Tendering Procedures

7/30/2019 Tendering Procedures

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Ahmed Saleh Mokhtar, PMP1

1-1-Establishment of Project StrategyEstablishment of Project Strategy

2- Pre-qualification processes2- Pre-qualification processes

3- Obtaining Tenders3- Obtaining Tenders

4- Opening of Tenders4- Opening of Tenders

5- Evaluation of Tenders5- Evaluation of Tenders

6- Award of Contract6- Award of Contract

TENDERING PROCEDURAL FLOWCHARTS ACCORDING TO FIDIC


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Establishing procurement StrategyEstablishing procurement Strategy

Requirements definition!

1.0

ESTABLISHMENT OF

PROJECT STRATEGY

Establish project strategy comprising:

procurement method

form of tendering / Contracting

time schedules

Establish project strategy comprising:

procurement method form of tendering / Contracting

time schedules

SECTION EMPLOYER/ENGINEER CONTRACTORS


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Procurement Strategy

Whether to procure?

make or buy?, Break-even analysis.

Procurement planning is the process of identifying which

project needs can be best met by procuring products or

services outside the project organization and should beaccomplished during the scope definition effort. It involves

consideration of whether to procure, how to procure, what to

procure, how much to procure, and when to procure.


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Break - even AnalysisBreak - even Analysis

No.

of

Units

Cost

Buy

MakeBreak-even Point


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Procurement StrategyProcurement StrategyWhat, How, WhenWhat, How, When

How much to procure?

Work packages (E&M works, Finishing, etc)

Phases: Design, Construction, Testing (Design-Build, etc)

Project incl. Finance (BOT),

What to procure? Goods (Material and Equipment),

Services, combination of them.

When to procure? Master time schedule, long lead items,

market conditions (inflation, etc)


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How to procure: Bidding TypesHow to procure: Bidding Types

How to procure?

Bidding and Contract type selection.

Tenders: open, restricted and local tenders

Bidding Type:

Negotiations: open, restricted and local negotiations

Direct orders: special cases


7/26Ahmed Saleh Mokhtar, PMP7

How? Broad categories of contractsHow? Broad categories of contracts

Fixed-price or lump-sum contracts: involve a fixed total price for a well-

defined product. They may include incentives for meeting or exceeding

selected project objectives.

Cost-reimbursable contracts: involves payment (reimbursement) to the seller

for its actual costs, plus typically a fee representing seller profit. They often

include incentives for meeting or exceeding selected project objectives.

Re-measured contracts: are a hybrid type of contractual arrangement thatcontains aspects of both cost-reimbursable and fixed-price-type

arrangements. e.g. Fixed unit rates + variable quantities)

Incentive contracts: add to other types of contracts



Fixed Price / Lump sum ContractsFixed Price / Lump sum Contracts

Advantages Disadvantages

Firm assurance of cost Control of changes /

delays Min. Buyer follow up Quick completionincentive

Must have clearrequirements Delayed solicitation

documents High bidding costs Increased prices tocover Sel ler risks(contingencies)

Fixed total price for a well defined product



Cost Reimbursable ContractsCost Reimbursable Contracts


Max. Flexibility to Buyer Min. Profit to Seller Min. Negotiations Min. Preliminary Specscosts

Min. Start time(Early completion)

Min. Risk of not qualifiedBidders with lowest price

No assurance of actualcost No financia l incentive Excessive changes indesign and (high) specs by

Buyer staff = more cost +time Auditing by Buyerrequired

Payment to the seller for its actual cost (direct and indirect) + fee



Incentive ContractsIncentive Contracts

Fixed-Price-Incentive-Fee

(FPIF)

Cost-Plus-Incentive- Fee

(CPIF) Final Price is guaranteedbe Seller (loss is possible) If actual cost < TargetCost, savings are shared

according to formula. If actual cost > TargetCost, Sellers Target fee is

reduced. Point of total assumption

Seller is reimbursed 100% ofcosts (loss is not possible) BUT a max. and min. feeexists If actual cost < Target Cost,savings are shared according to

formula. If actual cost > Target Cost,Sellers target fee is reduced.



Guaranteed max.-Share savingsGuaranteed max.-Share savings


Firm assurance of costControl of changes / delaysMin. Buyer follow upQuick completion incentiveBuyer and Seller share risksPossible cooperation in furtherprojects

Clear requirementsComplete auditing b y Buyer

required



2.1

PREPARATION OF PRE-

QUALIFICATION

DOCUMENTS

Prepare pre- qualificationdocuments comprising:

letter of invitation

information about

prequalificationprocedure

project information

prequalification application

Prepare pre- qualificationdocuments comprising:

letter of invitation

information about

prequalification

procedure

project information

prequalification application


2- Pre-qualification processes

RECOMMENDED PROCEDURE FOR THERECOMMENDED PROCEDURE FOR THE

PRE-QUALIFICATION FOR TENDERERS (1PRE-QUALIFICATION FOR TENDERERS (1))



2.2

INVITATION TO

PREQUALIFY

PREPARE PRE-QUALIFICATION

ADVERTISEMENT IN PRESS,EMBASSIES

ETC. AS APPROPRIATE STATING:

employer & Engineer

outline of project (scope, location,

programme, source of finance)

dates for issue of tender documents& submission of tenders

instructions for applying for pre-qualification

minimum requirements for pre-qualification

submission date for contractors pre-ualification

PREPARE PRE-QUALIFICATION

ADVERTISEMENT IN PRESS,EMBASSIES

ETC. AS APPROPRIATE STATING:

employer & Engineer

outline of project (scope, location,

programme, source of finance)

dates for issue of tender documents

& submission of tenders

instructions for applying for pre-qualification

minimum requirements for pre-qualification

submission date for contractors pre-qualification


RECOMMENDED PROCEDURE FOR THE PRE-RECOMMENDED PROCEDURE FOR THE PRE-

QUALIFICATION FOR TENDERERS (2)QUALIFICATION FOR TENDERERS (2)



2.3

ISSUE & SUBMISSION

OF PREQUALIFICATION

DOCUMENTS

Issue prequalification documents &

questionnaires requesting from each

company/joint venture:

organisation & structure

experience in the intended type of

work & the region

resources:

- Managerial

- Technical

- Labour

- Plant

financial statements

current contract commitments

litigation history

Issue prequalification documents &

questionnaires requesting from each

company/joint venture:

organisation & structure

experience in the intended type of

work & the region

resources:

- Managerial

- Technical

- Labour

- Plant

financial statements

current contract commitments

litigation history

Acknowledge receipt

Acknowledge receipt

Complete & submit PQ documents

& questionnaires

Complete & submit PQ documents

& questionnaires


Request Prequalification documentsRequest Prequalification documents

RECOMMENDED PROCEDURE FOR THE PRE-RECOMMENDED PROCEDURE FOR THE PRE-

QUALIFICATION FOR TENDERERS (3)QUALIFICATION FOR TENDERERS (3)



2.4

ANALYSIS OF

PREQUALIFICATION

APPLICATIONS

Analyse Prequalification data:

- company/joint venture structure

- experience

- resources- financial capailty

- general suitablity

Analyse Prequalification data:

- company/joint venture structure

- experience

- resources- financial capailty

- general suitablity

2.5

SELECTION OF

TENDERERSPrepare list of tenderersPrepare list of tenderers


2.6

NOTIFICATION OF

APPLICANTS

Notify all selected tenderersNotify all selected tenderersAcknowledge & confirm

intention to submit tender

Acknowledge & confirm

intention to submit tender

SHORT LIST

RECOMMENDED PROCEDURE FOR THERECOMMENDED PROCEDURE FOR THE

PRE-QUALIFICATION FOR TENDERERS (4)PRE-QUALIFICATION FOR TENDERERS (4)



RECOMMENDED PROCEDURE FOR OBTAININGRECOMMENDED PROCEDURE FOR OBTAINING

TENDERS (1)TENDERS (1)

3.1

PREPARATION OF

TENDER DOCUMENTS

Prepare tender documents:

Letter of invitation to tender

Instructions to tenderers

General and special Conditions

of contract

Form of tender

Drawings and specifications

Bill of quantities

Additional information

Prepare tender documents:

Letter of invitation to tender Instructions to tenderers

General and special Conditions

of contract

Form of tender

Drawings and specifications

Bill of quantities

Additional information

SECTION EMPLOYER/ENGINEER TENDERERS

3- Obtaining Tenders3- Obtaining Tenders



Types of SpecificationsTypes of Specifications

Design Specs: What is to be done in terms of

physical characteristics, Riskon the Buyer.

Performance Specs: Measurable capabilities in

terms ofoperational characteristics of the end

product, Riskon the Seller. Functional Specs: The Seller describes the end

use of the product, Riskon the Seller.



3.3

VISIT TO SITE BY

TENDERERS

Arrange date and time

for visit site

Arrange date and time

for visit siteApply for visit to site if

required

Apply for visit to site if

required

Visit(s) to site by tenderers accompanied by

employer/engineer

Visit(s) to site by tenderers accompanied by

employer/engineer

Issue tender documents to

contractors on list of

tenderers

Issue tender documents to

contractors on list of

tenderers

Acknowledge receiptAcknowledge receipt

3.2

ISSUE OF TENDER

DOCUMENTS




To 3.5To 3.5



3.4

TENDERERS

QUERIES

A) Correspondence

Method

B) Tenderers

Conference

Method

A) Prepare repliesA) Prepare replies

Submit queries in

writing by given date

Submit queries in

writing by given date

B) Inform tenderers present of queries and replies submitted

in writing. Replies to queries raised at conference

B) Inform tenderers present of queries and replies submitted

in writing. Replies to queries raised at conference




Send minutes to alltenderers

Send minutes to alltenderers

Acknowledgereceipt

Acknowledgereceipt

Issue addenda including

replies to queries to all

tenderers

Issue addenda including

replies to queries to all

tenderers

Acknowledge

receipt

Acknowledge

receipt

3.5

ADDENDA TO

TENDER

DOCUMENTS

FORM 3.2FORM 3.2



3.6

SUBMISSION ANDRECEIPT OF TENDERS

Record date and time of

receipt

Record date and time of

receipt

Submit tenders

Acknowledge receipt or

return unopened tendersreceived late

Acknowledge receipt or

return unopened tenders

received late




LIST OF TENDERERS



RECOMMENDED PROCEDURERECOMMENDED PROCEDURE

FOR THE OPENING OF TENDERSFOR THE OPENING OF TENDERS

4.1

OPENING OF

TENDERS

Tender opening by public or

restricted opening: announce and record the names of

tenderers and prices, including

prices for alternative tenders if

appropriate announce and record names of

tenderers (if any) disqualified due

to late or non-arrival of tenders

Tender opening by public or

restricted opening: announce and record the names of

tenderers and prices, including

prices for alternative tenders if

appropriate announce and record names of

tenderers (if any) disqualified dueto late or non-arrival of tenders

SECTION EMPLOYER/ENGINEER TENDERERS/CONTRACTOR

Attend public/

restricted openingif desired

Attend public/

restricted openingif desired

4- Opening of Tenders4- Opening of Tenders



RECOMMENDED PROCEDURE FORRECOMMENDED PROCEDURE FOR

THE EVALUATION OF TENDERS (1)THE EVALUATION OF TENDERS (1)

5.2 TENDERS

CONTAINING

DEVIATIONS

Evaluate deviations, seek clarification &

rank tenders as evaluated

Evaluate deviations, seek clarification &

rank tenders as evaluated

5.3

ADJUDICATIONOF TENDERS

5.4

REJECTION OF

ALL TENDERS

Assess tenders in accordance with

evaluation criteria Raise further points requiring

clarification, if any complete evaluation check with funding agency

Reject non-conforming tenders &advise tenderer(s) concerned

Assess tenders in accordance with

evaluation criteria Raise further points requiring

clarification, if any complete evaluation check with funding agency Reject non-conforming tenders &

advise tenderer(s) concerned


Provide clarificationProvide clarification

Provide clarificationProvide clarification

5.1

REVIEW OF

TENDERS

Establish conformity and completeness

of tenders, reject substantially

unresponsive tenders

Establish conformity and completeness

of tenders, reject substantially

unresponsive tenders

5- Evaluation of Tenders:5- Evaluation of Tenders:



Evaluation CriteriaEvaluation Criteria

Sample criteria:

Subjective and Objective Criteria

Often part of procurement documents, Why?

Overall life cycle cost: present value of purchasing, O&M, other costs.

Technical and managerial capabilities

Past experience

Financial capacity


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RECOMMENDED PROCEDURE FORRECOMMENDED PROCEDURE FOR

THE AWARD OF CONTRACTTHE AWARD OF CONTRACT

6.0

AWARD OF

CONTRACT

6.1

ISSUE LETTER OF

ACCEPTANCE

6.2

PERFORMANCE

SECURITY

Decide on contract

award, if necessary after

pre-award discussions

Decide on contract

award, if necessary after

pre-award discussions


Attend pre-award

discussions, if

required

Attend pre-award

discussions, if

required

Issue letter of acceptance Issue letter of acceptanceAcknowledge

receipt

Acknowledge

receipt

Obtain performance

security from contractor

Obtain performance

security from contractorProvide performance

security

Provide performance

security


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RECOMMENDED PROCEDURE FOR THE OPENING ANDRECOMMENDED PROCEDURE FOR THE OPENING AND

EVALUATION OF TENDERS (3)EVALUATION OF TENDERS (3)

6.3

PREPARATION

OF CONTRACTAGREEMENT

6.4

NOTIFICATIONOF

UNSUCCESSFUL

TENDERERS


Prepare contract documents

Signing of contract

Prepare contract documents

Signing of contract Signing of contractSigning of contract

Advise unsuccessfultenderers and return tender

security (if provided)

Advise unsuccessfultenderers and return tender

security (if provided)

Unsuccessfultenderers

acknowledge receipt

Unsuccessfultenderers

acknowledge receipt


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Contract DefinitionContract Definition

A contract is a mutually binding agreement that

obligates the seller to provide the specified product

and obligates the buyer to pay for it. A contract is alegal relationship subject to remedy in the courts .

Contracts may be called, among other names, a

contract, an agreement , a subcontract, a purchase

order, or a memorandum of understanding.

Documents

Tendering Procedures