Contract Management
Procurement, bid, Bid evaluation and
prequalification of contractors
What is Procurement?
Procurement
Procurement is the action of obtaining or procuring something – Oxford Dictionary
Procurement is acquisition of goods or services or work
Procurement is also known as contracting.
Procurement (& contracting) is a process that involves (two) parties with different objectives
who Interact in a given market segment.
Procurement
Project procurement management is discussed within the perspective of the
buyer-seller relationship. The buyer-seller relationship can exist at many levels
on any one project, and between organizations internal to and external to the
acquiring organization.
Procurement
The seller can be viewed during the contract life cycle first as a bidder, then as the selected
source, and then as the contracted supplier or vendor.
The seller itself may become a buyer of lower-tiered products, services, and materials from
subcontractors and suppliers.
Procurement Processes
1. Plan Procurements
First Step in the procurement process is the planning for purchases and
acquisitions, specifically the development of a procurement plan that states
what to procure, when, and how.
This process includes the following:
Defining the need for the project
Development of the procurement statement of work, specifications, and work
breakdown structure
Performing a make or buy analysis
Procurement Processes
1. Plan Procurements
The procurement plan will address the following questions:
How much procurement will be necessary?
Will they be standard or specialized procurement activities?
Will we make some of the products or purchase all of them?
Will there be qualified suppliers?
Will we need to prequalify some of the suppliers?
Will we use open bidding or bidding from a preferred supplier list?
How will we manage multiple suppliers?
Are there items that require long lead procurement?
What type of contract will be used, considering the contractual risks?
Will we need different contract types for multiple suppliers?
What evaluation criteria will be used to score the proposals?
Procurement Processes
2. Conducting the Procurements
Once the requirements are identified and a procurement plan has been
prepared, a requisition form for each item to be procured is sent to
procurement to begin the procurement or requisition process.
The process of conducting the procurements includes:
Bid documents (usually standardized)
Listing of qualified vendors (expected to bid)
Proposal evaluation criteria (source selection criteria)
Bidder conferences
How change requests will be managed
Supplier payment plan
Procurement Processes
3. Conduct Procurements: Request Seller Responses
Selection of the acquisition method is the critical element to request seller responses. There
are three common methods for acquisition:
Advertising - Advertising is when a company goes out for sealed bids. There are no
negotiations. Competitive market forces determine the price and the award goes to the
lowest bidder. (Invitation To Bidders (ITB))
Negotiation - Negotiation is when the price is determined through a bargaining process.
In such a situation, the customer may go out for one of the following:
Request for Information (RFI)
Request for quotation (RFQ)
Request for proposal (RFP)
Invitation for Bids (ITB)
Small purchases (i.e., office supplies)
Procurement Processes
4. Conduct Procurements: Select Sellers in case Competitive
Competitive Bidding
Competitive Bidding is of two types
1. Open Competitive Bidding: Competitive bidding in which the bid opening is conducted
at a public venue and in the presence of all who may wish to witness the opening of the
received sealed bids.
2. Closed Competitive Bidding: Competitive bidding in which the bid-opening is conducted
at a private venue and in the presence only of the authorized personnel of the party
requesting the bids.
Procurement Processes
4. Conduct Procurements: Select Sellers in case Negotiation
Vendor relations are critical during contract negotiations. The integrity of the
relationship and previous history can shorten the negotiation process.
The three major factors of negotiations are:
Compromise ability
Adaptability
Good faith
Once negotiations are completed, each selected seller will receive a signed
contract.
Procurement Processes
5. Contract Administration
The contract administrator Change management Documenting seller’s performance (for
is responsible for future source selection teams)
compliance by the seller to Specification interpretation Production surveillance
the buyer’s contractual Adherence to quality requirements Approval of waivers
terms and conditions and to Inspections and audits Breach of contract
make sure that the final Warranties Claims administration
product is fit for use. Performance reporting Resolution of disputes
Records management Payment schedules
The functions of the Contractor (seller) management Project termination
contract administrator Contractor (seller) performance report Project closure
card
include:
Procurement Processes
6. Contract Closure
The contract administrator is responsible for verification that all of the work
performed and deliverables produced are acceptable to the buyer.
Contractual closure is then followed up with administrative closure (identifying
lessons learned, identifying best practices, archiving project documentation,
etc.)
The seller also performs administrative closure once contractual closure is
recognized.
What is a Tender/ bid?
Tender
A Tender/bid Notice is an open Request for Proposal (RFP) when an
organization wants to buy something and is soliciting bids from suppliers.
bid " means a tender, or an offer, in response to an invitation, by a person,
consultant, firm, company or an organization expressing his or its willingness to
undertake a specified task at a price;
Prerequisites for Invitation to Tender
A. Completion of Feasibility Studies
− Technical Feasibility
− Economic Viability
− Environmental Impact Assessment (EIA)
Prerequisites for Invitation to Tender
B. Detailed Engineering Design
− Design of Project Components
− Finalization of Technical Reports
− Specifications
− Computation of Quantities
− Formulation of Engineer’s Estimate
Prerequisites for Invitation to Tender
C. Administrative Approval
− Preparation of PC-1 Proforma (more on PC forms)
− Approval by The Government
D. ARRANGEMENT OF FINANCES
− Local & Foreign Exchange Components
E. Land Acquisition
F. Prequalification of Contractors
PEC Bidding Documents
PEC Bidding Documents
PUBLIC PROCUREMENT REGULATORY AUTHORITY (PPRA)
The following documents have already been Notified by the Federal Government
1. Standard Form of Bidding Documents (Civil Work) > 25 Million
2. Standard Form of Bidding Docs for Procurement of Works (E & M)
3. Standard Form of Bidding Documents for Procurement of Works for Smaller Contracts < or
equal to 25Million
4. Standard Form of Contract for Engineering Consultancy Services (Time Based
Assignments)
5. Standard Form of Contract for Engineering Consultancy Services (Lump Sum Assignment)
6. Standard Form of Contract for Engineering Consultancy Services for Smaller Projects.
< or equal to 2 Million
Standard Form of Bidding Documents (Civil Work)
This document has been approved by ECNEC in its meeting on 12th November,
2007.
The document has been notified by Planning Commission, Government of
Pakistan vide Notification No. 8(60)WR/PC/2008 dated 12th February, 2008.
It is, therefore, mandatory for all engineering organizations and departments at
Federal and Provincial level and district governments to use this document for
procurement of civil works funded locally and/or through donor agencies.
Standard Form of Bidding Documents (Civil Work)
The complete Bidding Documents shall comprise twelve items listed therein
and any Addenda issued in accordance with thereof.
The Standard Bidding Documents, in addition to Invitation for Bids, includes the
following:
1. Instructions to Bidders 7. Form of Bid & Appendices to Bid
2. Bidding Data 8. Sample Bill of Quantities
3. General Conditions of Contract, Part-I (GCC). 9. Form of Bid Security
4. Particular Conditions of Contract, Part-II (PCC). 10. Form of Agreement
5. Specifications - Special Provisions. 11. Form of Performance Security/Bond &
Mobilization Advance Guarantee/Bond
6. Specifications - Technical Provisions. 12. Drawings.
Bidding Period Design Bid Build
Addenda
• Design issues may be identified during the bidding phase that causes
the issuance of addenda – clarifications or changes to materials and
project requirements
• Bidders must acknowledge receiving addenda since they are formal
changes to the bid documents and will be incorporated into the
contract – failure to do so bid likely to be rejected as non-conforming
to the requirements
• If changes are held until after the bid, the owner will not benefit from
competitive bidding and less able to negotiate added costs
Invitation for Bids
Notice Inviting Tender (N.I.T.) Notice of Tender
Invitation to Tenders Tender Notice
Invitation for Bids Bidding Notice
These are the general notice issued by the client inviting tenders from the
prospective construction firms. This signifies the intention of the client to get
work executed by contract.
The purpose of this is to get competitive offer. A condensed text of N.I.T.
covering key features is advertised in newspaper. This condensed text is known
as “Tender Notice” or “Press Tender Notice”.
Instructions to Bidders
• A. GENERAL
• IB.1 Scope of Bid
• … “the Employer” wishes to receive bids for the construction and completion of works as
described in these Bidding Documents, and summarised in the Bidding Data hereinafter
referred to as the “Works”.
• … complete the Works within the time specified in Appendix-A to Bid
• IB.2 Source of Funds
• Employers account/declaration of the source of funds that will be applied to eligible
payments under the Contract for which these Bidding Documents are issued.
• IB.3 Eligible Bidders
• Bid is open to all registered by the PEC and Duly prequalified / enlisted with the Employer
• IB.4 One Bid per Bidder
• Each bidder shall submit only one bid either by himself, or as a partner in a joint venture.
Submitting more than one will result in disqualification.
Instructions to Bidders
• A. GENERAL
• IB.5 Cost of Bidding
• … bidders shall bear all costs associated with the preparation and submission of their
respective bids …
• IB.6 Site Visit
• … bidders are advised to visit and examine the Site of Works and its surroundings and
obtain for themselves on their own responsibility all information that may be necessary
… All cost in this respect shall be at the bidder’s own expense.
• The bidders and any of their personnel or agents will be granted permission by the
Employer to enter upon his premises and lands for the purpose of such inspection, but
only upon the express condition that …. the bidders, their personnel and agents, will
release and indemnify the Employer, his personnel and agents from and against all
liability arising as a result of such inspection (death, injury, property damage, any costs
and expenses)
Instructions to Bidders
• B. BIDDING DOCUMENTS
• IB.7 Contents of Bidding Documents
• The Bidding Documents, in addition to invitation for bids, are those stated below and should be read in
conjunction with any Addenda issued in accordance with Clause IB.9.
1. Instructions to Bidders.
2. Bidding Data.
3. General Conditions of Contract, Part-I (GCC).
4. Particular Conditions of Contract, Part-II (PCC).
5. Specifications – Special Provisions.
6. Specifications - Technical Provisions.
7. Form of Bid & Appendices to Bid.
8. Bill of Quantities (Appendix-D to Bid).
9. Form of Bid Security.
10. Form of Contract Agreement.
11. Forms of Performance Security and Mobilization Advance Guarantee/Bond.
12. Drawings
• Failure to comply with the requirements of bid submission - bids which are not substantially responsive to the
requirements of the Bidding Documents will be rejected.
Instructions to Bidders
• B. BIDDING DOCUMENTS
• IB.8 Clarification of Bidding Documents
• Any prospective bidder requiring any clarification (s) in respect of the Bidding Documents may
notify the Employer in writing at the Employer’s address …
• The Employer will respond to any request for clarification which he receives earlier than 28 days
prior to the deadline for submission of bids.
• Copies of the Employer’s response will be forwarded to all purchasers of the Bidding Documents,
including a description of the enquiry but without identifying its source.
• IB.9 Amendment of Bidding Documents
• At any time prior to the deadline for submission of bids, the Employer may, for any reason, …,
modify the Bidding Documents by issuing addendum.
• Any addendum thus issued shall be part of the Bidding Documents … shall be communicated in
writing to all purchasers of the Bidding Documents. Prospective bidders shall acknowledge
receipt of each addendum in writing to the Employer.
• Employer may extend the deadline for submission of bids … to afford prospective bidders
reasonable time in which to take an addendum into account
Thank You!
Any queries??