Practice Manager, Solutions and Innovations in Procurement Governance Global Practice, World Bank
There is a common expression in management “you get what you measure”, which summarizes very well how crucial measurement and monitoring are for effective management. In fact, measuring enables projects to remain on the right track to achieve goals and teams to take corrective actions as needed.
Nonetheless, it is more complex than it appears. In management, measuring is done using indicators. In some disciplines, indicators are relatively easy: counting is straight-forward and there is enough knowledge on the right indicators. But in others, especially those related to public policies, public management, or development, the situation is far more complex and becomes more challenging. This is because indicators are only a proxy for reality, and hence are always imperfect and incomplete. So, if we go back to the idea that “you get what you measure”, it’s easy to see how poor indicators can deviate efforts from core objectives and lead to very poor outcomes.
WB’s procurement indicators: for many years procurement indicators have been limited in number and superficial in substance. For instance, some indicators count number of prior review activities, number of available risk assessments, complaints, and response time (in some cases). This reflects a focus on compliance with our internal regulations and, to an extent, some consideration for service standards as well. But, the core objective of the procurement function is to contribute to achieve our clients’ development objectives. Hence, value for money and the Bank’s fiduciary responsibility are important elements to be measured.
Why are we measuring the wrong concepts? Some notable reasons include::
- Performance in procurement is difficult to measure everywhere. For example, the private sector focuses on savings, but how to measure savings is debatable. In the case of the World Bank, savings seems to be not enough, as qualitative dimensions are also important.
- For many years, the World Bank’s procurement culture has been about compliance and hence the indicators naturally reflect that logic.
- We don’t have systems to register how procurement activities are performing (maybe as consequence of the compliance culture) so measuring performance is difficult and expensive.
- Lack of standardization is also an issue. The regional orientation, especially under the old structure, puts pressure for regional solutions. This increases the number of indicators and the way they are calculated, adding complexity to the problem. Moreover, indicators are more valuable when they are standard and can be used to establish comparisons between similar units.
The New Procurement Policy Framework (NPF) will bring about improvements.
The most important feature of the NPF is the shift from compliance to development outcomes, which puts the emphasis in the right place. Eventually, this will trigger a change in our procurement culture. New questions will become familiar in our discussions, such as: how are we contributing to disburse? Are we generating value for money? How competitive is a given market? Or how effectively we fulfill our fiduciary responsibility?
Along with this idea, the NPF is introducing a new system (called STEP) to monitor procurement transactions. This system will collect information that will help to build better proxies for performance indicators. In a couple of years, (once STEP is widely populated, which will happen along with the pace of the evolution of the portfolio), the World Bank will have the right set of indicators that will enable an enhanced management by both Managers and procurement specialists.