LPKN Training Center

Lembaga Pengembangan dan Konsultasi Nasional

TRAINING
PROJECT PROCUREMENT & CONTRACT
MANAGEMENT

Online 26-29 July 2023

MAIN TOPICS OF TRAINING

Project Management Fundamental

Project Procurement Management
Contract Management

2
3
Definition of Project
What is Project ?

Project Management is the application of

knowledge, skills, tools and techniques to
project activities to meet the project
requirement
Project Management Institute(PMI)

• Dealing with constraints & limitations

Scope • Scope
• Time
Quality
• Cost
Cost Time
• Quality

4
 Project Management Process
Fundamental Sequences

P
1 2
E
I 5
3 4
6

M&C
Legend:
I = Initiate
P= Plan
E = Execute
C
M & C = Monitor & Control
C = Close

5
Project Management Process
Main Activities

INITIATION PLANNING EXECUTION MONITOR & CONTROL CLOSURE

I P E M& C C

Project charter Project scope Realization Activity Project

statement tracking analysis
Work Project status Goal tracking Project report
Stakeholder
breakdown
Identification
structure
Progress Budget
Gantt chart
tracking tracking
 Project Life Cycles Various Types
TYPE OF
LIFE CYCLE PHASE DEFINITION
PROJECT

STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5 STAGE 6

Background Finding Test & Communication
Start-Up Definition Result
Research Solution Redesign
Engineering

STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5

Design Build Up Production Phase Out Termination

Manufacturing

STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5

Definition /
Conceptual Planning Closing
Design Implementation
IT Project

STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5 STAGE 6 STAGE 7

Feasibility FEED Detail Design EPC CommissioningOperations Transfer

Construction
Project Lifecycle Small Project

Concept/ Acquisition, Engineering , Commissioning, Delivery

Feasibility Pre-Design Procurement Operations
Construction

Legend:
I = Initiate
P= Plan
E = Execute
M & C = Monitor & Control
C = Close

8
Project Life Cycles Large Project

Concept/ Acquisition Design / Operates Sale/

Feasibility (Licensing, PMC, Construction /Management
FEED) (EPC)
Demolition

Legend:
I = Initiate
P= Plan
E = Execute
M & C = Monitor & Control
C = Close 9
 Project Management View – Details
Project Management Process
Initiating Process Planning Process Group Executing Process Monitoring & Closing Process
Group Group Controlling Process Group
Group

Integration
Integration
Integration
Management Develop Project Develop Project Direct & Manage Project Monitor & Control Project Close Project
Management
Management
Charter Management Plan Execution Work, Perform integrated
Change Control

Scope
ScopeManagement
Scope Management
Management Plan Scope Management, Collect Validate Scope, Control
Knowledge Areas

Requirement, Define Scope, Scope

Create WBS

Plan Schedule Mangmt., Define Control Schedule

Time
TimeManagement
Time Management
Management Activities, Sequences Activities,
Estimate Activities Resources,
Estimate Activities Durations,
Develop Schedule
Cost
CostManagement
Cost Management
Management Plan Cost Management, Estimate Control Cost
Cost, Determine Budget
Quality
Quality
Management
Management Plan Quality Management Perform Quality Control Quality
Assurance
HR Management Plan HR Mangmt Acquire Project Team,
Develop Project Team,
Manage Project Team

Risk Management Plan Risk Management Control Risk

Identify Risk, Perform
Qualitative and Quantitative
Analysis, Plan Risk Response
Communication
Management Identify Plan Communication Manage Communication Control Communication
Stakeholders Management,
Procurement
Management Plan Proc.Mngmt, Conduct Procurement Control & Monitor Close Procurement
Procurement 10
 Project Management Process Groups
1. Project Initiating I

2. Project Planning P

3. Project Executing E

4. Project Monitoring & Controlling M

&C

5. Project Closing C

11
 Project Management Process Groups
1. Project Initiating I

2. Project Planning P

3. Project Executing E

4. Project Monitoring & Controlling M

&C

5. Project Closing C

12
Project Initiating

Project has so
Business Needs many problem
that you need to
re-evaluate the
business needs

Project
Begin a new
Conceptions Project phase of Project
Initiating

The project initiating is formally start a new project. It involves officially authorizing the project and
providing project manager with Project Charter ( the information & authorisation necessary to begin the
project )

13
Develop Project Charter
❑ A document that formally authorizes a project and documenting initial
requirements that satisfy the stakeholder’s needs and expectations.

❑ Important output of Initiating process is Project Charter.

❑ Typical contents of Project Charter

• Project description
• Project purpose &
background
• Project measurable
objectives
• High level requirements
• Major milestone schedule
• Budget summary
• Project Manager appointment
with responsibilities and
authorities Source :http://player.slideplayer.com/13/3824576/#

14
Identify Stakeholder
➢ During Initiating the Project , the Project Team should be able to identify who will be the
stakeholders and provide the matrix.

Example of Oil and Gas Project Stakeholders List:

• Project Owner • Contractor, Sub-Contractor • Project Teams

• Project Managers
• Project Sponsor • Associated companies • Industry stakeholders
• Project Operator • Local Communities • Regulator

Stakeholder Analysis Matrix

Stakeholde Contact Person Impact Influence What is important How could the How could the Strategy for
r Name to the stakeholder stakeholder engaging the
Phone, Email, Website, Address How much does the How much influence do stakeholder? contribute to the block the stakeholder
project impact them? they have over the project? project?
(Low, Medium, High) project? (Low,
Medium, High)

15
 Project Management Process Groups
1. Project Initiating I

2. Project Planning P

3. Project Executing E

4. Project Monitoring & Controlling M

&C

5. Project Closing C

16
Project Planning
▪ Project Plan Definition: provides details about the project
▪ Project planning: documenting the strategy for managing
the project and processes

Scope
Plan
Proc. Time
Plan Plan

Com. Project Cost

Project Management Plan Plan Plan Plan

HR Quality
Plan Plan
Risk
Plan
17
The Project Detailed Planning Process
End User asks,
End
“what do I
User
want?”

Processes,
Project
Company Procedures,
system and previous
Specification
data of work

Project Manager Identify Project

requirement and create Manager
the project charter

Detailed
Planning
Sponsor Company signs Sponsor/ Project
and issues the charter end user Manage The project
and appoint PM r management is
bought into
approved,realistic
and formal
Project Manager
Develops the project
management plan

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Project Plan Actions

Main subjects People Aspect in Project

❑Project Scope Statement
❑WBS ❑Project Organization
❑Project Schedule ❑Communication
❑Project Cost estimation requirements
❑Project Quality Plan ❑Stakeholder analysis
❑Project Procurement Plan
❑Risk Response Plan

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Project Plan Actions
Main Subjects People Aspects in Project

Project Scope Statement

Project Organization

WBS

Communication requirements
Project Schedule

Project Cost Estimation Stakeholder analysis

Project Quality Plan

Project Procurement Plan

Project Risk Response Plan

 Project Plan Repetitive Process

TIME
Creating the

PROJECT
PLANS
project plan

Revising the project plan

Planning the initiation Preparing Preparing Preparing

STAGE
PLANS
stage Stage Plan 1 Stage Plan 2 Stage Plan 3

Revising the stage Revising the stage Revising the stage

Revising the initiation plan
plan 1 plan 2 plan 3

PLANS
TEAM
Revising team plans of Revising team plans of Revising team plans
stage 1 stage 2 of stage 3
Planning is Continuously Process until Baseline set -up

Executing stage 1 Executing stage 2 Executing stage 3

INITIATION
PRE-PROJECT STAGE STAGE 1 STAGE 2 STAGE 3
Project Plan Question?

❑Some Questions..
➢ For example you / your company have managed the previous
project, if you could re-do it again, How much better would be
your expectation?
➢ Who do you think will be better to manage the last project?

Project Planning presents huge opportunity to save resources,

time and money

22
 Project Management Process Groups
1. Project Initiating I

2. Project Planning P

3. Project Executing E

4. Project Monitoring & Controlling M

&C

5. Project Closing C

23
Project Executing

The Purpose of Project Executing

is to complete the work/task that PROJECT DELIVERABLES
is defined in Project Planning.

The second thing is to meet the Project ACHIEVE PLANNED : SCOPE,

Objective TIME, COST & QUALITY

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Project Executing Actions
▪ Hiring Project Team, Develop them and RESULT OF P.EXECUTION
manage team to perform jobs required by
project ➢ the deliverables &
performance
▪ Direct and Manage Project Execution for information.
every task/work need to be completed by ➢ Change requests if
Project available
▪ Perform Quality Assurance for each task/work ➢ Procurements and
contracts
▪ Conduct Procurement by releasing RFQ, ➢ Risks and Issues
received quotations, evaluate technical &
commercial, award and issue the Contract/PO
▪ At any time distribute information in
accordance to communication plan
▪ Project needs to Manage Stakeholders
Expectation at each stage of execution
25
What Do you need in Direct & Manage Project ?
WBS

Act-1 Act-2

Project Organisation
Work Work Work Work
Package-1 Package-2 Package-3 Package-4
Person-1
Team-1
Person-2
OBS
Person-3 Work
Team-2 Authorization
Person-4

OBS =Organisational Breakdown Structure

WBS = Work Breakdown Structure 26
Act =Account Group
Project Manager Roles

LEAD People
• Direction
• Communication
• Resources MANAGE
• Coach Proses
• Reinforce
Happy
Feedback Customers
What’s working?
Need to do differently?

Healthy processes lead to customer satisfaction

27
 Project Management Process Groups
1. Project Initiating I

2. Project Planning P

3. Project Executing E

4. Project Monitoring & Controlling M

&C

5. Project Closing C

28
Project Monitoring & Controlling
Project Monitoring & Controlling covering all process of PM from initiating, planning,
executing, until closing the project

Validate & Control

Scope
Control Schedule

Procurement
&
INITIAL Communication
M&C CLOSING
PLANNING Control
Cost

Control Risk
Perform
Quality Control

Result/Output:
1.Work Performance Reports
2.Change Request if available
3.Update Project Management
Plan
Project Monitoring & Controlling

Key Performance Objectives :

Scope
Cost = on
•Scope Budget
Completed

•Time Success

• Cost Time = Quality

Schedule

• Quality

Final…Client Acceptance 30
Project Performance Reports

▪ Measure performance against

a defined scope of work
▪ Compare performance
against the baseline
▪ Ensure that performance
deviation is not confused with
changes in workscope
▪ Use performance information
to manage the future NOT
bemoan the past!

bemaon =unhappy about something 31

 Project Management Process Groups
1. Project Initiating I

2. Project Planning P

3. Project Executing E

4. Project Monitoring & Controlling M

&C

5. Project Closing C

32
Project Closing
❑CLOSING PHASE: Completion and Handover
➢ Final control requirement
➢ 100% complete!!!
➢ Retention factors in contracts (related to warranty bond after
delivery)
➢ Formal ‘close-out’ notice
➢ No further expenditure accepted

❑Close-out Documentation
➢Concessions (end disagreement)
➢Final inspection reports and client ‘sign-offs’ (Obtain
acceptance by customer or project sponsor)
➢Cost/man-hour records
➢Purchased materials records and costs
➢Project correspondence (indexed to WBS)
➢Security BACK-UPS

33
34
35
 EPC Project Phases in Oil and Gas

Conceptual Sanction
Evaluation + Pre-
Project By
Company Sanction
(Project Owner)
Basic
Engineering by
ENGINEERING
CONSULTANT
COMPANY
Project
Execution by
EPC
36 CONTRACTOR
 EPC Project Phase
Design

Procurement

Manufacturing
/ Fabrication

Shipping /
Expediting

Installation

Construction
and Erection

Inspection &
Test

Hand over
37
 EPC Project Structure

Project

Engineering Procurement Construction

38
 EPC Project Structure

Project

Engineering Procurement Construction

Layout & Instrument

Safety Civil Equipment Electrical Process
Piping & Control

39
 EPC Project Structure

Project

Engineering Procurement Construction

Building & Pre-

Earthworks Pipeline Road Civil Works Erection Testing Commisioning
Office Fabrication

40
 EPC Project Structure
Project

Engineering Procurement Construction

Procurement Conduct Procurement Closing

Plan Procurement Administration Procurement

41
 What is Project PROCUREMENT Management

Project procurement management is the acquisition of goods, services or

combination of goods & services to complete a project.
This include managing project procurement plan, conduct procurement,
administer the purchase order/ contract, vendors to buy, rent or contract
products and services needed to achieve project objectives until closing .

42
Project PROCUREMENT Management

Monitoring
Initiating Planning Executing & Closing
Controlling

Initiate Plan Conduct Administer Close

Procurement Procurement Procurement Procurement Procurement

43
 Initial Stage
Purchase Request/Ccntract Request

Determining Type of Invitation Document Selecting Type of Contract

(RFQ/ITB/RFP) (Spot/Frame Agreement/Fixed Price/JV/CR/TM/EPC l)
Procurement Planning
Stage

Contract Drafting

RFQ/ITB/RFP expediting to Suppliers

Supplier submitted Quotation

Conductiing Procurement
Stage Evaluation of Quotations

Negotiation

Contract Award

Contract Document Signature

Contract Execution
Contract Performing Stage

Quality Monitoring & Controlling Quality Assurance

Delivery Acceptance

Closing Procurement stage

Contract Closing
Project PROCUREMENT Management
Initiate Procurement

Initial Identification Materials and Services to be procured

Some Process :

1. Requirement
Budgeting Procurement identification
2. Analyse requirement
3. Determine Budget
Finding Potential Contractor/Supplier
4. Sending Expression of
Interest to find potential
vendors

45
Requirement Identification
Quality - What to procure/purchase?

Quantity – How much/Many to purchase?

Time & Place – When & Where to deliver?

What Support & Service required?

Procurement
What information required by supplier?
What Aspects Need to be specified?
• The purpose of specifying requirements is to provide the information
that the supplier requires in order to reliably meet the user’s
expectations
• Specifying requirements correctly is fundamental, since it is a major
determining factor of cost and effectiveness, and hence of
profitability
• Unclear or incorrect specifications can result in:
• Disruption
• Additional Cost for Re-work/Re-supply
 Types of requirements

Company
Requirement

Non-
Production Production

Capital Operational Capital Operational

Requirement Requirement Requirement Requirement

Plant OFFICE
New Plant New IT
Modification Raw Material Packaging Logistics Modification MRO Accounting HR
Project Project
project project
 The aspects can be specified

• Required Product/Services
• Required Quantity
• Required the Delivery Time
• Required Supplier Services / Responsiveness
• Other Required Information needed by the
supplier
Specifiying Product & Service
• Define what is required to be procured in clear possible
• To avoid unambiguous and clear specification to be supplied by
vendors
• Specifying includes : functionality, design, capacity, etc
• Buyer Organization can specify requirement with the following
options:
1. Product specification
2. Service specification
3. Using external standard
4. Internal standardization
 Product specifications
Functional &
Brand and Supplier/ Technical Composition
Samples Performance
Trade Names Industry Code Specification Specification Spec.
• Clear (+) • Broadly used (+) • Easy to understand (+) • Define what exactly • Very precise and • Supplier can develop to
• Concise (+) • insufficient detail (-) • Buyer can asses the purchaser required (+) specific (+) optimum solution (+)
• Easy (+) quality (+) • Can be verified by • Easy to verify during • Less Effort for
• (Quality relied (+) • Buyer need to ensure purchaser easily when delivery (+) Purchaser (+)
actual supply (-) delivery (+) • Require specialist to • The risk of not meeting
• Expensive (-)
• Small Deviation difficult • Need effort / specialist develop (-) performance in
• Limited Competition (-)
to determine (-) to develop(-) • Verification often supplier side (+)
• The spec change by
• Costly for high level required testing (-) • Potential to get more
brand (-)
prescription (-) competition (+)
• They may limit the • Difficult to asses during
competition (-) evaluate technical (-)
• The risk of design in • Comparison of
Purchaser side (-) suppliers may complex
and lengthy (-)

Sample:
Car, Computer, 0111-Wheat, Shirt, Merchandise Fabrication of Raw Material EPC project
0115 Corn Chemical, Food New Plant
etc ,etc equipment
etc
 When to use Product specification
Specification Type
Brand or Trade Name
Supplier/industry codes
Samples
Technical Specification
Composition Specification
Functionaly and Performance
Specification
Where Appropriate
• For commonly used items.
• When association with a particular brand name will differentiate your product.
• When quality is more important than cost.
• For simple items.
• To facilitate purchases from a particular supplier
• When it is difficult to assess quality prior to purchase.
• When showing what is required is easier than describing it in writing or otherwise specifying it.
• When suppliers do not possess the required design expertise.
• Where the organisation wishes to maintain the design expertise in-house (e.g. to protect its competitive
advantage).
• Where there are complex interfaces with existing equipment.
• Where the buyer is prepared to accept the risk of the design not resulting in the required performance
• For products such as raw materials, commodities and food products.
• When safety or environmental considerations are critical.
• When performance depends on composition
• When suppliers have greater expertise than the purchaser.
• Where innovation is valued.
• When technology is changing rapidly in the supplying industry
 Services Specifications

• Prescriptive (e.g. detailed technical specification)

• Non-prescriptive (e.g. a performance based specification)
• The difficulty in specifying services because intangible
• Service specifications should still be as precise as possible.
• They should generally be stated in terms of outputs + Timeframe to
achieve the output
• Areas that may required service specification:
• Transport • Training & Consultancy
• Advertising • Payroll & Administration
 External specifications
• Industry standards
• Develop by industry association
• JISC,ASME
• National Standard
• Develop by country
• American Standard
• Japan Standard
• Germany
• Regional Standard
• EU Standard
• International Standard
• IEC
 Internal specifications

4. Large Scale 1.Internal Company Specification

Consolidated can improve better
price 01 Less time & effort when raise
PR/CR

06 02
5.Manage Suppliers better 2.Reduce number of different specificatio
Fewer Supplier less Determine internal specification
communication from various different
specification

05 03
6.Reduce Inventory
Fewer item less stock
04 3.Concentrate of Fewer Items
Focus on quality & time spending
to source best supply
Why Budgeting in Project Procurement?

• When Procurement not involve in the requirement, things can

happen like this:
• Urgent
• Ignoring commercial good practice
• Not meet requirement specified by end user
• How it should work:
• Involve in early stage
• Interaction in various levels
• Cross Function works
• Procurement better know in market
• Facilitate end user & supplier
Project Procurement Budgeting and
Supply Planning
• Budget typically for certain period i.e one year or depend on project
duration
• Budget is plan that expressed in financial term
• During actualization :
• Positive Variation (+) under budget
• Negative Variation (-) over budget
• Expenditure of procurement in many company is significant
• i.e : 60-70%
• If company can manage procurement , there is opportunity to minimize
cost hence increase profit in Profit Loss Report
• The more accurate the Budget, the more desirable for company
 Procurement Budget Overview

Procurement Plan

Operations Capital Investment

• Production • New Project

• Non Production • Modification Project

Procurement
requirement Specifying Procurement Determine
Methods &
Identification Requirement Strategy
Schedule Budget
Project Procurement Budget Steps:
• Suggested Method: Cost
budgets

▪ Calculate each activity estimate Management

of Work Package reserves

▪ Calculate all Work Package to Cost

get Control Account (Cost Baseline
Group) estimate Contingency
▪ Calculate all CA to count project Reserves

procurement estimate DD Project

Procurement
▪ Contingency reserves 10-12% Estimates

of project procurement CA1 C A2 ..... CA4

estimates
▪ Cost baseline for Project WP1 WP2 ..... WP11
Procurement
▪ Management reserves + …% A1 A2 A3 A4 A5

▪ Total cost budget (Baseline)

59
 3. Summary of Project Procurement Plan

Department Type of Purpose Product or Product Code Budget Amount

procurement Service
4. Priorities the Procurement Requirement

Expenditure Rank Product or Service Annual

Expenditure
1 Pump 400,000
20% items =
2 Motor 200,000
80% value
3 Casing 50,000
4 Computer
. …. 50
80% items =
. 50 20% value
1000 Stationery 100

Total Expenditure 1,000,000.00

Project PROCUREMENT Management
Plan Procurement

Some Process :
Identify What Materials and Services to be procured
1. Make or Buy Analysis
2. Create Proc. Plan sheet
3. Develop Specification of SOW
4. Determine Contract Type
Methods to Procure the materials and services 5. Generate PR/CR, RFQ, Contract
Form,etc
6. Determine Evaluation

Select Potential Contractor/Supplier

62
Project PROCUREMENT Management
Conduct Procurement

Advertising & Invitation for RFQ/Tender

Publishing the RFQ Document / Tender

Document

Received Suppliers Offers/Quotation

Perform Technical & Commercial Analysis

Negotiation and Prepare for Contract Docs.

Contract Siganature & Perform Contract

63
The objective of Conduct Procurement

Best
Ensure the “best fit” Value For
Money

Procurement
Suppliers
Organisation
64
 Type of Request For Quotation / Tender
Select (close) Multi-stage (two Invited Tendering
Open Tendering
Tendering steps) Tendering (Direct Offer)
• Open to public • Only selected • For complexs • Direct offer to
and announced suppliers invited tendering, specific
in advertising where required suppliers who
to evaluate the can meet the
technical requirment.
specification as
firs step.
• Follow by
commercial
tender

65
What need to be prepared

Contract
Specification
Strategy

Evaluation Communication
Criteria Methods

66
 Qualification of Bidders

 Qualification can take place before RFQ/Tender publish to bidders or (Pre-

qualification)
 Qualification can take place during technical bid submission
 Prequalification of prospective tenderers is used to ascertain that only those
who meet specific criteria, and have the necessary capabilities, are considered
for inclusion in a list of
invitees to bid.
 PRE QUALIFICATION evaluate :
 Motivation (desired to get the contract)
 Capabilties of bidders (administration, technical experiences and capital availablitiy)

67
 Supplier Selection Criteria in Conduct
Procurement in Project
❑Technical Compliance
❑Price
❑Qualification of Supplier
❑Schedule
❑Load of Workshop
❑References
❑References with Final Client (Case of EPC)
❑Financial Situation
❑Annual Turn Over
❑Internal Feedback (expert review)

68
 Request For Quotation or
Invitation to Tender

 Normally ,the RFQ/ tender invited to the bidders to propose in sealed bid
envelope.
 Every proposal /offer to be opened at the due time, on the due date
 Bidders must describe in full how they will fulfil the requirements of the
procurement organisation, with details of delivery and payments.
 The bid must also include a signed confidentiality agreement, signed of integrity
for anti collusion, coruption and nepotism

69
 Typical Invitation Document for
Conduct Procurement
 Expressions of interest (EOI) - used to shortlist potential suppliers before seeking
detailed offers. Very Initial Stage

 Request for information (RFI) - used in the planning stage to assist in defining the
project, however, not used to select suppliers.

 Request for proposal (RFP) - used where the project requirements have been defined,
but an innovative or flexible solution is needed.

 Request for quotation (RFQ) - invites businesses to provide a quote for the provision of
specific goods or services.

 Request for tender (RFT) - an invitation to 70tender for large works

 Contents in RFQ/Tender Documents
Part Description Remarks
1 Defines the Contract Date of start, end and details timescale

2 Condition of Contract General terms and conditions applicable in the contract

3 Pricing Schedule The price structure to be offered by bidders

4 Scope of Works /goods to be details of the scope of the work or services or the quantity and
frequency of requirements of goods or services to be supplied
provided
5 Procedural Requirements If any requirement to arrangement such as subcontractors etc

6 Details Technical Specification Consist of details specification to explain scope of works

7 Drawing and technical To support details specification

supporting documents
When, how and what requirement to submit the offers
8 Details submission of bids
If any deviation from conditions of contract
9 Special Condition to contract
71
Methods of Evaluating Bid
Evaluating Bid for Procurement
Evaluating Bid for Procurement
of goods/services/construction
of Consultancy Work
works
Lowest Price Pure Technical (Based on Quality)
1. Technical - Compliance/Non Compliance, Commercial : who
ever the lowest bidder
2. Technical with Passing Grade : e.g. >70% of 100% (accepted ),
Commercial : who ever the lowest bidder
Weighted Score (Merit Point)
(Technical : 20-40% . Commercial 60-80%)
Weighted Score (Merit Point)
Technical : 10-30%, Commercial: 70-90% Lowest Price
1. Technical - Compliance/Non Compliance, Commercial : who ever
the lowest bidder

Total Cost of Ownership(TCO) 2. Technical with Passing Grade : e.g. >70% of 100% (accepted ),
Commercial : who ever the lowest bidder
Evaluating Administration Requirement
• Checking the completeness of the bid documents
• Checking the validity and correctness of documents
• Identifying possible false documents
• Identify the validity and validity period of the document
• Evaluating aspects that were not assessed at the time of qualification
assessment
• Assessment elements: Substantial terms based on the requested documents,
Quotation (Offer) and Guarantee
Check List for Administration Requirement
Appropriate when conducting Procurement of
Aspect to be
Sub Aspect to be checked Consultancy Consultancy
check Goods Construction Services
Firm Individual
Quotation Date √ √ √ √ √
Validity of Quotation √ √ √ √ √

Signature √ √ √ √ √
Bank Name of Bank √ √ √ - -
Guarantee
Period of Guarantee √ √ √ - -
Name of Guarantor √ √ √ - -
Value of Bank Guarantee √ √ √ - -
√ √ √ - -
Name of Receiver √ √ √ - -
Title of Procurement √ √ √ - -

Validity of Bank Guarantee √ √ √ - -

Evaluating Technical Requirement
Evaluation of technical bid documents is carried out by:
1. Qualitative :
This applicable particularly for the compliance/non compliance method
without any passing grade.
2. Quantitative
This applicable for :
▪ Passing grade system with defined threshold value, for example >70%
of 100%
▪ Weighted Scoring (Merit System), for example: 20% Technical & 80%
Commercial
▪ Total Cost of Ownership
Aspects in Evaluating Technical Requirement
• For Procurement of goods, services and construction work the following aspects
to be evaluated
Evaluating Aspects:
1. Technical Specification
2. Methodology Evaluating Aspects:

3. Scope of Works 6. Minimum main equipment to perform work

4. Schedule of Delivery 7. After Sales Services, Warranty

5. Identity of goods being offered (Type, 8. Technical Staff and Personnel

Brand , etc) 9. Sub-Contract
10. Technical Inspection & Test

Note : that aspects to be applied as when required

Aspects in Evaluating Technical Requirement
• For Procurement of Services Job / Consultancy the following
aspects to be evaluated

Evaluating Aspects:

1. Company Experience

2. Methodology Approach

3. Expert Qualifications

Note : that aspects to be applied as when required

Evaluating Commercial Requirement
• For Procurement of goods, services
and construction work the following
aspects to be evaluated
• For Procurement of Consultancy the
Aspects to be evaluated: following aspects to be evaluated
1. Total Price
Aspects to be evaluated:
2. Unit Price
3. Offer fairness and competitiveness 1. Personnel Cost (Man Hours)
4. Pricing and word statement 2. Non Personnel Cost (Material)
5. Local Contents or In Country Value if applicable
3. Fitness of assigned core expert personnel
6. Total Cost of Ownership
4. Suitability of supporting personnel
Note : that aspects to be applied as when required
Other Requirement of Commercial Evaluation :
Local Content,preference And Normalization of Price
• Local Content: impose by a country to protect its local industry and economic.
• It can be local content of manufactured goods, local man power and local investment
• Preference : regulated by government and guideline of Local Content or In Country Value
• Price Normalization: Calculated based on preference
 NEGOTIATION WITH SUPPLIER
In this session we expect to have understanding about the
following
Be listener and ask
Increase question that will
opportunity to solve the
success by substance while
preparing maintain
negotiation relationship

Using Tactic and

Determine realistic various method of
target and achievable persuasion
objectives

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Negotiation Definition
A formal negotiation is an occasion where one or more representatives
of two or more parties interact in an explicit attempt to reach a jointly
acceptable position on one or more divisive issues about which they
would like to agree

1. Formal 2. Parties 3. Explicitly 4. Divisive

Genuinely and
Issue
deliberately to Divisive Issue
Negotiation restricts Buyer & supplier reach that they would
the occasion to like to agree
agreement
those in which

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The Reasons for Negotiation
Negotiation that well performed will create benefit

▪ Saving Procurement Cost

▪ Better Quality, Durability and Performance of goods /
service being procured Saving
▪ Reducing lead times
▪ Contract Implementation is more effective and on time
▪ Increase reliability of Suppliers
▪ Avoid dispute with Suppliers Quality

Lead Time
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Approach to Negotiation
• Adversarial Negotiation • Partnership Negotiation

Win - Lose Win - Win

Distributive Integrative

Confrontation Creative

Problem solving
The Content of Negotiation

Substance
Goal Relationship
Goal

• High Value items

• Reduce % of Inventory • Partnership sourcing
• Effect Price direct or indirectly • Supplier involvement in design
• E.g: & Development
• extended validity of current price • Sharing Technology
• Discount price
• Delivery time
• Warranty
• etc

Effective Negotiation : Solve Substance while maintain partnership

Negotiation in Procurement Cycles

Pre –Contract Post-Contract

Contract
Negotiation Negotiation

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 Negotiation Process
What are the objective? Who is to negotiate?
What are tactic & strategy?
1. Where is location?
What are the scenarios ? Preparation What are the facts?

Describe all stages of

Drafting statement negotiation
2.Negotiation
3.Follow-Up Techniques :
Details Agreement Meeting
Question, Concession,
Implementation Agreement Behaviors : proposing,
emotional, pressure 86
deadline
 Things To Consider When Negotiation

• Avoid the desire to be racist, sexual discrimination,

racism, etc.
• Understand the difference in perception
• Don't judge by emotion
• Speak clearly, slowly and check the understanding of the
other person
• Be careful with expressions, signs and body language
• Observe and study the situation

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Successful Negotiatior

• Spend more time in preparation and planning

• Consider various options and possible
outcomes
• More focus on general understanding
• Distinguish between facts and assumptions
• Define clear objectives
• Use open-ended questions
• Listen and observe carefully
• Use comments in official language and not
abbreviations
• Overcome with pressure
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 The Next After Negotiation

DRAFTING PURCHASE ORDER /

CONTRACT DOCUMENT
 Administer Procurement
Change Request / Change Order

Review Invoice

Authorised Payment to Suppliers/Contractors

Resolve Disputes

Review Claim.

Verify scope of work

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 Close Procurement
Product Verification

Negotiated Settlement

Procurement Closure

Lesson Learned

Create Procuremen Files

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