Slide overview of the Procurement Directive presented for comments to the Corporation’s Board of Directors (BoD)

1. Procurement Directive
Presentation to Corporation’s Board of Directors
December 2021

2. DISCUSSION CONTENT
 Procurement Department Goals
 Purpose of Developing this Procurement Manual
 Effective and Efficient Procurement
 Brief Overview - Chapters 1 – 8 of the Procurement Manual
 Major Differences – Existing vs New Adapted Manual

3. Procurement Department Goals
 Maximizing Profitability
 Cost Minimization
 Contribute towards organizational ‘Cash Flow Positivity’

4. Purpose of Developing the Procurement Manual
• Cost, Quality and Timely Delivery of Project Engagements
• Versatile Approach to the changing Supply Market Conditions of the Construction Industry
• Adapt a more Proactive & Collaborative Methods of Modern Procurement Applications
• Streamlining of Procurement Processes

5. EFFECTIVE & EFFICIENT PROCUREMENT
Effective Procurement Efficient Procurement
Understanding of requirements by all
business units
 Procurement Schedule: What is needed When?
 Standardize Specifications as much as possible
 Identify supply needs
Identifying the right supplier for meeting
those requirements
 Supplier Directory Pre-qualify Suppliers Supplier Framework
Periodically evaluating supplier
performance
 Continuous Supplier/subcontractor Performance evaluation
 Supplier Quality Management (SQM)
 E-Sourcing/Procurement Solutions
Negotiating contracts that can provide the
highest value at minimum cost
 Long-term supplier relationships through SQM and Supplier
Relationship Management (SRM)
Value adding combinations at various stages of a procurement process

6. Chapter 1 - Introduction
• Objective, Scope and Structure
• Procurement Principles
• Best Value for Money
• Fairness, Integrity and Transparency
• Best Interest of EEIG Construction

7. • Category Management
• Segregation of Duties
• Commercial and/or Finance Department (Project and Non-Project Based respectively)
• Procurement Department
• Supplier Registration and Prequalification Authority (Procurement or QA/QC Departments)
• Tender Opening Team (1xSenior Procurement Officer & 2xProcurement officers) – conducting formal tender opening sessions, receiving, recording, and
safeguarding of submissions.
• Technical Evaluation Team (QA/QC, Plant, MEP, ICT & Logistics Dep’ts) – responsible for verifying prequalified vendors and their offers satisfy the
requirements of the solicitation documents and to evaluate offers according to the predefined evaluation criteria.
• Contracting Approval Team (Commercial Department) – responsible for reviewing each procurement exercise is in line with the set procurement
procedures.
Chapter 2 – Organization of Procurement

8. • Main Supply Categories
• Category A: Office Supplies and Consumables Supply
• Category B: Direct Construction Material Inputs Supply
• Category C: Finishing Construction Material Inputs Supply
• Category D: Electro-Mechanical Equipment and Accessory Supply
• Category E: Specialty Contractors
• Category F: On-Road and Off-Road all-sized Motor Vehicles and Spare Parts Supply
• Category G: Transportation, Shipping and Logistics Services Supply
• Category H: Professional (Legal and External Audit) Services Supply
• Category I: Consultancy Services (Environmental, Fire Engineering, Public Health etc.) Supply
• Category J: Events & Promotional Materials and Equipment Supply
• Category K: Hotel Accommodation, Cleaning and Security Personnel Services Supply
Chapter 2 – CONTINUED…

9. Chapter 3 – Supplier Onboarding
• Supplier Registration and Prequalification
• Administering Supplier registration; (Procurement Dep’t)
• Establishment and maintenance of supplier files; (Procurement Dep’t)
• Supplier vetting & review; (Procurement, QA/QC & other Dept’s as applicable)
• Supplier Management
• Supplier & Subcontractor performance evaluation; (QA/QC & other dep’ts as applicable including Procurement
dep’t)
• proper documentation of supplier performance feedback from users. (QA/QC Procurement Dep’t)
• Supplier Sanctions
• Censure;
• Suspension;
• Removal;
• Other Sanctions.

10. Chapter 3 – CONTINUED…
• Supplier Onboarding Methods – applicable to both local & international suppliers
• Primarily via Expression of Interest
• Then upon suppliers’ application request or invitation from EEIGConstruction

11. Chapter 4 – Procurement Planning, Rules & Sourcing
• Procurement Planning
• Non-Project based – earmarked via Annual Budget at the beginning of the FY
• Project based – earmarked from project budget
• Requirement Definition – first step in the implementation of a procurement activity
• Purchase Requisition
• Term of Reference (ToR)
• Statement of Works (SoW)
• Source Selection Plan (SSP) – Applicable for RFQ, ITB, & RFP
• Permitted Procurement Methods
• Low-Value Acquisition (LVA);
• Request for Quotation (RFQ);
• Invitation to Bid (ITB);
• Request for Proposal (RFP).

12. Chapter 4 - CONTINUED
• Long-Term Agreements (LTAs) - geographical location, highly demanded materials,
after-sales services, price
• Single Supplier LTA: one supplier supplying the total requirements
• Multiple Supplier LTA without secondary bidding: Two or more suppliers supplying the same requirements (eg.
Cement, Rebar, bitumen, computer equipment and accessories etc.).

13. Chapter 5 - Tendering
• Procurement Methods
• Low-Value Acquisition (LVA): ≤ ETB ********
Requirement to Apply: Readily available off the shelf goods, standard specifications, simple service. (minimum of
quotes)
• Request for Quotation (RFQ): greater than ETB ******* ≤ ETB ********
Requirement to Apply: Materials, goods or services which are clear and specific. (minimum of 5 quotes)
• Invitation to Bid (ITB): greater than ETB ********;
Requirement to Apply: Goods, works or services which are clearly and completely specified. (no. of suppliers in the
respective sub-category)
• Request for Proposal (RFP): greater than ETB ********.
Requirement to Apply: Goods or services that cannot be expressed quantitatively and qualitatively, or complex
requirements that may be met in a variety of ways. (no. of suppliers in the respective sub-category)

14. Chapter 5 - CONTINUED
• Tender Documents
• Letter of Invitation
• Particulars and Instructions to Bidders
• Evaluation Criteria – Preliminary Screening resulting in a compliant bid, Mandatory, Technical & Financial
• Schedule of Requirements – Technical Specification, SoW, design documents and ToRs
• Contractual Information – General Terms of Contract (GCC) shall be attached

15. Chapter 5 – CONTINUED…
• Bid Floating Period

16. Chapter 5 - CONTINUED
• Approval of Tender Documents
• Distribution of Tender Documents
• Amendments to Tender Documents
• Cancellation of the Tender Process
• Communication with Tender

17. Chapter 5 - CONTINUED
• Exceptions to using ITB & RFP of Procurement
• Directly Negotiated Procurement Award
Conditions: when a monopoly exists, when prices are fixed by legislation or government regulation or where
where requirement involves a proprietary product or service (patent, legal right), when prior offered prices and
conditions remain competitive
• Using ITB and/or RFP has not produced satisfactory results
Conditions: Either RFQ, LVA or Directly negotiated procurement award shall be used.
• For purchase or lease of real property and market conditions do not allow for effective competition
Conditions: Either RFQ or Directly negotiated procurement award shall be used
• When unit CEO determines that a formal solicitation will give satisfactory results
Conditions: Either RFQ, LVA or Directly negotiated procurement award shall be used.
• Need for Standardization
Conditions: Directly negotiated procurement award

18. Chapter 6 – Management of Submissions
• Tender Opening Team
• Opening of Bids (ITBs):
• One-Envelope System, in some cases Two-Envelope System (eg. some services and construction works)
• Opening of Proposals (RFPs):
• Two-Envelope System

19. Chapter 7 – Evaluation of Submissions
• Technical Evaluation Review Team
• To best address the specification, SoW and ToR a rotational review team selected from relevant departments
been set-up, namely, QA/QC, Plant & Equipment, MEP, ICT & Logistics.
• They will all act as chairperson(s) and/or members as applicable depending on each procurement exercise.
• Financial Evaluation Team
• Procurement Department
• Evaluation Method
Solicitation Method Evaluation Method
LVA Lowest Competitive Priced, most technically acceptable
RFQ Lowest Competitive Priced, most technically acceptable
ITB Lowest Competitive Priced, substantially compliant
RFP Cumulative/weighted Analysis; award based on the most
responsive proposal

20. Chapter 7 – CONTINUED…
• Negotiation
• Less than ETB ********* – a team consisting of Procurement Manager and Senior Procurement Officer(s)
• Greater than ETB ********* and Less than ETB ******** – a team consisting of one Director level staff,
Procurement Manager
• Greater than ETB ******** – a team consisting of the Commercial Director, CFO, CEO and the Procurement
Manager

21. ESTIMATED
PROCESSING
TIME EEIG CONSTRUCTION - PROCUREMENT + PAYMENT PROCESS
1 PURCHASE REQUISITION/TOR/SOW
[including allowable / budget]
(authorised by Commercial
Manager/Department Head)
KEY:
IS THE P.O. /LOA FOR:
A CAPITAL EXPENDITURE ITEM ?
YES
NO
1 P.O. / LOA TO BE EMAILED TO SITE
(validated by Commercial Manager / Dept.
Designated Officer)
[AUTHORIZATION BY CFO]
Is P.O. / LOA FOR A VALUE
EXCEEDING ETB
3,000,000
YES
NO
(1) P.O. TO BE COUNTER SIGNED
(by CFO/Technical Dir.)
11(12) P.O. / LOA ISSUED TO SUPPLIER
[P.O. copy sent to logistics]
(Procurement)
SUBCONTRACT ? YES
NO
CON. AGREEMENT PREPARED
(Prep. Commercial Dept., Signed by CEO/CFO)
FOLLOW UP ON DELIVERY
(central store / logistics)
DELIVERY RECEIVED
[delivery note signed & checked]
(Site stores / logistics)
MONTHLY PAYMENT APPLICATION
[reviewed & checked]
(Site QS)
GOODS RECEIVED NOTE
[authorises payment for goods/services, original
delivery note attached]
(Authorised by Logistics & FM Manager)
S/C PAYMENT CERTIFICATE
[authorises payment for work executed & materials
on site]
(Authorised by Commercial Manager)
5 - 10 AUTHORISED GRN SENT TO ACCOUNTS
RECONCILE AGAINST INVOICES
(Accounts)
7 PAYMENT / CHEQUE PREPARED
(Accounts)
3 CHEQUE SIGNED
(EEIG Construction)
34
SUPPLIER PAYMENT AVAILABLE FOR
RELEASE
SITE
Is the Est. PROC. VALUE OF P.R./TOR/SOW > ETB 1
Mill. OR is PROC. for a LONG-TERM Con.?
ACCOUNTS
YES
NO
3 LVA
[issued to suppliers]
(Procurement)
7-21 BID ENQUIRY DOC. (RFQ, ITB, RFP)
[issued to subcontractors / suppliers / service
providers]
(Procurement)
2-3 CONSOLIDATION / COMPARISON / 7-14 CONSOLIDATION / COMPARISON /
NEGOTIATION NEGOTIATION (AS APPLICABLE) CONSULTATION WITH
[technical, price & terms] [technical, price & terms] SITE AS REQUIRED
(Procurement) (CEO, CFO, Technical Director, Procurement)
FINAL NEGOTIATION (AS APPLICABLE)
(Commercial Director, CFO, CEO,
Proc. M.)
2-3 P.O. / LETTER OF AWARD FINALISED
(authorised by Procurement Manager)
PROCUREMENT
NOTE: ONLY 1 WORKING DAY ALLOWED FOR THIS PROCESS - IF
NO QUERY IS RECEIVED BY PROCUREMENT DEPT, PROCESS
WILL AUTOMATICALLY PROCEED TO NEXT STEP
TENDERING
14

22. Major Differences – Existing Vs New Adapted Manual
• Category Management – Segmenting supply needs in to categories (N/A in existing manual)
• Supplier Framework – Supplier List vs Approved-List of Prequalified Suppliers
• Supplier Sourcing – Open Tendering vs Approved-List Tendering

23. CONTINUED…
• E-Tendering – Enables streamlining of procurement process (not included in existing manual)
• Evaluation Methods – Least Price vs Lowest Competitive Priced, most substantially compliant
bid
• Negotiation - helps to achieve it’s principles of Best Value for Money

24. Thank you.