Procurement involves selecting qualified bidders through competition to provide goods, services, or works at the lowest cost. An effective procurement process ensures the "Five Rights" - quality, quantity, cost, counterpart, and time. The main purposes are economy and equal opportunity. Key characteristics of tendering include advertisement, proof of competition, impartiality, formality, accessibility, and avoiding subjectivity. The procurement cycle includes identifying needs, planning, soliciting bids, evaluation, awarding contracts, and post-award actions. Common procurement methods differ based on goods/services/works procured, bidder coverage, geographical scope, awareness level, and qualification process.

1. 3. Procurement Management
3.1 Introduction and purpose
Procurement is a process used to select the lowest competitive and
qualified bidder for procuring services or works or goods from
potential competitors based on reasonable relevant criteria
Physical infrastructures are cost extensive and appropriate savings
obtained through competition are the main factor behind the
procurement process
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2. 3.1 Introduction and purpose
An effective and efficient procurement method ensures the following
rights called the "Five Rights". These are
The Right Quality,(technical expectation and
economic consideration)
The Right Quantity, (Take-off-Sheet Measurements
and Resources Allocations)
The Right Cost / Price /,(quality related and the
right cost is nearby cost, achieved mainly through
competition)
The Right Counterpart (to guarantee that the
parties shall be fit to the job) and
The Right Time. (scheduling with regard to right
timing is essential)
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3. 3.1 Introduction and purpose
The purposes of a Procurement Management System can be
summarized into two major points:
To satisfy the need for economy and efficiency,
To provide equal opportunity to competitive
bidders.
The successful achievement of these purposes requires the following
seven characteristics
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4. 3.1 Introduction and purpose
Figure : Seven Characteristics of Tendering
Characteristics
of tendering
Notice of
Advertisement
Proof of
Competition
Impartiality
Neutrality
Formality
Accessibility
Avoidance of
Subjectivity
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5. Characteristics of Tendering
Notice of advertisement:
Through an official newspaper, mass media, and
notice boards etc. which can enable the
advertisement to reach wide range of
competitors.
Proof of Competition:
tenders should be unlimited competition, unless
otherwise conditions such as complexity and
specialisation of projects require restriction to
open competition.
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6. Characteristics of Tendering
Neutrality: care shall be taken When
The specifications are prepared
To avoid preference to limited
alternatives
The bidding documents (contract conditions)
shall be balanced
 Not to cause disruption of the task to be
accomplished.
Accessibility:
The place where bid documents are purchased
shall be clearly indicated
The place, dates and time for submission
shall be notified
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7. Characteristics of Tendering
Impartiality: During tendering if clarification is requested, do so
accordingly to all bidders
Often Pre-Bid Submission Meeting is used for this
purpose.
Negotiation is not allowed during tender period.
Formality: Strict adherence to formality shall be taken to all tenders
like
the submission & opening of bids (place, date
and time)
rejection of late and non-responsive bids
the bid security condition shall also be a
formality to all tenders
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8. Characteristics of Tendering
Avoidance of subjectivity:
Criteria for evaluation shall be strictly set out
in the instruction to bidders’ part of the
bidding document and all evaluations shall be
carried out accordingly.
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9. 3.1.2 Procurement cycle
Before we go to the discussion on procurement method and
procurement management process, we have to oversee procurement
where to where.
It include the time frame between the identification of requirement
and the ultimate award of contract. The followings are fundamental
steps, to accomplish the ultimate goal of procurement cycle.
A. Requirement identification
The procurement cycle begins with identification of need
which creates a requirement.
 E.g. a need to cross a body of water creates
a requirement to build a bridge.
Budget allocation and fund availability are determined before
submission of requirements.
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10. 3.1.2 Procurement cycle
B. Procurement Planning:
once requirements are defined and approved, procurement
planning begins. At this phase determine the following;
i. What is needed, when and what is the relationship to other
requirement?
ii. Is the requirement dependent or independent of other
requirements?
iii. if dependent, what is the relationship to other dependent
requirement
iv. When is the dead line to fulfilling the requirement.
v. Is there sufficient time to fulfill the requirement given the project
schedule.
All requirements should ideally appear on the procurement plan
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11. 3.1.2 Procurement cycle
C. Procurement requisition processing:
The first step here is to determine what the requesting entity
wants. This is done by reviewing specification or description of
goods or services or works required.
D. Determine procurement method:
One must determine the appropriate procurement method to fulfill
the requesting entity's need in most expeditious and cost-effective
manner. This should ideally be done during procurement planning
stage.
However, if this was not the case, at this
point the procurement method needs to be
determined.
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12. 3.1.2 Procurement cycle
E. Prepare and publish bidding document:
Bidding process to begin after procurement method determined
F. Pre-bid / meeting and site visit:
Pre-bid meetings are held alone or in conjunction with a site visit.
Pre-bid meetings are held primarily for complex requirements.
The purpose of pre-bid meeting is to clarify the bid documents.
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13. 3.1.2 Procurement cycle
G. Bid submission and opening:
During the opening event the following needs to be determined
Is the bid received in a sealed envelope?
Is the bid form completed and signed?
Is the bid received on or before the submission
date and time?
Is there a power of attorney mandating the
authorized representative to sign the bid?
Is the bid security ( if any) in the form and amount
stipulated in the bidding document?
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14. 3.1.2 Procurement cycle
H. Bid evaluation: before the bid evaluation takes place, an evaluation
panel is formed and approved.
Initial examination is done during the bid opening: circumstances that
could lead to the rejection of bid at this stage are
Compliance of documents received with the
submission requirements.
Late bids
Preliminary examination of the bid
The responsiveness of the bid to the bid
documents
Detailed examination of the bid
Price comparison is done to determine the lowest
qualified and responsive bidder
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15. 3.1.2 Procurement cycle
I. Award recommendation:
the contract award recommendation resulting from evaluation of bids
lead to a request for clearance/ no-objection to award contract.
If no-objection, the contract award
recommendation will be published and noticed.
If there is any claim received, it will be reviewed
and investigated to determine validity.
A valid claim may result in suspension of the
intent to award, in order to undertake detail
investigation which could lead to re-evaluation of
bids or cancellation of the evaluation process.
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16. 3.1.2 Procurement cycle
J. Contract negotiation:
Contract for goods or works procurement are not a usually negotiated
except under special circumstances the details of which must be
specifically stipulated in the bidding document.
K. Contract award:
For goods and works procurement, contract award takes place with
the notification of the responsive bidder with lowest evaluated price.
Such notification is done by the way of a formal letter of acceptance to
which the response must be received within stipulated time period.
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17. 3.1.2 Procurement cycle
Post contract award considerations:
After contract signing, unsuccessful
bidders have the right to request
debriefing by the procurement entity.
The debrief can be done orally or in
writing.
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18. 3.2 Procurement Methods
Procurement types can be classified based on the things to be
procured and the way how they are procured. There are five bases for
classifying procurement methods. These are:
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Bases Things
procured
Bidders
coverage
Geographical
coverage
Procurement
awareness
Procurement steps
Types Goods Competitive International General PN Single
Services Negotiated Regional Specific PN Two stage
Works National Pre-Qualification
Local Post-Qualification

19. 3.2.1 Things to be Procured
(Goods Vs Services Vs Works)
Depending on the delivery system chosen during the contract planning
phase, mixed types of procurement types can be adopted
• Procurement of Goods: Physical resources such as Materials and
Equipments
• Procurement of Services: often termed as consultancy services
procurement. These include services like
pre-feasibility and feasibility studies,
design and contract administration of projects,
Construction management consultancy services,
research or study based consultancy services, etc.
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20. 3.2.2 Bidders’ Coverage
(Competitive Vs Negotiated Tendering)
Competitive Tendering: selection of better and capable winning
bidder among the various eligible firms. it can either be Open or
Limited Competitive Bidding in the form their invitations.
Open competitive bidding allows all eligible
bidders to participate
Limited competitive bidding allows a
number of selected firms only. The major
difference between open and limited
competitive bidding is the addition of
qualifying criteria beyond eligibility
• Limited Competitive Bidding is often used when the nature and
urgency of the work justifies to do so
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21. 3.2.2 Bidders’ Coverage
(Competitive Vs Negotiated Tendering)
Some of the qualifying criteria used for Limited Competitive Bidding
are ( usually short listing is done based on):
the firms past performance,
work load at present,
presence of a firm in the vicinity of the
projects,
knowledge of similar type of works before and
financial and technical capabilities of the firms
Usually in Limited Competitive Bidding, cost of projects might be
higher than expected
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22. 3.2.2 Bidders’ Coverage
(Competitive Vs Negotiated Tendering)
Negotiated Tendering: Under certain circumstances, The nomination
of this direct invitation is usually based on
good performance,
contact with the Project Owner,
for supplementary agreements, etc.
This kind of tendering is exceptionally exercised when the project
under consideration is very urgent or needs special skill whereby the
required skill is rarely available.
The main disadvantage of this type of tendering is that the price
offered can usually be higher than the competitive bidding.
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23. 3.2.3 Geographical Coverage
(International Vs Regional Vs National Vs Local
Tendering)
These types of procurements are generally caused by three major
factors. These are
Local Capacity,
Financial Sources ( dictate regional or
international)
Globalization (globalization and principles of Free
Trade and Trade Liberalization also encourages
international tendering)
In practice, Preference Margins in the range of 7% are applied to local,
national or regional tenderers, which imply tender offers higher than 7
% will be given preference to encourage local participation.
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24. 3.2.4 Procurement Awareness
(General and Specific Procurement Tendering)
Following requirement like proof of competition and increase
accessibility, General Procurement Notice (GPN) is made during
projects planning phase and it is only interests of the bidders are
aroused because sufficient tender documents are not available. This
approach is used:
The Project Owners to
identify interested bidders to issue Invitations
by letters and save time;
identify bidders relevant for the procurement
required;
protect loss of cost in preparing lots of tender
documents.
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25. 3.2.4 Procurement Awareness
(General and Specific Procurement Tendering)
The Bidders to:
give sufficient time to assess the cost of the
project;
protect loss of cost only to participate; and
encourage competent bidders who wary about
law-balling to participate
There are two types of General Procurement Notice based on their
purpose why and when they are notified
The first type of GPN
When?-- announced as soon as the design is
started
Why?-- to create awareness and let bidders’
prior information about upcoming projects
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26. 3.2.4 Procurement Awareness
(General and Specific Procurement Tendering)
The second type of GPN
When?--announced after financial sources are
determined
Why?--to determine interested bidders who
could be invited in the form of Limited
Competitive Tendering.
GPN covers
the Employer and its financiers for its project;
Description of the project with its probable or
planed implementation time;
type of procurement method and address
where further information can be obtained.
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27. 3.2.4 Procurement Awareness
(General and Specific Procurement Tendering)
Specific Procurement Notice (SPN)
is an Invitation for Tender or a Request for
Proposal when the project is ready for
implementation.
can be sent to those interested bidders
identified following GPN directly. Otherwise, it
should be advertise on the bases of enlarging
opportunities
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28. 3.2.5 Procurement Steps:
(Single Vs Two Staged and Pre-Vs Post-Qualification
Tendering)
Single or Two Staged Tendering: are related with whether tender
packaging for submission separately and their evaluations are staged
for a single or two steps when invitations are made. Often two staged
biddings are made for the submission of technical and financial
proposals separately and their evaluations one after the other.
Pre-Qualification Tendering: It is a procedure in which eligible bidders
are invited to provide evidence of their ability to perform the services
required by the employer.
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29. 3.2.5 Procurement Steps:
(Single Vs Two Staged and Pre-Vs Post-Qualification
Tendering)
Pre - qualification can be of two types
The first is Single stage tendering: when
companies are already considered qualified
during their licensing requirements. (evaluation
criteria become the low priced bid)
The Second is when two staged tendering is
used to pre-qualify tenderers’ for their technical
competency. Once pre-qualify, either the
lowest priced or the lowest evaluated bidder
recommended for award.
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30. 3.2.5 Procurement Steps
• The advantages of pre - qualification in procurement are:
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To the employer To the Bidder
Protect the employer
against unqualified
bidders
Saves bidders from the
cost of preparing bids
Quicker Evaluation for
only pre-qualified bidders
Assure pre-qualified
bidders for their bid
considerations
Ensure award to least
evaluated not lowest
bidder
Reduce low balling bidders
from participation
Assess level of interest
shown by bidders
Make bidders to be better
planned

31. 3.2.5 Procurement Steps
The following pre-qualification criteria's are often used in determining
the ability of the bidder to carry out the works:
Experience and past performance,
Health, Safety and Environment Records, if any,
Capability in respect of personnel and
equipment,
Organizational arrangement and facilities,
Financial Status, and
Schedule of Commitments.
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32. Delivery System
Procurement Method
Contract Type
Action Plan
Awareness on Future Business and
Follow Up
Letter of Invitation
Information about prequalification procedure
Project Information
Prequalification Application
Collect information about the
project and its location
Advertisement
Project Scope, Location, Source of finance
Issue, Submission and Opening dates of Tenders
Instructions to pre-qualify and evaluation criteria
Check Eligibility
Check Competitive Advantage
Collect Information
Decide to participate
Organization, Structure & Experience
Resources (Financial, Managerial, Technical, Labor,
Plant, Stock, etc)
Current Commitments
Acknowledge Receipt
Request and Obtain Pre – Qualification
docs.
Request & Obtain Clarifications
Complete and Submit Docs and Relevant
Info.
Open Tender in the presence of relevant attendee
Evaluate for Eligibility, Technical, Organizational ,
Financial Capability
Attend Tender Opening Ceremony
Pre-qualified tenderers are selected
Winners are Notified
Acknowledge & Confirm Intention to
participate in succeeding tender
Procedure Employer / Consultant Contractors
Procurement and Contract Strategy
(Contract Planning Phase)
Pre-qualification Documents
Tender Document Preparation
Invitation To
Pre-qualify
Tendering
Phase
Issuance & Submission of Pre-
qualification docs.
Tendering
Phase
Opening & Analysis of Pre –
Qualification
Tender Evaluation Phase
Selection and Notification of
Tenders
Tender Evaluation Phase
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pre-qualification flow chart

33. 3.2.5 Procurement Steps
Post – qualification:
• where Financial Evaluation is carried out first and rank bidders on the
basis of their offer for tender price.
That is, Technical Evaluation will be done after
the Financial Evaluation
• The advantage of this approach is
not to loose the lowest financially evaluated
bidder and
to save time during technical evaluations.
• However, Post qualification approaches often cause to fix evaluators on
financial results and be locked and biased for successive technical
evaluations.
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