Procurement Risk Framework: Guidance Note on Procurement

This guidance note describes ADB’s procurement risk framework for managing procurement risk throughout the procurement cycle. Effective risk management minimizes impacts on project objectives from adverse events. The guidance note describes how risks are identified, assessed, and managed at the country and sector/agency levels, and how those risks are used as inputs into the identification, assessment, and management of risk at the project level during procurement planning and through contract implementation.

Lessening procurement deviations using procurement post reviews: evidence from Ghana

Purpose Multilateral aid agencies generate most of their funds from taxpayers, and therefore, it is necessary to ensure that recipients or borrowers use the funds for the intended purposes. The World Bank is one of the major multilateral aid agencies that fund infrastructure projects in developing countries. Like other multilateral aid agencies, the World Bank uses oversight instruments/auditing tools to manage procurement risk on their funded projects. However, empirical insight about the effectiveness of these auditing tools is limited. This paper aims to assess the effectiveness of one of such multilateral aid agencies’ auditing tools (i.e. World Bank’s procurement post review [PPR]) in procurement risk mitigation on funded projects in a developing country context. Design/methodology/approach The study is based on secondary data obtained from the World Bank PPR reports carried out in the 2014, 2015 and 2016 financial years. Five projects with the highest loan amounts and five with the lowest loan amounts for the three-year period were selected from the 24 active World Bank projects during the time of the study. A purposive sampling technique was used to select a representative sample from a list of contracts under the 10 projects. Findings The results of the analysis showed a clear decline in the number of both major and minor deviations over the three-year period while an increase in the number of contracts with “No Deviation”. The study therefore concludes that procurement risk experienced a decline amongst the World Bank projects in Ghana where post reviews were carried out on yearly basis. Originality/value The study identifies the need for more frequent PPR and makes a case for the need to investigate whether PPR is a superior auditing tool compared to the other tools.

Time-dependent electricity pricing using variable announcement horizons

In the battle against climate change, electrification plays an increasingly large role in our society. The growing use of electricity networks requires advanced coordination mechanisms to avoid the tragedy of the commons. In this paper, we explore the effects of optimum time-dependent pricing (TDP) on supplier surplus within electricity markets, using a parameterized optimization model. Varying not only the prices themselves, but also their announcement horizon, we show how the suppliers’ optimal decision depends on risk aversion, forecasting quality, and end-user flexibility. The inclusion of procurement risk in our model shows that TDP can be beneficial for suppliers when they want to actively manage risk, even if expected profits are lower. At the same time, the shifting of end-user demand to low-cost times reduces the overall system cost, and potentially carbon emissions.