Report Topic: Procurement Planning and Budgeting Linkage

Reporter: Ma. Angelica O. Edar

Subject: PM-503 – Financial Management

Procurement Planning and Budget Linkage

Considerations (Sec. 7.1 of IRR):

 Within approved budget of procuring entity
 Judiciously done
 Consistent with government fiscal measures
 Considered crucial to the efficient discharge of governmental functions
o Required for the day-to-day operations
o In pursuit of the principal mandate of the procuring entity concerned
 The APP shall include provisions for foreseeable emergencies based on
historical records.

Sec. 7.2 of IRR

 No procurement shall be undertaken unless it is accordance with the approved

Annual Procurement Plan (APP)
 Approval of the APP by the Head of Procuring Entity (HoPE) or designated
second-ranking official is mandatory

Procurement Planning Timeline

Procurement Planning vis-à-vis Budget Cycle

When are Cost Estimates Prepared?
❑ As early as Budget Preparation thru issuance of Budget Call, PEs are
required to prepare cost estimates for its procurement activities for the
succeeding year
❑ PPMPs of various divisions/units/offices are required to support budget
proposal of government agencies

Determining the ABC

Factors to Consider in Determining the Approved Budget for the Contract

1. Cost or market price of the product/service
2. Inflationary factor
3. Incidental expenses
4. Quantities & Taxes
5. Cost of spare parts and/or maintenance services

Essential Factors to Consider

1. Foreign Exchange and Local Currency Cost
 Component prices are likely to vary between local and international
markets
2. Timeliness
 If the date of the cost estimates is:
o Less than 6 months – May still be acceptable.
o 6-12 months - Should be revised by simple escalation factor,
reflecting actual price changes since the date of cost estimates.
Unless, project team concludes that base cost has not changed
materially.
o More than 12 months – should be reappraised, unless project
team concludes base cost has not materially changed.
What is “Technical Specification”?

• Constitutes the “statement of the requirements”

• The totality of the technical requirements contained in the dedicated part
of the procurement documents, defining the characteristics required of:
• a service to be performed,
• a material or product to be supplied; or
• works to be constructed

It should be descriptive in such a way that they fulfil or reflect the use and purpose for
which they are intended by the Procuring Entity.
• states the needs to be satisfied by the procurement
• defines what it wishes to buy
• defines what the bidder is expected to supply or perform
• establishes the standard against which inspections, test and quality checks are
made
• directly affects the quality and performance of the items purchased, works
constructed or services provided and the price paid
Technical Specification for each type of procurement
Goods and Services Infrastructure Projects Consulting Services
Technical Specifications Scope of Work (SOW) Terms of Reference (TOS)
(TS)