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Tendering & Contracts

MECH4205(5) - Engineering Management II Semester 2 Academic Year 2011 / 2012

Prepared by Mr Bhoomitra Sharma TOOLSY

Fundamental Principle of Public buying

Procurement of goods in Public Interest
Efficiency, Economy, Transparency

Fair & Equitable treatment of suppliers Promotion of Competition

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Objectives of Public Procurement*

Value for money in procurement of goods, works and services Integrity avoiding corruption and conflicts of interest Accountability Equal Opportunities and equal treatment for providers Fair treatment for providers Efficiency in the procurement process

* Sue Arrowsmith

Procurement process
Procurement decision Preparation of RFP or Tender document Internal validation Publication of RFP Await proposal Receipt of proposals Evaluation of best proposal or best bidder Selection of best proposal or best bidder Presentation by best bidders Decision by soliciting company Contract / Agreement finalisation & signature

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Types of Tender
In broader terms there are three types of tender : Open Tender Limited Tender Single Tender

Writing the Bid

The Basics:
What / How / Who/ When / How Much?

Add Value:
Demonstrate a clear understanding of the specification Adds value and brings innovation to the specification Explains why choose us?

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The tendering process

Two Stage Tender

Contract Notice Expression of Interest Pre-Qualifying PreStage PQQ Evaluation Invitations to Tender issued Prepare Tender & Submit Tender Evaluation 8 Contract Award

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Preparation of tender document

Good tender document:
Letter of invitation to tender Instruction to tender conditions of contract Schedule of Requirement Technical specification Special conditions of contract Bills of quantities / Price schedule Contract Form General information about site Form of tender

Receipt of tenders
Tenderers may visit the site Double clarification Announcement of respective bids Disqualified bids

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Evaluation of tenderers
Technical Commercial Managerial contractual

EVALUATION PROCESS - micro

Tender is sealed Tender documents must clearly specify evaluation criteria. Two types of Bids:
Technical Financial

Tender evaluation to be in accordance with evaluation criteria.

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How Tenders Are Evaluated

Published evaluation criteria:
Best Price Most Economically Advantageous Tender (MEAT)

Usually evaluated by a panel Scoring matrix used to objectify subjective opinions Scores are weighted Tendering rigorously controlled and audited

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Proposal
Technical Financial No of copies to be prepared as per the RFP

Technical proposal
Executive summary Understanding of RFP
Understanding of problems Analysis of situation

Project description
Project scope and objectives Approach, methodology, task breakdown and deliverable(s) by task Plan of work Facilities and Equipments Any special requirement of project in terms of , logistics and permits Clarification of roles (service provider and client)

Team
Team, team composition and CVs Past experience relevant to the project

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Financial proposal
Services being charged and provided (but not charged) Labour / expertise cost and rates per day Cost of product or service (production and delivery) Distribution and logistics charges Administration fees Contingency charges covering unforeseen circumstances

Building effectiveness of proposals Questions to be asked during preparation:

What does the solliciting organisation really want? What is the problem that needs to be solved? What approaches to the solution will be viewed most favourably? What approaches will be viewed unfavourably? What objections will our plan elicit? Can we accomplish the goals we propose?

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Preparation of proposal
Tendering / Bidder / Proposing organisation may have to research on soliciting organisation in areas:
Problems Corporate culture and the resulting attitudes Current financial status Business goals

SelfSelf-check of proposal
What are the weaknesses of the plan from the clients point of view? How can we counter any weaknesses and clients potential objections? How can we make our plan appealing? How can we show that we understand their needs? How can we best present our capability to this project? What are our strengths?

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SelfSelf-check of proposal
From our knowledge of our organisation, what are our weaknesses to complete the project as proposed? Do we need to modify our proposed plan to avoid misleading the client about our ability to perform certain tasks on time, as proposed, and at cost? Can we sell our idea without compromising the accuracy of what we can actually do?

Must Haves
Price Period for Validity of Offer Responsive Offer from Responsible Offeror Compliant with Request except for Certifications Representations/WarrantiesWhat are they? Identification of Authorized Negotiators Others?

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Nice to Haves
Alternative Offers Negotiable Items
You may be willing to eliminate these items Relationship to Price

Options Nice to have and must have provisions can impact price

Functions of the Contract

Record of the agreement Document which frames and facilitates contract administration activities Risk allocation among the parties Defines Payment Terms Performance Incentive to Contractor

Request for Tender Forms the Foundation For the contract

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