Implementation of e-procurement by the Gauteng Department of Infrastructure Development and its impact on the development of small and medium construction firms
Date
2017
Authors
Sithole, Ronald Alfred
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Abstract
E-procurement has been implemented globally with the aim of optimising efficiency and
effectiveness within procurement processes of organisations and has become one of
the preferred systems for the acquisition of goods, works and services. In recent years,
e-procurement processes have been widely adopted and their application has been the
norm in many organisations’ procurement processes. However, while e-procurement
presents some significant opportunities, a set of challenges has emerged with the
implementation of e-procurement. For example, in the South African context, small and
medium construction firms (SMCFs) that do not have access to technological
infrastructure are often not able to participate fully in the e-procurement transactions. In
that regard, the implementation of e-procurement by the Gauteng Department of
Infrastructure Development (GDID), a public sector organisation within the Republic of
South Africa (RSA) and its impact on the development of SMCFs was investigated in
this study. This was done to ascertain the extent of e-procurement implementation and
the experiences of SMCFs, benefits and challenges associated with this in the study
area. In order to address the research question, the research design adopted involved a
detailed examination of the e-procurement methodologies used by the GDID in its
procurement for infrastructure projects. This was done through the utilisation of
questionnaires. 10 GDID officials chosen through the utilisation of a combination of the
stratified random and purposive sampling methods, participated on the research.
Secondly, to ascertain the impact of e-procurement implementation on the development
of SMCFs, 250 SMCFs within the GDID supplier database were emailed questionnaires
to obtain information regarding their experience, benefits realised and the inhibiting
factors associated with their participation in e-procurement. The 250 SMCFs were
selected through purposive sampling method were selected on the basis that they
participated in the procurement of infrastructure projects implemented by GDID in the
previous three financial years which are 2014/15; 2015/16 and 2016/17. Twenty-seven
of the 250 SMCFs responded. The e-procurement methodologies used by the GDID
were found to be e-notification, partial e-tendering, e-contract award, e-contract
management and e-maintenance, repairs and operations (e-MRO). There was no single
integrated e-procurement system used for carrying out all the e-procurement activities.
E-notifications were done through the notification of tender opportunities for
infrastructure projects through the Government Tender Bulletin, Construction Industry
Development Board (CIDB) website, Department of National Treasury e-tenders’ portal
and the Lead-2-Business website. Partial e-tendering is carried out through the
Department of National Treasury e-tenders portal. E-contract award was done through
sending of award letters to service providers as email attachments. E-contract
management is done through the utilisation of Oracles’ Primavera P6 and Unifier
software and Microsoft Project and emails for normal formal communication and
circulation of instructions and project reports. E-MRO was done through the emaintenance
software developed by GDID. It was also found that only around 33.3% of
the 27 SMCFs that responded were able to fully engage with all the 5 major eprocurement
methodologies, excluding e-MRO implemented by the GDID. The
remaining SMCFs still relied on the utilisation of a combination of both electronic and
paper based systems. The main impact of e-procurement on the development of
SMCFs was found to be both positive and negative. On the positive side, it increased
profitability through cost saving benefits and reduction in time required for transactions,
increased their market access (as they are able to view more tender opportunities),
made transactions faster, increased production rate on site (through reduction in the
time spent on tendering, thus releasing more time for managing projects on site), and
safer storage and back-up of information for reference purposes and benchmarking of
other projects, as well as, for dispute resolution. The main disadvantages were found to
be high capital cost of procuring and installing Information, Communication and
Technology (ICT) infrastructure, the lack of resources, unreliable power supply, security
risk and the lack of infrastructure and the non-compatibility of different software
packages and application (interoperability challenge). The study confirms that the use of
e-procurement by the GDID is still evolving and is yet to be fully implemented in a way
that guarantees its full potential and benefits. It also confirms that e-procurement
impacts both positively and negatively on the development of SMCFs, and that the
systems need to be carefully designed and applied in order to ensure the growth,
inclusiveness, sustainability and development of SMCFs in South Africa.
Description
Thesis is submitted in partial fulfilment for the degree of Master of Building (Project Management) to the Faculty of Engineering and the Built Environment, School of Construction Economics and Management at the University of the Witwatersrand, Johannesburg, 2017
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Citation
Sithole, Ronald Alfred (2017) Implementation of e-procurement by the Gauteng Department of Infrastructure Development and its impact on the development of small and medium construction firms, University of the Witwatersrand, Johannesburg, <http://hdl.handle.net/10539/24199>