Procurement Management

Procurement Management
Procurement of Works
- Keshav Thapa

Public Procurement in Nepal
• Procurement by public entities(PE) is governed
by the Public Procurement Act (PPA) 2063 and
the Public Procurement Regulation (PPR) 2064,
which is based on the Act.
• PE’s should follow the procurement provisions/
processes referred in the PPA and PPR , unless
• Government decides it as inappropriate in view of
national security/defense
or
when procurement is mandated to be made in
accordance with the procurement guidelines of a
Donor Partner as per the agreement with the DP.

BD
3
Prepare
Specifications
TOR and
Scope of Works
Procurement Management
Prepare
Procurement
Documents,
invite offers
Seek, Clarify
and Close
Offers
Award Contract
Manage the
Contract
Choose a
Procurement
Method
Identify Needs
Negotiate the
Contract
Evaluate
the Procurement
Evaluate
Offers

PPA and PPR Provisions
Initiating Procurement
Preparation and Approval
(i) Budget :
• Budget allocation and site for construction in
case of procurement for Works is prerequisite to
initiate any public procurement
• However, procurement may be initiated
irrespective of budget allocation for a multiyear
contract procurement after allocation of the
budget for the first year procurement, and
• For necessary preliminary procurement works
such PQ, EOI, issue of RFP

(ii) Master & Annual Procurement Plans
a) Master Procurement Plan
for projects that operate for more than a year or
the yearly procurements are valued in excess of
Rs100 million. The plan should be updated in
each financial year.
b) Annual Procurement Plan
to be prepared while preparing estimated annual
program and budget for next financial year if, a
public entity is required to make procurement
exceeding Rs.1 million. Should be based on
Master procurement plan (if any)

Master Procurement Plan (Format)

Annual Procurement Plan for Goods and Works
(Format)

(ii) Master & Annual Procurement Plans
c) Contract Packaging
• ideally to be decided by dividing the
procurement requirements to manageable
number of appropriate size packages that is
expected to provide maximum competitive
response from bidders.
• no procurement shall be done to limit
competition by increasing the contract
packages into slices

c) Contract Packaging
Factor for Packaging decision:
 Separation of need of procurement of goods,
works and services in different categories,
 Combination of similar or related items into a
single package under each category,
 capability of bidders/Suppliers to qualify to bid or
to implement the contract,
 For ICB whether the size of the package will
attract interest from the foreign contractors,
 the timing of requirement of goods & services,
 Based on the method of procurement time
required for processing and award of Contract.

d) Procurement Methods
i) Choice of Procurement Method:
• the nature of the goods, works and services to
be procured;
• the value of the planned procurement;
• local availability and cost of goods & services;
• duration required for the procurement process
and planned dates for delivery
• agreement with the funding agency; and
• transparency of the procedures proposed.

d) Procurement Methods
• By Inviting Open Bids at International Level,
• By Inviting Open Bids at National Level, (Rs.2 to
Rs.10000 million)
• Inviting Sealed Quotations up to Rs.2 mil
• Direct Procurement up to Rs.500,000;
• Through Participation of Users' Committee or
Beneficiary Group, up to Rs.10 mil
• Through Force Account .
• Lump Sum Rate (Rs.20mil); national advertisement
with estimate for single year contract only
• Limited Tendering

(iii) Preparation of Standing List
Standing lists of contractors, to be prepared for
direct procurement works, and procurement of
works to be carried out through NGO’s.
(iv) Description of Construction Work
Procurement details such as specifications,
plans, designs and drawings, descriptions and
special requirements necessary for the
procurement the construction works to be
prepared and approved by the authority
authorized to approve the cost estimate.

(iv) Cost Estimates:
a) To be prepared as per standard format and
based on:
 Existing norms, if new norms is required norms to
be approved by Council of Ministry.
 Availability of material at site
 Contract duration required
 Rate of material , equipment and labor to be as
determined by the rate fixation committee. If rates
are not available then rates fixed by GoN or GoN
owned corporation or fixed by Chambers of
Commerce and Industry or as determined by
department Chief

(iv) Cost Estimates: a) Basis Contd.
• Requires a single contract or multiple
contracts
 Alternatives (if available) to the procurement,
then what are these alternatives?
 Cost estimate, design and drawings to be
checked by one level higher ranked authority
than the technician who prepared it.
Departmental head to arrange for the check if
higher authority for checking is not available in
the entity

b) Approval of Cost estimates
• If the chief of PE is not entitled to approve the cost
estimate as detailed above then s/he should get it
approved from one level higher authority.
• Secretary /administrative chief of a constitutional
organ or body, ministry, secretariat and other offices of
similar nature may approve estimate of any value for
their office
• Cost estimate of one fiscal year should be updated
before initiating procurement in the next fiscal year.
Estimated Cost Approving Authority
Up to Rs. 10 million Office Chief (Gazetted Third Class)
Up to Rs. 50 million Office Chief (Gazetted Second Class)
Up to Rs. 100 million Office Chief (Gazetted First Class)
Above Rs. 100 million Head of the Department

Procurement Documents
1.Prequalifcation of Bidders
General
• Ensures that only technically and financially
sound firms having adequate managerial
capability are invited to participate in bidding
process,
• avoids evaluation of large number of bids hence
saves time and resources,
• generally recommended for large complex
projects

1) Prequalifcation Contd.
Procedure
• Document based on SPQD prepared by PPMO or
other appropriate standard document,
• Approval of prequalification criteria by head of the
Department
• Notice to be published in national daily or also
international media in case of ICB with submission
period of at least 30 days for NCB and 45 days for
ICB

Prequalifcation Procedure Contd.
Document Cost:
• Document should be signed by Chief of PE or
designated person
• Evaluation committee to evaluate based on the
document and criteria given in the document
• PQ Report to be prepared within 15 days after
Bid Estimate Document Cost
> Rs. 20 to Rs.100 million Rs. 5,000
> Rs. 100 to Rs.250 million Rs. 10,000
> Rs. 250 million Rs. 15,000

2. Preparation of Bidding Documents
• The quality of Bidding Documents plays a vital role
both in the procurement stage and contract
management stage of the projects.
• documents should provide information to the
potential bidders, suppliers and contractors of the
public entity’s expected requirements,
• should facilitate the potential bidders to prepare
and submit responsive bids by clearly defining the
scope of works, goods or services to be supplied,

2. Preparation of Bidding Documents Contd.
• The criteria set out for evaluation and selection of
winning bid should be fair and non-discriminatory
• Should detail the rights and obligations of the
Employer and of suppliers and contractors, and the
conditions to be met.
• The Bid Documents should be approved by the
Chief of the concerned PE.
• Should be based on Standard Bidding Documents
issued by PPMO or other SBD’s, if PPMO document
is not applicable for the particular procurement.

3. Misc. Provisions of Bid Documents
• Bid Security: should be a fixed amount (2% to 3%) of approved
estimate in the form of cash or unconditional bank guarantee and
should be valid 30 days beyond the bid validity period.
• Validity Period for Bids :90 days for estimate up to NRs.100.00
Million;120 days for estimated cost beyond NRs.100.00 Million
• Performance Security: 5% of Bid Price if it is up to 15% below estimate;
additional 50% of the amount by which the bid price is lower than 15%
below the cost estimates
Performance Security Amount =(0.85 x Cost Estimate-Bid Price) x 0.5+5%
of Bid Price.

3. Misc. Provisions of Bid Documents
• Advance Payment:up to 20% of the contract
amount against bank guarantee to be paid in two
installment through a separate account for advance
payment,
• Liquidated damages: to be paid by the contractor for
non-completion within the contract period shall be
0.05% of contract amount for each day of delay and
should be limited to 10% of the contract amount.
• Bonus Payment : for early completion shall be
0.05% of contract amount for each day of early
completion limited to 10% of the contract amount

Bidding Process
1) Invitation of Bids
Advertisement
• should be published in a daily newspaper of
national circulation and, in the case of an
international bidding, it may also be published
in any international communication media.
• shall also be placed in the website of the entity
or that of PPMO.
• minimum period allowed for preparation and
submission of bids and prequalification
proposal shall be 30 days in case NCB and 45
days in case of ICB.

Bidding Process
Contents:
• Entity’s name and address
• Nature of Works and duration
• Bid security (if required) amount and validity
• Bid validity period if bid security is frequired
• Document cost, Address and procedure for obtaining
the bid documents/prequalification document
• Place, date & time for submission & opening of bids
• invitation to bidder / authorized representative to
attend the bid opening
• Information regarding ICB or NCB

Bidding Process
Contents:
• Information as to weather bid is for prequalified
bidders, with qualification or without qualification
• Procurement method
• Electronic bid submission procedure
• Estimate amount (as required by PPR)
• Information when only national bidders are to
participate
• Preference to JV with national bidders(if applicable)
• Bid cannot be submitted by blacklisted forms

Bidding Process
2) Pre-bid Meeting
If provided, to be held at least 10 days prior to
the deadline for the submission of bid for
NCB and 15 days for ICB for briefing and
receiving queries from bidders on bid matters.
3) Site Visit
May be permitted or arranged by the PE for the
bidders/representatives for collection of bid
information. The cost and the risk of the site
visits shall be borne by the bidders

Bidding Process
4) Clarifications / Amendments / Extension of Bid
Submission Deadline
5) Withdrawal or Modification of Bids
• medium of withdrawal or modification of bids
should be same as the submitted bid
• withdrawal or modification can be given only once
• bidder cannot withdraw his bid once the
submitted bid is modified.
• Once a bid is withdrawn, the Bidder cannot
submit another bid response for the same
procurement

Bidding Process
6) Submission and Opening of Bids/Proposals
• Bids, PQ documents to be received and recorded
at the time, date and place specified in the
documents,
• After the expiry of the time for submission of the
bids, the chief of the PE or authorized officer
should sign and close the register recording the bid
receipt.
• 2 - member Bid Opening Committee (BOC) under
Coordination of Procurement Officer to be formed
• Bids should be opened publicly by the BOC in the
presence of the bidders /representatives
• Only originals to be opened

Bidding Process
• Bids not to be rejected at bid opening
• If withdrawal letter are satisfactory, then the
Bidder’s original Bid should not be opened. In case
of doubt the bid should be opened with other bids.
• Envelopes marked “modification” should be opened
with the original bid.
• procedure specified in the bid documents to be
followed while (i) opening of the bids and reading
out the bid details, and then (ii) preparing and
signing of the record of the bid opening.
• Incase of two envelope procedure only technical
proposal to be opened and Financial proposal to be
securely kept without opening

Bidding Process
Information to be readout, recorded and signed:
• Bidder’s name , address and bid amount
• Discount offered (if any)
• Bid amount for proposed alternate specifications if
any
• Presence/absence of bid security
• Details of differences in figures and words if any
• Presence /absence of signature in Letter of Bid and
Price schedule

Biding Process
Information to be readout, recorded and signed:
• Details of corrections made and the corrected
amount and whether the corrections are initialled
or not
• Remarks made in Bid Form if any and
information on details of requested rate analysis
(if any)
• Other matters as determined appropriate by the
Public Entity.

Bid Evaluation
a) Basics: to determine lowest evaluated
substantially responsive bid using pre-
determined procedures and criteria specified in
the bidding documents,
b) Time Frame for Bid Evaluation: at the earliest by
BEC to enable award of the Contract within the
Bid Validity period,
c) Only the Bids marked “Original” shall be
evaluated by the BEC. Late bids, as well as
those not opened and read out at bid opening
shall not be considered for evaluation

Bid Evaluation
d) Clarifications from Bidders: BEC may seek
clarifications from bidders to ensure proper and
fair evaluation of bids. Clarifications should be in
writing and should not permit any substantive
change in the bid
e) Confidentiality: During evaluation process,
information relating to evaluation of bids and
recommendation for contract award, should not
be disclosed to Bidders or to other persons not
officially concerned with the process until

Bid Evaluation Procedure
i) Examination of Completeness
 Whether document to establish the bidder qualified
under law is submitted or not?
 Whether the bid is complete as per the requirement
of the bid document and signed
 Bid security as required by bidding document is
submitted or not
 Whether the bid is substantially responsive to the
technical specifications and the terms of conditions
of the contract in the bid document.

i) Examination of Completeness (contd.)
 Presence /absence of Power of Attorney
 Joint venture if necessary is submitted or not
 Documents to establish eligibility, qualification of
bidder iif required)is submitted or not
 Rate analysis if required is submitted or not
 Whether the bidder as a sole bidder or as Joint
venture has participated in more than one bid
 Whether the bidder is declared ineligible to
participate

ii) General
 if bid prices may be expressed in different
currencies in ICB then the evaluation and
comparison of bids shall be made after conversion
to single currency and exchange rate as specified
in bid documents,
 Evaluation to be based on bid price excluding
VAT,
 Information on evaluation shall not be disclosed to
bidder or other persons not involved in evaluation,
 Evolution to be based on procedures and
qualification criteria given in the bid documents

ii) General (contd.)
 Technical , commercial and financial aspects of the bid
to be evaluated,
 A bid may be considered substantially responsive if it
contains minor deviations with regards to bid document
requirements acceptable to PE. In case of any effect on
cost such effect shall be added to bid price for
comparison purpose only,
 If the cost effect is more than 15% of bid price then the
bid shall be considered non responsive,
 Information given in original bid copy to prevail in case of
discrepancy between Original and Copy,
 BEC to prepare evaluation report detailing basis of the
lowest evaluated substantially bid and procedures

iii) Technical Aspects
 Scope of Works
 Specifications,
 Qualifications
iv) Commercial Aspects
 Works completion period
 Payment terms , liquidated damages, Bonus,
 Guarantee obligations
 Obligations to be fulfilled by bidders
 Any other conditions added to the Contract
 Evalution to be done as specified in the bid doc.

iii) Financial Aspects
 Domestic preference
iv) Special Evaluation
 Consistency of proposed Work Plan, schedule and
duration with bid provision,
 Reliability of the quoted unit rates in the Bill of
Quantities.
 Unbalanced bid price due to high rates for works to be
performed at early stage or for items bidder believes
were underestimated in Bill of Quantities
 If the bidder has signed Contract and initiated other
works then whether the bidder has technical capacity to
complete the work

iv) Special Evaluation (contd.)
 In case of bids with front loading or unrealistic low
bids to complete the work satisfactorily or high rates
for early stage works then BEC shall seek
explanation with rate analysis from such bidders,
 If explanation is satisfactory BEC to recommend
acceptance of the bid with additional Performance
Security up to 8% of the bid price and if the
explanation unsatisfactory then it may recommend
the PE to reject such bid,
 Additional guarantee to be released after payment
of the final bill.

Summary Bid Evaluation Sequence
A- Single Stage – Post Qualification Procedure
 Preparation Basic Data Sheet,
 Preliminary examination for completeness of the bids
 Determination of Bid responsiveness,
 Preparation of Table of Bid Prices and identification of
Bids for detail evaluation
 Application of evaluation criteria and financial
adjustments
 Determination of lowest evaluated substantially
responsive Bid
 Examination of adequacy of technical proposal
 Evaluation of qualification criteria and determination of
lowest evaluated bid for award of Contract.
 Preparation Bid Evaluation Report

B- Single Stage – Two Envelope Bidding Procedure
 Preparation Basic Data Sheet,
 Preliminary examination for completeness of the
Technical Bids
 Determination of Technical Bid responsiveness,
 Examination of adequacy of technical proposal,
 Evaluation of qualification criteria and
determination of substantially responsive qualified
bids for opening of Price Bids,

B- Single Stage – Two Envelope Bidding Procedure
 Opening of Price Bids and preparation of opening
record.
 Examination for completeness of the Price Bids
 Examine Price bids for responsiveness,
 Preparation of Table of Bid Prices and identification of
Bids for detail evaluation,
 Application of evaluation criteria and financial
adjustments
 Determination of lowest evaluated, qualified substantially
responsive Bid for award of Contract
 Preparation of Combined Evaluation Report.

Bid Evaluation Report
BEC to prepare bid evaluation report and submit it
within the period fixed by the PE Chief so as to issue
the Intention to Award letter to the bidder within the
Bid validity period. Report should detail:
• Bidders name address,
• Bid amount and payment currency
• Arithmetic corrections and corrections rate
differences in words and figures
• adjustment due to offered discount
• amount due to single currency connversion

Bid Evaluation Report
• Information regarding the examination of
completeness, responsiveness and clarification
sought from the bidders (if any)
• In case of bid from prequalified bidders checking
qualification compliance as per the prequalification
• Basis of the evaluation and procedure to determine
lowest evaluated qualified bidder.

Approval of Bid
• Lowest evaluated substantially responsive bid to be
selected for acceptance,
• Notice of the intent of acceptance to be served to
the concerned bidder within 7 days of selection of
the winning bid,
• Information regarding the name, address and the
price of the winning bid to be communicated to
other participating bidders,
• If no application for review is received within 7 days
then the bid is accepted and the bidder is asked to
furnish applicable performance security to conclude
the Contract within 15 days,

Approval of Bid
• If the selected bidder fails to sign the Contract
within the period then the bid security should be
forfeited and the next evaluated substantially
responsive bid should be accepted and contract
to be signed,
• Bid approval and signing of the Contract should
be concluded within the bid validity period,
• If any bidder requests within 30 days of issue of
letter of acceptance for information regarding
why his bid is not accepted , then the PE should
give information to the bidder.

Review of procurement Procedures and
Decisions
• Bidder may apply for review of the proceedings
stating the grounds to Chief of PE within (7) days of
issue of the notice of intention to accept by the PE.
The Chief to review the matter raised in and convey
its decision with reasons in writing, within five (5)
days
• The PE may suspend the procurement
proceedings and mention the procedure to be
adopted for continuation of the procurement
process or may reject the review application
• The decision of the Chief of the PE shall be final
for the procurement amount up to the value of
NRs.20 million

Review of procurement Procedures and
Decisions
• Bidder may file an application for review of
procurement proceedings / decisions before the
Review Committee if,
 PE, Chief does not make a decision within the
time limit or is dissatisfied with the decision made
for the procurement above NRs.20 million then
within seven (7) days of receipt of such decision,
the Bidder may file an application to the Review
Committee stating the reasons of its disagreement
on the decision of the PE.
 Bidder to furnish a cash or bank guarantee equal
to 0.15% of its quoted bid amount with the validity
period of at least ninety (90) days from the date of
review application.

Procurement Contract
The Contract shall include the terms and conditions as
referred to in the Bidding document .The terms and
condition may include the following:
• Name and address and contact persons of the parties
to the Contract,
• Scope of Work, Contract amount
• Details of included documents and their prioroty,
• Work Schedule,
• Contract duration and extension provision,
• Terms and conditions for acceptance of the Works
• Force majeure;

• Price adjustment procedure if applicable,
• Amendment and variation to the contract ,if
applicable,
• Insurance if applicable
• Required Performance Security,
• Liquidated damages provision for delay in completion,
• Bonus for early completion,
• Contract termination provisions,
• Subcontract related provision,
• Dispute resolution procedure
• Applicable law for the Contract,
• Other matters as specified.

• Shall include Budget symbol,
• Required Performance Guarantee ( 5% of contract
price) to be provided as per format given in the Bid
documents within prescribed time ,
• Validity period of the Performance guarantee shall
extend at least on month beyond the completion of
the defect liability period,
• If the Guarantee is issued by foreign bank it should
be counter guaranteed by bank established in Nepal

Contract Implementation
Public Entity (PE) is responsible Contract
implementation as per the provisions and in
conformance with the technical requirements
/specifications for completion of the work within
the agreed time schedule and the contract price.
1. The PE shall perform the following activities as
required:
• hold post bid conference if necessary with
the Contractor,
• prepare an action plan and work schedule
for contract implementation,
• form a contract implementation team, if
necessary,

1.Implementation Activities Contd.
• arrange handing over the construction site to
the construction entrepreneur and access to
the site;
• monitor progress as per contract work schedule
and inspect and examine quality aspects;
• manage contract modifications, variation
orders, price adjustment, suspension or
termination of contract, certification of work
completion and payment;
• in case of dispute adopt dispute, settlement
procedures provided in the contract

1. Implementation Activities Contd.
• manage financial aspects of contract
implementation including budgetary and cost
accounting aspects,
• maintain documents related with contract
implementation in a sequential and systematic
manner,
• accept the work performed, and
• submit periodic reports on the contract
implementation to one level higher authority.
Contract should be implemented as per the
drawings, specifications and Conditions of Contract.

2. Insurance: Unless other wise mentioned in the
Contract ,Contractor needs to provide insurence
as specified in the Contract for Works valued
more than 10 lakhs
3. Advance : May be made as provided in the
Contract. Details of bank account for advance
payment and monthly expenditures should be
provided regularly by the Contractor.
• Advance payment guarantee issued by foreign banks
should be counter guaranteed by bank in Nepal,
• Guarantee should be valid 1 month beyond the period
for repayment as provided in the Contract.
• Advance to be deducted from monthly payments

4. Work Acceptance Report: On completion of
the Work , PE to prepare work completion
report with the following information:
• Number of the Contract,
• Description of completed Works,
• Date of Completion,
• Date of acceptance of completed works

5. Contract Variations: Variation should detail the
following and should be certified by authorized
chief of the PE:
• Whether the design/drawings of the construction
works needs to be changed and if yes, then
whether the basic nature and the area of the works
require changes;
• Technical justification and reasoning for the
variation quantity
• If the cost estimated is affected as per the
provision of PPA 5 (ka) then it’s percentage; and
• Whether it is included in approved budget and
program.

5. Contract Variations Contd.:
Approval
Variation Percentage Approving Authority
Up to 5% Gazetted Second Class PE Chief or
equivalent
Up to 10% Gazetted First Class PE Chief or equivalent
Up to 15 % Department Chief
15% to 25 % Secretary of the Ministry or equivalent
Above 25 % Council of Ministers
Note:
1.However variation should not be issued by official who is
below the level of official who has approved the estimate.
2. Variation above 15% may be issued by Department Chief for
contract amount up to 60 lakhs

6. Price Adjustment :
• Prices shall be adjusted for fluctuations in the
cost of inputs if provided for in the SCC/PCC for
Contracts of duration exceeding 12 months as
per the price index formula included in the
Contract.
• Price shall be adjusted for unexpected increase
/ decrease of price of constructional material as
prescribed by deducting 10% in amount
increased/decreased for contract concluded
following invitation of national level bidding,

6. Price Adjustment :
• In general the adjustment amount shall be
limited to 25% of initial contract amount. If the
price adjustment exceeds the amount the PE
may:
 terminate the Contract ,
Negotiate with the Contractor to reduce cost to
keep the Contract price within the approved
budget, or
Adopt other measures to minimize cost ,or
Arrange additional budget.

7. Time extension :
• Extension contract duration shall be as per
provision provided in the Contract,
• However, in force majeure situation and failure
to provide the material to be supplied by the PE
or other reasonable causes , competent
authority may extend the contract period on
receiving application from the Contractor
• Contractor should submit application for
extension with reasons at least 7 days before
the end of the contract period.

7. Time extension :
• Received application should be examined on
the following grounds:
 whether the Contractor had applied his best
efforts to complete the work or not,
 whether delay in work resulted due to force
majeure situation,
 if the reason given in the application is
satisfactory then the authority approving the
bid may extend the Contract up to 6 months
and Department Chief may extend period
exceeding 6 months.

8. Liquidated Damages: To be applied for delay in
work at the rate of O.05 % per each day of
delay up to maximum of 10% of the Contract
amount.
9. Payment : The payment of bills to be made as
per the provision of the Contract.
10. Dispute Resolution Procedure:
• to be amicably resolved,
• if not resolved amicably then through
Arbitration as per prevailing Arbitration Act.

11.Work Completion Report :
• Contractor to submit as built drawing within 30
days of completion of the work,
• After expiry of the defect liability period following
completion of the Works , the Chief of the PE
shall through technical employee examine the
work as to whether it complies with design
,drawings and specification and prepare the
work completion report.
• The PE to submit the as built drawing and work
completion report to the bid approving authority
for approval.

Procurement Management

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Ähnlich wie Procurement Management

Ähnlich wie Procurement Management (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Procurement Management