PRESENTATION ON BID EVALUATION OF DESIGN, SUPPLY AND INSTALL CONTRACT

Bid Evaluation OF DESIGN, SUPPLY & INSTALL CONTRACT:�THE USE OF Life Cycle Costing method (LCC)

1. Bid Evaluation OF DESIGN, SUPPLY & INSTALL CONTRACT: THE USE OF Life Cycle Costing method (LCC) MODULE VII – Session XV Training of Trainers (TOT2) Workshop Monday 21 June – Friday 25 June Akinsiku, O. Emmanuel University of Lagos, Akoka , Lagos

2. Preamble: Design, Supply and Install procure ment strategy confers enormous responsibility on the bidder. The cost of owning (O&M) the facility is enormous. The PE should exercise care in selecting the most suitable Contractor, In the choice of the bidder, consideration of the Most Economically Advantageous bid for the purpose of contract award should be the criteria. The bid evaluation Process B id evaluation in the procurement of Design, Supply and Installation contracts is undertaken by a committee of experts whose range of competencies are adequate to cover all aspects of scrutiny in the assessment of received bids. The following are the successive steps in bid evaluation to be undertaken by the PE’s bid evaluation committee (BEC):

3. B id Evaluation process for procurement of Design, Supply and Installation contracts Preliminary Examination of the bids: Things to consider: eligibility, completeness bid validity period, compliant bid security or bid-securing declaration, legal capacity for signature, absence of a court conviction, Compliance with labour or environmental laws

4. B id Evaluation process for procurement of Design, Supply and Installation contracts Cont’d 2. Evaluation of the Technical Proposals of each bidder: D etailed technical evaluation requires the BEC to examine the adequacy of the Technical Proposal of each bidder and its compliance with the Employer’s Requirements. This step in the technical evaluation includes reviewing: the Site Organization organogram: the Method Statement: this consist of preliminary Design documents proposed by the bidder must demonstrate that the engineering design of the Facilities is conducive to render the Plant “fit-for-purpose” The proposed major items of Plant to be incorporated into the Facilities and their respective performance parameters are assessed relevant to the proposed Preliminary Design. The bidder must demonstrate clear understanding of the methods of construction to be used for the different parts of the Facilities and that these meet applicable engineering and safety standards. Quality assurance systems of the bidder are also considered here.

5. B id Evaluation process for procurement of Design, Supply and Installation contracts Cont’d Evaluation of the Technical Proposals of each bidder (cont’d): the Mobilization Schedule The construction work-plan the bidder’s proposed MSIP (Environmental and Social Management Strategy and Implementation Plan) The construction equipment Contractor’s Personnel Proposed subcontractors for Major Items of Plant and Installation Services

6. B id Evaluation process for procurement of Design, Supply and Installation contracts 3. Economic (Financial) Evaluation of Bids Only those bids that are considered technically as substantially responsive are admitted to the economic/financial evaluation. The following checks/actions should be undertaken during the economic evaluation: Corrections for Errors Adjusting the Bid Price for M odifications and Discounts Conversion to common evaluation currency Adjustments: Section II, Bid Data Sheet and Section III, Evaluation and Qualification Criteria specify which, if any, performance or service factors will be taken into account in the bid evaluation. Priced Deviations (a faster payment stream than specified in the bidding documents and/or a completion date that is beyond the date specified in the bidding documents but that is nonetheless technically acceptable to the Employer). Application of the Life Cycle Costing Method

7. B id Evaluation process for procurement of Design, Supply and Installation contracts 3. Economic (Financial) Evaluation of Bids Application of the Life Cycle Costing Method: The following factors would be included in a typical life cycle cost assessment: ( i ) initial purchase price (Bid Price as corrected for arithmetic errors); (ii) adjustments for delivery, variations in payment terms, etc . ; (iii) estimated fuel cost during the life of the plant; (iv) estimated cost of spare parts and labor for maintenance during the life of the plant; and (v) estimated cost of deviations from “ideal” functional guarantee values as indicated in the Bidding Document but above the specified minimum that is acceptable.

8. B id Evaluation process for procurement of Design, Supply and Installation contracts 3. Economic (Financial) Evaluation of Bids (cont ’d) In the above, the follow-on costs such as fuel, spare parts, cost of deviations from functional guarantees should be discounted to net present value to make the proper comparison. The bidder who submits the bid with the Lowest Life Cycle cost will be recommended for award after the Employer’s verifies the bidder’s continued qualification as per the stipulated Post-Qualification criteria. T he bidding document (Section III) must clearly outline the methodology for the quantification of these costs and also the specific information required to be submitted by each bidder. Since the evaluation will be based in part on bidder’s stated values, the contract must provide for adequate penalties if the equipment does not achieve guaranteed operating factors, like for example fuel consumption or maintenance cost or use of input raw materials per unit of output/production.

9. B id Evaluation process for procurement of Design, Supply and Installation contracts Post-Qualification: If prequalification was conducted, the bidder whose bid is the lowest evaluated should receive the award, unless the bidder’s qualifications have since materially deteriorated or the bidder has since received additional work that over-stresses its capacity. If no prequalification was undertaken then the proposed winner must be subjected to post-qualification as per the criteria stipulated in Section III of the bidding documents. Alternative Bids The Bid Data Sheet - ITB 13 may request alternative bids for specific components of the Facilities either under the stipulation that only the alternative submitted by the lowest evaluated bidder and conforming to the bidding documents will be considered (ITB 13.3), or alternative bids invited under ITB 13.4 that would be invited on their own merits. Calculations for the evaluation of alternatives should be provided in an attachment to the report. D etermination of Award The award must be made to the Lowest Evaluated Responsive Bid submitted by a bidder determined to be qualified, all as per Section III of the Bidding Document. The amount of the proposed award should be the bid price as submitted by the winning bidder and adjusted as described in the ITB for corrections, any discounts (including cross-discounts), and acceptance by the Employer of alternative offers from the lowest evaluated bidder.

10. B id Evaluation Report The MDBs’ format for Bid Evaluation Report is recommended. The Report must be signed by all Bid Evaluation Committee members. In case of any reservation by a member of the Committee, such member will sign the Report incorporating his/her reservations. The relevant Competent Authority will then take the decision concerning contract award which will be transmitted to all participating bidders via the Notification of Intention to Award. The Bid Evaluation Report shall be supplemented by the following attachments: Copy of the Bid Advertisement Copy of the Bid Opening Record Copy of the publication for currency exchange rates at the applicable date,