Authors (including presenting author) :
TONG WC, CHENG YF, CHAN HY, FUNG WS, WONG HL
Affiliation :
Procurement & Materials Management Department (P&MM), Kowloon East Cluster (KEC)
Keyword 1: :
Replacement of Equipment
Keyword 2: :
Aging Equipment
Introduction :
In the late 2010s, annual purchase requisitions (PR) increased substantially, rising from $1,378 million in 2016/17 to $2,165 million in 2019/20. A significant proportion of these requisitions involved common-type equipment repeatedly requested by multiple departments, particularly toward the end of the financial year. This resulted in duplicated orders, longer processing time, and reduced procurement efficiency.
To address the predictable replacement needs of aging common-type equipment, the Kowloon East Cluster Procurement and Materials Management Department (KECPMM) introduced a proactive 3-Year Replacement Plan in 2018/19. The plan focuses on common-type medical and general equipment with unit prices below $200,000, consolidating replacement demand through cluster-based contracts. By shifting from a reactive to a planned procurement approach, the initiative aims to streamline purchasing workflows, enhance cost-effectiveness, and mitigate operational risks associated with aging and obsolete equipment. The plan is currently in its third cycle and has been in operation for over seven years.
Objectives :
-reduce repetitive orders for common-type equipment by grouping aging items for planned replacement;
-achieve cost savings through long-term contracts and bulk purchasing for equipment priced under $200,000;
-incorporate buffer quantities in contracts to accommodate ad-hoc requirements, thereby reducing procurement workload and lead time; and
-minimize equipment downtime and service disruption caused by aging and obsolescence.
Methodology :
-review the age profiles of common-type medical and general equipment and selecting at least 30 equipment types for inclusion in each 3-year cycle;
-assign designated buyers to assess actual replacement needs for each equipment type;
-establish long-term bulk procurement contracts with buffer quantities to support timely replacement; -conduct annual reviews of equipment aging profiles to ensure ongoing relevance and effectiveness of the plan.
Result & Outcome :
Since its launch in 2018/19, the 3-Year Replacement Plan has covered at least 30 equipment types in each cycle. To support the plan, one- to two-year contracts were established. Between 2022/23 and 2024/25, a total of 4,588 sets of equipment were replaced at a cost of $44.75 million through 40 contracts. By reducing repetitive quotation exercises, it has improved procurement efficiency and ensured availability of essential equipment.
Equipment aging profiles are reviewed annually. The proportion of equipment under $200,000 and aged over 10 years has decreased from 24.05% in 2018 to 17.18% in 2025, demonstrating the plan’s effectiveness in modernizing assets and reducing the impact of aging equipment.
