Centralized procurement and cost saving in central government, a case study of ministry of energy and mineral development, Kampala

Abstract

This study examined the impact of centralized procurement on cost saving in central government, focusing on the Ministry of Energy and Mineral Development (MEMD). Specifically, the study assessed how centralized decision-making influenced cost saving, analyzed the role of digital procurement systems in achieving cost saving, and examined the influence of standardized procurement procedures on cost efficiency. The study objectives were to; to assess how centralized decision making influence cost saving at MEMD, to analyse the role of digital procurement systems in achieving cost saving at MEMD and to examine the influence of standardized procurement procedures on cost saving in MEMD The study was underpinned by Agency Theory and Institutional Theory, which explain how oversight mechanisms and institutional norms shape procurement practices and outcomes. A case study research design was adopted, utilizing a mixed-methods approach. The target population comprised 126 staff from key departments at MEMD, from which a sample size of 96 respondents was determined using Slovin’s formula. Census sampling was used for procurement, finance, and audit units, while simple random sampling was applied to the planning and geological departments. Data was collected using structured questionnaires and interviews, with additional document reviews for triangulation. Quantitative data was analyzed using SPSS Version 25, employing descriptive statistics, Pearson correlation, and linear regression analysis. Qualitative data was analyzed thematically. Findings revealed that centralized decision-making had a weak and insignificant correlation with cost saving (r = 0.20, p= 0.865 > 0.05). In contrast, digital procurement systems showed a strong positive correlation with cost saving (r = 0.721, p = 0.00 <0.05), and standardized procurement procedures demonstrated a moderate positive relationship (r = 0.654, p = 0.01 < 0.05). The study concluded that while centralized procurement in form of decision-making structures had limited influence on cost efficiency, digital systems and standardized procedures significantly contributed to cost-saving initiatives. It was recommended that MEMD invest more in digital procurement infrastructure, strengthen standard operating procedures, and reduce bureaucratic delays associated with central decision-making. Enhancing staff training and cross-departmental coordination was also advised to fully realize the benefits of centralized procurement.