Best Practice Procurement of Consulting Engineering Services
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Best Practice Procurement of Consulting Engineering Services Supported by the Construction Industry Development Board - CIDB. Introduction The seminar is a culmination of the CE Procurement Indaba conducted under the banner of CESA during Feb 2008.

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Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Best Practice Procurement of Consulting Engineering Services

Supported by the

Construction Industry Development Board - CIDB


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • Introduction

  • The seminar is a culmination of the CE Procurement Indaba conducted under the banner of CESA during Feb 2008.

  • A task team was established to draft a simplified step-by-step Best Practice Guideline Manual for Procurement Consulting Engineering Services.

  • To be rolled-out to all the twelve regions of CESA.

  • Western Cape - marks the 5th roll-out, where the manual is being launched.

  • The manual was drawn up in collaboration with the CIDB, (many thanks to CEO & Programme Manager : Procurement Delivery).


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • Introduction (cont’d)

  • Objectives:

  • To inform and capacitate clients and consulting engineers (as they are trusted/independent advisor and agent of client) with best practice in procurement

  • Inform Consulting engineers to appropriately respond to calls for consulting engineering services and to deliver these services in a true value–added context

  • to assist both the Client and the Consulting Engineer to better understand and implement the requirements of procurement contracts in terms of CIDB and Treasury legislation


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • Introduction (cont’d)

  • Objectives (cont’d):

  • The briefings also provide consulting engineers and clients a platform to make suggestions to the best practice procurement guideline manual, since the manual is a living document and which will be updated on a regular basis to reflect the reality of the challenges faced by our industry and will be available on http://www.cesa.co.za/  at no charge.


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • Introduction (cont’d)

  • The Manual contents follows typical steps in the procurement process : CHAPTER 1.   PROJECT LIFE-CYCLE - An outline of the typical project life cycle as background. CHAPTER 2.   CONSULTING SERVICES - A description of typical consulting services that can be provided by consulting engineers.

  • CHAPTER 3.   PROCUREMENT OF CONSULTING SERVICES - Legislation and objectives of procuring consulting engineering services

  • CHAPTER 4.   SCOPE - An expanded description of various elements of scope.

  • CHAPTER 5.   TENDER DOCUMENTATION FOR CONSULTING ENGINEERING SERVICES - Guidelines for preparing tender documentation for CE services.

  • CHAPTER 6.   VALUE – ADDED SERVICES - An expansion on the issues surrounding value that is obtained through CE services and pricing for these services.

  • CHAPTER 7.   EVALUATION OF TENDERS - Guidelines on the evaluation of CE tenders for services.

  • CHAPTER 8.   PERFORMANCE MONITORING – Suggested standard evaluation framework of CE performance.


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • the technical briefings are geared towards creating a conducive sustainable procurement environment  to enhanced infrastructure delivery.

  • ensure that the right firm(s) are appointed for the right job

  • At a reasonable level of compensation

  • Hence our Technical Briefing's theme is, ‘Walking together towards a Sustainable Procurement Environment’.

Introduction : Sum-up


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Right firm for the right job

Three Relative Easy Questions for a House & Bridge Consulting EngineerQuestion # 1:How much does a house weigh?

Question # 2:How much weight can a rural two-lane bridge Hold???


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Qualified firm for the right job

“… otherwise house becomes a bridge”


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Competent firm for the right job

“… a bridge that cannot be used”


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Appropriate Consultant for the right job

“… a house that cannot be used”


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Right firm for the right job

andQuestion # 3WOULD THIS BE COVERED BY PI,

HOME INSURANCE, CAR INSURANCE, OR, DOESIT COME UNDER ROADSIDE ACCIDENT FUND ???

“… delivers questions rather than intended product”


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • SESSION 1

  • 1.1Background and Manual Overview

  • 1.2The Foothold – Definitions

  • 1.3The Project Life-Cycle

  • 1.4Overview of Consulting Services


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • 1.1Background and Manual Overview


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • BACKGROUND AND BRIEFING OVERVIEW

  • The Manual

    • Product of the Procurement Indaba, February 2008

    • Need to collate a Best Practice Procurement Guideline Manual

    • and un-pack with CE and Clients.

    • Drawn up in collaboration with CIDB

    • (many thanks - CEO & Programme Manager : Procurement Delivery)

    • Purpose of the Manual and of this Seminar:

      • Educate and Guide both Consulting Engineers & Clients Bodies

      • Make the procurement environment conducive to enhanced infrastructure delivery in line with current legislation.

  • Procurement - Tendering

    • Procurement has undergone profound changes

    • Competitive tendering is here to stay enhance

    • Tendering for professional engineering service is unique

    • Lowest price – Less effort/ low level of technical skills –

    • No value added – high life cycle costs – poor performance/low quality of services


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • The Construction Industry Development Board (CIDB)

    • CIDB Mandate: Act 38 of 2000

      • Promote sustainable growth of the construction industry and sustainable participation of the emerging sector in the industry

      • Promote improved performance and best practice of public and private sector clients, contractors and other participants

      • Promote procurement and delivery management, the uniform application of policy throughout all spheres of government, uniform and ethical standards all guided by a Code of Conduct

      • Establish Registers as a tool to systematically regulate and monitor the performance of the industry and its stakeholders

        • Register of Contractors(RoC)

        • Register of Projects (RoP)

        • Register of Professional Service Providers (RoPSP)


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • The Construction Industry Development Board (CIDB)

    • CIDB documentation/prescripts (www.cidb.org.za)

      • Standard of Uniformity (SFU)

      • Code of Conduct

      • Practice notes

      • Legislation

    • Code of Conduct establishes certain standards of behaviour…

      • Behave equitably, honestly and transparently.

      • Discharge duties and obligations timeously and with integrity.

      • Comply with all applicable legislation and associated regulations

      • Satisfy all the relevant requirement established in procurement documents

      • Avoid conflict of interest

      • Not maliciously or recklessly injure or attempt to injure the reputation of another party.


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

1.2 THE FOOTHOLD – DEFINITIONS


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

THE FOOTHOLD – DEFINITIONS

Conformity of Terminology

  • Terminology in Manual conforms with CIDB documentation and

  • ECSA Guideline Scope of Services and Tariff of Fees

  • Mainly aligned with CIDB’s Revised SFU in Construction Procurement

    Noteworthy Examples

  • Bid = Tender

  • Client = he/she who engages the Consulting Engineer (CE)

  • Construction Monitoring (administration of Construction Contract for verification only) – new term

  • Contract = Agreement between Client and CE

  • Contractor = not the CE

  • Engineering and Construction Works contract: includes construction, repair, maintenance, alteration, demolition etc of building and engineering infrastructures


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Noteworthy Examples (cont’d)

  • Normal Services = Typical services as in ECSA guideline tariffs

  • Quality = “Totality of features of a service that bears on its ability to satisfy stated or implied needs”

  • Scope of Services = Services undertaken by the CE in relation to the Scope of Work

  • Scope of Work = Portion of the Works for which the CE is engaged

  • Tender Price = Price submitted including all payment conditions, costs and disbursements

  • Threshold = Monetary value of procurement contract above or below which a given procedure may be used


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

1.3 The Project Life Cycle


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

THE PROJECT LIFE CYCLE (cont’d)

Steps 1 to 3 : Identification, Definition, Feasibility

  • Identifying the potential project – often by Owner, Specialist assistance

  • And Defining the best project to meet the need

  • Reject unsuitable solutions, shortlist suitable alternatives

  • Select the best project, based on technical and financial feasibility

    Steps 4, 5, 6 : Concept & Viability, Design, Procure

  • Developing the project through all concept and viability stages, confirm viability

  • Detail design of the project to procure construction

  • Design can be a maintenance/operation assignment

  • Procuring a contractor to construct – proper tender/contract documents, proper evaluation of tenders


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

THE PROJECT LIFE CYCLE (cont’d)

Steps 7, 8 : Construct, Operate and Maintain

  • Construction - from site handover to when Owner takes possession of the constructed project

  • Final handover after Defects Liability Period expired and defects rectified

  • Operation and Maintenance:

    • Usually by Owner - According to manuals and own procedures

    • O & M - May be contracted out

      Note: CE may be appointed for any one, or all, of the steps 1 to 8


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

1.4 Overview of Consulting engineering services


Overview consulting services

OVERVIEW – CONSULTING SERVICES

Consulting engineering services include many Engineering Disciplines inter alia:

  • Agricultural

  • Civil

  • Construction Management

  • Construction Project Management

  • Electrical

  • Geotechnical

  • Mechanical

  • Structural

  • Transportation

  • Specialist Engineering Services


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

OVERVIEW – CONSULTING SERVICES (cont’d)

Delivering Value

  • Services deliver most value in early project stages

  • Functionality & quality of the proposed service more important than Cost (Steps 1 to 3)

  • After project is well defined, services are easier to determine

  • Role of high level expertise reduces as project develops

  • Efficient more routine tasks more important

  • Correct/comprehensive contract documentation is vital


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

REQUIRED EXPERTISE OVER THE PROJECT CYCLE


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

  • SESSION 2

  • 2.1How to Procure Engineering Services


How to procure consulting services

HOW TO PROCURE CONSULTING SERVICES

  • Procurement - Tendering

    • Procurement has undergone profound changes

    • Competitive tendering is here to stay

    • Tendering for professional engineering service is unique

    • Services cannot be awarded based on price only


How to procure consulting services1

HOW TO PROCURE CONSULTING SERVICES

  • Important that Government recognises:

    • CE’s are an important pool of expertise and skilled resources

    • High standard of engineering and Infrastructure development vital for growth

    • National Treasury policy statements:

      “it is necessary that certain minimum standards of quality and efficiency be achieved when appointing consultants”

    • Need to maintain a basic policy of competitive selection

  • Legal Environment for consulting engineering services:

    • Constitution of South Africa

    • System is to be Fair, Equitable, Transparent, Competitive, Cost effective

    • Adopted by ISO in ISO 10845 series for construction procurement


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

TABLE : PILLARS OF PROCUREMENT


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

HOW TO PROCURE CONSULTING SERVICES

Balancing Competition & Compensation in Procurement

  • Imperative to maintain balance between reasonable compensation (to ensure attractiveness of profession) while ensuring competition

    Primary Legislation Regulating Procurement

    • Refer to Table 3-2 in Manual (10 Acts)

    • Constitution, PPPFA, BBBEE, ‘Admin Justice’ Act, & CIDB Act

    • – organs of state

    • PFMA applies to National and Provincial Departments

    • MFMA - Municipalities

    • ‘Preventing Corruption’ Act - public & private sectors

    • Construction Sector Charter - all stakeholders

    • ‘Unfair Discrimination’ Act - State & all persons

    • Compliance with CIDB’s “Standard for Uniformity in Construction

    • Procurement” (SFU) – compulsory for organs of state


Best practice procurement of consulting engineering services supported by the construction industry development board cidb

Objectives of Procurement

  • Procurement is engaging skilled professionals – not purchase of a

  • commodity

  • Purpose of competitiveness is to ensure long term value for money not

  • short term low cost design

  • Transparency must encourage professionals to develop & maintain their

  • skills and expertise

  • CIDB Guidelines can provide the necessary results

  • Methods of Procurement

    1. Financial Offer

    2. Financial Offer plus Quality (Functionality)

    3. Financial Offer and Preference

    4. Financial Offer plus Quality & Preference

    • Prescribed by CIDB Standard for Uniformity (SFU)

    • Services must provide cost-effective & value-added performance

    • Depends on innovativeness, expertise and competence

    • Inclusion of Quality is ESSENTIAL


  • How to procure consulting services cont d 2

    HOW TO PROCURE CONSULTING SERVICES – cont’d (2)

    Method 4 : Quality and Cost-based Selection (QCBS) – Recommended

    • Accords with CIDB’s SFU (Standard for Uniformity)

    • Based on CIDB’s Best Practice Guidelines for Competitive Selection

    • Method 4 applies in all but small minority of cases

    • Method 4 is MANDATORY for public bodies


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    HOW TO PROCURE CONSULTING SERVICES – cont’d (3)

    Competitive Selection Procedures


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    HOW TO PROCURE CONSULTING SERVICES – cont’d (4)

    CIDB Best Practice Guideline A7

    Procurement of professional services undertaken on:

    demonstrated competence & qualifications (for type of services required)

    capacity & capability (to provide the quality of the service)

    fair & reasonable Financial Offers (not only least cost)

    Constitution requires procurement to be cost effective & have best value outcomes in terms of:

    quality,

    downstream & life cycle costs,

    timing

    Financial Offer

    least resources to effectively manage &control the procurement process.

    Selection on basis of quality – does not necessarily mean the best quality available but quality appropriate for the assignment.


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • Calling for Tenders:

    • Scope of Work and Services (SOWS):

    • fully describe SOWS so comparable tenders are received

    • fully describe SOWS so reduce time & effort for tender preparation

    • Total Input Cost - for all tenderers can be considerable and for small projects can exceed the potential fee - with negative effect on:

    • finances of the service provider

    • overall economy of the project.

    • Guideline:

    • potential fee earned by consulting engineer should be 20 times greater than the cost of preparing an individual tender.

    • alternatively, cost to prepare a tender should not exceed approx 5% of the potential fee

    • this means that tenders should not be solicited for small projects, since the Fees earned are required to cover - Staff costs, plus overheads, expenses and profit


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • Calling for Tenders (cont’d)

    • The following procedure should preferably adopted by client or CE (as agent of client)

    • Consider grouping small projects together

    • Request proposals for term contracts where consulting engineer can support

      • the client on a partnership basis for all small to medium projects over say a longer period (allows more effective employment of scarce engineering resources within the consulting engineering firm and the country)

    • Listing manuals and procedures as requirements so lengthy technical

      • proposals are not required (only proposed staffing & track record)


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • SESSION 3

    • 3.1Scope of Services

    • 3.2Tender Documentation for Consulting Services


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • 3.1Scope of Services


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    SCOPE OF SERVICES

    Definition

    Definition: “Services which a CE must provide in relation to scope of Work”

    MUST be clearly defined to ensure proper pricing and clear and unambiguous understanding by tenderer

    In many instances this is lacking – uncertainty and unrealistic pricing result

    Recommended listing DELIVERABLES to be produced by the CE, i.e. products of his work (studies, reports, designs, drawings, documents etc)


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    SCOPE OF SERVICES (cont’d)

    Planning Studies, Investigations and Assessments

    (i) Consultation with the client or client’s authorized representative.

    (ii) Inspection of the site of the project.

    (iii) Preliminary investigation, route location, planning and a level of design

    appropriate to allow decisions on feasibility.

    (iv) Consultation with authorities having rights or powers of sanction as well

    as consultation with the public and stakeholder groups.

    (v) Advice to the client as to regulatory and statutory requirements, including

    environmental management and the need for surveys, analyses, tests and

    site or other investigations, as well as approvals, where such are required

    for the completion of the report, and arranging for these to be carried out

    at the client’s expense.

    (vi) Searching for, obtaining, investigating and collating available data,

    drawings and plans relating to the works.

    (vii) Investigating financial and economic implications relating to the

    proposals or feasibility studies.


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    SCOPE OF SERVICES – cont’d

    Scope of Services for Typical Design Stages


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    SCOPE OF SERVICES (cont’d)

    Detailed examples (Appendix A)

    Refer to Appendix A, Numerous Normal Services tasks under Stages 1 to 6

    Includes Activities/Deliverables

    Recommended as a reference or checklist per stage

    Principal Consultant

    Refer to Appendix A, Additional Services to Normal Services

    Includes Activities/Deliverables

    Recommended as a reference or checklist per stage

    CIDB Register of Professional Service Providers

    To be published by CIDB


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    SCOPE OF SERVICES (cont’d)

    Key Factors common to every scope, in Developing the Scope of Services

    Obligations of the Parties

    Health and Safety

    Sustainability

    Information Available

    Scope MUST reflect Client’s intentions to enable tenderers to identify tasks and estimate times to be spent by personnel, and hence to quantify and price the tender

    Failure to prepare Scope of Services in sufficient detail

    Tenderer has to make assumptions

    Misinterpret Client’s requirements

    Price unnecessarily for Risks

    Resultant prices too low or too high

    Fails the interests of Client, Consulting Engineer and Project


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    KEY FACTORS IN DEVELOPING SCOPE


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    THE SCOPE OF WORK

    Definition

    Not the same as Scope of Services of the Consulting Engineer

    Scope of Work = portion of the Works for which the Consulting Engineer is engaged or the document which specifies and describes the supplies, services engineering and construction works to be provided (by the Contractor) including special requirements, constraints etc.

    For example - a client wishing to construct a Casino complex consisting of three distinct components being the Building, a Parking Area and an access road, may appoint a consulting engineer to undertake Stages 3-6 of the normal engineering services for the Parking Area. In this case the scope of services can be defined as set out in Appendix A while the scope of work may only involve the Parking Area. Some thought will have to go into preparing the scope of work as it interfaces with other works such as stormwater runoff from the building and the interface with the access road and gate house.


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    THE SCOPE OF WORK (cont’d)

    The scope of work for each service provider should be carefully

    determined to ensure that no overlaps and duplication in terms of scope

    of work exist. In some cases the consulting engineer will be required to

    appoint specialist sub-consultants in which case the consulting engineer

    will ensure that no duplication in terms of scope occurs.


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    EXAMPLES OF SCOPE OF WORK


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    FURTHER EXAMPLES OF SCOPE OF WORK


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • 3.2Tender Documentation for Consulting Services


    Tender documentation

    TENDER DOCUMENTATION

    Purpose

    • In line with principles and documentation of the CIDB

    • To achieve uniformity, in interests of a more efficient industry

      Model for Uniformity

    • CIDB’s “Construction Procurement Toolbox”

    • Process of Offer and Acceptance

    • Tenderers provide inputs to complete their submissions (offers)

    • These = inputs to the contract to be concluded after acceptance of offer

    • Separation of component documents

    • Complete enquiry documentation = critical to project’s success

      CIDB tables to assist compiling documentation – See Appendix B


    Tender documentation cont d

    TENDER DOCUMENTATION – cont’d

    Documents relating to the Tender


    Tender documentation cont d1

    TENDER DOCUMENTATION – cont’d

    Documents relating to the Form of Agreement


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    TENDER DOCUMENTATION (cont’d)

    Standard Coloured Pages/Dividers

    • T1.1 Tender Notice and Invitation to TenderWhite

    • T1.2 Tender DataPink

    • T2.1 List of Returnable DocumentsYellow

    • T2.2 Returnable Schedules Yellow

    • C1.1 Form of Offer and AcceptanceYellow

    • C1.2 Contract Data Yellow

    • C1.3 Form of Guarantee/SecuritiesWhite

    • C1.4 Adjudicator’s contract White

    • C2.1 Pricing Data/InstructionsYellow

    • C2.2 Activity/Work ScheduleYellow

    • C3 Scope of Services and Scope of WorkBlue

    • C4 Site inspection Green


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    TENDER DOCUMENTATION (cont’d)

    References

    • Revised Standard for Uniformity in Construction Procurement (SFU)

    • CIDB Construction Procurement Best Practice Guideline C3 – Adjudication

    • CIDB Professional Services Contract

    • PROCSA Form of Agreement

    • FIDIC Client/ Consultant Model Services Agreement

    • Standard Professional Services Contract by NEC


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • SESSION 4

    • 4.1Value-added Services


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    VALUE – ADDED SERVICES

    Value, Financial Offer, Quality

    • Acceptance of lowest price denies opportunity to assess value

    • Consulting Engineers are accustomed to tendering competitively

    • Professional services, unlike products, are not well defined

    • Requires careful descriptions in Scope of Services, Scope of Work

    • Still a tendency to rely on price, ignore quality (Treasury: Functionality)

    • Remuneration should reward desirable performance

    • What performance is achieved from the lowest price? (examples…..)

    • Life-cycle costs: Eng. 2%, Constr. 18%, O&M 80% (2% dictates 98% !)

    • Financial offers should reflect effort to optimise costs of project

    •  Relationship between Financial Offer & Quality (Effort) is not linear


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    VALUE – ADDED SERVICES


    Value added services cont d

    VALUE – ADDED SERVICES cont’d

    Life-Cycle Cost and impact on Project Success

    The procurement of consulting engineering services has the greatest impact on the life-cycle cost of the project, yet it is the least costly component

    Life-Cycle Cost

    Impact on Project Success

    Engineering Construction Operations & Maintenance

    10%

    50%

    40%

    60%

    20%

    20%


    Value added services cont d1

    VALUE – ADDED SERVICES – cont’d

    The Concept of “Value”

    “Value” should:

    • secure for the client value-for-money services

    • achieve minimum life-cycle costs (long term value for money)

    • Ensure the project will fulfill its intended purpose

      The tender process must allow the tenderer to show that:

    • value-for-money services are offered

    • minimum life-cycle costs are critical to the project’s success

    • The Financial Offer will demonstrate the value of inputs offered

    • Take Client’s quality evaluation criteria into account

      Quantifying “Value”

    • Needs to be a factor in considering tenders

    • Include in determination of tender score

    • Assess Preference, Quality, and Financial Offer (Price) individually

    • Consulting Engineer to tender accordingly


    Value added services cont d2

    VALUE – ADDED SERVICES – cont’d

    Guidelines for Pricing of Tenders – the “Golden Rules”

    • Project success relies on acceptance by client of the Consulting Engineer’s financial offer and conditions

    • Consulting Engineer needs to have his interests protected

    • Client needs to be comfortable with contract financial arrangements

    • “Golden Rules” apply to preparation of the financial offer

      Golden Rule No. 1 – Know the project requirements

    • No two projects the same – offer

    • Must be a clear and unambiguous Scope – clarify if necessary

    • Determine methodology, inc. innovation, value-adding procedures

    • Take Client’s quality evaluation criteria into account


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    ILLUSTRATION OF TOTAL COSTS

    Golden Rule No.2 – Know your costs involved


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    VALUE – ADDED SERVICES (cont’d)

    Golden Rule No. 3 – Know the Client’s situation

    • Able to produce and adhere to a clear and sufficient scope

    • Ability to fund or timeously secure funding for the project

    • Adequate resources to administer the contract

    • History of fees paid on time

    • Sufficient technical capability for reviews and approvals

    • Need for development (training, mentoring, etc)

    • Experience in using consulting engineering services

    • Able to responsibly evaluate & award consulting/construction contracts

      Finalising the Tender Price

      Feedback from Golden Rule No 3 is to be considered where aspects within Client’s ambit must be examined, for influence on level of the financial offer


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    VALUE – ADDED SERVICES (cont’d)

    Adjustments from Golden Rule No 3

    • Profit mark up

    • Pricing for contingencies or risk

    • Pricing work not called for but necessary (if not done by Client)

    • Pricing for unrealistically tight or slack deadlines

    • Pricing for work assumed but not required

    • Adding a margin in lieu of qualifying the tender

    • Provision for productivity delays to be expected in executing the work for the client

      Price Benchmarks

    • Important to test pricing against a norm and indicate adequacy of price

    • Appropriate Benchmark: ECSA Guideline Tariff of Fees

    • Percentage of Project Cost (sliding scale) x Factor for Stage and Type

    • Also ECSA recommended hourly rates – arrive at “Benchmark Fee”

    • Adjust up or down for project concerned, with a Benchmark Multiplier, to get an “Adjusted Benchmark Fee” considering specific circumstances


    Value added services cont d3

    VALUE – ADDED SERVICES – cont’d

    Benchmark Multipliers

    MultiplierCircumstances

    0.6 – 1.0“Favourable”

    1.0“Normal” or “Reasonable”

    1.0 – 1.6“Negative”

    Specific circumstances

    • Is scope complete and clear?

    • Is Client well versed in procuring consulting services?

    • Does Client have adequate resources for competent tender evaluation?

    • Does Consulting Engineer have a successful project record with the Client?

    • Can hours be saved from earlier similar work, or previous experience?

    • Is staff proposed well priced, ideally suited and competent for the project?

    • Is the Consulting Engineer better placed than most for specialist services?

    • Is project location advantageous for the Consulting Engineer?

    • Will the risks perceived be easy or difficult to handle?

    • Is level of complexity of the project normal or will it be very complex?


    Value added services cont d4

    VALUE – ADDED SERVICES – cont’d

    Specific circumstances (cont’d)

    • Will the risks perceived be easy or difficult to handle?

    • Is level of complexity of the project normal or will it be very complex?

    • Does the Consulting Engineer have a low order book and need the work?

    • Will start date and duration require price adjustment, if no escalation?


    Value added services cont d5

    VALUE – ADDED SERVICES – cont’d


    Value added services cont d6

    VALUE – ADDED SERVICES – cont’d

    Adjusted Benchmark (“Yardstick”) Fee

    • Average of the sum of all the particular fees used

    • Still based of ECSA recommended fee scales

      THERE IS NO SUCH THING AS A “DISCOUNTED” FEE


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • SESSION 5

    • 5.1Evaluation of Tenders


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    EVALUATION OF TENDERS

    References

    • CIDB Best Practice Guideline No. A4 : Evaluating Quality in Tender Submissions (guidelines)

    • CIDB Inform Practice Note No. 9 ; Evaluation of Quality in tender Submissions (overview)

      Evaluation of Tenders

      • Applies where Quality consideration is an essential part of the evaluation process – which should apply to the vast majority of tenders for Consulting Engineering services

      • Procurement Method 4 generally appropriate for Consulting Engineering services (Quality and Cost-based Selection)


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    EVALUATION OF TENDERS

    Method 4 – Financial Offer plus Quality and Preference

    • Score Quality, rejecting all offers that fail to score minimum points for Quality, stated in Tender Data

    • Score tender evaluation points for Financial Offer

    • Confirm tenders eligible for preferences claimed and if so score tender evaluation points for preferencing

    • Calculate total tender points

    • Rank tenders from highest number of tender evaluation points to lowest

    • Recommend Tender with highest tender evaluation points for award, unless compelling reasons not to do so


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    EVALUATION OF TENDERS (cont’d)

    Evaluation criteria

    • Essential that tender documents state evaluation criteria and scoring systems to be used in tender adjudication

    • If a criterion is stated, clarity required how the criterion will be adjudicated and weighted, relative to other criteria

    • CIDB Standard for Uniformity Sect. 4.4.3 calls for specific Tender Data:

      • Method to be used in evaluation

      • Weighting between Financial Offer (W1), Quality (W2), and Preference (W3)

      • Quantified descriptions of preferences incl. how granted and scored

      • (Refer also to Construction Scorecard (Construction Sector Charter, Govt Gazette: Board Notice 862 of 2009)

      • Details of Quality Criteria and Sub-criteria and manner of scoring


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    EVALUATION OF TENDERS (cont’d)

    Recommended Approach, to be Fair, Equitable, Transparent, Cost-effective

    • Quality of outputs/deliverables to satisfy client requirements

    • Service with reasonable skill and care of professionals

    • Advice independent of any affiliation causing conflict of interest

    • Repeat/straight forward projects : Cost-effective design important

    • Feasibilities, Complex projects : experience, expertise important

    • Weighting, Quality / Financial Offer is less for repeat type projects

    • All tenders to have a minimum number of Quality points, to proceed

    • Ratio Quality / Financial Offer plus Preferences depends on project value

    • Preferential Procurement Framework Act :

      • Assignments under R1million value, Ratio 80:20 mandatory

      • For higher value assignments, Ratio 90:10 mandatory

      • (Threshold as in Pref. Procurement Policy Framework Act Regs)

        Refer Tables based on CIDB references with certain CESA adjustments, pertaining to Scoring against Ratings


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    EVALUATION OF TENDERS (cont’d)

    Recommended Detail Procedure

    • Score Quality with 3 Quality reviewers, adjust if major scoring differences

    • Reject tenders not attaining minimum Quality score, inform them in writing

    • Inform tenderers of time & date for opening Financial Offers and announce these at the meeting

    • Calculate Final Evaluation Scores according to CIDB Standards for Uniformity

    • Apply Definitions and formulae (see next slide)

    • Mutually exclusive criteria recommended, to limit duplication

    • Black persons are addressed in allocating Preferences

    • Reviewers need to be experienced. If not available in the Client, then specialists or Consulting Engineers (unconnected with the tender) should be retained by the Client to assist with evaluations

    • See recommended Tables and Examples


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    EVALUATION OF TENDERS (cont’d)

    Definitions and formulae used:

    Nev = Total evaluated score

    Nm = Score for Price

    Nq = Score for Quality

    Np = Score for Preferencing

    W1 = Weight assigned to price

    W2 = Weight assigned to quality

    Nm = W1 x Pm/P – where Pm is lowest qualified tender price received and P is tender price under consideration (2 decimal places)

    Nq = W2 x S/Ms - where Ms is maximum possible quality score and where S is quality score for tender under consideration

    Nev = Nm + Nq +Np - Tenders ranked from highest to lowest Nev with

    tender awarded to tenderer with highest Nev


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    RECOMMENDED TABLES FOR EVALUATION OF TENDERS

    Table 7-1 Nature of Projects (5 types are defined):

    • Feasibility Studies and Investigations (require specialised skills; deliverable a report)

    • Innovative Projects (require innovation, creativity, expertise and skills; specialist advice needed is often identified in the project)

    • Complex Projects (require high level of technical skills and resources; may require skills other than normal engineering)

    • Straightforward Projects (comprise straight forward tasks with standard technologies; may need strong capacity and resources if project is large)

    • Repeat Projects (Straightforward tasks with routine/periodic activities, eg maintenance to maintain Client’s assets

      The Descriptions of each type show that the tenderer’s experience and

      capability are key, particularly in types 1 to 4


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    RECOMMENDED TABLES FOR EVALUATION OF TENDERS (cont’d)

    Table 7-2 Quality Criteria and Points Scale for small projects:

    • Quality plus Financial Offer/Preference ratio 80:20 (i.e.. 20 points for BBBEE)

    • Maximum points shown for 5 Project Types from Table 7-1 for BBBEE, Quality and Financial Offer, Financial Offer and Quality

    • Higher points used for Quality in more complex projects and lower points for Financial Offer

    • 9 Quality Criteria listed, from Adequacy of work plan to Demonstrable managerial ability

    • Quality maximum points from (2) allocated to 9 Quality criteria; allocation to 5 of the 9 Quality Criteria should suffice


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    RECOMMENDED TABLES FOR EVALUATION OF TENDERS (cont’d)

    Table 7-3 Quality Criteria and Points Scale for large projects:

    • Quality plus Financial Offer/Preference ratio 90:10 (i.e.. 10 points for BBBEE)

    • Maximum points shown for 5 Project Types from Table 7-1 for BBBEE, Quality and Financial Offer, Financial Offer and Quality

    • Higher points used for Quality in more complex projects and lower points for Financial Offer

    • 9 Quality Criteria listed, from Adequacy of work plan to Demonstrable managerial ability

    • Quality maximum points from (2) allocated to 9 Quality criteria; allocation to 5 of the 9 Quality Criteria should suffice

    • Operation similar to Table 7-2


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    RECOMMENDED TABLES FOR EVALUATION OF TENDERS (cont’d)

    Table 7-4 Indicators to be used when scoring tenderers on Quality Criteria

    • Ratings, very good/good/satisfactory/poor (100/70/50/0) with descriptors, listed for 9 x Quality Criteria

    • Note “poor” scores zero – criteria are unacceptable for Consulting Engineering services (see descriptors)

    • Ratings for 9x Quality Criteria are common to all Project types


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    RECOMMENDED TABLES FOR EVALUATION OF TENDERS (cont’d)

    Table 7-5 refers to “Qualification and Competence of Key Staff”

    • To be completed by Client when issuing tenders

    • Shows 6 x typical staff posts – Project Leader, Design Engineer, Materials Engineer, Contracts Engineer, Resident Engineer and Assistant Resident Engineer

    • Shows 5 x Project types (Table 7-1) for each post

    • Lists 6 x attributes for each post (qualification, experience thereafter , registration, experience thereafter, involvement on comparable projects (past 10 years), project values (past 6 years)

    • Client able to list preferred and minimum attributes, Tenderer fills in the Offer column

    • Although Titles of Job posts state “Engineer”, Client may choose to use Registered Engineering Technologist or Registered Engineering Technician, depending on nature of project


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    RECOMMENDED TABLES FOR EVALUATION OF TENDERS (cont’d)

    Table 7-6 Assessment example

    • Shows a worked example for a complex project in the 90:10 points system range with 5 of 9 x Quality Criteria addressed

    • Weight assigned to each Quality Criterion addressed. Total = maximum points for Quality

    • Rating indicators from Table 7-4 applied to each Quality Criterion by 3 reviewers to give Reviewers’ scores and average scores

    • Weights applied to average scores to give points for Quality, with total = Points for Quality for tender under consideration

    • Table shows 2 x sets of points for Quality results : 1st set : 2 outliers, 2nd set : no outliers, after a repeat review by the reviewers


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    RECOMMENDED TABLES FOR EVALUATION OF TENDERS

    CESA recommended changes to CIDB Tables

    (in using Tables 7-1 to 7-6)

    • Table 7-4 Ratings, very good/good/satisfactory/poor; CIDB uses 100/90/70/40. CESA recommend 100/70/50/0 because:

      • Descriptors for Poor (0) confirm unsatisfactory, i.e. unacceptable

      • Good/Satisfactory mean nearly the same; decrease Good to 70 to compare with Very Good (100) ; decrease Satisfactory 70 to 50.

    • Actual application of weightings, Quality / Financial Offer depends on relative value of the two criteria, e.g. Quality scoring 80 to 85 and Financial scoring 50 to 100%, Financial scoring can outweigh Quality scoring


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    • SESSION 6

    • 6.1Performance Monitoring – Consulting Services


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    PERFORMANCE MONITORING

    Introduction

    • Evaluation of CE’s performance is crucial in upholding & advancing the standards and level of service from Consulting Engineers

    • If client has an acceptable CE’s performance evaluation framework and the evaluation is conducted in a transparent and rigorous manner.

      (performance scores could be used for preselection and bid evaluation)

    • PM - Benefits both the client and CE

    • Necessary, Especially today when projects are becoming sophisticated, large scale and risky. (Even RDP houses have become sophisticated)

    • National Treasury and the CIDB calls for it

    • CESA is proposing a comprehensive set of evaluation criteria for gauging the performance of CE.


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    PERFORMANCE MONITORING

    Absence of PM - Quality Assurance

    • CE have a Quality Management System ISO 9001 : 2008 QMS or of similar levels ( a condition of CESA membership)

      • ISO requires firms to conduct Client Satisfaction surveys, analyse to show trends and confirm improvement.

      • Enable flaws to be detected, thus avoiding more costly deviation corrections

    • CE have adopted the principles of a Business Integrity Management System, ( Part of CESA members Code of conduct)


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    PERFORMANCE MONITORING (cont’d)

    Communication & Liaison

    • Starts at award, with confirmation of scope

    • Consulting Engineer advised of Client’s intention to monitor performance

    • Client can report to CESA any cases of malperformance

    • Client can use the firm’s own QMS if suitable

    • If Customer Satisfaction unsuitable, use CESA recommended Scorecard (Table 10-1)

    • PM is a useful addition to the procurement process – benefits Client and Consulting Engineer, in maintaining highest quality standards


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    PERFORMANCE MONITORING : EVALUATION SCORECARD


    Best practice procurement of consulting engineering services supported by the construction industry development board cidb

    CONCLUSION

    This technical briefing has been presented in the interests of a more efficient construction industry, enhanced through the use of more effective and uniform procurement

    CESA and the CIDB would like to thank consulting engineers and their clients for attending, and we wish you safe onward journeys


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