1 Bulgaria – Serbia IPA Cross-border Programme CCI No 2007CB16IPO006 CENTRE FOR EXCHANGE OF INFORMATION ON CROSS-BORDER ECONOMIC COOPERATION "The project is co-funded by EU trough the Bulgaria – Serbia IPA Cross-border Programme”. Procurement of works

2 Single tender (< or equal to 10,000 Euro) Competitive Negotiated procedure (>10,000Euro < 300,000 Euro) Local open tender (> or equal to 300,000 Euro and < 5,000,000 Euro) International open tender (> 5,000,000 Euro) Budget v/s Procedure

3 Single Tender Minimum of one company required Letter of invitation and tender dossier sent Evaluation to follow the procedure for open works tenders

4 Competitive Negotiated Procedure No procurement notice needs to be published Minimum of three contractors to be consulted Letter of invitation and tender dossier sent A minimum of three technically compliant offers must be received Evaluation to follow the procedure for open works tenders

5 Local Open Procedure Procurement forecast & notice published only in beneficiary country. EC publishes reference on the Internet with address from which interested companies can obtain further information Tender dossiers either picked up at CA or sent to interested tenderers A fee can be charged to cover the cost of the preparation of the tender dossier Often the tender dossier, particularly the Technical Specifications, will be prepared by an external expert Clarification or site meetings may be foreseen Variant solutions may be taken into account if permitted by the Contracting Authority, and are: Submitted by tenderer with the least expensive compliant offer, and They meet the required technical specifications Bids formally evaluated (minimum of 3 voting members required)

6 International Open procedure Procurement forecast & notice to be published on the Internet, in the Official Journal of the European Communities and in the media Tender dossiers either picked up at CA or sent to interested tenderers A fee can be charged to cover the cost of the preparation of the tender dossier Often the tender dossier, particularly the Technical Specifications, will be prepared by an external expert Clarification or site meetings may be foreseen Variant solutions may be taken into account if permitted by the Contracting Authority, and are: o Submitted by tenderer with the least expensive compliant offer, and o They meet the required technical specifications Bids formally evaluated (minimum of 5 voting members required) In exceptional and justified cases, and with the approval of the EC, a restricted tender procedure may be used.

7 Negotiated Procedure In certain circumstances, and with EC approval, a negotiated procedure may be used, notably:  Where there is an urgency incompatible with the appropriate tendering/contracting timetable  For unforeseen additional works becoming necessary to be carried out by existing contractor  Where such works cannot be separated from main contract  Where such works can be separated but are absolutely necessary  Aggregate cost of contracts awarded for additional works cannot exceed 50% of original contract  Where a tender has been unsuccessful

8 Works Tender Dossier Volume 1 Section 1 :instructions to tenderers Section 2 :Tender Form and Appendix to the tender Section 3 :tender guarantee form Section 4 :questionnaire Section 5 :Administrative Compliance Grid and Evaluation grid Volume 2 Section 1 :contract form Section 2 :general conditions for works contracts FIDIC Section 3 :particular conditions Section 4 :specimen performance guarantee Section 5 :specimen prefinancing payment guarantee Section 6 :specimen retention guarantee Section 7: tax and customs arrangements Volume 3 Technical specifications Volume 4 Financial Interpretative Note Financial offer lump sum contracts / financial offer unit price contracts Volume 5 Design documents, including drawings

9 FIDIC Federation Internationale des Ingenieurs-Conseils

10 What is FIDIC? Federation of Consulting Engineers Council Founded in 1913 (Based in Switzerland) Mission is to promote Engineering Expertise and fair procurement Extensive bookshop (cash on delivery) Represents member organisations in 68 countries Web site is

11 FIDIC Books Short Form Construction EPC Turnkey Plant and Design Build

12 Which Book ? Is it a straightforward and simple project? Is there any risk on design or process? Are the market and the unprecedented risks high? Fixed price – turn key Restricted client contribution High market risks no yes DETAILED EXAMINATION Correct according to Client`s requisitions and then create a modified contract yes no yes no

13 FIDIC Red Book The Client carries out all the engineering services and copes with the risks. The Consultant is responsible for the management and supervision. Checking and supervision of the design and Works, approval of those or rejection are Consultant's responsibilities The Contractor is paid per production and based on unit prices, risk of cost overrun is the risk of the Client. During the implementation of the Works detailed tests are performed. Usually tests are simpler during the Handover Period and Start-up. Disputes are caused are due to unexpected extra Works and increase of Cost. There is usually a cost overrun Consultant works as a daily Arbitrator.

14 FIDIC Yellow Book The Contractor carries out all the detail engineering services. The Contract deals not with "HOW TO DO" but with "WHAT TO DO" The main document is the "Employers Requirements" and explains what performance and quality is expected. The Contractor takes most of the risks including the overrun in quantity and cost. The Client may hold the authority to approve the design. Management and supervision of the contract is carried out by the Consultant. Checking and supervision of the design and Works, approval of those or rejection are Consultant's responsibilities The Contractor is paid on a calendar basis at on some milestones. During the implementation of the Works simpler tests are performed. Usually tests are more complicated during the Handover Period and Start-up. Disputes are caused are due to different interpretation of the "Employer's Requirements" Consultant works as a daily Arbitrator.

15 Fundamentals of Works Tender Dossiers Conditions of Contract (CC) – part of the Tender Dossier, respectively of the future contract that are addressing specific issues, required for the contract implementation. General C – are establishing a set of rules, generally valid in all EU financed contracts Special C – are modifying, amending, supplementing the General C, for including in the contract the specificities of a certain country, or of a certain project.

16 Contract (Agreement) Tender Form with its appendix Particular Conditions of Contract General Conditions of Contract Technical Specifications The design (drawings etc.) BoQs after arithmethical corrections Any other document forming part of the contract Addenda shall have the order of precedence of teh document they are modifying Order of precedence of Contract

17 Particular Conditions of Contract  The Particular Conditions take priority over the General Conditions  Are the instrument for the Contracting Authority/ Beneficiary, for introducing the particular aspects of the local legislation, or of the project.  The General Conditions can be applied for any project, anywhere in the world, but will never be able to deal with the specific issues related to a specific project, nor to the legislation of a certain country

18 The PC should provide all relevant conditions that relate to the projects and the laws of the contract, which add, complement, or amend the General C In drafting the PC, one must pay particular attention to cross- reference with all other interconnected Clauses that may be affected. Make sure you don’t create ambiguities with other Clauses, or provisions of other documents Major exercise in cross referencing PC with: GC Technical Specifications Schedule/ Annexes (e.g. delivery schedule) Particular Conditions of Contract

19 Examples should be only used after verifying they are suitable for your specific case and adapted accordingly The guidance is to assist writers of the special conditions, by giving options for various sub-clauses where appropriate It is recommendable that suitably-qualified engineers (technical staff) to prepare documents and a review by a suitably-qualified legal advisers There is no specific Clause in the General C requiring additional data to be included in the PC, this is done only when and as much as necessary Any modification of existing Clauses, or insertion of a new Clause, must be made for a clear reason and only in conjunction with the other Clauses PC will only contain modified Clauses, without repeating the ones from GC that are not modified Particular Conditions of Contract

20 Applicable law and language Contractor’s obligations Performances/ Insurances Timetable/ Schedules Documents/ Drawings/ Specifications/ Manuals Patents and licences Variations of contracted quantities Main aspects to be addressed in PC

21 Quality levels Inspection/ Testing at the delivery, Testing after installation Acceptance Payments methods/ schedules Delivery – place, risks, related documents and procedures Warranty/ After-sales services Disputes resolution Main aspects to be addressed in PC

22 Bill of Quantities-BoQs The objectives of BoQs are; to provide sufficient information on the quantities of Works to be performed to enable Bids to be prepared efficiently and accurately when a Contract has been entered into, to provide a priced (BOQ) for use in the periodic evaluation of Works executed. In order to attain these objectives, Works should be itemized in the (BOQ) in sufficient detail to distinguish between the different classes of Works, or between Works of the same nature carried out in different locations or in other circumstances which may give rise to different considerations of cost. Consistent with these requirements, the layout and content of the (BOQ) should be as simple and brief as possible.

23 The Bill of Quantities should be divided generally into the following sections: a. Preamble; b. Work Items (grouped into parts); c. Daywork Schedule; and d. Summary. Bill of Quantities-BoQs

24 The Preamble should indicate the inclusiveness of the unit prices, and should state the methods of measurement that have been adopted in the preparation of the Bill of Quantities and that are to be used for the measurement of any part of the Works. BoQs Preamble

25 The items in the Bill of Quantities should be grouped into sections to distinguish between those parts of the Works that by nature, location, access, timing, or any other special characteristics may give rise to different methods of construction, phasing of the Works, or considerations of cost. General items common to all parts of the Works may be grouped as a separate section in the Bill of Quantities. When a family of Price Adjustment Formulae are used, they should relate to appropriate sections in the Bill of Quantities. BoQs Work Items

26 The Bill of Quantities usually contains the following part Bills, which have been grouped according to the nature or timing of the work: Bill No. 1-General Items; Bill No. 2-Earthworks; Bill No. 3-Culverts and Bridges; Bill No. 4-etc., as required; Daywork Schedule; and Summary Bill of Quantities. BoQs Work Items

27 Daywork Schedule should be included if the probability of unforeseen work, outside the items included in the Bill of Quantities, is relatively high. To facilitate checking by the Employer of the realism of rates quoted by the bidders, the Daywork Schedule should normally comprise: list of the various classes of labor, materials, and Contractor’s Equipment for which basic Daywork rates or prices are to be inserted by the bidder, together with a statement of the conditions under which the Contractor will be paid for work executed on a Daywork basis; a percentage to be entered by the bidder against each basic Daywork Subtotal amount for labor, materials, and Plant representing the Contractor’s profit, overheads, supervision, and other charges. BoQs Daywork schedule

28 The Summary should contain a tabulation of the separate parts of the Bill of Quantities carried forward, with provisional sums for Daywork, for physical (quantity) contingencies, and for price contingencies (upward price adjustment) where applicable. BoQs Summary

29 A general provision for physical contingencies (quantity overruns) may be made by including a provisional sum in the Summary Bill of Quantities. The inclusion of such provisional sums often facilitates budgetary approval by avoiding the need to request periodic supplementary approvals as the future need arise. Where such provisional sums or contingency allowances are used, the Particular Conditions of Contract should state the manner in which they will be used, and under whose authority (usually the Engineer’s but here is the CA) BoQs Provisional Sums

30 Sample BoQ Bill 1

31 Evaluation of Works Evaluations are held in phases: Receipt and registration of tenders Prepatory meeting Tender Opening Session (Public Open) Administrative Compliance Technical Evaluation Financial Evaluation Conclusion

32 Evaluation Committee 5 members for contract < 5,000,000 Euro 2 non-voting + 3 voting 7 members for contract > 5,000,000 Euro 2 non-voting + 5 voting Reasonable command of English + technical & administrative capacity Impartiality and confidentiality (conflict of interest)

33 Admin Check –To check tenders are complete and tender guarantee is submitted –EU representatives should be informed (ex-ante) –Opening checklist should be filled –Chairperson has to check the conflict of interest of the Evaluation Committee –Tender opening checklist & report has to be completed Administrative Compliance Grid: Documentation complete as required Nationality of the Tenderer Language Correct Committee may request clarifications within reasonable time Only compliant tenders go on to next phase

34 Technical Evaluation Done Lot by Lot (if applicable) Be careful about criteria for tenderers tendering for multiple Lots Use the Evaluation Grid in the tender dossier Rules of origin Eligibility of sub-contractors Required Capacity (economic, financial, professional and technical) Only technically compliant offers go on to the next phase

35 Financial Evaluation Check arithmetical errors Calculate discounts for multiple Lots Contract is awarded to the lowest compliant offer; within the available budget Evaluation of variant solution – only those submitted by the lowest compliant offer Problem of abnormally low offers

36 Conclution Evaluation Committee recommends to: Award the contract to the tenderer which  complies with administrative and technical requirements  is the lowest offer within the maximum budget available Cancel the procedure

37 Questions?