HTM Guide 3 Chapter 1-2

Anna WormFor Engineering World Health

March 20

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HTM for session 5

• We will cover Guides 3 and 6.

• Guide 3: How Procure and Commission: How to Manage Vol 3, Lenel et. al., (Ziken International: 2005).

Guide 6: How to Manage Finances: How to Manage Vol 6 Lenel et. al., (Ziken International: 2005).

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What will we cover with Guide 3?

• Procurement and commissioning of new (and used) equipment.– Activities before purchasing– Steps to take when purchasing– How to prepare for, and receive, store and distribute

goods– Receiving, installing, commissioning and accepting

goods– How to monitor and evaluate (and improve) your

activities

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definitions

• Procurement =The acquisition of goods and services through purchase,

donation or rental.

• Commissioning= the process of assuring that all systems and components are designed, installed, tested, operated and maintained according to the operational requirements of the owner

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Why are we covering Guide 3?

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HTM cycle p24

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What is your role in the procurement process?

• Does the hospitals write requirements? Are you involved?

• Do you check the equipment when it is delivered? Do you write or sign documents after checking it?

• Do you install new equipment? Do you sign documents?

• etc

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Teams for procurement and commissioning p15

• Procurement unit• Procurement/tender committee• Specification writing group• Commissioning team• Training sub-group• Project sub group (external funders)

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Important pages from the book

• H1: – p9-10– p14-19

• H2:– p24 Figure 4– p39 box– p42

HTM Guide 3 Chapter 3How to decide when and what to procure

Anna WormMarch 20

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content

3.1 why you need to procure3.2 issues to consider when choosing

equipment3.3 a review of the different ways to get

equipment3.4 new or second hand items?

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3.1 Why you need to procure

• First planning and budgeting as covered in Guide 2 (p45):– Up to date inventory– Vision for health services delivery– Policies– Model equipment lists

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Procurement policies p.45,46,47

1. equipment requires replacement2. Regular supplies of equipment-related items

are required3. Additional equipment is necessary for

providing a basic standard level of care4. additional equipment is required to improve

services and go beyond a basic level of care5. Additional equipment is required that is

outside the health facility’s own plansONLY POSSIBLE IF FUNDING COMES AVAILABLE

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3.2 issues to consider when choosing equipment

• Purchasing and donation policies should help you by specifying ‘good selection criteria’, which should also help you to decline gift if not appropriate for your healthcare system

• Al equipment should:– Be appropriate to your setting– Be of assured quality and safety– Be affordable and cost effective– Be easily used and maintained– Conform to your exsisting policies, plans and guidelines

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example

• EWH offers your district hospital a brand new MRI, what do you do?– Be appropriate to your setting NO– Be of assured quality and safety Probably– Be affordable and cost effective NO– Be easily used and maintained NO– Conform to your existing policies, plans and

guidelinesNO

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Be appropriate to your setting, p51Factors Issues

You have the skills Equipment can be operated and (preferably) maintained by your staff, with or without additional training.

It suits your climate and conditions

It has been designed or adapted to cope with the location where it will be used. For example:

◆ In humid climates: ◆ In high ambient temperatures: With unreliable power supplies: ◆ ◆ With unreliable water supplies: ◆ In dusty environments:

It is simple to use The equipment should have a limited number of settings and modes of operation (unless you are buying extremely specialized equipment to suit extremely specialized personnel). Experience shows that equipment with more than three settings requires a specialist.

It fits into your health facility

The equipment: ◆ is compatible with existing equipment and knowledge in the organization (if

possible) ◆ is suited to the power source and power quality available ◆ does not require unavailable or unreliable service supply installations

(utilities) ◆ does not require more space than you have.

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• Performance• Sources• Materials & Design• Safety• Standards• Labeling and Packaging

Be of assured quality and safety, p52

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Be affordable and cost effective, p54

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Be easily used and maintained p59

Many of the cost we discussed relate to the (availability of the) following• Skills & training MANUALS!• Maintenance & support services SERVICE

ENGINEER in country?• Guarantees and warranties • Consumables, Accessories and spare parts

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Conform to your existing policies, plans and guidelines

• Purchasing and donation policies;– In line with equipment development plan

• Standardization policy– Limit the variety of equipment, limit your purchases to a

few trusted suppliers• Model equipment lists and generic specifications– National standard

• Literature & knowledge available– Prepare well before deciding. Do proper market

research

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3.3 ways to get equipment, p64

• Purchase/donate/lease, rent or hire

3.3.1 purchase with national funds3.3.2 purchase using external support

agencies3.3.3 donations3.3.4 leasing3.3.5 research & demonstration models

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3.3.1 purchase with national funds

• Government funds- find out which bodies and which sections are responsible for purchasing different types of equipment

• Own independent funds

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3.3.2 purchase using external support agencies

• Loans (repayable with interest) & grants (non- repayable)• Donors might have different regulations and procedures that

conflict with yours. Potential conflict areas:– Your standardization policy– Your budgets, external partner responsible for the ‘hippo’– Your aims and whishes. You should be able to make choices

THE ART OF GETTING THE RIGHT EQUIPMENT IS CHOOSING THE RIGHT EXTERNAL SUPPORT AGENCY TO SUPPORT IT! TO DO SO YOU NEED YOUR EQUIPMENT DEVELOPMENT PLAN TO BUILD A STRONG AND CLEAR BUSINESS CASE

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3.3.3 donations

Keep in mind:• What will it cost?• Is it appropriate?• Do you have the skills?• Is it sustainable?• Why am I being offered it?

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3.3.4 leasing p76

• Equipment can sometimes be hired, meaning it remains under ownership of the other party, they are responsible for maintenance and repair. Lease contract

• Lease type arrangement: a way of buying with spread costs

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(dis)advantages leasing etc, p77Advantages Disadvantages

◆ Provides certainty as costs are known in advance.

◆ Reduces the need to tie up capital funds in fixed assets.

◆ Enables the suitability of equipment to be assessed over a pre-determined trial period.

◆ Sometimes enables you to obtain equipment or material that is hard to purchase.

◆ A fixed obligation is created to pay rental from your recurrent funds.

◆ The flexibility to dispose of obsolete equipment before the end of the lease may be reduced.

◆ Doesn’t provide ownership. ◆ Agreements are one-sided. When leasing, if

something goes wrong most risks are transferred to the lessee (for example, loaned items must be replaced if damaged). Under leasing type arrangements, although most of the risk remains with the owner of the equipment this has to be paid for in the rental price, and additional costs will be incurred, depending on the contract terms, if a leased item is misused or otherwise damaged.

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3.3.4 obtain new or second hand equipment

Advantages Disadvantages

◆  Often reduces the cost substantially (on average between 40 and 80 per cent of new equipment costs). ◆  May be more readily available. ◆  When reconditioned or rebuilt, may have a long life and be protected by guarantees or warranties. ◆  May be economical to buy when it would not pay to acquire new. ◆  May be compatible with others already in use, thus reducing the cost of holding stocks of spare parts and consumables.

◆  Can have problems linked to age and lack of spare parts, consumables, manuals, or servicing support. Although some organizations repair second-hand goods to improve their lifespans, many do not. ◆  Risks are bigger and you may have less protection if anything goes wrong. Used goods are sold as they are, meaning they are not always perfect. The supplier takes no responsibility if the faults are obvious when you make your purchase and you cannot expect a refund or compensation. You can only ask for your money back if the equipment does not do the job you bought it to do. ◆  May be less reliable, last for a shorter period of time, and require more maintenance than new equipment.

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3.3.5 research and demonstration models

• Research models are still under development• Demo models are second hand with full documentation• Only accept when:

– Officially tested and approved – Conforms to standards– Equipment remains property of supplier– Supplier responsible for running cost– Supplier responsible for claims from patients– You are not responsible for loss or damage– You ask permission of patients (or relatives) before using the

equipment on the patient

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Important pages from the book

• H3 all– P 45-82– Annex 3 p305-308

HTM Guide 3 Chapter 4

Anna WormMarch 27

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Chapter 4 How to decide on the way to purchase

4.1 determining the model for procurement4.2 choosing your purchasing method4.3 different types of suppliers4.4 Identifying suitable suppliers

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4.1 models for procurement

• Centralized procurement– E.g. through MoH or ACM– Often big tenders, high value

• Group procurement– E.g. procure equipment for all PiH hospitals– More negotiating power

• Decentralized procurement– Direct procurement by your hospital– Often small orders, low value, with local suppliers

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4.1 models for procurement

• Mixed procurement– Combination of centralized and decentralized – E.g. the big orders through MoH and the small

ones through the hospital• Using procurement agents– E.g. when orders are large and/or complicated. – Often for development projects, e.g. a new

hospital

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4.2 choosing your purchasing method

• Direct order; contact supplier, ask for price and order

• Tendering; procedure with bidders . Open and restricted tenders

• Quotation; you ask for a price, and have some time to decide. Normally you ask quotations from several suppliers

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Why do you choose Direct order, tender or quotation?

• What are you purchasing?• The model of procurement• Who is paying• Transparancy required• Procurement guidelines (e.g. grant requires tender)• The market place• The size of the order• Level of authorization needed; e.g. I am allowed to by a

$5 stapler without advanced approval• How soon the equipment is needed

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4.2.2 Tenders

• Open tenders– Open for any supplier to bid– You receive many respsonses– Takes at least 6 months up to 1 year

• Restricted tenders– Smaller number of bidders (e.g. only national)– 4 to 6 months

Disadvantage of tenders: price only thing that counts, what about quality?

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4.2.3. Quotation-based methods

• Request for quotes: buyer asks minimum of 3 suppliers for a quote. Buyer evaluates and decides

• National competitive bids: advertised nationally, many bids accepted, evaluate, compare and decide

• Competitive negotiation: several suppliers are asked for a price, the buyer shares all offers with all suppliers to get even better offers

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4.2.4. Direct ordering

• You know what you want, model, brand etc

• You know which supplier to approach

• You contact supplier directly communicate personally with them and negotiate terms

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4.3 different types of suppliers

• International manufacturers– And their representatives. E.g GE

• national manufacturers and suppliers– E.g supplier of imported goods, service company

• Whole salers and retailers– Range of products from different suppliers

• International supply organizations– E.g procurement agents

• International turnkey organizations– Also do design, work with engineers etc

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(dis)advantages local/international

• discussion

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4.4 identifying suitable suppliers

• Pre qualification– Screen potential suppliers before bids or quotes

• Post qualification– Suppliers are screened after bids or quotes

• Monitoring– Keep track of suppliers

• Disqualification– You need a system to disqualify suppliers who do

not perform well or don’t keep their word

HTM Guide 3 Chapter 5

Anna WormMarch 27

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Chapter 5 How to Prepare for procurement

5.1 determining quantities needed5.2 Deciding whether to use lots5.3 Finalizing how to procure5.4 Timetabling 5.5 Preparing paperwork

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5.1 determining quantities

Available plans; look at your Equipment Development plan!

Decide what you need, how much and what quality

Capital budget recurrent budget

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Capital budget

• To buy euqipment• Big amounts• Hippo model, not only purchasing costs

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Recurrent budget

• Also called operational budget • Smaller amounts• Supplies, accessories, contracts

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5.2 using lots

• Combining similar or related equipment into lots to make purchasing easier – Stronger position for negotiation– Reducing time scale of procurement and delivery– Attracting a large number of bidders– Examples:• Imaging equipment• Laboratory equipment

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5.4 time table for procurement

• Plan your purchases!• Example Ultrasound:– Once purchase– Lifetime– Accessories

Annual/scheduled/perpetual/single project p133

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5.5 paperwork

• Remember Costica’s example last week

• Please read this to review Costica’s lesson last week

HTM Guide 3 Chapter 6

Anna WormMarch 29

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6. How to manage the purchasing process

6.1 Asking for bids/quotes and issuing documents6.2 receiving and opening the bids/quotes6.3 evaluation and comparison process6.4 award of contract and placing the order

6.5 local direct purchasing and ordering

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6.1 Asking for bids/quotes and issuing documents

• First write detailed purchase document• Request tender bids or (at least 3) quotations– Open tenders or national competitive bids: invitation to bid

is advertised in a number of locations

– Restricted tenders/competitive negotiation/request for quotes: purchase document directly issued to preselected suppliers

– Direct order: the purchase document is issued directly to a single prequalified or selected supplier

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6.2 receiving and opening tender bids/quotations

• For direct orders, competitive negotiation, request for quote of low value can be informal. E.g. You can set a date for receiving quotes

• For all other methods you’ll need a more formal procedure

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Opening tender bids/high value quotations

• Opening; Procurement Mngr opens sealed bids (or quotations) at the indicated time and place and in public

• Registering; bidders (or reps) should be present and sign a register, quotation opening should be recorded

• Processing; open, content checked, signature checked. Bid/quote admitted for further comparison

• Late arrivals: should not be openened, but stamped with date and time and unopened returned to sender

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6.3 Evaluation and Comparison process

1. Checking for compliance; compare the bid with the tender document

2. Preparing the evaluation information; put all information next to each other

3. Carrying out the technical evaluation; does the product offered fit the requirements?

4. Carrying out the financial evaluation; lowest purchase price or most economically advantageous offer

See sample quotation comparison form! p175

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5. Making recommendations: use scoring and weighting

6. Consultations: talk to users and technicians7. Evaluating the suppliers8. Final decision: does the offer fit the budget?

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6.4 award of contract and placing the order

Nice table on p 183• Prepare the notification of award• Inform supplier• Discuss contract terms• Issue purchase order• Supplier’s response• Issue the contract• Inform all bidders• Organize the funds• Make a record of the purchase

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documents

• Purchase order: numbered printed form used by the buyer to place an order with an supplier. For accountants the purchase order number will be used to dedicate the funds from the relevant budget account

• Proforma invoice: breakdown of suppliers quote and terms of payment

• Contract: binding document for a specified period of time

• Notification of award: for winning bidder, signed by authorities, including unit and total price awarded

HTM Guide 3 Chapter 7

Anna WormMarch 29

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7. How to receive goods and distribute them to site

7.1 preparing to receive equipment and supplies7.2 safe shipment, custom clearance, and transport to distribution centers7.3 storage at distribution centers and dispatch7.4 Delivery to final destination site

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7.1 preparing to receive equipment and supplies

• Monitoring progress using a Gantt Chart p196• Pre-installation work– Site preparation chart p 201– Organizing lifting equipment– Organizing warehouse space– Installation and commissioning details– Training details

• Preparing for customs clearing

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7.2 safe shipment, custom clearance, and transport to distribution centers

• Is the equipment always delivered in the hospital? Who’s taking care of the safe shipment and clearance?

• Supplier or buyer should contract clearing agent

• Insurance• Customs to initial destination, who’s in charge:

supplier or buyer?

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7.3 storage at distribution centers and dispatch

• Your aim should be to put equipment into service directly, and don’t use storage. Of course for things in bulk, you store (like accessories or disposables)

• Distribution centers, central or zonal

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7.4 Delivery to final destination site

• Do you use own transportation or do you contract a company?

• Direct delivery by freight forwarder• Collection from airport using your own

vehicle, hired vehicle or a clearing agent• You may organise onward delivery from the

distriv=ution centers yourself

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Important abbreviations, p328

• EXW= Ex Works. All cost for buyer• FOB= Free On Board. Supplier pays till port of departure• CIF=Cost Insurance and Freight. Supplier pays till port of

destination, incl insurance• CIP= Carriage and Insurance Paid. Supplier pays insurance and

transport till final destination (avec DDU)• DDU= Delivered Duty Unpaid. Buyer pays import taxes.• DDP= Delivered Duty Paid. Supplier pays all taxes.

LEARN BY HEART!

HTM Guide 3 Chapter 8

Anna WormApril 2

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Chapter 8: how to receive commission and store goods on site

8.1 an overview of the acceptance process8.2 receipt and checking of goods8.3 assembly, installation, commissioning and initial training8.4 registration and hand over8.5 when and how to make payments8.6 damage or unsatisfactory supply

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8.1 an overview of the acceptance process

• Acceptance Procedure:– Delivery/receipt of the equipment on site– Unpacking and checking for damage and for

completeness– Assembly & Installation– Commissioning and safety testing– Official acceptance– Initial training– Registration; entering stocks into stores and records– handover

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Who’s responsible?

The HTM working group (ideally the commissioning team)

It’s normal for a manufacturer to send technical personnel (such as engineers) to do the installation and commissioning, and a different person to do the user training

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Documents required for acceptance

• Copies of purchase order• Shipping documents• Packing list• Blank copies of Acceptance test Logsheet• New Equipment files

• Service and user manuals

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Materials required for acceptance

• Hand trolley, fork lift, people?• Tools to open the box• Tools for assembly and installation• Insulation testing instruments to test

insulation and earth connections• Safety analyzer• Any other relevant test equipment

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Space required

• Room fo unpacking• Room for assembly• Room for training

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8.2 receipt and checking of goods

• Receiving and unpacking– Clean environment– Easy access for crates– Easy access to department

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8.3 Assembly, installation, commissioning and training

• Preparation• Assembly: steps to put equipment together if it was

dismantled for transport• Installation: fixing equipment into place• Commissioning: series of tests and adjustments

performed to check whether new equipment is functioning well, and that any adjustments are made before equipment is used

• Training: VERY important. Before users start using new equipment they need to be trained

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8.4 registration and handover

• Entering new orders into health facility records; equipment inventory, PPM plan, etc

• Storing manuals; original copies in a safe place, make photocopies

• Upload digital copies to your CMMS• Storage and stock control of recurrent orders of

equipment related supplies• Handover: formal presentation of the equipment

to he user department after acceptance

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8.6 damage to goods or unsatisfactory supply of goods or services

• goods are damaged• order incomplete• Wrong product• Product doesn’t fit specifications• Doesn’t fulfill function• No service as agreed (e.g. training)

Compare your original purchase contract with what you received. The person contacting the supplier should be senior and have enough clinical and technical knowledge

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• Call supplier, contact insurance company• Do NOT sign acceptance Test logsheet, but

write Fault Report to the procurement manager describing the problems. Make pictures!!

HTM Guide 3 Chapter 9

Anna WormApril 3

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Chapter 9; action planning and monitoring of progress

• Planning and reviewing to evaluate your performance and the performance of the system

= Quality Managementfor client satisfactionfor cost efficiencyfor compliance with laws

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9.1 setting goals

• Important to monitor performance and progress with regard to procurement and commissioning

• Annual Action Plan; clear specific goals for the coming year. An opportunity for team members to agree the range of activities they want to implement

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NOT in AAP

• Need for major investments in equipment (that’s part of the EDP)

• Shortage of staff or money

WHAT DO WE PUT in AAP?• Improvements that staff can execute

them selves, with the existing staff, equipment, facilities and other resources

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For all aspects of your work

• Find info on new products• Improve procurement skills• Implementing effective equipment acceptance

procedures• Improving stock control of supplies• More successful installation and

commissioning• Improved training

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AAP

• Plan should be clear and straight forward• Goals understood by all• If staff is involved in creating the AAP they will

be more motivated to make it happen

• The book suggests an Action Planning Seminar once a year

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Ultimate goal of an AAP

• Be able to plan in advance and to look back and compare the results with the plan. So in January 2012 you compare the AAP 2011 with the results of 2011 and you create AAP2012.

• Discuss problems and seek solutions!

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Setting goals

1. Targets2. Recommendations3. Longer term objectives

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targets

• Targets guide the work of all groups involved in procurement and commissioning during the following year

• Targets should be SMART– Specific what and who– Measurable easy to measure– Achievable possible with existing resources– Relevant solve a priority– Time-bound when should it be completed

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P 259target By whom How to

measureHow to achieve

Time table

Actions agreed in order of priority

Name(s) of responsible persons

How progress will be measured

Resources required

Time fram, start and completion

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recommendations

• Sometimes you can’t achieve something without extra money, extra staff, or extra supplies. Make a recommendation

• Specifically addressed to someone• Reasonable keep it

realistic• Essential no

easier alternative

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Longer term objectives

• Some things can not be solved in one year.

• Try to chop it up in smaller pieces and monitor the progress over several years

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How to measure goals

• You need indicators to measure and you need baseline data

• Table p 261

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9.2 monitoring progress with procurement and commissioning

• After planning we do monitoring

• Monitor progress against annual goals• Monitoring progress in general• Audit process for development projects

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Antivirus & back up

• Comodo• Sophos• Norton• McAfee

• External hard drive• Burn CD• Print hard copy

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Citations:• How to Organize: How to Manage Vol 1, Lenel et. al., (Ziken International: 2005). Retrived from:

http://library.ewh.org/greenstone/collect/BMETDigitalLibrary/index/assoc/HASH019f.dir/guide%201%20How%20to%20Organize.pdf

• How to Plan and Budget How to Manage Vol 2, Lenel et. al., (Ziken International: 2005). Retrived from: http://library.ewh.org/greenstone/collect/BMETDigitalLibrary/index/assoc/HASH3e7a.dir/guide%202%20How%20to%20Plan%20and%20Budget.pdf

• How Procure and Commission: How to Manage Vol 3, Lenel et. al., (Ziken International: 2005). Retrieved from: http://library.ewh.org/greenstone/collect/BMETDigitalLibrary/index/assoc/HASH01c1/0c3e7249.dir/guide%203%20How%20to%20Procure%20and%20Commission.pdf

• How to Manage Finances: How to Manage Vol 6 Lenel et. al., (Ziken International: 2005). Retrieved from: http://library.ewh.org/greenstone/collect/BMETDigitalLibrary/index/assoc/HASH01ad.dir/guide%206%20How%20to%20Manage%20Finances.pdf