Chapter One Procrument An Overview.pdf

Project Contract
and
and
Procurement Management

CHAPTER ONE
PROCUREMENT – AN OVERVIEW
Procurement Terminologies
• Goods
• Services
• Works
• Works
• Consulting Services
• Non-consulting Services
• Supplier/consultant/contractor
• Candidate
• Bidder
• Special Procurement

An Overview….
Question:
What is Procurement? (Discuss five Minutes in group and
report to the class)
– The discussion should be made to show the comprehensive
definition of procurement.

An Overview….
Procurement is the acquisition of:
• Goods, works and/or services
– at the best possible total cost of ownership,
– in the right quantity and quality,
– in the right quantity and quality,
– at the right time,
– in the right place
• for the direct benefit or use of corporations,
individuals, or government.

• Thus, the procurement process:
– Not only involves the purchasing of commodities,
works, and/or services;
– But also quality and quantity checks.
– But also quality and quantity checks.
• Question:
What is the difference between purchasing and
procurement? Are they similar or different? Why?
How?

• The procurement process does not end at the
commissioning or contract award stage, but
spans the entire life cycle of the product or
service.
service.
• Purchasing is the acquisition of goods and/or
services for payment.
• Procurement is the process of obtaining goods
and/or services.

Methods of Procurement
International Competitive Bidding
– Is open to all eligible and qualified bidders.
– Gives the bidders equal access and a fair opportunity
to compete for contracts for required goods, works,
and services.
and services.
– Advertised internationally (using the international
media)
– Uses formal bidding documents which are fair, non-
restrictive, clear and comprehensive.

Methods of Procurement…
– Language is important in international competitive
bidding;
– Bids should be opened at a time and place specified
in the bidding documents and data sheets;
– Currency of bid;
– Currency of bid;
– Currency of comparison;
– Currency of payment;
– Domestic preference scheme;
– Rejection of all bids or retendering.

National Competitive Bidding (Local Competitive
Bidding)
– Similar to ICB
– Advertised in local newspapers
Adequate competition
– Adequate competition
– Clarity of procedures
– Fair treatment of all bidders in award and evaluation
of bid
– Local language

Limited Bidding or Restricted Bidding (LB)
• Selective Bidding (limited bidding, or repeated
order) procedures are similar to those for open
bids (ICB)
• Conditions:
– There are only a limited number of suppliers of the
additional particular goods or services needed; or
– Other conditions limit the number of firms that are
able to meet contract requirements, or justify
departure from full open bidding procedures.

• LB is an optional bidding method
• Bids should be solicited from a list of potential
suppliers broad enough to ensure competitive
prices
prices

Shopping (RfQ, Pro Forma)
• Is an appropriate method for procuring readily
available off-the-shelf goods or standard
commodities in quantities of small value.
• Is appropriate for small simple works.
• Is appropriate for small simple works.
• Usually at least three - to ensure competitive
prices.

Direct Purchase/Negotiation/Single Bidding
• Direct purchase without competition.
• Negotiation is required for price reasonableness.
• Not a competitive bidding.
• When additional quantity is required.
• When additional quantity is required.
• Direct Purchase may be used in exceptional cases
where:
– The extension of an existing contract awarded for goods,
works or services;
– Standardization of equipment or spare parts;

– The required product can only be provided by a single
supplier because of exclusive capabilities or rights; or
– It is a case of extreme urgency, such as in response to
natural disasters.

Procurement of Consultancy Service
• Consulting assignments, which are of an intellectual
nature, are carried out over a wide spectrum of
sectors.
• “Consulting services” refer to services of a
professional nature provided by consultants using
their skills:
To study,
To study,
To design,
To organize, and
To manage projects;
To advice clients; and,
when required, build their capacity.
15

• Consulting services may vary from simple routine tasks
to highly specialized and complex assignments.
• Consulting services should satisfy the following
requirements:
Meet high standards of quality
Be impartial (that is, delivered by a consultant acting
independently from any affiliation, economic
standing or otherwise, that may lead to conflicts of
interest); and
Be proposed, awarded, administered, and executed
according to the highest ethical standards.

Selection of Consultants
Main Considerations in the Selection of
Consultants
• Policies and procedures should be guided by the
following principles:
ECONOMY - Achieve best value through open and fair
ECONOMY - Achieve best value through open and fair
competition
TRANSPARENCY - Promote transparency in the
selection process
ACCOUNTABILITY - Ensure the accountability of those
involved with the selection process

EQUITY – through uniform policies and procedures for
procurement create an equitable environment for
competition
EFFECTIVENESS - facilitate optimum effectiveness in
pre-selection operations so that they deliver the
pre-selection operations so that they deliver the
desired outcomes
EFFICIENCY - through standardized procedures and
consistent application of best selection practices
minimize delays to the procurement process; and

ETHICAL STANDARDS - to provide staff involved with
procurement a set of standards and framework under
which selection is to be undertaken that represents
which selection is to be undertaken that represents
the highest standards of ethics and honesty.

Conflict of Interest
• Conflicts of interest must be avoided b/c they affect
the consultants’ impartiality and spoil the quality of
their advice.

Selection Steps
• Depending on the selection method adopted, the
process carried out by the client may include the
following steps:
Preparation of the TOR of the assignment
Preparation of the cost estimate or budget of the
Preparation of the cost estimate or budget of the
assignment
Public invitation of consultants’ Expressions of
Interest (EOI)
Short listing of consultants
Preparation, and issuance of the RFP to short listed
consultants

Preparation and submission of proposals by
consultants
Evaluation of technical proposals - quality evaluation
Opening and evaluation of financial proposals - cost
Opening and evaluation of financial proposals - cost
evaluation
Combined quality and cost evaluation to select the
winning proposal (under QCBS) and
Negotiations and signing of the contract between the
client and the consultants.

Selection Methods
• There are six methods for the selection of consultants.
They include:
Quality and Cost Based Selection (QCBS)
Quality Based Selection (QBS)
Selection under a Fixed Budget (FBS)
Least Cost Selection (LCS)
Selection based on Consultant’s Qualifications (CQS)
Single Source Selection (SSS)

Quality and Cost Based Selection
(QCBS)
• QCBS is the preferred sub-method that shall
be used in most cases.
• QCBS uses a competitive process among
short-listed consultants that takes into
short-listed consultants that takes into
account the following in selecting the
successful firm:
– the quality of the proposal; and
– the cost of the services

• The most important consideration in the
selection of a successful Consultant in the
procurement of intellectual and professional
services shall be given to the quality of a
Consultant's technical proposal.
Consultant's technical proposal.
• The cost of the services shall be considered
judiciously because, in the procurement of
intellectual and professional services, quality is
the primary concern.

• Under QCBS, the Public Body shall request for the
Technical and Financial proposals to be submitted
at the same time: in two clearly marked sealed
envelopes inside a sealed outer envelope.
• Quality and cost of the proposals are evaluated
independently.
• The opening panel will sign the envelopes with
the financial proposals and they should then be
safeguarded following the written procedures by
the Public Body.

• After evaluation of the technical proposals,
the financial proposals are opened and
evaluated only for those passing minimum
technical requirements.
technical requirements.
• In Ethiopia, it is the 70% level.

Quality Based Selection (QBS)
• QBS may be appropriate for complex or highly
specialized assignments, or those which invite
innovations.
• The selection is based solely on the quality of
• The selection is based solely on the quality of
the proposal without consideration of the
cost.
• QBS should be used for the following types of
assignments:

1. Complex or highly specialized assignments
where it is difficult to define precise TOR and
the required input from the consultants, and
for which the client expects the consultants
for which the client expects the consultants
to demonstrate innovation in their proposals;
2. That have a long term impact and in which
the objective is to have the best experts
available;

3. That can be carried out in very different ways, and
therefore proposals may not be directly comparable.
• The RFP should not indicate the estimated budget,
but may provide the estimated number of key staff
but may provide the estimated number of key staff
and time, specifying that this information is given as
an indication only, and that consultants are free to
propose their own estimates.
• The envelopes containing the technical proposals
shall be opened in the presence of the consultants.

Fixed Budget Based Selection
• This method is appropriate only when the
assignment is simple and can be precisely
defined and when the budget is fixed.
• The rules to be followed for the FBS method shall
• The rules to be followed for the FBS method shall
be the same as for the QCBS sub-method, with
the following exceptions:

Selection Based on Least Cost
• This method is appropriate for procurement of a
consultancy service which is standard, simple
and doesn't call for special qualification of a
consultant.
• In evaluating consultants by applying this
• In evaluating consultants by applying this
method, an entity shall set the minimum point
of technical evaluation which they shall indicate
in the request for proposal to be issued for
consultants who are selected from the suppliers
list.

• The envelopes of technical proposals shall be
opened in the presence of the consultants and
the evaluation shall be carried out thereafter.
• Consultants failing to score the minimum point
• Consultants failing to score the minimum point
set for technical qualification shall be
disqualified.
• The envelopes containing the financial evaluation
of consultants not satisfying the minimum point
set for technical qualification shall be returned to
them unopened.

• The financial envelopes of the consultants who
have technically qualified shall be opened in their
presence and the price offered by each bidder
shall be read out.
shall be read out.
• The consultant offering the lowest evaluated price
shall be selected as the successful consultant from
among the consultants who have technically
qualified by satisfying the minimum point.

Selection Based on the Consultants’
Qualification
• This method may be used for small assignments
of which the cost and time required for preparing
and evaluating competitive proposals is not
justified.
justified.
• This method may only be used where the value
of the consultancy services does not exceed
some threshold.

• The terms of reference to be prepared for such
consultancy service shall require candidate
consultants to state their experience and level of
qualification.
• The consultancy assignment shall be based on the
• The consultancy assignment shall be based on the
agreement reached through negotiation on the
technical and financial proposal of the consultant
selected through evaluation of information
submitted by candidates chosen from the suppliers’
list or contained in the data base of the procuring
entity.

• This method is applicable in the following
cases:
• Used for small assignments of which the cost
and time required for preparing and
and time required for preparing and
evaluating competitive proposals is not
justified and under Ethiopian procurement
framework only where the estimated cost is
below some threshold.

• TOR is simple: require individual consultants to
state their experience and level of qualification in
a simple way.
• Invitation based on suppliers‟ list or data base of
• Invitation based on suppliers‟ list or data base of
the Public Body.
• Selection based on negotiation based on the
technical and financial proposals.
• No requirement for the use of two envelopes and
two-stage-opening.

1.6. Preparation of TOR
• Title of consultancy
• Background of the required service
• Objectives and Scope of the Study
• Approach and Methodology
• Desk Review Phase / Secondary Data Collection
• Field level Data Gathering Phase / Primary Data Collection
• Synthesis phase
• Consultant’s Profiles
• Consultant’s Profiles
• Roles and Responsibilities
• Consultant
• Client
• Expected Output/deliverables of the research
• Schedule/Timetable
• Technical Proposal and Criteria for Selection

Chapter One Procrument An Overview.pdf

Chapter One Procrument An Overview.pdf

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Chapter One Procrument An Overview.pdf