DETERMINANTS OF PROCUREMENT CONTRACT MANAGEMENT OF SELECTED STATE CORPORATIONS IN NAKURU COUNTY, KENYA, KENYA

Abstract

A contract is a written or oral legally -binding agreement between the parties identified in the agreement to fulfill the terms and conditions outlined in the agreement. Contract management is the process that ensures both parties to a contract fully meet their respective obligations as efficiently and effectively as possible, in order to deliver the business and operational objectives required from the contract and in particular to provide value for money. Contract management enhances the procurement function in diverse ways including anticipating future needs of users, reacting to arising challenges, and achievement of product and services quality. Despite the importance of contract management amongst the procurement authorities, state corporation still face diverse challenges associated with contract management. The study therefore seeks to determinants of procurement contract management of selected state corporations in Nakuru County, Kenya, Kenya. Specifically the study sought to establish the role of compliance of contract conditions, contract documentation, cost management and contract monitoring on procurement contract management of selected state corporations in Nakuru County, Kenya. This study adopted descriptive research design. The target population of this study comprised of 28 procurement staff, 28 finance staff and 30 management staff from 10 selected state corporations in Nakuru County, Kenya. The study used primary data, which was collected by use of structured questionnaires. Quantitative data was analysed by use of descriptive and inferential statistics through the help of Statistical Package for Social Sciences (SPSS) version 24. Descriptive statistics included percentages, frequencies, measures of central tendencies (mean) and measures of dispersion (standard deviation). Inferential statistic involving the use of correlation analysis was used to determine the nature of the relationship between variables. The regression coefficient of -0.200 for the compliance with contract terms and conditions implied that a unit increase in compliance levels with contract conditions with the other variables left constant would lead to a -0.200 decrease in the effectiveness of contract management. This implies that compliance with contract terms and conditions on its own is not sufficient to lead to a positive influence on the contract management. The regression coefficient of 0.243 for the contract documentation implies that a unit increase in contract documentation would lead to a 0.243 increase in effective contract management with the other independent variables kept constant. The regression coefficient of -0.240 for the cost management implied that a unit increase in cost management with the other variables left constant would lead to a -0.240 decrease in the effectiveness of contract management. On the other hand, a unit increase in contract monitoring would lead to a 0.317 increase in effective contract management with the other independent variables kept constant. The study concluded that compliance with contract terms and conditions as well as cost management were metrics that on their own they could lead to a positive influence on procurement contract management. From the finding the researcher concluded that state corporations comply with contract conditions by awarding the contract to the most suitable party. Regarding contract documentation the researcher concluded that failure to understand the contract document potentially leads to mistakes in implementation of contract which caused unnecessary rework and increase in project cost.The study recommends that in order for the state corporations to improve on the effectiveness of the contract management, the state corporations must place emphasis on contract documentation and contract monitoring of contract management. Emphasize should be done to contractors to review and understand the contract requirement.