TENDERING AND PREQUALIFICATION

THE AIM OF TENDERING AND PRE-QUALIFICATION

Tendering is a kind of competitive bidding by which an external contributor is selected. Pre-qualification is a preliminary evaluation of the potential external contributors before entering into the tendering phase based on a predefined set of criteria. Types of tendering are differentiated based on how the pre-qualification itself relates to the tendering.

TYPES OF TENDERING

Open tendering: it does not require prequalification, thus each potential contributor can submit a tender bid. Bidding is not preceeded by prequalification. Selective tendering: only those potential external contributors may submit their tender bids who have been pre-qualified for the project work in question. It implies that bidding is preceeded by pre-qualification.

 Two-tier tendering: a certain part of the tender bid is coupled with the pre-qualification itself.
Two-step tendering: a proposal for the technical solution of the desired project result (or the problem to be solved) is submitted along with pre-qualification. Two-stage/stair tendering: unit prices/rates are submitted along with pre-qualification.

Invitation tendering: a client invites a few potential external contributors to submit their tender bid. Thus, bidding is not preceeded by prequalification.
direct invitation: it is based on a certain kind of monopoly (e.g. a unique know how) serial tender: when a client wants to implement the same project a few times but in different locations, or a complex information system project will be implemented in a stage by stage manner etc.

RELATIONSHIP BETWEEN TENDERING AND PRE-QUILIFICATION

Types of tendering
Open tendering Selective tendering

Pre-qualification
No pre-qualification Bidding is preceded by prequalification (only pre-qualified external contributors may submit bid).

Two-tier tendering Two-step system Two-stage system

Proposal for the technical solution and pre-qualification precedes bidding. Proposal for unit prices/rates and prequalification precedes bidding.

Invitation tendering Direct invitation

No pre-qualification, invitation is based on a certain monopoly. No pre-qualification, invitation is based on previous experience.

Serial tendering

ADVANTAGES OF THE USE OF TENDERING

There is a potential for clear competition. Bids are comparable with ease, and there is a potential for objective bid ranking. The most economic implementation of the project work.

DISADVANTAGES OF THE USE OF TENDERING

A bulk of documentation should be prepared, analysed and evaluated which leads to longer project duration time. It increases the potential for selecting the cheapest price bid instead of the most economic bid.

ASPECTS OF CONTRACTORS CAPABILITY

Capability aspects of prequalification Technical capability Evaluation criteria Available resources (human, plants, subcontractors, suppliers) Quantity of work in progress References (similar projects) Quality assurance (work) Familiarity with specifications Balance sheet Profit and loss statement Creditability Financial liability insurance References (same contract type) PM expertise (professionals) Quality assurance (project management) Organisational arrangement company level project level reporting relationship

Financial capability

Project management capability

STANDARD PREQUALIFICATION FORMS

Standard Prequalification Form for Contractors (by Fdration Internationale des Ingnieurs Conseils) Standard Prequalification Questionnaires and Financial Statement for Bidders (by The Associated General Contractors of America) These forms can be customized to the actual project context.

THE PROCESS OF EVAULATION

ranking the three aspect of capability according to their order of importance (project implementation strategy in the narrow sense) ranking the criteria belonging to the aspects of capability (project implementation strategy in the narrow sense) weighting the criteria in accordance with their rank devising an evaluation scale for each criterion evaluating each applicants against each criterion identifying all capable potential contributors

IMPORTANT DECISIONS

What is the minimum acceptable level of capability for each criterion? What is the level of capability (which is associated with the predefined weight for each criterion) as the available maximum? In this way the client: can maintain the relative importance of the criteria can make clear the minimum level of the required capability can avoid incapable contributors can develop a scale for each criterion to evaluate the applicants

MATCHING PREQUALIFICATION WITH THE PROJECT IMPLEMENTATION STRATEGY

The impact of the project implementation strategy The importance of the capability aspects Technical Financial Project management

Types of contract
- Traditional - Turnkey - Management Types of payment - Price-based - Cost-based - Target-based Higher Lower Moderate Higher Higher Lower Lower Higher Lower Lower Higher Higher

ADVANTAGES OF USING PRE-QUALIFICATION

Unqualified bidders could save the cost of bid preparation which results in lower future bid prices or lower fees. Evaluation of only those bids which are submitted by qualified tenders results in time and cost saving in the client organisation. Client organisations could have information about the likely level of competition.

DISADVANTAGES OF USING PRE-QUALIFICATION

It increases the duration time of the entire awarding phase (and the entire project). Both clients and applicants should manage a bulk of documentation which increases both the cost and duration time of the project.