Research On Procurement Risk Management Of World Bank Financed Projects In China

As of June30,2011, the World Bank’s cumulative lending to China was overUSD49.1billion for a total of337development projects. World Bank financed projectscan be found in infrastructure, education, health, new energy and all other sectors of theeconomy.Operation procurement is a key element of project management under Bankfinanced projects. Procurement Unit of the Bank is assigned with fiduciaryresponsibility by donor countries, which requires procurement activities under Bankfinanced projects to meet project objectives and at the same time, to follow Bank’sprocurement policy and procedures. The current procurement risk management can besummarized as one phase and one method, i.e. to carry out procurement riskidentification and to prepare risk mitigation measures at appraisal phase, later on, tomanage procurement transactions through document review in all other phases. The wayof management has some disadvantages. Using a risk-list-based dynamic riskmanagement method by carrying out risk management prior, during and after riskaffairs occurrence is and will be the direction of future work. The achievements of thisthesis will contribute to the formulation of a proactive procurement managementmethod.In this thesis, the risk management theory and method was used for analysis of riskaffairs identified in selected projects in China portfolio. Risks were identified at everyphase of the project cycle, from project appraisal, negotiation, implementation to post-evaluation. Following it, the risk assessment was made and mitigating measuresproposed. At the end of above work, a risk list containing risk ranking and mitigationmeasures suitable for China portfolio was worked out for use. On basis of the aboveachievements, the thesis formulated a risk-list-based dynamic risk management methodfor use in a newly implemented project. Experience and lessons learned were shared.Given the consistency of the World Bank procurement policy in all Borrowercountries worldwide, projects from Azerbaijan, Brazil and Vietnam were selected forprocurement risk review. Analysis on issues identified and comparison with risks ofChina projects were made. The purpose is to learn from others’ experience.The achievements of the thesis will help World Bank financed projects in China to carry out a risk-list based dynamic risk management model throughout the project cycle.In addition, it will also help domestic procurement policy maker and executor to betterunderstand the policy gap between World Bank requirements and domesticrequirements, which will benefit future policy adjustment and project implementation.