Question

Discuss implications of financial planning on public procurement.

Answer 1

Public procurement is the process by which government departments or agencies purchase goods and services from the private sector. Authority had to put purchasing decisions out to tender and then deal with whichever provider offered the lowest price . This makes financial planning one of the most important step in the public procurement cycle.

There are many factors that makes financial planning a signifacant factor for assessing the public expenditure.

• It helps in defining the responsibility to cover the particular procurement over a period of time. Time period can be for 6 month or year .
• Financial planning helps in reviewing the internal controls of the activity so that risk of any failure , loss , fraus can be mitigated.
• Financial planning helps in doing the detailed cost cut and profit analysis with availale existing resources.

For example , when Tender is allotted to a contractor than through proper financial planning , we can give the contract at minimum cost . we can compare cost , profit , breakeven period to complete our targets. In this way we can comapre Year on year comparison and get the successful results in delivery of the projects.