Types of Tendering, procurement methods, Procurement Terms

1. 1
Effective Tender
Management
Muhammad Awais Tahir
Addl Executive Engineer LESCO
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2. Oh Lord!
Am I scared?
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3. 3
Tender Management
Contents:
●What is tender management?
●Prequalification of Supplier’s
●Consolidation of Material Requirements
●Preparation of Plan and Approvals
●Types of tendering
●Opening of Bids
●Commercial and technical Evaluations
●Award of contract
●Terms of Supply
●Management of Supplies
●Case Study (Procurement in LESCO/DISCO’s)
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4. 4
1. What is Tender Management?
“The process of systematically and
efficiently managing the contract
creation, execution and analysis for
maximising operational and financial
performance and minimising risk”
(Elsey, CIPS Contract Management Guide, 2007)
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5. 5
Procurement Cycle
8. Closure / Review
Need
1. Identify
Need
2. Develop Business
Case
3. Define Procurement
Approach
4. Supplier Appraisal5. Tender Evaluation
6. Award Contract
7. Manage
Implementation
of Contract
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6. 6
2. Prequalification of Supplier’s
 Procuring agency must prequalify the potential suppliers likely to
contend in the bidding process.
 A top level committee of technically and financially expert people be
constituted to scrutinize the capability of participants
 Their installed capacity, financial strength, manpower, skilled labour
may be checked by committee in order to access whether they have
the capability to execute large scale contracts.
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7. 3. Consolidation of Material requirement
● There are two ways to collect the actual requirement
to be utilized in the Financial Year
a) Seeking requirement from the field formations as per
their new financial targets and plans
b) Having a close look at the 02-3 years data of Items
issued by the store to all field formations
● Comparison between both the statements and
forecasting the estimated requirement for Financial
Year
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PROCUREMENT PLAN

9. 4. Preparation of Plan and Approvals
● After getting requirements from field formations, the
Annual procurement plan should be prepared
● Estimated prices as per previous and current market
trends be put in with the consultation of cost Analysis team
and Finance department
● Full procurement plan be put to Board of Directors for
commercial and technical approval
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10. 5. Types of Tendering
 International Tender
 Tenders in which foreign and local companies
both can participate and bidding in foreign
currency (i.e USD and EURO) is allowed
 Local Tenders
 Only local prequalified companies can participate
without any involvement of foreign exchange
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11. 7. Types and Opening of Bids
● There are two type of bidding
a) Single stage/ single envelope
b) Two Stage/ Two envelope
● The Authority should constitute the tender opening
committee, comprising of officers from technical,
procurement, finance and Audit departments to witness
the crystal clear bidding process
● Committee should must ensure that there should be no
cartel/pool between the supplier’s and encourage healthy
competition
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12. 8. Technical & Commercial Evaluations
● The Authority should constitute a tender evaluation
committee comprising of officers having engineering
and financial background
● Evaluation Committee shall scrutinize the conditions
of suppliers i.e Delivery Schedules, Specifications,
Validity, Payment terms
● Committee should do the cost-analysis of the lowest
quoted rates with the help of specification and prices
of raw materials in the international market
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13. 8. Technical & Commercial Evaluations
Sample Cost Analysis of 95mm.sq Earthing Conductor
Size of Conductor = 7wire/4.20mm
Weight of Conductor = Area * Density
Area = 3.142*(4.20mm)2
* 7
4
= 96.99mm2
----------(A)
Density of Copper = 8.89 gm/cm3
----------(B)
Area = A*B* twisting Factor
= 96.99 * 8.89 * 1.02
= 880 Kg/KM
Rate of Cu as per LME = US$8100 * Duty Factor+Conversion
= US$8100 * 1.07
= US$8667
Rate of Cu in Rs = US$ 8667 * 63 = Rs 546,021/MT
= Rs 546/Kg (Approx)
Material Prices = 880 * 546 = Rs 480,480/KM
Expenses & Profit @ 15% = Rs 72,072
Total Cost / KM = Rs 552,552 /Km
Tender Price/KM = Rs 605,000/Km
% Diff from tender price = (+) 9%
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14. 9. Award of Contract
● On recommendations of evaluation committee, the
procurement case may be put to decision making Authority
according to Book of Financial Powers for approval of
award.
● Letter of Intent (LOI) / Notification of Award (NOA) be
placed on supplier/contractor after Authority’s Approval
● Upon acceptance of LOI/NOA from supplier, Purchase or
work order be issued by the procuring agency
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15. 10. Terms of Supply
● FCS
● C&F
● CIF
● FOB (Origin/Destination)
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16. 11. Management of Supplies/Execution
● After placement of Purchase order/Award of contract, the
procuring/contracting agency should must pursue the
Delivery/execution deadline to avoid any delay in
completion of ongoing projects
● Stocks in store and work in pipeline should must be kept in
close watch and risk management be applied
● In case of delay alternate measures should be taken to
avoid delay in execution of on going projects
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17. PIPELINE STATUS
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18. Case Study: TENDER CONDITIONS
 Bid Schedule
 Bid Security
 Validity
 Performance Security
 Inspection
 Consignee
 Payment terms and Conditions
 Delivery Schedule
 Warranty
 Failure and termination
 Force Majeure
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19. 19
Recommended reading:
1.PPRA Rules 2004 (http://www.ppra.org.pk/rules)
2.Wapda Purchase Procedures Manual
3.Incoterms 2000
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20. 20
THANK YOU
04/11/17 Tender Management