The output shows a contingency table for the model in this basic state. You can see that
SPSS has predicted that procurement performance is low, which results in 0% accuracy
for the procurement performance of the administration was high, and 100% accuracy for
those observed to be low procurement performance. Overall, the model correctly
classifies 74.6% of respondents and classification from the null model is 74.6% accurate.

Table 4.16: Classification Table for Block 0

Predicted
Observed PPP Percentage
Low High Correct
Step 0 PPP Low 132 0 100.0
High 45 0 .0
Overall Percentage 74.6
a. Constant is included in the model.
b. The cut value is .500
Source: SPSS 24 Statistics Output, April 2019

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Block 1: Method = Enter

Having analyzed the results from the Block 0 method, that is, the results of the logistic
regression of our model with only the constant included before any coefficients included,
we then went to the second step in our binary logistic regression analysis. This represents
the results when we include the chosen independent variables (Procurement planning,
Staff competency, ICT utilization, and Internal control) for our model as a predictor
(Block 1). Therefore, the overall fit of the new model is assessed using the log likelihood
statistic and large values indicate poorly fitting statistical models (Field, 2009).

So, SPSS output Table 4.17 (Omnibus Tests of Model Coefficients), Table 4.18 (Model
Summary of Variable Relationship), and Table 4.19 (Classification Table for Block 1)
respectively, shows summary statistics about the new model (which we’ve already seen
contains procurement planning, staff competency, ICT utilization, and internal control)
which essentially indicates the relationship between the independent variables and the
dependent variable. Therefore, it was useful to examine them as a way of ascertaining the
substantive value of the model.

Table 4.17: Omnibus Tests of Model Coefficients

Chi-square df Sig.
Step 1 Step 43.292 4 .000
Block 43.292 4 .000

Model 43.292 4 .000

Source: SPSS 24 Statistics Output, April 2019

Table 4.18: Model Summary of Variable Relationship

-2 Log Cox & Snell R Nagelkerke R

Step likelihood Square Square
1 157.406a .217 .320

Source: SPSS 24 Statistics Output, April 2019

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The Omnibus Tests of Model Coefficients table gives the result of the Likelihood Ratio
(LR) test which indicates whether the inclusion of this block of variables contributes
significantly to the model fit. A p-value (sig) of less than 0.05 for block means that the
block 1 model is a significant improvement to the block 0 models. It uses chi-square tests
to see if there is a significant difference between the Log-likelihoods (specifically the -
2LLs) of the baseline model and the new model. If the new model has a significantly
reduced -2LL compared to the baseline then it suggests that the new model is explaining
more of the variance in the outcome and is an improvement to (Field, 2009).
Accordingly, from the above Table 4.18, Omnibus Tests of Model Coefficients gives us a
Chi-Square of 43.292 on 4 df, significant p-value < .01 which is significant at 0.01. This
is a test of the null hypothesis that adding the Procurement planning, Staff competency,
ICT utilization and internal control variables to the model has not significantly increased
our ability to predict the decisions made by our respondents. Thus, the null hypothesis is
significant at a 0.01 level and so the researcher can conclude that adding the predictors to
the model has significantly increased our ability to predict whether the procurement
performance of the administration is high or not significantly better than it was with only
the constant included.

Under Model Summary Table 4.18 above, we see that the -2 Log Likelihood statistics is
157.406. This statistic measures how poorly the model predicts the decisions - the value
of −2LL should be less than the value when only the constant was included in the model
(because the smaller the statistics indicate that the better the model in predicting the
outcome variable more accurately) (Field, 2009). So, we merely take the new model and
subtract from it the baseline model (the model when only the constant is included). When
only the constant was included, the -2 Log Likelihood statistics (−2LL) = 200.698, but
now all predictors has been included this value has been reduced to 157.406 by 43.292
(200.698 - 157.406), the chi-square statistic I just discussed in the previous paragraph.
This reduction tells us that the model is better at predicting whether the administration
procurement performance was high than it was before the four predictors were added.

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Again, according to David & Mitchel (2010) in standard regression, the coefficient of
determination (R2) value gives an indication of how much variation in y is explained by
the model. This was represented by the R2 statistic in linear regression analysis. However,
this cannot be calculated for logistic regression but the ‘Model Summary’ table gives the
values for two pseudo R2 values (Cox & Snell R2 & Nagelkerke R2) which try to measure
something similar. Table 4.18 above gave us two other measures of R2. The first is Cox
& Snell’s R2 value, which is 0.217, and the second is Nagelkerke’s R2 value, which is
0.320. However, as we can see, all of these values differ, but they can be used as effect
size measures for the model and we can conclude that there is good relationship between
the predictors and the response variable between 21.7% and 32.0% of the variation in
procurement performance can be explained by the model in block 1. Thus, the correct
classification rate has increased by 4.4% to 79%.

Table 4.19: Classification Table for Block 1

Predicted
Observed PPP Percentage
Low High Correct
Step 1 PPP Low 124 8 93.9
High 29 16 35.6
Overall Percentage 79.1

Source: SPSS 24 Statistics Output, April 2019

To further provide model fit logistics there is also a Classification table that was created
to summarize the results of the predictor variables in the model. According to O’Connell
(2006), this plot shows you the frequency of categorizations for different predicted
probabilities and whether they were “yes” or “no” categorizations. This provides a useful
visual guide to how accurate our model is by displaying how many times the model
would predict a “yes” outcome based on the calculated predicted probability when in fact
the outcome for the participant was “no”. The Classification Table shows us that this rule
allows us to correctly classify 16/45 = 36% of the subjects where the predicted event
(agree on the high procurement performance) was observed. This is known as the
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sensitivity of prediction, the P (the correct | event did occur), that is, the percentage of
occurrences correctly predicted. We also see that this rule allows us to correctly classify
124 / 132 = 94% of the subjects where the predicted event was not observed. This is
known as the specificity of prediction, the P (the correct | event did not occur), that is, the
percentage of nonoccurrence’s correctly predicted. Overall our predictions were correct
140 out of 177 times, for an overall success rate of 79%. Recall that it was only 75% for
the model with intercept only.

B. Goodness-of-Fit of Model (Hosmer and Lemeshow Test)

The Hosmer–Lemeshow test is to examine whether the observed proportions of events
are similar to the predicted probabilities of occurrence in subgroups of the model
population. A small value (with a large p-value closer to 1) indicates a good fit to the
data, therefore, a good overall model fit. Large values (with p < 0.05) indicate a poor fit
to the data which means if the test is not statistically significant you can be fairly
confident that you have fitted a good model (Hosmer & Lemeshow, 2000). In this study
to test the null hypothesis that the data fit the specified model, the Hosmer –Lemeshow
Goodness-of-Fit test was conducted to assess how well the chosen model fits the data.
The interest in the Hosmer & Lemeshow test table is on the p-value. The p-value gives an
indication of whether the model is significant or insignificant. Hence, the Hosmer &
Lemeshow test statistics of the goodness of fit shown as SPSS output in Table 4.20 below
was statistically insignificant as χ2 (5, N=177) = 6.444, p = 0.265 > 0.05, and the null
hypothesis was retained. This means that the model was a good fit to the data, and the
model was adequate for analysis purposes.

Table 4.20: Hosmer and Lemeshow Test

Step Chi-square df Sig.

1 6.444 5 .265

Source: SPSS 24 Statistics Output, April 2019

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 C. Parameters Estimates and Significance levels of Each Predictor in the
Model
If the overall model works well, the next question is how important each of the
independent variables is. The binary logistic regression was also performed to assess the
impact of a number of factors on the likelihood of high procurement performance of
Gulele Sub-City administration. The question here is these independent variables are a
factor of high procurement performance? Table 4.21 below known as “Variables in the
Equation” provides the information on the contribution or importance of each
independent variable (factors for procurement performance) on the model.

The Variable in the equation is crucial because it tells us the estimates for the coefficients
for the predictors included in the model (Field, 2009). Therefore, this section of the
output gives us the coefficients and statistics for the variables that have been included in
the model at this point (namely procurement planning, staff competency, ICT utilization,
internal control and the constant). To observe the tests of individual variables in the
model, the Maximum Likelihood Estimates (β), the Wald statistics, and odds ratios (Exp
(β)) were presented for each variable category. The β-value (second column) is the same
as the β-value in linear regression tells us the strength of the relationship between a
predictor and the outcome variable. It also used to establish the probability that a case
falls into a certain category. If it is significant (Sig. < .05 in the SPSS table) then the
predictor variable significantly predicts the outcome variable (procurement performance).

The interpretation of this coefficient in logistic regression is very similar in that it

represents the change in the logit of the outcome variable associated with a one-unit
change in the predictor variable. The logit of the outcome is simply the natural logarithm
of the odds of Y occurring (Field, 2009). Similarly, the Wald statistic (fourth column)
has a chi-square distribution and tells us whether the β coefficient for each predictor is
significantly different from zero. If the coefficient is significantly different from zero
then we can assume that the predictor is making a significant contribution to the
prediction of the outcome (Y) (Menard, 1995). However, for these data, it seems to
indicate that having the procurement planning, staff competency, ICT utilization, and
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 internal control (or not) is a significant predictor of whether the administration
procurement performance is high (note that the significance of the Wald statistic is less
than 0.05).

Moreover, the more crucial to the interpretation of logistic regression is the value of the
odds ratio (Exp(β) seventh column in the SPSS output), which revealed relationship type
between the predictors and the outcomes and also presents the extent or influence level to
which the change in “odds” of being in one of the categories of the dependent variable for
every unit increase of any given variable in the model. However, the odds ratio (Exp(β))
estimates are the most descriptive in regards to explaining the relationship between the
dependent and independent variables (Field, 2009).

Indeed, Table 4.21 shows a model contains four independent variables (factors). The
factors corresponding to the values under the sixth column labeled Sig. which are less
than 0.05 are the variables that contribute significantly to the predictive ability of the
model. This suggests that the model was able to distinguish whether Gulele Sub-City
administration procurement performance is high or not. In addition to the odds ratios, a
95% confidence interval for each of the odds ratio estimates was calculated.

Table 4.21: Significance of Regression Coefficients (Variables in the Equation)

Variables in the Equation

95% C.I. for EXP(B)
B S.E. Wald df Sig. Exp(B) Lower Upper
a
Step 1 PP(1) 1.365 .419 10.602 1 .001 3.914 1.721 8.900
SC(1) 1.296 .422 9.427 1 .002 3.653 1.598 8.354
ICTU(1) 1.093 .445 6.043 1 .014 2.983 1.248 7.129
IT(1) 1.014 .415 5.976 1 .015 2.758 1.223 6.219
Constant -2.606 .371 49.289 1 .000 0.074
a. Variable(s) entered on step 1: PP, SC, ICTU, IT.

Source: SPSS 24 Statistics Output, April 2019

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So, the model shows all four (4) predictors namely; procurement planning, staff
competency, ICT utilization, and internal control were statistically significant, as shown
earlier, where χ2 (4) = 43.292 with p-values of 0.001, 0.002, 0.014 and 0.015
respectively. Hence, all four predictors (factors) are less than 0.05, which confirm that the
above four explanatory variables have made a unique statistically significant contribution
to the model and significant in determining the outcome (procurement performance).
While the β value provided in the second column are the values that are used in an
equation to calculate the probability of a case falling into a specific category i.e. β values
of 1.365, 1.296, 1.093 and 1.014 respectively. Moreover, in this study as revealed in table
4.21, all explanatory variable coefficients of Wald statistics are different from zero
(10.602, 9.427, 6.043, and 5.976) that confirm the explanatory variable effect on the
outcomes. But also, the odds ratio of each predictor that stated in the above table revealed
that there is a positive relationship between predictors and the outcomes i.e. (3.914,
3.653, 2.983 & 2.758). Since each predictor is a categorical variable, odds ratios
displayed under the column Exp(β) is need to be interpreted. Finally, the confidence
interval for the odds ratio is important because values greater than 1 mean that as the
predictor variable increases, so do the odds of (in this case) being high procurement
performance. Values less than 1 mean the opposite: as the predictor variable increases,
the odds of being high procurement performance decrease. The fact that both limits of
our confidence interval are above 1 gives us confidence that the direction of the
relationship that we have observed is true in the population.

Generally, results from the binary regression analysis, using the P-value of individual
predictors in the model showed that procurement planning and staff competency were
statistically significant at the 1% level of significance in predicting the odds of high
procurement performance. But, ICT utilization and internal control were statistically
significant at the 5% level of significance in predicting the odds of high procurement
performance. To interpret the result, as described above, of the statistical significance of
individual regression coefficients it is vital that the Categorical Variables encoding table
were referred from the SPSS out. It acts as an important reminder of which categories

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were coded as the reference (baseline) for each of my categorical explanatory variables.
In this case “parameter coding” was used in the SPSS binary logistic regression output
rather than the value labels so the researcher was needed to refer to this table 4.22 below
later on. Hence, the explanatory variable coding scheme uses the “0” category for the
categorical variables as the reference category (Bolded). For example, for explanatory
variables procurement planning (PP), staff competency (SC), ICT utilization (ICTU) and
internal control (IC) were coded “0” was considered Disagree, and coded “1” was
considered Agree. Similarly, I have coded the dependent variable i.e. procurement
performance coded with “1” = High and “0” = Low.

Table 4.22: Categorical Variables Coding

Parameter coding
Frequency (1)
PP Agree 46 1.000
Disagree 131 .000
SC Agree 43 1.000
Disagree 134 .000
ICTU Agree 43 1.000
Disagree 134 .000
IC Agree 55 1.000
Disagree 122 .000

Source: SPSS 24 Statistics Output, April 2019

Hence, based on the overall results, the strongest predictor is the procurement planning
factor (β = 1.365, Wald = 10.602, p-value = 0.001 < 0.01) and staff competency factor (β
= 1.296, Wald = 9.427, p-value = 0.002 < 0.01), recording an odds ratio of 3.914 and
3.653 respectively. This is closely followed by ICT utilization factor (β = 1.093, Wald =
6.043, p-value = 0.014 < 0.05, Exp (β) = 2.983) and internal control factor is ranked the
least predictor with a β = 1.014, Wald = 5.976, p-value = 0.015 < 0.05 and Exp (β) =
2.758. Therefore, we can conclude that all predictors are significant in determining the
outcome. From the above-presented findings on Table 4.21 of variables in the equation

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(Significance of regression coefficients), the estimated (fitted) binary logistic regression
model was presented as follows:

PPP = -2.606 + 1.365PP + 1.296SC + 1.093ICTU + 1.014IC

Where, PPP = Public Procurement Performance; PP = Procurement planning; SC = Staff

Competency; ICTU = ICT Utilization and IC = Internal Control.

D. Statistical Test of Hypothesis

This research assessed the factors that affect the procurement performance of the Gulele
Sub-City administration. In achieving this main objective, the study was guided by four
null hypotheses which were subjected to statistical tests to determine their validity to the
research objectives and demonstrated by a β coefficient, Wald test, the level of
significance (p-value) and odd ratio attained by each of the independent variables
computed in Table 4.21 above.

Therefore, the logistic regression results obtained from the model were utilized to test
these hypotheses. The hypotheses sought to test for a significant effect (influence) of
procurement planning (PP), staff competency (SC), ICT utilization (ICTU), and internal
control(IC) on the direct effect of procurement performance which was measured in
terms of weather the administration procurement performance is high or not. Then, the
results of these hypotheses testing were compared to previous studies on procurement
performance based on the logistic regression output on the above Table 4.21.

1. H01: Procurement planning has no significant effect on the procurement

performance of the Gulele Sub-City administration.

From the table of significance of regression coefficients above (Table 4.21), the
individual test figures of “Procurement Planning” indicated by (β = 1.365, Wald =
10.602, p-value = 0.001 < 0.01, Exp (β) = 3.914). This result showed that the Wald test is
10.602 which is different from zero, β coefficient is positive (β = 1.365 > 0) and this
coefficient is significant (p-value = 0.001 < 0.01) to indicate that having the procurement
planning (or not) is a significant predictor of whether the administration procurement

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performance is high. On the basis of this result, the null hypothesis is rejected at the 1%
level of significance. The straightforward interpretation of these results is that
procurement planning has a significant effect (influences) on procurement performance
of Gulele Sub-City administration at the 1% level of significance. However, the positive
β weight represents the probability of high procurement performance is higher for the
non-reference category coded “1” (i.e. those respondents who are agreed on the statement
which are related with procurement planning factors). The odds ratio (Exp (β)) for this
variable is 3.914, is a value greater than 1. This indicates that the likelihood of high
procurement performance is 3.91 times higher for those respondents who are agreed on
the procurement planning factors than those of disagreed, keeping other explanatory
variables constant. This implies that for additional positive improvement in procurement
planning, the probability of high procurement performance in the administration is
increased by a factor of 3.91.

Therefore, we could conclude that procurement planning has a strong positive effect
(influence) on the public procurement performance of the administration. The findings
are in agreement with Basheka (2008) who indicated that the procurement plan has the
potential to cut costs, shorten timescales and enhance stakeholder relationships, reduce
risks and improve overall performance. These findings also correspond with the previous
findings by Hamza et al (2016) and Kioko & Were (2014) who observed that the level of
preparing procurement plans increases the performance of the procurement function tends
to increase.

2. H02: Staff competency has no significant effect on the procurement performance of

the Gulele Sub-City administration.

Results as depicted in the Table 4.21 above, the individual test figures of for “Staff
Competency” indicated by (β = 1.296, Wald = 9.427, p-value = 0.002 < 0.01, Exp (β) =
3.653). This result revealed that the Wald test is 9.427 which is different from zero, the β
coefficient is positive (β = 1.294 > 0) and this coefficient is significant (p-value = 0.002 <
0.01) to determine the outcomes. On the basis of these results, the null hypothesis is

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hereby rejected at the 1% level of significance. This shows that staff competency has a
significant effect (influence) on procurement performance at the 1% level of significance.
However, the negative β weight represents the probability of high procurement
performance is higher for the non-reference category coded “1” (i.e. those respondents
who are agreed on the staff competency factors). The odds ratio for this variable,
however, like 3.653, is a value greater than 1. This indicates that the likelihood of high
procurement performance of the administration is 3.65 times higher for those respondents
who are agreed on the staff competency factors than those of disagreed, keeping other
explanatory variables constant. This implies that for additional positive improvement in
staff competency, the probability of high procurement performance in the administration
is increased by a factor of 3.65.

Therefore, we could conclude that staff competency has a positive effect (influence) on
the public procurement performance of the administration. This result was similar to the
results that Samson et al. (2016) found. Samson et al. (2016) found that staff competency
influenced public procurement performance in Tans-nozia County. Similarly, a study
conducted by Kiage (2013) on “Factors affecting Public Procurement Performance in
Local Government Authorities in Tanzania” revealed that staff competency procurement
is an important factor of performance of the procurement function in the local
government authorities in Tanzania and recommended that procurement staff should
possess sets of skills appropriate in procurement activities.

3. H03: ICT Utilization has no significant effect on the procurement performance of

the Gulele Sub-City administration.

In regards to testing the third null hypothesis “ICT Utilization”, the table of significance
of regression coefficients shown in Table 4.21 above (β = 1.093, Wald = 6.043, p-value =
0.014 < 0.05, Exp (β) = 2.983). This result indicated that the Wald test is 6.043 which is
different from zero then we can assume that the staff competency is making a significant
contribution to the prediction of the outcome (procurement performance), the β
coefficient is positive (β = 1.093 > 0) and the p-value is also less than 0.05 level of

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significance (p-value = 0.014 < 0.05). Statistically, the results suggest the null
hypothesis is rejected at 5% level of significance. The result clearly tells us that ICT
utilization is deemed has a significant effect (influence) on procurement performance at
the 5% level of significance. However, the positive β weight represents the probability of
high procurement performance is higher for the non-reference category coded “1” (i.e.
those respondents who are agreed on the ICT utilization factors). The odds ratio for this
variable is (Exp (β) = 2.983) value greater than 1. The results of this analysis show that
the respondents who are agreed on the ICT utilization factors are 2.98 times higher for
the likelihood of high procurement performance as compared to those of disagreed on the
ICT utilization factors, keeping other explanatory variables constant. This implies that for
additional improvement in ICT utilization, the probability of high procurement
performance in the administration is increased by a factor of 2.98.

Therefore, we could conclude that ICT utilization has a positive effect (influence) on the
public procurement performance of the administration. This outcome is consistent with
the results of Aberu (2017) who found that the utilization of ICT has an effect on the
procurement performance of PPPDS. Similarly, the above result was also in agreement
with the results of Amayi and Ngugi (2013), which conclude that the existence of ICT
usage in procurement processes increases the procurement performance in public entities.

4. H04: Internal control has no significant effect on the procurement performance of

Gulele Sub-City administration

Moreover, in testing the fourth and last hypothesis of this study called “Internal Control”,
the table of the significance of regression coefficients revealed that the β = 1.014, Wald =
5.976, p-value = 0.015 < 0.05 and Exp (β) = 2.758. Based on this result the Wald test is
5.976 which is different from zero, the β coefficient is positive and also significant in
determining the outcome with the p-value (0.015) is less than the significance level of
0.05. Statistically, the results suggest the test is significant and therefore the null
hypothesis is rejected at 5% level of significance. This represents that internal control
has a significant effect (influence) on procurement performance at the 5% level of
significance. However, the positive β weight represents the probability of high
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procurement performance is higher for the non-reference category coded “1” (i.e. those
respondents who are agreed on the internal control factors). Exp (β) column (Odd ratio)
for this variable is 2.758 which is greater than 1. This implies that the likelihood of high
procurement performance is 2.76 higher for those respondents who are agreed on the
internal control factors than those of disagreed, keeping other explanatory variables
constant. This implies that for additional positive improvement in internal control, the
probability of high procurement performance in the administration is increased by a
factor of 2.76.

Therefore, we could conclude that internal control has a positive effect (influence) on the
public procurement performance of the administration. The results of this analysis were
also consistent with the findings by Hailemariem (2014) and Kassie (2014), who revealed
that the existence of internal control in the procurement processes strongly correlated
with procurement performance in public entities. They concluded that the existence of an
adequate internal control system in the public sector procurement processes is very
important to increase the effectiveness of procurement function.

In short, on the basis of the results of the above inferential analysis the p-value of the four
(4) independent variables were significant as indicated in the table of individual
regression coefficient 4.21 above the study findings confirm that the chosen explanatory
variables for the study; procurement planning, staff competency, ICT utilization and
internal control all have their own role in explaining the level of procurement
performance observed in the studied population, just as found by the result of our
descriptive statistics in section 4.4.4 above. Moreover, all factors have a significant
positive contribution to our prediction of high procurement performance. On the basis of
these findings, the study concluded that procurement performance is best measured in
terms of the extent to which the function has achieved its procurement objectives
(Effectiveness). Finally, this study was analyzed using a binary logistic regression model
and the paper was tested the institutional, technological, organizational, and
environmental, and legitimacy theory of the procurement planning, staff competency,
ICT utilization, and internal control respectively with little settings. The findings show
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that the essentiality and suitability of the adopted theories of procurement planning, staff
competency, ICT utilization, and internal control in explaining and modeling factor
affecting procurement performance in Gulele Sub-City administration.

4.6. Chapter Summary

This chapter was presented the study findings concerning the respondents’ demography,
and descriptive statistics of the study variables based on frequencies, percentage.
Hypotheses testing using Spearman correlation coefficients and binary logistic regression
analyses have also been presented. On the basis of the presented results, four hypotheses
tested were not accepted (rejected); it was evident that procurement planning, staff
competency, ICT utilization, and internal control were major factors that affected the
procurement performance of the administration. This implies that lack of procurement
plans, staff competency, ICT utilization, and internal control in the administration public
procurement negatively affects the whole procurement performance of the administration,
and leads to mismanagement of public resources and corruption. Similarly, inadequate
linking of demand to the budget, non-compliance with procurement policy and
regulations, delay of dispute resolution in procurement processes, fraud and corruption,
and unplanned purchasing in the procurement processes are additional factors that affect
procurement performance of the administration. Therefore, results further suggest that all
officials involved in the procurement process must pay more attention to those factors,
and for improved procurement performance.

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 CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSIONS &

RECOMMENDATIONS

5.1. Introduction
In the light of the study objectives undertaking this research work as described above, the
summary of the entire study is presented in this chapter. Specifically, this chapter
discusses the research findings as presented in the previous chapter, the conclusions are
drawn from the findings, recommendations that were made relating to the deficiencies
identified, and the proposed areas for further researches.

5.2. Summary of Findings

Procurement function plays a key support role in the operations of the Gulele Sub-City
administration. The procurement process must be well thought through action plans
which are not static. With deploying procurement staffs having necessary skills and
experience to carry out procurements effectively, proper internal control, and automating
procurement processes of the administration are assured of efficient and effective service
delivery.

The overall objective of this study was to assess factors that affect procurement
performance in Addis Ababa city, Gulele Sub-City administration. In conjunction with
this main objective, the study specifically examine the effect of procurement planning,
determine the effect of staff competency, assess the effect of ICT utilization and finally
ascertain the effect of internal control on procurement performance of Gulele Sub-City
administration. The study was conducted through a mixed research method with total
respondents of 197, drawn from a sample population of 9 public entities in the Gulele
Sub-City administration. The respondents were procurement officers, public sector office
employees, procurement support process owners, and public sector office heads. The
tools used to collect data were questionnaires and interview schedules, which the
researcher administered personally. The data analysis was done with the aid of SPSS
version 24 to generate frequencies, percentages, Spearman correlation coefficients and
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binary logistic regression analysis with factor analysis to reduce irrelevant items. As a
result, from 25 measurement items, 20 items were chosen using the principal component
analysis method in SPSS 24. Before going into hypothesis testing, internal consistency
measures such as Cronbach alpha reliability, validity, Kaiser-Meyer-Olkin (KMO)
sampling adequacy test, and multicollinearity assumptions have adequately tested.
Seemingly, all values for composite reliability and average factor score calculated in this
study meet the recommended threshold values.

Accordingly, all the four independent variables (factors) were statistically significant and
therefore considered for further analysis and discussions. The researcher was measured
the procurement performance of the administration based on the level of achievement of
procurement effectiveness (with regard to 5R’s). This informed us of the best indicators
that public entities should adopt in measuring the performance of their procurement
functions. Finally, the research findings are presented as follows:

Demographic Information of the respondents:

The response rate of selected public entities and questionnaire were 100% and 97%
respectively which was significant. Most (71.8%) of the respondents had a Bachelor
degree while the least (5.6%) were those had a Master’s Degree; 27.8% of respondents
were graduated in engineering while only 1.1% were graduated in procurement and
supply management; the majority (35.0%) of the respondents have five up to ten years of
working experience.

Effect (Influence) of Procurement Planning on Procurement Performance of Gulele

Sub-City Administration:

This was the first objective of the study. The objective in this variable was to examine the
effect of procurement planning on procurement performance in the administration. The
results revealed that the majority (76%) of the respondents were indicated that
procurement planning is one of the major factors which have affected (influenced) the
administration procurement performance. The Spearman correlation coefficients
indicated a significant positive correlation between procurement planning and

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procurement performance of the administration. The logistic regression analysis also
indicated that procurement planning positively affects (influences) the whole
procurement performance of the administration. To put in the other way, lack of
procurement plans negatively affects the procurement performance of the administration.

This implies that for additional improvement in procurement planning, the probability of
high procurement performance in the administration is increased by a factor of 3.9.
Similarly, the study found that to a large extent, procurement planning was significantly
affected by all the five questions under the independent variable and they are the barriers
toward developing an integrated annual procurement plan. This study was confirmed that
the low level of procurement planning i.e. incomplete procurement plan, lack of budget
allocation and urgent/unplanned procurement requisitions have resulted in lack of to
procure the goods, services and works at the right time, at the right quality, quantity, and
price and from the right source.

Effect (Influence) of Staff Competency on Procurement Performance of Gulele Sub-

City Administration:

The second objective of the study was to determine the effect of staff competency on the
procurement performance of the Gulele Sub-City administration. The results revealed
that 76% of the respondents were indicated that staff competency has affected
(influenced) the administration procurement performance. The Spearman correlation
coefficients indicated that there is a significant positive correlation between staff
competency and procurement performance of the administration. The logistic regression
analysis also indicated that staff competency in the administration public procurement
positively affects (influences) the whole procurement performance of the administration.
This implies that for additional improvement in staff competency, the probability of high
procurement performance in the administration is increased by a factor of 3.65. The study
found that, jointly, the five questions under this variable do have an influence on the
extent to which the staff competency affects the procurement performance of the
administration. In addition, the major challenges and constraints to achieving staff
competency in the administration are, the high turnover of staff is a typical problem and
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the root causes seem to be the low salary level compared to international organizations
and even the private market. The lack of recognition of procurement as a profession and
its limited options in terms of building a professional career is also considered to be part
of the problem.

Effect (Influence) of ICT Utilization on Procurement Performance of Gulele Sub-

City Administration:

The third objective of the study was to assess the effect of ICT utilization on the
procurement performance of the Gulele Sub-City administration. The results revealed
that 74% of the respondents were agreed that ICT utilization has affected (influenced) the
administration procurement performance. The Spearman correlation coefficients
indicated that there is a significant positive correlation between ICT utilization and
procurement performance of the administration. Similarly, the logistic regression analysis
indicated that ICT utilization in the administration public procurement positively affects
(influences) the whole procurement performance of the administration. This implies that
for additional improvement in ICT utilization, the probability of high procurement
performance in the administration is higher by a factor of 2.98. The study findings
showed that the five questions under this variable to a large extent affected ICT
utilization and procurement performance of the administration. Generally, low level of
automation and embracement of ICT systems i.e. e-procurement technology in the
procurement processes, lack of computer literacy level amongst the employees in the
support processes and low-level benefit from attendant ICT use and adoption in the
procurement processes are the major factors for poor ICT utilization and procurement
performance of the administration.

Effect of Internal Control on Procurement Performance of Gulele Sub-City

Administration:

The fourth and last objective of this study was to acertain the effect of internal control on
the procurement performance of the Gulele Sub-City administration. The results revealed
that 69% of the respondents were indicated that internal control has affected (influenced)
the procurement performance of the administration. The Spearman correlation

127
coefficients indicated a significant and positive correlation between internal control and
procurement performance of the administration. The logistic regression analysis also
indicated that internal control has a positive influence on the whole procurement
performance of the administration. This implies that for additional improvement in
internal control, the probability of high procurement performance in the administration is
higher by a factor of 2.76. The variable consisted of five questions, all of which were
doing have an influence on the extent to which the internal control affects the
procurement performance of the administration. In addition, they are the major indicators
of an ineffective internal control system and poor procurement performance of the
administration, and results in delay in the delivery of items and will yield customer
dissatisfaction or users of the procurement support processes.

To sum up, the p-value in Hosmer –Lemeshow Goodness-of-Fit tests (Table 4.21) shows
that the predictors significantly predict the scores, implying that the model fits the data.
Statistically, this indicates the stronger relationship between the dependent variable and
the independent variables. Furthermore, the Individual regression coefficient (Table 4.22)
indicates that independent variables namely procurement planning and staff competency
at a 1% level of significance while ICT utilization and internal control at a significance
level of 5% significantly affect the procurement performance of the administration. The
implication here is that the four chosen explanatory variables have their own contribution
in explaining the procurement performance of the administration. On the basis of the
above results, it can fairly be concluded that the achievement of procurement objectives
(effectiveness) is a better approach to the measuring procurement performance of the
administration. On individual basis procurement planning and staff competency greatly
affects the achievement of procurement objectives and hence performance. The effect of
procurement planning and staff competency is closely followed by ICT utilization and
internal control in the procurement process. Above all, inadequate linking of demand to
the budget, non-compliance with procurement policy and regulations, delay of dispute
resolution in procurement processes, fraud, and corruption, unplanned purchasing, and

128
bureaucracies in procurement processes were other factors that affect procurement
performance of the administration.

Generally, the findings of the study suggested that the level of procurement planning,
staff competency, ICT utilization, and internal control observed in the administration
public procurement was low and affects the whole procurement performance of the
administration, and leads to mismanagement of public resources and corruption.

5.3. Conclusions
The general objective of this study was to assess the factors that affect procurement
performance in Addis Ababa City, Gulele Sub-City Administration. The sampled
population consisted of three public procurement and property administration support
processes, and six public sector offices that spent a huge amount of the government
money through the procurement process in the year 2010 E.C. In order to empirically test
the effect of the proposed variables, a conceptual model was developed. Both primary
and secondary data were collected. The main data collection tool employed was a self-
administered questionnaire measured in a 5 points Likert scale and interview guide. Data
were analyzed through descriptive and inferential analyses. Based on the study findings,
the following are the main conclusions that can be drawn from this study;-

Firstly, on the appropriate procurement performance indicator (s), the study concludes
that procurement performance of Gulele Sub-City administration is best measured in
terms of its level of achievement of the procurement objectives as reflected in on-time
delivery, right quality, right quantity, right supplier and reasonable prices of the procured
goods, services, and works. In the logistic regression models developed in this study, the
findings are in favor of this model in which procurement performance of the
administration was assessed in terms of its ability to make timely availability of right
quantity from right supplier with right quality and reasonable prices of goods, works, and
service required by the administration.

Secondly, regarding on the procurement performance of the administration measured in

five R's of purchasing (at the right time, from the right source, at the right price, at the
129
right quality) , the study concludes that public procurement and property administration
support processes of the administration are working under low performance and
providing inefficient services for end users and suppliers.

Thirdly, the study concluded that week culture of preparing annual procurement plan and
late submission of procurement plans by user departments, lack of budget allocation and
lack of circulating approved/updated procurement plans by procurement support
processes was the major problems. As well as, the procurement staff in the administration
is not well trained in procurement and most of them are not graduated in procurement
related fields. Regarding, ICT factors notably; lack of automating and embracing modern
technology i.e. e-procurement systems, lack of computer skills amongst the employees
and lack of training to run the procurement processes using information technology were
to a large extent affects the administration procurement performance. Furthermore, lack
of conducting regular reviews and analysis on the departmental total procurement
expenditure, lack of conducting extensive training on the internal control system and lack
of providing procurement audit reports timely resulted ineffective procurement internal
control system and poor procurement performance in the administration.

Therefore, the study concluded that procurement planning, staff competency, ICT
utilization, and internal control have a significant positive effect on procurement
performance of the administration. Here, procurement planning and staff competency are
the most influential predictors to the outcome (procurement performance) of the
administration followed by ICT utilization and internal control respectively.

Overall, the study concludes that there is a significant positive relationship between the
predictors (factors) and outcome (procurement performance) of the administration since
the value of the beta coefficient is positive. In other words, the procurement performance
of the Gulele Sub-City administration is negatively influenced by the lack of procurement
planning, lack of staff competency, lack of ICT utilization and lack of internal control in
the procurement process. This indicates that having organized procurement plans,
motivated and well-qualified staff, successful automated procurement systems and

130
adoption of ICT systems, and effective procurement internal control systems are crucial
for enhanced public procurement performance in the administration.

5.4. Recommendations
Emanating from the above research findings, analyses, discussions, and conclusions, the
following recommendations can be made with regards to the procurement performance of
Gulele Sub-City administration.

It is recommended that the Gulele Sub-City administration public procurement and

property administration support processes should focus on enforcement of the established
rules and regulations with a view of enhancing compliance and punitively deal with
entities found violating the rule and regulations. Certainly, this will increase compliance
levels among the entities and reduce complaints from public sector offices (user
departments), and consequently value for money procurement can be achieved through
timely availability of best quality and priced goods, works and services.

The researcher also recommends that public procurement support processes and user
departments should comply with the existing procurement law and regulations during
preparing the procurement plan to discourage impulse buying and unplanned
procurements. It is my recommendation that annual and semi-annual procurement plans
shall prepare on time with complete specifications of goods, services and works by end
users, continuous training on procurement plan preparation should be arranged and
attended by all those involved in the procurement process within the entity, the
administration must ensure that the overall procurement plan is in harmony with the work
program of the administration, fully integrated with the strategic plan and budget of the
administration and inclusive of all procurement needs of the public sector offices.
Preparing an effective procurement plan helps the administration to enable and achieve
its goals with the right quality, quantity, and price, supplier of goods, service, and works
in time and to reduce piecemeal purchasing.

Public procurement and property administration support processes should be staffed with
adequate and professionally qualified employees as required by both, the proclamation
131
649, 2009 and the directive, 2010. Procurement is no longer any body’s job. It is a
professional job that must be managed only by those personnel who are professionally
trained and qualified. Efforts should be made by the administration in providing
procurement personnel and process owners with adequate skills, experience and
educational qualification in the fields relevant to public procurement for preventing
corruption in public procurement and improving procurement performance. In particular,
in order to address the problem of staff competency in the procurement support processes
the study recommends that, the administration should be allocated budget for the training
of staffs and, establish consistent and continuous practical procurement training program
for employees depending on their job responsibilities, knowledge, and experience to
updating them. Therefore, the employment of professionally trained and qualified
procurement staff and process owners should be emphasized and implemented.

In terms of ICT utilization, the administration should be able to adopt automate

procurement systems and ICT systems such as; Enterprise Resource Planning System
that would integrate e-procurement into the entire activities of the administration which
would create benefits to all the stockholders very useful to communicate easily with the
user department, procurement support processes, and suppliers this, in turn, will improve
transaction time and accuracy, efficiency, effectiveness and transparency in public
procurement activities. Similarly, the researcher recommends that the administration
focus on how employees at the procurement unit get the skill of Information technology
and apply to their specific job by conducting the necessary training or hiring employees
who have IT skills for procurement activities.

In order to address the problem of internal control in procurement activities, the study
recommends that the administration should ensure that the internal control unit has a
clear line of responsibility to conduct a procurement-related audit. It should establish
adequate monitoring and evaluation of procurement performance are put in place with the
input of procurement personnel and the user department with progress reports that help to
take necessary action; the administration should support more the internal audit unit to
provide the appropriate reports and facilitate the procurement auditing functions through
132
recurring more adequate and competent internal audit staffs; it is necessary to arrange
regular training for all procurement staffs on the internal control system of the
administration and supervised them to improve their competence for their jobs to which
they are assigned; take appropriate disciplinary action in response to departures from
approved procurement policies and procedures or violations of the code of conduct.
Furthermore, in order to enhance procurement performance, the administration should
strengthen the internal control system and improved the checklist used for monitoring the
public procurement support processes. In particular, the checklist should include
statements relating to timely availability, quality, and quantity, right supplier and cost
aspects of the procurement requirements.

Generally procuring of goods, services and works need to be based on public

procurement principles and guidelines to achieve value for money, efficiency, and
effectiveness in the public procurement and to fulfill the mission and vision of Gulele
Sub-City administration.

5.5. Areas for Further Research

Since this research is conducted only on selected public entities existed in Gulele Sub-
City administration, the study suggests that future study should focus on other public
entities so as to establish as to whether procurement performance of the administration
differ depending on the category in which the respective entity belongs in or not and to
ascertain whether these findings are universal. The study was limited to five performance
indicators to measure the administration procurement performance. Future studies should,
therefore, adopt other indicators on procurement performance in the public sector
organization. This study limits itself to four factors that affecting the procurement
performance of the Gulele Sub-City administration. Therefore, the researcher
recommends further research to investigate the other factors which are not included or
studied by this research such as legislation, integrity, procurement processes and
governance that may affect procurement performance.

133
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 APPENDICES
Appendix 1A
Ethiopian Civil Service University

College of Finance, Management and Development

Department of Public Procurement and Asset Management
Questionnaires for public procurement and property administration support processes staff

On the Assessment of Factor Affecting the Procurement Performance: The Case of Addis Ababa
City, Gulele Sub-City Administration
Dear respondent,
Dear Sir/Madam,

My name is Wossene Mesele, a Masters student in the Ethiopian Civil Service University
Department of Public Procurement and Asset Management (PPAM), supervised by Dr.
Baynesagn Asfaw. As part of the requirement for the award of the Master’s Degree, I am
expected to undertake a research study on assessing factor affecting the performance of
procurement: The case of Addis Ababa city, Gulele sub-city administration. Therefore, I humbly
request for your participation in this study to fill the questionnaires attached below. Your opinion
is extremely important in this study and I promise that the research results will be used for
academic purposes only and will be treated with maximum confidentiality. For this reason, your
honest contribution to filling this questionnaire is helpful to produce a quality paper. So you are
warmly requested to answer the following questions please. Thank you for your time and be
blessed.

Instruction: Please take a few minutes to tell us what you think about the factors of public
procurement performance. There are no rights or wrong responses; we are merely interested in
your personal opinions. There is no need to write your name or any other personal identity. For all
questions below, you may tick (√) and choose where applicable or give a brief explanation where
necessary. If you need any clarification or information contact me by Mob. No. 0922579964 or
by E-mail:[email protected]

Thank you in advance for your cooperation!

147
PART I: General Information

1. Which public office are you working?

Public procurement and property management support core processes

Public service and human resource development office

Finance and economic development office

Small and micro enterprise development office

Tenure administration transitional period service project office

Construction office

Education office
2. Gender:
Male Female
3. What is your age?
18 – 30 41 – 50

31 – 40 Above 50

4. What is your highest level of education?

Certificate First Degree

Diploma Master’s Degree and above

Other (Specify) ………………………………………………..

5. Your general work experiences (in years)

Less than 5 years 11 – 15 years Above 20 years

5 - 10 years 16 – 20 years

6. What is your profession?

Management Accounting Economic

Engineering Procurement & supply management

Other specify________________________
148
7. How long have you been worked as procurement professional?
Less than 5 years 11 – 15 years Above 20 years

5 - 10 years 16 – 20

PART II: Below are statements describing the effect of procurement planning on procurement
performance in the Gulele Sub-City administration. Please indicate by ticking the extent to which
you agree or disagree with each statement as applied to your organization as:
“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

No. Procurement planning related questions SA A N DA SD

1. The procurement activities of the administration are guided by an 1 2 3 4 5
annual procurement plan.
6. Procurement plan prepared through the involvement of concerned 1 2 3 4 5
employees and public sector offices.
7. Public sector offices submit their procurement need on time. 1 2 3 4 5
8. The procurement plan of the administration identifies materials as 1 2 3 4 5
per the user departments need.
9. Public procurement and property administration support processes 1 2 3 4 5
circulate approved/updated procurement plan to the concerned
public sector offices.

10. What do you suggest/recommend to minimize the effect of procurement planning and
implementation in the organization procurement performance?
…………………………………………………………………….………………………………....
...…………………………………………………………………………………..............................
PART III: Below are statements describing the effect of staff competency on procurement
performance in the Gulele Sub-City administration. Please indicate by ticking the extent to which
you agree or disagree with each statement as applied to your organization as:

“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

11. Have you received on the job training on procurement law and procurement process?
Yes, it was sufficient training No
Yes, but I need more training I do not need training

149
No. Staff competency related questions SA A N DA SD
12. The procurement activity of the administration is conducted by 1 2 3 4 5
competent procurement staff.
13. Employees at procurement support processes have the relevant 1 2 3 4 5
education background related to procurement.
14. All the procurement staff applies public procurement principles in 1 2 3 4 5
the procurement process.
15. The administration recruits competent staff to handle the 1 2 3 4 5
procurement function.
16. All procurement staffs have the ability to understand users need and 1 2 3 4 5
suppliers’ capacity.

17. In your own opinion, how can the management increase the competency of the procurement
staff in your department? Please specify.
………………………………………………..…………………………….......................................
................…………………………………………………………………………
PART IV: Below are statements describing the effect of information communication technology
utilization on procurement performance in the Gulele Sub-City administration. Please indicate by
ticking the extent to which you agree or disagree with each statement as applied to your
organization as:
“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

No. ICT utilization related questions SA A N DA SD

18. The administration has embraced ICT in its procurement processes. 1 2 3 4 5
19. All employees at the procurement unit effectively use the IT 1 2 3 4 5
platforms.
20. The administration ICT infrastructure gets better information flow 1 2 3 4 5
between the procurement department and user departments/
suppliers.
21. The use of ICT has supported to reduced paperwork in procurement 1 2 3 4 5
support processes.
22. The use of ICT has eased the procurement process of the 1 2 3 4 5
administration by lowering costs and increasing productivity.

150
23. In your own opinion, how can the management apply information technology to increase
procurement performance in your department? Please specify.
…………………………………………………………………………………………………
………………………………………………………………………………………………….
PART V: Below are statements describing the effect of internal control on procurement
performance in the Gulele Sub-City administration. Please indicate by ticking the extent to which
you agree or disagree with each statement as applied to your organization as:
“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

No. Internal control related questions SA A N DA SD

24. The administration effective internal control system is able to 1 2 3 4 5
prevent/detect fraud and errors.
25. Internal Audit Unit conducts regular reviews and analyses of the 1 2 3 4 5
departmental total procurement expenditure.
26. Internal Audit Unit provides timely information to enable 1 2 3 4 5
management action and for improving procurement performance.
27. The administration conducts extensive training programs for its 1 2 3 4 5
employees with regards to internal control implementation.
28. Procurement support processes assess and monitor its performance 1 2 3 4 5
over time through evaluation and feedback whether they are
working to perfection.

29. In your own opinion, how can the management apply an internal control system to increase
procurement performance in your department? Please specify.
………………………………………………………………………………………………………
…………….......................................................…………………………………………………….

30. If you want to add other factors that affect the procurement performance of the
administration? Please specify.
………………………………………………………………………………………………………
…………….......................................................…………………………………………………….

151
PART VI: Below are statements describing Gulele Sub-City administration public procurement
performance related questions with regard to five R’s. Please indicate by ticking the extent to
which you agree or disagree with each statement as applied to your organization as:
“1” for Very Good, “2” for Good, “3” for Neutral, “4” for Poor, “5” for Very Poor

31. How do you rate the administration procurement performance based on five rights of
purchasing?

No. Procurement performance rating with regard to five R’s VG G N P VP

A. With Right Quality

B. At Right Time

C. At Right Price

D. From the Right Source

E. Right Quantity

32. What is your recommendation to which the procurement and property administration support
processes of your entity has fostered availability of the required goods, works, and services at
the right Time, Quality, Quantity, Price and Supplier?
…………………………………………………………………………………………………
………………….......................................................……………………………………………
…………………………………………………………………………………………………

------------------------------Thanks a lot for your valuable time -----------------------------

152
 Appendix 1B

Ethiopian Civil Service University

College of Finance, Management and Development

Department of Public Procurement and Asset Management

Questionnaires for public sector office/user department employees

On the Assessment of Factor Affecting the Procurement Performance: The Case of Addis Ababa
City, Gulele Sub-City Administration

Dear respondent,

Dear Sir/Madam,

My name is Wossene Mesele, a Masters student in the Ethiopian Civil Service University
Department of Public Procurement and Asset Management (PPAM), supervised by Dr.
Baynesagn Asfaw. As part of the requirement for the award of the Master’s Degree, I am
expected to undertake a research study on assessing factor affecting the performance of
procurement: The case of Addis Ababa city, Gulele sub-city administration. Therefore, I humbly
request for your participation in this study to fill the questionnaires attached below. Your opinion
is extremely important in this study and I promise that the research results will be used for
academic purposes only and will be treated with maximum confidentiality. For this reason, your
honest contribution to filling this questionnaire is helpful to produce a quality paper. So you are
warmly requested to answer the following questions please. Thank you for your time and be
blessed.

Instruction: Please take a few minutes to tell us what you think about the factors of public
procurement performance. There is no right or wrong responses; we are merely interested in your
personal opinions. There is no need to write your name or any other personal identity. For all
questions below, you may tick (√) and choose where applicable or give a brief explanation where
necessary. If you need any clarification or information contact me by Mob. No. 0922579964 or
by E-mail:[email protected]

Thank you in advance for your cooperation!

153
PART I: General Information
1. Which public office are you working?

Public procurement and property management support core processes

Public service and human resource development office

Finance and economic development office

Small and micro enterprise development office

Tenure administration transitional period service project office

Construction office

Education office
2. Gender:
Male Female
3. What is your age?
18 – 30 41 – 50

31 – 40 Above 50

4. What is your highest level of education?

Certificate First Degree

Diploma Master’s Degree and above

Other (Specify) ………………………………………………..

5. Your general work experiences (in years)
Less than 5 years 11 – 15 years Above 20 years

5 - 10 years 16 – 20 years

6. What is your profession?

Management Accounting Economic

Engineering Procurement & supply management

Other specify________________________
154
PART II: Below are statements describing the effect of procurement planning on procurement
performance in the Gulele Sub-City administration. Please indicate by ticking the extent to which
you agree or disagree with each statement as applied to your organization as:
“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

No. Procurement planning related questions SA A N DA SD

1. The procurement activities of the administration are guided by an 1 2 3 4 5
annual procurement plan.
2. Procurement plan prepared through the involvement of concerned 1 2 3 4 5
employees and public sector offices.
3. Public sector offices submit their procurement need on time. 1 2 3 4 5
4. The procurement plan of the administration identifies materials as per 1 2 3 4 5
the user departments need.
5. Public procurement and property administration support processes 1 2 3 4 5
circulate approved/updated procurement plan to the concerned public
sector offices.

6. What do you suggest/recommend to minimize the effect of procurement planning and

implementation in the organization procurement performance?
…………………………………………………………………….………………………………....
...…………………………………………………………………………………..............................
PART III: Below are statements describing the effect of staff competency on procurement
performance in the Gulele Sub-City administration. Please indicate by ticking the extent to which
you agree or disagree with each statement as applied to your organization as:
“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

No. Staff competency related questions SA A N DA SD

7. The procurement activity of the administration is conducted by 1 2 3 4 5
competent procurement staff.
8. Employees at procurement support processes have the relevant 1 2 3 4 5
education background related to procurement.
9. All the procurement staff applies public procurement principles in the 1 2 3 4 5
procurement process.
10. The administration recruits competent staff to handle the procurement 1 2 3 4 5
function.
11. All procurement staffs have the ability to understand users need and 1 2 3 4 5
suppliers’ capacity.

155
12. In your own opinion, how can the management increase the competency of the procurement
staff in your department? Please specify.
………………………………………………..…………………………….......................................
PART IV: Below are statements describing the effect of information communication technology
utilization on procurement performance in the Gulele Sub-City administration. Please indicate by
ticking the extent to which you agree or disagree with each statement as applied to your
organization as:
“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

No. ICT utilization related questions SA A N DA SD

13. The administration has embraced ICT in its procurement processes. 1 2 3 4 5
14. All employees at the procurement unit effectively use the IT platforms. 1 2 3 4 5
15. The administration ICT infrastructure gets better information flow 1 2 3 4 5
between the procurement department and user departments/ suppliers.
16. The use of ICT has supported reduced paperwork in procurement 1 2 3 4 5
support processes.
17. The use of ICT has eased the procurement process of the administration 1 2 3 4 5
by lowering costs and increasing productivity.

18. In your own opinion, how can the management apply information technology to increase
procurement performance in your department? Please specify.
…………………………………………………………………………………………………
PART V: Below are statements describing effect of internal control on procurement performance
in Gulele Sub-City administration. Please indicate by ticking the extent to which you agree or
disagree with each statement as applied to your organization as:
“1” for Strongly Agree, “2” for Agree, “3” for Neutral, “4” for Disagree, “5” for strongly Disagree

No. Internal control related questions SA A N DA SD

19. The administration effective internal control system is able to 1 2 3 4 5
prevent/detect fraud and errors.
20. Internal Audit Unit conducts regular reviews and analyses of the 1 2 3 4 5
departmental total procurement expenditure.
21. Internal Audit Unit provides timely information to enable management 1 2 3 4 5
action and for improving procurement performance.
22. The administration conducts extensive training programs for its 1 2 3 4 5
employees with regards to internal control implementation.
23. Procurement support processes assess and monitor its performance over 1 2 3 4 5
time through evaluation and feedback whether they are working to
perfection.
156
24. In your own opinion, how can the management apply internal control system to increase
procurement performance in your department? Please specify.
………………………………………………………………………………………………………
…………….......................................................…………………………………………………….

25. If you want to add other factors that affect the procurement performance of the
administration? Please specify.
………………………………………………………………………………………………………
…………….......................................................……………………………………………………

PART VI: Below are statements describing Gulele Sub-City administration public procurement
performance related questions with regard to five R’s. Please indicate by ticking the extent to
which you agree or disagree with each statement as applied to your organization as:
“1” for Very Good, “2” for Good, “3” for Neutral, “4” for Poor, “5” for Very Poor

26. How do you rate the administration procurement performance based on five rights of
purchasing?

No. Procurement performance rating with regard to five R’s VG G N P VP

F. With Right Quality

G. At Right Time

H. At Right Price

I. From the Right Source

J. Right Quantity

27. What is your recommendation to which the procurement and property administration support
processes of your entity has fostered availability of the required goods, works, and services at
the right Time, Quality, Quantity, Price and Supplier?
…………………………………………………………………………………………………
………………….......................................................……………………………………………
------------------------------Thanks a lot for your valuable time -----------------------------

157
 Appendix 1C
Interview guides for Procurement process owners

1. Does the public procurement activities of the organization are guided by annual procurement
planning? If No, what are the common challenges?
2. Does your support process procurement plans prepared in a way that ensures prudent
economic decision, open up market opportunities and avoid/reduce emergency procurement?
3. Do you think that all user departments have enough knowledge in procurement planning and
cost estimation? If no what are the reasons?
4. How do you examine, the general communication system with user departments? Is there a
written communication procedure? Do you think this communication is effective?
5. Does your support process delivered goods at the right time, right quality, with the right
quantity, right price from the right source to user departments? If no what are the reasons?
6. Are your support process staffed with appropriate professions and capable individuals? If no
what are the major reasons?
7. Does procurement staff get continues training with procurement laws and rules? If Yes explain
8. Does your support process efficiently equipped with all the necessary
automated/computerized materials? If no what are the major reasons?
9. Is there any mechanism for evaluating supplier performance in relation to price, quality, and
delivery?
10. Is there a regular procurement audit system to carry out procurement/contract management
audits? Can you explain how it is done? By whom? If so what were the major findings?
11. Do you think the internal control system established by the organization is effective? If yes,
state your reason?
12. What are the common complaints from user departments and suppliers concerning the
functioning and procurement performance of the procurement department? (please explain)
13. Do appropriate contract monitoring systems in place by the organization to monitor delivery,
verify quantity, quality, and timelines as per contract document? If yes explain?
14. Is your support process regularly evaluating the performance of its procurement process? If
yes, in what way?
-----------------------------------------END---------------------------------------
158
 Appendix 1D

Interview guides for public sector offices/user departments

1. Does the public procurement activities of the organization are guided by annual procurement
planning? Has your entity been able to implement its annual procurement planning fully? If
No, what are the common challenges?
2. Do you think that your office has enough knowledge in procurement planning and cost
estimation? If no what are the reasons?
3. Does the procurement support process circulate an approved/updated procurement plan for all
public bodies/user departments?
4. Does the procurement support process procure goods at the right time, right quality, with the
right quantity, right price from the right source and matches with your office plan and
specification? If no what are the reasons?
5. Is there a close consultation mechanism with a procuring entity during procurement planning?
If no what are the reasons?
6. Does your office ask urgent/unplanned requisition? If Yes, what are the reasons?
7. Does the procurement support process staffed with appropriate professions and equipped with
all the necessary automated/computerized materials to process procurement activities? If no
what are the major reasons?
8. Do you think the internal control system established by the organization is effective?
9. Does the procurement support process have any procurement complaint review system? If yes,
do you think it is effective?
10. How do you observe the performance of the procurement support process in terms of
efficiency, cost, time of delivery, quality and quantities of goods, services and works
procured? Explain it briefly.
11. How do you examine, the general communication system with the procurement support
process? Is there a written communication procedure? Do you think this communication is
effective? If no what are the reasons?
12. What do you suggest for further improvement and ensure the public procurement performance
of the organization? Explain it briefly.
-----------------------------------------END---------------------------------------
159
 Appendix 1E: Data collection Duration

Visits Research Sites/Public Place *Number of workdays

[dates] Entities
At Site Total
Visit 1 Chief Executive Office Addis Ababa City, 1
[05/03/2019 – 06/03/2019] Public procurement and Gulele Sub-City 1 2
property administration Administration
support processes
Chief executive public 2
procurement and property
administration support
process
Finance and economic Addis Ababa City, 2
Visit 2 development office Gulele Sub-City
[07/03/2019 – 01/04/2019] Small and micro enterprise Administration 2 18
development office
Land development 2
management public
procurement and property
administration support
process
Construction office 2
Tenure administration 2
transitional period service
project office
Public service public 2
procurement and property
administration support
processes
Public service and human 2
resource development office
Education office 2
Visit 3 Selected support processes 4
[02/04/2019 – 05/04/2019] and public sector offices
Total workdays in the data collection 24

*workdays mean Monday, Tuesday, Wednesday, and Friday, except for public holidays
Source: Adapted from John (2013) with modification, April 2019
160
 Appendix 1F: Interview Details

Participants Public Entities Level/Status Pre-arranged Interview Interview

Interviews Date Minutes

Chief executive public Process 1 02/04/2019

Public procurement procurement and property Owner 35
and property administration support
administration process
support process, 3
Land development Process 1 02/04/2019 30
process owners
management public Owner
procurement and property
administration support
process
Public service public Process 1 03/04/2019 30
procurement and property Owner
administration support
processes

Finance and economic Office Head 1 03/04/2019 25

development office
Public sector office Small and micro enterprise Office Head 1 04/04/2019 30
heads
development office
6
Construction office Office Head 1 04/04/2019 20
Tenure administration Office Head 1 05/04/2019 25
transitional period service
project office
Public service and human Office Head 1 05/04/2019 30
resource development office

Education office Office Head 1 05/04/2019 20

Total Interviews and Interview Minutes 9 245 min.

Source: Adapted from John (2013) with modification, April 2019

161
 Appendix 1G: Research Variables, Indicators and Variable Measurement

Name of Variable Variable Indicator (s) Variable Measurement

Participation in planning A 5-Point Likert scale with

Procurement Adherence to procurement plan Ordinal ranking, where;
Planning User need identification 1. Strongly Agree
Approved plan circulation 2. Agree
(X1) 3. Neutral
Procurement need submission 4. Disagree
5. Strongly Disagree
Competent staff A 5-Point Likert scale with
Staff Competency Ordinal ranking, where;
Staff profession
1. Strongly Agree
(X2) Application of procurement 2. Agree
principles 3. Neutral
Independent Staff recruitment 4. Disagree
Variable Personal ability 5. Strongly Disagree
ICT implementation A 5-Point Likert scale with
ICT Utilization Staffs ICT skill Ordinal ranking, where;
Information flow 1. Strongly Agree
(X3) 2. Agree
Benefit from ICT 3. Neutral
Use in Procurement process 4. Disagree
5. Strongly Disagree
Fraud/corruption detection A 5-Point Likert scale with
Internal Control Regular review & analysis Ordinal ranking, where;
1. Strongly Agree
(X4) Timely information 2. Agree
3. Neutral
Training
4. Disagree
Assessing & monitoring 5. Strongly Disagree
performance
Procurement Right Quality A 5-Point Likert scale with
Dependent Performance of Ordinal ranking, where;
Right Time
Variable the 1. Strongly Agree
Administration Right Price 2. Agree
(Y) From the Right Source 3. Neutral
4. Disagree
Right Quantity 5. Strongly Disagree

Source: Adapted from Mrope (2018) with modification, April 2019

162
 Appendix 2A: Rotated Component Matrix Including Dependent Variable

Questions Component
SC PPP IC ICTU PP
Right time .817
Right quantity .801
Right quality .797
Right price .730
Right source .674
Procurement activities of the administration are guided by .793
annual procurement plan.
Public sector offices submit their procurement need on time. .772
Procurement plan prepared through involvement of .740
concerned employees and public sector offices.
Public procurement and property administration support .793
processes circulate approved/updated procurement plan to
the concerned public sector offices.
Procurement plan of the administration identify materials as .859
per the user departments need.
Procurement activity of the administration is conducted by .833
competent procurement staffs.
Employees at procurement support processes have the .810
relevant education background related to procurement.
The administration recruits competent staff to handle the .797
procurement function.
All the procurement staff applies public procurement .796
principles in the procurement process.
All procurement staffs have the ability to understand users .765
need and suppliers’ capacity.
The administration ICT infrastructure get better information .863
flow between procurement department and user
departments/ suppliers.
The administration has embraced ICT in its procurement .854
processes.
All employees at procurement unit effectively use the IT .821
platforms.
The use of ICT has eased the procurement process of the .766
administration by lowering costs and increasing
productivity.
163
The use of ICT has supported to reduced paper work in .668
procurement support processes.
Internal Audit Unit provides timely information to enable .730
management action and for improving procurement
performance.
Internal Audit Unit conducts regular reviews and analysis of .796
the departmental total procurement expenditure.
The administration conducts extensive training programs for .675
its employees with regards to internal control
implementation.
Procurement support processes assesses and monitors its .784
performance over time through evaluation and feedback
whether they are working to perfection.
The administration effective internal control system is able .754
to prevent/detect fraud and errors.
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations.

Source: SPSS 24 Statistics Output, April 2019

Appendix 2B: KMO and Bartlett’s Tests

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .829

Bartlett's Test of Sphericity Approx. Chi-Square 2101.427

df 300

Sig. .000

Source: SPSS 24 Statistics, April 2019

164
 Appendix 2C: Spearman Rank Correlation Coefficient (Spearman correlation matrix)

Procurement Staff ICT Internal Procurement

plan competency utilization control performance

Spearman's Procurement Correlation 1.000 .287** .091 .245** .584**

rho planning Coefficient
Sig. (2-tailed) . .000 .230 .001 .000
N 177 177 177 177 177
Staff Correlation .287** 1.000 .003 .214** .564**
competency Coefficient
Sig. (2-tailed) .000 . .966 .004 .000
N 177 177 177 177 177
ICT Correlation .091 .003 1.000 .040 .453**
utilization Coefficient
Sig. (2-tailed) .230 .966 . .598 .009
N 177 177 177 177 177
Internal Correlation .245** .214** .040 1.000 .535**
control Coefficient
Sig. (2-tailed) .001 .004 .598 . .002
N 177 177 177 177 177
Procurement Correlation .584** .564** .453** .535** 1.000
performance Coefficient
Sig. (2-tailed) .000 .000 .009 .002 .
N 177 177 177 177 177
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).

Source: SPSS 24 Statistics Output, April 2019

Appendix 2D: Detection of Multicollinearity Based on Collinearity Statistics

Unstandardized Standardized Collinearity

Coefficients Coefficients Statistics
Explanatory variables B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) .863 .090 0.924 .357
Procurement Planning -.255 .069 -.257 -3.667 .000 .896 1.116
Staff Competency -.235 .070 -.231 -3.341 .001 .917 1.091
ICT Utilization -.173 .068 -.170 -2.553 .012 .989 1.012
Internal Control -.162 .064 -.172 -2.514 .013 .936 1.069
a. Dependent Variable: Procurement Performance

Source: SPSS 24 Statistics Output, April 2019

165
 Appendix 2E: Detection of Multicollinearity Based on Colinearity Diagnostics
(Eigen Values and Condition Index)

Dimension Eigen Condition Variance Proportions

value Index (Constant) Procurement Staff ICT Internal
Planning Competency Utilization Control
1 4.213 1.000 .01 .01 .01 .01 .01
2 .300 3.745 .00 .01 .00 .39 .47
3 .223 4.345 .00 .25 .28 .20 .38
4 .185 4.778 .00 .66 .57 .00 .00
5 .079 7.291 .99 .07 .15 .39 .14
a. Dependent Variable: Procurement Performance (PPP)

Source: SPSS 24 Statistics Output, April 2019

Appendix 2F: Letter of Introduction and Research Clearance Permit

166