Tender

Peer Experience And Reflective Learning (PEARL) www.indiaurbanportal.
in
National Institute of Urban Affairs (NIUA)
THE TENDERING PROCESS
S M
Sabnis
Mr Sharad Sabnis, Chief Engineer MSRDC is a Civil Engineer, with both his B.Tech, and M.Tech degrees from IIT, Mumbai.
aving o!ted for a career in the !ublic sector, Mr Sabnis "oined the Maharashra #$D and when the Maharashtra State Road
Develo!ment Cor!oration %imited was created in &''(, he moved there to wor) on road and infrastructure !ro"ects.
Mr Sabnis has wor)ed on man* successful infrastructure !ro"ects in the State, but the feather in his ca! must surel* be the
!lanning and e+ecution of the Bandra,$orli Sea,lin) #ro"ect - considered one of the most !restigious !ublic sector !ro"ects in
modern India.
This article was written b* Mr Sabnis as !art of the material !re!ared b* ./S/D/ for the Ministr* of 0rban Develo!ment,
under its Ra!id Training #rogramme initiative.
Civil works carried out by various central or state departments e.g. PWDs, Governmental
organisations or urban local bodies are usually classified into two groups viz.
Original Works !"ese re#uire capital investment and are generally funded from Plan
allocations.
$aintenance and %epairs !"ese are in t"e nature of routine or periodic renewal or
maintenance works and are generally funded from non& plan allocations.
Original works t"at are carried out by various central or state departments, Governmental
organisations or urban local bodies are of, but not limited to, t"e following categories Dams,
'ead&works and 'ydraulic (tructures, 'ig"ways and %oads, )ridges, *lyovers and (ubways,
%unways, +irports and affiliated facilities, Water (upply, (ewerage and Pipeline, Power and
!ransmission ,ines, )uildings and 'ousing -residential, offices, "ospitals, sc"ools etc.
'owever, only t"e following components of civil works are considered admissible for assistance
under t"e .//0%$. -Details may be obtained from t"e $odified Guidelines of .//0%$.1
0rban %enewal i.e redevelopment of inner -old1 city areas
Water (upply and sanitation
(ewerage and (olid Waste $anagement
Construction and improvement of drains2storm water drains
0rban !ransport, including roads, "ig"ways2e3pressways2 $%!(2metro pro4ects.
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5
Parking lots2spaces on Public Private Partners"ip basis
Development of "eritage areas
Prevention and re"abilitation of soil erosion2landslides only in case of (pecial Category
(tates w"ere suc" problems are common, and
Preservation of water bodies.
!"e land ac#uisition component of t"e cost of t"e pro4ects is not eligible for assistance e3cept in
case of ac#uisition of private lands in t"e sc"emes in t"e nort"&eastern states and t"e "illy states
of 'imac"al Prades", 0ttaranc"al and .ammu and 6as"mir.
!"e following components are not admissible for assistance under t"e .//0%$ Power,
!elecom, 'ealt", 7ducation, Wages of (taff etc. and e
!"e basic principles t"at need to be followed by public bodies undertaking civil works are as
follows
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/o new works s"ould be sanctioned wit"out careful assessment of t"e assets or facilities
already available and time and cost re#uired to complete t"e new works.
+s budgetary resources are limited and granted on annual basis, ade#uate provisions s"ould
be ensured for works and services already in progress before new works are undertaken.
!"e construction period and sanctioned cost stipulated in t"e sanction of Pro4ect will not be
e3ceeded as far as possible.
!"e competent financial aut"ority according administrative approval s"ould be kept informed
of t"e progress of t"e work till t"eir completion t"roug" regular periodical reports.
/o pro4ect or work will be split up to bring it wit"in t"e sanctioning powers of a lower
aut"ority.
+ny anticipated or actual savings from a sanctioned estimate for a definite pro4ect, s"all not,
wit"out special aut"ority, be applied to carry out additional work not contemplated in t"e
original pro4ect.
*urt"er, no works s"ould generally be commenced or liability incurred t"ereon unless
i1 +dministrative approval "as been obtained from t"e appropriate aut"ority.
ii1 (anction to incur e3penditure "as been obtained from t"e competent aut"ority.
iii1 + properly detailed design "as been sanctioned.
iv1 7stimates containing t"e detailed specifications and #uantities of various items "as been
prepared and sanctioned on t"e basis of t"e applicable sc"edule of rates e.g. PWD9s District
(c"edule of %ates etc.
v1 *unds to cover t"e c"arge during t"e year "ave been provided by competent aut"ority.
vi1 !enders "ave been invited and processed in accordance wit" rules.
:
vii1 + work order "as been issued after following acceptance of tenders and obtainment
of
Performance (ecurity as stipulated
;f on grounds of urgency or ot"erwise, it becomes necessary to carry out a work or incur a
liability under circumstances w"en t"e provisions set out above cannot be complied wit", t"e
concerned e3ecutive officer may do so on "is own 4udgement and responsibility 'owever,
simultaneously, "e s"ould initiate action to obtain approval from t"e competent aut"ority and
also to intimate t"e aut"orities concerned wit" accounts and audits as may be relevant.
Processing of
Works
Pro4ect development and implementation goes t"roug" t"e following steps
;nclusion in t"e Plans -CDP1
*easibility (tudies
Preparation of Preliminary Pro4ect %eport -PP%1
+cceptance of PP% and Go +"ead (anction
Detailed 7ngineering
Detailed Pro4ect %eport -DP%1
+dministrative +pproval and )udget Provision
!ec"nical (anction 2 +pproval
Preparation of Draft )id Documents
+pproval to Draft )id Documents
!endering -Procurement1 Process
+cceptance of !enders and +ward of Work
;mplementation
;n case of works considered for implementation on t"e Public Private Partners"ip model, t"e
following steps usually "ave to be traversed w"ile developing and e3ecuting works
;nclusion in t"e Plans -CDP1
*easibility -!ec"nical *easibility and *inancial <iability1
Preparation of Preliminary Pro4ect %eport -PP%1
+cceptance of PP% and Go +"ead (anction
Detailed 7ngineering including financial viability study and determining <iability Gap
Detailed Pro4ect %eport -DP%1
+dministrative +pproval and )udget Provision
!ec"nical (anction2 +pproval
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Preparation of Draft )id Documents
+pproval to Draft )id Documents
!endering -Procurement1 Process
+cceptance of !enders and +ward of Work
*ormation of (P<
Concession +greement
*inancial Close
;mplementation -Construction followed by Operations P"ase1
!ransfer to t"e owner department as stipulated
Steps in Preparation of Project Reports
Preparation of Pro4ect %eports is an important step in t"e pro4ect development cycle in respect of
any civil work implemented by a 0,) or a state department or a Governmental organisation.
!"e preparation of pro4ect report usually involves t"e following t"ree stages
a1 Pre& *easibility (tudy
b1 *easibility (tudy 2 Preliminary Pro4ect %eport
c1 Detailed Pro4ect %eport containing detailed engineering and plan of construction
;n t"e first instance, a feasibility study for t"e pro4ect is to be carried out, eit"er in&"ouse or more
commonly t"roug" a consultant. ;n some cases, especially for large pro4ects w"ere e3ternal funds
are soug"t or for pro4ects to be implemented on t"e PPP model, it may be necessary to prepare a
pre&feasibility report to enable a funding agency or private financier to appreciate t"e broad
features of t"e pro4ect, t"e study of financial involvement and possible returns. !"e feasibility
study establis"es t"e scope of t"e work, brings out t"e re#uirement of land, prepares social and
environmental assessments, carries out preliminary economic and financial analysis, e3amines
different options, works out t"eir merits and costs, and recommends t"e most suitable one. ;n
case t"e pro4ect is already identified, or its utility is well establis"ed, or an e3isting asset is to be
improved2 upgraded2 replaced, feasibility study may be dispensed wit". ;n anot"er situation, it
may be found more practical as well as e3pedient to combine feasibility report wit" detailed
pro4ect report. Decision regarding t"ese aspects may be taken in individual pro4ect situations.
!"e studies and recommendations of feasibility generally form t"e Preliminary Pro4ect %eport
-PP%1. On approval of PP%, or ot"erwise if it "as been dispensed wit", a Detailed Pro4ect %eport
-DP%1 is prepared. ;n t"is, standards, design parameters and specifications will be precisely laid
down along wit" tec"nology and #uality standards to be followed. Detailed drawings, bill of
#uantities, detailed cost estimates form essential components of t"e DP%. !"e DP% is to be
approved by t"e competent aut"ority. (anctions to t"e DP% are usually in t"e form of
=+dministrative +pproval> and =!ec"nical (anction2 +pproval> by aut"orities empowered to
accord suc" approvals.
?
+dministrative approval is generally accorded by t"e competent *inancial aut"ority to t"e
e3ecution of work after due e3amination of Detailed Pro4ect %eport and detailed estimates.
!ec"nical sanction 2 +pproval to detailed cost estimates is accorded by t"e tec"nical aut"ority
empowered to do so. !"is sanction ensures t"at proposals are structurally sound and t"at t"e
estimates are accurately calculated based on ade#uate data. ;n case t"e work is to be e3ecuted
t"roug" a Public Works Organisation as a deposit contribution work, tec"nical sanction is
accorded by t"at organisation.
During preparation of DP%, or at tender processing stage, or during e3ecution of work, or after
t"e completion of work, if it is felt t"at t"e pro4ect cost "as or is likely to vary significantly -by
more t"an 5@A1 over t"e sanctioned cost, t"en a %evised Pro4ect %eport taking into account
various possible reasons for variation like c"ange in scope, design of work, material2 labour cost,
time overrun etc. s"all be prepared and sanction of competent aut"ority needs to be obtained
8
.
Projects to be implemente on t!e PPP
moel
!"ese involve private investment, w"olly or in part, and w"ic" may be domestic or foreign. !"ey
may use various routes suc" as )O! -0ser *ee )ased1 -or )OO!, )O,!, D)*O1 and )O!
-+nnuity1, etc. )ridges, *lyovers or )ypass roads can be implemented by offering rig"ts of t"e
toll revenue to t"e private entities. ;n ot"er sectors too, t"e private entities can be invited to
implement t"e pro4ect by offering t"e rig"ts to collect user c"arges in full or in part. !"e
involvement of t"e private sector can be looked at bot" during t"e entire pro4ect life cycle of
construction a nd Operations and $aintenance or purely in t"e OB$ P"ase. ;n suc" pro4ects, t"e
0,) or t"e state department or Governmental organisation implementing t"e pro4ect may "ave
to carry out t"e preparatory work, arrange environmental and ot"er clearances, and meet t"e cost
of land, feasibility studies, relocation of utilities, resettlement and re"abilitation, etc. ;n order to
improve t"e viability of a private funded pro4ect, t"e governmental body or t"e 0,) may, wit"in
defined limits, provide capital grants -termed as t"e viability gap funding1, participate in e#uity
and offer bridge loans, besides agreeing to periodic revision of user fees, etc.
*or some pro4ects, w"ic" may be taken up on t"e PPP model e.g. )O! -0ser *ee1 basis, carrying
out complete Detailed Pro4ect %eport may not be necessary. ;nstead only *easibility& cum&
Preliminary Design of t"e pro4ect may be ade#uate to invite bids on PPP pattern. *easibility&
cum&Preliminary Pro4ect %eport -PP%1 may be prepared including t"e financial viability study to
reflect a reasonable assessment of pro4ect costs and pro4ect revenues and determination of
viability gap, w"ic" t"e pro4ect aut"ority may "ave to provide to t"e private entity in case of
adoption of t"is route for t"e implementation of t"e pro4ect. !"ese feasibility studies need to be
got carried out t"roug" consultants w"o "ave t"e competence to deal wit" t"e tec"nical demands
of t"e pro4ect as well as t"e financial viability analysis of suc" pro4ects.
!"e Feasibility-cum-Preliminary Project Report s"ould, as a minimum, establis" and evaluate
t"e following
a1 !"e basic c"aracteristics of t"e pro4ect
b1 (ources and availability of t"e pro4ect input
C
c1 ,ocation, geological and soil conditions and access to site
d1 7nvironmental and social impacts and land ac#uisition if any
e1 0tility relocation plans
f1 Preliminary design and detailing of t"e pro4ect
g1 *inancial appraisal of t"e pro4ect profitability, including
"1 (ensitivity analysis
i1 Preliminary estimation and costing
!"e following format can be used for reference w"ile preparing a PP%. $odifications may be
made to suit t"e re#uirement of individual pro4ects.
Volume-I: Preliminary Design Report
-a1 73ecutive summary
-b1 Pro4ect description
-c1 7nvironmental ;mpact +ssessment and 7nvironmental $anagement +ction Plan
-d1 (ummary of %esettlement Plan
-e1 0pdated cost estimates
-f1 0pdated economic and financial analyses
-g1 (uggested met"ods of procurement and packaging
-"1 Conclusions and recommendations
Volume II: Design Report
-a1 +vailable *acilities ;nventory
-b1 (ummary of survey and investigations data
-c1 Proposed design basis, standards and specifications
-d1 Preliminary designs
Volume III: Drawings
-a1 ,ocation map
-b1 ,ayout plans
-c1 Ot"er relevant drawings
-d1 ;ndicative land ac#uisition plans
VolumeIV: 7nvironment ;mpact +ssessment or ;nitial 7nvironmental 73amination and
7nvironment $anagement Plan.
Volume V: %esettlement Plan and %esettlement +ction Plan.
D
Contents of t!e DPR
!"e Detailed 7ngineering covers detailed surveys and investigations e.g. soil and materials
surveys, detailed design studies, all t"e relevant studies e.g. drainage studies, environment
management plan based on environment impact assessment studies, detailed drawings, estimates
and implementation sc"edules and documents.
.//0%$ !oolkit provides reference format for t"e preparation of a Detailed Pro4ect %eport.
!"e pro4ect report is e3pected to contain t"e following sections
:
.
5. (ector background conte3t and broad pro4ect rationale
:. Pro4ect definition, concept and scope
8. Pro4ect cost
?. Pro4ect institution framework
C. Pro4ect financial structuring
D. Pro4ect p"asing
E. Pro4ect OB$ framework and planning
F. Pro4ect financial viability2sustainability
G. Pro4ect benefits assessments
!"e key issues t"at need to be addressed and ot"er relevant details are outlined in t"e .//0%$
Detailed Pro4ect %eport !oolkit.
Objecti"es of P#blic
Proc#rement
Procurement process is an important step in t"e implementation of civil works. ;t can be defined
as a process of ac#uiring goods, services or works or a combination t"ereof. !"e ob4ective of
Public Procurement is to procure work, goods or services, of t"e specified #uality, wit"in t"e
specified time, at t"e most competitive prices, in a fair, 4ust and transparent manner. !"e five key
parameters t"at must be associated wit" a public procurement process, are transparency,
fairness, value for money, #uality, and time.
W"ile procurement deals wit" t"e entire gamut of activities pertaining to works, goods and
services, t"e discussion in t"is c"apter restricts itself to construction works.
Construction contracts fall wit"in t"e following types
Percentage Rate
Teners
*or percentage rate of tenders, t"e contractors are re#uired to #uote rate as overall percentage
above or below t"e total estimated cost. !"is form of tender can be used in respect of
construction and maintenance works, w"ere t"e #uantities of various items are based on design
of works carried out by t"e department20,). (uc" percentage rate contracts are usually
confined to relatively smaller works.
E
Item rate Teners
*or item rate tenders, contractors are re#uired to #uote rate for individual items of work on t"e
basis of sc"edule of #uantities. !"e contractor "as to #uote t"e rates against eac" item of work.
+s in t"e case of Percentage %ate !enders, t"e #uantities in respect of all items of work are based
on designs prepared by t"e department2 0,) -as opposed to tenders w"ere t"e works are based
on Contractor9s own designs.1
Piece
Work
!"is form is to be used mainly in cases of routine maintenance activities and usually restricted to
very small works. !"e contract is based on calling #uotations and t"e conditions of contract are
not as rigid as in t"e case of percentage rate or t"e item rate type of contracts. !"is form is
resorted to in cases w"ere it is necessary to start t"e work in anticipation of formal acceptance of
contract, an agreement on piece work form may be drawn and t"e contract may be cancelled as
soon as regular contract is signed. ;n cases of running contracts e.g. for pipes, laying of sewerage
etc. #uotations are called periodically and a running rate contract is drawn up as a result of t"ose
#uotations usually for one year. !"e piecework form provides for payment of stipulated rates
only w"en it refers to suc" #uantity of time and also stipulates t"at t"e procuring entity may put
an end to t"e agreement at "is option at any time.
$#mp s#m
Contracts
!"is form is used for work in w"ic" contractors are re#uired to #uote a lump sum figure for
completing t"e works in accordance wit" t"e given designs, specifications and functional
re#uirements. (uc" contracts need also to include a sc"edule of variations, w"ic" determines t"e
payment to t"e contractor in t"e event of c"anges suc" as increase or decrease in #uantities or
c"anges in t"e scope of works.
Design%&#il
Contracts
!"ese are contracts w"ere t"e works are e3ecuted on t"e designs prepared by t"e Contractor
based on t"e design criteria and specifications stipulated. !"ese are usually lump sum contracts.
)eing lump sum contracts t"ese also need to include a sc"edule of variation, w"ic" determines
t"e payment to be made to t"e contractor in t"e event of c"anges in t"e scope of works.
Contracts base on
PPP
Contracts based on t"e PPP model aim at implementing t"e works t"roug" a private entity t"at
e3ecutes t"e work on its own finances and is allowed to operate t"e facility for a specific period
during w"ic" revenues from toll2user fee collection etc. are vested eit"er fully or partially in t"e
private entity. !"is mec"anism "elps Governments or 0,)s to tap private finance for relatively
more viable pro4ects and save t"eir precious capital for ot"er less viable pro4ects. !"e mec"anism
also "elps risk s"aring between parties in a manner t"at t"e risks get allocated to parties t"at are
best e#uipped to carry t"em. !"e pro4ect delivery and OB$ can be e3pected to improve from t"e
efficiency of t"e private sector. !"e benefit allowed to t"e private entrepreneur to compensate
F
"im towards costs borne by "im is called Concession. !"e common form of concession is in t"e
form of rig"ts to collect user fees for a specific period called t"e Concession Period. 0sually t"e
concession period includes t"e period of construction in addition to t"e period of Operation and
$aintenance of t"e facility. <arious forms of t"is concession can be contemplated and t"e types
of contracts t"at are in vogue are as follows. !"e private entrepreneur w"o gets t"e concession is
called t"e Concessionaire.
Build, Operate and Transfer (BOT)
!"is is t"e most commonly used form especially in "ig"way pro4ects. !"e concessionaire builds
t"e facility, operates t"e facility till t"e end of t"e concession period and "ands t"e pro4ect
facility back to t"e owner department.
Build, Own and Operate (BOO)
!"is is similar to t"e )O! e3cept t"at t"e pro4ect facility continues to be wit" t"e concessionaire
w"o owns and operates t"e facility. 0sually power plant pro4ects and telecom pro4ects are
implemented t"roug" t"is mec"anism.
Build, Operate, Lease and Transfer (BOLT)
!"is is similar to )O! e3cept t"at t"e transfer is carried out over t"e years t"roug" lease
ad4ustments. Pro4ects involving power plants or development and operation of port terminals are
implemented t"roug" t"is mec"anism.
Contract 'orms e"ol"e b( 'IDIC an t!e
Worl &ank
FIDIC Forms
*;D;C i.e. *7D7%!;O/ ;/!7%/+!;O/+,7 D7 ;/G7/;70%(&CO/(7;,( -;nternational
*ederation of Consulting 7ngineers1 is an international organisation based in Geneva t"at "as
been instrumental in t"e evolution of various standard forms of contracts used worldwide in civil
engineering works. !"e World )ank "as also adopted t"e *;D;C standard forms wit" suitable
modifications for applications in t"e works carried out wit" its assistance.
!"e key differentiator of t"e *;D;C based contract is t"e role assigned to t"e =7ngineer> w"o is
an impartial and independent e3pert w"o administers t"e contract between t"e parties viz. t"e
=7mployer> -i.e. t"e public body e.g. 0,)1 and t"e =Contractor>. !"e conventional PWD forms
used in our country did not ade#uately provide for t"e role of pro4ect management and
supervision to be carried out by a consultant. !"e *;D;C form is eminently suitable for adoption
in cases w"ere t"e pro4ect management of t"e work is to be entrusted to an e3pert consultant,
w"o functions as t"e =7ngineer> to administer t"e contract.
*;D;C "as developed t"e following forms
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Conditions o Contract or Construction: !"ese are forms used for construction contracts and
are usually item rate type of contracts, alt"oug" t"e form can also be used for lump sum
contracts.
G
Conditions o Contract or Plant Design and !uild: !"ese forms are suitable w"ere t"e works
are e3ecuted on Contractor9s own designs. !"ese are lump sum contracts
Conditions o Contract or "PC# $urn%ey Contracts: !"ese forms are to be used for 7PC or
!urnkey contracts w"ere t"e contractor carries out t"e design and also finances works e.g. in t"e
)O! type of contracts.
!"e standard contract documentation on individual works, using t"e *;D;C forms "as two parts
Part I: &eneral Conditions o Contract: !"ese are t"e standard conditions of t"e *;D;C form
of t"e type above as may be suitable to t"e work
Part II: Particular Conditions: !"ese are amendments to t"e General Conditions as may be
appropriate for t"e specific work and ot"er work&specific conditions e.g. special conditions of
contract, drawings, specifications etc.
'orld !an% (tandard Forms o Contracts
!"e World )ank
G
"as evolved standard bidding documents applicable for eac" of t"e following
types of bidding.
International Competiti)e !idding *IC!+: !"is standard form is used for t"e World )ank
aided pro4ects w"ere international bidding is resorted. !"e ob4ective of ;nternational Competitive
)idding -;C)1 is to provide all eligible prospective bidders wit" timely and ade#uate notification
of t"e 7mployer9s re#uirements and an e#ual opportunity to bid for t"e re#uired works.
,imited International !idding *,I!+ !"is is essentially ;C) by direct invitation wit"out open
advertisement. ;t may be an appropriate met"od of procurement w"ere -a1 t"ere is only a limited
number of suppliers, or -b1 ot"er e3ceptional reasons may 4ustify departure from full ;C)
procedures.
-ational Competiti)e !idding *-C!+: !"is is t"e competitive bidding procedure normally
used for public procurement wit"in t"e country and may be t"e most appropriate way of
procuring goods or works w"ic", by t"eir nature or scope, are unlikely to attract foreign
competition.
Re.uest or Proposals or (election o Consultants: !"ese are t"e guidelines and t"e standard
documentation evolved by t"e World )ank for procurement of consultancy services.
Pre-.ualiication Document or Procurement o 'or%s: !"is is t"e document provided by
t"e World )ank for adoption in World )ank aided works w"ere t"e bidding process stipulates
t"e pre&#ualification of t"e intending bidders.
W"ile t"e documentation developed by t"e World )ank is meant for adoption in works aided by
t"e bank, various departments and organisations in t"e country "ave used t"ese as guidelines for
developing standard contract documentation for t"eir procurement of works.
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Steps in Proc#rement
Public Procurement procedure usually follows t"e following steps
5. Preparation of )id Documents
:. +pproval of )id Documents by Competent +ut"ority
8. Public ;nvitation for Pre&#ualification -w"ere relevant1
8.5. ;ssue of ;nstructions and Pre&#ualification criteria
8.:. Pre&+pplication $eeting and ;ssue of Clarifications to +pplicants
8.8. %eceipt of PH applications and scrutiny
8.?. +pproval to PH
?. ;nvitation for )ids
C. ;ssue of )id documents to prospective bidders
D. Pre )id $eeting and ;ssue of $inutes, Clarifications and Common (et of Deviations
E. %eceipt of )ids
F. (crutiny
G. /egotiations, w"ere warranted
5@. +cceptance of )ids
Preparation an )ppro"al to Draft &i Doc#ments
Draft )id Documents "ave to be prepared before t"e invitation of t"e bids is commenced. !"e
Draft )id Documents can be based on standard documentation mentioned in t"e paragrap"s
above. !"e documents "ave also to be approved by t"e aut"ority empowered to approve suc"
documents. W"ile approving t"e )id documents it s"ould be inter alia ensured t"at -a1 t"ere is
no ambiguity, contradiction, or duplication in t"e nomenclature of items, conditions of contract,
specifications and drawingsI -b1 t"e specifications and drawings are capable of implementation at
siteI and -c1 t"e time stipulated to complete t"e 4ob is ade#uate. !"ere is also a practice in some
organisations for t"e official approving t"e bid documents to affi3 "is signature on every page of
t"e bid document as a token of approval and a certificate of approval.
&i )"ertisements in Ne*spapers in
Web sites
Wide publicity must be given to t"e )id ;nvitation /otice. !enders must be invited in t"e most
open and public manner possible, by advertisement in t"e Press and by notice in 7nglis"2'indi
and regional language newspapers of t"e concerned District2 (tate or /ational ,evels as may be
applicable. $any departments2 organisations2 0,)s "ave well&managed web sites wit" t"e
practice of "osting t"e notices on t"e web site in addition to t"e invitation in t"e press. ;t is now
common to provide t"e invitation in t"e newspaper in a window format w"ere t"e important or
55
core information is provided w"ile leading t"e intending bidders to t"e detailed tender notice on
t"e web site of t"e organisation.
C+C G#ielines on Tener P#blicit(,
!"e Central <igilance Commission9s -C<C1 communication no. O**2C!72 dated ?.:.:@@:
stipulates -a1 ;n order to "ave wider, fair and ade#uate competition, it is important t"at
sufficient time, say ?&D weeks in case of +dvertised2Global tenders is allowed. -b1 !"e tenders
s"ould preferably be kept open for sale till t"e date of tender opening or 4ust one day prior to t"e
date of tender opening. -c1 Wit" t"e widespread use of ;nformation !ec"nology, t"e tender
notices s"ould also be put on t"e website and e&mail address of t"e organisation s"ould be
indicated in t"e tender notice.
Time Perio for
&is
Period given for submission of )ids s"ould be ade#uate to enable t"e bidder make "is
investigations, visit t"e site, carry out "is costing, and #uote realistically. *or domestic )ids t"is
period may be 8@ to D@ days. *or smaller works t"e period could be less t"an 8@ days. *or very
s"ort works t"e period could be about 5C&:@ days. *or large and comple3 works, t"is period will
depend on t"e demands of t"e work2 stipulation imposed by t"e funding institution -e.g. World
)ank1. 0sually t"e period is reckoned from t"e publication to t"e last date of sale of bid
documents. (ome organisations prescribe a time gap of four to seven days between t"e last date
of sale and t"e receipt of bids so as to allow some time for t"e bidders to study t"e bid documents
and prepare t"eir bids. !"e time period for bids is reduced for t"e second or subse#uent calls, in
case re&bidding is resorted to.
Sale of
Teners
!ender documents must be kept ready for sale before t"e issue of ;nvitation for )ids. !"e
intending bidders desiring to tender s"ould generally make a written application and pay t"e
price of t"e bid documents in t"e specified format. +n official is designated to see t"at tender
documents wit" complete set of drawings are made available to t"e bidders as soon as t"eir
applications are received. )idders need to acknowledge receipt of t"e bid documents for
purposes of record.
Pre &i
-eeting
+ Pre )id $eeting is "eld at a specified place and time, in respect of relatively large works to
enable prospective bidders to seek clarifications about t"e provisions of t"e bid and make
suggestions to t"e organisation20,) -7mployer1 about t"e work and t"e bidding conditions. ;t is
to be noted t"at non&attendance at t"e Pre )id $eeting does not constitute a dis#ualification of
t"e bidder. + senior official connected wit" t"e bid process usually c"airs t"e meeting. $inutes
of t"is meeting are prepared along wit" clarifications to t"e bidders to respond to t"eir #ueries. ;n
case t"ere are amendments to t"e bid conditions proposed at t"is stage ensuing from t"e
suggestions made by t"e bidders or ot"erwise, t"e same are issued in t"e form of Common (et of
Deviations -C(D1 to t"e bidders. !"e minutes of t"e Pre )id $eeting, Clarifications and t"e
5:
C(D as above need to be supplied to t"e bidders wit"out delay. + minimum gap of about ten to
fifteen days is usually allowed between t"e ;ssue of t"ese minutes and t"e clarifications2C(D and
t"e last date of sale of t"e bid documents primarily wit" a view to enable bidders w"o are
attracted to t"e bid process on account of t"ese deviations, to purc"ase t"e bid documents and
participate in t"e bid.
&i
+aliit(
)id documents re#uire t"e bids to be valid for a stipulated period after t"e submission. !"is
period is usually 5:@ days. !"e process of scrutiny and evaluation of t"e bids "as t"erefore to be
completed and acceptance communicated well wit"in t"e validity period. ;f for some reason, t"e
process of scrutiny and evaluation is delayed, eit"er t"e successful bidder or all t"e bidders could
be re#uested to e3tend t"eir validity for a suitable period. ;t must be noted t"at e3tension to t"e
bid validity is entirely discretion of t"e bidder and suc" a re#uest may not be responded
favourably.
&i
Sec#rit(
+ bid security -/ormally 5A of t"e estimated cost of t"e work put to tender1 is to accompany t"e
bids. !"is is also called 7arnest $oney Deposit. !"e format of t"e bid security as well as t"e
time frame and manner of its refund in case of unsuccessful bids is stipulated in t"e bid
documents. !"e successful bidders are allowed usually to convert t"e bid security into t"eir
performance security.
S#bmission an Opening of
&is
!"e Organisation20,) -7mployer1 needs to fi3 a place and a specific date and time as t"e
deadline for t"e submission of tenders. !"e 7mployer may, prior to t"e deadline for t"e
submission of tendersI e3tend t"e deadline, if necessary on account of reasons e.g. to afford
bidders reasonable time to take t"e clarification or modification of t"e minutes of Pre )id
$eeting into account in t"eir tender. !"e 7mployer may, in its absolute discretion, prior to t"e
deadline for t"e submission of tenders e3tend t"e deadline, if it is not possible for one or more
suppliers or contractors to submit t"eir tenders by deadline owing to any circumstance beyond
t"eir control. /otice of any e3tension of t"e deadline needs to be given promptly to eac" bidder.
!"e tender must be submitted in writing, signed and in a sealed envelope as per stipulations
contained in t"e )id documents.
!"e employer may provide to t"e bidders a receipt s"owing t"e date and time w"en its tender
was received, especially w"en asked for. !"e tender received after t"e deadline for t"e
submission of tender, s"all be returned unopened to t"e bidders w"o submitted t"e same. On t"e
due date and appointed time, as mentioned in t"e bid document, t"e 7mployer needs to open t"e
bids in t"e presence of t"e intending bidders or t"eir representative. !"e bidder9s name, t"e bid
prices and discount, if any will be announced by t"e procuring entity during opening of bids. +
record of opening of bids is to be maintained. W"ere t"e bidding follows a two envelope bid
submission, t"e first envelope of t"e bidders containing t"e documents to ascertain
eligibility2#ualification of t"e bidders and2 or tec"nical proposals is opened on t"e bid
58
submission date. !"e documents in t"e first envelope are scrutinized in due course. !"e financial
bids in respect of t"ose bidders w"o #ualify and w"ose tec"nical proposal meets t"e
re#uirements in t"e bid documents are opened. !"e #ualifying bidders are intimated about t"e
date on w"ic" t"e financial bids are to be opened. )id documents s"ould clearly spell out t"e
procedure of opening and scrutiny of t"e bid documents.
Responsi"e
&is
(crutiny of t"e J*inancial )idsJ is carried out to determine w"et"er eac" bid "as been properly
signed and is substantially responsive. *or t"is purpose, a substantively responsive bid is one t"at
conforms to all t"e terms, conditions and specifications of t"e tender documents wit"out material
deviation and reservation.
+ material deviation or reservation is one -a1 w"ic" affects in any substantial way t"e scope,
#uality, or performance of t"e worksI or -b1 w"ic" limits in any substantial way t"e 7mployerJs
rig"ts or t"e bidderJs obligationsI or -c1 w"ose rectification would affect unfairly t"e competitive
position of ot"er bidders w"ic" are substantially responsive. ;f a bid is not substantially
responsive to t"e re#uirements of t"e bid documents, it s"all be re4ected wit" t"e approval of t"e
aut"ority empowered to accept t"e bid in t"e first instance, and may not subse#uently be made
responsive by correction or wit"drawal of t"e non&conforming stipulation. ;n t"is conte3t,
conditional bids may be considered as non&responsive. !"e provisions regarding determination
of responsiveness of bid documents generally form part of t"e ;nstructions to )idders -;!)1
incorporated in t"e bid documents.
Correction of
Errors
(ubstantially responsive financial bids are c"ecked for any arit"metic errors. +rit"metic errors
are to be rectified on t"e basis of t"e standard procedure stipulated in t"e ;!) w"ic" is as
follows -a1 ;f t"ere is a difference between t"e amount of rate in figure and in words of an item,
and t"e total amount is worked out, t"en t"e rate w"ic" corresponds to t"e amount worked by t"e
bidder s"all be taken as correct. -b1 ;f t"e bidder "as not worked out t"e amount of an item, or t"e
same does not correspond wit" t"e rates written eit"er in figures or in words, t"en t"e rate #uoted
by "im in words s"all be taken as correct. -c1 ;f t"e rate #uoted by t"e bidder in figures and in
words tallies, but t"e amount is not worked out correctly, t"e rate #uoted by t"e contractor s"all
be taken as correct and not t"e amount.
Clarifications from
&iers
!o assist t"e process of e3amination, evaluation and comparison of bids a procedure is stipulated
in t"e bid documents w"ereby, t"e 7mployer may ask t"e bidder individually for clarification, if
any, of t"eir bids, including breakdown of unit rates and price. !"e re#uest for clarification and
t"e response must be in writing, but no c"ange in t"e price or substance of t"e bid will be soug"t,
offered or permitted, e3cept as re#uired to confirm t"e correction of arit"metical errors
discovered by t"e 7mployer in t"e course of scrutiny.
5?
E"al#ation an Comparison of &is
!"e evaluated bid Prices will be ad4usted after taking into account -i1 correction for errorsI -ii1
ad4ustments for any acceptable variations, deviations and, -iii1 ad4ustments to reflect any
discounts or ot"er modifications offered. <ariations, deviations, or alterative offers and ot"er
factors w"ic" are in e3cess of t"e bidding documents or ot"erwise result in unsolicited benefits
for t"e Contractor s"ould not be taken into account in bid evaluation. Duties, ta3es and ot"er
levies will not be considered in evaluation of bids. ;f t"e bid of t"e successful bidder is seriously
unbalanced in relation to t"e estimate of t"e cost of t"e work, t"e 7mployer may ask t"e bidder
to produce detailed price analysis for any or all t"e items of )ill of Huantities, to demonstrate t"e
internal consistency of t"ose prices wit" t"e construction met"ods and sc"edule proposed. +fter
evaluation of t"is analysis, t"e 7mployer may re#uire t"at t"e amount of performance security be
increased to a level sufficient to protect t"e 7mployer against financial loss in t"e event of
default of t"e successful bidder under t"e Contract.
Confientialit(
Consierations
!"e ;!) s"all usually provide for t"e confidentiality of t"e process by stipulating t"at
information relating to t"e e3amination, clarification, evaluation and comparison of bids, and
recommendations for t"e award of a contract s"all not be disclosed to bidders or any ot"er person
not officially concerned wit" suc" process, until t"e award to t"e successful bidder is announced.
+dditionally, )idders are not to contract t"e 7mployer or "is officials from t"e time of bid
opening to t"e time contract award on any matter related to t"e bid, e3cept on re#uest and prior
written permission and t"at any effort by t"e )idder to influence t"e 7mployer in bid evaluation,
bid comparison or contract award decisions will result in t"e re4ection of t"e )idderJs bid.
)cceptance of
&is
+t t"e end of its scrutiny and evaluation of t"e buds a comparative statement of tenders is
prepared to compare t"e tenders and in order to ascertain t"e successful tender in accordance
wit" t"e procedures and criteria set fort" in t"e bid documents. /o criteria s"all be used t"at "as
not been set fort" in t"e tender document. )ased on t"e acceptance criteria stipulated in t"e )id
documents, t"e competent aut"ority s"all accept t"e tender t"at meets t"e re#uirements of t"e bid
documents and t"e acceptance criteria stipulated. !"e usual criterion stipulated in bid documents,
is to regard a bidder successful if "is bid #uotes t"e lowest price sub4ect to any margin of
preference applied pursuant to Government policy.
!"e )id documents s"ould incorporate t"e stipulation t"at t"e 7mployer s"all reserve t"e rig"t to
accept or re4ect any bid or all bids, recall t"e tender and to annul t"e bidding process, at any time
before t"e award of its work, wit"out t"ereby incurring any liability to t"e affected bidder-s1 or
any obligation to inform t"e affected bidder-s1 of t"e grounds for t"is action. 'owever, w"ile
e3ercising t"is rig"t t"e competent official of t"e 7mployer must base "is action of re4ection on
clear, logical reasons and keep t"ese reasons for re4ection2recall of tenders on record.
5C
Negotiations, C+C G#ielines
+s a general rule, negotiations s"ould not be resorted to. 'owever, t"ey may become necessary
in certain situation. C<C guidelines in t"is regard stipulate as under
a1 !"ere s"ould not be any negotiations. /egotiations, if at all, s"all be an e3ception and only in
t"e case of proprietary items or in t"e case of items wit" limited source of supply.
/egotiations s"all be "eld wit" ,&5 only. Counter offers are tantamount to negotiations and
s"ould be treated at par wit" negotiation.
b1 /egotiations can be recommended in e3ceptional circumstances only after due application of
mind and recording valid, logical reasons 4ustifying negotiations. ;n case of inability to
obtain t"e desired results by way of reduction in rates and negotiations prove infructuous.
(atisfactory e3planations are re#uired to be recorded by t"e Officials2Committee w"o
recommended t"e negotiations. !"e Officials2Committee s"all be responsible for lack of
application of mind in case its negotiations "ave only unnecessarily delayed t"e award of
work2contract.
c1 ;n case of ,&5 backing out t"ere s"ould be re&tendering as per e3tant instructions.
d1 !"e original terms and conditions of t"e bid s"ould not be varied w"ile negotiating. + record
of t"e negotiations will be kept, w"ic" will form part of t"e agreement along wit"
undertakings given by t"e contractor.
G#ielines for )cceptance of Single Ten ers
!"e acceptance of single tender poses difficulty and is not encouraged. +cceptance of a single
tender is to be an e3ception and not a general rule. !"e following guidelines adopted by /'+;
for its works, may be used for guidance.
?.
;n case only a single bid is received by t"e due date of receipt, normally t"e bid process may
be cancelled and re&bidding done by giving a s"orter notice -say of four weeks1 e3cept in
cases w"ere due to ot"er reasons like difficult conditions, law and order etc., t"e tender
response is e3pected to be poor.
;n case of re&bidding, c"ange from pre&#ualification to post&#ualification may also be
considered and resorted to, if t"at would "elp increase response of tender.
;n case re&bidding2c"ange to post&#ualification also results in receipt of single bid t"en it
s"ould be opened and t"e bid amount s"ould be compared wit" t"e estimated pro4ect cost. ;n
case t"e bid amount is wit"in 5CA of t"e estimated cost, t"en acceptance of t"e bid may be
considered wit" proper 4ustification and reasons.
*or 7PC contracts suc" single tenders can be considered for acceptance provided if bid is
reasonable and sufficient 4ustifications e3ist for acceptance.
;n cases w"ere due to reasons like difficult conditions, law and order, likeli"ood of poor
response etc., it is decided to open t"e single bid wit"out going for re&bidding, t"en for
5D
acceptance, t"e above guidelines s"all be applicable as are prescribed for acceptance of
tenders w"ere re&bidding is resorted to.
Comm#nication of )cceptance
+cceptance of t"e bid is communicated to t"e successful bidder well before t"e e3piry of t"e bid
validity period, in a standard format of acceptance letter. !"e bidder is re#uested to submit a
performance security -0sually C A to 5@A of t"e contract price1 wit"in t"e stipulated period so
as to issue a notice to proceed wit" t"e work -Work Order1
Performance
Sec#rit(
!"e successful bidder is re#uired to furnis" to t"e 7mployer a performance security after t"e
receipt of ,etter of +cceptance, wit"in t"e time stipulated, usually of an amount e#uivalent to
CA to 5@A of t"e contract price plus additional security for unbalanced bids. !"e Performance
(ecurity to be provided by t"e successful bidder is in t"e form of a bank guarantee as per
prescribed format issued from any nationalized ;ndian bank2;D);2;C;C;273port ;mport
bank2*oreign bank wit" counter guarantee from any nationalized ;ndian )ank or ot"er bank as
may be acceptable to 7mployer -!"e bid documents need to provide clear stipulations in t"is
regard1. !"e )ank Guarantee for performance security s"all remain valid for a sufficient period
-as specified in t"e Contract1 after e3piry of Defects ,iability Period.
+fter t"e successful bidder furnis"es t"e performance security towards t"e work as stipulated in
t"e bid documents, t"e notice to proceed wit" t"e work -Work Order1 is issued and t"e
agreement is signed.
Eligibilit( an .#alification of
&iers
Pre-.ualiication: !"e successful e3ecution of contracts for large buildings, civil engineering,
supply and installation, turnkey, and design and build pro4ects re#uires t"at contracts be awarded
only to firms, or combinations of firms, t"at are suitably e3perienced in t"e type of work and
construction tec"nology involved, t"at are financially and managerially sound, and t"at can
provide all t"e e#uipment re#uired in a timely manner. !"e assessment by an implementing
agency of t"e suitability of firms to carry out a particular contract prior to being invited to
submit a bid is a process called pre-.ualiication.
/
Post-.ualiication:W"ere t"e assessment by t"e implementing agency of t"e suitability of t"e
firm to carry out t"e contract is carried out after t"e submission of bids, t"e process is called
post-.ualiication. !"e post&#ualification process comprises scrutiny of t"e credentials of t"e
firm from t"e first envelope of t"e two envelopes bidding process and considering t"e financial
bids in t"e second envelope only of t"ose bidders w"o conform to t"e stipulated #ualification
criteria.
5E
Pre-.ualiication Post-.ualiication
5 !"e process enables prospective bidders, w"o may be
insufficiently #ualified on t"eir own, to avoid t"e
e3pense of bidding. Conversely it is an incentive for
t"ese potential bidders to form a 4oint venture t"at may
give t"em a better c"ance of success.
;nsufficiently #ualified bidders
enter t"e bid process and incur t"e
e3pense of bidding. !"ere is no
incentive to form a 4oint venture
t"at may give t"em a better c"ance
of success.
: +fter being pre&#ualified, well&#ualified firms will
price t"eir bids wit" t"e knowledge t"at t"ey are
competing against ot"er #ualified bidders meeting
realistic minimum competence criteriaI t"e assurance
t"at inade#uately #ualified competitors will be
e3cluded from submitting unrealistic low bids t"us
encourages leading contractors to bid.
(ince t"e bid process is open to all,
and since t"ere is no assurance t"at
inade#uately #ualified bidders will
be kept out, leading contractors are
relatively less keen to bid in t"is
process.
8 ;t reduces t"e amount of work and time involved by
7mployers in evaluating bids from un#ualified
contractors.
!"e 7mployer is compelled to
scrutinize and evaluate all t"e bids
? Procurement lead&time may increase, alt"oug" t"is can
be minimized by good procurement sc"eduling, e.g.,
undertaking t"e pre&#ualification process w"ile
)idding Documents are being prepared.
Procurement ,ead&time is relatively
less.
C Collusion -and t"e possibility of price&rigging1 is easier
among a limited number of identified bidders.
Collusion less likely.
(trategy towards Pre#Post 0ualiication: Considering t"e relative merits and demerits of pre&
#ualification and post&#ualification, it may be desirable to resort to pre&#ualification in cases of
large and comple3 pro4ects w"ere t"e ability to deliver t"e pro4ect is a key re#uirement. *or t"e
relatively medium and small 4obs, t"e strategy of post #ualification may be adopted. !"e criteria
to be used for pre or post #ualification could be more or less similar.
Pre-.ualiication Process: !"e pre&#ualification process includes four main p"ases advertising,
preparation and issuing of t"e pre&#ualification document, application preparation and
submission by bidders, and application evaluation, and pre&#ualification of applicants.
1d)ertising: !"e advertisement for pre&#ualification s"ould conform to t"e guidelines for t"e
publicity of bids w"ereby wide publicity is accorded to t"e pre&#ualification process. ;n case of
international bids, t"e publicity may "ave to be made in appropriate international newspapers.
Preparation and Issue o Pre-.ualiication Document: Pre&#ualification documents "ave to be
got prepared and approved from t"e competent aut"ority in a manner identical to preparation and
5F
approval to bid documents. !"e typical pre&#ualification document "as usually t"e following
sections
Instructions to 1pplicants: (pecifies t"e procedures to be followed by +pplicants in t"e
preparation and submission of t"eir +pplications for Pre&#ualification as well as information on
opening and evaluation of applications.
'or% (peciic Data: Consists of provisions t"at are specific to eac" pre&#ualification and
supplement t"e information or re#uirements included in t"e section covering ;nstructions to
+pplicants.
0ualiication Criteria and Re.uirements: 'ig"lig"ts t"e met"ods and t"e criteria used for
carrying out t"e pre&#ualification of applicants.
Forms and Formats: !"e forms and formats in w"ic" t"e applicants are e3pected to furnis"
t"eir information for pre&#ualifications
(cope o 'or%s: (pecifies t"e scope of t"e work including drawings and specifications as
well as t"e delivery sc"edule in respect of t"e work for w"ic" t"e pre&#ualification
applications are soug"t.
1pplication Preparation and (ubmission by 1pplicants: !"is is t"e stage w"ere t"e intending
applicants study t"e pre&#ualification documents and prepare t"eir applications in t"e form and
formats stipulated. During t"is time t"e 7mployer is re#uired to respond promptly to t"e #ueries
t"at t"e applicants mig"t raise. !"is process could be facilitated t"roug" a Pre&+pplication
$eeting.
1pplication ")aluation and Pre-.ualiication o 1pplicants: !"is is t"e stage w"ere t"e
7mployer evaluates t"e applications and pre&#ualifies t"e bidders based on t"e #ualification
criteria stipulated in t"e application documents.
Eligibilit(
Criteria
7ligibility criteria generally stipulated in t"e bid documents comprises t"e following
Conflict of ;nterests + firm t"at "as provided consultancy services to t"e 7mployer in t"e
preparation of t"e pro4ect or bid documents etc. or affiliates of suc" a firm are not eligible to
provide services or goods and t"us not eligible for bidding.
Government owned enterprises are not eligible for bidding unless t"ey are legally and
financially autonomous and operate under t"e commercial law.
+ firm declared ineligible for "aving indulged in corrupt or fraudulent practices by t"e
7mployer s"all not bid. *irms t"at "ave been debarred from participating in t"e bid
processes of t"e 7mployer for non& performance s"all be ineligible for bidding in t"e period
so applicable.
5G
.#alification Criteria
Generally, t"e following #ualification criteria are specified in t"e pre&#ualification document for
#ualification of bidders. !"e criteria may also be used to carry out post&#ualification of bidders.
!"e criteria could be modified and e3panded to include ot"er conditions to meet t"e
re#uirements of individual works.
Registration o Contractors in 1ppropriate Class: !"e Hualification criteria usually
stipulates t"at t"e bidders must be registered in appropriate class wit" t"e 7mployer or t"e
CPWD or (tate PWDs or %ailways etc, !"e registered contractors would be eligible to tender
for t"e class -es1 of work-s1 for w"ic" t"ey are registered and up to t"e limits of t"eir
registration and area of operation.
&eneral Construction "2perience: !"e #ualification criteria stipulates t"at bidders s"ould
"ave been actively engaged in civil works construction business for similar work at least for
C2 5@ years immediately prior to t"e date of submission of application.
Particular Construction "2perience: !"e #ualification criteria stipulation may provide t"at
t"e bidder s"ould "ave successfully completed or substantially completed, wit"in t"e last
C25@ financial years, at least one contract of t"e specified percentage -e.g. EC A1 of t"e
contract value in #uestion and w"ic" is similar to t"e one now being proposed and -ii1 !"e
bidder s"ould also "ave ac"ieved t"e minimum annual production rates of t"e key
construction activities stipulated.
$urno)er: !"e minimum average turnover of t"e bidder during t"e preceding C to E years
s"ould be more t"an t"e specified value. !"is is usually two times t"e estimated cost of t"e
work put to tender divided by t"e time in years allowed for t"e work. W"ile working out t"e
turnover of t"e preceding years, a compounding factor -e.g. 5@A per year1 may be specified.
!id Capacity: !"e #ualification criteria invariably provide t"at t"e bidder s"ould possess t"e
bidding capacity as calculated by t"e specified formula. !"e formula generally adopted is
)id Capacity K + 3 / 3 * &), w"ere
+ K $a3imum value of works e3ecuted in any one year during t"e last C years -updated at t"e
current price level by a compounding factor e.g. 5@A per annum1, taking into account t"e
completed as well as works in progress.
/ K /umber of years prescribed for completion of t"e work in #uestion.
) K <alue -updated at t"e current price level1 of t"e e3isting commitments and ongoing works to
be completed in t"e ne3t J/J years.
* K + multiplier factor -0sually 5.C to :1
Financial Capability: Wit" a view to ensure t"at t"e bidder "as access to or possesses
ade#uate li#uid assets and ot"er financial assets to meet t"e cas" flow re#uirements for t"e
contract in #uestion, t"e #ualification criteria provides t"at -i1 !"e bidder must possess a
specified minimum value of li#uid assets -Generally 5@A of t"e annual turnover1 -ii1 !"e
bidder s"ould "ave ade#uate sources of finance to meet t"e cas" flow re#uirements of works
:@
currently in progress and for future contract commitments and -iii1 !"e bidder s"ould possess
financial soundness as establis"ed by audited balance s"eets and2or financial statements.
!owards t"is t"e bidder may be re#uired to produce t"ese details suc" as Profit and ,oss
(tatements and )alance ("eets for t"e preceding five or seven years. !"e bid documents may
also provide t"at t"e 7mployer may seek reference from t"e bidder9s bankers to establis" "is
financial soundness.
".uipment Capability: !"e #ualification criteria may provide t"at t"e bidders s"ould
demonstrate t"e availability of key e#uipment necessary for t"e contract work. !"is may be
t"roug" owners"ip of t"e e#uipment of t"roug" "ire or lease. !"e prime consideration in t"is
regard would be to assure t"e availability of t"e e#uipment at t"e time w"en it is re#uired to
be deployed in t"e contract work.
Personnel Capability: !"e #ualification criteria may re#uire t"e bidder must demonstrate
t"e availability of key personnel of t"e re#uisite #ualification and e3perience for deployment
in t"e contract work.
,itigation 3istory and Past Perormance: Wit" a view to weed out bidders wit" a "istory
of unsuccessful or bad litigation or poor performance in past contracts, e.g. unsuccessful
completion, or e3cessive delays t"e criteria may re#uire t"e bidders to provide details of
previous works and litigations. !"e 7mployer may, in t"is regard insist on certificates2
independent verification from t"e previous 7mployers to ensue t"at t"e past "istory of t"e
bidder does not create a doubt about "is performance in t"e present contract. + decision to
dis#ualify "as to be based on solid evidence -references1 from t"e previous 7mployers to
substantiate t"at non&performance resulted from a default by t"e bidder.
/oint +ent#res
;ntending bidders forge 4oint ventures to bring toget"er t"eir tec"nical, financial, personnel and
e#uipment capabilities to meet t"e re#uirements of a contract work. *or large and comple3 works
-say costing more t"an %s. 5@@ Cr.1, 4oint ventures are, t"erefore, permitted.
?
W"ile #ualifying
4oint ventures, t"e memorandum of understanding forming t"e 4oint venture agreement s"ould be
carefully scrutinized. !"e $O0 between t"e 4oint venture partners s"ould contain details suc" as
$anagement structure of t"e .2<, s"are of individual partners in t"e .2<, ,ead Partner and "is
empowerment to incur liabilities and enter negotiations, responsibilities of individual partners in
furnis"ing bid security, performance security etc., t"eir 4oint and several liability and remedy in
case of abdication of responsibility by one or more parties etc.
W"ile considering #ualification of a .oint <enture, some of t"e criteria specified above could be
met collectively and some by t"e ,ead Partner. (ome of t"e criteria could be applied to t"e
individual partners to t"e e3tent of t"eir s"are in t"e .2<. *or smaller contracts it may be
desirable to disallow 4oint ventures.
Cons#ltanc(
Contracts0)ssignments
Considering t"e magnitude and comple3ity of works faced by t"e Central2 (tate departments,
Governmental organisations or t"e 0,)s, it is inevitable t"at services of "ig" #uality consultants
:5
are deployed at all stages of t"e pro4ect life cycle. Consultants "ave to be engaged for conducting
feasibility studies, pro4ect preparation, preparation of bid documents and pro4ect management
during t"e construction stage as well as supervision during t"e OB$ stage.
T(pes of Cons#ltanc(
Contracts
,ump (um $ype: ,ump sum contracts are used mainly for assignments in w"ic" t"e content
and duration of t"e services and t"e re#uired output of t"e consultants are clearly defined. +reas
of application will be simple planning and feasibility studies, environmental studies, detailed
design of standard or common structures, preparation of data processing systems, and so fort".
Payments will be linked to outputs -deliverables1, suc" as reports,J drawings, bills of #uantities,
bidding documents and software programs.
$ime !ased Contracts: !"is type of contract will be an appropriate c"oice w"en it is difficult to
define t"e scope and lengt" of services. +reas of application will "e comple3 studies, supervision
of construction, advisory services, and most training assignments. Payments will be based on
agreed "ourly, daily, weekly, or mont"ly rates for staff -w"o are normally named in t"e contract1
and on reimbursable items using actual e3penses and2or agreed unit prices. !"e rate for staff
include salary, social costs, over"eads, fee -or profit1, and w"ere appropriate, special allowances.
!"is contract s"ould specify t"e ma3imum amount to be paid to t"e consultants. !"is ceiling
amount s"ould include a contingency allowance for unforeseen work and duration, and provision
for price ad4ustments, w"ere appropriate. !ime based contracts need to be closely monitored and
administered in order t"at t"e assignment is progressing satisfactorily and t"at payments claimed
by t"e consultants are appropriate.
Percentage Contracts: !"ese contracts will be relevant for arc"itectural services. !"is can also
be used for procurement, inspection agents, or work supervision. ;n t"ese, t"e fees paid to t"e
consultant s"ould be related to t"e estimated or actual pro4ect construction cost, or t"e cost of t"e
goods procured or inspected. !"e contracts will be negotiated on t"e basis of market norms for
t"e service and2or estimated staff&mont" costs for t"e services, or competitive bid. !"ese
contracts may encourage t"e consultants to provide proposals t"at are not economical.
Retainer and#or Contingency *(uccess+ Fee Contracts: %etainer and contingency fee contracts
are widely used w"en consultants -e.g. financial firms1 are preparing companies for sales or
mergers of firms, notably in privatization operations. !"e remuneration of t"e consultant
includes a retainer and a success fee, t"e latter being normally e3pressed as a percentage of t"e
sale price of t"e assets
Indeinite Deli)ery Contracts *Price 1greement+: !"ese contracts will be used w"en t"ere is a
need to "ave J>On callJ specialized services to provide advice on a particular activity, t"e e3tent
and timing of w"ic" cannot be defined in advance. !"ese may be used to retain advisers for
implementation of comple3 pro4ects, e3pert ad4udicators for dispute resolution panels,
institutional reforms, procurement advice, and tec"nical trouble s"ooting etc. !"e client and t"e
firm agree on t"e unit rates to be paid for t"e e3perts, and t"e payments are made on t"e basis of
t"e time actually used.
::
Selection of Cons#ltant, -et!os
!"e consultants may be drawn from various sources, w"erever talent and e3perience of t"e
relevant kind are available. !"ese may include private and public entities suc" as consulting
firms, engineering firms, construction managers, management firms, procurement agents,
inspection agents, investment institutions, researc" bodies, government agencies, individuals.
Different met"ods of selection and t"e areas to w"ic" a particular met"od is most appropriate,
and also t"e detailed procedure of evaluation, selection and appointment of consultants are
a1 Huality&and Cost&)ased (election -HC)(1
b1 Huality&)ased (election -H)(1
c1 *i3ed )udget (election
d1 ,east& Cost (election
e1 (election )ased on ConsultantJs Hualification
f1 (ingle (ource (election
.#alit( an Cost &ase Selection
1.C&S2
HC)( uses a competitive process among firms t"at takes into account t"e #uality of t"e proposal
and t"e cost of t"e services in t"e selection of t"e successful firm. Cost, as a factor of selection, is
to be used 4udiciously. !"e relative weig"t to be given to t"e #uality and cost will be determined
for eac" case, depending on t"e nature of t"e assignment.
!"e weig"t associated wit" Huality i.e. !ec"nical Proposal may be as "ig" as F@A and t"at
associated correspondingly wit" cost i.e. *inancial Proposal may be :@A. !"is met"od is t"e
preferred met"od for many of t"e consultancy assignments relating to works to be undertaken for
World )ank aided pro4ects.
!"e process of service procurement is in t"e following steps
a. Preparation of !erms of %eference -!O%1I
b. Preparation of cost estimate of t"e services and t"e budgetI
c. +dvertising to seek e3pression of ;nterest -7O;1I
d. Preparation of t"e s"ort list of consultantsI
e. Preparation and issuance of t"e %e#uest for Proposals -%*P1I
,etter of ;nvitation -,O;1I
;nformation to Consultants -;!C1I
Proposed contractI
f. %eceipt of proposalsI
g. 7valuation of tec"nical proposalsI consideration of #ualityI
:8
". 7valuation of financial proposalI
i. *inal evaluation of #uality and costI and
4. /egotiations and award of t"e contract to t"e selected firm.
.#alit( &ase Selection 1.&S2
H)( is used in t"e following types of assignments
a. Comple3 or "ig"ly specialized assignments for w"ic" it is difficult to define precise !O%
and t"e re#uired input from t"e consultants, and for w"ic" t"e client e3pects t"e
consultants to demonstrate innovation in t"eir proposal
b. +ssignments t"at "ave a "ig" downstream impact and in w"ic" t"e ob4ective is to deploy
t"e services of t"e most eminent e3pertI and
c. +ssignments t"at can be carried out in substantially different ways, suc" t"at proposals
will not be comparable.
;n H)(, t"e %*P comprises submission of a tec"nical proposal and t"e financial proposal in two
separate envelopes. !"e selection involves t"e selection of t"e consultant based on #uality w"ose
financial bid is opened and considered for acceptance.
'i3e &#get
Selection
!"is met"od will be used w"en t"e assignment is simple and can be precisely defined, and w"en
t"e budget is fi3ed. !"e %P* s"ould indicate t"e available budget and re#uest t"e consultants to
provide t"eir best tec"nical and financial proposals in separate envelopes, wit"in t"e budget.
!O% s"ould be particularly well prepared to make sure t"at t"e budget is sufficient for t"e
consultants to perform t"e e3pected tasks. 7valuation of all tec"nical proposals s"all be carried
out first as in t"e HC)( met"od followed by public opening of t"e financial bid envelopes.
Proposals t"at e3ceed t"e indicated budget s"all be re4ected. !"e consultant submitting t"e
"ig"est ranked tec"nical proposal among t"e rest s"all be selected and invited to negotiate t"e
contract.
$east Cost
Selection
!"is met"od is used for assignments of a standard or routine nature, w"ere well&establis"ed
practices and standards e3ist and in w"ic" t"e contract amount is small. 0nder t"is met"od,
minimum inputs re#uired will be specified and certain minimum #ualifying marks for t"e
#uality, establis"ed. Proposals to be submitted in two envelopes will be invited from a s"ort list.
7nvelopes containing t"e tec"nical proposal are opened first and evaluated. !"ose securing less
t"an t"e minimum will be re4ected and t"e financial proposals of t"e rest opened publicly. !"e
firm wit" t"e lowest price s"all t"en be selected. !"e minimum inputs re#uired and t"e minimum
#ualifying marks s"all be stated in t"e %*P.
:?
Selection &ase on Cons#ltant4s .#ali5cation
!"is met"od is used for very small assignments for w"ic" t"e need for preparing and evaluating
competitive proposals is not 4ustified. ;n suc" cases, !"e !O% is prepared and e3pression of
interest re#uested and information on t"e consultants9 e3perience and competence relevant to t"e
assignment is obtained to establis" a s"ort list of consultants. !"e firm wit" t"e most appropriate
#ualifications and references is t"en selected. !"e selected firm s"all be asked to submit a
combined tec"nical& financial proposal and t"en be invited to negotiate t"e contract.
Single So#rce
Selection
(ingle&source selection of consultants does not provide t"e benefits of competition in regard to
#uality and cost, lacks transparency in selection, and could encourage unacceptable practices.
!"erefore, single&source selection is to be used only in e3ceptional cases. (ingle&source selection
may be appropriate only if it presents a clear advantage over competition -a1 for tasks t"at
represent a natural continuation of previous work carried out by t"e firm -b1 in emergency cases,
suc" as in response to disasters and for consulting services re#uired during t"e period of time
immediately following t"e emergency, -c1 for very small assignments, or -d1 w"en only one firm
is #ualified or "as e3perience of e3ceptional wort" for t"e assignment.
Stanar Pro"isions in Cons#ltanc(
Contracts
Price 1djustment: +d4ustment of t"e remuneration for foreign and2 or local inflation will be
done as per price ad4ustment provision included in t"e contract if its duration is e3pected to
e3ceed 5F mont"s. ;n e3ceptional cases, contracts of s"orter duration may include a provision for
price ad4ustment w"en local or foreign inflation is e3pected to be "ig" and unpredictable.
Payment Pro)isions: Payment provisions, including amounts to be paid, sc"edule of payments,
and payment procedures, currencies of payment in case of foreign consultants, s"all be clearly
defined in t"e contract agreement. Payments may be made at regular intervals -as under time
based contracts1 or for agreed outputs -as under lump sum contracts1.
Perormance (ecurity: )id and performance securities are generally not recommended for
consultants9 services.
C
!"eir enforcement is often sub4ect to 4udgment calls, t"ey can be easily
abused, and t"ey tend to increase t"e costs to t"e consulting industry wit"out evident benefits,
w"ic" are eventually passed on to t"e )orrower. 'owever, in specific cases, performance
security amounting to about CA of t"e consultancy contract may be stipulated in t"e form of
bank guarantee to be valid well beyond t"e tenure of t"e consultancy assignment.
?
Conlict o Interest: !"e consultant s"all not receive any remuneration in connection wit" t"e
assignment, e3cept as provided in t"e consultancy contract. !"e consultant and its affiliates s"all
not engage directly or indirectly in activities t"at conflict wit" t"e interest of t"e 7mployer under
t"e contract, and s"all be e3cluded from downstream supply of goods or construction of works or
purc"ase of any asset or provision of any ot"er service related to t"e assignment ot"er t"an a
continuation of t"e J(ervicesJ under t"e ongoing contract not connected wit" t"e 4ob concerned.
:C
Proessional ,iability: Professional liability is a term used to recognize t"e obligation of a
person or firm to compensate t"ose w"o suffer loss or damage as a result of t"e negligent
performance of t"e professional services provided by t"em. !"e consultant will be e3pected to
carry out t"e assignment wit" due diligence and in accordance wit" prevailing standards of t"e
profession. 'e will always act, in respect of any matter relating to t"e Contract or t"e (ervices,
as fait"ful adviser to t"e 7mployer and will at all times support and safeguard t"e 7mployerJs
legitimate interests in any dealings wit" t"e subcontractors or t"ird parties. !"e Consultant s"all
be responsible for accuracy of data -w"et"er collected directly by "im or procured from ot"er
agencies2aut"orities1, t"e designs, drawings, estimates and all ot"er details prepared by "im as
part of t"e (ervices. 'e s"all indemnify t"e 7mployer against any negligence, deficiency in
services, or inaccuracy2deficiency in t"e work t"at mig"t surface during implementation of t"e
pro4ect. !"e consultant will also be responsible for correcting at "is own cost, t"e drawings
including any re&survey2investigation and correcting layout, if re#uired.
Proessional Indemnity Insurance: Professional ,iability ;nsurance, more commonly referred
to as Professional ;ndemnity ;nsurance, is a mec"anism to transfer all or part of t"e risk to an
insurance company for payment to t"ose w"o are entitled to be compensated for t"eir losses to
t"e negligent performance of t"e duty by a t"e professional. !"e consultant s"all provide to t"e
7mployer a Professional ,iability ;nsurance -P,;1 for a period of five -C1 years or as per
applicable law, w"ic"ever is "ig"er, after completion of services.
?
!"e liability to t"e 7mployer
s"all be limited to t"e total payments e3pected to be made under t"e consultantJs contract, or t"e
proceeds t"e consultant is entitled to receive under its insurance, w"ic"ever is "ig"er.
$ermination: ;f t"e consultant is found to be not performing satisfactorily during t"e course of
t"e consultancy assignment, or refuses to re&do part of t"e work w"ic" is found unacceptable, or
fails to comply wit" any decision reac"ed as a result of arbitration proceedings, or becomes
bankrupt, or is found to indulge in corrupt and fraudulent practices, or knowingly submits a false
statement w"ic" "as a material effect on t"e rig"ts, obligations or interests of t"e 7mployer, may
terminate t"e contract after giving due notice. 0pon termination, t"e 7mployer s"all, after
offsetting any advances, pay for t"e services satisfactorily done before t"e effective date of
termination, and also of reimbursable e3penditures w"ic" "ave been actually incurred before t"e
said date
(ta (ubstitution Pro)isions: During an assignment, if substitution is necessary -for e3ample,
because of ill "ealt" or because a staff member proves to be unsuitable1, t"e consultant s"all
propose ot"er staff of at least t"e same level of #ualifications for approval by t"e 7mployer. (uc"
substitution may be allowed only in respect of a proportion of t"e staff proposed, and provisions
towards penalties for suc" substitution may also be included in t"e consultancy contract. !"e
contract may also contain provisions for replacement of personnel found unsuitable by t"e
7mployer.
Dispute Resolution Pro)isions: Consultancy contracts need to include a clause for settlement of
disputes. !"e dispute resolution mec"anism usually provides for amicable settlement failing
w"ic" t"e dispute is referable to an arbitration proceeding.
:D
References:
1. JNNURM: Modified Guidelines
2. JNNURM Detailed Project Report Preparation Toolkit
3. Manual on Policies and Procedures for Procureent of !orks issued "# G$%& Ministr# of 'inance (2))*+
,. National -i./0a# 1ut/orit# of %ndia : N-1% !orks Manual2(2))*+
3. Guidelines: 4election and 5plo#ent of 6onsultants "# !orld 7ank 7orro0ers (2))*+
*. !orld 7ank2 Pre28ualification Docuent for Procureent of !orks and User9s Guide (2))*+
:. !orld 7ank2 4tandard Re8uest for Proposals for 4election of 6onsultants (2)),+
;. !orld 7ank2 4tandard 7iddin. Docuent for Procureent of !orks and User9s Guide (2)):+
<. !orld 7ank2 Guidelines Procureent under %7RD =oans and %D1 6redits (2)),+
1). '%D%6 6ontracts Guide to t/e 6onstruction& Plant and Desi.n27uild and 5P6>Turnke# 6ontracts (1st 5dition& 2
:E

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