HTM Guide 3 Chapter 1-2

Anna Worm
For Engineering World Health
March 20
 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).

2
 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
3
 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
4
Why are we covering Guide 3?

5
HTM cycle p24

6
 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

7
 Teams for procurement and commissioning
p15
• Procurement unit
• Procurement/tender committee
• Specification writing group
• Commissioning team
• Training sub-group
• Project sub group (external funders)

8
 Important pages from the book
• H1:
– p9-10
– p14-19
• H2:
– p24 Figure 4
– p39 box
– p42

9
 HTM Guide 3 Chapter 3
How to decide when and what to procure

Anna Worm
March 20
 content
3.1 why you need to procure
3.2 issues to consider when choosing
equipment
3.3 a review of the different ways to get
equipment
3.4 new or second hand items?

11
 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

12
 Procurement policies p.45,46,47
LE
1. equipment requires replacement B A
IL
A items are
2. Regular supplies of equipment-related AV
required ES
OM
3. Additional equipment isGnecessary C for providing
I N
a basic standard level N D of care
F U
4. additional equipment
I F is required to improve
services and L E beyond a basic level of care
go
SI B
S
O equipment is required that is outside
5. Additional
Y P
L
theN health facility’s own plans
O
13
 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

14
 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
guidelines NO

15
Be appropriate to your setting, p51
Factors Issues
Equipment can be operated and (preferably) maintained by your staff, with or
You have the skills without additional training.
It has been designed or adapted to cope with the location where it will be
used. For example:
It suits your climate ◆  In humid climates:
◆  In high ambient temperatures:
and conditions ◆  With unreliable power supplies:
◆  With unreliable water supplies:
◆  In dusty environments:
The equipment should have a limited number of settings and modes of
operation (unless you are buying extremely specialized equipment to suit
It is simple to use extremely specialized personnel). Experience shows that equipment with more
than three settings requires a specialist.
The equipment:
◆  is compatible with existing equipment and knowledge in the organization (if
It fits into your health possible)
◆  is suited to the power source and power quality available
facility ◆  does not require unavailable or unreliable service supply installations
(utilities)
◆  does not require more space than you have.

16
 Be of assured quality and safety, p52
• Performance
• Sources
• Materials & Design
• Safety
• Standards
• Labeling and Packaging

17
Be affordable and cost effective, p54

18
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

19
 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

20
21
 3.3 ways to get equipment, p64
• Purchase/donate/lease, rent or hire

3.3.1 purchase with national funds

3.3.2 purchase using external support
agencies
3.3.3 donations
3.3.4 leasing
3.3.5 research & demonstration models
22
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

23
 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

24
 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?

25
 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

26
 (dis)advantages leasing etc, p77
Advantages Disadvantages
◆  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
◆  Provides certainty as costs are known in reduced.
advance. ◆  Doesn’t provide ownership.
◆  Reduces the need to tie up capital funds in ◆  Agreements are one-sided. When leasing, if
fixed assets. something goes wrong most risks are
◆  Enables the suitability of equipment to be transferred to the lessee (for example, loaned
assessed over a pre-determined trial period. items must be replaced if damaged). Under
◆  Sometimes enables you to obtain leasing type arrangements, although most of
equipment or material that is hard to purchase. 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.

27
3.3.4 obtain new or second hand equipment

Advantages Disadvantages
◆  Can have problems linked to age and lack of
spare parts, consumables, manuals, or servicing
support. Although some organizations repair
◆  Often reduces the cost substantially (on
second-hand goods to improve their lifespans,
average between 40 and 80 per cent of new
many do not.
equipment costs).
◆  Risks are bigger and you may have less
◆  May be more readily available.
protection if anything goes wrong. Used goods
◆  When reconditioned or rebuilt, may have a
are sold as they are, meaning they are not
long life and be protected by guarantees or
always perfect. The supplier takes no
warranties.
responsibility if the faults are obvious when you
◆  May be economical to buy when it would
make your purchase and you cannot expect a
not pay to acquire new.
refund or compensation. You can only ask for
◆  May be compatible with others already in
your money back if the equipment does not do
use, thus reducing the cost of holding stocks of
the job you bought it to do.
spare parts and consumables.
◆  May be less reliable, last for a shorter period
of time, and require more maintenance than new
equipment.

28
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

29
30
 Important pages from the book
• H3 all
– P 45-82
– Annex 3 p305-308

31
 HTM Guide 3 Chapter 4

Anna Worm
March 27
 Chapter 4 How to decide on the way to
purchase
4.1 determining the model for procurement
4.2 choosing your purchasing method
4.3 different types of suppliers
4.4 Identifying suitable suppliers

33
 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
34
 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

35
 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
36
 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
37
 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?
38
 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
39
 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

40
 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

41
(dis)advantages local/international
• discussion

42
 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
43
 HTM Guide 3 Chapter 5

Anna Worm
March 27
Chapter 5 How to Prepare for procurement

5.1 determining quantities needed

5.2 Deciding whether to use lots
5.3 Finalizing how to procure
5.4 Timetabling
5.5 Preparing paperwork

45
 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

46
 Capital budget
• To buy euqipment
• Big amounts
• Hippo model, not only purchasing costs

47
 Recurrent budget
• Also called operational budget
• Smaller amounts
• Supplies, accessories, contracts

48
 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

49
 5.4 time table for procurement
• Plan your purchases!
• Example Ultrasound:
– Once purchase
– Lifetime
– Accessories

Annual/scheduled/perpetual/single project p133

50
 5.5 paperwork
• Remember Costica’s example last week

• Please read this to review Costica’s lesson last

week

51
 HTM Guide 3 Chapter 6

Anna Worm
March 29
6. How to manage the purchasing process

6.1 Asking for bids/quotes and issuing

documents
6.2 receiving and opening the bids/quotes
6.3 evaluation and comparison process
6.4 award of contract and placing the order

6.5 local direct purchasing and ordering

53
 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

54
 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

55
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
56
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

57
5. Making recommendations: use scoring and
weighting
6. Consultations: talk to users and technicians
7. Evaluating the suppliers
8. Final decision: does the offer fit the budget?

58
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
59
 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

60
 HTM Guide 3 Chapter 7

Anna Worm
March 29
7. How to receive goods and distribute them
to site
7.1 preparing to receive equipment and supplies
7.2 safe shipment, custom clearance, and
transport to distribution centers
7.3 storage at distribution centers and dispatch
7.4 Delivery to final destination site

62
 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

63
 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?

64
 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

65
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

66
 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!
67
 HTM Guide 3 Chapter 8

Anna Worm
April 2
 Chapter 8: how to receive commission and
store goods on site
8.1 an overview of the acceptance process
8.2 receipt and checking of goods
8.3 assembly, installation, commissioning and
initial training
8.4 registration and hand over
8.5 when and how to make payments
8.6 damage or unsatisfactory supply

69
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
70
 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

71
 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

72
 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

73
 Space required
• Room fo unpacking
• Room for assembly
• Room for training

74
 8.2 receipt and checking of goods
• Receiving and unpacking
– Clean environment
– Easy access for crates
– Easy access to department

75
 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
76
 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
77
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
78
• Call supplier, contact insurance company
• Do NOT sign acceptance Test logsheet, but
write Fault Report to the procurement
manager describing the problems. Make
pictures!!

79
 HTM Guide 3 Chapter 9

Anna Worm
April 3
Chapter 9; action planning and monitoring of
progress
• Planning and reviewing to evaluate your
performance and the performance of the
system
= Quality Management
for client satisfaction
for cost efficiency
for compliance with laws

81
 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

82
 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
83
 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
84
 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

85
 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!

86
 Setting goals
1. Targets
2. Recommendations
3. Longer term objectives

87
 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
88
 P 259
target By whom How to How to Time
measure achieve table
Actions Name(s) How Resources Time
agreed in of progress required fram,
order of responsib will be start and
priority le measured completio
persons n

89
 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

90
 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

91
 How to measure goals
• You need indicators to measure and you need
baseline data

• Table p 261

92
 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

93
 Antivirus & back up
• Comodo
• Sophos
• Norton
• McAfee

• External hard drive

• Burn CD
• Print hard copy
94
 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%20
1%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%2
02%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/gui
de%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%2
06%20How%20to%20Manage% 95
20Finances.pdf