Presentation on theme: "Aligning SCM processes to facilitate implementation"— Presentation transcript:
1 Aligning SCM processes to facilitate implementation Implementing the CIDB Standard for Uniformity in Construction Procurement 3aAligning SCM processes tofacilitate implementation
2 STANDARDIZED CONSTRUCTION PROCUREMENT DOCUMENTS FOR ENGINEERING AND CONSTRUCTION WORKS NB Employers should develop their own standardised procurement document using this generic document as a base.STANDARDIZED PROCUREMENT DOCUMENTS FOR ENGINEERING AND CONSTRUCTION WORKS
3 A need triggers the procurement process Principal activities associated with the procurement process1 Establish what is to be procured2 Decide on procurement strategies3 Solicit tender offers4 Evaluate tender offers5 Award contract6 Administer contracts and confirm compliance with requirementsMethodsProceduresPolicyProvision of works, services, supplies concludes the procurement processComponents of a procurement system
4 @cidb Outline of procurement process 1. Establish what is to be procuredClarify what is to be procured2. Decide on procurement strategiesDetermine how the procurement is to take place3. Solicit tender offersSolicit tender offers in terms of a set of procedures@cidb
5 4. Evaluate tender offers Evaluate tender offers in terms of undertakings and parameters established in procurement documents.5. Award contractEnter into contract with the successful tenderer.6. Administer contract and confirm compliance with requirementsAct in terms of the contract and confirm that procurement is in accordance with all requirements.Register award and cancellation, if any on cidb website
7 Activity 1: Establish what is to be procured Prepare broad scope of work for procurementEstimate financial value of proposed procurementControl point : Obtain permission to start with the procurement process
8 Activity 2: Decide on procurement strategies Establish applicable preferential procurement policycontract and pricing strategytargeting strategyprocurement procedureWhat BEE goals are to be pursued?How are the risks, liabilities and obligations of the parties to be structured?How is the contractor to be paid?What are the preferencing arrangements?What procedure is required to solicit tender offers?Control point: obtain approval for procurement strategies that are to be adopted
9 Choosing a procurement strategy is similar to developing a business plan In cases where procurement is routine and occurs regularly, standard procedures can be developed and used.NB Procurement documents need to be aligned with chosen procurement strategy
10 Activity 3: Solicit tender offers Prepare procurement documents Invite contractors to submit tender offers (or expressions of interest) advertise onReceive tender offers (or expressions of interest)Evaluate expressions of interestsPrepare evaluation report on short listing processInvite tender offers from short listControl pointsobtain approval for procurement documentsconfirm that budget in placeProcurement procedureControl point : confirm short-list
11 A procurement system may be considered to be transparent if: the terms upon which the procurement process are to be conducted and the criteria upon which any decisions are to be made are properly documented and made widely available;the eventual procurement award decision, and where appropriate, any intermediate decisions, is made publicly available as are the reasons given for these decisions; andit is possible to verify that the documented procedures and criteria were indeed applied.
12 Standardised procurement documents Tendering procedures T1.1 Tender Notice and Invitation to TenderT1.2 Tender DataReturnable documentsT2.1 List of Returnable DocumentsT2.2 Returnable SchedulesPart 1: Agreements and contract dataC1.1 Offer and AcceptanceC1.2 Contract DataPart 2: Pricing dataC2.1 Pricing InstructionsC2.2 Activity Schedule / Bill of QuantitiesPart 3: C3 Scope of WorkPart 4: C4 Site informationExample in CIDB Standard for UniformityCIDB Standard conditions of tenderExamples in CIDB Standard of UniformityCIDB Standard of UniformityStandard Industry Form of Contract with contract specific dataProject specificSANS (SANS 1921, SANS 2001 and 1914)Project specific (SANS 10403)
13 @cidb generates this notice T1.1 Tender Notice and Invitation to Tender (sample)Tenders are invited for the provision ofThe Employer is …………..The physical address for collection of tender documents is: …………...Documents may be collected during working hours after 09:00 on …..A non-refundable tender deposit of R……payable by cheque made out in favour of the Employer is required on collection of the tender documents.Queries relating to the issues of these documents may be addressed to Mr/Ms , Tel No , Fax No e mailA compulsory pre tender meeting with representatives of the Employer will take place at on starting at hrs.The closing time for receipt of tenders is hrs onRequirements for sealing, addressing, delivery, opening and assessment of tenders are stated in the Tender Data.@cidbgenerates this notice
14 T1.2 Tender DataThe conditions of tender are the Standard Conditions of Tender as contained in Annex F of the CIDB Standard for Uniformity in Construction Procurement.The standard conditions of tender for procurements make several references to the tender data for details that apply specifically to this tender. The tender data shall have precedence in the interpretation of any ambiguity or inconsistency between it and the standard conditions of tender.Each item of data given below is cross-referenced to the clause in the standard conditions of tender to which it mainly applies.Clause numberF.1.1The employer is ………
15 Annex F Standard conditions of tender CIDB Standard for Uniformity in Construction Procurement1 GeneralTender DocumentsInterpretationCommunication and employer’s agentThe employer’s right to accept or reject any tender offer2 Tenderer’s obligationsEmployer’s undertakingsNB Conditions facilitate compliance with several requirements of MFMA - SCM RegulationsImpacts on SCMprocesses
16 Tenderer’s obligations Eligibility Cost of tenderingCheck documents Confidentiality and copyright of documentsReference documents Acknowledge addendaSite visit and clarification meeting Seek clarificationInsurance Pricing the tender offerAlterations to documents Alternative tenders Information and data to Submitting a tender offer be completed in all respectsClosing time Tender offer validityClarification of tender offer after Provide other materialsubmission Submit securities, Inspections, tests and analysis bonds, policies, etc.Check final draft Return of other tender documents Certificates
17 The Employer’s undertakings Respond to clarification Issue AddendaReturn late tender offers Opening of tender submissionsTwo-envelope system Non-disclosureGrounds for rejection andDisqualification Test for responsivenessArithmetical errors Clarification of a tender offerEvaluation of tender offers Insurance provided by the employerAcceptance of tender offer Notice to unsuccessful tenderersPrepare contract documents Issue final contractComplete adjudicator's Provide copies of the contract contracts
18 List of returnable documents Returnable Schedules required for tender evaluation purposesOther documents required for tender evaluation purposesTax Clearance Certificate / Application for a Tax Clearance CertificateReturnable Schedules that will be incorporated into the contractPreference schedulesOther schedules and affidavits that will be incorporated into the contract
19 CIDB Standard for Uniformity in Construction Procurement Preferencing schedulesAnnex D: Direct PreferencingAnnex E: Participation GoalsBEE
20 Standard returnable documents -Compulsory Enterprise QuestionnaireRequires tenderers to:Provide name , VAT, Tax, Company and CIDB registration numbersRecord involvement of principals in the service of the state (current and within the last 12 months)Record of spouses, children and parents in the service of the stateNB Facilitates compliance with SCM Regulation 21 c) re the compelling of tenderers to declare any conflict of interest and provide certain particulars
21 CIDB Standard for Uniformity in Construction Procurement C1.1 Form of offer and acceptanceOfferAcceptanceSchedule of deviationsNote: Tenderer signs offer and employer signs acceptance to form the contract.The schedule of deviations records the items that have changed between offer and acceptanceImpacts on SCMprocesses
22 PrinciplesThe agreement comes into effect on the date when the tenderer receives the signed agreement (offer and acceptance), complete with schedule of deviations.The tenderer (now contractor) has a specified number of working days from the date of receipt of signed agreement to advise the employer why he cannot accept the contents of this agreement (eg schedule of deviations does not reflect what was agreed) , failing which agreement constitutes a binding contract between the parties.
23 On what date does the contract come into effect? Option 2- employer submits documentation to a courier-to-counter delivery / counter-to-counter delivery / door-to-counter delivery /door-to-door delivery /courier serviceOption 1- tenderer comes in and collects signed contractWhen tenderer receives the signed agreement2 working days after the employer submits the signed agreement to the service provider, provided that the employer notifies the tenderer of the tracking number within 24 hours of such submission
24 C1.2 Contract DataExampleThe General Conditions of Contract for Construction Works (2004) published by the South African Institution of Civil Engineering, is applicable to this contract.Copies of these conditions of contract may be obtained from the South African Institution of Civil Engineering (tel )Part 1: Contract Data completed by the Employer(see guidance on essential data and optional data provided in GCC 2004)Part 2: Contract Data completed by the Contractor
25 Part 2 :Pricing DataFormulate around the pricing strategy that is adopted, typically Bill of Quantities.Other strategies include:Activity schedulesCost reimbursable Target costTime-based contract Retainer and / or contingency contractPercentage contract Indefinite Delivery ContractNote: The terms of payment and the provisions for price adjustment for inflation, if applicable, are established in the contract data.
26 C2.1 Pricing Instructions The method of measurement published by the South African Bureau of Standards in clause 8 of the Standardised Specifications for Civil Engineering Construction is applicable, subject to the variations and amendments contained in the section “Applicable SABS 1200 standardised specifications”.Descriptions in the Schedule of Quantities are abbreviated and comply generally with those in the Standardised Specifications. Clause 8 of each Standardised Specification, read together with the relevant clauses of the Scope of Work, set out what ancillary or associated activities are included in the rates for the operations specified. Should any requirements of the measurement and payment clause of the applicable Standardised Specification, or the Scope of Work, conflict with the terms of the Schedule, the requirements of the Standardised Specification or Scope of Work, as applicable, shall prevail.
27 Bill of quantities Item. Ref Description Unit Quantity Rate Price Total for section carried forward to the summary of Bill
28 e.g. 1. building will be occupied during upgrading The Scope of Work specifies and describes the engineering and construction works which are to be provided and any other requirements and constraints relating to the manner in which the contract work is to be performede.g. 1. building will be occupiedduring upgrading2. Other contractors will beon site simultaneously
29 e.g. the building shall maintain an ambient day time temperature The Standard for Uniformity in Construction Procurement (see clause 4.4.7) requires that the scope of work shall, wherever possible be:a) described in terms of performance rather than the design or descriptive characteristics, andb) based on national or international standards, where such exist.e.g. the building shall maintainan ambient day time temperatureof 20 to 24 degrees
30 separation of management from construction SANS 1921 family of standards for Construction and Management RequirementsConstructionWorks specificationsPlant and materialsConstruction EquipmentExisting servicesSite establishmentSite usagePermits and way leavesAlterations, additions, extensions andmodifications to existing worksInspection of adjoining propertiesWater for construction purposesSurvey control and setting out of the worksManagementManagement of the worksHealth and safetyEach part of SANS 1921 standardizes an aspect of requirementsseparation ofmanagement fromconstruction
31 SANS 1921 family of standards for Construction and Management requirements for Works Contracts Part 1 General engineering and construction worksPart 2 Accommodation of traffic on public roadsPart 3 Structural steelworkPart 4 Third-party management support in works contractsPart 5 Earthworks activities which are to be performed by handPart 6 HIV/AIDS AwarenessEPWP requirement
32 SANS 2001 family of Construction Works Standards Site clearance Earthworks Earthworks (small Earthworks (pipe trenches) Earthworks (small dams) works)Gabions and pitching Earthworks (roads, Earthworks (railway Structural aluminum work subgrade) sidings)Piling Concrete (small works)) Concrete (structural)Precast concrete (structural) Prestressed concrete Installation of Masonry walling Foundations for masonry glazing in windowCladding and sheeting walls and door framesFixing of roofs tiles and Structural steel work Structural steelworkSheeting Corrosion protection of (sundry items)Structural timberwork structural steelwork Timber flooringMedium pressure pipelines Bedding (pipes) Cable ductsSewers Stormwater drainage Erf connectionsPipe jacking Cement –mortar lining (water)Roads (general) of pipes and pipelines SubbaseBase Bituminous surface Asphalt base and Segmented paving treatment surfacingKerbing and channeling Ancillary roadworks Base-heavyBase (light pavement structure) Supply of crushed stone base pavement Railway sidings (trackwork) Cement plaster structuresUnder development
33 Part 4 : Site Information Describe the site and access to the site as at the time of tender to enable the tenderer to price his tender offer and to decide upon his method of working and programming.examples1. report on founding conditions2. Building will be occupied during upgrading contractNB Forms basis of claims if situation is different from what is described.
34 Activity 4: Evaluate tender offers Open and record tender offers receivedDetermine whether or not tenders offers are completeDetermine whether or not tender offers are responsiveEvaluate tender submissionsPerform a risk analysis on preferred tenderer.Prepare a tender evaluation reportControl point: Confirm recommendations contained in the tender evaluation report.
35 Make information available to interested parties Standard Conditions of Tender: employer’s undertakingsOpening of tendersRecord particulars-name of tenderer-the total of prices-preferences claimedMake information availableto interested partiesF.3.5.2Register contractawardcidb website
36 Disqualify tenderer if corrupt or fraudulent practices are detected Standard Conditions of Tender: employer’s undertakingsDisqualify tenderer if corrupt or fraudulent practices are detectedF.3.7Links to Code of Conduct
37 F.3.8 Standard Conditions of Tender: employer’s undertakings Test for responsivenessA responsive tender submission is one whicha) satisfies the requirement of the tender data;b) has been properly and fully completed and signed; and c) conforms to all the terms, conditions, and specifications of the procurement documents without material deviation or qualification which, in the organization’s opinion, would-detrimentally affect the scope, quality, or performance of the works, services or supply identified in the scope of work,-change the employer's or the tenderer's risks and responsibilities under the contract, or-affect the competitive position of other tenderers presenting responsive tenders,if it were to be rectified.F.3.8SCMprocesses
38 F.3.9 Standard Conditions of Tender: employer’s undertakings Arithmetical errorsCheck responsive tender offers for arithmetical errors, correcting them in the following manner:Amount in words govern.In a bill of quantities (or schedule of quantities or schedule of rates) the line total applies and the rate shall be corrected. Where there is an obviously gross misplacement of the decimal point in the unit rate, the unit rate will be corrected.The total of the prices applies and the tenderer will be asked to revise selected item prices (and their rates if a bill of quantities applies) to achieve the tenderedtotal of the prices.F.3.9SCMprocesses
39 Ranking and scoring of responsive tenderers SCMprocessesRanking and scoring of responsive tenderersDo so in terms of method nominated in Tender DataF.3.11
40 Method 1: Financial offer e.g. emergency 1) Rank tender offers from the most favourable to the least favourable comparative offer.2) Recommend highest ranked tenderer for the award of the contract, unless there are compelling and justifiable reasons not to do so.
41 Financial offer and preferences Method 2:Financial offer and preferences1) Score tender evaluation points for financial offer.2) Confirm that tenderers are eligible for the preferences claimed and if so, score tender evaluation points for preferencing3) Calculate total tender evaluation points.4) Rank tender offers from the highest number of tender evaluation points to the lowest.5) Recommend tenderer with the highest number of tender evaluation points for the award of the contract, unless there are compelling and justifiable reasons not to do so.
42 Financial offer and quality Method 3:Financial offer and quality(when appropriate)1) Score quality, reject all tender offers that fail to score the minimum number of points for quality stated in the Tender data, if any.2) Score tender evaluation points for financial offer.3) Calculate total tender evaluation points.4) Rank tender offers from the highest number of tender evaluation points to the lowest.5) Recommend tenderer with the highest number of tender evaluation points for the award of the contract, , unless there are compelling and justifiable reasons not to do so.
43 Method 4: Financial offer, quality and preferences1) Score quality, reject all tender offers that fail to score the minimum number of points for quality stated in the Tender data, if any.2) Score tender evaluation points for financial offer.3) Confirm that tenderers are eligible for the preferences claimed, and if so, score tender evaluation points for preferencing.4) Calculate total tender evaluation points.5) Rank tender offers from the highest number of tender evaluation points to the lowest.6) Recommend tenderer with the highest number of tender evaluation points for the award of the contract.
44 Pm = comparative offer of the most favourable P = comparative offer of the offer being scoredHighest price (or discount)Lowest price (or percentage commission/fee)F
45 Scoring price and preference Ps = 80 (1- (Pt – Pmin))PminWherePs = Points scored for financial offer of tender under considerationPt = Rand value of financial offer under considerationPmin = Rand value of lowest acceptable financial offerTotal points= Points for financial offer + points for preferenceor 90 depending upon the value
46 Scoring financial offer, quality and preference Quality scorescore for quality (Sq) using the following formula:Sq = W2 x So/MswhereW2 is the percentage score given to quality (remainder allocated to financial offer eg 60% quality and 40% to financial offer)So is the score for quality allocated to the submission under considerationMs is the maximum possible score for quality in respect of a submission
47 Financial offerScore financial offer using the following formula:Ss = Pmin X W3 or (1- (Pt – Pmin)) X W3Pt PminWhereSs = the percentage scored for price of the tender submission under consideration;Pmin = the lowest acceptable tender submissionPt = the price of the tender submission under considerationW3 = percentage allocated for priceNote: negative numbers result if Pt > 2 x P min
48 Preferential Procurement Policy Framework Act Act does not make reference to functionality. The regulations, however, do. The Act only provides for tender price + preference.Total points not equal to price + quality + preferenceTotal points equals tender price (combination of points for quality and financial offer) + preference
49 Combine quality and financial offer The score for quality and financial offer is to be combined, before the addition of the score for preference, as follows:WC = W3 x (1+(S-Sm))SmWhereW3 is the number of tender evaluation points for quality and financial offer and equals 80 / 90S is the sum of score for quality and financial offer of the submission under considerationSm is sum of the score for quality and financial offer of the submission scoring the highest number of pointsStandard method
50 Risk analysisDoes any of the following present an unacceptable commercial risk?:a) unduly high or unduly low tendered rates or amounts in the tender offer;b) contract data provided by the tenderer; orthe content of tender returnables which are to be included in the contract.If so overlook tenderer (justifiable reason)
51 Tenderers (reasons for not awarding): may not be subject to restrictions eg listed on Register of Tender Defaultersmust have the capability and capacity to perform the contract.must have legal capacity to enter into the contract.must be solventmust satisfy all legal requirements, eg no tax clearance.may be disqualified due to conflicts of interest.
52 Tender evaluation report Prepare report as per employer’s requirementsRemember that written reasons must be given for decisions taken. State reasons for rejecting a tender so that tender evaluation committee can confirm / overturn decisions.
53 Suitable point for capturing of data pertaining to the procurement Contract concludedActivity 5: Award contractNotify successful tenderer and unsuccessful tenderers of outcomeCompile contract documentCapture contract award dataControl point:formally accept tender offerSuitable point for capturing of data pertaining to the procurement
54 Employer signs acceptance portion CIDB Standard for Uniformity in Construction ProcurementForm of offer and acceptanceOfferAcceptanceSchedule of deviationsNote: Tenderer signs offer and employer signs acceptance to form the contract.The schedule of deviations records the items that have changed between offer and acceptanceEmployer signs acceptance portion
55 Register of projects (deemed to satisfy provisions) Register contract Awardcidb website
56 Ensure compliance with requirements Activity 6: Administer contracts and confirm compliance with requirementsAdminister contract in accordance with the terms and provisions of the contractEnsure compliance with requirementsRegistercancellationof contractcidb websiteControl point: capture contract completion / termination data
57 Contact persons Please contact the following people at the CIDB for: Procurement related issuesNomaphoso MkhonzaLerato MolefeContractor Registration issues:Wisane MalulekeBusang TjaleTel: