PROCUREMENT OF WORKS

(Highlight of PPA, 2007 & PPR, 2007, Contract type &

Standard bidding documents)

Prepared By:
Group Members (M.Sc. III Semester)
Ayush Joshi
Krishna Koirala
Milan Bhattarai
Sandeep Udash
Sarala Dahal
 Procurement

“Procurement” means the acquisition by any

public entity of any goods, consultancy
services or other services, or executing or
causing to be executed any construction
works by such an entity. (PPA, 2007)
 Construction works

The construction works means all activities

associated with the construction, reconstruction,
demolition, repair or renovation of a building,
structure or associated activities, such as site
preparation, excavation, erection, building,
installation of equipment or materials, decoration
and finishing.
 Provisions Relating to Procurement of works

 Prior to procuring construction work, a public

body shall prepare a specification, plan,
drawing, design, special requirement or other
descriptions thereof.
 A public body shall prepare a cost estimate as
prescribed for any procurement whatsoever.
 Provisions Relating to Procurement works
 A public entity shall approve the cost estimate.
Authority to approved cost estimate:
• Cost estimate upto 1 crore by Gazetted 3rd class chief of Office.
• Cost estimate upto 5 crore by Gazetted 2nd class chief of Office.
• Cost estimate upto 10 crore by Gazetted 1st class chief of Office.
• Cost estimate above 10 crore by the head of department.
Cost estimate once approved, such an amendment differs by more than
25% of the original cost estimate figure or the act of procurement gets
affected for the reason that the defective design has been made or abnormal
cost estimate has been prepared, the official who has prepared, examined or
approved such a design or cost estimate and the consultant who has been
involved in that act shall be liable to action under the prevailing law.
 Provisions Relating to Procurement works
 A public entity should prepared Procurement plan.
(a) Master procurement plan : Project period exceeding 1
year (multiyear project) or in making an procurement of an
amount exceeding 10 crores a year.
(b) Annual procurement plan: Where a public entity is to
make procurement of an amount exceeding 10 lakhs a year.
 Each public entity should prepare separate standing list of
suppliers, construction entrepreneurs, consultants for
procurement to be made.
 Procurement method
A public entity shall make procurement of works by applying
any of the following methods based on conditions and
purchase price:
1. Inviting international open bidding (ICB)
2. Inviting national open bidding (NCB)
3. Inviting sealed quotations
4. Direct procurement
5. Through participation of users' committee or beneficiary
group
6. Through a forced account
 International Competitive bidding (ICB)
1. If the construction works as requisitioned by a public entity are not
available at the competitive price from more than one construction
entrepreneur within the State of Nepal,
2. If no bid has been submitted in response to an invitation to national
bidding for the procurement of construction works, and the same has to be
procured from abroad,
3. If construction works have to be procured through the foreign assistance
source pursuant to the agreement entered into with a donor party,
4. If it is certified by the public entity that the construction works, being of
complex and special nature, have to be procured through international
bidding.
5. If Project cost estimate exceed 1 Arab.
 National Competitive bidding (NCB)
1. A construction work the cost estimate of which is above 20
lakh rupees but not exceeding 1 Arab rupees has to be
procured upon having competition between native bidders
only through the national open bidding, except in the
circumstances referred to in Section 15 of the Act.
2. Standard bidding procedure used as per procurement value:
• NCB, Single Stage Single Envelope (1S1E) – Procurement
value above 20 lakhs and upto 2 crores.
• NCB, Single Stage Two Envelope (1S2E) – Procurement
value above 2 crores.
 Bidding Procedure for ICB/NCB…
Bid invitation
A notice for invitation to bids or pre-qualification proposals shall be published in
a daily newspaper of national circulation, and in the case of an international
bidding, it may also be published in any international communication media.
The notice shall be placed in the website of the entity or that of the Public
Procurement Monitoring Office i.e. www.bolpatra.gov.np/egp.
Period of a notice:

• For NCB or PQ proposal : Minimum 30 days

• For ICB or PQ Proposal : Minimum 45 days
•
 Bidding Procedure for ICB/NCB…
 Fees for Bidding Documents
• 20 lakhs to 2 Crores Rupees : Rs 3000
• > 2 Crores to 10 Crores Rupees : Rs 5000
• >10 Crores to 25 Crores Rupees : Rs10,000
• > 25 Crores Rupees : Rs 20,000

 Withdrawal and Modification of Bid

• Within last submission date of bid in sealed envelop in case of bidder
who submits bid electronically
• Within 24 hour before the last submission date for other bidders
• Withdrawal or modification can be done at one time only.
 Bidding Procedure for ICB/NCB
 Pre-bid meeting
• For NCB at least 10 days before of last submission date
• For ICB at least 15 days before of last submission date
• To be informed to bidders if any amendment within 5 days
pre bid meeting

 Bid Security
• 2 to 3 % of estimated amount
• Validity of bid security 30 days more than bid validity period
• Bid security amount shall be in form of a cash deposit or of a bid
security equal to that amount issued by a commercial bank or financial
institution.
 Bidding Procedure for ICB/NCB
 Bid security will be forfeited if
• If requested for withdrawal or modification within the period of last bid
submission date and last date of bid validity.
If the bidder does not accept the correction of arithmetic error
• If the selected bidder rejects for agreement
• If the selected bidder fail to submit performance bond within due date
of contract agreement
• If clarification submitted by bidder makes substantial change to the bid
• If the bidder violates the code of conduct as per clause 62 of PPA.


 Bidding Procedure for ICB/NCB
 Bid validity Period
• Bid validity period is a period within which bidder’s rate are valid
• Contract agreement is done within bid validity period
• For bid having estimated cost within 10 Crores : 90 days
• For bid having estimated cost above 10 Crores: 120 days
• Period to be counted from last date of bid submission
• Can be increased with justified reasons
• Who agrees to extend bid validity shall extend validity of bid
security also
• Bid bond amount shall be returned to bidder if he disagrees to
extend bid validity
 Bidding Procedure for ICB/NCB
 Bid Opening
• Immediately after last date and time of bid submission in presence of
bidders as far as possible (Absence of bidders does not disturb the
opening process)
• Then bid submitted electronically are opened first and then other bids
are opened
• Before opening bid, envelop of letter of withdrawn or modified bid
shall be opened and read
• Then remaining bids shall be opened and matters like bid security,
discount if any etc. shall be read, noted and signed
• No bid shall be rejected at the time of opening
 Bidding Procedure for ICB/NCB
 Examination of completeness of bids

 Evaluation of bids:

 Technical Evaluation

 Financial Evaluation

 Special Evaluation

 Evaluation report

 Bid approval
• Upto 3 crores: gazetted third class chief of the office
• Upto 7 crores: gazetted second class chief of the office
• Upto 15 crores: gazetted first class chief of the office
• Above 15 crores: the head of department
 Bidding Procedure for ICB/NCB
 Performance security
• To be taken to ensure due performance of contract
• 5% of Contract Value If bid price of the bidder selected for acceptance
is up to 15(fifteen) percent less than the approved cost estimate, the
performance security amount shall be 5 (five) percent of the bid price.
• For the bid price less than 15 percent of the cost estimate, the
performance security amount shall be determined as follows:
Performance Security Amount = (0.85 × Cost Estimate –
Bid Price) × 0.5 + 5% of Bid Price.
• The Bid Price and Cost Estimate shall be inclusive of Value
Added Tax
 Bidding Procedure for ICB/NCB
 Contract award
• Letter of intent is issued within seven days of bid selection & information should be
given to other bidders also.
• If there is no complaint from other bidders within seven days, letter of acceptance is
issued to notify the successful bidder to come with performance security for contract
agreement within 15 days.
• If successful bidder fails to furnish the performance guarantee and to sign contract
within 15 days, then his bid security shall be forfeited and bid of next lowest
responsive bidder is accepted and called for agreement
If lowest evaluated bidder does not sign the agreement, in addition to forfeiture of bid
bond PPMO on the recommendation of PE blacklist the bidder.
• If any bidder requests for information on the reason for rejection of within 30 days
of issuing of letter of intent, the public entity shall communicate such information to
the bidder.
 Bidding Procedure for ICB/NCB
 Rejection of tender or cancellation of procurement proceedings
• Where non of the tenders is substantial responsive
• Where the bid price of the lowest evaluated substantially responsive bid is
substantially higher than cost estimate
• Where construction works are no longer required.
No tender shall be rejected or re tendering shall be invited only by the
reason that only a few tenders or only one tender is substantial responsive.
A public entity shall communicate a notice along with the reason for the
rejection of tenders or the cancellation of procurement proceedings to all
bidders.
 Sealed Quotation
 Procurement of works up to 20 lakhs can be carried out adopting
sealed quotation
 Procedure
Preparation of Sealed Quotation Document
Invitation: Notice in national or local newspaper with minimum
period of 15 days.
Sale and registration of Bid :Same as open bidding
Bid validity period : 45 day
 Bid security : same as open bidding (validity 75 days)
Withdrawal and Modification of Bid: Not allowed
Bid Evaluation & Bid Evaluation Report
Same as open bidding except if less than three sealed quotations
are submitted, it shall be cancelled and re-notice is published.
However for the second time less than three sealed quotations can
 Sealed Quotation
 Selection for Award of Contract: Same as open bidding
Price of Bidding Documents: Rs. 1000
Performance security: Same as open bidding
Contract award
• The public entity shall accept the sealed quotation within 15
days of opening.
• Notice is issued to selected bidder within 7 days of acceptance
of the sealed quotation. Notice is issued to other bidders also.
• The sealed quotation bidder who receives the notice shall enter
into the procurement contract by furnishing the performance
guarantee within 7 days of date of receipt of such notice
 Quotation
 Construction work may be procured by means of quotation
of works if the the value of work procurement up to 5 lakhs.
In this situation quotation shall be demanded with at least
three firms which are registered in the standing list of office.
 Community Participation /User’s Committee
 This method is used for executing small labor intensive works
where the objective is to:
• Provide employment and income directly to persons living in the
project area.
• Increase the utilization of local know how, appropriate technologies
and materials
• Hand over the completed works for operation and maintenance
directly by persons living in the project area.
• When objective of project is to create employment which enhances
the economy, quality or substantiality of beneficiary community then
this method is used.
Works up to 1 crore (including VAT, contingencies & portion
of community) may be carried out by community participation.
 Force Account
 Work such as repair and maintenance of ordinary nature, regular
petty work or sanitation may be executed by force account

 If a construction work is to be executed through force account

such a work may be caused to be executed through negotiation
after breaking it into pieces not exceeding 1 lakhs rupees or be
awarded on wage basis by making available the necessary
construction materials.
 Types of contract for procurement of works
 A public entity may, in order to carry out a construction work, conclude any
one of the following contracts (Clause 22, Appendix 4 of the Public Procurement
Regulation):-
A. Unit Rate Contract
B. Lump-sum Contract
C. Cost Reimbursable Contract
D. Time and Material Rate Contract
E. Design and Build Contract
F. Management Contract
G. Performance Based Maintenance Management Contract
H. Piecework Contract
I. Build and maintenance contract
J. Turnkey contract
 Unit Rate Contract:
 A unit rate contract may be concluded to execute a construction work the
quantity of which is not ascertained at the time of conclusion of the
procurement contract or to provide the per unit activity of a construction work
at the rate referred to in the Bill of Quantities. In such a unit rate, the bidder
shall include the materials, labor and other things required to complete the
proposed construction work.

 Adopted when the quantities are difficult to be estimated precisely or they are
expected to vary

 In making payment for the work done pursuant to this contract, payment shall
be made of the amount to be found from computing the quantity of construction
work as ascertained from measurement of construction site by the per unit rate.
 Lump sum contract:
 Provided that if the financial liability of the construction work is increased
for the reason that the public entity has ordered to make a change of any
type in the construction after the commencement of the construction work
upon conclusion of the procurement contract, the public entity shall bear
such contract.

 Adopted when quantities are fairly known (Eg. Superstructure of a Bridge)

or Difficult to Measure (Eg. Offshore Underwater Pipeline)

 lump sum contracts involve a fair amount of risk for contractors because
they don’t account for unexpected costs or delays after the project is
started.
 Cost-reimbursement Contract:
 The cost-reimbursement contract may be concluded to execute a construction work nature of
which is high risky and unpredictable conditions of work and a construction entrepreneur does
not agree to execute or cannot execute it under the unit rate contract.

 In making payment to the construction entrepreneur for the construction work to be executed
by concluding this contract, payment may be made for the actual cost incurred in executing
such a construction work, overhead cost thereof, in addition to the profit as stated in the
approved cost estimate.

 In having a construction work executed by concluding this contract, the chief of the public
entity shall fix the maximum amount of cost-reimbursement and if an amount exceeding such
limit is to be paid, he or she shall obtain the prior approval of the head of department.
Different methods of reimbursement :
 Cost + percentage
 Cost + fixed fee
 Cost + fixed fee + profit-sharing clause.
 Time and Material Rate Contract:
 The time and material rate contract may be concluded to carry out a work
by computing the labor on the basis of time and the materials as per the unit
rate due to unpredictability at the time of conclusion of the procurement
contract of the labor and materials required for the repair and maintenance
of a construction work.

 May be utilized for maintenance and repair services, and other situations
where it is difficult to predict the requirement of Labour and Material.
 Design and Build Contract:
 The design and build contract may be concluded to have a design and
construction of a construction work to be executed by the same
construction entrepreneur.

 The public entity shall start the work under this contract only after causing
the design of construction work to be examined and approved by a
technician or a team of technicians.

 The technician or team of technicians who so examines the design shall

examine and approve such design, drawing and cost estimate by following
the procedure set forth in this Regulation for examination and approval.
 Management contract:
 May be used in Project where there are Diverse Activities.

 Contractor takes the Legal and Contractual Responsibility

about Quality and Timely Completion.

 Payment for the work under this contract shall be made only to
the construction entrepreneur who has concluded the
procurement contract with the public entity.
 Performance-based maintenance or management contract:

 The performance-based maintenance or management contract

may be concluded to execute a construction work without
mentioning the equipment required to maintain and manage
the construction work and item wise work and by mentioning
only the final performance.

 Used in Repair and Maintenance Projects.

 Payment based on Performance rather than Item-wise quantity.

 Penalty Provision if Performance Indicators not met.

 Piecework Contract
 Used for small Repair and Maintenance works
 On As and When required basis.
 Contract Period generally not to be more than 1 year
 Build and maintenance contract:

 The build and maintenance contract may be concluded to build

a big fast track, power plant with a big reservoir or pumping
station or turbine, ropeway, railway cable car or similar other
physical structure with sophisticated or complex technology,
conduct testing, give training, as required, to the employees of
the concerned public entity for operating such structure and
also to repair and maintain such structure.
 Turnkey contract:
 The turnkey contract may be concluded to build a big fast
track, power plant with a big reservoir or pumping station or
turbine, ropeway, railway cable car, bridge or road with
sophisticate technology or similar other physical structure with
sophisticated or complex technology, conduct testing,
complete operation of such structure and hand it over to the
public entity.
 Preparation of Bid Documents
 Bidding Documents should be prepared on the basis of Standard Bidding

Documents (SBDs) of PPMO, WB and ADB, etc. as the case may be. The

following step wise points to be followed to prepare Bid documents:

• Decide the SBD to be used;

• Finalize Cost Estimate;

• Collect the Scope of specialized works like pavement, Concrete, bridge etc;

• Finalize BoQ

• Discuss with authority on qualification criteria including financial capacity and

technical capacity to be applied;

• Prepare Qualification criteria in separate Excel sheet (for easy reference);

 Preparation of Bid Documents
• Decide on whether to go for E-bidding or not;

• Prepare IFB providing all required information;

• Prepare Bidding Data Sheet as per project requirement and complexity;

• Prepare qualification requirements as per project requirement and complexity,

referring qualification criteria excel sheet prepared earlier;

• Prepare Contract Data/PCC as per project requirement and complexity;

• Take care of Price adjustment factor (whether for construction material only or
standard practice);

• Prepare Preamble for BoQ;

• Provide supplementary information, if any.

• Get NOL or approval of Bid document, as the case may be.

 Outline of Bidding Documents
Invitation for Bids
Part I: Bidding Procedures
Section - I Instructions to Bidders
Section - II Bid Data Sheet
Section - III Evaluation and Qualification Criteria
Section – IV Bidding Forms
Part - II Requirements
Section - V Works Requirements
Section - VI Bill of Quantities
Part - III Conditions of Contract and Contract Forms
Section - VII General Conditions of Contract
Section - VIII Special Conditions of Contract
Section - IX Contract Forms
 Thank you

for your kind attention

Your queries please !