bid and pq, documents, guidelines, and...

Procurement of Works

Bid and PQ, Documents, Guidelines, and Procedures

WORLD BANK

Pre-qualification (PQ)

• Very desirable if not mandatory for large contracts

• Optional for mid-size contracts

• Usually replaced by Post-qualification in small contracts

• PQ does not eliminate need for Post bid verification of qualification, which must be done anyway to ensure veracity of info provided at PQ and whether it is still valid at the time of award.

2

Structure of SBD Large Works

3

Broken into 3 Parts, 9 Sections

Explanation of Sections (1 of 3)

4



5


6

Sound familiar? (SCC)

When to Use it?

• Procurement of Works (large contracts)

• May include supply/installation of some plant

• Design provided by Employer

• Alternative SBDs:

– Civil Law Version of SBD (affects French speaking countries having a tradition

of civil law for the for civil works contracts by international Public invitation to tender).

– SBD for Smaller Contracts

7

BID DATA SHEETSOME IMPORTANT Entries

• Number and identification of lots (contracts) and packages (ITB 1.1)

• Pre-Bid Meeting and Site visit (ITB 7.4)

• Language of the bid (ITB 10.1)

• Alternative Bids (ITB 13)

• Bid Prices and Discounts (ITB 14)

• Fixed or Adjustable Prices (ITB 14.5)

8

BID DATA SHEETSOME IMPORTANT Entries

• Currencies of Bid and Payment (ITB 15)

• Period of Validity of Bids (ITB 18)

• Bid Security (ITB 19)

• Source and Date of Exchange Rates and procedure for Conversion of Currencies (ITB 32.1)

9

SOME OTHER TERMS RELEVANT FOR CIVIL WORKS CONTRACTS

• Temporary and Permanent works

• Provisional Sum

• Daywork

• Variations and their procedure

• Value Engineering

• Nominated Subcontractor

10

EVALUATION AND QUALIFICATION CRITERIA

• Bid Evaluation Criteria, and

• Bidder Qualification Criteria

are applied separately!

11

BID EVALUATION CRITERIA

• Technical Compliance/ Non Compliance

• Bid Price

• Alternative Completions Time and/or Technical Alternatives evaluated in accordance with ITB (Instuctions to Bidders) and BDS (Bid Data Sheet)

• Adjustments for non material deviations if any

• No Use of Merit Point System

12

BIDDER QUALIFICATION CRITERIA

Two alternatives:

• Pre-Qualification

• No Pre-Qualification

13

PARTICULAR CONDITIONS

• Part A - Contract Data

• Time for Completion

• Performance Security

• Sections of Works

• Delay Damages (LDs)

• Advance Payment and Reimbursement

• Retention Money

• Maximum Liability of Contractor to Employer

• Insurance Specifics

• Resolution of Disputes Mechanism –Dispute Board

14

PARTICULAR CONDITIONS

• Part B – Specific Provisions

• Provision on Import Duties on Contractor’s Equipment

15

Appendix to Bid

Includes Critical Contract Data:

• Schedule of Adjustment Data (Price Adjustment) for local and foreign currency payments

• Summary of Payment Currencies (breakdown) for the various Sections of Works

16

Procurement of WorksAdmeasurement & Bill of Quantities

Most Works Contracts use Admeasurement to calculate amounts due to the Contractor. This is based on multiplying, for each item of construction, the unit price shown on the Bill of Quantities by the quantity executed as shown on the Monthly Invoices. This is a complex procedure, requiring certification by the “Engineer” and careful supervision and measurement of the work done.

17

Item no. Description Unit Quantity Rate Amount

201 Excavate topsoil to maximum depth 25 cm and

stockpile for reuse, maximum haul distance 1 km

m3 95,000

202 Excavate topsoil to maximum depth 25–50 cm, and

dispose

m3 15,000

203 —etc.—

206 Excavate fill material from cuttings or approved

borrow pits, haul up to 1 km, deposit, shape, and

compact to fill

m3 258,000

207 Excavate rock in cuttings and dispose, any depth m3 25,000

208 —etc.—

18

Bill of Quantity (BoQ) (Slide 1 of 2)

19

Bill of Quantity (BoQ) (Slide 2 of 2)

So what’s difference out Works type contracts? ….Let’s start with Packaging Works Contracts

Slice and Package presents huge advantage because contractors of different size and qualifications may qualify for different size slices.

This increases competition and optimizes the bidding process.

Slices to accommodate small and large contractors.

20

Packaging Example

• Highway 150 km long.

• Estimated cost US $150 million.

• Developing Country.

• 3,000,000 m3 excavation.

• 900,000 m3 pavement concrete.

• Execution period 3 years. Rainy season with no work possible happens 4 months per year.

• 25 small bridges ($200,000 each).

• Employer estimates minimum 6 weeks to process invoices approved by the Engineer.

21

What Number of Slices to Make?

• 10 of 15 km? (Large firms not interested)

• 5 to 30 km? (Still does not attract large firms)

• 3 of 50 km (Better)

Factors to consider: local contractors, interest of international contractors in the country, previous good or bad experiences……

For an example let’s take 10 of 15km

22

Calculating Qualification Requirements(Say) 15 km slice - estimated at $ 15 million

Calculating Cash on hand (Liquid assets needed):

First Calculate Cash needed per month… Account for rainy seasons

Number of “work” months = 3 yrs*(12-4) = 24 months

Cash per month =$15 mil / 24 mo. = $.625 mil

Next Calculate “lag time” until payments…

Between execution and invoice = 1 monthApproval by Engineer = 1 monthPayment by Employer = 1.5 monthSafety = 0.5 month

Therefore – minimum Liquid Assets should be…

$.625 mil * 4 (months of cash) = $ 2.5 mil Liquid Assets

23


Calculating Average Annual Turnover requirements:

Annual disbursement = $15 mil / 3 yrs = $5 mil annually

Using factor of x2 = $ 10 million annual turnover

Using Factor of x2.5 = $ 12.5 million annual turnover

Using factor of x3 = $ 15 million annual turnover

Recommend 2.5!

24

Assessing experience requirements:

• Completed 2 highway projects in the last 5 years at least $12 million each. Must include concrete pavement and small bridges. [15x0.8=12]

• Having done 120,000 m3 excavation per year. [3,000,000/10 =300,000 m3 per slice of 15 km; 300,000/2=150,000 m3 per year; 150,000x0.8=120,000 m3]

• Having done 36,000 m3 concrete pavement in one year [900,000/10=90,000 m3 per slice of 15 km; 90,000/2=45,000 m3 per year; 45,000x0.8= 36,000 m3 per year]

25


In case of Joint Ventures:

• The Figures of the partners shall be added together to meet technical and financial requirements.

• Each partner must satisfy no less than 25% of annual turnover and partner in charge no less than 40%.

26


SBD (Standard Bidding Documents) & SBDSW (SBD Small Works)

Major Works• Generally for large and/or

complex Works• Very thorough GC (General

Conditions) and PC (Particular

Conditions)

• Dispute Resolution is very Useful. Bank demands it. (Dispute Resolution Board)

• Based on FIDIC

Smaller Contracts• Generally for smaller or

simpler works• Simpler GCC and SCC, leaving

room for interpretation• The Contract can’t operate

without DR and Bank demands it. (Adjudicator)

• Developed by the Bank

27

Documents comprising the Bid

• The Bid, in the specified format

• Bid Security or Bid Securing Declaration

• Priced Bill of Quantities

• Qualification Information Forms and Documents

• Alternative offers where Invited

28

Bid Prices

• Contract shall be for the whole of Works

• Items not priced in the BoQ (Bill of Quantity) are deemed Free of charge.

• All taxes, duties, levies payable by the contractor (as of 28 days before submission) included in the price.

• Unless execution time < 18 months, there will be price adjustment formulae (plural).

29

Bid Prices

• Major works:

– Alternative A: Price quoted entirely in local currency but bid states percentage payable in specified foreign currency also giving rate of exchange to remain fixed during contract.

– Alternative B: Prices quoted in different currencies and payments in those currencies without exchange calculation.

• Small works: Only Alternative A

30

Pre-Bid Meeting

Whereas the PBM (Pre-Bid Meeting) is often useful for Goods, it is almost always necessary for Works. It provides:

• Opportunity to find errors in Bid Documents.

• Assess interest of bidders in participating.

• Increase competition.

31

Bid Opening - Evaluation

Requests for clarification of bids through contacting the

Bidder is almost always a bad idea. It makes sense when asking for breakdown of unit prices, or to request historical data for qualification purposes. It leads to corruption or problems when it opens the door for changes to the bid. Never ask “is item XYZ included in prices”.

32

Bid Opening – EvaluationResponsiveness

Substantial Deviations

Key sections not signed

Eligibility Criteria not met

Not accompanied by required securities

Not substantially responsive in respect of technical acceptance and time of execution

33

Bid Opening – EvaluationResponsiveness

The Bank will generally accept the position of the Borrower concerning deviations if the judgment applied is reasonable.

34

Bid Opening – EvaluationComparison - Alternative A

1. Breakdown into different currencies defined by bidders, using Bidders stated rates of exchange.

2. Conversion into single currency (Employer’s usually) using an established official rate at a defined rate shown on the Bidding Documents.

35

Bid Opening – Evaluation

1. Corrections for errors

2. Exclude Provisional Sums and Contingencies

3. Include Day-works priced competitively

4. Convert to common currency

5. Apply “quantifiable” adjustments to deviations

6. Allowances for variations of completion time

7. Apply discounts in case of multiple awards

36


Unbalanced Bids

When, in a long execution contract, items to be executed first are priced higher than normal and contracts to be executed last are priced lower than normal. It gives the Contractor a financial advantage. (Also known as ” Front end loading”)

Borrower may ask for breakdown of unit prices, and even for ask additional Performance Security

37


Domestic of preference of 7 ½%, if indicated in Bidding Data, provided that:

• Individual Firm– Registered in the country of the Borrower– More than 50% ownership by Nationals of the Country of

the Borrower– Does not subcontract more than 10% of the Contract price

to foreign contractors• JV

– Individual firms as above– JV registered in Borrower’s country– JV does not subcontract more than 10% to foreign firms

38

AWARD

• Award to LEB (Lowest Evaluated Bidder) meeting Qualification requirements

• Notification of Award constitutes the formation of the Contract. Therefore, Borrowers should not issue conditional notifications of award

• Published in

– UNDB (United Nations Development Business) online, and

– dgMarket (Development Gateway Market)

39

AWARD (Continued)

• Performance Security. Purpose. Difference between Retention and PS.

• Dispute Review Mechanism IN PLACE, meaning DRB (Dispute Review Board) personnel or DRE appointed and functioning!

40

http://www.devbusiness.com/

http://www.dgmarket.com/