Notes on Procurement of

Services
PRMG 155 – Procurement Management
Notes on Procurement of Services
• In this Topic, we highlight some of the significant matters
related to the procurement of Services.

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Services include, among others:
• Design Services
• Project Management
• Site supervision
• Contracts and Claims Consultancy services
• Quantity surveying
• Studies e.g. market analysis and feasibility studies

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Types of Procurement
• Same as in procurement of Works, however, the
Open Bidding is rarely used in procurement of
Services.

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Types of Agreements
 Lump Sum Fee
 Percentage of Works
 Man-hour based or Man-day based

 Note: the terminology ‘contract’ is often replaced by

‘agreement’ in procurement of services.

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Lump Sum Fee Agreements
 The fees of the consultant represent a price that is set at
the time of entering into the Agreement.
 Common usage: design services, contracts and claims
consultancies, evaluations, quantity surveying, studies
e.g. market analysis and feasibility studies

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 Percentage of Works
 The fees of the consultant represent a percentage of the
works executed related to the services.
 Common usage: project supervision, design services, project
management.
 Example:
 The estimated budget for the works = 120 Million EGP
 Fees for Project Management = 6% of the estimated budget for the works or the
actual price of the works
 Usually a ceiling is put for the fees, to avoid cost overruns.
Sometimes a flooring is set too.
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 Man-hour based or Man-day based
 The fees of the consultant are calculated based on the hours spent
on performing the services and the number of individuals involved in
the services.
 Upon signing the Agreement, usually there is an estimation for the
number of individuals and the man hours or man days. This
estimation however could vary upon performance of the Agreement.
 Applies to monthly fees, as well, which depend on the duration of
performance of the Agreement.
 Usually used in Supervision Services
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Man-hour based or Man-day based
Years of
Position Experience Number Unit Monthly Total Monthly
Fees Fees
(EGP) (EGP)
1
Project Manager 20 30,000 30,000
1
Secretary 3-5 10,000 10,000
1
Document Control 3-5 8,000 8,000
1
Senior Structural Engineer 8-10 20,000 20,000
8-10 1
Senior Architectural Engineer 20,000 20,000
8-10 1
Senior QS Engineer 20,000 20,000
8-10 1
Senior Mechanical Engineer 20,000 20,000
8-10 1
Senior Electrical Engineer 20,000 20,000
8-10 1
Senior Landscape Specialist 20,000 20,000
1
Senior Roads Engineer 8-10 15,000 15,000
1
Land Surveying Engineer 8-10 12,000 12,000
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What constitutes the Bidding Documents?
• Invitation For Bid;
• Instructions to tenderers;
• Form of Tender;
• Special Conditions;
• General Conditions;
• Specification;
• Drawings; Employer’s requirements

• Bill of Quantities; and

• Form of Agreement
Note: In short Agreements, we do not need all these documents 13
 Examples of Selection Criteria
• Experience in similar projects with similar size
• Similar experience in the country where the services are to be
provided
• Previous positive experience with the company
• Quality of work and Performance record
• Resource capabilities
• Health and safety record and competence
• Financial stability
• History of delays 14
Bidding Documents Aka
• Request for Proposal
• Tender Enquiry Documents

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Before issuing the Bidding Documents:
• The Employer usually sends the Consultant a Non-Disclosure
Agreement to sign before receiving any documents related to the
Project.
• In the Non-Disclosure Agreement, the Consultant declares that he
will not disclose any information related to the Project to third
parties, unless the Employer agrees. The exception to this is if the
information was already made known to the public domain.

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Short Forms
• Write a list that a short agreement has to include.

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 Agreement Checklist
• Recitals

• Preamble

• Main Body

• Boilerplate

• Signatures

+ Statement of Work (SOW) 18

 Agreement Checklist
• Recitals The Parties,
addresses,
• Preamble commercial registry,
...etc
• Main Body

• Boilerplate

• Signatures

+ Statement of Work (SOW) 19

 Agreement Checklist
• Recitals

• Preamble reasons for entering into

the Agreement. e.g.
• Main Body “Whereas the Employer
• Boilerplate desires to perform the
Services known as …”
• Signatures

+ Statement of Work (SOW) 20

 Agreement Checklist
• Recitals
Definitions, Interpretation
• Preamble Agreement Documents
Employer’s General Obligations
• Main Body Consultant's General Obligations
Commencement
• Boilerplate Agreement Duration
Agreement Price
• Signatures Payment Terms

+ Statement of Work (SOW) 21

 Agreement Checklist
• Recitals Durations for Approvals
Guarantees/Insurances
• Preamble Sub-consultants
Variations/Changes
Completion
• Main Body
Termination by Employer
Termination by Consultant
• Boilerplate Claims (Time and Cost)

• Signatures

+ Statement of Work (SOW) 22

 Agreement Checklist
• Recitals

• Preamble Force Majeure

Entire Agreement
• Main Body Severability
• Boilerplate Dispute Resolution & Arbitration
Applicable Law
• Signatures Non-waiver
Copyrights & Confidentiality

+ Statement of Work (SOW) 23

 Agreement Checklist
• Recitals

• Preamble

• Main Body

• Boilerplate

• Signatures

+ Statement of Work (SOW) 24

Thank You

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