Overview of Construction Industry and Procurement Process
1
General Overview
Construction Industry
is an industry which is involved in the planning,
building, execution and evaluation of all types of civil works.
Construction projects can be broadly classified as:
Building Construction
(includes facilities for habitation, institutional
, educational, light industrial (e.g. warehouse), commercial, social and
recreational purposes),
Engineered Construction
(includes highway and heavy (e.g. dams,
sewage plant) construction), and
Industrial Construction
CI
is among the leading industry in producing employment and contribute
to the overall national development.
2
Cont…
The main players in the
construction industry are:
The Client:
The Consultant:
The Contractor:
Insurance Companies:
Banks:
Suppliers:
Permitting Agencies:
Public:
3
Job
Supervisors
Subs
Owners
Corporate
Management
Field Labor
Design
Center
Sales &
Marketing
Accounting
Scheduling
Purchasing
Estimating
Local
Municipalities
Banks &
Mortgage
Lendors
Manufacturers
Suppliers
RE Agents
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4
Ethiopian Construction
Roads Projects ( More 43 Billion Birr in 5 yrs)
Many road projects under the federal & regional state
Road authorities.
Light weight railway project
Hydropower projects
Great renascence dam
Tekeze
Gilgel Gibe I. II, and III
Buildings projects
Housing projects at federal & regional state level ( 400,000
houses ( 16 B. Birr)
The 31 universities.
Many health centers.
5
Procurement
Outline
1.Procurement
1.1. What is Procurement?
1.2. Contract/project delivery system
1.3. Stages of Civil Engineering projects
1.4. Bid preparation
1.5. Bid evaluation
1.6. Selection of bidders
1.7. Statistical approach in tendering
6
1.PROCUREMENT
1.1What is Procurement?
1.1.1 Procurement
Procurement
is the acquisition of appropriate goods, works and
or services at the best possible total cost of ownership to meet the
needs of the purchaser in terms of
quality
,
quantity ,time
,and
location.
The complete action or
process of acquiring or obtaining
personnel ,material ,services ,
or
property
by means
authorized in pertinent directives.
Corporations and public bodies often define processes intended to
promote
fair
and
open competition
for their business while
minimizing exposure to fraud and collusion.
7
Cont…
In short , Procurement is Obtaining goods , works ,consultancy or other
services through purchasing , hiring or obtaining by any other contractual
means.
Tendering/Bidding
:
is a stage in the procurement process extending
from advertisement (invitation to bid) up to signing of contract.
Tender/Bid
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 apart of it consisting of specified works.
When signed and submitted the Bid/Tender creates a
legally binding
and
valid offer.
8
1.1.2 What is to be Procured?
Consultancy Services
: a service of an intellectual and advisory
nature provided by consultants using their
professional skills to study
,
design and organize specific projects ,advice clients ,conduct training and
transfer knowledge.
Services
:
mean any object of procurement
not related to
professional skills
other than works ,good sand consultancy services ;
such as transportation ,printing and duplicating books , maintenance ,
security , electricity , telecommunication and water supply services.
9
1.2 Contract/Project Delivery Methods
Contract/project
delivery system
is the way
Project Owners
together with
Project Regulators
and
Financiers
determine the
assignment of responsibilities
to
Project Stakeholders
along the
Construction Process.
It is often determined during the
basic planning phase
of the
construction project.
Delivery systems are basically classified into two broad areas:
Force Account,
Outsourced.
10
1.2.1 Force Account
Definition
Work
ordered on a construction
project
without an
existing agreement
on its cost and performed with
the understanding that the contractor will bill the
owner according to the cost of labor, materials, and
equipment, plus a certain percentage for
overhead
and
profit
.
When the project owners engage them selves to
undertake the project ,it is called a
force account
delivery
system.
Such a system is often
promoted
if the Project
Owners believe that there is a
comparative
advantage
in
quality ,cost and time
.
11
1.2.2 Outsourced delivery systems
Most of the project delivery methods/systems are found under the
category of out sourcing.
The criteria for such category are based on:
segmentation ,
integration and financing.
A.
Segmented Delivery Methods
A.
Design-Bid-Build(DBB);
B.
Design-Build(DB);
C.
Construction Management(CM);
D.
Pure Operation sand Maintenance (O&M)
12
Cont…
3.
Integrated Process Delivery Methods
Design-Build-Operate;
Design-Build-Operate-Maintain;
Design-Build-Finance-Operate;
2.
External Financing Methods
Design-Build-Finance-Operate;
Build-Own-Operate;
Build-Own-Operate-Transfer
;
13
1.2.2 Outsourced delivery systems
A
.
Segmented Delivery Methods
A . Design-Bid-Build , DBB
( Traditional Method )
After Project Owners did prepare the Basic Planning that
identifies construction project programs , they call upon the
participation of Design and/or Supervision Consultants.
This Consultant will carry out the
design
together with the
necessary
tender documents
which will be the basis for
tendering
to select Contractors.
14
Cont..
For many years ,DBB has been the most common method
of project delivery for public projects ,and form any
private projects as well.
DBB is effective on projects
Where the owner needs both professional design services and
construction services.
Where the designer does not require detailed knowledge of the
means and methods of construction.
DBB provides the owner with a
high degree of control.
15
Cont…
16
(
Two Separate
Contracts for Design & Construction)
Cont…
Advantages:
Applicable to a wide range of projects,
Well established and easily understood,
Clearly defined roles for all parties,
Provides the lowest initial price that
competitive bidders can offer,
Extensive litigation has resulted in well
established legal precedents,
Insurance and bonding are well defined.
17
Disadvantages:
Innovation not optimized;
Usually cost overruns;
Disputes between parties;
Client retains risks;
Usually low bid-incentive
for change orders;
Owner responsible for
errors and omissions.
B. Design- Bid , DB (Turnkey)
Design Build or Turnkey , in principle ,
reduces
numbers of
procurement processes
engaged in the fragmented process and
employ only one procurement process and a single design build
contractor to provide the entire Construction Implementation
Process (design and construction ).
The
design builder performs design
and
construction
according to
design parameters , performance criteria
and
other requirements
established by the employer or his
representative.
In this arrangement both the design and construction liability rests
with the Contractor
18
Cont…
Advantages.
Single source responsibility both for design &
construction;
Integrating design & construction;
Reduction in administration;
Innovation;
Cost savings;
Construct ability optimized;
Most risks transferred to the design-builder;
Design reflects.
19
C. Construction Management , CM
Under CM the Owner contracts separately , but some what
simultaneously , with a design consultant and with a firm whose
primary expertise is construction ( the Construction Manager).
The owner procures the management services of the Construction
Manager (in most cases a general contracting construction firm)
early in the design phase.
Types of CM delivery system:
CM at Free : as agent,
CM at Risk : as a constructor.
20
Advantages may include
CM At Free
Provides a managing &
administering services for all
phases of a project;
Treats planning, design,
construction as an integrated
tasks;
Some costs & schedule control;
21
CM At Risk
Good for clients with insufficient
staff;
Responsible for time & cost overrun;
Holds & manages the trade
contractors;
Constructability design review;
Works closely as a teaming effort &
encouraging partnering & trust;
Disadvantages may include
CM At Free
No contractual relationship
with trade contractors;
No contractual
responsibility for outcomes
of a project;
Client retains the risks;
22
CM At Risk
Duplication of administration &
additional paperwork;
More paper work for the client;
Some duplication of administration;
Fast tracking difficult to control with
designer & CM;
Sometimes difficult to manage all phased
packages with costs, changes & schedules;
D. Design-Build-Operate , DBO
According to
FIDIC
, the
DBO
approach to contracting
combines design , construction , and long term (ex.20 years)
operation (and maintenance) of a facility in to one single contract
awarded to a single contract or (who will usually be a joint
venture or consortium representing all the skills for in a DBO
arrangement).
The advantages are categorized in terms of :
time ,
finance and quality.
23
Cont…
Time
With possibilities to overlap some design & build activities it will be possible
to minimize delays & optimize the smooth flow of construction activities
.
Finance
With cost restraints & commitments & other risks being carried by the
contractor, there is less risk of price over-run.
Quality
With the contractor responsible for
20
years operation, he has an interest to
design & build quality plant with low operation & maintenance costs.
Not only will then plant be “fit for purpose” but it will be “built to last”.
The FIDIC has now prepared conditions of contract which facilitate
the D-B-O process.
24
E. Build-Operate-Transfer , BOT
BOT is a form of procurement and contract delivery system that promotes
Public Private Partnership (PPP)
in which a private company is
contracted to finance , design , construct , operate for a certain period
(usually 10 years) and transfer the facility to the Project Owner.
The typical
BOT
project contract is the process where by a government
grants a concession to a project development company to develop and
operate what would normally be a public sector project , for a given period
of time known as the concession period.
BOT project involves a potentially complex contractual structure.
25
G. Delivery systems based on Financing
method
Design-build-operate-transfer ; DBOT
Design-build-operate-maintain ; DBOM
Design-build-own-operate-transfer ;DBOOT
26
1.3.Stages of Civil Engineering Projects
The project life cycle of a construction project may be viewed as a
process through which a project is implemented from cradle to grave.
27
Cont…
The
major stages in construction projects encompass:
Pre-design stage
Design stage
Processing construction bids stage
Construction stage
Completion and handover (contract closeout)
28
1.3.1 Pre-design stage
It encompasses the following major activities:
Carry out feasibility study,
Selection of suitable site,
Preparation of tentative cost estimates,
Making topography of the site,
Preliminary sub-surface investigation.
Pre-by Ermias Solomon.
29
1.3.2 Design stage
It encompasses the preparation of:
Concept design,
Preliminary design,
Final design,
Engineer’s cost estimate,
Bid documents,
Drawing sand design reports.
30
1.3.3 Tender/ Bid stage.
What is Tender?
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 .
Will be started after the design complete and project budget must be
approved .
31
client
contractor
client
consultant
main contractor
sub-contractor
Difference between a contract and a
tender
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.
Pre-by Ermias Solomon.
32
Cont…
The following activities need attention during processing
of construction bids.
A . Bid documents and related issues:
Preparation of bid documents
Clarity of bid documents,
Validity of bid security,
Amendment of bid document (if any),
Site visit ,
Performance Security etc.
33
Cont…
B .
Bid processing and award of contract:
Determination of project category (possible procurement
method),
Competitive bidding (ICB,NCB),
Limited/restricted bidding( ICB,NCB),
Direct contracting (appointment/ negotiated contract)
Force account
Announcement of invitation for pre-qualification,
Public bid opening,
Bid evaluation and award process,
Preliminary examination of bids.
Evaluating bids.
Propose award.
Bid evaluation report.
Contract award.
Rejection of all bids,
Preparation of contract document,
Signing of contract
.
34
1.3.4 Construction stage
Construction stage is the
critical phase
since the result of all prior
planning , design and the total pre-construction decisions are brought to
fruition
.
The
success
of this stage mainly
depends
on the
relation
and
strength
of the
construction team
(main stake holders).
The main activities in construction phase are
construction supervision
and
contract
administration
.
I . Construction supervision :
Site control,
Quality control,
Quantity control,
Monthly and quarterly progress evaluation
meetings.
35
Cont…
ii. Contract administration:
It covers the major activities of addressing changes ,
payments ,claims etc.
It will be dealt with in detail under chapter2
36
1.3.5 Contract closeout stage
Transition from design and construction to the actual use
of the constructed facility.
The management team must provide
documentation ,
shop drawings , as built drawings
, and
operation
manuals
to the owner organization.
Assessment
of the
project team’s performance
is
crucial
in this stage for a voiding mistakes in the future.
Actual activity costs
and
durations
should be recorded
and
compared
with that was
planned.
37
1.4 Bid Preparation
1.4.1
Preparation of Bid Documents
The Bidding document shall in corporate all in formation necessary
for prospective bidders to prepare their bids.
The
detail
and
complexity
of
bid documents
may
vary
with
the
size
and
nature
of the proposed
bid package
and
contract.
The consultant hired for the job/the client prepares all the design
and tender document which includes
Legal
&
Technical
section .
38
Cont…
39
A) Legal section
Invitation to bidders
Instruction to bidders
Conditions of contract
GCC & SCC
Tender forms
Form of tender
Appendix to form of tender
Certificate of tender visit to site
Form of tender security(bank grantee)
Form of agreement
Form of performance bank grantee
Form of grantee for advance payment
Schedule of Supplementary
information
B) Technical section
The contract drawings
The specification
The bill of quantities
The bill of schedule
Soil investigation reports
Addenda
Cont…
Bid documents for works include:
A.
Bidding information,
B.
Contractual information.
Contractors are
responsible
for all
duties
, taxes
and
other levies
; hence , bidders shall take these factors into
consideration in preparing their bids
.
40
Cont…
A.
Bidding Information
It’s part of a tender document , where bidders are required to respond (
provide their offer , data , information) in accordance with the
requirement of the documents within the bidding period.
Bidding Information Comprises:
Invitation for bid(IFB),
Instruction to bidders (ITB),
Bid Data Sheet (BDS),
Bid forms including BOQ,
Addenda(Bid Amendment).
41
Cont..
B.
Contractual Information:
Documents included in the tender document to furnish bidders with
full and detailed information of the project for application after
winning the contract.
The bidder should utilize such information to provide a fair and
reasonable offer to the bidding document.
Contractual Information Comprises :
Agreement form (Contract Agreement),
Standard (General) Conditions of contract,
particular or special conditions of contract,
Technical specifications and Methods of measurement,
Drawings,
Appendix to Contract Agreement.
42
1.4.2 Invitation to bidders
This is a document that describes ,
The name of the projects
Its locations
The principal elements of the work to be done
The sources of finance
Where & when to obtain the tender documents and the return
address and date
Amount of bid security
Date of site visit and,
Pre-bid meeting etc
43
Sample Form of Tender
Pre-by Ermias Solomon.
44
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The discounts offered & the methodology for their application are:
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We have no conflict of interest in accordance with the ITB;
Our firm, its affiliates or subsidiaries - including any subcontractors /
suppliers for any part of the contract - has not been debarred from
participation in public procurement by the Government of the
FDRE, in accordance with the ITB ;
We have read & understood the provisions on fraud and corruption
in the ITB and we undertake to abide by the Code of Ethical
Conduct for Bidders during the procurement process and the
execution of any resulting contract;
We understand that this bid, together with your written acceptance
thereof included in your notification of award, shall constitute a
binding contract between us, until a formal contract is prepared and
executed.
We understand that you are not bound to accept the lowest
evaluated bid or any other bid that you may receive.
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1.4.3 Time for Preparation of Bids
Time for preparation and submission of bids depend on the
particular circumstances of the project ,magnitude and
complexity of the contract.
The time to be all owed for the first call is 30 calendar days to
enable prospective bidders to conduct investigations before
submitting their bids.
In some cases the employer is encouraged to convene a pre-bid
meeting and arrange site visits.
Concise instructions as to the time , date and place for
submission of tenders should be given.
45
Instruction to bidders
The instruction to bidders contains information which is relevant to the
tender
Preparations such as,
A brief description of the works and its location,
Validity of tenders
Tender security
Amount and types of currency as well as bank form
Ruling language of the contract documents
Site visit dates
The employer arranges site visit to acquaint with the prevailing site
conditions
Pre-bid meeting
After site visit pre bid conference will be arranged by the employer to
answer question raise by the tenders
Dead line of submission of tenders
46
PPA SBD\Wks-SBD-ICB-Section 1.doc
PPA SBD\Wks-SBD-ICB-Section 2.doc
1.4.4 Submission of tender
The employer will distribute a blank forms that will be filled
by the bidders
All bids should be submitted in a sealed envelope marked on
the outside with the name of the project and the bidders
name & address
All tenders received at the closing date are opened & read to
be evaluated under established procedures & conditions
Any tender that is not submitted through the indicated
procedures will be disqualified
47
1.4.5 Evaluation of tender
After the invitation to bidders is floated, tenders will submit their
proposal to the client carries out an evaluation of the bids through
comparisons of different offers
The first step in evaluation process is
public opening
and reading of
offer in the presences of all competitors.
At this stage the name of the tenders offering bids are readout and
recorded with a general check on establishing,
Conformity with instruction to bidders
Validity of tenders (based on various criteria)
Check tender security and
Readout & recording of bid prices
48
Cont…
Subsequent to this the employer /consultant then starts the formal bid
evaluation processes
The evaluation processes includes the following
General contractual and administrative evaluation
Technical evaluation
Financial evaluation
General contractual and administrative evaluation
Prior to a detailed bid evaluation a general conformity check is
carried out
Usually this check insures compliance with the legal/contractual
aspect of the contact and may include whether there are
deviations or not
49
Cont….
Financial evaluation
The evaluation of the financial part is straightforward .
The prices are corrected for arithmetic errors and then added up
and compared with each other , some of the issues that are
considered in financial evaluations are:
Verifications readout prices
Checking of submitted prices are the same as the figures
readout during the opening ceremony
Check & adjust arithmetic errors, omissions, adjustment,
additions.
Based on the analysis of the above factor, bids are then compared
with each other and then the lowest bid value is then selected
50
Cont…
Technical
evaluation
Besides the priced bill of quantity contractors are required to submit a
technical compliance documents
This technical compliance document will require submission of requested
details
The evaluation processes contains some of the following issues
Completeness of the bid
General compliance of the tender requirements
Substantial responsiveness to the technical Specification & biding
documents
Alternative proposal if any
Review of the proposed organization /staff organization charts
Cash flow
Schedule of suppliers
Financial stability details etc
51
Cont….
Combined financial & technical
evaluation (cont…)
The above evaluation outcome are then combined to take into
consideration the various aspects and quantified financially as
the need may be
The steps of combined evaluation include,
assessing the combined capability of the bidder ( technical
&financial)
Comparisons of the bids and ranking of tenders as evaluated
52
PPA SBD\Wks-SBD-ICB-Section 3.doc
1.7
Statistical Approach of Tendering
53
Cont…
54
Pre-by Ermias Solomon.
55
The construction industry plays a vital role in national development, encompassing various types of projects from building construction to infrastructure development. Key players include clients, consultants, contractors, and financial institutions. Ethiopian construction projects showcase significant investments in road infrastructure, housing, and energy sectors. The procurement process in construction involves acquiring goods and services to meet project needs efficiently while ensuring fair competition and transparency. This process covers bid preparation, evaluation, and selection of bidders.
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Presentation Transcript
General Overview Construction Industry is an industry which is involved in the planning, building, execution and evaluation of all types of civil works. Construction projects can be broadly classified as: Building Construction (includes facilities for habitation, institutional , educational, light industrial (e.g. warehouse), commercial, social and recreational purposes), Engineered Construction (includes highway and heavy (e.g. dams, sewage plant) construction), and Industrial Construction CI is among the leading industry in producing employment and contribute to the overall national development. 2
Cont The main players in the construction industry are: The Client: The Consultant: The Contractor: Insurance Companies: Banks: Suppliers: Permitting Agencies: Public: 3
Too Many Participants Job Subs Supervisors Corporate Management Owners Field Labor RE Agents Suppliers Design Center Manufacturers Sales & Marketing Accounting Banks & Mortgage Lendors Scheduling Local Municipalities 4 Purchasing Estimating
Ethiopian Construction Roads Projects ( More 43 Billion Birr in 5 yrs) Many road projects under the federal & regional state Road authorities. Light weight railway project Hydropower projects Great renascence dam Tekeze Gilgel Gibe I. II, and III Buildings projects Housing projects at federal & regional state level ( 400,000 houses ( 16 B. Birr) The 31 universities. Many health centers. 5
Procurement Outline 1.Procurement 1.1. What is Procurement? 1.2. Contract/project delivery system 1.3. Stages of Civil Engineering projects 1.4. Bid preparation 1.5. Bid evaluation 1.6. Selection of bidders 1.7. Statistical approach in tendering 6
1.PROCUREMENT 1.1What is Procurement? 1.1.1 Procurement Procurementis the acquisition of appropriate goods, works and or services at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality, quantity ,time ,and location. The complete action or process of acquiring or obtaining personnel ,material ,services ,or property by means authorized in pertinent directives. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion. 7
Cont In short , Procurement is Obtaining goods , works ,consultancy or other services through purchasing , hiring or obtaining by any other contractual means. Tendering/Bidding : is a stage in the procurement process extending from advertisement (invitation to bid) up to signing of contract. Tender/Bid 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 apart of it consisting of specified works. When signed and submitted the Bid/Tender creates a legally binding and valid offer. 8
1.1.2 What is to be Procured? Consultancy Services : a service of an intellectual and advisory nature provided by consultants using their professional skills to study , design and organize specific projects ,advice clients ,conduct training and transfer knowledge. Services : mean any object of procurement not related to professional skills other than works ,good sand consultancy services ; such as transportation ,printing and duplicating books , maintenance , security , electricity , telecommunication and water supply services. 9
1.2 Contract/Project Delivery Methods Contract/project delivery system is the way Project Owners together with Project Regulators and Financiers determine the assignment of responsibilities to Project Stakeholders along the Construction Process. It is often determined during the basic planning phase of the construction project. Delivery systems are basically classified into two broad areas: Force Account, Outsourced. 10
1.2.1 Force Account Definition Work ordered on a construction projectwithout an existing agreement on its cost and performed with the understanding that the contractor will bill the owner according to the cost of labor, materials, and equipment, plus a certain percentage for overhead and profit . When the project owners engage them selves to undertake the project ,it is called a force account delivery system. Such a system is often promoted if the Project Owners believe that there is a comparative advantage in quality ,cost and time. 11
1.2.2 Outsourced delivery systems Most of the project delivery methods/systems are found under the category of out sourcing. The criteria for such category are based on: segmentation , integration and financing. A. Segmented Delivery Methods Design-Bid-Build(DBB); A. Design-Build(DB); B. Construction Management(CM); C. Pure Operation sand Maintenance (O&M) D. 12
Cont 3. Integrated Process Delivery Methods Design-Build-Operate; Design-Build-Operate-Maintain; Design-Build-Finance-Operate; 2. External Financing Methods Design-Build-Finance-Operate; Build-Own-Operate; Build-Own-Operate-Transfer; 13
1.2.2 Outsourced delivery systems A.Segmented Delivery Methods A . Design-Bid-Build , DBB ( Traditional Method ) After Project Owners did prepare the Basic Planning that identifies construction project programs , they call upon the participation of Design and/or Supervision Consultants. This Consultant will carry out the design together with the necessary tender documents which will be the basis for tendering to select Contractors. 14
Cont.. For many years ,DBB has been the most common method of project delivery for public projects ,and form any private projects as well. DBB is effective on projects Where the owner needs both professional design services and construction services. Where the designer does not require detailed knowledge of the means and methods of construction. DBB provides the owner with a high degree of control. 15
Cont (Two Separate Contracts for Design & Construction) 16
Cont Advantages: Disadvantages: Innovation not optimized; Applicable to a wide range of projects, Well established and easily understood, Usually cost overruns; Clearly defined roles for all parties, Disputes between parties; Provides the lowest initial price that Client retains risks; competitive bidders can offer, Usually low bid-incentive Extensive litigation has resulted in well for change orders; established legal precedents, Owner responsible for Insurance and bonding are well defined. errors and omissions. 17
B. Design- Bid , DB (Turnkey) Design Build or Turnkey , in principle , reduces numbers of procurement processes engaged in the fragmented process and employ only one procurement process and a single design build contractor to provide the entire Construction Implementation Process (design and construction ). The design builder performs design and construction according to design parameters , performance criteria and other requirements established by the employer or his representative. In this arrangement both the design and construction liability rests with the Contractor 18
Cont Advantages. Single source responsibility both for design & construction; Integrating design & construction; Reduction in administration; Innovation; Cost savings; Construct ability optimized; Most risks transferred to the design-builder; Design reflects. 19
C. Construction Management , CM Under CM the Owner contracts separately , but some what simultaneously , with a design consultant and with a firm whose primary expertise is construction ( the Construction Manager). The owner procures the management services of the Construction Manager (in most cases a general contracting construction firm) early in the design phase. Types of CM delivery system: CM at Free : as agent, CM at Risk : as a constructor. 20
Advantages may include CM At Risk CM At Free Good for clients with insufficient Provides a managing & staff; administering services for all Responsible for time & cost overrun; phases of a project; Holds & manages the trade Treats planning, design, contractors; construction as an integrated tasks; Constructability design review; Some costs & schedule control; Works closely as a teaming effort & encouraging partnering & trust; 21
Disadvantages may include CM At Free CM At Risk Duplication of administration & No contractual relationship with trade contractors; additional paperwork; More paper work for the client; No contractual responsibility for outcomes Some duplication of administration; of a project; Fast tracking difficult to control with Client retains the risks; designer & CM; Sometimes difficult to manage all phased packages with costs, changes & schedules; 22
D. Design-Build-Operate , DBO According to FIDIC , the DBO approach to contracting combines design , construction , and long term (ex.20 years) operation (and maintenance) of a facility in to one single contract awarded to a single contract or (who will usually be a joint venture or consortium representing all the skills for in a DBO arrangement). The advantages are categorized in terms of : time , finance and quality. 23
Cont Time With possibilities to overlap some design & build activities it will be possible to minimize delays & optimize the smooth flow of construction activities. Finance With cost restraints & commitments & other risks being carried by the contractor, there is less risk of price over-run. Quality With the contractor responsible for 20 years operation, he has an interest to design & build quality plant with low operation & maintenance costs. Not only will then plant be fit for purpose but it will be built to last . The FIDIC has now prepared conditions of contract which facilitate the D-B-O process. 24
E. Build-Operate-Transfer , BOT BOT is a form of procurement and contract delivery system that promotes Public Private Partnership (PPP) in which a private company is contracted to finance , design , construct , operate for a certain period (usually 10 years) and transfer the facility to the Project Owner. The typical BOT project contract is the process where by a government grants a concession to a project development company to develop and operate what would normally be a public sector project , for a given period of time known as the concession period. BOT project involves a potentially complex contractual structure. 25
G. Delivery systems based on Financing method Design-build-operate-transfer ; DBOT Design-build-operate-maintain ; DBOM Design-build-own-operate-transfer ;DBOOT 26
1.3.Stages of Civil Engineering Projects The project life cycle of a construction project may be viewed as a process through which a project is implemented from cradle to grave. 27
Cont The major stages in construction projects encompass: Pre-design stage Design stage Processing construction bids stage Construction stage Completion and handover (contract closeout) 28
1.3.1 Pre-design stage It encompasses the following major activities: Carry out feasibility study, Selection of suitable site, Preparation of tentative cost estimates, Making topography of the site, Preliminary sub-surface investigation. Pre-by Ermias Solomon. 29
1.3.2 Design stage It encompasses the preparation of: Concept design, Preliminary design, Final design, Engineer s cost estimate, Bid documents, Drawing sand design reports. 30
1.3.3 Tender/ Bid stage. What is Tender? 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 . Will be started after the design complete and project budget must be approved . client contractor client sub-contractor consultant main contractor 31
Difference between a contract and a tender 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. Pre-by Ermias Solomon. 32
Cont The following activities need attention during processing of construction bids. A . Bid documents and related issues: Preparation of bid documents Clarity of bid documents, Validity of bid security, Amendment of bid document (if any), Site visit , Performance Security etc. 33
Cont B . Bid processing and award of contract: Determination of project category (possible procurement method), Competitive bidding (ICB,NCB), Limited/restricted bidding( ICB,NCB), Direct contracting (appointment/ negotiated contract) Force account Announcement of invitation for pre-qualification, Public bid opening, Bid evaluation and award process, Preliminary examination of bids. Evaluating bids. Propose award. Bid evaluation report. Contract award. Rejection of all bids, Preparation of contract document, Signing of contract. 34
1.3.4 Construction stage Construction stage is the critical phase since the result of all prior planning , design and the total pre-construction decisions are brought to fruition. The success of this stage mainly depends on the relation and strength of the construction team (main stake holders). The main activities in construction phase are construction supervision and contract administration. I . Construction supervision : Site control, Quality control, Quantity control, Monthly and quarterly progress evaluation meetings. 35
Cont ii. Contract administration: It covers the major activities of addressing changes , payments ,claims etc. It will be dealt with in detail under chapter2 36
1.3.5 Contract closeout stage Transition from design and construction to the actual use of the constructed facility. The management team must provide documentation , shop drawings , as built drawings , and operation manuals to the owner organization. Assessment of the project team s performance is crucial in this stage for a voiding mistakes in the future. Actual activity costs and durations should be recorded and compared with that was planned. 37
1.4 Bid Preparation 1.4.1 Preparation of Bid Documents The Bidding document shall in corporate all in formation necessary for prospective bidders to prepare their bids. The detail and complexity of bid documents may vary with the size and nature of the proposed bid package and contract. The consultant hired for the job/the client prepares all the design and tender document which includes Legal & Technical section . 38
Cont A) Legal section B) Technical section Invitation to bidders Instruction to bidders Conditions of contract GCC & SCC Tender forms Form of tender Appendix to form of tender Certificate of tender visit to site Form of tender security(bank grantee) Form of agreement Form of performance bank grantee Form of grantee for advance payment Schedule of Supplementary information The contract drawings The specification The bill of quantities The bill of schedule Soil investigation reports Addenda 39
Cont Bid documents for works include: A. Bidding information, Contractual information. B. Contractors are responsible for all duties , taxes and other levies ; hence , bidders shall take these factors into consideration in preparing their bids. 40
Cont A. Bidding Information It s part of a tender document , where bidders are required to respond ( provide their offer , data , information) in accordance with the requirement of the documents within the bidding period. Bidding Information Comprises: Invitation for bid(IFB), Instruction to bidders (ITB), Bid Data Sheet (BDS), Bid forms including BOQ, Addenda(Bid Amendment). 41
Cont.. B. Contractual Information: Documents included in the tender document to furnish bidders with full and detailed information of the project for application after winning the contract. The bidder should utilize such information to provide a fair and reasonable offer to the bidding document. Contractual Information Comprises : Agreement form (Contract Agreement), Standard (General) Conditions of contract, particular or special conditions of contract, Technical specifications and Methods of measurement, Drawings, Appendix to Contract Agreement. 42
1.4.2 Invitation to bidders This is a document that describes , The name of the projects Its locations The principal elements of the work to be done The sources of finance Where & when to obtain the tender documents and the return address and date Amount of bid security Date of site visit and, Pre-bid meeting etc 43
Sample Form of Tender We have no conflict of interest in accordance with the ITB; Date: [insert date] Procurement Ref. No.: [insert tender reference no] Page [insert page no] of [insert total n0 of pages] pages Our firm, its affiliates or subsidiaries - including any subcontractors / suppliers for any part of the contract - has not been debarred from participation in public procurement by the Government of the FDRE, in accordance with the ITB ; To: [insert complete name of Employer] We, the undersigned, declare that: We have read & understood the provisions on fraud and corruption in the ITB and we undertake to abide by the Code of Ethical Conduct for Bidders during the procurement process and the execution of any resulting contract; We have examined and have no reservations to the Bidding Documents, including Addenda No.: [insert the number and issuing date of each Addenda]; We understand that this bid, together with your written acceptance thereof included in your notification of award, shall constitute a binding contract between us, until a formal contract is prepared and executed. We offer to execute the [insert the name & procurement ref. no of the Contract] in conformity with the Bidding Documents for the Contract Price of [insert amount in no & words] Ethiopian Birr, excluding any discounts offered below; We understand that you are not bound to accept the lowest evaluated bid or any other bid that you may receive. The advance payment required is .. . Ethiopian Birr: The discounts offered & the methodology for their application are: We accept / do not accept the appointment of [insert name of . proposed in the BDS] as the ... and propose instead that [insert name] be appointed as . Whose fees and biographical data are attached. Our bid shall be valid for a period of [specify the no of days that the bid is valid for] calendar days from the date fixed for the bid submission deadline in accordance with the ITB, & it shall remain binding upon us & may be accepted at any time before the expiration of that period; Signed: [insert signature] In the capacity of [insert legal capacity of person signing the Bid] Name: [insert complete name of personsigning the Bid] Duly authorized to sign the bid for and on behalf of: [insert complete name of Bidder] Dated on ____ day of _________ , _____ [insert date of signing] We, including any subcontractors / suppliers for any part of the contract, have nationality from the following eligible countries: [insert the nationality of the Bidder, including that of all parties that comprise the Bidder, if the Bidder is a JV, and the nationality of each subcontractor and supplier] Pre-by Ermias Solomon. 44
1.4.3 Time for Preparation of Bids Time for preparation and submission of bids depend on the particular circumstances of the project ,magnitude and complexity of the contract. The time to be all owed for the first call is 30 calendar days to enable prospective bidders to conduct investigations before submitting their bids. In some cases the employer is encouraged to convene a pre-bid meeting and arrange site visits. Concise instructions as to the time , date and place for submission of tenders should be given. 45
Instruction to bidders PPA SBD\Wks-SBD-ICB-Section 2.doc PPA SBD\Wks-SBD-ICB-Section 1.doc The instruction to bidders contains information which is relevant to the tender Preparations such as, A brief description of the works and its location, Validity of tenders Tender security Amount and types of currency as well as bank form Ruling language of the contract documents Site visit dates The employer arranges site visit to acquaint with the prevailing site conditions Pre-bid meeting After site visit pre bid conference will be arranged by the employer to answer question raise by the tenders Dead line of submission of tenders 46
1.4.4 Submission of tender The employer will distribute a blank forms that will be filled by the bidders All bids should be submitted in a sealed envelope marked on the outside with the name of the project and the bidders name & address All tenders received at the closing date are opened & read to be evaluated under established procedures & conditions Any tender that is not submitted through the indicated procedures will be disqualified 47
1.4.5 Evaluation of tender After the invitation to bidders is floated, tenders will submit their proposal to the client carries out an evaluation of the bids through comparisons of different offers The first step in evaluation process is public opening and reading of offer in the presences of all competitors. At this stage the name of the tenders offering bids are readout and recorded with a general check on establishing, Conformity with instruction to bidders Validity of tenders (based on various criteria) Check tender security and Readout & recording of bid prices 48
Cont Subsequent to this the employer /consultant then starts the formal bid evaluation processes The evaluation processes includes the following General contractual and administrative evaluation Technical evaluation Financial evaluation General contractual and administrative evaluation Prior to a detailed bid evaluation a general conformity check is carried out Usually this check insures compliance with the legal/contractual aspect of the contact and may include whether there are deviations or not 49
Cont. Financial evaluation The evaluation of the financial part is straightforward . The prices are corrected for arithmetic errors and then added up and compared with each other , some of the issues that are considered in financial evaluations are: Verifications readout prices Checking of submitted prices are the same as the figures readout during the opening ceremony Check & adjust arithmetic errors, omissions, adjustment, additions. Based on the analysis of the above factor, bids are then compared with each other and then the lowest bid value is then selected 50
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