Evaluation and QualificationRequirements

Evaluation & Qualification Requirements

The success of procurement is measured by obtaining the goods, works, and physical services in a timely manner, at the required quality, and at the best (lowest) possible price the market can offer. To meet this objective, the procurement process conducted by the procuring entity should ensure that the contract is awarded to a bidder who:(i) is capable to perform the contract on time ; (ii) will provide the goods, works and services at the required quality (determination of the responsiveness of the bid) ; and (iii) at the best price conditions.

QUALIFICATION PROCEDURES

PRE-QUALIFICATION FIRST STEP IN PROCUREMENT PROCESS

APPLICABLE TO LARGE AND COMPLEX CONTRACTS IN:

CIVIL WORKS (e.g. dams, hydropower stations, power transmission lines, pipelines, roads, railways, ports, airports, water treatment plants, etc.)

INFORMATION SYSTEMS (hardware + software)

PRIVATE SECTOR PARTICIPATION (e.g. management contracts, BOT-BOO-BOOT, concession)

ALL PRE-QUALIFIED CONTRACTORS ARE INVITED TO BID

QUALIFICATION PROCEDURES (cont’d)

CLASSIFICATION PRECONDITION FOR PARTICIPATION IN BIDDING

APPLICABLE TO NATIONAL CONTRACTORS CLASSIFIED BY CATEGORIES OF WORKS IN ACCORDANCE WITH CONTRACT TYPE AND SIZE AND CONTRACTOR QUALIFICATION

ONLY CONTRACTORS BELONGING TO CATEGORY/IES SPECIFIED IN INVITATION TO BID ARE ELIGIBLE TO PARTICIPATE

QUALIFICATION PROCEDURES (cont’d)

POST-QUALIFICATION

LAST STEP IN BID EVALUATION PROCESS

APPLICABLE TO ALL GOODS AND WORKS

CONTRACTS

AWARD OF CONTRACT TO QUALIFIED

BIDDER WITH LOWEST EVALUATED

RESPONSIVE BID

QUALIFICATION PASS-FAIL CRITERIA (cont.d)

1. GENERAL EXPERIENCE

AVERAGE ANNUAL TURNOVER:

“MINIMUM 2 (1,5) OF AVERAGE ESTIMATED

COST/YEAR IN LAST - (two to five) - YEARS”

QUALIFICATION PASS-FAIL CRITERIA

2. SPECIALISED EXPERIENCE

SCOPE OF WORKS:

SIMILAR TYPE & SIZE OF CONTRACTS

SIMILAR CONDITIONS (e.g. climate)

“MINIMUM NUMBER - (one to three) - OF

CONTRACTS DURING LAST - (five to ten) -YEARS

QUALIFICATION PASS-FAIL CRITERIA (cont.d)

3. PERSONNEL QUALIFICATIONS

MANAGERIAL AND TECHNICAL KEY POSITIONS:

MINIMUM NUMBER OF SIMILAR PROJECTS

SUCCESSFULLY MANAGED BY THE INCUMBENT

MINIMUM NUMBER OF YEARS OF EXPERIENCE

(TOTAL AND IN POSITION)

QUALIFICATION PASS-FAIL CRITERIA (cont.d)

4. FINANCIAL CAPABILITIES PAST PERFORMANCES

LIABILITIES/ASSETS

CASH FLOW REQUIREMENT

“MINIMUM AMOUNT AVAILABLE FOR THE PERIOD IN MONTHS BEFORE PAYMENT IS RECEIVED BY CONTRACTOR

e.g: CW/PS: $240 M. /48 MTHS = $5m*4 MTHS: $20M.

IS: $12M./24 MTHS = $0.5m* 4 MTHS: $2M.

5. EQUIPMENT CAPABILITIES MINIMUM KEY EQUIPMENT LISTED

QUALIFICATION PASS-FAIL CRITERIA (cont.d)

QUALIFICATION PASS-FAIL CRITERIA (cont.d)

6. CONTRACT COMMITMENTS

CURRENT CONTRACTS COMMITMENTS & WORKS IN PROGRESS

7. LEGAL STATUS

8. LITIGATION

9. REFERENCES

PRE-QUALIFICATIONFOR ICB

PRACTICE LARGE OR

COMPLEX CIVIL WORKS

CUSTOMDESIGNED EQUIPMENT

INFORMATION SYSTEMS

INDUSTRIAL PLANT

PRIVATE SECTOR OPERATIONS

SPECIALIZED SERVICES

PRE-QUALIFICATION FOR ICB (cont’d)

OBJECTIVE SAVES EXPENSE OF BIDDING FOR

UNQUALIFIED BIDDERS IMPROVES INTEREST OF

LEADING CONTRACTORS INDICATES INTEREST OF

POTENTIAL CONTRACTORS ESTABLISHES ELIGIBILITY FOR

DOMESTIC PREFERENCE (IF ANY) REDUCES POTENTIAL FOR

CONTROVERSY

PRE-QUALIFICATION FOR ICB (cont’d)

INFORMATION PROVIDED DESCRIPTION OF WORKS,

SIZE OR COST SCOPE OF CONTRACT SOURCE OF FINANCE,

TERMS OF PAYMENT IMPLEMENTATION SCHEDULE ELIGIBILITY, LANGUAGE,

PROCEDURES PRE-QUALIFICATION REQUIREMENTS

PRE-QUALIFICATIONFOR ICB (cont’d)

INFORMATION REQUESTED MINIMUM NECESSARY AVOID CERTIFICATES USE STANDARD QUESTIONNAIRE

NUMBER PRE-QUALIFIED ALL FIRMS WHO MEET CRITERIA

(NO MAXIMUM)

Bid Evaluation OBJECTIVE

SECURE GOODS/SERVICES ATMOST ECONOMICAL COST

PRICE ONLY ONE FACTOR OTHER FACTORS

TIME OF DELIVERY/COMPLETION TERMS OF PAYMENT OPERATING COST EFFICIENCY AND COMPATIBILITY OF THE EQUIPMENT AVAILABILITY OF SERVICES AND SPARE PARTS RELATED TRAININIG ENVIRONMENTAL BENEFITS OTHER FACTORS OTHER THAN PRICE TO BE USED

FOR DETERMINING THE LEB SHALL BE TO THE EXTENT POSSIBLE EXPRESSED IN MONETARY TERMS, I.E RESALE VALUE.

TIME OF DELIVERY EVALUATE LOSS OR GAIN BY

LATE OR EARLY DELIVERY

PAYMENT TERMS EVALUATE VARIATIONS AT SPECIFIED

INTEREST/DISCOUNT RATE

Evaluation Methodology Commercial Features (cont’d)

Evaluation MethodologyTechnical Features

OPERATING COST FUEL TRAINING MAINTENANCE COST STANDARDISATION RESALE VALUE /DEPRECIATED COST LIFE CYCLE COST OWNERSHIP COST CAPACITY PRODUCTIVITY

Evaluation MethodologyMinimum Technical Specifications

PASS/FAIL CRITERIA

MINIMUM REQUIREMENT

BELOW MINIMUM: REJECTED

NO CREDIT FOR BETTER SPEC

RESPONSIVE = LEB

MAXIMUM REQUIREMENT

RANGE PARAMETERS (MAX <>min)

Life CycleCost Methods

COST TO OWN AND OPERATE ITEMDURING ITS USEFUL LIFE

INITIAL PURCHASE PRICE ADJUSTED FOR EXTRAS, DELIVERY,

VARIATIONS IN PAYMENT TERM, ETC. VALUE FOR ADJUSTMENTS ADDED TO BID PRICE

OPERATING COST DURING LIFE OF ITEM FUEL, SPARE PARTS, MAINTENANCE (X YEARS) ANNUAL COST DISCOUNTED TO NPV

OWNERSHIP COST DURING LIFE OF ITEM ECONOMICAL USEFUL LIFE (X YEARS)

RESALE OR SCRAP VALUE DISCOUNTED TO NPV

Life CycleCost Methods (cont’d)

EFFICIENCY COST METHOD

CAPITALIZE DIFFERENCES INEFFICIENCY IN OPERATION OF ITEMSi.e. BOILER, TURBINE, TRANSFORMER, ETC. DURING LIFE

PRODUCTIVITY COST METHOD

DETERMINE LIFE CYCLE COST PER UNIT OF OUTPUT FOR COMPARISON PURPOSES LIFE CYCLE COST OF PLANT (x YEARS)

NPV DIVIDED BY TOTAL UNITOUTPUT OF PLANT

On“Life Cycle Cost” Basis

ALL FIGURES IN USD

A B

TOTAL EVALUATED INITIAL COST 46,400 44,350(without preference)

FUEL COST FOR 8 YEARS 1 45,000 46,000

MAINTENANCE COST FOR 8 YEARS 34,000 28,000

MINUS DEPRECIATED COST/RESALE VALUE -2,000 -5,000

LIFE CYCLE COST 130,400 113,350

RANKING 2 1

1 DISCOUNTED TO PRESENT VALUE

Bid Evaluation UsingLife Cycle Costing for Procurement

of 100 Urban Buses

RELEVANT PART OF THE BID EVALUATION CLAUSES IN THE BIDDING DOCUMENTS

THE EVALUATION AND COMPARISON OF BIDS SHALL BE BASED ON THE LIFE CYCLE COST FOR THE VEHICLES

DURING THE FIRST 6 YEARS, WORKED OUT IN THE FOLLOWING MANNER

INITIAL PRICE CIF PRICE QUOTED FOR BUSES

OFFERED FROM ABROAD EX-FACTORY/EX-SHOWROOM PRICE FOR

VEHICLES OFFERED FROM WITHIN THE COUNTRY

Bid Evaluation UsingLife Cycle Costing for Procurement

of 100 Urban Buses (cont’d)

OPERATING AND MAINTENANCE COSTS FUEL COSTS SHALL BE COMPUTED ON

THE BASIS OF 100,000 KM OFOPERATION PER YEAR ATA FUEL PRICE OF0.80 USD PER LITER,DISCOUNTED TO NET PRESENT VALUE AT A DISCOUNT RATE OF 10%

Bid Evaluation UsingLife Cycle Costing for Procurement

of 100 Urban Buses (cont’d)

OPERATING AND MAINTENANCE COSTS SPARE PARTS COST SHALL BE BASED ON 100,000

KM PER YEAR OF OPERATION,BASED ON THE GUARANTEED FIGURES PROVIDED BY THE BIDDER FOR EACH YEAR, DISCOUNTED TO NET PRESENT VALUESAT A DISCOUNT RATE OF 10 PERCENT

IF GUARANTEED FIGURES ARE NOT PROVIDED, PURCHASER MAY USEESTIMATED FIGURES BASED ONPAST EXPERIENCE, IF AVAILABLE

Bid Evaluation UsingLife Cycle Costing for Procurement

of 100 Urban Buses (cont’d)

DEPRECIATED COST PURCHASER SHALL ESTIMATE

THE DEPRECIATED COST OF THE VEHICLEOFFERED BASED ON THEGUARANTEED LIFE PRIOR TO THE FIRST MAJOR OVERHAUL, ORBASED ON PAST EXPERIENCE, BUTIN NO CASE MORE THAN 8 YEARS.

BIDDERS SHALL FURNISH ALL THE DATA REQUIRED FOR THE ABOVE COMPUTATIONS AS FURTHER OUTLINED UNDER CLAUSE OF THE TECHNICAL SPECIFICATIONS

Bid Evaluation UsingLife Cycle Costing for Procurement

of 100 Urban Buses (cont’d)ALL FIGURES IN 000’ USD

A C1. INITIAL COST

BID PRICE EX-FACTORY/CIF 65,000 70,000EVALUATION ADJUSTMENT FOR DELIVERY SCHEDULE 6,000 ---EVALUATION ADJUSTMENT FORVARIATION IN PAYMENT TERMS --- 1,000 TOTAL 71,000 71,000

2. OPERATING AND MAINTENANCE COSTSFUEL - GUARANTEED COST (AVERAGE) FOR EACH YEAR (8,000) (6,000) NPV FOR 6 YEARS 34,840 26,130

SPARES - GUARANTEED COST (AVERAGE) FOR EACH YEAR (5,000) (4,000) NPV FOR 6 YEARS 21,775 17,420

TOTAL 56,615 43,5503. DEPRECIATED VALUE (DEDUCT)

LIFE (6 YRS) (8 YRS)DEPRECIATED VALUE 0 12,500

4. TOTAL LIFE CYCLE COST 127,615 102,050 RANKING 2 1

Bid Evaluation Using Life Cycle Costing for

Oil Palm Plant

RELEVANT PART OF THE BID EVALUATION CLAUSES IN THE BIDDING DOCUMENTS

THE EVALUATION AND COMPARISON OF RESPONSIVE BIDS SHALL BE BASED ON THE TOTAL LIFE CYCLE COST FOR SIX YEARS, PER UNIT OF OUTPUT

THE LIFE CYCLE COST SHALL BE THE SUM OF THE INITIAL PURCHASE PRICE OF THE PLANT AND THE COST OF OPERATION IN ELECTRIC ENERGY FOR SIX YEARS OF OPERATION AT A UNIT COST OF US$ 0.10 PER KWH,DISCOUNTED TO PRESENT VALUE AT 12%

Bid Evaluation Using Life Cycle Costing forOil Palm Plant (cont’d)

BID EVALUATION AND COMPARISON ALL FIGURES IN 000’ USD

A C1. INITIAL COST 9,500 10,3002. OPERATING COST PER YEAR (1,200) (1,000)

OPERATING COST FOR 6 YEARS NPV AT 12% 4,933 4,111

3. TOTAL LIFE CYCLE COST 14,433 14,4114. OUTPUT PER YEAR (TONS) 3,600 4,0005. EVALUATED COST PER TON OF OUTPUT 4.01 3.606. RANKING 2 1

* A:12 MILLION KWH @.10 PER KWH* B:10 MILLION KWH @.10 PER KWH

Evaluation MethodologyMerit Point System (NOT recommended by the World Bank )

ALLOCATE WEIGHTS TODIFFERENT TECHNICAL FEATURES

ESTABLISH RELATIONSHIPBETWEEN QUALITY AND PRICE

SELECT BID WITH HIGHEST NO. OF POINTS or LOWEST PRICE PER POINT

ADVANTAGE: SIMPLE DISADVANTAGE: SUBJECTIVE

ASSIGNMENT OF POINTS

Evaluation MethodologyMerit Point System (cont’d)

(NOT recommended by the World Bank )

POINT WEIGHTAGES TYPICAL

EQUIPMENT PRICE 65-70 SPARE PARTS 8 - 10

TECHNICAL FEATURES 8 - 10

AFTER SALES SERVICE 4 - 5

STANDARDIZATION 4 - 5

TOTAL 100

BIDDING DOCUMENTS

SPECIFIES POINT WEIGHTAGE

Evaluation MethodologyMultiple Lots

LOTS INCLUDE ALL ITEMS INCOMPLETE LOTS

> 10% REJECTED

< 10% PRICE TO BE ADJUSTED

EVALUATION OF EACH LOT (1, 2, …) FROM EACH BIDDER (A, B, C, …)

COST OF ALL COMBINATIONS OF LOTS A(1) + B(2) + C(3)

A(1+2) + B(3)

A(1+2+3)

LOWEST EVALUATED COST COMBINATION