Module 10Organizing ProcurementSession 10.3 Works: Bidding, Evaluation, and Award; The Bidding Process
Instructional Objectives At the end of this session, learners will be able to 1. Define the following terms: specification, Bill of Quantities, responsiveness. 2. List at least five criteria frequently used in evaluating the fitness of bidders. 3. Compare the advantages and disadvantages of prequalifying bidders with postqualifying bidders. 4. Describe each step in a normal bidding process. 5. Describe the three components of a typical works contract document.
Instructional Objectives(continued) 6. Identify situations in which simpler contracts are preferable to more complex ones. 7. Compare the advantages and disadvantages of having site visits, during the bidding period, organized by the client. 8. Describe the steps in the evaluation and award process. 9. List the criteria traditionally used in evaluating bids. 10. Given one or more situations relating to responsiveness, resolve each situation.
Evaluation of Bidders • Legal status • Financial status • Size of firm, expressed in terms of turnover, during the recent years • Experience in constructing work similar to that now envisioned • Principal equipment • Key personnel
Bids Returned Award Contractors Evaluation Detailed Implementation preparing bids design by client Prequalification Postqualification Two Basic Types of Qualification
Prequalification’s Advantages • Saves inexperienced firms the expense of bidding • Eliminates unsuited firms before bidding • Tests level of interest
Prequalification’s Disadvantages • May increase lead time • Presents opportunities for collusion
Postqualification Pros and Cons • Inexperienced firms incur the cost of bidding. • Unsuited firms participate in the process. • No test of interest occurs until after bidding. • A short lead time is required. • It reduces opportunities for collusion up front. • Rejection of the unfit lowest bidder may provoke controversy.
Prequalification • Required by major international organizations • Used for large, complex works • Bid documents must be issued to all prequalified firms • May be project-by-project or continual
The contractdocuments Thebidpackage What is required under the contract How the bid should be prepared The Bidding Documentation
The Bid Package • The bidding documents • Preparation of the bid • The language • What the prices should include • Currencies • Bid security and validity • Prebid meeting • Bid evaluation criteria • Contract award procedure
The Bid Package(continued) • Submission of the bid • Sealing and marking • Deadline • Modification/withdrawal of bids • Bid opening and evaluation • Process • Clarification, correction of errors
The Bid Package(continued) • Evaluation and comparison of bids • Client’s rights • Notification • Performance security • Signing of contract
The Bill ofQuantities The ‘Financial’ The specificationsand drawings The ‘Technical’ Theconditionsof contract The ‘Legal’ The Contract Documents
The Legal Element • The conditions of contract • Legal language • Prevailing document • Best to use standard prepared by international body • The FIDIC is an example.(International Federation of Consulting Engineers)
The Legal Element The FIDIC • The FIDIC’s conditions of contrast have two parts. • Part 1: Conditions that do not (should not) change from project to project • Part 2: Condition of particular application • Advantage of two-part structure • Part 1 does not change. • Clients focus on Part 2 during the bidding process.
The Technical Element • Specification - defines required product in unambiguous technical language • Technical specification: Precise detailed description of the product of the project. • Functional specification: General requirements defining how the product is expected to perform. • Functional specifications allow more latitude to the contractor.
The Financial Element(In Remeasurement Contracts) • The Bill of Quantities (B/Q) • Items of work • Estimated quantities • Bidders enter unit rates against estimated quantities when bidding.
The Financial Element(In Remeasurement Contracts)(continued) • Daywork schedule • Sometimes included in B/Q • Quantities for commonly used • Equipment • Materials • Labor • Bidders enter unit rates. • Serves as embedded “cost-plus” minicontract • Gives staff flexibility for small items of additional work for emergency situations
Simplified Contracts • Small projects (less than US$10 million) usually require less complex documents. • Simplified documents may serve as a model for national competitive bidding.
Bid Security Performance Security Bidding Design Evaluation Implementation and award process Bid and Performance Securities Bonds • Securities that protect the client if successful bidder 1. Fails to sign contract 2. Abandons contract while work is in progress • Bid security submitted with bid • Performance security provided after award and replaces bid security
The Bidding Period • Clients may provide • Formal site visits for bidders • Prebid meeting • Clarification of issues • Within time period specified • Request and response shared with all purchasers of bidding documents
Summary – Works: The Bidding Process • Criteria for evaluating bidders • Pros and cons of pre-and postqualification(PREQUALIFICATION RECOMMENDED) • Bidding documentation • Bid package • Contract documents • Legal • Technical • Financial • Documentation should be supplied for smaller projects. • Bid and performance bonds typically required • During bidding period, the client should provide site visits, prebid meeting, and clarification.
Module 10 Organizing Procurement Session 10.3 Procurement of Works: Evaluation, and Award
Submission of Bids • Must conform to conditions in bidding document • Place • Time • Open in public immediately after deadline • Read bids aloud and make record of proceedings. • Create atmosphere of “transparency.” • Develop confidence in client. • May lead to general reduction in level of bids in future.
Examination of Bids • Review all bids for compliance after opening, but before detailed evaluation • Check of eligibility • Acceptability of proposed securities • Review of deviations from bidding documents • Exceptions, exclusions, qualifications, and alternatives • Degree of acceptability must be evaluated. • Acceptability • Impact on subsequent bid comparison
Evaluation of Bids and Award • Only further consider bids that are “substantially responsive” to bidding requirements • Steps in evaluation process • Check arithmetic errors. • Conversion to common currency, if relevant • Application of appropriate preferences, if permitted • Review of postqualification information, if required • Select lowest evaluated bidder (LEB) • Award made to LEB
Rejecting Bids • State client right in bidding documents • Not required to accept any or all of the bids • No reason need be given for rejection • Reasons for rejecting a bid • Lowest evaluated bidder may substantially exceed the estimate • All bids considered nonresponsive • Client judges a lack of effective competition exists • Should use right sparingly to avoid undermining client’s credibility
Summary • Process should adhere to procedures established in bid documents. • Process should promote transparency and selection of best proposal. • Contract is awarded to lowest evaluated bidder. • Client should retain the right to refuse bids but use sparingly to avoid undermining credibility of process and adding costs in the future.