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Tender Management
This document provides an overview of effective tender management. It discusses prequalifying suppliers, consolidating material requirements, preparing procurement plans for approval, different types of tendering such as international and local, evaluating bids commercially and technically, awarding contracts, managing supplies, and includes a case study on procurement in Pakistan's power distribution companies. The goal of tender management is to systematically and efficiently manage the entire procurement process to maximize performance and minimize risks.
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Tender Management
- 1. 1 Effective Tender Management Muhammad AwaisTahir Addl Executive Engineer LESCO 04/11/17 Tender Management
- 2. Oh Lord! Am Iscared? 204/11/17 Tender Management
- 3. 3 Tender Management Contents: ●What istender 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) 04/11/17 Tender Management
- 4. 4 1. What isTender 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) 04/11/17 Tender Management
- 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 04/11/17 Tender Management
- 6. 6 2. Prequalification ofSupplier’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. 04/11/17 Tender Management
- 7. 3. Consolidation ofMaterial 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 704/11/17 Tender Management
- 8. 04/11/17 Tender Management8 PROCUREMENT PLAN
- 9. 4. Preparation ofPlan 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 904/11/17 Tender Management
- 10. 5. Types ofTendering 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 1004/11/17 Tender Management
- 11. 7. Types andOpening 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 1104/11/17 Tender Management
- 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 1204/11/17 Tender Management
- 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% 1304/11/17 Tender Management
- 14. 9. Award ofContract ● 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 1404/11/17 Tender Management
- 15. 10. Terms ofSupply ● FCS ● C&F ● CIF ● FOB (Origin/Destination) 1504/11/17 Tender Management
- 16. 11. Management ofSupplies/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 1604/11/17 Tender Management
- 17. PIPELINE STATUS 04/11/17 TenderManagement 17
- 18. Case Study: TENDERCONDITIONS Bid Schedule Bid Security Validity Performance Security Inspection Consignee Payment terms and Conditions Delivery Schedule Warranty Failure and termination Force Majeure 04/11/17 Tender Management 18
- 19. 19 Recommended reading: 1.PPRA Rules2004 (http://www.ppra.org.pk/rules) 2.Wapda Purchase Procedures Manual 3.Incoterms 2000 04/11/17 Tender Management
- 20. 20 THANK YOU 04/11/17 TenderManagement