the point based system for contractor selection for award of construction works

The Point Based SystemThe Point Based System

For Contractor Selection For Award Of For Contractor Selection For Award Of

Construction WorksConstruction Works

Accelerating Bhutan’s Socio-Economic DevelopmentAccelerating Bhutan’s Socio-Economic Development- GNHC, MoWHS & MoF- GNHC, MoWHS & MoF

Outline of Presentation:Outline of Presentation:

1. The Point Based System1. The Point Based System

2. Reclassification of Construction Firms 2. Reclassification of Construction Firms

3. Schedule of Implementation3. Schedule of Implementation

4. e-tool for evaluation 4. e-tool for evaluation

1. Background:

Why the need for a new point based system?

A point based system in place prior to April 2009

From 1st April 2009, a pass/fail system was introduced that used a series of parameters on which a contractor needed to pass in order to qualify.

Both these systems however addressed the needs of a robust process only partly and suffered from some drawbacks.

Objectivity

1

Old Point Based System Current Pass/Fail System

Potentially possible for contractors to score low on some parameters and compensate by scoring high on others

But high weightage given only to experience related parameters

Possible to build-in incentives but not done

No reason for contractors to get incorporated, employ local people etc.

Rigidity

2

Incentives for best practices

3

Subjective evaluation on technical capability – manpower, equipment, performance

Requirements loosely defined; no quantification

-

+

-

+

-

-

Project specific requirements for manpower, equipment specified; one-on-one comparison done

No test for proven past performance

Stringent qualification criterion for each parameter

Must to pass on ALL parameters to qualify

Extremely difficult for young, promising contractors to qualify

Often leads to re-tendering

Incentives for best practices cannot be built in as by definition they will need to be pass/fail

Criteria

Need for a system that addresses their shortfalls of the both the systems while retaining the positive aspects

Need for a system that can evaluate contractors on parameters most critical in achieving good performance in Bhutan’s construction sector context, and

Need for a system that can give incentives to the contractors to adopt some of the best practices that will help in development of the sector in general.

The Point Based System:- Background contd..

Objectivity

1

Old Point Based System Current Pass/Fail System Proposed Point Based System

Project specific requirements for manpower, equipment specified; one-on-one comparison done

No test for proven past performance

Objective levels of achievement and scoring specified for all technical parameters

Project specific requirements clearly defined

Stringent qualification criterion for each parameter

Must to pass on ALL parameters to qualify

Extremely difficult for young, promising contractors to qualify

Often leads to re-tendering

Adequate flexibility to allow young, promising contractors to qualify

Weightage to parameters well in-line with their relative importance in project execution

Potentially possible for contractors to score low on some parameters and compensate by scoring high on others

But high weightage given only to experience related parameters

Incentives for best practices cannot be built in as by definition they will need to be pass/fail

Suitable incentives for local employment, commitment for VTI internships, incorporation etc.

Possible to build-in incentives but not done

No reason for contractors to get incorporated, employ local people etc.

Rigidity

2

Incentives for best practices

3

Subjective evaluation on technical capability – manpower, equipment, performance

Requirements loosely defined; no quantification

-

+

-

+

-

-

+

+

+

+

-

system’s advantage

system’s disadvantage

Criteria

The Point Based System of Evaluation:

The New Point Based

System

Technical Parameters

Financial Parameters

1. Capability2. Capacity3. Organizational

strength

1. Financial bid quoted by a Contractor

combination of technical and financial parameters

Two stage qualification & evaluation process:Two stage qualification & evaluation process:

Technical Parameters - 40%

Financial Parameters - 60%

Techno-Financial ScoreTechno-Financial Score

Lowest quoted bid among qualifying bids 60% -------------------------------- Financial bid quoted by x

40% of Technical score for x

1. First Stage : Technical Qualification1. First Stage : Technical Qualification

Technical Parameter (40%)

A. Capability – 50 points

B. Capacity – 25 points

C. Organizational Strength 25 points

A contractor needs to obtain a score of at least 60 points out of 100 to qualify for the next stage.


1. Similar work experience - 102. Access to adequate equipment - 153. Availability of manpower - 154. Average performance score from previous work* - 10 Total - 50

points

Parameters above tests on the capability to execute the given work. Capability is taken to be a function of prior experience, their ability to

generate enough resources in form of manpower and equipment, and their performance track-record from previous works.

1 - Similar work experience (last 5 calendar years) Two options:-

a. the contractor can either be evaluated on the size of a SINGLE largest similar work that (s)he might have executed in the past

OR

b. on the aggregate size of THREE similar works that (s)he might have executed in the past

Scoring pattern for similar works:-Scoring pattern for similar works:-

Parameter Level of Achievement Score

Aggregate size of similar contract

(max 3) in the last 5 calendar yrs.

• > 175% of current project size

• 150-175% of current project size




• < 75% of current project size

10

8

6

4

2

0

Size of the largest similar contract

executed in the last 5 calendar yrs

• > 100% of current project size





• < 50% of current project size

10

8

6

4

2

0

2 – Access to adequate equipments:

Allocate points to each equipment based on its importance:-

Equipments of Tier-I importance: 50 points Equipments of Tier-II importance: 30 points Equipments of Tier-III importance: 20 points

Total marks out of 100 to be scaled down to 15 100% marks if the equipment are owned and 75% marks if hired. Scoring on equipment is fundamentally similar to the way it has been done in

the pass/fail system

An illustrative list of prescribed equipments :

Nature of work Tier-I (50 pts) Tier-II (30 pts) Tier-III (20 pts)

Road construction Excavator Road roller, Paver, Vibrator

Air compressor, Tipper trucks, survey equipment

Building construction Bull-dozer, Concrete-mixer

Shuttering set, Crane truck, Dumper truck

Air compressor, Survey equipment

Road resurfacing Road roller Vibrator, Sprayer Air compressor, Tipper trucks

Road construction Excavator Road roller, Paver, Vibrator

Air compressor, Tipper trucks, survey equipment

Building construction Bull-dozer, Concrete-mixer

Shuttering set, Crane truck, Dumper truck

Air compressor, Survey equipment

An illustrative list of prescribed equipments :

Equipment Maximum marks Number required

Excavator 50 2

Paver 10 3

Vibrator 10 3

Road roller 10 3

Truck 5 4

Mechanical sprayer 5 2

Air compressor 5 1

Survey equipment 5 3

Total 100

3 – Availability of Manpower

The 100 points allocated is as follows:

Personnel position of Tier-I importance: 50 points Personnel position of Tier-II importance: 30 points Personnel position of Tier-III importance: 20 points

This parameter evaluates contractors on their ability to deploy personnel with suitable qualifications and experience

Scoring on manpower is fundamentally similar to the way it has been done in the pass/fail system

Allocate points to each of they key project personnel positions based on its importance

An illustrative list of manpower requirements:

Tier of importance Position Qualification/Experience Score

Tier – IProject

Manager

Graduate civil engineer with 10+ years of experience

Graduate engineer with 5-10 years of experience

Diploma engineer with 5-10 years of experience

Any other level of qualification or experience

50

30

15

0

Tier – IIProject

Engineer

Graduate engineer with 5+ years of experience

Diploma engineer with 5+ years of experience

Graduate or diploma engineer with 3+ years of experience


30

20

10

0

Tier – IIISite

Supervisor

Diploma engineer with 3+ years of experience

Personnel with formal training certification from VTI and at least 5 years of experience


20

10

0

4. Average performance score from previous work (0-10 pts)

The 100% performance score is composed of the following parameters:

1. On-time completion - (30%)

2. Quality of execution - (70%)

4 – Average performance score from previous work (0-10 pts)

This parameter gives points based on contractor’s performance score of the last 5 calendar years

To begin with, all contractors will have a default performance

score of 100%.

This score will diminish whenever a contractor defaults on any one of the parameters of performance

Performance score information system and will be institutionalized with the introduction of the new point based system.

As contractor execute more projects, this score will keep getting averaged out over the number of projects executed


This category of parameter tests the contractor on his/her ability to generate adequate financial resources for executing the project.

The parameters covered under this category are:

1. Bid Capacity - 15

2. Credit line available (unused) - 10

Total - 25 points

1 – Bid Capacity (15 points)

A= Average turnover of the contractor over the last 3 calendar

years

N= Estimated duration of the project being tendered in years

B= Portion of other ongoing works to be completed in the period that overlaps with the current project’s duration (that is, N)

Bid Capacity = 2*A*N – B

Bid capacity having calculated, the scoring will be as follows:

Parameter Level of achievement Score

Bid Capacity

Bid capacity ≥ quoted bid

Bid capacity is between 80-100% quoted bid



Bid capacity is between <40% quoted bid

15

12

08

04

00

2 – Credit line available (Unused):-

- This parameter evaluates the contractor on his/her ability to raise credit from banks and other financial institutions to manage the working capital requirements of the project.

- The contractor will get a score based on a letter of credit from a bank that gives the amount of credit available to the contractor for the work to be awarded.

- Level of achievement on this parameter will be judged in terms of months of project cash flow for which the credit is available.

Scoring pattern will be done as follows:


Credit line available (unused)

≥ 100% of estimated 3 month project cash flow90 – 100% of estimated 3 month project cash flow80 – 90% of estimated 3 month project cash flow70 – 80% of estimated 3 month project cash flow60 – 70% of estimated 3 month project cash flow<60% of estimated 3 month project cash flow

10

08

06

04

02

00

This sums up the scoring of 25 points under the “capacity” category in the technical score. We now proceed to the next category – “organizational strength”::

C. Organizational Strength 15 pointsC. Organizational Strength 15 points

This category of parameters evaluates the contractor on how well the contractor’s organization is set up and functioning and how much is it contributing to the overall betterment of the sector.

The parameters under this category are:

1.Status (incorporated, proprietorship, JV etc.) - 052.Employment of local people - 103.Strength of special skill & knowledge base - 054.Commitment for internships to VTI graduates - 05 Total - 25 points

1 – Status (incorporated, proprietorship, JV etc.)

The scoring on this parameter will be as follows:


Status (incorporated,

proprietorship, JV)

Incorporated company bidding alone

Incorporated company as the lead partner (>50% stake) in a bid by a joint venture

Incorporated company as a non-lead partner (<50% stake) in a bid by a joint venture

Any other (proprietorship, partnership etc.)

5

3

1

0

2 – Employment of local people - This parameter is designed to give the contractors benefit for employing local

people in construction jobs.

The scoring on this parameter are as follows:


Employment of local people

≥ 50% project workforce to be Bhutanese

40 – 50% project workforce to be Bhutanese



≤ 15% project workforce to be Bhutanese

2 bonus points for contractors having Bhutanese

people in at least 20% of permanent positions

8

6

4

2

0

Organisational contd….Organisational contd….

3 – Strength of special skill & knowledge base

- This parameter is to encourage contractors to employ environment friendly and new and innovative technologies etc. in construction



Strength of special skill & knowledge

base

Use of metal scaffolding instead of bamboo

Use of non-polluting construction equipment

Use of other technologies or equipments so far not used in the sector

5

4

3

4 – Commitment for internships to VTI graduates

- This parameter is designed to provide incentives to contractors to facilitate the betterment of vocational training for construction in Bhutan



Commitment for internships to VTI

graduates

Internship opportunities for VTI graduates equivalent to ≥ 10% of project workforce

Internship opportunities for VTI graduates equivalent to 5-10% of project workforce

5

3

This sums up the scoring of 25 points under the “Organizational Strength ” category in the technical score.

Award of Work:-Award of Work:-

Contractors who obtain a score of 60 points or more on technical will move to the second stage.

In the second stage, the technical score from the previous stage will be combined with the financial bid to obtain the overall techno-financial score as given below:

**Work shall be awarded to the contractor obtaining the highest overall techno-financial score.

Lowest quoted bid among qualifying bids 60% -------------------------------- Financial bid quoted by x

40% of Technical score for x

2. New System For Contractor

Classification

Simplifications to the existing classification systemSimplifications to the existing classification system

Nu 4 million

PRESENT CLASSIFICATIONPRESENT CLASSIFICATION PROPOSED CLASSIFICATIONPROPOSED CLASSIFICATION

Nu 15 million

Name D

No. of contractors 2522

Limit on project sizes < 2 mn

Max. no. of projects 1

Name C

No. of contractors 285

Limit on project sizes 2-9 mn

Max. no. of projects 3

Name A B

No. of contractors 58 35

Limit on project sizes >19 mn 9-19 mn

Max. no. of projects 5 4

LARGE contractors No restriction on number of projects? Eligible for projects > Nu 15 million To be awarded projects based on the new point

based system proposed

MEDIUM contractors No restriction on number of projects? Nu 15 mn ≥ Project size > Nu 4 mn To be awarded projects based on the new point

based system proposed

SMALL contractors Maximum 2 project allowed at a time? Total works (all together) ≤ Nu 4 mn To be awarded projects based on the lowest bid

basis

Same as class B; equipment of class A

Should get incorporated within 1 year

Class Requirements

No requirements on track-record for being in any class – registration purpose Possible for new, promising contractor to enter higher class Adequate consideration for the large number of small contractors

Same as those for class C

One site supervisor

Incentive to those bidders who employ VTI site supervisor

Class –LargeClass –Largeallowable Range :- > 15 mnallowable Range :- > 15 mnmax No of Project :- max No of Project :- No limit No limit /5 /5 Nos.Nos.

Proposed System for Contractor Classification

Class –Mediumallowable Range :- 4-15 mnmax No of Project :- No Limit/ 4 Nos

Class –Smallallowable Range :- < 4mnmax No of Project :- 2 Nos provided the total amount is <4mn

3. Schedule of Implementation3. Schedule of Implementation

4. e-tool for evaluation

CDB WEBE-Software

Bid Invitation Stage

Up-load Tender

EnterName of the workEstimate AmountProject Duration

Enter RequirementsEquipmentsManpowerSpecial Strength

CDB Database

Work IDGenerated

Information gets

Stored

Evaluation Stage

Enter Work IDReceives Information from DatabaseName of the workEstimate AmountProject DurationSet Criteria (manpower, equipment etc.)

CDB Database

CDB WEBE-Software

(Enter ID)/CDB No.

Enter CDB No.Receives Information from Database for contractorSimilar ExperienceAnnual TurnoverPast PerformanceNos. of work in hand & value of works that overlaps with the current project

Enter other parameters:

eqip, m/p etc.

Repeat for each bidder – evaluation complete

Gets Storied in Database

CDB WEBE-Software

Work Completion stage

EnterDate of completionFinal AmountPerformance ScoreTimely Completion ScoreQuality Score

CDB Database

The past performance score of the bidder’s gets updated which will be used in the next bidding processWork awarded gets updated as completed

Tashi Delek

the point based system for contractor selection for award of construction works

Documents

promising contractors

old point

new point

series of parameters

technical capability

doneno reason

best practices

comparison doneno test