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Progress Towards: New Sample Standard Bidding Documents for Design-Build-Operate (DBO) for Solid Waste Management

Progress Towards: New Sample Standard Bidding Documents for Design-Build-Operate (DBO) for Solid Waste Management . Context for DBO for SWM in MNA. Initiated as part of the Solid Waste Management Strategy for METAP countries - presented at Cairo conference-May 2000

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Progress Towards: New Sample Standard Bidding Documents for Design-Build-Operate (DBO) for Solid Waste Management

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  1. Progress Towards: New Sample Standard Bidding Documents for Design-Build-Operate (DBO)for Solid Waste Management

  2. Context for DBO for SWM in MNA • Initiated as part of the Solid Waste Management Strategy for METAP countries - presented at Cairo conference-May 2000 • METAP is Mediterranean Technical Assistance Program • Financed by ESSD Norwegian Trust Fund - multi-year program • Work began on DBO documents in 2001 • Endorsed for ‘pilot testing’ in 2002

  3. SWM Strategy for METAP Countries • Guiding Principles for SWM in MNA • Tackle immediate problems first: • inadequate collection & degradation by dumps • Treat systemic causes of problems: • public awareness and institutional issues • Begin to manage waste as a resource: • reduce, reuse, recycle (3Rs), economic incentives

  4. SWM Strategy for METAP Countries • Immediate Measures • close and rehabilitate dumps • strengthen MSW management • strategic investments in SWM facilities • Structural/Systematic Measures • legal framework, institutional, cot recovery and sustainable financing, etc. • Continuous/Permanent Activities • 3Rs, monitor environmental impacts, monitor performance of public and private sector

  5. SWM Strategy for METAP Countries • MNA Region needs approx. $2.5 – 3.0 billion over next 10 years: • 8% - Correction of Past/Current Problems • 15% - Strengthen/Rationalise Collection • 12%-Legal/Institutional/IWM Planning/Capacity Strengthening • 65% - Facilities Investments

  6. Role of Private Sector in SWM • Improve efficiency and lower costs • well-focused performance objectives • financial and managerial autonomy • hard budget constraint • Transfer new ideas, technologies, skills • Take-on technical risks • Maybe? - mobilize investment funds

  7. Role of Public Sector in SWM • Make clear separation between service (i.e. operational) and regulatory functions • Strengthen capacity for technical supervision • Set clear client service and quality levels • Strengthen management capacity • Improve regulation of private operators • Reduce environmental and health impacts (externalities) • Establish cost-recovery and financial sustainability framework

  8. Public Sector Institutions in SWM • Urban areas should manage wastes better to become good “environmental citizens” • decentralize collection services • centralize disposal operations where possible • focus on cost recovery and self financing • enlist support of private sector • adopt landfill as backbone of integrated systems • Central governments should assist urban areas • develop national policy and regulatory framework • provide technical support and access to financing • consider matching grants for disposal externalities

  9. Why We Started on DBO in SWM ? • Experience in Bank financed SWM projects • Difficult to construct a SWM facility in 5 yrs • Multiple procurements cause slow implementation • Feasibility contract • Environmental and Social Safeguards Assessment • Detailed engineering design contract • Civil works contract • Supervision of construction contract • Operations contract

  10. Other Reasons for DBO in SWM • Overlaps lead to messy ‘handovers’ • Private sector likes DBOs • Can bundle with other activities (e.g. dump closure, transfer stations, access roads) • Uses the strong technical and project management skills of private sector • Allows municipalities to focus their limited human resources on systemic SWM issues

  11. More Reasons for DBO in SWM • Incentives for cost effectiveness PSD adapted to local conditions • One private operator is responsible for design, construction and environmental impacts (does not own or lease land) • Prevents good landfills reverting to open dumps • Can include other optional features: • performance incentives (e.g. carbon finance, recycling rates) • Equipment purchase • Transfer of employees

  12. Characteristics of the DBO • Intermediate step in PSD • Public sector financing and financial risks • Private sector technical skills and technical risks • Typical duration is 8 years: • 1 year detailed design phase • 2 years construction phase • 5 years operations phase • Can bundle with other SWM priorities • Examples: dump closure, training and outreach • Transitional step to operational costs assumed by municipality

  13. Again More Reasons for DBO • After the DBO a municipality / utility still has options: • Operate itself as public sector • Continue with same private sector operator (e.g. annual contract renewals) • Bid a new contract to the private sector

  14. Key Features in the DBO • Flexible pre-qualification to attract local and international companies (e.g. joint-ventures) • Follows Bank procurement guidelines: • base is Standard Bidding Document Supply and Installation of Plant and Equipment (Nov 1997) • Designed for use in Bank loans by Borrowers

  15. Prerequisites to DBO for SWM 1. Social and Environmental Safeguards Assessment 2. Land acquisition completed 3. Financing secured • e.g. Bank loan for 5 yrs and central/municipal financing for 3 yrs 4. Feasibility level site layout drawings 5. Transaction advisors • (legal and technical) for first few transactions for sample documents

  16. Key Features in the DBO • Two Part Process (not two stage) • Part 1: Pre-qualification • Sub-contractor’s SWM technical and financial experience is eligible • Part 2 : Bidding • One Envelope Bid Submittal-both technical and financial • Unified Bid Evaluation Process • Technical Evaluation: Pass or fail evaluation based on substantially responsive • Financial Evaluation: Pass or fail based on substantially responsive • WINNER - Lowest evaluated price of technically responsive bids wins

  17. Key Features in the DBO • NOT A DESIGN COMPETITON • BASIC CONCEPTUAL DESIGN SET OUT IN BID • Important role for Technical Evaluation Committee 1. Design-build criteria 2. Operations criteria 3. Staffing plan criteria • DO NOT quantify above criteria (lesson learned) • Assistance by transaction advisors and/or supervision consultant (lesson learned)

  18. Key Features in the DBO • Bid Price Structure • Design-Build services – flat monthly fee vs. progress payments (lesson learned - no unit prices and quantities) • Operations services - monthly fee • Bottom line = total lump sum price • Role of Supervising Consultant • technical evaluation advisor • acceptance of final design • progress payments • change orders

  19. Key Success and Lessons Learned in Pilot DBO • Successes • Testing private sector reaction to DBO concept and document structure (San Fernando City – Philippines) • Working across sectors and regions at Bank • Procurement can be innovative and flexible • Lessons • For capacity building in the sector • When to use the DBO tool • Procurement process and contents of the bidding documents

  20. DBO Generic Documents • Tab I – Pre-qualification Documents • Tab II – Bidding Documents Annex A - Draft Contract General Conditions Appendices 1 to 11 to the General Conditions Annex B - Various Bidding Documents and Forms (Bid Form, Bidders Price Form and Price Schedule, Bid Security Form, Performance Security Form, Bank Guarantee Form-Advance Payment and Form of Curriculum Vitae)

  21. DBO Generic Documents Appendices to the General Conditions • Appendix 1 -Special Conditions of Contract • Appendix 2 -Terms and Procedures of Payment • Appendix 3 - Technical Specifications - Appendix 3A -Design-Build Services - Appendix 3B - Operations Services - Appendix 3C - Technical Standards

  22. DBO Generic Documents Appendices to the General Conditions (continued) • Appendix 4 - Site • Appendix 5 - Service Area • Appendix 6 - Contract Price Adjustment • Appendix 7 - Incentive Compensation • Appendix 8 - Liquidated Damages • Appendix 9 - Existing Staff • Appendix 10 - Operator’s Personnel • Appendix 11 - Operator’s Bid

  23. Key Sector Lessons Learned • Hard to insert DBO in existing Bank loans • Need to be very pro-active with clients (beneficiary level and implementing agencies) • Use DBO cost savings for early transaction advisors (legal, procurement and technical) • DBO process builds technical and management capacity

  24. Key Procurement Lessons Learned • Start early with transaction advisors (legal, procurement and technical) • Front-load the capacity building effort with all in-country stakeholders • DO NOT quantify technical evaluation criteria – follow ITB 5.5 and not performance criteria in 3A, 3B and 3C • Clearly define when design-build ends (DO NOT use unit prices and quantities) • Clearly define when operations begin

  25. Next Steps • Post DBO Bid Documents on Bank Procurement (OPCPR) web page as a Sample Edition • Comments by e-mail to OPCPR • Considering technical guidance note on performance specifications (Appendixes 3a, 3b, 3c) • Considering advisory committee to regional RPA/RPM and task teams

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