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Chapter 2 [compatibility mode]

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Procurement Management and Contract Administration

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Chapter 2 [compatibility mode]

  1. 1. Lecture by: Andualem Endris (M.Sc) andu0117@yahoo.com Chapter Two Madawalabu University College of Engineering Construction Technology and Management Department Procurement Management and Contract Administration CoTM 4242 1
  2. 2. COTM 4242 2
  3. 3. • Procurement is the acquisition of goods, works, consultancy or other services through purchasing, hiring or obtaining by any other contractual means. • Tendering is a stage in the procurement process extending from advertisement (invitation to bid) up to signing of contract. • Tender is an offer which incorporates the sum of money, time and other conditions required to carry out the contract obligations in order to complete a project or a part of it consisting of specified works. COTM 4242 3
  4. 4.  Stage 1: Inception & Feasibility study – identifying project objectives / set up project brief  Stage 2: Design – develop further project brief / develop concept & schematic design / Undertake detailed design & detailing / prepare cost plan & budget  Stage 3: Tendering – issue tender documents / prepare & submit tender / evaluation of tender / award tenders / prepare contract documents COTM 4242 4
  5. 5.  Stage 4: Construction – site possession & mobilization / undertake procurement fabrication, installation, construction / carry out contract administration  Stage 5: Handover & Maintenance – undertake all testing, commissioning & training / handover project to owner /carry out necessary maintenance / Defect rectification / etc COTM 4242 5
  6. 6. Tendering will be started after the design completed and project budget is approved The process that is used to obtain offers leading to a contract between: client contractor client consultant main contractor sub-contractor COTM 4242 6
  7. 7.  A tender formally means an invitation to trade under the terms of offer.  A contract is the term used for when the parties have reached agreement. COTM 4242 7
  8. 8. COTM 4242 8 SELECTION CRITERIA In this process we look at the ways to choose between different tenderers, reviewing the specific Criteria for tender evaluation: •Pre-qualification •Technical evaluation •Financial Evaluation •Relationship between Technical and Financial
  9. 9. COTM 4242 9 Pre- Qualification Technical Evaluation Financial Evaluation Interested firms or consortia, submit experience and financial capacity details Contracting Authority assesses these details Short list the firms Only short-listed firms can submit a proposal Bidders submit proposals
  10. 10. COTM 4242 10 Pre- Qualification Bidders submit Technical Proposals, showing how they would run the contract Bidders provide information on Financial and technical ability Proposals assessed using ‘technical evaluation criteria Bidders have to pass a ‘technical threshold’ to be eligible for selection (e.g. scoring at least 70 percent on technical evaluation criteria in our country) Technical Qualification Financial Evaluation
  11. 11. COTM 4242 11 Pre- Qualification Financial proposals of only technically acceptable bids should be opened and evaluated. Financial Criteria can be very simple, as following examples: Bidder asking for lowest tariff Bidder asking for Lowest Fee (Least Bidder) Bidder with best financial proposal awarded the contract Financial Qualification Technical Evaluation
  12. 12. COTM 4242 12
  13. 13.  To select a suitable contractor at a time appropriate to the situation of the project.  To obtain from the contractor selected at the proper time, an acceptable tender or offer upon which a contract can be let. COTM 4242 13
  14. 14. COTM 4242 14 Stage 2: APPROVAL TO TENDER Stage 1: PREPARATION Stage 3: DOCUMENTATION Stage 4: INVITATION Stage 5: PROCESSING Stage 6: AWARD CONTRACT
  15. 15.  Final completion of drawings, specification, measurement / take-off process.  Choose conditions of contract.  Parties involved: architects, engineers, QS, client COTM 4242 15
  16. 16.  Discussion and decision on type of tender to be used.  Selection of tender:  Open  Selective  Negotiate  Parties involved: CLIENT, CONSULTANT, and CONTRACTOR COTM 4242 16 Short-listed tenderers
  17. 17. Contract Document  Letter of invitation  Checklist for submission of tender  Articles of agreement  Form of tender  Specifications  Bills of quantities  Drawings  Letter of acceptance form  Schedule of day work rates COTM 4242 17
  18. 18.  Based on selection of tendering methods  Open / competitive / bid tender – produce tender notice  Selective – short listed contractors will be invited to tender if they wish  Negotiated – only one contractor is approached- direct entry to project COTM 4242 18
  19. 19.  The Tender Notice is a brief description of the job being tendered which is to be published in Newspapers and on the Internet.  The Internet is a very cost effective way of publishing the tenders. COTM 4242 19
  20. 20. a. Name of the Project. b. Name & Address of the Company floating the tender. c. Name of work, materials or services. d. Place of work location. e. Approximate estimated cost of work. f. Earnest Money. g. Period of completion. h. Date on which the Tender Document sale commences. i. Date and time up to which tender documents can be obtained. j. The cost of tender documents. k. The date and time up to which the tenders to be submitted and are to be opened. l. Specification. m. Eligibility Criterion. COTM 4242 20
  21. 21.  Receive tender submitted by contractor  Tender assessment / evaluation  Completed tenders are received  Arithmetical check  Reasonable tender sum  Reasonable completion time  Capabilities of renderers' under considerations  Tender recommendation / report – tender board COTM 4242 21
  22. 22.  Pre-award meeting with contractors – validation of lowest complying bid  Validate lowest bid - Pre-contract meeting with contractor for contract signing  Approval by tender board / treasury COTM 4242 22
  23. 23. COTM 4242 23
  24. 24. COTM 4242 24 Stage 2: Determine basis of tender Stage 1: Decision to tender Stage 3: Preparation of cost estimates Stage 4: Commercial appreciation Stage 5: Conversion of estimate to tender Stage 6: Submission of tender
  25. 25.  Receipt of tender documents  Pre-tender data sheet  Decision to tender  Consider implications of:  Bonds  Warranties  Parent company  Guarantees  Funding COTM 4242 25
  26. 26.  Abstract materials and subcontractors  Sent out enquiries  Consider construction methods / prepare method statement  Design temporary works / consider alternatives  Prepare outline program  Check major quantities  Identify restrictions  Visit site and compile site report  Campaigning meeting (designating areas responsibilities) COTM 4242 26
  27. 27.  Calculate current rates using:  Materials  Equipments and  Labour costs  Analyze and check subcontractors’ quotations  Price prelims / general items (in association with members of the team  Prepare summary sheets COTM 4242 27
  28. 28.  Tender committee meeting part 1:  Review:  Method  Program  Technical and commercial risks  Cash flow and finance  Use of own plant  Competition  Commercial opportunities  Economic climate  Check prelims against historical cost data COTM 4242 28
  29. 29.  Tender committee meeting – part 2:  Calculate ‘spread’ and add to estimate COTM 4242 29
  30. 30.  Submit in format required (Bid submission format)  Organize delivery. COTM 4242 30
  31. 31. 31COTM 4242

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