Regional Seminar Papers 1997

Tool and Equipment Procurement

Feeder Roads Project Eastern Province, Zambia: Experiences with Procurement of Equipment and Hand tools for Labour-based Road Maintenance and Rehabilitation Works

The Feeder Roads Project was requested to give a presentation on procurement. As we are no procurement specialists, but merely a project which recently procured equipment and handtools for its programme, we would like to share those experiences with you. Before going into procurement issues, we would briefly like to introduce the Feeder Roads Project to you.

1. Develop capacity of district councils to plan, design, implement and manage road rehabilitation and maintenance works by small scale labour-based contractors.
2. Develop a private sector construction industry capable of rehabilitating and maintaining feeder roads using labour based methods.
3. Improve access to project areas.
4. Create direct employment.

1. District staff trained in planning, design and management of R&M contracts.
2. Supervisory staff trained in effective supervision and inspection of R&M contracts.
3. Maintenance programmes established and under implementation.
4. An efficient system for contract management tested and established, including a monitoring and reporting system.
5. Two National Engineers trained to manage labour-based rehabilitation and maintenance programmes.
6. Selection procedures for potential contractors developed.
7. Nine small scale rehabilitation and 25 small scale maintenance contractors developed to operate as labour based R&M enterprises.
8. Approximately 500 km of road rehabilitated and approximately 700 kms under a regular maintenance programme by contract using LB methods.
9. A total of approximately 900,000 worker days of direct employment generated during rehabilitation and maintenance contracts.

1. Fifteen maintenance contractors trained and effective.
2. Ten rehabilitation contractors trained.
3. US$ 800,000.- of equipment procured and issued. (A Credit Firm is being engaged to recover these funds from the contractors, to be re-invested in rehabilitation)
4. 14 council supervisors, seven districts under training.
5. 21 km of road rehabilitated.
6. 60 km of road maintained.
7. 70 km of rehabilitation contracts prepared.
8. 190 km of maintenance contracts prepared.
9. 15,000 worker days generated on maintenance works.
10. 30,000 worker days generated on rehabilitation works.

The project had four main purposes for which procurement was required:

• Equipment for district staff to design, prepare, manage labour based contracts.
• Handtools for maintenance and rehabilitation contractors.
• Equipment for rehabilitation contractors.
• Equipment, tools, etc. for the project office.

In all four cases the exact requirements had to be defined. Requirements are partly dictated by the project document (work programme and budget), and partly by knowledge and expertise of project staff.

To implement the procurement, the project had a number of options available, each of them having their own regulations with regards to procurement procedures:

• through the executing agency, in this case the Ministry of Local Government & Housing.
• through the financing or co-operating agency (UNDP and ILO).
• through IAPSO (UN Procurement Agency).
• through direct purchase in the project area.

A brief description will follow for each purpose for which the project has procured equipment.

The shift from force account implementation of roadworks to implementation by private contractors is only possible by training contractors, and in recent years attention went mainly to develop contractor capacity to make sure that road maintenance and rehabilitation works were carried out in a professional way. However, to enable this shift successfully to be made, the capacity of the district councils to plan, design, and manage contracts needs to be enhanced. An enabling environment within the Director of Works (DoW) departments (eight in total) need to be established to ensure proper supervision and management of the contractors. This is being addressed by the project as follows:

After an inventory of existing assets within the DoW departments (which was basically nothing), a schedule of requirements was prepared in a meeting with the DoWs. The requirements consisted of survey equipment, soil testing equipment, office equipment and transport equipment. Although certain items like stationary could be bought locally, most items like level instruments, measuring wheels, copiers and computers are cheaper abroad and therefore it was decided to facilitate the procurement through IAPSO. After submitting the request for a quotation, the same was received two weeks later. The project is now in a phase to gather more information from IAPSO on the offered items to ensure that the correct items will be purchased. Once agreement is reached on the order, the project will ask the Ministry to prepare a Request for Direct Payment, to be submitted to the UNDP. Once this is done, the order can be placed.

The preparation of the schedule of requirements has proven to be the most difficult and time consuming part of the process. Equipment and tools for planning, surveying, preparing and managing contracts is not well addressed in the ‘ILO Guide to Tools and Equipment' (The Guide). The section on surveying equipment is mostly considered unprofessional and therefore unacceptable. The Guide does not give information on soil testing equipment. In view of this experience the project recommends as follows:

Recommendation 1: The Guide to be revised to include engineering survey equipment and soil testing equipment for all tests required.

Recommendation 2: Check lists to be prepared to ensure that clients will be equipped with the correct tools and equipment to enable them to do a good job.

Recommendation 3: Identification of manufacturers and suppliers of survey and soil testing equipment in different project areas, information which should be updated on a regular basis.

The maintenance contractors are only equipped with handtools and these were procured by the UNDP before the start of the project with the assistance of the Roads Training School in Lusaka, and were available in the project area. The procurement of handtools for the rehabilitation contractors was implemented by the Project and started in January 1997 with the preparation of a schedule of requirements. For the schedule of requirements, the project relied on expertise within the its personnel, the guide and documents and reports of other projects. Taking into account the monthly expected output per contractor, a decision was taken on the quantities for each item. With regard, to technical specifications, detailed descriptions were provided only if further identification of the tool was required. The most important specification given was to supply good quality handtools. The suppliers were instructed to mention the manufacturer of each item in their quote.

The next step in the process was to identify possible manufacturers of handtools in the project area. A manufacturer of hoes, slashers and bush knives was found in Blantyre, for the rest, only commercial suppliers of imported handtools were available in Zambia. From previous experience, a number of reliable suppliers were invited to prepare and submit a quotation. A number of suppliers came back for further information on a few items.

After receiving the quotations, an evaluation was prepared and the project asked the Ministry to prepare a Request for Direct Payment, to be submitted to the UNDP. The order was confirmed and the handtools arrived in the project area six weeks later.

Of the total order (approximately US$ 50,000), about US$ 7,000 (15%) had to be withheld for wrong deliveries. Plastic watering cans were delivered instead of steel ones. Small garden rakes were delivered instead of soil spreaders. Plain pine wood in 6m length was delivered instead of boning rods. The supplier has promised to correct the wrong deliveries.

The total period to procure the hand tools, from preparation of schedule of requirements until delivery in the project area was approximately three months.

The Guide gives very detailed information and specifications on a number of hand tools. However, those detailed specifications are mainly important in the manufacturing process of the handtool and cannot help much in a procurement process. Budget and time rarely allow a project to go into development of manufacturing capacity of handtools in the area of operation, it must depend on ready available products. Professional production of the larger variety of handtools requires expertise and large investments.

Recommendation 4: The Guide to be updated to identify manufacturers of good quality handtools in different project areas and more information should be readily made available to projects on sources for communication (tel/fax/email).

The procurement of rehabilitation equipment has been an important challenge for the project, and the main concern was timely arrival to allow the contractors to start work in the field as soon as they came out of the formal training phase. However, procurement could not start before the signing of the project document. The items to be procured per contractor were the following: two tractors, three trailers, one waterbowser, one waterpump, one vibrating pedestrian roller, one tractor towed roller, one vanette 4WD pickup. The whole package was estimated at US$ 120,000.

With regard to the tractors, it was first established which models were already available in the project area, which would minimise spares supply and servicing problems and, after this was established, that particular brand was specified in the schedule of requirements. Procurement procedures proved to be flexible enough to do this. The same applied to the pedestrian vibrating rollers, and a particular model was specified in the schedule of requirements.

With regard to trailers, water bowsers and tractor towed steel drum rollers, the project attempted to source local manufacturers in the country and it concentrated its search mainly in the Lusaka area which is 600km away from the project area. The drawings of the Kenyan trailer proved to be very helpful during discussions and negotiations, however, such specifications did not exist in the case of water bowsers and rollers. Together with the identified workshop, basic measurements were taken from rollers developed by and in use at the Roads Training School, and modified to arrive at a final design. The workshop had never made the Kenyan type of trailers, secondly, they did not to have enough capacity to manufacture all the required trailers (21), and it was therefore decided to order only seven trailers and seven rollers with the workshop, while the balance of the requirements were ordered from a well known manufacturer of trailers and water bowsers in a neighbouring country. Because of the absence of proper drawings for the rollers, close supervision of the manufacturing process was required by the project, which was not easy to arrange. With regard to implements like trailers, rollers, water bowsers and culvert moulds, local manufacturing should be strongly encouraged, provided that quality can be assured.

In procuring such large quantities of equipment, it is very important to be aware of certain regulations in procurement procedures. In our case, for example, the tractor order passed the US$100,000 rule which implied that the tender board of UNCDF New York had to be involved, taking a long time to approval. Eventually, all equipment arrived in the project area in time to start the field work.

Recommendation 5: Detailed construction drawings be prepared and agreed for water bowsers, steel drum rollers and culvert moulds. Drawings should include a breakdown of elements and practical tips for the manufacturing process. Reports to be published as attachments to The Guide.

Recommendation 6: In the case of equipment, addresses and contacts of manufacturers, workshops and branch offices per country or region need to be updated.

Recommendation 7: Procurement regulations to be described in a practical way to allow for proper planning.

In general, the Feeder Roads Project did not encounter severe problems with the procurement of equipment and handtools. Handtools were procured within three months time and all equipment required by the project arrived in the project area approximately half a year after the procurement process was initiated.

However, with this paper, we hope we were able to present a number of problems which will provide sufficient basis to stimulate a discussion during the seminar.

Equipment Procurement for the DNEP/DFID Feeder Roads Project, Mozambique

R N Geddes, Project Advisor, DNEP/DFID Feeder Roads Project, Zambézia, Mozambique

Synopsis

This paper provides an account of the procurement of equipment for the DNEP/DFID Feeder Roads Project in Zambézia Province, Mozambique. An outline is provided of the procurement process, mainly from the in-country point of view. Measures that have been taken for clearing the equipment through Mozambique customs are described.

The objectives of the project include: the rehabilitation of tertiary roads in Zambézia Province in order to improve the economic and social prosperity of the local population, and the development of capacity in the local road construction industry. The project is being implemented by the National Directorate of Roads and Bridges (DNEP), with support from consultants. Execution of the works is by emergent, small-scale contractors who are receiving training within the project.

The equipment supplied to the project includes tractors and trailers, towed water bowsers, pedestrian rollers, towed rollers, Land Rover pick-ups, seven tonne flat-bed trucks and many other smaller items. The equipment has been procured, mainly in the United Kingdom, in accordance with the requirements of the Department for International Development (DFID). It is being delivered by sea to the port of Quelimane in Zambézia Province.

The Mozambique Government has been able to fulfil its commitment to pay the import duties. This has resulted in relatively few problems with clearance of the equipment through customs in Quelimane. The consultants have provided support to DNEP for the co-ordination of in-country aspects of the importation of the equipment at a local and national level.

The purpose of the DNEP/DFID Feeder Roads Project is to rehabilitate approximately 800km of existing classified feeder roads in Zambézia Province, Mozambique. This is in order to improve the economic and social condition of the local population. The project is being implemented by the Mozambique National Directorate of Roads and Bridges (DNEP) through DEP Zambézia, the Provincial Department of Roads and Bridges. Support to DNEP and DEP for the management of the project is being provided by consultants.

The project is being funded by the British Government, through the Department for International Development (DFID), for the purchase of equipment, materials, works execution and the consultants. In addition, DFID are funding upgrading of accommodation, some road maintenance (within the project period) and UK/regional training. The Government of Mozambique contribution includes the payment of import duties, DEP supervision of the works, offices and housing for the consultants, and in-country training.

The project is part of DNEP's Feeder Roads Programme, which in turn is part of the World Bank-supported Roads and Coastal Shipping Project (ROCS), which seeks to ultimately rehabilitate the majority of the classified road network in Mozambique.

Preparations for the implementation of the project started in September 1995 in order to facilitate the commencement of site operations after the 1995-1996 rains. The project completion date is 15 September 2000.

By the end of July 1997, approximately 60 kilometres of road had been rehabilitated to all-weather standard and 40 kilometres were under routine maintenance. Six contractors are currently working independently on different sites in Mocuba and Ilé districts under the supervision of the Provincial Department of Roads and Bridges (DEP), and with continued support from the Consultants.

The equipment supplied to the project is relatively sophisticated for a labour-based project. It includes tractors and trailers, towed water bowsers, pedestrian rollers, towed rollers, Land Rover pick-ups, seven tonne flat-bed trucks and many other smaller items. Most of the equipment is provided to enable gravelling operations and for compaction. It is anticipated that gravelling will be required on up to 50% of the project roads.

The equipment has been procured in accordance with the requirements of the Department for International Development. Most items have been supplied from the United Kingdom and are being delivered by sea to the port of Quelimane in Zambézia Province. The total budget for procurement of equipment is about US$3,000,000.

The contractors are hiring the equipment from DNEP at rates calculated to represent the full cost of owning and maintaining equipment. Payment is made through deductions from the monthly payment certificates. DNEP is currently preparing proposals to the Ministry of Finance to allow it to enter into hire-purchase contracts with the contractors for the sale of specific items.

The contractors will be encouraged to purchase equipment in accordance with their management capacity in order to avoid over-capitalisation through the purchase of assets that may be surplus to their requirements. Future work opportunities, beyond the end of the project , will likely be confined to routine maintenance contracts.

Items of equipment that are not purchased by contractors will be kept centrally and will be available for hire for the duration of the project. At the end of the project, DNEP will either dispose of the surplus equipment, or continue to make it available for hire.

To date all items for the first consignment have been received in the port of Quelimane and have been cleared through customs for use on site. The ordering and delivery of items from the second consignment has commenced, in accordance with the site requirements, and some items from the second consignment have been received.

The procurement of equipment for use on the project is being done by the consultants through an associated company. This company is a registered procurement agent with the British Government Procurement Advisory Monitoring Unit (PAMU)1.

The use of in-house procurement capability has benefited the project in various ways:

1. Good lines of communication and a close understanding have developed between the procurement advisor in the United Kingdom and the project advisor in the field. This has enabled prioritisation of the procurement activities and the adjustment of specifications to suit site requirements. The project has, as a result, been able to meet programme deadlines.
2. Staff of the consultant travelling to southern Africa, often on other projects, have been able to carry urgently required documents and small items of equipment and spare parts.

The procurement process has been relatively complicated, as demonstrated in the flow chart given in Figure I.

The process started with the preparation of the equipment list. The list was prepared by the consultants on the basis of the requirements of the project appraisal and was approved by DNEP and the DFID. The equipment specifications were based on the standard equipment specified for the Feeder Roads Programme brigades. The quantity of each item was calculated on the assumption that some contractors would develop larger operations than others, and would therefore require, and be able to afford, more equipment.

The equipment has been ordered in two main consignments. This was in order to reduce the risk of over-supply in the event that it would not be possible to find enough contractors to participate in the project. The first orders were placed in May 1996, and most of the equipment from the first consignment was operational on site before the end of 1996.

The selection of suppliers was done on a competitive basis in accordance with the requirements of the PAMU. The technical evaluation of the bids received from the tenderers was done on site by the consultants mechanical technician and the project advisor. Technical considerations included: availability of spare parts and agent back-up locally or in the region; standardisation of parts where possible, and experience of durability and suitability from similar projects in Africa. The financial evaluation was done by the procurement advisor in the United Kingdom. The final appointment was made with reference to the technical and financial evaluations in accordance with PAMU's requirements.

Some urgently required items were purchased in the region. This included: vehicles for the consultant's supervision staff; some tractors and trailers; handtools, and; building materials for use in the rehabilitation of housing for the consultant. The local procurement resulted in some additional costs, but was necessary in order to commence implementation of the training site ahead of the arrival of the bulk of the equipment from the United Kingdom.

In order to minimise transport costs, suppliers of small items have supplied their goods CIF (Carriage in Freight) to a container terminal in the United Kingdom. Shipping to Mozambique has been arranged by the procurement agent, who has co-ordinated the supply of goods to the terminal, to ensure that containers are full when they are dispatched. Shipping to Quelimane has been done via the South African port of Durban.

The importation and clearance of the equipment has been initiated and managed on behalf of DNEP by the consultant's project team based in Quelimane. The importation process includes: production of the import permit; clarification of queries from the inspection agents; arranging inspection of the goods by Customs on arrival; temporary storage in Quelimane before deployment to the sites; registration and insuring of vehicles; transport to site. The key to the success of the process has been the local recruitment of a Mozambican expediter, with a thorough knowledge of Quelimane, and some experience in dealing with the various agencies involved in the process of importation. The decision to manage the process at a local level has been critical to its success.

The payment of import duty for the clearance of the goods is the responsibility of the Government of Mozambique, through the National Directorate of Roads and Bridges (DNEP), who are the owners of the equipment. DNEP's capacity for dealing with large consignments of imported equipment is now well developed, following many years of experience, and the clearance of the goods has been relatively trouble-free. Delays that have occurred have largely been due to the lack of capacity in the parastatal clearing agent, ADENA (Agência Nacional de Despacho) and in Customs to deal with the sheer volume of paperwork that has been generated.

Project funds have been used for payment for services provided in Quelimane, such as the production of the import permits, port charges, and the licensing and insuring of equipment following customs clearance. This has been a considerable advantage in reducing delays in the deployment of equipment on the sites.

Typical bureaucratic problems that have been encountered in the procurement process include:

1. The preparation of documentation for the importation of some items, such as, the mechanic's tools and equipment, was delayed for several months in Mozambique due to the large number of items, and the complexity of the descriptions of the goods which had to be translated into Portuguese. The government department (Ministério da Indústria, Comércio e Turismo) approving the import permits in Quelimane initially insisted that all items should be listed individually on the permit. This requirement was eventually abandoned following advice from Maputo that items with the same identification code can be grouped on the license, as long as they are listed separately on the supplier's proforma invoice.
2. Trailers imported from Zimbabwe were to be transported from Harare by rail to the Mozambique port of Beira, and then by ship to Quelimane. This is the cheapest transport route from Harare to Quelimane for bulk goods. On arrival in Beira, the trailers were impounded by customs who demanded clearance of the trailers before they could be transported to Quelimane. The shipping agent employed by the supplier inadvertently gave the shipping documents to a commercial clearing agent who initiated the clearance process. Since all goods imported by the Mozambique government must be cleared by ADENA (the parastatal clearing agent), the commercial agent was not in a position to clear the goods. By the time the problem had been identified, and the documents retrieved from the commercial agent and passed on to ADENA, several months of delay had occurred.

Meanwhile, the Clean Report of Findings (CROF) certificate issued by the inspection agency was sent in error to Customs in Maputo who apparently lost it. This error caused a further delay of several months as Customs, and the inspection agent, searched for the document. Production of a duplicate copy would have required a specific letter of request from DNEP. Eventually, the CROF was located and forwarded through Quelimane to ADENA in Beira, who were able to clear the goods.

Other consignments of goods imported for the project from Zimbabwe have been transported by road through Malawi, and have entered Zambézia at the Milange border. Control of the Milange border post is the responsibility of customs in Quelimane. It has thus been possible for the consultant, who has a permanent presence in Quelimane, to facilitate and co-ordinate the clearance process. Few problem have been experienced.

3. The office of Agência Nacional de Despacho CADENA) in Quelimane has, at times, been overwhelmed by the volume of paperwork received from ADENA in Maputo. This is due to the large number of different items imported for the project, and has led to long delays in clearing specific items. For example, heavy duty tow hitches for the tractors were held in the port for several months while ADENA apparently waited for clearance documents from Maputo. When the documents finally emerged, it was apparent that they had been in the office of ADENA in Quelimane for about six months.

The equipment specifications and quantities for the DNEP/DFID Feeder Roads Project have been designed to enable the project to attain its objectives in terms of output of rehabilitated road, and the development of capacity within the local road contractor industry. The equipment specified is similar to equipment supplied to brigades within the national Feeder Roads Programme, but the quantities have been adjusted to meet the requirements of private contractors.

The equipment is owned by DNEP who lease it to the contractors at rates that reflect the full purchase price. The contractors will ultimately have the opportunity to enter hire-purchase agreements with DNEP for the purchase of specific items. The opportunity to own equipment is a major motivator for the contractors, and provides them with a means to invest in capital assets. This is essential for the growth of a small business.

The procurement of equipment is being done by the consultants in accordance with the requirements of the British Government PAMU. The use of in-house capacity has allowed flexibility in the procurement programme to suit site requirements, and the project has benefited from group commitment to meeting programme deadlines.

Bureaucratic delays in the clearance of equipment in-country have largely been overcome through prompt payment of import duties by the DNEP, and pro-active support by the consultants for the co-ordination of the process. The availability of project funds and management capacity at a local level have been significant in facilitating the movement of goods through Quelimane port and onto the sites.

1 Soon to be renamed "Procurement, Policy and Practice Unit".