ABSTRACT
The large volumes of infrastructural works elevate to
the fore the need to be particular about the procurement procedures for the
acquisition of infrastructure. The private tertiary education industry in
recent times has been financially challenged. One of such institutions is the
Methodist University College Ghana. Low levels of student admissions have had a
direct correlation with revenue projections and therefore the lack of a proper
framework in the utilization of scarce funds toward physical development could
have serious consequences. The study sort to develop policy guidelines for the
Methodist University College Ghana to regulate the procurement of works. The
specific objectives were to identify the procurement and contracting cycles in
practice; and also to identify the construction procurement structures that
exist in the University College. Data were collected through questionnaire
survey involving key officers in charge of the procurement of works in the
institution. An analysis of existing procurement documentation was also
undertaken using seven new management tools. The study found that there was the
lack of a regulatory policy for construction procurement. There was the absence
of an open competitive tendering process because key tender boards had not been
constituted. As a result, poor contract management/administration and
supervision, procurement reporting, monitoring and evaluation were the
challenges the institution was faced with. The study therefore makes
recommendations for the rationalisation of the procurement structures in the
institution by the introduction of tender boards and distinctly laying out the
requisite roles and responsibilities of all procurement functionaries.
Guidelines are also proposed to aid in the preparation of a policy that covers
generic tendering procedures, risk management, contracting and contract
administration.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Procurement is recognized as having
a major role in the economic and institutional growth of a developing nation
(Schooner et al. 2008). Public procurement in Ghana over the years has formed a
large part of government expenditure between 50 – 70% of national budget
(Adu-Aning, 2010). The function of procurement of good, services and works is
no different for private business organizations. One industry of interest where
this assertion holds prominence is the private tertiary education industry.
This is mainly due to the fact that this industry has rapidly expanded within
the past decade and has been without direct government support since its
inception about 20 years ago. The industry actors have had challenges competing
with the state owned and sub vented tertiary institutions. With the aid of the
state, public universities have the resource for physical expanded mainly for
their internally generated funds.
Private universities struggle to
admit and maintain large student numbers due to the lack of physical
infrastructure, the funds to expand the existing structures and the relatively
higher academic fees compared with public universities. According to The
Chronicle (2013) corporate tax exemptions being enjoyed by the private
education industry was revoked with the amendment of Section 6 of the Internal
Revenue Act, Act 859 of 2000. This further highlights the limited financial
resources available to private educational establishments and the need for
efficient utilization of such resources.
The Methodist University College
Ghana (MUCG) is arguably one of the leading private tertiary education
establishments in the country. It is fully owed by the Methodist Church Ghana and
has the Church’s Presiding Bishop as the Chairman of its Council. The
University College had had steady growth in terms of student numbers and
revenue from its inception in 2000 to 2012. The student population is said to
have increase by 85% from 3,412 to 6,302 between 2009 and 2011 while revenue
also increased by 72% from GH¢ 8,318,044.60 to GH¢ 13,559,980.40 (Ampadu,
2015). In the light of this the Council of the University College as part of
the strategic goal of attaining autonomy adopted for implementation a five year
infrastructure development plan, MUCG Strategic Plan 2011 – 2016.
MUCG negotiated a credit facility
from Prudential Bank to carry out major physical and electronic infrastructural
development on its three campuses in anticipation of further growth in student
numbers. In June 2011 a loan of GH¢ 10,000,000.00 was secured for this
expansion drive with a floating interest of 20.5%, 11 equal semester payments
and 7 years tenor (Ampadu, 2015). Repayment of the loan is however causing the University
College challenges due to a downward trend of student intakes replacing a high
number of graduands for the past three years (Adjepong, 2015). This is as a
result of new admission requirements issued by the National Council for
Tertiary Education (NCTE). Admission figures of MUCG dropped from 2500 to under
1000 over the period and the figures have yet to improve. This represents a
drop of more than 60% of the annual fresh students’ fee revenue.
Graphic Online (2015) reports of
general speculations within the University College community and the Methodist
Church that the works procurement and contractual arrangement for the projects were
not undertaken appropriately. Thus forcing the Methodist Church to bail out the
University College by compulsorily levying its members. These assertions are
further evident in the long project durations, the seemingly lack of capacity
by some of the project contractors and sub-contractors, scope creep, volume of
construction waste and surplus building materials upon project completion.
The University Colleges’ Internal
Auditor adds that “The decision to secure the GH¢ 10million loan to expand the
infrastructure base of the University was inevitable at the time and management
is commended for taken that decision, however Internal Audit is of the view
that adequate internal control measures were not put in place to ensure value
for money. Internal structures should be respected and used, while internal
procedures are adhered to when undertaken future projects” (Ampadu, 2015). The
MUCG Development Office (2015) recognizes the challenges and faults of the
existing system of construction procurement and argues for the adoption of a
new works procurement policy to promote efficiency, accountability and value for
money in the operation, management and reporting of works procurement.
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