The Purpose of Planning
We all know that a plan is, in many ways, a best estimate. We do not control the future, so plans rarely unfold exactly as expected. Why, then, do we plan? We plan to create a reasonable picture of how something is expected to work, to set direction, and to give ourselves a basis for comparison when reality unfolds differently.
Procurement planning works in much the same way. We plan procurements for a coming period knowing that the plan represents our best estimate, not a guarantee. We try to anticipate uncertainties, but when the plan does not materialize as expected, the differences help us assess our performance and improve future planning exercises. During implementation, the closer actual procurement activities remain to the plan, the stronger the indication that planning and execution are aligned.
Is Procurement Planning a Requirement?
In many public procurement legal and regulatory frameworks, procurement planning is not merely good practice — it is a mandatory obligation. Procuring entities are typically required to prepare and publish annual procurement plans as part of their budget and work planning cycles. Under donor-funded frameworks such as the World Bank’s Procurement Regulations for IPF Borrowers, a procurement plan is a condition of project implementation and must be agreed with the financing institution before procurement activities commence.
What Does a Procurement Plan Contain?
A procurement plan typically sets out, for a defined planning period, the following information for each anticipated procurement requirement:
- A description of the requirement
- The estimated contract value
- The proposed procurement method
- The anticipated timeline, including key milestones such as solicitation, evaluation, award, and delivery
- The responsible entity
- The source of funding and confirmation of fund availability
The level of detail required will vary by framework and by the complexity of the requirements being planned.
Why Does It Matter?
The benefits of procurement planning extend well beyond having a document on file. A well-prepared procurement plan:
- Confirms budget and fund availability before commitments are made, reducing the risk of procurement processes being initiated without adequate funding.
- Manages lead times by ensuring procurement activities begin early enough to meet operational needs. Inadequate lead time planning is one of the most common causes of emergency and sole-source procurement; both of which carry significant value-for-money and integrity risks.
- Prepares the market by giving potential suppliers, contractors, and service providers advance notice of upcoming opportunities, which improves competition and the quality of offers received.
- Identifies aggregation opportunities by providing a consolidated view of requirements across departments, enabling packaging decisions that can reduce costs and administrative burden.
- Enables coordination across procurement, finance, technical, and requesting entity departments, aligning procurement activities with organizational priorities and budget cycles.
- Supports oversight and audit by providing a documented baseline against which actual procurement activities can be compared and explained.
Who Is Responsible?
Procurement planning is a shared responsibility. The procurement unit typically coordinates and consolidates the plan, but the inputs must come from requesting entities and technical departments who are best placed to define their requirements, timelines, and budget estimates. Finance must confirm fund availability. Senior management must approve the plan and provide the organizational commitment necessary for it to be implemented effectively.
The Cost of Not Planning
Organizations that do not plan their procurements, or plan them poorly, typically find themselves resorting to emergency procurement, sole-source awards, and late contract starts. These outcomes are not only operationally costly but also create conditions that are difficult to defend under audit and that expose the organization to integrity risks. A realistic, well-maintained procurement plan is one of the most effective tools available for preventing procurement failure before it occurs.
Further Reading
For a more detailed treatment of procurement planning principles and practice, see Procurement Planning Basics, part of the Procurement ClassRoom Lessons series.
6 thoughts on “Why Plan Procurements?”
Dear Jorge,
Let me firstly thank you for this invaluable project. This should be an alphabet for public procurement officials, both beginners and active practitioners.
Procurement planning is crucial. Although, as you correctly noted, not everything can be planned beforehand, nevertheless leaving your project or organization without a procurement plan can cause numerous problems and eventually may cost a lot.
Procurement planning is important not only for procurers, but also for requesting departments/projects. The requestor should plan what goods, works and services are envisaged, consequently, what and when will be requested from procurer, so the procurer in his/her turn can plan further steps. As many organisations should follow specific procurement guidelines and manuals, planning helps forecast both timing and personnel to be spent on the process.
Planning can also help us consolidate similar procurement requests from different requestors/departments into bigger tenders, allowing wider competition, fewer workdays, lower prices, considerable time savings, etc.
Eventually, based on the forecasted workload, procurement plan can help us chose our vacation timing. Planning is a good practice in any profession, in procurement it is a must.
Just stumbled on this site. I wish I knew about it much earlier. Very educative. I appreciate the practical answers/ responses and comments.
Well done, Jorge.
God bless your efforts.
Another beautiful piece of advice is here: http://www.procurementombudsman.com/#!planning/c1zx8
Thanks Jorge for this topic.
One of the most challenging aspects of public procurement in Uganda is procurement planning. Procurement planning is so crucial for successful execution of projects especially when it is based on approved budgets.
In my experience with procurement audit work in public entities in Uganda, especially in Local Governments, the process of coming up with estimates is not given due attention. The estimates are seldom realistic and this poses a serious challenge to the whole procurement process. At planning level, entities ought to come up with specifications of the procurements to be able to come up with realistic estimates in the procurement plan that reflect market prices. In most cases when bids are solicited, the prices offered by different bidders are above the entities budgets.
I would be interested in knowing how other public entities in Africa are doing in regard to procurement planning.
Steven
Thank you for sharing your knowledge in procurement, I’m gaining a lot as a new student . I’m everyday reading your articles.