KOFORIDUA TECHNICAL UNIVERSITY

FACULTY OF BUSINESS AND MANAGEMENT STUDIES

DEPARTMENT OF PROCUREMENT AND SUPPLY SCIENCE

ASSESSING RISK IN PROCUREMENT

(A CASE STUDY OF KOFORIDUA TECHNICAL UNIVERSITY)

BY

OWUSU-DARTEY EWURAKUA AGYAPOMAA

(04/2018/563D)
&
BANAHENE ISHMAEL
(04/2018/5675D)

A DISSERTATION SUBMITTED TO THE DEPARTMENT OF

PROCUREMENT AND SUPPLY SCIENCE, FACULTY OF BUSINESS AND
MANAGEMENT STUDIES, KOFORIDUA TECHNICAL UNIVERSITY IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
HIGHER NATIONAL DIPLOMA IN PURCHASING AND SUPPLY.

OCTOBER, 2021
 STUDENTS’ DECLARATION

We hereby declare that this is our own research work and that no part of it has been

presented for another certificate in this institution or elsewhere.

……………………………………....... ……………………………….......

OWUSU-DARTEY EWURAKUA AGYAPOMAA DATE

(04/2018/5623D)

……………………………………....... ……………………………….......

BANAHENE ISHMAEL DATE

(04/2018/5675D)

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 CERTIFICATION

We hereby certify that this project was supervised in accordance with the guidelines of

supervision of project work laid down by the University.

……………………………………....... ……………………………….......

MR. WILLIAM-MILLS ABBEY DATE

(SUPERVISOR)

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 ACKNOWLEDGMENT

We seize this opportunity to express our gratitude to all those who assisted in the

preparation of project work.

Our sincere gratitude goes to Mr. William-Mills Abbey, our supervisor, for his useful

advice, guidance and constructive criticism which helped us to produce this research

project on schedule.

We are also thankful to the staffs of Koforidua Technical University, permitted us to

undertake the study in their institution even during this pandemic for providing us with

all the necessary and relevant information we needed for the search.

Finally, we express our heartfelt appreciation to all others who have in divers’ ways

contributed to the success of this research. We say may god bless you all.

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 DEDICATION

This project is dedicated to the Glory of the Almighty God through whose undeserved

kindness we have been able to complete this work. Also, to our family members and

supervisor for their support and encouragement throughout this project: our friends and

colleagues, we appreciate them for their guidance and support, thank you.

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 ABSTRACT

Assessing risk in procurement is very important for any procurement entity. Risk

Assessment are conducted to assess the negative influences and potential related to

prospective goal or decision. A census was conducted as the number of staff of the

population was 20 which include the Procurement office, Account office, Audit office

and Stores office are selected for the study. Questionnaires were used as the main

instrument of data collections. The study revealed that there are risk exposures in

procurement, and some effects of risks which affect procurement and the organization as

a whole and also ways of minimizing risk in procurement. However, it was therefore

recommended that there is the need for procurement to emphasize the importance of risk

assessments by identifying the risk exposures within the procurement. The establishment

of risk management policy should be addressed and complying by the rules and

regulations at the procurement sector. Also, it is very necessary for effective risk

communication need to be involved with other stakeholders.

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 TABLE OF CONTENTS

CONTENTS PAGES

Students’ Declaration..........................................................................................................i
Certification........................................................................................................................ii
Acknowledgment..............................................................................................................iii
Dedication.........................................................................................................................iv
Abstract...............................................................................................................................v
Table Of Contents.............................................................................................................vi
List Of Tables..................................................................................................................viii

CHAPTER ONE...............................................................................................................1
INTRODUCTION............................................................................................................1
1.0 General Introduction.....................................................................................................1
1.1 Statement Of The Problem...........................................................................................1
1.2 Aim Of The Study........................................................................................................2
1.3 Objective Of The Study................................................................................................2
1.4 Research Questions......................................................................................................2
1.5 Scope Of The Study......................................................................................................3
1.6 Significance Of The Study...........................................................................................3
1.7 Research Outlined/ Organisational Study....................................................................3

CHAPTER TWO..............................................................................................................4
LITERATURE REVIEW................................................................................................4
2.0 Introduction..................................................................................................................4
2.1 The Concept Of Procurement Risk...............................................................................4
2.2.1 There Are Risk Exposures In Procurement Activities..............................................5
2.2.2 There Are Effects Of Risk In Procurement Activities.............................................10
2.2.3 There Are Ways Of Minimizing Procurement Risk................................................12

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CHAPTER THREE........................................................................................................18
RESEARCH METHODOLOGY..................................................................................18
3.0 Introduction................................................................................................................18
3.1 Research Design.........................................................................................................18
3.2 Population And Target Population.............................................................................18
3.3 Census.........................................................................................................................19
3.4 Sources Of Data..........................................................................................................19
3.4.1 Primary Data............................................................................................................19
3.4.2 Secondary Data........................................................................................................20
3.5 Data Collection Instruments.......................................................................................20
3.5.1 Questionnaire...........................................................................................................20
3.6 Data Analysis Procedure............................................................................................21

CHAPTER FOUR..........................................................................................................22
RESULTS AND DISCUSSION.....................................................................................22
4.0 Overview....................................................................................................................22
4.1 Bio Data Of Respondent.............................................................................................22
4.2 Procurement Risk Assessment (Risk Exposures).......................................................23
4.3 Effects Of Risks..........................................................................................................26
4.4 Ways Of Minimizing Risk..........................................................................................28

CHAPTER FIVE............................................................................................................31
SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION.........31
5.0 Introduction................................................................................................................31
5.1 Summary Of Findings................................................................................................31
5.1.1 Procurement Risk Assessment (Risk Exposures)....................................................31
5.1.2 Effects Of Risks.......................................................................................................31
5.1.3 Ways Of Minimizing Risk In Procurement.............................................................32
5.2 Conclusions................................................................................................................32
5.3 Recommendations......................................................................................................33

REFERENCES...............................................................................................................34
APPENDIX.....................................................................................................................36
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 LIST OF TABLES

TABLES PAGES

Table 4.1...........................................................................................................................22

Table 4.1.2........................................................................................................................23

Table 4.2 Procurement Risk Assessment (Risk Exposures).............................................24

Table 4.3 Effects of Risks................................................................................................27

Table 4.4 Ways of Minimizing Risk................................................................................29

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 CHAPTER ONE

INTRODUCTION

1.0 GENERAL INTRODUCTION

Risk assessments are conducted to assess the negative influences and potential losses

related to a prospective goal or decision. The main practical purpose of risk assessment

is to provide information, which can then be used to manage identified potential risks to

avoid their occurrence or minimize their influence.

1.1 STATEMENT OF THE PROBLEM

According to World Bank report, in most countries in the developing world, they were

awarded contracts which were badly estimated, ill-considered and, sometimes did not

meet specifications, resulting probability of risks and consequences of dying projects

that do not meet the expectations and risk exposure (World Bank, 2005).

The problems of lack of accountability or responsibility, inaccurate assumptions and or

unexpected events, mistakes in supervision, changes in needs or variations after work are

misunderstood. These problems have the likelihood of eventual risks in projects and

affect contract effectiveness and delay performance as well as allowing room for

contract abrogation leading to increasing cost of public procurement (World Bank,

2005). Furthermore, continuous budgets reduction and pressure in meeting increasing

demand for Goods, Works and Services without corresponding investments pose threats

and deficit supply as well as risk within Public procurement sector.

According to Ward, S. & Chapman, C. (2006), procurement process cannot be

completed without the emerging of risks. Hence, providing value for money, promoting

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competition, fairness and transparency as indicated by PPA, Act 663, (2003) within

public procurement are essential if proper risks assessment is done right from pre-tender

to Post tender stage to help create value for money and limit high risk to be encountered.

This study assess the Risk in Procurement at Koforidua Technical University.

1.2 AIM OF THE STUDY

The purpose of this study is to assess the risk in the procurement process. Assessing risk

in the process of supply, particularly in the procurement sector that will allow strategies

of various mitigation mechanisms to manage the risks identified and also the principles

of risk management in procurement.

1.3 OBJECTIVE OF THE STUDY

The general objectives of this research is to assess risks within the procurement process

to achieve the general objective, specific objectives have been outlined for the study and

they are as follows,

i. To identify the risk exposures in procurement activities.

ii. To examine the effects of risk on procurement activities.

iii. To assess ways of minimizing risk at the procurement office.

1.4 RESEARCH QUESTIONS

i. What are the risk exposures in procurement activities?

ii. What are the effects of risk on procurement activities?

iii. What are the possible ways to minimize risk at the procurement office?

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1.5 SCOPE OF THE STUDY

The scope of the study is to assess risk in procurement.

1.6 SIGNIFICANCE OF THE STUDY

The findings of the study will specifically help all procurement entities in their

procurement activities if they are to improve procurement process. The study will also

help to make a standardize policies and mitigate or manage risks in procurement which

currently affects organizations.

1.7 RESEARCH OUTLINED/ ORGANISATIONAL STUDY

This study will be comprised with five main chapters, with chapter one is made up of the

background of the study, statement of the problem, and objective of the study, research

questions, scope and delimitations of the study and significance of study. Chapter two

will be devoted to literature review with a look at conceptual to theoretical aspect of

risks in procurement sector. Furthermore, the research methodology will tackle in

chapter three in which data collection. Chapter four will be made up of analysis of the

various data gathered based on the responses from the respondents. Finally, summary of

major findings, recommendations and conclusion will entail in chapter five respectively.

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 CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter deals with literature, which addresses the work of other authors on the

subject under studied.

2.1 THE CONCEPT OF PROCUREMENT RISK

Procurement refers to all activities involved in acquiring goods or services either

outright or leases. This include acquiring consumables, capital equipment, real property,

infrastructure, and services under consultancies, professional services, facilities

management and construction, as well as the outsourcing functions and subsequent

contracting (Procurement-Independent Commission against Corruption, 2021). The

procurement structures range from a single person with responsibility for purchasing, to

a large, centralized or decentralized procurement with procurement professionals

working in separate locations or business units.

Risk is likelihood or the probability of experiencing some type of harm, or losing

something that one value. (Website: SlideShare, February 5, 2014). According to Capital

Asset Pricing Model (CAPM, 2016) risk is defined as the volatility of returns. According

to Knights definition of risk, risk entails both uncertainty and exposures of possible

consequences. Risk is an important concept of scientific fields, yet there is no consensus

on how it is to be defined and interpreted (Aven, 2011). Risk is a combination of

(Kumantoto & Henley, 1996). Risk is a combination of the probability and scope of the

consequences (Risk Management Vocabulary, ISO 2002). Risk refers to uncertainty

about and severity of the events and consequences (or outcomes of an activity with

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respect to something that human’s value (Aven & Renn, 2009). Risk is the expression of

influence and possibility of an accident in the sense of the severity of the potential

accident and the probability of the event (ML-STD-882D, 2000). Risk is the measure of

probability and the weight of undesired consequences (Lawrence, 1976). Management

are to increase the probability and consequences of positive events and decrease the

probability and impact of negative events in the project (PMBOK, 2013). The Random

House Unabridged Dictionary (2012) “defines risk as Exposure to risk of injury or loss,

a hazard or dangerous chance.

Procurement risk is the potential for failures of a procurement process designed to

purchase services, products or resources. According to Amir khusroo (2016), identified

some major risk in procurement, failure to serve ongoing supply critical to the

organization, insufficient lead-time and misrepresentation. Fraud, corruption and

unprofessional conduct can enter into any state of the procurement process producing

risk of loss of organizational resources and budget for inappropriate supply with

corresponding great damage to the image of the organization. Whitehat security (2021)

defines risk exposures as the measure of potential future loss resulting from a specific

activity or event.

2.2.1 THERE ARE RISK EXPOSURES IN PROCUREMENT ACTIVITIES

 Inappropriate method of procurement

There are number of different types of procurement route available for client to

choose from. Each different type of procurement (traditional, design and build,

management, etc.) has its own proponents and inherent strengths and

weaknesses. Selection of optimal procurement systems is difficult, because even

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 experienced clients cannot know all the potential benefits or risks for each

system. Procurement is therefore in succession of calculated risk. (John

[Link] et al, Engineering Construction and Architectural Management)

Article Publication Date, 1 January, 2001.

 Poor Contract Management

One of the top risks, according to the report is when contracts lack critical

documents. This can occur for example, when sales executives under pressure to

hit goals, add, remove clauses in standard contracts to meet both buyers and

sellers requirements. Further, risks is that contracts documents will simply be

lost. Memba cited a study by the International Association of Contract and

Commercial Managers (IACCM) reporting that up to 10% of contracts are lost

and less than 20% of contracts reach filling cabinets. The risk arises for example,

when original contracts have to move across multiple departments that may keep

the original for its own archives and pass along a photocopy by mistake.

Subsequently, the search to find the original may have deliver into archives in

sales, purchasing, legal finance operations and support departments. Companies

may also be exposed to the risk of having annual contracts automatically roll

over because notice to terminate the contract was not given in time.

"Occasionally, terms of contracts may have to be changed to account for new

regulations, bankruptcy, legal statements, mergers, acquisitions and so on. In

these circumstances, the ability to quickly retrieve all affected contracts is a real

competitive advantage." Memba wrote.

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 Delays in Delivery Process

Late delivery from component suppliers are one of main sources of production

delays, and their specific causes are endless. Causes can depend on the type of

product being procured, the complexity and scope of a supply chain and other

wildcard variable such as economic and natural disasters. Website, Digi source

 Unethical Behavior within the Procurement Process

In the purchasing situation, the purchaser and seller pitch their strength against

each other. The stranger partly usually obtains the greater advantage when the

purchaser accepts favor, gifts or money, he gives his position of strength to the

seller. This might become a vicious circle which cannot be stopped. (Gorham,

1998: 28).

When thinking of the ethical aspects of purchasing management, bribery and

gifts immediately come to mind (Bayles, 1983: 42).

 Political Interference

However, Pillary (2004) argues that senior officials and political leaders use

public office for private gain and this has receive clandestine payments in

government procurement. This ultimately interferes with the procurement

process and constraints compliance. This is also re-echoed by Lodhia and Buritt

(2004) who recognizes that social and political influences have an importance

bearing on Public Sector Reform. The threat of being suspended or fired has in

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 many cases intimidated public officers into obeying illegal ministerial directives

leading to non-compliance (Akech, 2005).

 (Hui et al, (2011) asserted that interference from the local politicians,

businesspersons, members of parliaments and very influential top management

individuals has interrupted the procurement processes and deterred transparency.

There are some areas of risks also involved in procurement;

 Environmental Risks

Risks origins are external and cannot be influenced by the company or supply

chain, since they occur outside the control of the company and the supply chain

(Zsidisin et al, 2004). Patrik Jonsson, 2008 and Zsidisin et al, 2004) has indicated

that external risks can be (terrorist attacks) policies (regulations, taxes)

environment (example, firms, storms, earthquakes) or social.

 Supply Risks

Supply risk is the probabilities that an inbound supply problem will disrupt a

business. This includes issues with suppliers, shipment and markets that disrupt

production, operations, sales, and or projects. Supply risk can be flowed by

external risks so damaged by lightning supplier in delivery disturbances lead to

drown stream customers of firm which may not necessarily associated with

certain suppliers, such risk can vary in general and is applicable to the entire line

of industry or type of provider. This is the case when a general shortage of

capacity of raw materials (Zsidisin et al, 2004, Patrik Jonsson, 2008).

 Demand Risk

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 Demand risk is potential hazard that all business must face during the course of

normal operations. It is also the idea that these forecast may not accurately

predict the amount of product that customers are willing and able to buy. They

could be an essential fluctuation, change in customer behavior and preferences,

change in design or short product life cycle (Patrik Jonsson, 2008, Zsidisin et al,

2004) included.

 Process Risk

Process risk is considered to be a sub-component. It exists when the process that

supports a business activity, lacks both efficiency and effective which may lead

to financial, customer and reputational loss. It is a loss in revenue as a result of

ineffective and or inefficient processes. The process is likely due to shortages,

changes or deficiencies internal processes such as material handling, quality

control or production process occurring suppliers, customers or the environment.

Overcapacity in an internal procedure may be that the effect of the delivery to a

customer is the example of minimization. (Zsidisn et al, 2004, Patrik Jonsson,

2008).

 Control Risk

Controls are used because of the risks by the internal planning and control system

and decision rules. It is a process that involves the implementation of risk

response plans. It also involves tracking the identified threatening risks,

identifying new risks, monitoring residual risks as well as evaluating the efficacy

of risk processes utilized during the entire project. This could lead to material

planning method (size of security, stocks problems that are difficult to manage or

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 may increase or the impact of supply and demand can lead to reduce risks

(Zsidisn et al, 2004,Patrik Jonsson, 2008).

2.2.2 THERE ARE EFFECTS OF RISK IN PROCUREMENT ACTIVITIES

 Raising the Price for the Customer

For one when you raise the price you risk turning the customer off. If the

customer has the choice to get the same product from the competitor at a lower

price you could lose the customer permanently. On the other hand, raising the

price could have no effect at all, especially if it is a product that is in high

demand and not available at competitors. In fact, charging a higher price

compare with other similar products and services sometimes entices consumers

to buy because some buyers equate a high price with a superior quality product.

(Website: Bizfluent, January 25, 2019)

 Customer Dissatisfaction

The definition of dissatisfaction comes from Oliver’s disconfirmation between

prior expectations and post-purchase outcomes [Ferguson & Johnston 2011;

Oliver 1980]. Expectations are the pre-exposure beliefs about the product

[Venkatesh & Goyal 2010; Olson & Dover 1979]. The discrepancy between

expectations and actual outcomes is defined as disconfirmation. Better-than-

expected outcomes result in satisfaction, while worse-than-expected outcomes

result in dissatisfaction [Oliver 1980].

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 Customer dissatisfaction has far-reaching effects on business because customers

will not patronize brands they do not trust. More than affecting your sales and

revenues. Customer dissatisfaction can lead to poor brand reputation which has a

long-term impact on brand. (Website: Simplicable, John Spacey, January 16,

2008)

 Poor Quality Products

Poor quality products, an unsafe work environment, or failure to comply with

regulations ranging from product safety to social responsibility, can cause

business disruption. Financial loss, costly lawsuits, and long lasting damage to

the brand and corporate image of organizations that are dependent upon supply

chain vendor performance. (Quality Digest, Anderson Jacinto; Article published:

December 5, 2008).

 Challenges between Buyers and Suppliers

The relationship between buyer and supplier can be a constant tug-of-war by

both sides. The supplier complains that the buyer gives short notice on orders.

The buyer complains that the supplier doesn’t deliver the orders on time or

quality of the product is not to par. Each side points the proverbial finger at the

other, which can cause tension and bad blood between the two. (RBW logistics,

John Albright; 2017)

 Loss of Market Share

Building market share is a risky costly activity that can ignite retaliatory actions

by competitors. For low-share business in particular, share building may not even

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 be possible because of limitations of resources or market influence. (Robert D.

Buzzell et al, Harvard Business Review, Article published: January 1975)

Loss of market share is the main risk to firm. The report by the Society of

Practitioners of insolvency covered 1,900 company failures, loss of market share

accounted for about half of all company failures. (Website: Independent,

Terrence Wilkinson, October 23, 2011).

 Loss of Customers

Loss of customers can have a damaging impact on sales projections, cash flow

and profitability goes without saying, but a loss customer can cut volume and

prohibit meeting buying commitment with suppliers and vendors. (Website:

thinksales, Ivor Jones, 2008).

It is important to assess risk to ensure a high greater profitability and to achieve goals in

every organization which include,

 To identify health and safety and evaluate the risks presented within workplace.

 To evaluate the effectiveness and stability of existing control measures.

 To ensure additional controls including procedural are implement wherever the

remaining risk is considered to be anything other than low.

 To prioritize for their resources if needed to ensure the abo

2.2.3 THERE ARE WAYS OF MINIMIZING PROCUREMENT RISK

 Complying the rules and regulations at the Procurement Sector

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 Procurement regulations are rules that the nation follow when they award

contracts to services to companies. The purpose behind procurement oversight is

to ensure that government act in a fair and cost-efficient manner in awarding

these often lucrative.

(Website: MylawQuestions, 2003). Every organization have some rules

governing the acquisition of goods, works and services to ensure fulfillment of it

goals. National procurement policies or laws must support the constitution. Next

to the procurement laws are the regulation in some countries instruments that

support the national procurement law. They usually originate from the

procurement regulatory body of the country. These regulations support the

procurement law by proving detailed explanations of provisions of the

procurement law. (Website: The Procurement ClassRoom; [Link] T,

2021)

 Involving with other Stakeholders

Stakeholders can participate constructively in inspection, management decisions

and process and standards compliance audits or verification. When managed

well, these stakeholders can provide accurate and low-cost information.

Stakeholder engagement, when done professionally and with genuine two-way

communication is a tool which can increase the accuracy of risk assessment.

When combined with the more traditional forms of assessment, stakeholders’

engagement adds to evaluate the risks and benefit involved in a business

decision. (ECCLOGIA, November 2011)

 Establishing risk management policy

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 To implement a risk management system, risk plan is in need that includes;

Risk management objectives (strategic as well as operational ones).

Risk management activities to be undertaken within a proper timeframe to help

the organization achieve its strategy objectives.

 Decisions regarding risk communications, internal and external.

It describes risk management strategy progress will be monitored, reviewed and

reported. Regarding the activities to be undertaken, several of them are crucial

whether resulting from an extended program or from a quick one through a

release of the risk management system. The resources that an organization will

invest in implementing such a system are also crucial to determine the quality

and progress of results.

Resources required, including people, knowledge and budget. (UNECE- The

United Nations Economic Commission for Europe, April 2015)

 Training programs for staff

A training program provides an opportunity to build an effective service delivery

team whose members fully understand the organization’s vision and goals. Yet

training is rarely given its due when the topic of risk management is discussed.

The failure to provide appropriate training can lead to a range of undesired

outcome, such as the failure to recognize a medical emergency and call for help,

a staff member’s inappropriate, excessively rough reaction to normal behavior by

a client and an automobile accident involving a staff member who was unfamiliar

with the handling of rented van. Sometimes these risks materialize when it has

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 neglected to provide specific training around risk management topics. (Nonprofit

Risk Management Center, 2021)

 Consulting

Risk management consulting utilizes a planned and structured approach to assess

the various risks faced by organizations. A risk management clients, such as

cyber risk assessments governance, risk and compliance, incident response

planning, and IT due diligence. Organizations of all sizes and within all

industries can benefit from hiring risk management consultant to assist with

common threats like data breaches and cyber-attacks. (Hartman Executive

Advisors, 2021)

 Effective communication

However for risk management to be effective, communication plays a very

critical role. Rather, communication plays a critical role in mitigating risks that

an organization is exposed to. Indeed effective risk communication is a pre-

condition for proper risk management and assessment. Thus, communication

helps build and encourage transparency and confidence in the risk mitigation

process and encourages broader understanding and acceptance of risk

management decisions within an organizations. Those involved in risk

management within an organization can be considered as a communicators or

better put as risk communicators at some point in the procedure. Consequently,

risk assessors and or risk managers and other participants within the risk

management process all need risk communication skills. (The STAR, 2021)

There are also methods of handling risk

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 Contingency plans

A common method mitigating or minimizing the impact of a risk event is to

develop a contingency plan in advance of the possible occurrence usually shortly,

after the risk is identified. The purpose of this plan is to enable the sustained

execution of mission, critical processes and information technology systems in

the events of an extraordinary event that causes these systems to fail minimum

requirements. The contingency plan will assess the needs and requirements so

that the organization may be prepared to respond to the event in order to

efficiently regain operation of the systems that are made inoperable from the

event.

 Avoidance

Eliminating the cause of the risk can sometimes remove a risk that is specifically

identify. For example, if the lack of skilled resources causes an identified risk,

risk is being eliminated by having the supplier hire the skills needed to perform

the contracted services. Risk avoidance techniques also include reducing the

scope of the contract to avoid high risk elements, adding resources or time to the

contract, avoiding suppliers or contractors with unproven track records and using

a proven approach instead of a new one.

 Insurance

This is another major method that most people, businesses, and other

organizations can use to transfer pure risk, by paying a premium to an insurance

company in exchange for a payment of a possible large loss. By using the law of

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 large numbers, an insurance company can estimate fairly reliably the amount of

loss for a given number of customers within a specific time. An insurance

company can pay for losses because it pools and invests the premiums of many

subscribers to pay the few who will have significant losses.

 Reduce

This is achieved by undertaking survey, redesign, use of other materials, use of

different method or by changes in procurement plan. Reduction is accomplished

by actions undertaken by members of the project delivery team. Survey will not

cost money to conduct. The team members can review different materials or

equipment to achieve the required outcome. By adopting a more proven method

or solution (which by definition is less innovative) the risk is likely to be

reduced. They could prove different ways of working towards the project

objectives and reduce risk in that way. The team could package the work in

different ways to reduce the interfaced between the trade contractors thereby.

 Transfer

Transferring the risk occurs by allocating risks to other entities or by buying

insurance to cover any financial loss should the risk become a reality. In some

situations, the supplier may be better suited to dealing with a particular risk. So

transferring it through negotiations might be in order. However, risk transfer may

come with additional cost, such as the cost of insurance or an additional amount

tasked on to pricing by the supplier in order to be able to deal with the event

should it occur.

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 CHAPTER THREE

RESEARCH METHODOLOGY

3.0 INTRODUCTION

This chapter presents the various tools use by the researchers in gathering data for the

research work. This includes the study area, research design, the population, the sample

size/technique, data collection techniques, data collection procedure and data analysis

procedure.

3.1 RESEARCH DESIGN

Research design is not just a work plan but it is a tool that enables the researchers to

ensure that the evidence obtained answer the questions under investigation in a research,

as unambiguously as possible (De Vaus, 2001). This approach is chosen because it

18
allows the researchers to have in-depth understanding of the events. In order to answer

the research questions under investigation convincingly, it is important to collect data

that can guarantee an in-depth understanding. According to Mugenda and Mugenda

(2003) survey design is appropriate because it involves collecting data in order to answer

questions concerning the current status of subjects of the study. Cooper & Schindler

(2000); has indicated that every research method has its strengths and weaknesses and

certain concepts has adequately examined by some methods than others.

3.2 POPULATION AND TARGET POPULATION

A research population can be defined as the totality of a well-defined collection of

individuals or objects that have a common, binding characteristics or traits (Neuman and

Vidler, 2006).Target population is the entire group of individuals about whom you want

to gather information. To design a useful research project, there is the need to be specific

about the size and location of your population. The target population for this research

consists of KTU, Staff in the Procurement Department, Stores Department, Audit and

Account Department. The Population number. The population number is 20.

3.3 CENSUS

A census is the procedure of systematically calculating, acquiring and recording

information about the members of a given population. Modern census data are

commonly used for research, business marketing and planning, and as a baseline for

designing sample surveys. This study indicates the population that was collected and

estimated at each departments for the research project.

3.4 SOURCES OF DATA

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Data as a general concept refers to the fact that some existing information or knowledge

is represented or coded in some form, suitable for better usage or processing. The use of

more than one data collection instrument portrays a true picture of the case under study.

In research there are different sources used to gather information all of which fall into

two categories .i.e. primary and secondary data (Douglas¸ 2015). This approach was

used because it revealed issues that could not be raised in using only one data collection

instrument. The study made use of primary and secondary data sources in order to gather

relevant information for the study.

3.4.1 PRIMARY DATA

Primary data refers to the first hand data gathered by the researcher, the data always

specific to the researchers’ needs, as argued by (Ajayi, 2017). The main research

instruments used are questionnaires, and field observations. This was done with the

focus on the objectives set in the study. The primary data are collected from the selected

respondents within the sample frame in the research population. The analysis of the

study is substantially based on this data.

3.4.2 SECONDARY DATA

According to Valcheva (2021), secondary data represent the data or information

collected for another purpose and relevant to the currents research needs. The

researchers referred to various publications of foreign and Local Origin, books, journals,

articles, newspapers, reports obtained from libraries and the internet on the subject to

obtain additional information in order to answer the questions set in the problem

definition.

3.5 DATA COLLECTION INSTRUMENTS

20
The data collection tools are used to collect data, such as a paper questionnaire or

computer-assisted interviewing system. The data collection tool that is employed in this

research is questionnaire. According Saunders et al. (2003), a questionnaire is one of the

primary tools used to collect data and it is a devise used for acquiring response to a

predesigned subject matter using a form which the respondent completes. Questionnaire

is principally employed as the main data collection tool because it is easy to analyze to

get a valid data relevant to the subject. The questionnaire is made up of closed-ended

questions which presented the respondents with a fixed set of options.

3.5.1 QUESTIONNAIRE

Questionnaire as one of the primary sources of data is an observational technique which

comprises series of items presented to a respondent in a written form, in which the

individual is expected to respondents are given list of written items which the responds

to by ticking the one consider appropriate. The researchers used closed-ended form of

questions for the questionnaire. Closed- ended questions are questions, which restrict

respondents to a set of predetermined responses or options. Closed-ended questions are

used by the researchers because they are easy to collate, code and analyse which saves

much time.

3.6 DATA ANALYSIS PROCEDURE

This section deals with the methods of analysing of data. Both quantitative and

qualitative methods are used to analyse the data. Prior to analysing the results, the data

that are collected are cross checked to ensure that the respondents had provided

appropriate responses as required by the question items in the questionnaire. Indeed

researchers generally analyse for patterns in observations through entire data collection

21
phase (Savenye, Robinson 2004). . The statistical package for social sciences (SPSS) is

the software that is employed to analyse the data. Interpretation of results was then

carried out. The SPSS is used to generate the frequencies and Microsoft excel 3D chart

is used to generate the figures. The collected data is summarized and displayed in

compact form so as to enable them to be easily analysed. Data is quantitatively

processed, interpreted and analysed by means of classifying and then summarizing them

so as to bring the clear picture of responses obtained from the questionnaire.

CHAPTER FOUR

RESULTS AND DISCUSSION

4.0 OVERVIEW

The findings of the study are presented in this chapter. Necessary discussions of the

findings are also made to establish understanding and show variable in relations

literature review and the research objectives. The data gathered was analysed to provide

insight into assessing risk in procurement.

4.1 BIO DATA OF RESPONDENT

22
Table 4.1

Bio Data Characteristics Frequency Percentage %

Gender Male 10 52.63%
Female 9 47.367%
Source: Researchers’ Field study, 2021

The study above sought to determine different Bio Data of respondent in order to

determine their knowledge and understanding of questions posed to them in the

questionnaire.

As can be seen above in the Table 4.1, the total population is 20 but 19 respondents are

able to participate with their responses of the questionnaire. 10 males respondent are

gathered as 52.63% while 9 females respondent equals 47.367% out of 100%.

Table 4.1.2

Bio data Characteristics Frequency Percentage %

Highest educational level Basic 0 0

Secondary 2 10.526%

Tertiary 15 78.945%

Others 2 10.526%

Source: Researchers’ Field study, 2021

23
From the table above, given their highest educational level, almost 78.945% have the

highest educational level of tertiary, 10.526% have their secondary level while others

with have their educational level like PhD, Masters, etc. are 10.526%. The analysis

shows the highest educational level of respondents means that those who have HND,

Diploma and Degree at the tertiary level have more knowledge about risk assessment

and worked for a number years at KTU.

4.2 PROCUREMENT RISK ASSESSMENT (RISK EXPOSURES)

The first objective of the study was to find out the Procurement Risk Assessment (Risk

exposures) at KTU procurement office which disrupt the performance of supply chain

and procurement activities. Respondents were asked to how these risk exposures are

serious. Using a scale=Very serious to Not very serious.

Table 4.2 Procurement Risk Assessment (Risk Exposures)

RISK Very Serious Neutral Not Not Very

EXPOSURES Serious Serious Serious
1 Inappropriate 8(5.263) 3(5.263) 3(5.263) 3(5.263) 2(5.263)
methods of
procurement
2 Poor Contract 7(5.263) 3 (5.263) 3(5.263) 3(5.263) 3(5.263)
Management
3 Delays in delivery 6(5.263) 7(5.263) 4(5.263) 1(5.263) 1(5.263)
process
4 Unethical 6(5.263) 6(5.263) 2(5.263) 4(5.263) 1(5.263)
Behaviour within
the procurement

24
 process
5 Political 7(5.263) 2(5.263) 4(5.263) 5(5.263) 1(5.263)
Interference
6 Environmental risk 3(5.263) 7(5.263) 6(5.263) 2(5.263) 1(5.263)
7 Supply risk 2(5.263) 12(5.263) 1(5.263) 3(5.263) 1(5.263)
8 Demand risk 0 10(5.263) 4(5.263) 4(5.263) 1(5.263)
9 Process risk 0 10(5.263) 5(5.263) 3(5.263) 1(5.263)
10 Control risk 2(5.263) 6(5.263) 8(5.263) 2(5.263) 1(5.263)
Source: Researchers’ Field study, 2021

Table 4.2 above depicts the Procurement Risk Assessment (Risk Exposures). From the

table above 42.104% of the respondents say that inappropriate methods of procurement

as a risk exposure in procurement is very serious, 15.789% of respondents suggest that is

serious, 15.789% of respondents agreed that is neutral, 15.789% of respondents suggest

that is not serious while 10.526% of respondents says is not very serious.

Poor Contract Management which is one of the risk exposures in procurement. 36.841%

of respondents say is very serious, 15.789% of respondents suggest that is serious,

15.789% of respondents say is neutral, 15.789% of respondents suggest that is not

serious while 15.789% of respondents also suggest that is not very serious.

Delays in delivery process is another risk exposure in procurement. 31.578% of

respondents suggest that is very serious, 36.841% of respondents suggest that is serious,

21.052% of respondents suggest that is neutral, 5.263% of respondents says is not

serious and also 5.263% of respondents says is not very serious.

Unethical behaviour within the procurement process is a risk exposure in procurement.

For unethical behaviour within the procurement process, 31.578% of respondents says is

very serious, 31.578% of respondents says is serious, 10.526% 0f respondents says is

25
neutral, 21.052% of respondent suggest that is not serious and also 5.263% of

respondents suggest that is not very serious.

Political interference is one of the risk exposures in procurement listed in the

questionnaire and its responses, 36.841% of respondents says is very serious, 10.526%

of respondents suggest that is serious, 21.052% of respondents says is neutral, 26.315%

of respondents says is not serious and 5.263% of respondents says is not very serious.

Environmental Risk is a risk exposure which is occurred in procurement. The responses

from the respondents’ shows that 15.789% of respondents says is very serious, 36.841%

of respondents says is serious, 21.052% of respondents suggest that is neutral, 10.526%

of respondents says is not serious and 5.263% of respondents says is not very serious.

Supply risk is a risk exposure that affect the supply chain and procurement process

which has been listed in the questionnaire and its responses from respondents’ shows

that 10.526% of respondents says is very serious, 63.156% of respondents says is serious

5.263% of respondents suggest that neutral, 15.789% of respondents says is not serious

and 5.263% of respondents says is not very serious.

Demand Risk is a risk exposure that affect in the procurement activities. It is indicated

that 52.63% of respondents says is serious 21.052% of respondents says is not serious

while 5.263% of respondents says is not very serious.

Process risk is a risk exposure that affect within the procurement. It is indicated that

52.63% of respondents says is serious, 26.315% of respondents says is neutral, 15.789%

of respondents says is not serious and 5.263% of respondents says is not very serious.

Control risk is also a risk exposure that affect within the procurement. It shows that

10.526% of respondents says is very serious, 31.578% of respondents says is serious,

26
42.104% of respondents says is neutral, 10.526% of respondents says is not serious and

5.263% of respondents says is not very serious.

The analysis shows that the majority of respondents agreed that there are very serious

risk exposures at the procurement office while minority of respondents also agreed that

there are not very serious risk exposures at the procurement office.

4.3 EFFECTS OF RISKS

The second objective of the study was to determine and rank the effects of risk on

procurement activities at KTU procurement office. Each respondent is to determine the

level of agreement to use the scale 1-Strongly Agree to 5-Strongly Disagree. The

responses to this are as displayed in.

Table 4.3 Effects of Risks

EFFECTS Strongly Agree Neutral Disagree Strongly

Agree Disagree

1 Raising the price 1(5.263) 9(5.263) 4(5.263) 4(5.263) 1(5.263)

for the customers
2 Customer 5(5.263) 6(5.263) 4(5.263 2(5.263) 1(5.263)
dissatisfaction
3 Poor quality 4(5.263) 8(5.263) 2(5.263) 5(5.263) 0
products
4 Challenges between 3(5.263) 5(5.263) 6(5.263) 4(5.263) 1(5.263
buyers and

27
 suppliers
5 Loss of market 6(5.263) 1(5.263) 5(5.263) 7(5.263) 0
share
6 Loss of customers 0 7(5.263) 5(5.263) 7(5.263) 0
Source: Researchers’ Field study, 2021

Table 4.3 shows the effects of risks in procurement. From the table above, indicate each

options of the effects listed in the questionnaire and its results from the respondents

responses. One of the effect of risk is raising the price for customers. It is indicated that

5.263% of respondents strongly agree, 47.34% of respondents agree, 21.052% of

respondents suggest that is neutral, 21.052% of respondents disagree and 5.263% of

respondents strongly disagree. Customer dissatisfaction is another effect of risk in

procurement. It shows that 26.315% of respondents strongly agree, 31.578% of

respondents do agree, 21.052% of respondents suggest that is neutral, 10.526% of

respondents disagree and 5.263% of respondents strongly disagree. Poor quality

products affects the procurement activities. It indicate that 21.052% of respondents

strongly agree, 42.104% of respondents agree, 10.526% of respondents says is neutral

and 26.315% of respondents disagree. Challenges between buyers and suppliers are

another effect of risk in procurement. This shows that 15.789% of respondents strongly

agree, 26.315% of respondents agree, 31.578% of respondents decides it’s neutral,

21.052% of respondents disagree and 5.263% of respondents strongly disagree. Loss of

market share as an effect of risk affects procurement activities and the organizational as

a whole. The responses from the respondents indicate that 31.578% of respondents

strongly agree, 5.263% of respondents agree, 26.315% of respondents says is neutral and

36.841% of respondents disagree. Loss of customers is also an effect of risk in

procurement. This shows that 36.841% of respondents agree, 26.315% of respondents

says is neutral and 36.841% of respondents disagree.

28
The analysis shows that the majority of respondents agree with the effects of risk in

procurement while minority of respondents also disagreed and others strongly disagree

with the effects of risk in procurement.

4.4 WAYS OF MINIMIZING RISK

The third objective of the study was to analyze the ways of minimizing risk at KTU

procurement office. Each respondent was posed to determine their level of agreement to

use a scale: 1-strongly agree to 5-Strongly disagree.

Table 4.4 Ways of Minimizing Risk

Ways of Strongly Agree Neutral Disagree Strongly

Minimizing Risk. Agree Disagree

1 Complying by the 15(5.263) 4(5.263) 0 0 0

rules and
regulations at the
procurement
sector
2 Involving with 11(5.263) 8(5.263) 0 0 0
other stakeholders
3 Establishing risk 9(5.263) 7(5.263) 3(5.263) 0 0
29
 management
policy
4 Training programs 10(5.263) 7(5.263) 1(5.263) 1(5.263) 0
for staff
5 Consulting 7(5.263) 11(5.263) 0 1(5.263) 0
6 Effective 7(5.263) 10(5.263) 1(5.263) 1 (5.263) 0
communication
Source: Researchers’ Field study, 2021

Table 4.3 also depicts the ways of minimizing risk in procurement. This indicates that

each respondent response is shown above and its results. One of the ways of minimizing

risk is complying the rules and regulations at the procurement sector. This shows that

78.945% of respondents strongly agree while 21.052% of respondents agree. Involving

with other stakeholders is another way of minimizing risk. Above the table shown

indicates that 57.893% of respondents strongly agree while 42.104% of respondents

agree. Establishing risk management policy is also one of the ways of minimizing risk in

procurement. It is shown that 47.367% of respondents strongly agree, 36.841% of

respondents do agree and 15.789% of respondents disagree. Training programs for staffs

is the other way of minimizing risk in procurement. 52.63% of respondents strongly

agree, 36.841% of respondents agree, 5.263% of respondents says is neutral and 5.263%

of respondents disagree. Consulting is also the other way of minimizing of risk. About

36.841% of respondents strongly agree, 57.893% of respondents do agree and 5.263% of

respondents strongly disagree.

The analysis also shows that the majority of respondents strongly agree with the ways of

minimizing risk in procurement while minority of respondents also disagree.

30
 CHAPTER FIVE

SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION

5.0 INTRODUCTION

This chapter gives a summary of the findings of the study, the conclusions and the

recommendation of Assessing Risk in Procurement have been discussed in the next sub-

sections.

5.1 SUMMARY OF FINDINGS

31
The summary of the study findings is presented in relation to the objectives of the study.

The discussion of the results in the previous chapter shows the following main findings.

5.1.1 PROCUREMENT RISK ASSESSMENT (RISK EXPOSURES)

The first objective of the study was to identify the risk exposures at KTU procurement

office. The respondents indicated that there is risk exposures at the procurement office.

This includes, poor contract management, inappropriate methods of procurement,

unethical behavior within the procurement process and others.

5.1.2 EFFECTS OF RISKS

The second objective of the study was to examine the effects of risks at KTU

procurement office. There are some effects of risks which was discussed at the previous

chapters; raising the price for the customers, customer dissatisfaction, poor quality

products, challenges between buyers and suppliers, loss of customers and loss of market

shares. All these were also listed in the questionnaire with its responses from

respondents.

5.1.3 WAYS OF MINIMIZING RISK IN PROCUREMENT

The third objective of the study was assess the ways of minimizing risk at KTU

procurement office. The respondents with the measures that risk should be minimized at

the procurement office. . There are ways of minimizing risks in procurement which was

discussed at the previous chapters; complying by the rules and regulations at the

procurement sector, involving with other stakeholders, training programs for staff,

consulting, loss of customers and loss of market shares.

32
5.2 CONCLUSIONS

The conclusion is based on the objectives of the study as indicated below;

Objective 1- to identify the risk exposure in procurement activities.

In conclusion, Koforidua Technical University had to be able to reduce the risk

exposures at the procurement office, which includes; poor contract management, delays

in delivery process, unethical behaviour within the procurement process, political

interference, environmental risk, supply risk, demand risk, process risk and control risk.

Objective 2- to examine the effects of risks on procurement activities.

In conclusion, Koforidua Technical University have been examined with the effects of

risks at the procurement after the procurement risk have been identified with its

consequences. They are, raising the price for customers, customer dissatisfaction, poor

quality products, challenges between buyers and suppliers, loss of market share and loss

of customers.

Objective 3- to assess ways of minimizing risks at the procurement office.

In conclusion, Koforidua Technical University had to assess ways of minimizing risk the

procurement office. These are the ways of minimizing risk; complying by the rules and

regulations at the procurement sector, establishing risk management policy, involving

with other stakeholders, training programs for staff, consulting and effective

communication.

5.3 RECOMMENDATIONS

33
From the findings originating from this study, the followings are the recommendations;

It is recommended that risk assessment at the procurement office is very important to

identify the risk exposures within.

It is recommended that KTU procurement office need to establish a risk management

policy and to comply by the rules and regulations at the procurement sector especially,

the Public Procurement Act 663.

Finally, it is also recommended that KTU procurement office had to be taken into

consideration that there are some consequences or effects of risks at the procurement

office which is very necessary for effective risk communication while at the same time

involving with other stakeholders.

REFERENCES

Akech, J. M. M. (2005). Development partners and governance of public procurement in

Kenya:

Aven, T., Renn, O., (2009). On risk defined as an event where the outcome is uncertain.

Journal of Risk Research, 12, 1–11.

34
Bayles, 1983: 42; Ethical Issues in Purchasing Management Business, Quarterly 48-CD,

42-47.

Engineers and Scientists, IEEE Press, ISBN-13: 978-0780360174

Gorham, 1998: 28; Ethics “A view from one side” Purchasing and Supply Management,

April 28th, 1998.

Hui, W. S., Othman, R. O., Normah, O., Rahman, R. A. & Haron, N. H. (2011).

Procurement issues in Malaysia. International Journal of Public Sector

Management, 24(6), [Link].

International Association for Contract and Commercial Management (IACCM).

John [Link] et al, Engineering Construction and Architectural Management, Article

Publication, Date, 1 January, 2001.

Kumamoto, H., Henley, E., (1996). Probabilistic Risk Assessment and Management for

Lawrence, W.W., (1976). Of Acceptable Risk, William Kaufman Inc., Los Altos

Lodhia, S. K. & Burritt, R. L. (2004). Public sector accountability failure in an emerging

economy: The case of the National Bank of Fiji. International Journal of Public

Sector Management, 17(4), 345–359

MIL-STD-882D, (2000). DoD

Mugenda, O.M.; & Mugenda, A. G. (2003. Research methods: Quantitative and

qualitative approaches. Nairobi: Act Press.

Project Management Book of Knowledge Six Edition, (2017).

The Random House Unabridged Dictionary (2012).

35
 APPENDIX

KOFORIDUA TECHNICAL UNIVERSITY

FACULTY OF BUSINESS AND MANAGEMENT STUDIES

DEPARTMENT OF PROCUREMENT AND SUPPLY SCIENCE

QUESTIONNAIRE

TOPIC:

36
 ASSESSING RISK IN PROCUREMENT: A CASE STUDY OF KOFORIDUA

TECHNICAL UNIVERSITY PROCUREMENT OFFICE.

This is an academic exercise to be undertaken by final year students of Koforidua

Technical University in the Department of Procurement and Supply Science. The

information provided will be treated confidential and used only for academic purpose.

Please tick ( ) the alternative applicable to you or comment in the provided space where

appropriate.

SECTION A: BIO DATA

Q/N QUESTIONS RESPONSES

Q1 Gender Male [ ]
Female [ ]
Q2 Highest Educational level Basic [ ]
Secondary [ ]
Tertiary [ ]
Others ………………….

SECTION B: PROCUREMENT RISK ASSESSMENT (RISK EXPOSURES)

How will you rank the following risk exposures facing the procurement office which

disrupt the performance of supply chain and procurement activities?

Please use the scale:

1-Very Serious, 2-Serious, 3-Neutral, 4-Not Serious and 5- Not Very Serious

RISK EXPOSURES 1 2 3 4 5

37
 1 Inappropriate methods of procurement
2 Poor Contract Management
3 Delays in delivery process
4 Unethical Behaviour within the procurement process
5 Political Interference
6 Environmental risk
7 Supply risk
8 Demand risk
9 Process risk
10 Control risk

SECTION C: EFFECTS OF RISKS

From your experience how will you rank the following effects of risk on procurement

activities at KTU procurement Office? Please use the scale:

1-Strongly Agree, 2-Agree, 3-Neutral, 4-Disagree and 5- Strongly Disagree

EFFECTS 1 2 3 4 5

38
 1 Raising the price for customers

2 Customer dissatisfaction

3 Poor quality products

4 Challenges between buyers and suppliers

5 Loss of market share

6 Loss of customers

SECTION D: WAYS OF MINIMIZING RISK.

What are the ways/method of minimizing risk at KTU procurement office?

Use 1-Strongly Agree, 2-Agree, 3-Neutral, 4-Disagree and 5- Strongly Disagree

Ways of Minimizing Risk. 1 2 3 4 5

1 Complying the rules and

regulations at the procurement
sector
2 Involving with other stakeholders
3 Establishing risk management
policy
4 Training programs for staff
5 Consulting
6 Effective communication

Please indicate any other ways of minimizing procurement related risks

39
3

THANK YOU

40