21st MARCH 2014

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 Introduction:
Evaluation and Award are most important but often
controversial matters
Bid is a price and conditions at which a bidder intend to
buy at any given time
Bidder main target is to maximize the profit while
remaining lowest among other competitors and
minimize the risk .
Type of bidding – ICB, NCB, SSB (Single Source)
Tender and bid are used in the same meaning
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Types of Biddings:
Single Stage– Single Envelope
Single Stage– Two Envelopes
Two Stage – Single Envelope
Two Stage – Two Envelopes

Evaluation is the process to determine whether a bid

meets specified criteria according to provisions in the
tender documents
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Agreement = Bid (proposal) + Acceptance
A contract is the agreement enforceable by law
Principles to conform Contract Act 1872
Essentials for a Valid Contract:

(a) Competent to Bid

(b) Free Consent
(c) Lawful Considerations
(d) Lawful Object

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 Parameters:
 Presentation limited to procurement of goods and works
 Process commences upon receipt of bids
 Process to end after Award
 PEC documents:
 Standard Procedure for Evaluation
 Instructions to Bidders for Civil Works Documents
 Instructions to Bidders for E&M Works Documents
 Instructions to Bidders for Smaller Works Documents
 PPRA Rules 2004
 Construction bye-laws
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 Priority of Documents
for Evaluation :
 Provisions stated in the Bidding Documents
 In absence – relevant provision in PEC Act, bye-laws,
procedure
 Bidding Documents can not be prepared in contradiction to
statute laws & relevant PEC framework bidding documents
and bye-laws
 Priority of PEC Documents:
 Act
 Relevant Bye-laws
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  Framework Bidding Documents
 Procedure (Guidelines)

 PPRA Rules are assimilated in June, 2007 PEC

documents

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 General
Principles :
 Evaluation shall be based on explicit provisions in the
Bidding Documents
 In case deficient, ambiguous provisions; PEC
documents and International Practices to follow
(FIDIC)
 Three bids requirement is a convention and an
inference from Section 42 of PPRA Rules 2004
 Members of Committee for adjudication of evaluation
must be engineers
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 Instructions to users of PEC documents are of legal
value as rules
 Besides required knowledge, evaluators must have
moral integrity, impartiality and should work on good
faith
 Non-transparent evaluation and award results:
 Lack of interest by bidders at large
 Foreign bidders hesitate to invest
 Less competition increased cost, more time for project
completion

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 Area of Disputed
Opinion :
 Substantial responsiveness
 Arithmetic corrections
 Price Adjustments of acceptable deviations (Loadings)
 Long list of unresolved issues/ queries
 Pre-award negotiations/ clarifications
 Domestic Preference
 Conditional acceptance (LOCA, LOA)
 Award to Lowest Bidder

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 Getting Ready for
Evaluation :
 Evaluation team comprising relevant professionals
 Preferably team members should be from among those
preparing Bidding Documents
 Necessary checklists, formats specific to the Bidding
Documents are ready
 Bid opening materials received:
 Copies of bids verified with originals
 Signed statements of the bid opening committee
members ( Attendance sheet, Valid Bid Security etc.)
 Instructions to proceed with evaluation with schedule
 ISO-9001Process and Quality Plan for evaluation 11
 Conformance to Bidder Requirements
(Commercial):
Sr. Clause no. of Description Specified Bidder A Bidder B Bidder C
No. “Instructions Requirement (1) (2) (3)
to Bidders"
1 2.1 Prequalification of Whether the Bidder is C C C
Bidders pre-qualified
2 2.1 Eligibility of Bidders - Registered with PEC C1 C1 NC1

3 2.1 Eligibility of Plant and C C C

Services
4 9.1 Documents (a) Covering Letter C C C
comprising the Bid (b) Form of
Bid/Letter of Offer
(duly filled-in, signed C2 C C
and stamped)

C: Conformance NC: Non Conformance S: Submitted NS: Not submitted NA: Not applicable
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 Example of Note Against Table:

Bidder A
C1:As required under the provisions of Sub-Clause 2.1 of
Instructions to Bidders (IB), PEC license valid for the year 2005
has been provided for Siemens Pakistan only, whereas, Bidder
has only provided Enlistment Certificate for Siemens AG,
Germany.

C2:Form of Bid is not authenticated by a Notary Public nor

countersigned by a Pakistani Consul or diplomatic representative
in Germany as per Sub-Clause 45.1 of IB.

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C3:Bid – Schedule A Price Schedule is initialed by a
person for whom no Power of Attorney is available with
the Bid. In response to post bid query, Bidder provided
Power of Attorney of required person.

C4:Bid – Schedule ‘E’ Specific Plant Data is not initialed

as per Sub-Clause 9.1 of IB.

C5:The amount of Bid Security shown in paragraph No.4

is incorrect.

C6:The Form of Bid submitted without signatures of

authorized person.
 Bid Opening:
Committee publicly announce and sign tabulated sheet for:
Name of bidder, single or a J/V of firms

Quoted Price (read out)

Discounts, if any

Withdrawal of bids, if any

Late receipt of bids, if any

Presence/absence of bid security & amount

Alternative bids, if any/ if allowed

Minutes of the meeting prepared by the Committee 15

 Evaluation Process:

Process to be confidential until Announcement of

evaluation result
Announcement to be made at least 10 days prior to
LOCA/ LOA
Any effort to influence Employer in processing bid or
in award may result in rejection of such bid
Employer shall not award to a bidder black listed by
PEC/ or any previous Employer/ Agency
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 Aggrieved bidder may lodge written complaint within
15 days of Announcement
 Mere lodging should not suspend procurement
process
 Bid Evaluation will not contain too many unresolved
matters requiring resolution prior to award

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 Preliminary
Examination:
 Pertains to Verification, Eligibility, Bid Security and
Completeness of Bid
 Eligibility of Bidders:
 Have valid PEC License
 Pre-qualification/ enlistment with Employer
 From eligible countries
 Qualification of Bidders:
 Capacity to work & minimum years of work experience
 From eligible source country

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 Average Annual turn over in last five years equal to
or more than the Bid price
 Adequate funding facility/line of credit
 If foreign bidder; Notarized Joint venture agreement
with Local Contractor/ firm
 Written power of Attorney for the signatory
 Availability of minimum required skilled/ unskilled
manpower and critical construction equipment

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Joint Venture Agreement, in case the bidder is a J/V
J/V partners must satisfy experience requirement as
described in Bidding Documents
Properly signed by the authorized person(s) and the
authorization is bona-fide and available
Any other items, provided in the Bidding Documents due
to its peculiarity
Documents comprising the Bid are accompanied, duly
signed and stamped
Accompanied Bid Securities:
 Amount is adequate and rightly written in the prescribed form

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 From Scheduled Bank/ Insurance in Pakistan

For the specified period

Original Security

In the name of J/V in case bidder is a J/V

If allowed, Segregation of Bid Security in special

circumstances
Clarification of Bids:
To assist in examination, evaluation and comparison

Query to bidder is at the discretion of Employer/

Engineer

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 Post – Bid Queries in writing

Clarifications may also be asked to confirm/ provide any

missing information, works, equipment as mentioned in
Employer’s Requirement without changing the substance
of the bid
Substantial Responsiveness:

Bidder will not be considered responsive, if:

Notarized valid bid security of specified amount is missing

The bidder participated with more than one JV for the

same bid
Bid received after deadline for submission
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 Bid submitted through fax, telex, telegram or e-mail

Prices quoted are not fix, in case of firm price contract

Bidder refuses to accept arithmetic corrections

Bid is materially different

Any Contractual or technical deviation by Bidder.

Any other conditions of rejection stated in a particular

Bidding Documents as such
A material deviation or reservation is one:
Which affects in any substantial way the scope, quality,
or performance of the works Continue… 23
 Which limits in any substantial way, inconsistent with the
Bidding Documents, Employer’s rights or bidder’s obligations
Whose rectification/adoption will affect competitive position
of bidders
Minor informality, non-conformity or irregularity will not
constitute reasons for rejection, which can be waived-off
Detailed evaluation to be carried out only for the
substantially responsive bids

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Arithmetic Corrections:
Check for the substantially responsive bids

The amount in words will govern amount in figure

Unit rates govern to correct line total

Correction thus made is binding upon bidder, non-

acceptance will entail forfeiture of Bid Security

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 Detailed Evaluation
of Bids:
Correction for Prices:
Read-out total bid prices excluding provisional sums and
discounts
Corrected total bid price (discount +arithmetic
corrections)
Corrected price converted to single currency

Evaluated Bid Price after Price Adjustment

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Computations & rates to be part of Bid Evaluation
Report:
Exchange Rate used will be 28 days prior to the
date of Bid submission for evaluation
Price Adjustments for Technical Compliance

Price Adjustments for Commercial Compliance

Domestic Preference, if applicable

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Domestic Preference (E&M):
For Civil Works – no preference

Preference for use of indigenous products under SRO

827
Bidders in J/V with local partner as Lead entitled to
Price Preference for minimum total of 20% value
addition
Preference 15%, 20% & 25% are allowed

Preference is calculated on a prescribed formula by

reducing corresponding ex-factory bid price

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 Computation for Domestic Preference:
Domestic Goods (Value added in Pakistan)
[Bidders claiming eligibility for domestic preference should fill in for supply items only, all columns
hereunder and provide necessary documentation to substantiate their claim]

Domestic value
Total Price of added in the Amount of value
Sr. Description of
Goods Ex-Factory manufacturing addition
Indigenous Unit Qty
No. cost as
Goods (Pak Rs.) (Pak Rs.)
percentage of Ex-
Factory Price
1 2 3 4 5 6 7

Computations:
A. Total amount of Value Addition (from Col.7) Rs________
B. Total Ex-Factory Price of Indigenous Goods (from Col.5) Rs________
C. Total DDP Price of imported supply items Rs________
D. Total Price of supply items [B+C] Rs ________
E. % of value addition = [(A/D)x100] ________ %
F. Domestic Preference =(15,20 or 25)% of B Rs________
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 Detailed Evaluation
of Bids:
Price adjustments (Loading):
For evaluation purpose only
Only against stated provisions
Completeness – included in other items
Missing items – competitor’s average price
Technical compliance – highest price of bidders
Completion Schedule
Commercial Compliance Prima Facie situation
Other deviations
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 Read-Out Total Bid Prices and Discount:
Tender
Sr. Read-Out Tender Price Discount Security Discounted Tender Price
No. F.C.C. *L.C.C. Offered Provided F.C.C. L.C.C.
Tenderer's
Name
 

  EURO USD PKR   Yes/No EURO USD PKR

-
1 Bidder A - 1,478,779 43,584,814 Nil Yes - -
                 
                   
-
2 Bidder B 2,806,511 - 65,908,443 Nil Yes - -
                 
                   
-
3 Bidder C - 2,431,072 68,760,570 Nil Yes - -
                   
* Includes Provisional Sum of PKR 15,000,000

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 Corrected Total Bid Price
Converted to Single Currency:
Sr. Corrected Total Tender Price Corrected Total Tender
No. Tenderer’s (Ref. Table 3-1) Price Excluding
Name Provisional Sums
Eq.PKR
FCC L.C.C
EURO USD PKR

(1) (2) (3) (4) 5={(3)x**}+{(4)-

15,000,000}
1 Bidder A - 1468814 43557284 115922341
2 Bidder B 2806511 - 65908452 266897539
3 Bidder C 2431072 68760570 198360733

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 Computation of Evaluated Bid Prices:
Sr. Bidder A Bidder B Bidder C
No. Description
FCC LCC Total FCC LCC Total FCC LCC Total
EURO Pak. Rs. Eq.Pak. EURO Pak. Rs. Eq.Pak. Rs. EURO Pak. Rs. Eq.Pak. Rs.
Rs.
1 Corrected 44,091,683 468,097,715 3,635,196,122 45,947,000 692,744,640 3,993,117,650 44,129,577 757,999,734 3,927,827,245
Total Tender
Price
(Excluding
Provisional
Sums) Ref.
Table 3.3)

2 Price - - - - - - -
Adjustment
for
Technical

3 Price - - - - - - -
Adjustment
for
Commercial
Compliance
(Ref. Table
5.1)

4 Total: 3,635,196,122 3,993,117,650 3,927,827,245

Evaluated
Bid Price (1
thru 3)

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 Award of Contract:

Employer’s Right to Accept or Reject

Prior to contract award: Accept or reject any bid, annul
bidding process and reject all bids at any time
No liability of Employer for affected bidders

Grounds for rejection (without justification) will be

communicated to requesting bidder(s)
Rejection of all bids shall be notified to all bidders promptly

Instructions to Bidders when read in conjunction with PPRA

Rule-38; lowest evaluated responsive bidder can not be
avoided Continue… 34
Employer’s right to post qualification
Even the bidders were pre-qualified, for a reason
or prima facie evidence
Minimum post qualification review items are:

(a)Experience (General and Specific)

(b)Competence
(c)Performance

(d)Financial

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No negotiations but clarifications on outstanding items
in Bid Evaluation Report
Conditional Acceptance (LOCA) by bidder is not
tenable under Section 7 of Contract Act 1872
Letter of Acceptance (LOA) or LOCA to be issued
prior to expiration of Bid validity period
Upon receipt of Performance Security, employer will
notify others and return their bid securities
Failure to furnish Performance Security within 28 days
of LOA may annul the contract and forfeit the bid
security
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Main Phases of Construction

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 Different Types of Construction Contracts
on the Basis of Pricing Strategy:
Lump Sum or Fixed Price Contract

In a lump sum contract (also known as a “fixed

price” contract), you have the certainty of
knowing what the contractor is going to charge
you for the work. In return for this lower risk, you
should expect the contractor to quote more than
they would for a cost plus or variable contract: the
lump sum price will include an estimate for
unforeseen contingencies.
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Cost Plus Fixed Percentage Contract

Under this type of contract, you carry all the risk of

cost overruns. You pay the contractor for the
actual cost of carrying out the work, plus a fixed
percentage of the cost of the work. Under this type
of contract, the contractor has little incentive to
reduce the cost of the job or components of it.

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Cost Plus Fixed Fee Contract

Under this type of contract, you will pay the

contractor for the actual cost of carrying out the
work, plus a fixed fee. There is more incentive for
the contractor to work efficiently because the fee
is fixed regardless of the duration of the work.
You still bear the risk of the actual cost of the
work being more than estimated.

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Cost Plus Variable Percentage Contract

For this type of contract, the contractor agrees to

a penalty if the actual cost exceeds the estimated
job cost, or a reward if the actual cost is below
the estimated job cost. This type of contract
places considerable risk on you for cost overruns,
but also provides incentives to contractors to
reduce costs as much as possible.

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 Different Types of Construction Contracts
on the Basis of Contracting Strategy:
BOO (Build Own Operate)

A form of project where a private company or

group of companies agrees to finance, construct,
operate, and maintain a facility previously owned
and/or operated by a public authority. The
concessionaire retains ownership of the facility.
The concessionaire bears the commercial risk of
operating the facility.

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BOOT (Build Own Operate Transfer)

Financing arrangement in which a developer

designs and builds a complete project or facility
at little or no cost to the government or a joint
venture partner, owns and operates the facility
as a business for a specified period (usually 10
to 30 years) after which it transfers it to the
government or partner at a previously agreed-
upon or market-price. 

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BOT (Build Operate Transfer)

A form of concession where a private party or

consortium agrees to finance, construct, operate,
and maintain a facility for a specified period and
then transfer the facility to a government or other
public authority. The concessionaire bears the
commercial risk of operating the facility.

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BOT (Build Operate Transfer)

A form of concession where a private party or

consortium agrees to finance, construct, operate,
and maintain a facility for a specified period and
then transfer the facility to a government or other
public authority. The concessionaire bears the
commercial risk of operating the facility.

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Design & Build

The Contractor is responsible for completing the

design, as well as carrying out the works, and the
employer must provide detailed documents to
outline their requirements.

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EPC (Engineering, Procurement &
Construction)

This is the prominent form of contracting

agreement in the energy industry. The engineering
and construction contractor will carry out the
detailed engineering design of the project, procure
all the equipment and materials necessary, and
then construct to deliver a functioning facility or
asset to their clients.

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EPCC (Engineering, Procurement,
Construction & Commissioning)

The same as EPC with the addition of the

commissioning phase which will see the
contractor undertake testing of all the facilities at
the project prior to commercial start-up.

EPCM (Engineering, Procurement,

Construction & Management)
This type of contract is different to an EPC
Contract in that the Contractor is not directly
involved in the construction but is responsible for
administering the Construction Contracts. Continue… 51
The typical allocations of total risk between the two
main parties, the employer and the contractor, on the
commonly encountered contracting and pricing
strategies may be illustrated as follows:

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Which FIDIC Contract Should I Use? 

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Remember…

If you are an owner entering into a contract for

construction at your property, YOU are the
commodity: YOU have the sole power to decide
what type of contract should be used and what
terms that contract should contain. It is important
that YOU understand the risks, obligations and
responsibilities. If they are not clear to you on the
face of the contract, then you should not be
entering into the contract. Take the time to seek
advice if you need to.
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