Procurement Management and Contract Administration

1. Lecture by: Andualem Endris (M.Sc)
andu0117@yahoo.com
Chapter Two
Madawalabu
University
College of Engineering
Construction Technology and Management Department
Procurement Management and Contract Administration
CoTM 4242
1

2. COTM 4242 2

3. • Procurement is the acquisition of goods,
works, consultancy or other services through
purchasing, hiring or obtaining by any other
contractual means.
• Tendering is a stage in the procurement
process extending from advertisement
(invitation to bid) up to signing of contract.
• Tender is an offer which incorporates the sum
of money, time and other conditions required to
carry out the contract obligations in order to
complete a project or a part of it consisting of
specified works.
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4.  Stage 1: Inception & Feasibility study –
identifying project objectives / set up project brief
 Stage 2: Design – develop further project brief /
develop concept & schematic design / Undertake
detailed design & detailing / prepare cost plan & budget
 Stage 3: Tendering – issue tender documents /
prepare & submit tender / evaluation of tender / award
tenders / prepare contract documents
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5.  Stage 4: Construction – site possession &
mobilization / undertake procurement fabrication,
installation, construction / carry out contract
administration
 Stage 5: Handover & Maintenance –
undertake all testing, commissioning & training /
handover project to owner /carry out necessary
maintenance / Defect rectification / etc
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6. Tendering will be started after the design completed
and project budget is approved
The process that is used to obtain offers leading to a
contract between:
client contractor
client consultant
main contractor sub-contractor
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7.  A tender formally means an invitation
to trade under the terms of offer.
 A contract is the term used for when
the parties have reached agreement.
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8. COTM 4242 8
SELECTION
CRITERIA
In this process we look at the ways to
choose between different tenderers,
reviewing the specific Criteria for
tender evaluation:
•Pre-qualification
•Technical evaluation
•Financial Evaluation
•Relationship between Technical and
Financial

9. COTM 4242 9
Pre-
Qualification
Technical
Evaluation
Financial
Evaluation
Interested firms or consortia,
submit experience and financial
capacity details
Contracting Authority assesses
these details
Short list the firms
Only short-listed firms can
submit a proposal
Bidders submit proposals

10. COTM 4242 10
Pre-
Qualification
Bidders submit Technical Proposals,
showing how they would run the contract
Bidders provide information on Financial
and technical ability
Proposals assessed using ‘technical
evaluation criteria
Bidders have to pass a ‘technical
threshold’ to be eligible for selection (e.g.
scoring at least 70 percent on technical
evaluation criteria in our country)
Technical
Qualification
Financial
Evaluation

11. COTM 4242 11
Pre-
Qualification
Financial proposals of only technically
acceptable bids should be opened and
evaluated.
Financial Criteria can be very simple, as
following examples:
Bidder asking for lowest tariff
Bidder asking for Lowest Fee (Least Bidder)
Bidder with best financial proposal awarded
the contract
Financial
Qualification
Technical
Evaluation

12. COTM 4242 12

13.  To select a suitable contractor at a time
appropriate to the situation of the project.
 To obtain from the contractor selected at the
proper time, an acceptable tender or offer
upon which a contract can be let.
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14. COTM 4242 14
Stage 2:
APPROVAL TO
TENDER
Stage 1:
PREPARATION
Stage 3:
DOCUMENTATION
Stage 4:
INVITATION
Stage 5:
PROCESSING
Stage 6:
AWARD
CONTRACT

15.  Final completion of drawings, specification,
measurement / take-off process.
 Choose conditions of contract.
 Parties involved: architects, engineers, QS,
client
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16.  Discussion and decision on type of
tender to be used.
 Selection of tender:
 Open
 Selective
 Negotiate
 Parties involved: CLIENT, CONSULTANT,
and CONTRACTOR
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Short-listed
tenderers

17. Contract Document
 Letter of invitation
 Checklist for submission of tender
 Articles of agreement
 Form of tender
 Specifications
 Bills of quantities
 Drawings
 Letter of acceptance form
 Schedule of day work rates
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18.  Based on selection of tendering methods
 Open / competitive / bid tender – produce tender
notice
 Selective – short listed contractors will be invited to
tender if they wish
 Negotiated – only one contractor is approached-
direct entry to project
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19.  The Tender Notice is a brief
description of the job being tendered
which is to be published in
Newspapers and on the Internet.
 The Internet is a very cost effective
way of publishing the tenders.
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20. a. Name of the Project.
b. Name & Address of the
Company floating the tender.
c. Name of work, materials or
services.
d. Place of work location.
e. Approximate estimated cost
of work.
f. Earnest Money.
g. Period of completion.
h. Date on which the Tender
Document sale commences.
i. Date and time up to which
tender documents can be
obtained.
j. The cost of tender
documents.
k. The date and time up to
which the tenders to be
submitted and are to be
opened.
l. Specification.
m. Eligibility Criterion.
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21.  Receive tender submitted by contractor
 Tender assessment / evaluation
 Completed tenders are received
 Arithmetical check
 Reasonable tender sum
 Reasonable completion time
 Capabilities of renderers' under considerations
 Tender recommendation / report – tender board
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22.  Pre-award meeting with contractors – validation of
lowest complying bid
 Validate lowest bid - Pre-contract meeting with
contractor for contract signing
 Approval by tender board / treasury
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23. COTM 4242 23

24. COTM 4242 24
Stage 2:
Determine
basis of
tender
Stage 1:
Decision to
tender
Stage 3:
Preparation of
cost estimates
Stage 4:
Commercial
appreciation
Stage 5:
Conversion of
estimate to
tender
Stage 6:
Submission
of tender

25.  Receipt of tender documents
 Pre-tender data sheet
 Decision to tender
 Consider implications of:
 Bonds
 Warranties
 Parent company
 Guarantees
 Funding
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26.  Abstract materials and subcontractors
 Sent out enquiries
 Consider construction methods / prepare method
statement
 Design temporary works / consider alternatives
 Prepare outline program
 Check major quantities
 Identify restrictions
 Visit site and compile site report
 Campaigning meeting (designating areas
responsibilities)
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27.  Calculate current rates using:
 Materials
 Equipments and
 Labour costs
 Analyze and check subcontractors’ quotations
 Price prelims / general items (in association with
members of the team
 Prepare summary sheets
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28.  Tender committee meeting part 1:
 Review:
 Method
 Program
 Technical and commercial risks
 Cash flow and finance
 Use of own plant
 Competition
 Commercial opportunities
 Economic climate
 Check prelims against historical cost data
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29.  Tender committee meeting – part 2:
 Calculate ‘spread’ and add to estimate
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30.  Submit in format required (Bid
submission format)
 Organize delivery.
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31. 31
COTM 4242