1. SEC Distribution Field Force Overview
Distribution Contractors Day with Saudi Electricity Company
October 28th, 2015

2. The contracting phase consists of two main elements: tendering process and contracting process
Prequalification
Contracting
Operation
1. Tendering
2. Contract 1 2
Key levers
1.1 Ceiling distribution & coverage assurance
2.1 General terms & conditions
Key elements
1.2 Bidding mechanism
2.2 Performance management
1.3 Pricing mechanism
2.3 Others

3. A number of key recommendations are implemented in Phase 1
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A number of key recommendations
are implemented in Phase 1
Prequalification
Tendering
Contracting 1 2 3
Key Changes'
Prequalification model: new prequalification process and criteria to assess contractors
Coverage model: model will be used on office level to help match supply to demand in all offices across the Kingdom
Tendering strategy: will include the number of required contractors in each electricity department and how their ceilings will be defined
Pricing mechanism: reference prices along with an improved pricing mechanism are expected to yield more accurate prices
Contract ceiling: contract ceiling is distributed based on contractors’ work capacities, prequalification scores and bids
Awarding strategy: will determine who gets awarded a contract, and what their ceiling will be. If contractor refuses to sign, his ceiling is given to the next in line contractor (cascading)
Guarantees: Bid bonds are required from contractors. These are refundable unless contractor confirms intent to sign contract. Bank guarantees are 5% of contract ceiling.
Contract duration: new UR contract term is reduced to 2 years with 1 optional year
Payment terms: 50% payment upon completion of work is incorporated to allow better liquidity
KPIs: KPIs are integrated in the contract to objectively measure contractor's performance, and linked to SEC’s evaluation sheet
Incentives & penalties system: the building blocks for a future incentive & penalty system are put in place

4. Prequalification Tools Contracting & tendering Tools
12+ operational tools are developed
to facilitate the operationalization of the new process
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Prequalification Tools
Contracting & tendering Tools
Contracting guide
Updated contract clauses
KPI
evaluation
Price uniformization
Coverage analysis model
Value allocation & commitment
Instructions for Bidders
Work order allocation tool

5. Initiation includes developing historic reference prices to gauge
contractor bids
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Tendering
Prequal
Contracting
Bids from last tendering process are entered
into model
Model applies appropriate inflation factor
New price uniformization methodology is applied to bids
Final historic reference prices are generated
Historic bids entered to be compared against new contract bids
An inflation factor based on a detailed contractor cost model is applied to historical bids
New contract bids are uniformized on a line item level using a standard deviation methodology
Bids are compared to historic reference prices and final prices are calculated

6. Contractors’ bids and prequal scores will be used in determining the
contract ceilings
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Tendering
Prequal
Contracting
SEC will determine total coverage required in every office
…And distribute it accordingly to contractors
Demand
Supply x
150% ~ x
40%
Note: This data pertains to the Madinah office only
Source: SEC data
Example of Madinah Office

7. 5 star safety system is now a mandatory system that all contactors
must abide by
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Tendering
Prequal
Contracting
contract Safety requirements are updated to integrate 5-star SYSTEM
contract Safety requirements are updated to integrate 5-star SYSTEM
Safety KPIs are incorporate in contractor performance measurement:
Number of Type 1 (First Aid) Incidents per 1 M work
Number of Type 2,3,4 (Injury, Handicap, Death) Incidents per 1 M work
Percentage of times that work site complied with SEC safety standards
12% of the points in the prequalification scoring pertains to safety record & HSE systems
Safety performance averaged over the last three months will be reflected in work allocation through KPIs
Contract addendum enforces the 5-star safety system in performance
Safety systems will be checked in post-signing stage. Contract is subject to termination if standards are not met
Non-compliance on safety requirements for trenches subject contractors to a penalty of 200 SAR

8. ~10 KPIs were developed based on current situation & best practices
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Tendering
Prequal
Contracting
Category
KPI
Description
Timely Work Performance
1. Percentage of WOs completed within time (count)
Total work orders completed on time compared to total number of WOs completed
2. Percentage of WOs completed within time (value)
Value of all work orders completed on time compared to all work value performed under URC
5. Average delay on delayed WOs (count)
The average number of delayed days for all work orders that have delays
7. Density of contractor work
Average work value for a given contractor's work orders
Safety Performance
9. Number of Type 1 (First Aid) Incidents per 1M SAR work
Number of type 1 incidents that happen with a given contractor compared to his value of work
10. Number of Type 2,3,4 (Injury, Handicap, Death) Incidents per 1M SAR work
Number of type 2, 3, 4 incidents that happen with a given contractor compared to his value of work
12. Percentage of times that work site complied with SEC safety standards
Number of contractor site visits that complied with SEC safety standards compared to total number of site visits
Collaboration & Responsiveness
18. Average number of days to accept work order
Response time of contractor when a work order is issued
20. Number of emergency and maintenance rejected WOs*
Number of emergency and maintenance rejected work orders in a given month
21. Number of construction rejected WOs
Number of construction rejected work orders in a given month

9. dashboard for KPIs linked to the standard evaluation form
We have developed a new
dashboard for KPIs linked to the
standard evaluation form
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Tendering
Prequal
Contracting
KPI dashboard to be generated monthly…
… and automatically linked to evaluation using weights
New evaluation system will the building block for a future incentive & penalty scheme