SEC Distribution Field Force Overview

Distribution Contractors Day with Saudi Electricity Company

October 28th, 2015

 The contracting phase consists
of two main elements: tendering process and
contracting process
Prequalification Contracting Operation

Tendering
1 .1 Contract
2 .2

1.1 Ceiling distribution & coverage

2.1 General terms & conditions
assurance

Key elements
Key levers

1.2 Bidding mechanism 2.2 Performance management

1.3 Pricing mechanism 2.3 Others

 A number of key recommendations
are implemented in Phase 1
1 Prequalification
1. Prequalification model: new
prequalification process and criteria to
assess contractors
2. Coverage model: model will be used
on office level to help match supply to
demand in all offices across the
Kingdom
Key Changes'
3. Tendering strategy: will include the
number of required contractors in
each electricity department and how
their ceilings will be defined
2 Tendering
1. Pricing mechanism: reference
prices along with an improved
pricing mechanism are expected
to yield more accurate prices
2. Contract ceiling: contract ceiling
is distributed based on
contractors’ work capacities,
prequalification scores and bids
3. Awarding strategy: will
determine who gets awarded a
contract, and what their ceiling will
be. If contractor refuses to sign,
his ceiling is given to the next in
line contractor (cascading)
3 Contracting
1. Guarantees: Bid bonds are
required from contractors. These
are refundable unless contractor
confirms intent to sign contract.
Bank guarantees are 5% of contract
ceiling.
2. Contract duration: new UR
contract term is reduced to 2 years
with 1 optional year
3. Payment terms: 50% payment
upon completion of work is
incorporated to allow better liquidity
4. KPIs: KPIs are integrated in the
contract to objectively measure
contractor's performance, and
linked to SEC’s evaluation sheet
5. Incentives & penalties system:
the building blocks for a future
incentive & penalty system are put
in place
 12+ operational tools are developed
to facilitate the operationalization of the new process

PREQUALIFICATION TOOLS CONTRACTING & TENDERING TOOLS

UPDATED WORK ORDER

CONTRACTING CONTRACT KPI ALLOCATION
GUIDE CLAUSES EVALUATION TOOL

COVERAGE VALUE
ANALYSIS PRICE ALLOCATION & INSTRUCTIONS
MODEL UNIFORMIZATION COMMITMENT FOR BIDDERS
 Initiation includes developing historic
Prequal Tendering Contracting

reference prices to gauge

contractor bids
New price
Bids from last tendering Model applies
uniformization Final historic reference
process are entered appropriate inflation
methodology is applied prices are generated
into model factor
to bids

Historic bids entered to be An inflation factor based New contract bids are Bids are compared to
compared against new on a detailed contractor uniformized on a line item historic reference prices
contract bids cost model is applied to level using a standard and final prices are
historical bids deviation methodology calculated
 Contractors’ bids and prequal scores
Prequal Tendering Contracting

will be used in determining the

contract ceilings
SEC WILL DETERMINE TOTAL COVERAGE AND DISTRIBUTE IT ACCORDINGLY…
REQUIRED IN EVERY OFFICE TO CONTRACTORS
Work Value (M SAR)

400 391 391

Contractor D

300 Contractor C
260

Contractor B
200
x x 156
150% ~ 40% Contractor D
Madinah Office Contractor C
100
Contractor A Contractor B

Contractor A
0
Forecasted Total coverage Max. ceilings Min. ceilings
work value required

Demand Supply

Note: This data pertains to the Madinah office only EXAMPLE OF MADINAH OFFICE
Source: SEC data
 5 star safety system is now a
Prequal Tendering Contracting

mandatory system that all contactors

must abide by
CONTRACT SAFETY REQUIREMENTS ARE CONTRACT SAFETY REQUIREMENTS ARE
UPDATED TO INTEGRATE 5-STAR SYSTEM UPDATED TO INTEGRATE 5-STAR SYSTEM

• Safety KPIs are incorporate in contractor performance

measurement:
- Number of Type 1 (First Aid) Incidents per 1 M work
- Number of Type 2,3,4 (Injury, Handicap, Death) Incidents per 1
M work
- Percentage of times that work site complied with SEC safety
standards
• 12% of the points in the prequalification scoring pertains
to safety record & HSE systems
• Safety performance averaged over the last three
months will be reflected in work allocation through KPIs
• Contract addendum enforces the 5-star safety system in
performance
• Safety systems will be checked in post-signing stage.
Contract is subject to termination if standards are not
met
• Non-compliance on safety requirements for trenches
subject contractors to a penalty of 200 SAR
 ~10 KPIs were developed based on
Prequal Tendering Contracting

current situation & best practices

CATEGORY KPI DESCRIPTION

1. Percentage of WOs
completed within time (count)
2. Percentage of WOs
Timely Work completed within time (value)
Performance 5. Average delay on delayed
WOs (count)
Total work orders completed on time compared to total number of WOs
completed
Value of all work orders completed on time compared to all work value
performed under URC
The average number of delayed days for all work orders that have delays

7. Density of contractor work Average work value for a given contractor's work orders

9. Number of Type 1 (First Aid) Number of type 1 incidents that happen with a given contractor compared to his
Incidents per 1M SAR work value of work
10. Number of Type 2,3,4 (Injury,
Number of type 2, 3, 4 incidents that happen with a given contractor compared
Safety Handicap, Death) Incidents per
to his value of work
Performance 1M SAR work
12. Percentage of times that
Number of contractor site visits that complied with SEC safety standards
work site complied with SEC
compared to total number of site visits
safety standards
18. Average number of days to
Response time of contractor when a work order is issued
accept work order
Collaboration & 20. Number of emergency and
Number of emergency and maintenance rejected work orders in a given month
Responsiveness maintenance rejected WOs*
21. Number of construction
Number of construction rejected work orders in a given month
rejected WOs
 We have developed a new
Prequal Tendering Contracting

dashboard for KPIs linked to the

standard evaluation form
KPI DASHBOARD TO BE GENERATED AND AUTOMATICALLY LINKED TO …
…MONTHLY EVALUATION USING WEIGHTS

New evaluation system will the building block

for a future incentive & penalty scheme