FACTORS AFFECTING PERFORMANCE OF CONSTITUENCY

FACTORS AFFECTING PERFORMANCE OF CONSTITUENCY

FACTORS AFFECTING PERFORMANCE OF CONSTITUENCY DEVELOPMENT FUND PROJECTS IN KENYA: CASE STUDY OF KIKUYU CONSTITUENCY Andrew Juma Malala, P. O. Box 3663...

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FACTORS AFFECTING PERFORMANCE OF CONSTITUENCY DEVELOPMENT FUND PROJECTS IN KENYA: CASE STUDY OF KIKUYU CONSTITUENCY Andrew Juma Malala, P. O. Box 36637 – 00200 Nairobi, Kenya ([email protected]) Jackson Ndolo, Private Bag, Thika, Kenya ([email protected]) Eunice Njagi, Private Bag, Sultan Hamud, Kenya, ([email protected]) ABSTRACT This study examined in detail factors that affect the performance of Constituency Development Fund (CDF) projects in Kenya. There have been numerous reports by scholars, professionals, the media and civil rights organizations that the whole CDF ideology is being used as a tool for embezzlement of public funds as opposed to it being a devolved development vehicle; part of the cited malpractice area is in the entire procurement process of the projects’ materials, goods and services. The public rants that procurement is highly unsatisfactory with numerous cases of corrupt activities including collusion of some CDF Committee members being suppliers, which raises the question of conflict of interest. There is also the aspect of poor entrepreneurial attitude by the Small and Medium Enterprises (SME) who are supposed to be promoted by supplying to the CDF projects but majority lack the ethics to pay taxes or even be registered in order for Constituency Development Fund Committee (CDFC) to contract them within law. The public has also raised questions about governance and political interference of the fund; some members of the CDFC are ill informed about project management and therefore put in doubt their ability to manage and govern the CDF funded projects effectively. Scenarios of some ghost projects has also become rampant and the question is if real time monitoring and evaluation is done to make sure that projects being implemented are on schedule without misappropriation of public funds. Finally, the very Small and Medium Size Enterprises (SMEs) that are supposed to be promoted by them supplying to the CDF funded projects most of the time lack the capacity to make the supplies which makes one wonder if CDF should stick to promoting SMEs. This results to majority (over sixty percent, 60 %) of CDF projects delay, stalling or abort since the procurement process is not justifiable; one wonders whether there is a policy about CDF projects procurement process is supposed to be done, governance and composition of the CDFC to be free of arm twisting by politicians, training exists for SMEs on best practice entrepreneurial activities, monitoring and evaluation criterion is highly questionable as well as initiatives to help the SMEs improve on their capacity The study therefore sought to identify factors that affect the performance of CDF projects in Kenya. The researcher found out that: procurement process of CDF projects is not effectively done, SMEs totally lack entrepreneurial practices/attitude, governance of CDF projects is marred with political interference, monitoring and evaluation is uncoordinated, ineffective and does not promote superior performance of CDF funded projects and finally SMEs lack the capacity to undertake CDF funded projects to enhance performance of CDF funded projects in Kenya. These five factors-procurement, entrepreneurial attitude, governance and political interference, monitoring and evaluation and capacity constraints directly affect CDF project performance which in turn has resulted into CDF projects in Kikuyu Constituency being rated by the public (as the evaluators) as being behind schedule (88 % percent of projects), with a paltry 12 % of projects being on schedule and no project was rated as being ahead of schedule (0 %).

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Key words: devolve funds, entrepreneur, procurement, public procurement, purchasing and supply chain management. INTRODUCTION 1.1 Background The enlightened public of the twenty first century has continually demanded good governance, proper monitoring and evaluation of public projects (and therefore funds) as well as total compliance to the law by officer given the responsibility to manage public funds as contained in a recent report by National Tax Payers Association (NTPA, 2010). There is also increasing demand by the public and other government services consumers world over for timeliness in materials, goods and services availing by the public procuring entities to enhance efficiency, effectiveness, transparency and accountability by various user departments; all these are captured in the World Bank Procurement guidelines (World Bank; 2005) objectives of; maximization of economy and efficiency, promotion of competition and fair treatment of competitors, integrity promotion and fairness of procedures, increasing transparency and accountability of procedures, increasing public confidence of the said procedures and facilitation of promotion of local industry and economic development. It is critical to note that most government policies and procurement reforms, guidelines and regulations (world over) were customized from World Bank procurement guidelines likewise Government of Kenya. Contra to traditional accounting and projects viability assessing models, modern models of assessing the viability of an investment or project such as Constituency Development Fund needs to consider the time value of money and appreciate the fact that a shilling received now is more viable than a shilling received in five years’ time and that the two can only be compared if they are of the same value that is after discounting them (Manas’seh, 1990). With this in mind, the enlightened Kenyan public has come to demand timely procurement materials and services for CDF projects to be accelerated so as the project money does not lose value due to the delay caused by the procurement process; in fact, this has made the public to demand supplies as planned in the project schedule as well as the project procurement plan. Chopra and Meindl (2005) note that, procurement is a special function in the firm (and the GOK therefore) since by its mandate as the supplies acquiring function of GOK funds, manages the expenditure of close to seventy percent (70%) of a firm’s (and the GOK) budgetary allocation. (KNBS 2003 to 2008) reveals that procurement activities utilize 42.2 % of the GDP; with this in backdrop, it will be critical to ensure that the procurement process which help the organization (and thus the GOK) acquire her supplies are filtered all cost adding processes so as to remain with value adding processes only. Procurement is not a stand-alone exercise in an organization-CDF operations alike-and therefore must be ably accompanied with the right entrepreneurial attitude of SMES constituency bidders, good governance, professional monitoring and evaluation as well as incremental capacity of the bidding SMEs so as to realise increased performance of the CDF funded projects. For CDF operations, procurement has remained questionable to all stakeholders (ranging from the members of parliament-MPs, the public, private firms, suppliers and Community Based Organizations-CBOs) with a lot of grey areas ranging from tender or quotation advertisement, opening process, unjustified tender/quotations evaluation, unclear awarding of the bids as well as inactive or total lack of a receipt, inspection and acceptance committee. Professionals have also pointed a finger at entrepreneurial attitude of SMEs meant to bid for supply of materials, goods and services, governance has been an issue as contained in a report by the International

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Governance Institute (IGI Kenya, 2010) as well as Monitoring and Evaluation as pointed out by a recent NIMES (2009/2010) report which reports that it is difficult for one to effectively determine whether or not M & E of CDF projects is done as expected of an M & E exercise. The effect of these factors is that various CDF projects, nearly 60 %, remain behind schedule or abandoned (Mutunga, 2009). It is critical to note that CDF will remain ineffective, misappropriated, embezzled and thus remain under performing if procurement process is poorly done, SMEs remain with a don’t care attitude, there is poor governance and political interference, monitoring and evaluation processes is poorly done as well if the SMEs do not strive to improve their capacity. Streamlining of CDF operations especially procurement process, entrepreneurial attitude change by constituency SMEs, proper governance free of political interference, monitoring and evaluation urgently need re-engineering so as to be geared towards attaining value for money through these very factors enhancing performance of the CDF funded projects as well as not being a perpetual hindrance to Constituency Development Fund projects as has been the case since its inception in 2003 through the CDF Act 2003. The unnecessary processes that make the total acquisition cost (TAC) of items to be expensive rather than economical need policies to be put in place and Public Procurement Oversight Authority (PPOA) and other supervisory government agencies mandated and facilitated to enforce so that delays of CDF funded projects becomes a thing of the past which will go a long way in ensuring that the tax-payer gets value for money through timely services provision by CDF and attains the Kenya Vision 2030 by individually and collectively making their constituencies (and thus Kenya) “globally competitive and prosperous with a high quality of life by the year 2030” (Ministry of State for Planning, National Development and Vision 2030; GOK). 1.2 Statement of the problem There have been numerous complaints by various groups notably scholars, researchers, professionals and consultants alike that CDF projects lack clear guidelines on how they need to be managed. A research by Rutere (2009) reveals that procurement is a cause of stalling of CDF projects in North Imenti Constituency; a similar research by Wambugu (2008) in Dagoretti Constituency reveals that there is political interference on the implementation of CDF projects which leads to underperforming of CDF projects in the period of study. The government needs to realize that CDF office is a whole development entity like any other (such as other GOK ministries, state corporations, GOK departments, parastatals, Schools and Colleges, Universities, city councils and municipal councils among others) and needs to have her officers trained (or competent ones hired) on procurement process, governance, project management, capacity building of SMEs on attitude change and proper, effective monitoring and evaluation to ensure that Kenya realizes her Vision 2030 via constituency development (and the country’s development by reflection). The speed at which the government deals with the grey areas of CDF funded projects management will determine the realization of the Kenya Vision 2030 through the well-intended devolved CDF fund. From the CDF mandate aforementioned, CDF projects performance heavily relies on real time procurement process, engagement of SMEs, proper governance of projects free of political interference as well as effective monitoring and evaluation. The government can ignore the management of CDF projects at its own peril. Not putting proper procurement process for sourcing of CDF funded projects supplies, poor entrepreneurial attitude by the SMEs, mediocre governance full of political interference, poor monitoring and evaluation criterion as well as diminishing capacity of SMEs at constituency level means more than just delaying development 3

processes but also has a catastrophic impact on attainment of the Kenya Vision 2030. Members of parliament have continually cried foul over delayed procurement process as being one of the stumbling blocks to the development initiatives of their constituencies. The performance of the CDF is to be determined or measured by reduction in poverty index, improved infrastructure, better education facilities, improved health care as well as completion of the said CDF funded projects. It is upon this that this study investigated whether there are factors that affect the performance of CDF projects in Kenya, particularly in Kikuyu Constituency that have continually made poverty index to go up, instead of reducing and the public not having a better quality of life which is the core objective of the CDF as stipulated in the Act 2003 (CDF Act, 2003). 1.3 Research objectives 1.3.1 General objective To identify factors affecting the performance of Constituency Development Fund projects in Kenya, particularly in Kikuyu Constituency. 1.3.2 Specific research objectives 1. To find out the effect of procurement process on the performance of Constituency Development Fund projects in Kenya. 2. To investigate whether entrepreneurial attitude of Small and Medium size Enterprises at constituency level affects the performance of Constituency Development Fund projects in Kenya. 3. To determine the effect of governance and political interference on the performance of Constituency Development Fund projects in Kenya. 4. To examine the effect of monitoring and evaluation on the performance of Constituency Development Fund projects in Kenya. 5. To find out whether capacity of Small and Medium size Enterprises at the constituency level affects the performance of Constituency Development Fund in Kenya. 6. To make recommendations on how Constituency Development Fund projects in Kenya can better their performance. 1.4 Research questions From the above objectives (general and specific), the research will anchor its findings on the following research questions: a) Does procurement process affect performance of Constituency Development Fund projects in Kenya? b) How does entrepreneurial attitude of Small and Medium size Enterprises at the constituency affect performance of Constituency Development Fund funded projects in Kenya? c) Does governance and political interference affect the performance of Constituency Development Fund projects in Kenya? d) How does Monitoring and Evaluation affect the performance of Constituency Development Fund projects in Kenya? e) How does capacity of Small and Medium size Enterprises at constituency level affect the performance of Constituency Development Fund projects in Kenya? f) Can recommendations be made to better the performance of Constituency Development Fund projects in Kenya? 4

1.5 Significance and justification of the study The study findings are of great significance to all the stakeholders interested in the success of the devolved fund-CDF which will help realise the Kenya Vision 2030 which is Kenya’s development blue print. The study determined factors affecting performance of CDF projects in Kikuyu Constituency. The factors whose effects were investigated included; procurement process, entrepreneurial attitude of the SMEs who supply CDF funded projects materials, governance and political interference, monitoring and evaluation as well as capacity of the SMEs to meet supplies needs of CDF projects. These study findings are beneficial to other stakeholders in other constituencies in Kenya and beyond who are involved in similar projects. The findings herein will also be vital as reference tools for project procurement management. From the study findings, conclusion and recommendations, it will be easier to strategize on how to address the grey areas of CDF projects management that hinder their performance and other related devolved public funds in other developing countries world over. The study findings, conclusion and recommendations will also provide reference material for future research in the area of project management with a bias in procurement. 1.6 Scope of study The research was carried out in Central Province, Kiambu County particularly in Kikuyu Constituency which neighbours Nairobi County on the West; by extension, the sampled respondents were drawn from Kikuyu Constituency. This is because of the researcher’s vast experience in CDF projects’ management during industrial attachment (formerly) as well as its proximity to the researcher’s place of work. 1.7 Limitations of the study Some target respondents were not willing to provide sensitive information especially that concerning projects that registered failure, since the operations had been semi political. Other respondents misinterpreted the intentions behind the research and refused to provide accurate information-besides assurances of confidentiality-for fear of disclosure. 1.8 Justification for use of unpublished literature It is vital to note that CDF is a new concept in Kenya since it has been in operation for less than a decade (from June 2003 to date) and few researchers, professionals as well as academicians have carried out studies on it and published-in order to form published literature source. This is the reason why most of the literature quoted in this study is unpublished; however as CDF continues to receive research attention-such as this one-in many circles as well as media coverage, both positive and negative, there is likely to have growth on published literature on it for future researchers to refer. LITERATURE REVIEW 2.1 Introduction This chapter explores existing literature about devolved funds and the institutional framework under which CDF projects’ operates in relation to standardized international best practices anchored in Project Management Body of Knowledge (PMBOK, 2009) which is a best practice guideline by professionals on project management.

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2.2 Conceptual framework The study had five independent variables that were investigated for their impact on the dependent variable. The independent variables comprising of CDF project performance components of; (a) CDF projects procurement process, (b) entrepreneurial attitude of SMEs participating in CDF projects (c) CDF projects governance and political interference (d) Monitoring and Evaluation (M & E) and (e) capacity of SMEs at constituency level. All these independent variables were investigated with a view of finding their effect on CDF project performance in Kikuyu Constituency. This is represented in figure 2.1 on the next page; Figure 2.1: conceptual framework Independent Variables

Dependent Variable

Procurement process of CDF projects

Entrepreneurial attitude of SMEs participating in CDF projects

Governance and political interference

CDF projects performance

Monitoring and evaluation (M & E)

Capacity of SMEs at Constituency level

2.2.1 CDF projects procurement process By guidance of procurement rules and regulations that are internationally taken as benchmarks well adopted and customized from the World Bank procurement guidelines, procurement needs to be competitive so as to attract a wide range of bidders so as to get the best from the bidders in the supply market (WB, 2006). The most appreciated way to get bidders responding is by way of advertising for procurement opportunities; the rule of the thumb is that it 6

can be done in any way (within law) so long as it reaches as many intended bidders as possible, notably, it may be done in daily press widely read, online or such other form. Borrowing a leaf from the IBRD (International Bank for Development and Reconstruction), the very advert must be timely and in their advisable media notably a widely read local newspaper or international media if International Competitive Bids (ICB) with a draft General Procurement Notice of the very advertisement being sent to the Bank. Timely notification of bidding opportunities is essential in competitive bidding. According to the World Bank procurement guidelines (WB 2010), the time for the bid opening shall be the same as for the deadline for receipt of bids or promptly thereafter, and shall be announced, together with the place for bid opening, in the invitation to bid and so should be CDF procurement opportunities. Bids shall be opened in public; bidders or their representatives shall be allowed to be present (in person or online, when electronic bidding is used). The name of the bidder and total amount of each bid, and of any alternative bids if they have been requested or permitted, shall be read aloud (and posted online when electronic bidding is used) and recorded when opened and a copy of this record shall be promptly sent to the Bank and to all bidders who submitted bids in time. Bids received after the time stipulated, as well as those not opened and read out at bid opening, shall not be considered. Our very own Public Procurement and disposal Act 2005 (and Regulations 2006 and 2009) have also borrowed this standardized process of tender opening (PPDA 2005) and indeed clearly states how the tender or quotations opening process needs to be done. The PPDA 2005 (section 60) states that the accounting officer shall appoint a tender opening committee specifically for the procurement which; shall have at least three members and at least one of the members shall not be directly involved in the evaluation process. Immediately on the deadline for submitting the bids, the tender opening committee shall open all tender received before the deadline; those submitting the bids or their representatives may choose to attend. The Act also points out that the tender opening committee member shall assign an identification number to each bidder. As directed from the best practice evaluation procedure from the World Bank (WB, 2010) the beneficiary shall ascertain whether the bids (a) meet the eligibility requirements specified in the Guidelines, (b) have been properly signed, (c) are accompanied by the required securities or required declaration signed as specified in the Guidelines, (d) are substantially responsive to the bidding documents, and (v) are otherwise generally in order. If a bid is not substantially responsive, that is, it contains material deviations from or reservations to the terms, conditions, and specifications in the bidding documents, it shall not be considered further. The bidder shall not be permitted to correct or withdraw material deviations or reservations once bids have been opened. The purpose of bid evaluation is to determine the cost to the Borrower of each bid in a manner that permits a comparison on the basis of their evaluated cost (WB 2010). Subject to the Guidelines, the bid with the lowest evaluated cost, but not necessarily the lowest submitted price, shall be selected for award. The bid price read out at the bid opening shall be adjusted to correct any arithmetical errors. The public procurement and disposal act 2005 also recommends (and therefore it is lawful) that all PPE’s to follow the standardized evaluation procedure/process; likewise we expect CDF, being class C PPE to follow the very laid down process in all her bids. 2.2.2 Entrepreneurial attitude of SMEs participating in CDF projects The CDF Act 2003 expressly directs that unless where the locals do not have the capacity to supply, all resources to be utilized in her projects shall be procured within the local market; by

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reflection it embraces an ideology of promoting trade within the very constituency. This implies that in the CDF projects procurement for instance, advertisement shall be localized via churches, mosques, public notice boards and/or public barazas. The attracted vendors shall therefore be the local Small and Medium size Enterprises (SMEs) to participate in supply of materials, goods and services for implementation of the said CDF funded projects. Research by Omanga (Omanga, 2010) indicates that 70 % of the local SMEs are not registered and therefore do not pay taxes. If SMEs do not pay taxes, then, as a legibility criterion, these none registered, none tax paying SMEs are therefore prohibited from trading with the CDF since the Public Procurement and Disposal Act 2005 and Regulations 2007 and 2009 (PPDA, 2005) requires that bidders, be they SMEs or large companies, must be registered and have current tax compliance certificates. On several occasions where the DPO implements the law to the letter, MPs cry ‘foul’ for unfair procurement terms for their locals and yet the law does not-unless where stated-offer tax exemptions. The attitude by the SMEs that ‘CDF is our money’ should be carefully explained to them since it is worth for the SMEs to note that the CDF is actually money from Government of Kenya Revenue, which are taxes collected by the Kenya Revenue Authority (KRA). Actually, the fund comprises an annual budgetary allocation equivalent to 2.5% of the government's ordinary revenue. The key objective of the CDF is to ensure that the stated public resources are devolved to constituencies “for the purpose of development and in particular in the fight against poverty at the constituency level”. The fund aims at reducing imbalances in regional development brought about by partisan politics through constituency-level development projects. 2.2.3 Governance and political interference Many people say CDF has not reduced corruption or discrimination as earlier envisaged. Instead, it has increased graft and political manipulation. There are no accountability structures making it susceptible to misappropriation and embezzlement. There is no evidence to suggest that CDF has contributed to the improvement of the quality of life at the grassroots, yet this is an important ingredient to the country's economic performance and development blue contained in the Kenya Vision 2030 document. Bad governance and poor management of programs like CDF have led to this current mess (Tome, 2009). Members of parliament have arrogated themselves excessive powers through the CDF Act 2003 and the CDF amendment Bill 2007. From the very outset, the duplication of roles of the Member of Parliament has continued to seriously undermine the democracy, transparency and accountability of the fund (OSIEA-Social Audit report 2008). The duplicity of the roles of the MP is a fundamental flaw in the design of CDF, which contravenes all fundamental rules of accountability. The MP sits in parliament as a legislator formulating and passing laws on CDF. The Constituencies Fund Committee which is a committee of parliamentarians is empowered to determine amounts allocated to the fund, develop policy, has a final say on issues of implementation, and is responsible for the oversight of the fund. Further, the MP appoints the CDFC members who are responsible for the implementation at the constituency level. This duplicity of roles makes CDF a de-facto “MP’s kitty’’ without regard to MP’s competence in development planning and implementation, and also fails to provide adequate checks and balances to prevent abuse. The National Management Board (NMB) unlike its successor, the National Management Committee (NMC) lacks the requisite powers to adequately regulate the operations of the fund. This follows amendments to the CDF Act in 2007 which only mandates the Board to forward any project proposals it may consider inappropriate for funding to the parliamentary CFC rather than rejecting such projects as was the case before the amendment of the Act.

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There is lack of clarity on the role of other government institutions in the management of the fund. For instance, the District Development Officers are the ones bearing the Authority to Incur Expenditure (AIE) for CDF funds but they lack the necessary powers to enforce accountability on CDFCs who may refuse to comply. Other notable governance challenges include corruption, fraud, many of which are perpetuated through collusion of the key actors by flouting procurement procedures, poor public participation, weak project management committees, withholding of funds, skewed allocation of funds across locations, withholding information, double funding and piecemeal funding that has led to the existence of many incomplete projects. 2.2.4 Monitoring and evaluation (M & E) Monitoring is the continuous assessment of project/ programme implementation through verification of activities against set targets (NIMES, 2008). On the other side, evaluation on the other hand is defined as a periodic exercise that attempts to asses systematically and objectively the relevance, performance and impact of ongoing and completed projects and other management initiatives (NIMES, 2008). The central role of monitoring is to assess actual success in relation to expected results pegged on the objectives of the projects as set out during its formulation phase in the project life cycle (PLC). Monitoring therefore assists in taking corrective action in case of an error in implementation of the project and thus helps in the proper planning of subsequent phases of the project from the time it has been monitored. The Constituency Development Fund Act 2003 envisages that the projects being implemented under the fund shall be subjected to monitoring and evaluation (M & E) on a regular basis. Section 30(4) stipulates that the CDFC shall be responsible for monitoring and evaluation and may designate a sub-committee, a location committee or a project committee the functions of monitoring an on-going project. Although 2% of CDF funds disbursed to each constituency are set aside for use in monitoring and evaluation (CDF ACT, 2003), the exercise is seldom done in the right money due to existing capacity gaps among the implementers. Many of the players lack the technical competence to track project progress along the defined parameters as well as measure the necessary indicators and effectively compile a report on the same. For instance, many projects implemented by CDF lack documented objectives, work plans, predetermined total project costs; which are key to any meaningful M & E exercise. Many of these flaws occur at the planning phase where monitoring indicators are not formulated early enough making it difficult to monitor progress later on. The CDF Act 2003 (NMB, 2009) highly promotes the involvement of experts to aid M & E as well as in the implementation of projects through the line ministries of the projects who expressly are supposed to be government officers in the respective districts. However, there is an observed apathy in consulting these officers by the Project Management Committees (IPAR, 2006). This tendency is attributed to inadequate staffing, bureaucracy, outright ignorance by the PMCs and corruption tendencies by public officers. This non-involvement of such expert opinion throughout the project cycle has led to the allocation of inadequate funds to projects leading to high non-completion rates, dragging of projects over a long time, poor quality work and nonutilization of completed CDF projects. 2.2.5 Capacity of SMEs at Constituency level There has been concern over the capacity of SMEs at the constituency level have what it takes or are willing to step up their capacity to meet the ever increasing demand for the supply of materials, goods and services by the CDF funded projects in a report by PPOA criticizing SMEs role in promoting local trade (PPOA 2010). Many have complained that the SMEs lack what it

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takes to trade since some cannot serve a full contract which makes the said CDF committee to look for suppliers not within her constituency due to capacity issues. This has really affected SMEs who are near towns since the trade is therefore open to all and although this is encouraging for the PMC since competition is guaranteed, which leads to acquisition of quality products making them susceptible to missing out on trade opportunities-although ‘fairly’. Capacity needs to be viewed by SMEs as an incremental ability which needs to grow as the business grows; it is directly proportional to the rate at which a business grows. Businessman Chris Kirubi, in a message to SMEs in Kiambu County recently, told participants that any business has four crucial phases that it follows either consciously or unconsciously and it is up to the investor to steer the rapid growth of her/his business. Firstly, there is what he calls the initialization phase where one gets to put together resources to roll out the business; which according to him involves hefty mobilization of resources and setting out what to trade in, who to trade with and importantly, how to actually do the trade. Secondly, there is the growth phase which sees an enterprises grow in size and capacity by enlarging and enrichment its trade horizons, regions and clientele. The ability of an entrepreneur to expand her or his trade horizon or market, determines the enterprise’s profitability; it is a highly spontaneous exercise, according to him, 80 % of enterprises flop during this phase which is usually the second year in trade. The third phase is the maturity stage where an enterprise has developed an empire and enjoys a fair market share in its capacity as well as preferential over the others. These are the vendors who win majority of the bids at the constituency and regional level since they have grown in capacity, reputation and have a good network of associates to trade with or for. Immediately after this comes the decline phase which if not handled carefully can lead to collapse of an enterprise or the enterprise can as well be re-engineered to another set of exponential growth phase all again. At this stage, the business faces challenges of competition from existing, new entrants, substitutes among others (Porters, 2005). In Kenya, constituency SMEs are not unique but rather peculiar of most Kenyan enterprises that recently, have been crying foul over award of majority of contracts to Chinese Companies such the Upgrading of Thika Highway to Various Chinese owned companies. This was ‘against’ the wish of a Kenyan owned company Kirinyaga Contractors while we are all aware of this Kenyan owned company performing questionable quality work, extended contract time, lack of necessary machines to execute assignment given and over all, over pricing which are many times higher than the Chinese owned companies. It therefore calls for a total change of entrepreneurial attitude with a mind to remind our local SMEs at constituency and national level to keep improving their capacity as their business grows if they want to stay in contention for business fairly (Ministry of Industries, 2010). 2.2.6 CDF project performance indicators (Key Performance Indicators-KPI) Key Performance Indicators are quantifiable measurements that reflect the critical success factors of an organization (PMBOK, 2006). Based on beforehand agreed measures, they reveal a high-level snapshot of the organization. They vary depending on the kind of organization they characterize; for instance a business may have a KPI as the annual sales volume, while KPIs of a social service organization may have to do more with the number of people helped out. Moreover, colleges may have number of students graduating per year, as one of their KPIs. Thus before any Key Performance Indicators are selected, it is vital to identify what the organization’s goal is, which are in turn dependent upon the its mission and its stakeholders. Consequently, KPIs act as a measure of progress towards these goals. Whatever they may be, they must be critical to the success of the organization.

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The application of Key Performance Indicators provides project managers-such as CDFwith a high-level, real-time view of the progress of a firm (Hareld, 2003). They may consist of any combination of reports, spreadsheets and charts. They may be sales figures (global or regional), trends over time, supply chain information or any other long-term consideration which may be essential in gauging the health of the organization. However, it should be noted that Key Performance Indicators should not only reflect the organizational goals but should also be quantifiable. For a Key Performance Indicator to be of any value there must be a way to accurately define and measure it. This is so because a KPI may meet the criteria of reflecting the organizational goal, which may for instance pertain to being the most popular company. However, since a company’s popularity cannot be measured or compared to others, therefore the KPI would be useless (Larson, 2002). Considerations regarding how a KPI is to be measured should also be established in advance. Definitions as to exactly how the indicator is to be calculated and whether it is to be measured in dollar amounts or units should also be specified. Moreover, it is imperative that the organization then sticks to these definitions from year to year in order to allow for annual comparisons. Key performance indicators can be used for all types and in all areas of project management: IT (information technology), construction, engineering, risk management, supply chain, safety, quality, manufacturing, financial management, sales and so on. After the Key Performance Indicator has been defined and a way to measure it has also been determined, a clear target has to be demarcated which should be understandable by everyone. The target should also be specific so that every individual can take actions towards accomplishing it. For CDF it is needless to say that to achieve a particular target level of Key Performance Indicator for it, every PMC and the CDFC by extension has to work in synergy towards it. For this purpose, all the PMCs of CDF need to define their respective KPIs which should in turn work towards accomplishing the overall KPIs of CDF. It is important that after Key Performance Indicators and their relative components have been identified, they should be used as a performance management tool. Best ways to represent variance (from the target levels) should be defined, eventually making sure that everyone in the organization is focused towards meeting target levels of the Key Performance Indicators. In the same vein, Project Management Body of Knowledge (PMBOK 2007), a project can be classified as being behind schedule (if it is lagging behind the planned time), on schedule (if it is in line with the planned time) or ahead of schedule (if it is way ahead of the planned time). The scheduling of a project is determined by a method adopted by the PMC but all the same, there is always a critical path which is the longest time a project can take (Maylor, 2003). It therefore implies that those CDF projects behind schedule are even beyond that time a project manager has assumed that the project has been faced with the worst case scenario of resources constraints. Time is just one of the resources in project management, the other resources are human, finance as well as stakeholder. At such procurement over sees the management of the resource finance, implying that its management (procurement) oversees the utilization of the finance resource. Directly, this has an impact on the performance of any project, by reflection, CDF projects. Shiundu (2010) reports that 60 % of projects in Kasarani Constituency were behind schedule, a further 30% have been reported as being on schedule while 10 % have been reported as being completed although we are not told about the methodology used in coming up with these statistics. The report goes further to state that those projects behind schedule, the procurement processes were behind the delay as well as misappropriation of funds meant for development.

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Omanga (2010) while studying factors affecting the implementation of CDF funded projects in Lari Constituency found out that the constituents believed that CDF projects fail because the procurement is not transparently done. He found out from the research that 70 % of the respondents strongly believe that the procurement process is highly influenced and thus negatively impacts on performance of CDF projects while only 30 % believe that the CDF projects fail for other reasons and not because of procurement process. The study further reveals that 12 % of the projects were complete, 67 % of the projects were on-going, 15 % had stalled and 6 % had been abandoned altogether. He does not however indicate how many or the stalled or abonded (21 % in total) projects were as a result of failed procurement. 2.2.7 Procurement policy and regulatory framework Since the CDF is a procuring entity as aforementioned, it is worth to mention that its accounting officer is not clearly known. However, with the Member of Parliament being the appointing authority for the CDF management committee members, s/he therefore qualifies to be the accounting officer and is in-charge of appointing her or his CDF tender sub-committee to oversee the procurement of the CDF activities (PPDA 2005). Until 2009, the secretary to the CDF sub-committee was to be anyone amongst those appointed by the MP in the CDFC; but after the Kenya Gazette Notice No. 63 of 2009, the secretary to this committee is the district procurement officer (DPO) of the district in which the constituency falls. The DPO being brought on boards is a good move since s/he is bound by the supplies practitioners’ act 2007 that demands diligence in public procurement from the practitioners. The challenge however remains if the entire procurement cycle shall be managed by the very DPO or remains a rubber stamping officer for CDF project. It is critical to mention that even though the DPO, who is a professional, is the secretary to the CDF tender sub-committee, it is the Project Management Committee (PMC) overseeing a given project that initiates and oversees the whole procurement cycle and thus the role of CDF tender sub-committee is to ratify the recommendation forwarded by the said PMC for purchase to be realized (GOK; CDF ACT 2003). At such, the CDF tender sub-committee is not fully incharge of CDF projects procurement activities unless where the procurement is centralized, which is a very rear scenario; it is evident that the PMC, under CDF Act amendment of 2007, functions (illegally though according to PPOA, 2009 Regulations) as a public procuring entity. (a) CDF projects procurement procedure It is noteworthy that under Section 31 (1) of the CDF (Amendment) Act, 2007 all works and services relating to projects under the CDF Act shall be sourced using existing Government procurement regulations (CDF Act 2003). However, this very amendment recognizes the PMCs as procuring entities; on its composition for a given project, they get to know what is to be procured (need identification) which project procurement planning by assistance from the relevant GOK departmental head; a local or national advertisement for the procurement opportunity is made so as to attract bidders although local bidders (where local bidders means those from the constituency in question) are given a priority over the none local bidders so long as they have the capacity (not necessarily registered and tax compliant). On receiving the bids, the PMC does the opening, evaluation and awarding basing on responsiveness of the bidders towards registration requirements, tax compliance and experience of similar works. Under the PPDA 2005, this procedure is not allowed; a member of evaluation committee should not be in the awarding committee to avoid conflict of interest or actually to offer free and fair competition to the bidders as a core objective of public procurement world over (World Bank 2006).

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The minutes of the above meetings are forwarded to the CDF tender sub-committee for ratification even though in the mean time, the PMC already communicates to the ‘winning’ bidder about the award. This is again wrong since in the event of the said ‘winning’ bidder being disqualified on certain ground by the CDF tender sub-committee, this might out rightly result into a complain to the PPOA complain tribunal in turn causing delay in implementation of the project under question. Communication to the winning bidder needs to be done after ratification by the CDF tender sub-committee as well as to the unsuccessful bidders of the award without mentioning the winning bidder and in fact by the secretary to the CDF tender sub-committee (PPDA 2005). (b) Malpractices in CDF procurement activities The Institute of Social Accountability (2009) points out that Section 31 of the CDF (Amendment) Act, 2007 states that ‘all works and services relating to projects under this Act shall be sourced using existing Government procurement regulations’. Thus CDF is governed by the Government Financial Management Act, 2004; the Constitution of Kenya (cap 227); and the Public Procurement and Disposal Act, 2005; further, there are regulations including the latest through Kenya Gazette Supplement No. 63 of 2009 where the Finance minister made amendments further to the public procurement and disposal regulations. The Project Management Committee (PMC) is recognized in the CDF Amendment Act 2007 as the committee responsible for implementation of a project. The CDF Implementation Guidelines further expressly recognize PMC’s as a procurement unit also subject to government financial regulations. However, according to the Public Procurement Oversight Authority, the Project Management Committee (PMC) has no legal mandate to award tenders (PPDA 2005). Economy maximization is a core value in procurement, whether local, regional or international (Section 2 of PPDA 2005). One of the ways of economy maximization is ensuring that purchases are made in relation to the prevailing market prices; the preferred way to know if a purchase is within prevailing market rates is by carrying out a market survey prior to a purchase. Even before the CDF in the year 2003, the public have been involved in development projects either individually or collectively as well as privately, at such they are aware of prices of commodities which is why the public questions the pricing criterion of some CDF projects. There have been cases of Millions meant for development programmes being misappropriated, according to a recent audit report. It includes money earmarked for the expansion of classrooms, dormitories, laboratories and related activities covered under free primary and day secondary learning. According to the Controller and Auditor General, there was massive irregular procurement, forgery, over-payment and money not accounted for in the Ministry of Education. The government auditor’s report for the period 2008/2009 shows major improprieties, including irregularly purchased laboratory equipment worth KES 261 million. The Auditor-General further said equipment for 1,457 secondary schools spread across the country was single-sourced. This is contrary to Section 74 of Public Procurement and Disposal Act, 2005 (Siringi, 2010). 2.3 Critique of other researches done on CDF Wambugu (2008) in his research in Dagoretti Constituency notes that procurement of CDF projects is highly unprofessional since the CDFTC members are ill informed of the policy and regulatory framework that it needs to operate under; he sampled 0.056 % of the entire population although he did not mention how he spread the sample to cover the entire Constituency. A similar research by Rutere (2009) in North Imenti Constituency reveals that CDF projects were behind schedule mainly due to delay in delivery of materials (50 % of respondents), in his study, 78 % of the respondents ranked CDF projects as being behind

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schedule as a result of poor procurement. Rutere also did not mention his spread of the sample distribution to have a fair representation of the entire population. Siringi (2010) reported that Eldoret North Constituency lost KES 2,000,000.00 (two million only) through contract award which was paid but no deliveries were made-he does not mention his sample size and methodology. The report further reveals that residents do not know where and when the advertisements for supply are made and that the prices of supplies, particularly building materials are exaggerated. These studies clearly indicate that there is a direct contribution of procurement to performance of CDF projects; this is what triggered the researcher to carry out a research on the particular elements of procurement notably advertisement, market survey as well as policy and regulatory framework. There is lack of a systematic research in this particular area to show the direct connection of CDF projects performance and procurement. Mutunga (2010) reports that public funds go to waste since CDF projects stall and yet the government keeps pumping more money into the kitty. It further reports that in some areas within the country, most of the projects have either stalled or failed to kick off; in others, shoddy performance by merchants had been noted. However, no systematic study has been carried out and revealed to the public to support these arguments. A lot has been researched on CDF, Youth fund, Free primary education, women fund and other government public devolved funds such as those by Wambugu (2008), Rutere (2009), Omanga (2010), Siringi (2010) focusing on the factors influencing their performance notably procurement, governance and politics; majority of the projects resulting from these funds researched on have been ranked CDF projects as stalled (60 %), abandoned (20 %) and completed (10 %) in 2008/2009 and 2009/2010 financial year. These researches were systematic as required but the concern is the lack of (a) evidence of spread to cover the entire scope sampled (b) biasness in terms of carrying out interview with the CDF account managers who by their position may give misleading information since they are ‘the supervisors of their own service’. However, none of the researchers has brought out procurement, poor entrepreneurial attitude by the constituency SMEs, poor governance (and political interference), skewed monitoring and evaluation as well as low trading capacity by the constituency SMEs as expressly being the cause of the current state of affairs of CDF projects. There is need for researchers to focus on t visibility of these factors (procurement, governance, entrepreneurial skill, capacity constraints) in CDF projects as a key performance indicators in order to realize on time, economical and high completion rate of GOK and (by extension) Donor funded projects in Kenya as scheduled during the project planning where all project activities originates. 2.4 Summary on literature review The management of the Constituency Development Fund should not operate in a vacuum as is proving to be the case from the above literature; there needs to be policies and regulations that must be followed to the letter with observance of due diligence by the officers responsible to urgently mitigate the acts of mismanagement that have been highlighted ranging from lack of compromised procurement processes, questionable entrepreneurial attitude by local Small and Medium size Enterprises, mediocre governance with immense political interference, unprofessional Monitoring and evaluation (M & E) as well as diminishing capacity by the SMEs to handle the ever growing CDF projects capacity. It has been revealed by scholars, researchers and journalists a like that everything is not right with the way CDF is being managed and therefore all projects under it (with exception of a few Constituencies such as Gatanga); there is systematic research evidence to justify all these malpractices at CDF projects.

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Management of the CDF therefore needs to be viewed by all as a highly dynamic and complex process that demands best practices rapidly and continuously identified, analyzed and sustainably implemented with the ultimate goal of ensuring that the public gets value for its money in an economical, effective and efficient manner. Where, in the interest of project sustainability such as CDF projects, or to achieve certain specific social objectives of the project, it is desirable to (a) call for the participation of local communities and/or nongovernmental organizations (NGOs) in the delivery of services and therefore better performance of CDF projects and (b) increase the utilization of local know-how and materials including in-sourcing in the Constituency. 2.5 Research gaps There is little evidence of tailor-made project management user guidelines that can help on how CDF projects need to be managed; this is even more complicated given that executing individuals for CDF projects are not professional project managers per sae. This is because project management cannot be taken as a normal operational management since a project, by its own definition (Project Management Institute, 2006), a project is a temporary and unique endeavour that has resources constraints of time, money, human, capital and therefore need not take routine management practice done in day-to-day operations of institution. For this, there is a research gap that needs to be done on project management and base it on local projects such as CDF, Local Authority Transfer Funds (LATF) among others. This study is a step in this direction since it gives an insight of factors affecting the performance of projects particularly the Constituency Development Fund. 2.6 History of CDF in Kenya The Constituency Development Fund (CDF) was established in 2003 through the enactment of the CDF Act as contained in the Kenya Gazette Supplement No. 107 (Act No. 11) of January 9, 2004. Kenya, being a developing country has had a problem in even distribution of national resources; CDF was to help address this problem by decentralizing government development funds. The fund comprises an annual budgetary allocation equivalent to 2.5% of the government's ordinary revenue. The key objective of the CDF is to ensure that the stated public resources are devolved to constituencies “for the purpose of development and in particular in the fight against poverty at the constituency level”. The fund aims at reducing imbalances in regional development brought about by partisan politics through constituency-level development projects. Kenya consists of 210 constituencies, each represented in the National Assembly by an elected Member of Parliament (MP). Allocation of the CDF among constituencies is governed by a formula specified in the CDF Act 2005. Since the government did not have poverty estimates at the constituency level in 2003, the CDF was allocated equally in the 2003/2004 FY-with each constituency receiving KES 6 million (six million only). However, from the year 2004, the CDF allocation was revised and pegged on a formula comprising of two parts; part “(a) three quarters of the net total CDF divided equally among all constituencies (netting out 3% administrative takedown), and part (b) a quarter of the net total CDF divided by the national poverty index multiplied by the constituency poverty index” (GOK; 2004). Part (b) of the formula was implemented by allocating a quarter of the net total CDF kitty based on the contribution to national poverty of each constituency with a 0.23 adjustment factor that rescales the allocations downwards for 16 urban constituencies. CDF Act embraces a concept where leaders consult more closely with their constituents or by involving them in the project cycle of identification, initiating, planning, executing, monitoring (and evaluation) and project closing (PMBOK, 2004) leading to ownership of the

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said project rather than imposing outsider-devised interventions on them. In particular, the Project Management Committees are mandated to do the project’s materials and services procurement and forward the same recommendations of award to Constituency Development Fund Tender Committee (CDFTC) for approval or ratification of contract or tender award (GOK; CDF Act 2007). With the CDF, the constituency is functioning as a development unit and thus a public procuring entity (PPE) with numerous projects being funded; as a result, there are a lot of procurement activities going on. From 2003/2004 FY, considerable National resources have been channelled towards developing the constituencies through the fund; good percentages (about 68 %) of these resources are spent on procurement related activities. Going by the CDF allocation formula, every constituency spends 68 % of its annual allocation on procurement related activities through sourcing, advertising, evaluation, awarding, contracting and contract management; this is so because, of the annual CDF allocation 15 % is usually set aside for education none infrastructure development activities (bursary, continuous assessment tests and mock examinations), administration activities gets 3 % of the allocation, 3 % goes to recurrent expenditure, 2 % for sports activities excluding cash awards, monitoring & evaluation gets 2 % of the allocation, emergency kitty of 5 % of the annual allocation is also catered and 2 % for environmental activities (GOK; 2004). The table 2.1 below shows the amount CDF Kikuyu Constituency has spent on procurement related activities from 2003/2004 financial year to 2009/2010 as representation of 68 % of annual allocation. Table 2.1: Kikuyu Constituency Fund Allocations 2003-2010 Financial Year

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

AMOUNT

6M

22.71M

29.37M

40.69M

40.94M

40.949M

49.98M

NO. OF PROJECTS

10

15

17

38

45

58

56

AMOUNT SPENT ON PROCURE MENT

4.08M

15.44M

19.97M

27.67M

27.83M

27.845M

33.99M

Source: http://www.cdf.go.ke Given the percentage (68 %) of resources being managed by procurement activities in every financial year, it is critical to establish its effect on the performance of CDF projects with other CDF projects performance factors such as governance, entrepreneurial attitude of SMEs in the constituency, monitoring and evaluation, capacity of SMEs in the constituency to trade with CDF in relation to the CDF project cycle; all these are investigated in relation to the project performance as viewed by the public since they are the end-users or beneficiaries. The effect of all these factors under study is measurable since, for instance, poor procurement delayed supplies which leads to slow kick off of projects that result into poor performance of the said CDF project. RESEARCH METHODOLOGY 3.0 Introduction This chapter describes the research design, population, sampling frame, sample and sample technique, research instruments, data collection procedure, pilot that was undertaken as well as the researcher’s data processing and analysis of the same data collected.

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3.1 Research design The study adopted a quantitative and descriptive survey research design. This design was chosen because of its efficiency mode of collecting quantitative and descriptive data regarding characteristic of a sample of a population, current practices, conditions or needs as well as quantified information such as the number of CDF projects behind schedule, on schedule or ahead of schedule. This research design also allowed the researcher to gather information regarding the respondent’s opinion, perceptions, attitudes and views in an economical way avoiding ambiguity. 3.2 Target population The study targeted Kikuyu Constituency constituents who are the beneficiaries of CDF projects during the financial year 2009/2010 and therefore could judge; (a) CDF projects procurement process, (b) entrepreneurial attitude of SMEs participating in CDF projects (c) CDF projects governance and political interference (d) Monitoring and Evaluation (M & E) and (e) capacity of SMEs at constituency level. This was a population of 265,829 (KNBS, 2010) adults of whom 80,000 are expected registered voters (IIEC, 2010). The year 2009/2010 was picked for one important reason; the legal and regulatory framework under which the fund regulates its projects’ activities particularly supply chain management was subjected to changes through a Kenya Gazette Notice No. 63 in the year 2009 (GOK, 2009) where the respective District Procurement Officers (DPO) was brought on board as secretary to the CDF tender subcommittee so as to give the required technical back stopping to CDF projects. These amendments were expected to address the short comings of CDF projects’ activities in particular procurement that seemed to be hindering CDF project performance experienced in the earlier financial years during CDF implementation in Kenya of between 2003/2004 and 2008/2009 FYs. The said previous financial years of implementation of CDF projects have been marred with uncoordinated, unregulated, crafty and unprofessional procurement procedures, poor governance, poor monitoring and evaluation as well as embezzlement of public funds that result into unwarranted delays or abort altogether in performance of the projects funded by the CDF that is otherwise meant to be a development vehicle to improve quality of life for all Kenyans. 3.3 Sampling frame Kikuyu Constituents eligible to vote during 2009/2010 formed the sampling frame. The population was stratified into 14 categories which represents the number of locations where CDF projects were implemented during the period under study. Stratification of the population is expected to generate sub-populations that are more homogeneous individually than would be the entire population; samples were randomly drawn from each stratum. Since each stratum is more homogeneous within itself than the total population, more precise estimates for each stratum were obtained. By estimating the parameters under study accurately, a better view of the whole scenario was captured. In brief, random stratified sampling resulted in more reliable and detailed information. 3.4 Sample and sampling technique The study used a sample drawn from Kikuyu Constituency (eligible voters as of 2009/2010 financial year) public population; a total of sixty five respondents were interviewed to capture the response on the variables of the study. A minimum of four respondents were interviewed in each stratum with an extra respondent being interviewed at the CDF office. Sixty

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five was taken as the sample size since it represented Bernoulli distribution that is not biased. The researcher relied on his lack of bias in terms of choosing was interviewed with respect to age (needs to be an eligible voter, but need not necessarily produce a voter’s card). Along each stratum, the choice of respondents was by use of simple random sampling technique (SRST) which ensured that the findings were free of bias; the random choice was however among those suspected to be or have been CDF funded project(s) beneficiary in the period of study. 3.5 Instrument The researcher used questionnaires as the research instrument which had both structured and unstructured questions drafted from the objectives, research questions and the variables of the study. This research instrument was chosen due to its simplicity and economy in collecting data as well as limited influence from researcher/interviewer on the response given by the respondents thus minimizing bias (Ary et. al., 1979). Other techniques that were employed included a study of records and documents at the CDF offices concerning procurement activities, thus a secondary data source. 3.6 Data collection procedure The researcher used questionnaires for data collection and informal interactive sessions with the members of the public. Both primary and secondary data was collected during the research. 3.6.1 Primary data This data was collected by administration of questionnaires by the researcher through interview so that various aspects of the variables were economically captured free of ambiguity and redundancies. The completed questionnaires were sorted and cleaned of errors. 3.6.2 Secondary data The researcher collected this data by a study of records and documents at the CDF office concerning procurement, CDF projects bidders’ who are SME, governance complains or compliments, monitoring and evaluation reports concerning projects status with documentary evidence. 3.7 Pilot test The questionnaires were pilot tested in CDF Limuru Constituency in order to check their reliability. Limuru Constituency borders the study area to the west and the two constituencies have a lot of aspects in common besides it being in the same Kiambu County thus the choice for pilot. Wiersma (1995) reveals that piloting is vital since it aids in identification of ambiguities, useless and inadequate items in the data collection tool. The results of the pilot test were used to develop more reliable and effective data collection tool. The data collected was then converted into numerical codes to facilitate the determination of reliability. The researcher has relied on expert judgment from the study supervisor. 3.8 Data processing and analysis The data collected was organized and cleaned of errors made during data collection. The data was then coded, keyed in the computer and analysed using descriptive statistics with the aid of the Statistical Package for Social Sciences (SPSS), Microsoft Excel and Microsoft Access

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computer software. Both quantitative and qualitative statistical techniques were used during the analysis to describe and summarize data. The results of the analysis have been presented and interpreted in the form of descriptive statistics which measures the tally, spread and influence of the variables under study. The findings have been presented in tables and graphs. RESEARCH FINDINGS AND DATA ANALYSIS 4.0 Introduction This chapter gives a detailed presentation of the research findings following the data collection and analysis methodology described in chapter 3 above. The results are presented in the form of tables. The researcher administered seventy (70 number) questionnaires and had a response of 65 (92.86 % response rate). The findings of the study are presented in this section.

4.1 Presentation of findings 4.1.1 Respondents’ gender, age and level of education Table 4.1: Respondents gender, age and level of education Gender Male

Number 46

Percentage (%) 70 %

Female

19

30 %

Discussion From the total of 65 (sixty five) respondents interviewed, 46 were male which was 70 % of the sample size while the female were 19, representing 30 % of the sample size. A further look at this sample size of the respondents indicate that 65 % (or 43) of them were of forty five years and above, 20 % (or 13) were between 31 years old and forty. It was also established that 15 % (or 9) of the respondents were aged below thirty years of age (but above eighteen years old). A further analysis of this sample population established that 5 % (or 4) were professionals in various areas; notably others were lecturers with Doctoral qualifications, Masters Degrees among others. 60 % (or 39) of the sampled respondents had O level qualifications and above although they did not want to state their exact area of speciality and profession; the remaining 35 % (or 22) had education qualifications of less than O level-which they also were not willing to state.

4.1.2 Awareness about CDF projects and involvement Table 4.2: Awareness about CDF projects and involvement Number 62

Percentage (%) 95 %

3

5%

Involvement in CDF projects (Yes)

39

60 %

None involvement in CDF projects (No)

26

40 %

Awareness of CDF projects (Yes) None awareness of CDF projects (No)

Discussion Respondents interviewed overwhelmingly expressed that they were aware of various CDF projects especially those concerning roads, education, health facilities and bursaries. 95 % (or 62 respondents) were fully aware of CDF funded projects in their locations while only 5 % (or 3 respondents) were totally unaware of CDF funded projects in their area or the entire neighbourhood. Sixty 19

percent (or 39 respondents) respondents affirmed that they were involved at various levels of CDF funded projects in their locations (or locality) although they could not confirm the exact role they played in the same. On the other side, 40 % (or 26 respondents) expressed none involvement in the CDF funded projects in their locality at whatever level of the CDF funded project life cycle.

4.1.3 Procurement of CDF funded projects Table 4.3: CDF funded projects procurement Yes Percentage No Percentage Knowledge 43 70 % 19 30 % on sourcing Of those respondents who were aware of CDF funded projects (62 respondents), 43 respondents (or 70 %) were aware of how CDF funded projects procurement of goods, services and works was done while 19 (or 30 %) respondents were totally unaware of how CDF funded project’s sourcing is done. The 70 % who were aware described that the sourcing is usually through tendering or local bidding (sixty percent) while 40 % described it as being shopping by CDF officials. Probed whether the sourcing is fairly or unfairly done, an overwhelming 90 % believed that it was unfairly done with particular individuals being the ‘preferred’ suppliers. The sourcing process was reported as being not within law since they believed that it was unfairly done. It is interesting to note that the respondents do not understand the law within which the sourcing is supposed to be done and yet they reported that the sourcing was not done within law. Table 4.4: CDF funded projects procurement authority CDFC PMC MP Don’t know Total

Respondents number 25 13 2 3 43

Percentage 60 % 30 % 4% 6% 100 %

Discussion When asked the agency or institution responsible for procurement of CDF funded projects, 60 % of the respondents believed that CDFC was fully responsible for this, 30 % said it was done by the various project management committees and 4 % knew that this is done by the Member of Parliament. Only 6 % of these respondents aware of CDF funded projects had no idea of who was responsible for procurement of these projects. Table 4.5: Participants in CDF funded projects procurement Number of Percentage respondents Locals 13 30 % None locals 24 55 % Others 6 15 % Tally 43 100 % Discussion Thirty percent (30 % or 13 respondents) believed that the local entrepreneurs were engaged in the CDF projects procurement while fifty five percent (55 % or 24 respondents) differed by responding that none local entrepreneurs from outside Kikuyu Constituency were engaged in CDF projects procurement. The remaining 15 % (or 6 respondents) gave a range of suppliers they believed were engaged in CDF projects procurement notably government agencies, community based organizations, youth groups and well wishers.

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4.1.4 SMEs entrepreneurial attitude Table 4.6: Local SMEs involvement and encouragement to be engaged in CDF projects procurement Local SMEs involved in CDF projects procurement Local SMEs encouraged to participate in CDF projects procurement

Number 28

Percentage (%) 65 %

15

35 %

Discussion When asked whether local small and medium sized enterprises were involved in CDF projects procurement, 65 % (or 28 respondents) agreed that the local SMEs were involved while 35 % did not agree to this fact. As regards the same SMEs feeling encouraged in engaging in CDF projects procurement, it was 35 % who agreed that local SMEs felt encouraged to fully participate in CDF projects procurement. For those who responded that the local SMEs did not feel encouraged to participate in CDF projects procurement, they gave reasons for this such as; the SMEs lack sufficient information of opportunities to participate in the CDF projects procurement, there was favouritism to particular SMEs thus no interest to participate (due to anticipated failure to secure contracts), some SMEs had a negative attitude towards CDF projects altogether and some simply had no interest at all to participate in CDF funded projects. Further probing about the view of local SMEs towards CDF projects bids revealed that a resounding 90 % of respondents felt that CDF funded projects were way beyond the reach of majority of the local SMEs. It was also shocking to learn that almost all the respondents (96.5 %) reported that they were not certain the local SMEs were either registered or had tax compliance certificate-which is a core requirement for government bidding. Table 4.7: SMEs’ idea of where GOK gets the CDF funds Number 10 7 24 2

Percentage (%) 25 % 16 % 55 % 4%

Donors Politicians contribution Revenue collection No idea Discussion When the respondents were asked where they thought the government gets the CDF funds, 55 % (or 24 respondents) understood clearly that these funds came from revenue collection, 25 % (or 10 respondents) believed that donors were behind the CDF funding and a further 16 % (or 7 respondents) responded that politicians contributed the money to fund CDF projects. Only 4 % (or 2 respondents) did not have an idea where the government gets funding for CDF projects.

4.1.5 Governance of CDF projects Table 4.8: Governance of CDF projects

Very well governed Well Governed Poorly governed Very poorly governed Total

Number 18 12 8 5 43

Percentage (%) 41 % 30 % 19 % 10 % 100 %

Discussion

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When asked to rank the governance of CDF in Kikuyu Constituency, 41 % of the respondents ranked CDF projects as very well governed and 30 % ranked them as well governed. On the other side, 19 % of the respondents ranked the CDF projects as poorly governed, with the remaining 10 % of the respondents ranking the same CDF projects as very poorly governed. Among the reasons given by respondents who ranked the projects as poorly or very poorly governed include; there were too many projects, the local community was not involved in the projects, there was a lot of political interference and lack of cooperation in various committees and subcommittees. This is captured in table 4.8 above. The respondents were also asked to give reasons that cause dissatisfaction by the public towards the management of CDF in Kikuyu Constituency. Among the many responses given, the following were common among majority of the respondents. That there was little publicity, ignorance (or negative attitude), lack of local community involvement in project appraisal leading to lack of ownership of the very projects meant to benefit the locals and poor or total lack of effective monitoring and evaluation systems as well as public audit of the same projects. The respondents also described the CDFC in Kikuyu Constituency as competent, very popular and accountable. However, they were (CDFC members) said to be all political cronies to the political class and thus could not address project issues that are not good to the political class even where this is the right thing to do to the general public.

4.1.6 Monitoring & Evaluation (M & E) of CDF projects Table 4.9: Agency responsible for M & E of CDF projects Agency responsible for M & E Percentage (%) CDFC 60.15 Government department 4.75 Project Management Committee 25.24 Project beneficiaries 7.03 None 2.56 Total 100 % Discussion Respondents responding to the query of which agency was responsible for carrying out

Monitoring and Evaluation (M & E) on their project, 60.15% cited the Constituency Development Fund Committee, 25.24% attributed the role to the PMC, 7.03% attributed the role to the project beneficiaries while only 4.75% of the respondents attributed the role with government departments. 2.56% of the respondents however reported that the role was not specifically assigned to any agency as captured in table 4.12 above. Table 4.10: Description of the nature of Monitoring and Evaluation Agency was effective in M&E Existed an avenue for sharing M & E reports Information collected was useful in decision making during implementation Project performance indicators for the project were developed in advance and documented Mean

% Yes 31.80

% No 44.16

% Didn’t know 24.04

18.72

62.15

19.13

24.82

20.00

55.18

2.34

85.55

12.11

19.25

53.25

27.50

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Discussion As can be seen in table 4.10 above, 44.16% of the respondents consider the agency responsible for monitoring and evaluation as being ineffective. 18.72% agree that there existed an avenue for sharing Monitoring and Evaluation reports with stakeholders. A resounding majority (85.55%) reported that project performance parameters were not developed beforehand and were not documented. A further 55.18% of the respondents indicated that they did not know whether information gathered during monitoring was used in decision making during implementation. 4.1.7 Capacity of SMEs in Kikuyu Constituency Discussion Sixty percent (60 %) of the respondents felt that the local SMEs lacked the capacity to meet the supply needs of the CDF in Kikuyu Constituency while 40 % (forty percent) of the respondents believed that the local SMEs had the capacity to meet the supply needs of Kikuyu CDF funded projects. A resounding 96.5 % of the respondents however revealed the Kikuyu CDFC has never had capacity building sessions for her SMEs on best entrepreneurial practices-which probably reflect why majority of them (SMEs) are neither registered nor have tax compliance certificates (96.5 %).

4.1.8: CDF project performance (and status) Table 4.11: Range (number) of projects No. of projects 0-10 11-20

Number 30 17

Percentage (%) 48 27

Over 20 Not sure Total

13 2 62

21 4 100 %

Discussion Of all the interviewed respondents, 48 % could accurately give the range of projects in their location as between one (1) and ten (10) although they could not name whether these were education, health, bursaries, water, road or any other category of projects funded by CDF. Another 27 % number the projects as being between eleven (11) and twenty (20); a further 21 % reported that the CDF projects in their location were over twenty (20). Table 4.12: CDF projects status Project status Percentage (%) Behind schedule 88 % On schedule

12 %

A head of schedule

0%

Discussion When asked to state the project status of the said project in their location 90 % (or 56) of the respondents classified 88 % of the projects as being behind schedule. The remaining 10 % (or 6 respondents) of the respondents rated 12 % of the projects in their location as being on schedule. None of the respondents rated projects in their locations as being ahead of schedule. The respondents who said that their projects were behind schedule were further probed to give reason for the project status. They varied responses but generally revolved around lack of enough funds allocation to various projects, lack of clear timelines for the projects, political interference, lack of involvement of the local communities (and thus lack of ownership by the local community) and poor monitoring and evaluation of the same projects.

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From the interviewed respondents, it is interesting to note that the local community does not view the CDF funded projects in their locations as a priority to the people, this is from the 80 % respondents who ranked the projects in their locations as none priority to the local community but rather politically imposed motives/projects. 20 % believed that the projects were a priority to the local community.

4.2 Conclusion on research findings and data analysis The above research findings and data analysis reveal that indeed there are several factors that affect the performance of Constituency Development Fund (CDF) funded projects in Kikuyu Constituency. Among the notable factors with the revelation of the above statistical finding are: procurement; which has been faulted by the respondents as being done out of law and that the interested Small and Medium Enterprises (SMEs) are ill informed about the very procurement opportunities, involves mostly none locals and tends to favour particular vendors and thus the expressed lack of interest by the many locals to participate. SMEs attitude; they feel that they are not involved in the procurement process fully as they think they should although it is again revealed that majority are not registered and they do not also pay taxes. Governance; that CDFC in Kikuyu Constituency is governed by competent, popular and accountable people who are however political cronies and therefore do not stand by the needs of the people they are supposed to be representing. As concerning the capacity of the local SMEs to meet the supply needs to CDF funded projects, the locals lack the capacity to do this and further that CDF does not have (at all) capacity building sessions for her SMEs on best entrepreneurial practices so that they meaningfully be involved CDF funded projects procurement. Finally, concerning performance of CDF funded projects majority (88 %) rate them as behind schedule with only 12 % being on schedule while none pf the projects is ahead of schedule. Various factors have been pointed as core sources of these tendency of projects being behind schedule, notably, procurement process, political interference, poor or total lack of monitoring and evaluation, lack of local community involvement throughout the project life cycle and evidently also, the technical expert from government departments are also not involved which has left grey areas as concerning the quality of works done by the same CDF funded projects.

SUMMARY, CONCLUSIONS AND RECOMMENDATION 5.0 Introduction This chapter comprises of the summary of the key findings presented in Chapter 4 above. The section also contains the conclusion drawn from the findings and recommendations. The respondents interviewed were drawn Kikuyu Constituency constituents who are the beneficiaries of CDF projects during the financial year 2009/2010 and therefore could judge; (a) CDF projects procurement process, (b) entrepreneurial attitude of SMEs participating in CDF projects (c) CDF projects governance and political interference (d) Monitoring and Evaluation (M & E) and (e) capacity of SMEs at constituency level. 5.1 Summary The study established factors that affect the performance of CDF funded projects in Kikuyu Constituency. The research found out that 95 % (or 62 respondents) were fully aware of CDF funded projects in their locations while only 5 % (or 3 respondents) were totally unaware of CDF funded projects in their area or the entire neighbourhood. Of the respondents aware of CDF funded projects in their locations/locality, sixty percent (or 39 respondents) respondents affirmed that they were involved at various levels of CDF funded projects in their locations (or locality) although they could not confirm the exact role they played in the same. On the other side, 40 % (or 26 respondents) expressed none involvement in the CDF funded projects in their locality at whatever level of the CDF funded project life cycle.

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5.1.1 Procurement of CDF funded projects This research reveals that populace aware of CDF funded projects (62 respondents), 43 respondents (or 70 %) were aware of how CDF funded projects procurement of goods, services and works was done while 19 (or 30 %) respondents were totally unaware of how CDF funded project’s sourcing is done. They mentioned that most of the CDF funded projects procurement is done via tendering and shopping by CDF officials. The research also reveals that CDFC is responsible for the procurement, as well as various PMCs and the Member of Parliament. Also, some percentage (6 %) have no idea of who, where and how CDF funded projects procurement is done. Contra to the believe that local entrepreneurs are engaged in CDF funded projects supply contracts, this research evidently reveals that only a few local entrepreneurs are engaged in the supply contracts.

5.1.2 SMEs entrepreneurial attitude Although the research shows that the populace believes that local entrepreneurs are engaged in CDF funded projects supply contracts (65 % of respondents interviewed), it shows that they are not willing to participate in this since they complain of; they lack sufficient information of opportunities to participate in the CDF projects procurement, favouritism to particular SMEs thus no interest to participate (due to anticipated failure to secure contracts), other SMEs had a negative attitude towards CDF projects altogether and some simply have no interest to participate in CDF funded projects. A resounding majority of 96.5 % respondents were totally not sure that the local entrepreneurs are registered business enterprises or had tax compliance certificates. It is also interesting to note that only 55 % of the populace understand where CDF originate with some reporting that it was contributed by politicians! It can be concluded that the SMEs are ill informed about CDF projects and therefore its procurement process is a bizarre to them since they understand not the requirements to participate in these opportunities. On the other side of CDF, they do not advertise to reach would be local SMEs to allow them participate in the various available opportunities.

5.1.3 Governance issues of CDF funded projects The research reveals a mixed reaction from the public concerning governance of CDF funded projects in Kikuyu constituency (and by reflection in Kenya). 41% of the respondents believe CDF is very well managed, 30 % believe the fund is well managed; it is interesting since this is not reflected in the completion rate of projects in the Constituency. The minority comments by the 29 % respondents who ranked CDF funded projects as either poorly managed or very poorly managed are a true reflection of the majority projects status-88% behind schedule. The respondents/constituents categorically state that there were too many projects, they are not involved in the projects phases and there is a lot of political interference. The also cite lack of collaboration between project management committees and the public.

5.1.4 Monitoring and Evaluation (M & E) of CDF funded projects The Constituency Development Fund Committee (CDFC) and Project Management Committees (PMC) were said to be the ones responsible for conducting Monitoring and Evaluation of CDF funded projects; a response percentage of 85.39 %. However, the said parties responsible for M & E were reported to be ineffective as evidence by number of projects behind schedule (88 %). It can be said that tools for M & E are not set out clearly at the initialization stage of CDF funded projects and therefore the M & E exercise is unprofessionally done without any performance measures or indicators. A study of records at the CDF office also reveals that there are no records to show the frequency of M & E exercise.

5.1.5 Capacity of SMEs in Kikuyu Constituency It can be summarized that the Small and Medium size Enterprises in Kikuyu Constituency lack the capacity to meet the supply needs of CDF funded projects. An interview of some PMCs members reveals that they report failed deliveries or poor quality works in cases where local SMEs are contracted for high amount funded projects. This probably explains why CDF funded projects get supplies from 25

outside Kikuyu Constituency environments/supply market. The public reports that there has never been capacity building sessions to educate the local SMEs on best entrepreneurial practices and standards so as to equip the local SMEs with knowledge on how to secure government devolved fund projects; response percentage of 96.5 %.

5.1.6 CDF funded projects performance and status As concerning general view of CDF projects in terms of performance in Kikuyu Constituency, the respondents generally reveal that a lot needs to be done to make CDF act as a poverty alleviation tool and a development vehicle for decentralized government. The performance was overly rated as unsatisfactory by all the respondents since majority of the project were taking longer than ordinarily expected and the intended benefits are never met to the community (88 % of projects are behind schedule). There was also expression that the; procurement process derails CDF projects performance, community needs to be involved more so as to realise ownership, the community also needs to be involved in monitoring and evaluation as well as involving the technical government departments to ensure quality and value for money to the public through the CDF funded projects.

5.2 Conclusion This research reveals that CDF funded projects have a numbers of factors that affect its performance either directly or indirectly. The intensity of the effect of each of the factor various according to its expected contribution to the performance of the projects; some factors are expected to contribute more to the performance of the projects than others. However, the combined contribution of all the factors is immense if not properly done. Notable factors that affect the performance of CDF funded projects in Kikuyu Constituency (and in Kenya by reflection) as revealed by this research are;

procurement process, entrepreneurial attitude of SMEs participating in CDF projects procurement, governance and political interference, Monitoring and Evaluation (M & E) and capacity of SMEs at constituency level to fulfil supplies needs of CDF funded projects. It is evident from this research that Constituency Development Funded projects procurement is done by CDFC officials and PMC members through tendering. The available procurement opportunities are poorly advertised, which translates to few local SMEs participating although other SMEs have no interest to participate due to; favouritism to particular SMEs thus no interest to participate (due to anticipated failure to secure contracts) and negative attitude towards CDF projects altogether lack of transparency in the whole process. On the side of the SMEs themselves, this research concludes that they are ill informed about CDF projects and therefore the procurement process is unknown to them since they understand not the requirements to participate in these opportunities. The SMEs lack knowledge on CDF funded projects’ procurement requirements and the CDF has not (in line with this and as a need) conducted any capacity building sessions on this and yet this is provided for in the Constituency Development Fund ACT 2003 (GOK, 2004) in the funds allocation formula. From this research as well, there is a revelation from governance point of view that the CDFC is composed of political cronies to the politicians, although they are qualified to be in the CDFC. For this reason, the CDFC as well as PMCs don’t propagate projects the locals would wish to be funded but rather propagate those projects politicians need for their own political ambitions; funding for projects is also thinly done leading majority of projects being in perpetual state of ‘ongoing’ for over six years-this implies that the purpose for which projects are started for is not met. Monitoring and evaluation is unprofessionally done by either CDFC or PMC, with lack of records to show frequency, expected projects’ output and even performance indicators. CDF funded projects’ objectives are not smartly done (Specific, Measurable, Achievable, Realistic and Timely) during early project stages (more so at inception stage) to set timelines and deliverables. CDF funded projects’ M & E has an allocation of 2 % of the total annual allocation yet this is not properly utilized for the public’s benefit. As concerning overall CDF funded projects in Kikuyu Constituency performance was overly rated as unsatisfactory by all the respondents since majority of the projects were taking longer than 26

ordinarily expected and the intended benefits are never realized by the community. The mentioned lack of close working relationship between CDFC and PMC with the public makes the ownership idea a bizarre in CDF funded projects. This cites that even for the few traces of projects that may have been completed, the community may not own up the projects for continuity. This explains why some projects may be completed but totally underutilized since it may not have been the community’s idea but rather that of the CDFC and PMC-who propagate the politician’s selfish interest.

5.3 Recommendation(s) From this research study findings, summary and conclusions, the following recommendations can be made to help meet the objectives for which CDF is aimed at achieving. Firstly, CDF funded projects’ procurement opportunities need to be well advertised so as to reach as many would be bidders as possible. The respective supply chain management officer (SCMO) should be fully responsible of all CDF funded projects’ procurement activities with the CDFC making membership of the CDF tender committee. From the project inception, the SCMO needs to develop a procurement plan for all project’s activities and the same communicated to the PMCs. Secondly, CDFC should take responsibility to make certain information straight to the public through capacity building sessions notably, that concerning; source of Constituency Development Fund, requirements for participating in CDF procurement opportunities with the help of the SCMO for the SMEs benefit. Thirdly, CDFC members need to be individuals who have the interest of the public at hand so as to involve them in all CDF funded projects stages to realize ownership of CDF funded projects. The CDFC and by extension PMC need not be ‘recruited’ basing on political cronyism so as to have some standards of professionalism in CDF management. Various government ministries need to be fully involved to give the much required technical input throughout CDF project cycle and not at convenient stages as is the current case. Fourthly, during CDF funded projects planning and implementation clear objectives need to be set and strict timelines given so that monitoring and evaluation is done basing on this and not it being uncoordinatedly done by individuals who lack the expertise to do M & E. To have professionalism, the relevant government ministry (Ministry of Planning) or such agency should be brought on board independently to verify the M & E exercise. Lastly, there should be a way verification can be done by an independent institution (or consultant) to ascertain community involvement in CDF projects’ stages as reported by CDFC and PMC members.

5.4 Areas for further research There is need to carry out research on the impact of the entrepreneurial attitude and culture on public sector procurement in Kenya with a focus on government devolved funds in the counties. Such a research is to look into how this has affected public sector procurement performance and therefore government projects-either state funded or donor funded.

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Yin, R. K., (2003), Case Study Research: Design and Methods, (3rd edition). Sage Publications, London

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