EFFECTS OF ECONOMIC FACTORS ON PROCUREMENT PROCSEE
A CASE STUDY OF YALA SUB DISTRICT HOSPITAL

PRESENTED BY
POLYCENA MUKAMI MIRITI

A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULLFILMENT FOR THE AWARD OF BACHELORS IN BUSINESS MANAGEMENT OF MOI UNIVERSITY
SCHOOL OF BUSINESS AND ECONOMICS
2013

DECLARATION
I POLYCENA MUKAMI MIRITI hereby declare that this research proposal is my original work and not a duplicate of similar published work of any scholar for academic purpose and has not been submitted to any other institution of higher learning for the award of certificate, diploma or degree in special needs education
I further declare that all materials cited in this paper which are no my own have been duly acknowledged.

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SUPERVIRSOR’S NAME:……………………………………………..

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DEDICATION
I dedicate this research proposal

ACKNOWLEDGEMENT

ABSTRACT
For decades procurement performance attracts great attention from practitioners due to poor performance resulting from non adherence to proper process and procedures
The purpose of the study is to examine economic positive and negative factors that effect of procurement process at Yala Sub District Hospital.
The objective of study is to identify of effect of economic factors on the procurement procedure at the hospital.The study involve use of quantitative and qualitative research methods. The study will involve 10 staffs in management and 18 staff in non –management totaling 23 staffs of Yala Sub District Hospital
. Procurement effectiveness and economic function are measures of procurement performance in an organization. This paper therefore aims at identifying effects of economic factors towards procurement performance.

Key words: Procurement Process, Economic Performance, efficiency and effectiveness.
CHAPTER ONE
INTRODUCTION
1.0.Background of the study
The economic function on procurement has not been given the recognition it deserves in most public entities. This could be deliberate or sheer ignorance on the value the positive economic management could contribute to any organization (Telgen, Zomer, & de Boer, 1997). A major objective of most procurement system is to successfully acquire the goods, works or services concerned on the best possible terms. This is often referred to as value for money or efficiency or economic efficiency. Procurement outcomes are mostly considered in terms of cost effectiveness regulated by economy, in most firms procurements outcomes are always regulated by company guidelines which regulate the key aspects of facilitating any purchases. Again,it is perceived that procurement is less costly more favorable in perception of economic efficiency. Kenyans Procurement procedures and practices tend to be locked due to high volume standards, need for proof of large financial base and other pre-qualification standards, other practices such as limited publication of contract opportunities and overly on erroneous pre qualification requirement, costly tender submission procedures resulting from financial inflations.

1.1 Statement of the problem
Unraveled economy remains one of most constraints to the growth and competitiveness in procurement function (Mc Grath, 2003, MC Cormick 1997.) The researcher is hoping to identify effects of economy in procurement processes at Yala Sub District Hospital.
This research aims to identify cues of economic short comings and to tackle the question; What are the economic effects on procurement?

Objectives
The main objective of this paper is to analyze the effects of economy on public procurement. The paper aims at analyzing the economic policies, laws and procedures that determine procurement with a view of identifying inherent barriers. More specifically the research will
Identify and analyze economic effects in public procurement process
Analyze process of different approaches to enhancement of procurement.
To achieve these objectives, the researcher will use descriptive analysis. The study will review reviews public procurement theories, the hospitals regulatory and institutional framework as well as case study evidence. In particular, the researcher will review various policy documents, public procurement regulations and the Public Procurement and Disposal Act (2005), supplies manuals, Public Procurement Guide, and tender documents that relate to Hospitals procurement process.

Concepts and Theoritical Framewok
Definition of Key Words
Procurement Process;
Procurement is the process of acquiring goods and services or works starting from need identification to contract management and evaluation in the public sector (Wittig, 1998; Owegi et al, forthcoming) Procurement includes all logistical activities relating to the movement and control of goods and services through an organization developing and evaluating bids, negotiating proposals and presenting findings to elected official,s (Mc Cure and Gianakis, 2001)

Economic Performance
Economic performance theory can be useful in unraveling the effects in participation of procurement. Economy judges the cost of obtaining and verifying information about the quantity and quality of goods and services.
Efficient procurement relations is defined by consensual economic rules, routines and habits that reduce uncertainty in transactions and thus favoring business coordination and cooperation

REVIEW OF RELATED LITERATURE
INTRODUCTION
The economic plays a vital role in procurement processes and can have both negative and positive impacts, the aim of this study is to evaluate the economic impact on procurement – as it is the key tool in ensuring that procurement decisions are beneficial to a given organization.
Procurement Behavior (Risk Allocation)
Murdoch and Hughes (2008) identified important risks that the client must consider when deciding the appropriate procurement method for a project, including delays, design negligence, cost overruns and level of quality. The sector advocates that risks associated projects that should be passed to the party that can more effectively respond. The importance of risk allocation to ensure that project risks are passed to the party best placed to manage the risks. During the any slump in the economy that may occur during procurement. Project risks should be borne by the party best able to manage and respond to them. The underlying principle associated with risk allocation for each of these procurement methods is transferring the risks to other sectors.
In order to achieve value for money objectives in projects and service delivery development, Bing et al., (2005) concluded that the public and private sector partners must agree a mutually acceptable risk allocation scheme prior to the contract being awarded. This should facilitate both the public and private sectors to a more comprehensive understanding of risk and its allocation. The utilization of risk allocation procurement method suggests that the procurement behaviour of incase of any economic slump may continue to mitigate risk through transfers to the private sector.
Economic variation of state affects on procurement price

According to Celec et al., savings due to price differences is the main factor that can justify framework agreements (Celec, Nosari, Voich Jr., 2003). Lower prices due to the economy of scale are an advantage of the procurement process, which is being mentioned most often. C. L. Munson and K. Karjalainen state that procurement lowers the price of goods and services if the merging of several orders into one major one allows making use of the quantity-based discounts (Munson, 2007; Karjalainen, 2009). Many other authors emphasize that larger procurement volumes increase the buyer’s negotiating power (Porter, 1998; Faes et al., 2000). H. Schiele has found that the concentration of knowledge and human resources with high qualifications lead to a larger potential of savings due to lower prices as a result of better performing economy (Schiele, 2007).
Economic impacts drug consumption and prices in health sector
Economy of a state also regulates health sector procurements procurement, expenses, drug consumption; as a result of inflation in procurement prices. Danzon and Liu (10) explains how the short run effect of economy places a twist in the manufactures demand curve at the reference price. The twist demand model implies that brand prices fall and generic prices increase in response to economy. (According to these authors, in a twist demand curve model. Its never optimal price below the twist.
Economy plays vital roles on price changes and which dictates the organizational procurement ability.

CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
The chapter contains research approach, research design, population sample size, procedure, research instruments, data collection procedure, methods of data analysis.

3.1. Research Approach.
The research approach will be descriptive and quantitative because it will involve collecting analysis, interpretation and tabulation of data numerical form.

3.2 Research Design
In the study survey research design will be used. This will enable data to be collected from many respondents as possible. The views of the response will be the representative of the view of the entire population.

3.3. Target Population
This represents the entire group from which data will be collected. The population of the study will be the Hospital Management Staff within Yala Sub District Hospital

3.4. Sample Technique and sampling size
The researcher will use the convenient sampling by choosing the nearest and most convenient persons as respondent..

3.5 Research instruments
The instrument to be used in data collection will be questionnaires. The research also will use interview schedule; this will enable the researcher to collect data from many respondents within a short period of time.

3.6. Procedure of collecting data
To euthenics the research, the researcher will visit Yala Sub District Hospital to be granted permission to carry out the study within Yala Sub District Hospital. In addition she will seek permission from the Hospital superintendent where she will distribute the questionnaires. The researcher will proceed to the field for data collection where she will administer the questionnaire to the respondents personally, however in some cases the researcher might be forced to go back with the questionnaire i.e. where the respondents are un cooperative and refuse to take the questionnaire.

3.7. Data Analysis
The research analysis to be used will be frequency distribution table to present the data