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Contracting in Urban Transport. Structure of Presentation. Objectives of Module Case Example Preparation of Feasibility Report (FR) and Detailed Project Report (DPR) Procurement Process Contracting Options and Case Studies Procurement Strategies Preparation of RFQ/RFP

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structure of presentation
Structure of Presentation
  • Objectives of Module
  • Case Example
  • Preparation of Feasibility Report (FR) and Detailed Project Report (DPR)
  • Procurement Process
  • Contracting Options and Case Studies
  • Procurement Strategies
  • Preparation of RFQ/RFP
  • Bid Process Management
  • Contract Management
objective of module
Objective of Module

The Contracting module is developed with an objective to make the users mainly understand the following

  • Components of project life cycle
  • Preparation of Feasibility Report and DPR, and their appraisal
  • Preparation of Terms of Reference (TORs) and Request for Proposals(RFP)
  • Procurement and contracting strategy for urban transport projects
  • Preparation of bid documents , contract documents and Agreements
  • Project implementation options and models
  • Preparation of various types of procurement documents and contract documents
  • Bid process, evaluation and award of contracts
  • Supervise/ monitor/ manage projects
  • In a Standing Committee Meeting of an urban local body held on 25th January 2012, based on advise of a city engineer, a decision was taken to develop 2 urban roads.
  • The City Engineer is advised to implement the project immediately and accordingly a Notice Inviting Tender (NIT) is to be issued by him on 30th January 2012
  • What are the issues in this entire process ?
problems and issues
Problems and Issues
  • The Standing Committee took a decision on implementation of the project without conducting a Feasibility Study/ DPR and neither advised the City Engineer to get a DPR/ Feasibility Study conducted
  • The Project Implementation Options were not deliberated upon. The project could be implemented on a PPP basis or through funding support from other Government agencies
  • If the city does not have internal resources/ capacity to conceptualize/ structure the project, external assistance from advisors/ consultants should have been taken before issuing the NIT.
notice inviting tender
Notice Inviting Tender
  • Given below is a tender notice that appeared in the newspapers. Read the tender notice and list out all the lacunae that you find

Government of ………………/

Government of ……………..Urban Development Trust


Tender Notice No:8/ ____________/__________/12-13 Dated:30-1-2012

The Municipal Commissioner,………………… Municipality, invitees sealed tenders from interested bidders for “Providing Street lighting in the unserved areas in

Package-A: Road No ……to……. Of Sector …… and

Package-B: Road No ……to……. Of Sector ……”

Estimated Contract value of work is (a) Rs 255.55 lakhs (b) Rs 154.85 lakhs. Last Date for receipt of tenders including EMD is before 3.00Pm on (a) 21-01-2013 (b) 21-01-2013.

Documents can be purchased from the Municipal Commissioner , …………….Municipality Ph.No……………..,Fax No………… remitting a D.D. or Municipal Challan for Rs 22,000/- before 5.00pm on (a) 16-01-2013 (b) 16-01-2013. Other details regarding eligibility etc. are in the tender documents.


(City Engineer,……….)

lacunae in the nit
Lacunae in the NIT

Following are the lacunae for the above Tender Notice

  • Eligible/Qualification of bidders not mentioned
  • Bidders are eligible to apply for individual packages or not
  • Eligibility in terms of joint venture and consortium details not mentioned
  • EMD amount not mentioned
  • Pre-bid meeting and contact person to be contacted
  • Application sale start dates
  • Qualification Criteria in terms of technical and finance
  • Is the Cost of tender document of Rs 22,000/- is for Package (A) or both packages
how do we identify a project
How do we identify a Project?
    • Identification and prioritization of projects in conformity to State & National Policies & Guidelines:
    • National Urban Transport Policy,
    • Jawaharlal Nehru National Urban Renewal Mission
  • A comprehensive vision document of a city must identify a sustainable project:
    • Master plan
    • City development plan
    • Comprehensive traffic and transportation study
    • Comprehensive Mobility Plan
  • Project ideas may also come from:
    • ULBs,
    • Stakeholder departments
    • Donors or from
    • NGOs
  • Introduction

Project Identification

  • Project Scoping
  • Project Planning & Preparation
  • Project Appraisal
  • Public Consultation
  • Project Structuring
  • Bid Process Management
  • Project Implementation
  • Monitoring and Evaluation
project scoping
Project Scoping
  • Project scope : Definition of what the project is supposed to accomplish in the allocated budget (time and money) to achieve the project objectives
  • A project scoping study gives the project manager the opportunity to look at and assess the project before it becomes formally "live".
  • Introduction

Project Identification

  • Project Scoping
  • Project Planning & Preparation
  • Project Appraisal


  • Public Consultation

Project Scope & Quality

  • Project Structuring
  • Bid Process Management
  • Project Implementation
  • Monitoring and Evaluation



project scoping1
Project Scoping
  • A SMART analysis. Projects should be SMART i.e. Specific, Measurable, Achievable, Realistic, and Time-bound.
  • Project scoping does not check the feasibility of the project but establishes how it needs to be organized and managed:
    • what the project aims and objectives should be
    • what the risks, limitations, and possible difficulties are
    • how the project should be organized and tackled
    • vision of a long-term sustainability of the project
    • infrastructure requirements
    • capacity of operations and maintenance during the project life cycle
  • Introduction

Project Identification

  • Project Scoping
  • Project Planning & Preparation
  • Project Appraisal
  • Public Consultation
  • Project Structuring
  • Bid Process Management
  • Project Implementation
  • Monitoring and Evaluation
project planning preparation
Project Planning & Preparation
  • Project formulation is a process of documenting the eligible facility, the eligible work, and the eligible cost for projects.
  • Formulation allows for the consolidation of similar work items into projects to expedite approval and funding and to facilitate project management
  • Project formulation includes:
    • Preliminary Project Report
    • Feasibility Analysis
    • Techno-Economic Analysis
    • Project Design and Network Analysis
    • Input Analysis
    • Financial Analysis
    • Cost-Benefit Analysis
    • Pre-Investment Analysis
  • Introduction

Project Identification

  • Project Scoping
  • Project Planning & Preparation
  • Project Appraisal
  • Public Consultation
  • Project Structuring
  • Bid Process Management

Preliminary Project Report

Feasibility Report

Detailed Project Report

  • Project Implementation
  • Monitoring and Evaluation
project appraisal
Project Appraisal

The key criteria for an appraisal of a project are:


  • consistent with the policy and programming framework and other ongoing and planned projects
  • within the institutional capacity of the project sponsor to implement
  • addressing key problems of the sector or stakeholders


  • Strategy is realistic and within government policy
  • Cost estimates are sound
  • Assumptions made by the project are justified
  • The project implementing agency has the management, coordination, and financing arrangements to implement the project


  • There is adequate ownership of the project by project beneficiaries
  • Technology is appropriate
  • Environmental concerns have been addressed
  • Financial or economic analysis is reliable (e.g. a cost-benefit analysis)
  • Introduction

Project Identification

  • Project Scoping
  • Project Planning & Preparation
  • Project Appraisal
  • Public Consultation
  • Project Structuring
  • Bid Process Management
  • Project Implementation
  • Monitoring and Evaluation
public consultation
Public Consultation
  • At each stage, public/ stakeholders consultation is required to ensure the project is accepted by the end-users
  • Project details should be prepared through a consultative or participatory process involving stakeholders and the community.
  • Public participation should be generated with stakeholders through the use of various methods, such as in-depth interviews, public meetings, workshops, focus group discussions, etc.
  • Consultations should also be held with vulnerable groups.
  • Introduction

Project Identification

  • Project Scoping
  • Project Planning & Preparation
  • Project Appraisal
  • Public Consultation
  • Project Structuring
  • Bid Process Management
  • Project Implementation
  • Monitoring and Evaluation
project structuring beginning of contracting process
Project Structuring- Beginning of Contracting process
  • This stage of the project cycle involves structuring of the project and securing financing for the same, either through:
    • the Government budget,
    • or through aid donor funds,
    • or through private sector investors under a suitable Public Private Partnership (PPP) format.
  • It is important the once a project has been approved, discussions should be held with donors to secure their commitments to fund the projects.
  • Introduction

Project Identification

  • Project Scoping
  • Project Planning & Preparation
  • Project Appraisal
  • Public Consultation
  • Project Structuring
  • Bid Process Management
  • Project Implementation
  • Monitoring and Evaluation
project structuring options
Project structuring Options

Public Sector

Private Sector







Item Rate

EPC Trunkey

Service Contract

Management Contract






Public Ownership

Private Ownership

Source: Sustainable Urban Transport Planning Toolkits for Public Private Partnership in Urban Transport, 2008,Ministry of Urban Development

issues in project implementation
Issues in Project Implementation
  • What are the issues faced by you in your city for implementation of any project?
    • Scoping
    • Planning
    • Financing
    • Political environment
    • Public consultation- consensus
    • Project preparation
    • Selection of contractor
    • Contract monitoring
defining feasibility report and dpr
Defining Feasibility Report and DPR
  • Introduction and Objective of Study
  • Project Need and Justification, Project Area Characteristics
  • Existing Situation and Anticipated Demand
  • Options Considered and Comparison of Feasible Options - Preliminary technical & financial assessment
  • Conclusions and Recommendations- Gives a GO/No GO
  • Introduction and other elements same as Pre-feasibility Report
  • Definition, Scope and, Purpose
  • Technical Specifications- Scope, Features of the project, location, broad alignment
  • Examination of the Critical Risks and Problems of the Project
  • Broad estimation of Financial and Economic returns from the project
  • Evaluation and Conclusion- Gives Recommendations - is the project technical and financially feasible and does it warrant a DPR to be made
  • Introduction and other elements same as Feasibility Report
  • Existing Situation - Traffic and Transportation Characteristics - Issues and Policy
  • Project Details - Detailed Design and drawings of Project components - Technical Specification – Detailed Project Cost and BoQ
  • Social and Environmental Impacts
  • Project Implementation Framework - Project Institutional Framework
    • Project Financial Structuring and Phasing - Project O&M Framework and Planning
  • Project Financing - Financial Viability & Sustainability -
    • Project Benefits Assessment (Social Cost-Benefit Assessment) - Risk Management Framework
  • Conclusion - Detailed Design Drawing and Technical Specification ; Cost and Revenue Estimates

Pre-Feasibility Report

Feasibility Report

Detailed Project Report

how to select a consultant for preparing dpr
How to select a Consultant for Preparing DPR?

Procedures and steps for hiring consultants

  • Preparation of cost estimate and budget
  • Preparation and issue of:
    • Request for Proposal (RFP);
    • Letter of Invitation (LOI)
    • Information to Consultants (ITC)
    • Proposed Contract
  • Receipt of proposals
  • Evaluation of technical proposals: consideration of quality
  • Evaluation of financial proposal
  • Final evaluation of quality and cost
  • Negotiations and award of the contract to the selected firm

Selection of Consultants

  • Selection of Consultants
    • The hiring of consultants should be undertaken through competition among qualified short-listed firms
    • Selection should be based on technical proposal and on the cost of the services to be provided (Quality & Cost Based Selection [QCBS]).
    • Other acceptable selection procedures in addition to QCBS are as under :
      • Quality Based Selection (QBS)
      • Fixed Budget Selection (FBS)
      • Least Cost Selection (LCS)
      • Single Source Selection (SSS)
      • Selection of individual consultants
terms of reference for engaging a consultant
Terms of Reference for engaging a Consultant
  • A precise statement of objectives
  • Define Scope of work
  • An outline of the tasks to be carried out
  • A schedule for completion of tasks
  • The support/ inputs provided by the client
  • The final outputs that will be required of the Consultant
  • Composition of Review Committee to monitor the Consultant’s works
  • Procedures for – Mid-term review and Progress Reports required from Consultant
  • Experience Profile of the Consultant
  • List of key positions - CV and experience would be evaluated
how to appraise the dpr
How to appraise the DPR?
  • Project Appraisal is an important step for accessing grants (financial).
  • The Local Agencies should make sure that the DPR should fulfill guidelines and parameters laid out under the schemes of the funding agencies.
  • The DPR appraisal criteria include the following:
    • Technical
    • Financial
    • Social and Environmental
    • Institutional

Checklist for Appraisal of DPR – JnNURM

Technical Appraisal

  • Objectives/Project Details & Need for the project
  • Compliance with National Urban Transport Policy
  • Whether CDP/ CMP is prepared, appraised and approved
  • Is PPP envisaged or not
  • Land Required under Project and Status of Land Acquisition.
  • Timelines for implementation
  • Whether Project technical feasibility study has conducted surveys for explaining existing conditions
  • List anticipated hindrances in project implementation and measures for solutions
  • Assessment of the existing user demand and forecast the same
  • A detailed design of physical infrastructure, bill of quantities and cost estimates.
  • An evaluation plan & a detailed list of monitoring and evaluation indicators for the project outcomes
general appraisal criteria jnnurm
General Appraisal Criteria - JnNURM

Financial & Economic Appraisal

  • Phasing and Estimated (Amount/Share) cost of the Project, O & M Cost and Financial Sustainability
  • ULB/Parastatal share (financial); Funding Pattern – for Capital cost and to meet O&M expenditure
  • Project proposals shall present the cost-benefit analysis incorporating a life-cycle cost analysis
  • Technical feasibility and selection of a least life-cycle cost should be based on financial and economic viability parameters
  • For ULB/parastatal agency-sponsored projects, DSCR (incl. sinking & revolving fund), should be at 1.
  • The cost- benefit analysis for individual projects of Rs.50crores or more shall demonstrate a positive Net Present Value (NPV) and an ERR equal to or above the appropriate opportunity cost of capital.
  • For projects undertaken by Special Purpose Vehicle (SPV) on a Public-Private Partnership (PPP):
    • Internal Rate of Return (IRR) greater than the cost of capital raised for the project.
    • Proposal shall demonstrate financial viability based on a targeted IRR of at least 200 basis points above cost of capital. DSCR should not be less than 1.25.
    • Project should provide an Economic Rate of Return (ERR) greater than the cost of capital and the proposed minimum
general appraisal criteria jnnurm1
General Appraisal Criteria - JnNURM

Social & Environment Appraisal

Social and Environment

  • Whether proper identification of environmentally and socially sensitive areas has been carried out.
  • Whether Environmental Assessment Study outcomes and Social Assessment Study clearly listed
  • Incorporation of suggestion on mitigation measures to minimize the negative impacts
  • Whether all concerned authorities issued clearance, ed. Environmental. NHAI and others


  • Assessment of existing required Institutional framework of the implementation and further monitoring of project
  • Identification of areas for capacity building and strengthen of institution


contents of a feasibility report
Contents of a Feasibility Report
  • Introduction
  • Rationale and Scope
  • Definition, scope and, purpose and level of detail of the feasibility study
  • Technical Specifications
  • Financial and Economic plans of a project
  • Social and Environmental Impacts
  • Examination of the critical risks and problems of the project
  • Evaluation and conclusion
contents of a dpr
Contents of a DPR
  • Project Background
    • Introduction - City Profile
    • Sector background context & broad project rationale
    • Project Definition, Concept and Scope
  • Existing Situation
    • Traffic and Transportation Characteristics in the City
    • Existing Issues and Policy
  • Project Details
    • Detailed Design of Project
    • Project Cost
  • Project Implementation Framework
    • Project Institutional Framework
    • Project Financial Structuring and Phasing
    • Project O&M framework and planning
  • Project Financing
    • Financial Viability & Sustainability
    • Project Benefits Assessment (Social Cost-Benefit Assessment)
    • Risk Management Framework
  • Conclusion

As per the Procurement Bill 2012 of Indian Government,

‘‘procurement’’ or “public procurement” means the acquisition of works, goods or services by a procuring entity, and includes all stages of the process of acquisition, by purchase, lease, licence or otherwise, of works, goods or services, beginning with the process for determining the need for such acquisition and ending with completion and expiry of the procurement contract or framework agreement, but does not include any acquisition without consideration, and “procure” or “procured” shall be construed accordingly.


As per the Procurement Bill 2012:

  • Bill apply to Ministry or Department of the central Government, any Central Public Sector Undertaking (50%), or authority or society or trust or autonomous body (by whatever name called) established or constituted under an Act of Parliament or a body owned or controlled by the Central Government.
  • Bill shall not apply to procurements, which are less than INR 50 lakhs, emergency procurements made for disaster management, and procurement for the purpose of national security.

States Government should follow their own acts and regulations for procurement of good and services

when do you start thinking about procurement
When do you start thinking about procurement?

Source: CRISIL Risk and Infrastructure Solutions Limited.


Contracting Options

  • EPC / Cash Contract Mode: State Undertaking / SPV intend to create / upgrade the facilities -
    • Design Parameters fixed by Administrative Department (AD)
    • Bids are called on BOQ / Item Rate Contract basis
    • Supervision with AD
    • Funds for development to be arranged by the AD
public private partnerships ppp vs engineering procurement construction epc contracts
Public Private Partnerships (PPP) vs. Engineering Procurement Construction (EPC) Contracts



Contracting Options

  • PPP Mode: developing facilities through offering the project to Private Sector Player (PSP), by giving it the right to earn revenues / user charges from the project, for a defined concession period
    • Management Contract (O & M)-
      • Contractual arrangement for the management of a part or whole public facility or service by the PSP.
      • Capital investment is typically not the primary focus in such arrangements
      • Revenue retained by the AD, the PSP gets a fixed fee for O & M

Contracting Options

  • Lease Contracts
      • Asset is leased by AD to PSP
      • Involves building an asset, transferring it to the Govt and leasing it back
      • PSP delivers the service and collects user charges, intern may offer a fixed fee to the AD
  • Build Operate Transfer (BOT/ BOOT) Contracts
      • Design frozen by the AD
      • The bidding Parameter can be Concession Period / Annual Concession Fee / Upfront Premium / Revenue Share
      • Private partner has the responsibility for construction and operations
      • Ownership is with the private partner for the duration of the concession
      • For example, Ludhiana, Amritsar & Jalandhar Bus Stands

Contracting Options

  • e. Design-Built-Finance-Operate-Transfer (DBFOT)
      • PSP responsible for designing, financing, construction, and operations
      • Bidding Parameter can be Concession Period / Annual Concession Fee / Upfront Premium / Revenue Share
      • Sub-leasing rights with the PSP for the concession period
      • Right to Escrow the revenue for raising the Finances.
      • Mohali Bus Stand, Himachal Bus Stands (Una, Hamirpur, Parwanoo)
      • Most Preferred mode of development – appropriate risks transferred to PSP

Deciding mode of Contracting

  • Need for a particular infrastructure facility
  • Scale of development, and Greenfield /Brownfield development
  • Need for PSP considering the Value for Money (VFM) analysis
  • Balance between viability and welfare objectives
  • However, the most preferred mode of Development of Bus Terminus Projects for State Undertakings is DBOT mode as this distributes the risk among stakeholders.

Need for PPP in Bus Terminals/ Depots

  • Constraints faced by STUs- Lack of Basic Passenger amenities like clean toilets, covered passenger concourse area, designated parking lots, robust PIS etc
  • Heavy O&M costs- for bus terminal buildings and related facilities
  • Lack of funds for up-gradation and provisioning for modern technologies and amenities

Value through PPP

  • Creation of State-of-Art Infrastructure / Services for Users
  • Better design / segregation / safe design
  • Introduction of Best Management Practices for O & M
  • Self-Sustaining through optimum utilization of valuable land and available sources of Revenue from Bus Terminals
  • Additional source of revenue for state undertakings which can be utilized for CBS / Non-PPP able components / small depots
key risks in project financing of urban transport
Key Risks in project financing of Urban Transport
  • Before Project Construction
    • Land Acquisition
    • Permits and clearances
    • R &R
    • Financial Closure
  • During Construction
    • Unforeseen physical challenges (soil type etc)
    • Unfactored Inflation /forex/ interest rate changes
    • Inadequate Design
    • Technology choice
    • Utilities shifting
    • Force Majeure
  • After Construction (Operation Stage)
    • Ridership/Demand
    • Tariff / Political
    • Operations and Maintenance
    • Force Majeure

Commissioning Risk

Construction Risk

Demand Risk

Design Risk

Environmental Risk

Financial Risk

Force Majeure Risk

Indst. Relations Risk

Latent Defect Risk

Operating Risk

Performance Risk

Change in Law Risk

Residual Value Risk

Technology Risk

Upgrade Risk


Risk Structuring / Mitigation

  • Risk can be structured/ mitigated in 5 ways:
    • controlled or shared, as in a contract;
    • switched from one party/support to another by means of a trigger
    • financed, such as through standby loans;
    • deemed reduced, per study results; or
    • avoided altogether.

Hyderabad Metro

  • Concessionaire : L&T
  • Cumulative Length: 71.16 km
  • Project Cost: Rs 12132 Cr.
  • Govt. Grant: Rs 1458 Cr.
  • Concession Period: 35 years (with extension for 25 years)
  • Govt. owns “Golden Share” in SPV- one representative on Board with affirmative powers
  • Real Estate Development at:
    • 3 Depots : Total cumulative area- 11.61 Lakhs sqm.
    • 25 Stations: Total cumulative area- 5.57 Lakhs sqm.
  • Automatic Annual Fare Revision linked with WPI
  • Revenue Share with Govt: (Ceiling 10%)

Modalities of Implementation of Gurgaon Metro

  • Shareholders in Concessionaire Company:
      • IL&FS Rail- 48%
      • ITNL- 26%
      • DLF- 26%
  • Based on DBFO model
  • Total Concession Period: 99 years
  • Schedule and fare integrated with DMRC
case study ahmedabad brts
Case Study – Ahmedabad, BRTS
  • SPV contracts and monitors
  • Buses procured by operator and operating on gross cost + incentives basis
  • Minimum guaranteed kms committed by SPV
  • SPV has financial as well as manpower support from MC
  • Fare revision linked with change in fuel price & WPI, periodic revision on 1st April of every year
  • Cost/km revision wrt change in fuel & WPI
  • Incentives/penalties linked with pre-defined performance parameters
  • Change in schedule, fleet size at the discretion of SPV
  • System sustainability: breaking even

Case Study – Ahmedabad, BRTS

  • PPP Responsibility Matrix for BRTS Components
case study ahmedabad brts intelligent transit management system itms integrated overview
Case Study – Ahmedabad, BRTSIntelligent Transit Management System (ITMS) - Integrated Overview

Source : Janmarg, Ahmedabad

Case Study – Ahmedabad, BRTSIntelligent Transit Management System (ITMS) - Conceptual Overview of AJLITMS
case study ahmedabad brts itms contract
Case Study – Ahmedabad, BRTSITMS Contract
  • Scope of the Service Provider
    • Integrated contract comprising the installation, commissioning, operations and maintenance of the following
      • Passenger Information System (PIS )
      • Automatic Fare Collection System (AVLS)
      • Automatic Vehicle Operating system (AFCS)
      • Financial Management System (FMS)
      • Decision Support Systems (DSS)
    • Fare Collection at the Bus Stations
    • Operations of the Central Control room including
      • Fleet and System Monitoring
      • MIS and Reporting
      • Integration with Depot Operations
      • Provision of
    • Maintenance of A Disaster Recovery Centre

Case Study – Ahmedabad, BRTSITMS Contract

  • Contract Design
    • Purchase of Hardware and Software on outright purchase basis
    • Monthly payments for Operations and Maintenance of Hardware and Software (payment per bus, bus station and for CCC)
    • Monthly payments for Fare Collection Operations at Bus Stations and other Manpower needs for CCC
    • Monthly contracts for 72 months
  • Challenges in terms of deciding whether to adopt BOT method
    • The first bid issued followed a mix of Supply cum Maintenance on BOT.
    • Second bid issued follows a pure Supply and Maintenance removing BOT part
  • Qualification of Bidders
    • Technical Experience in AFCS, PIS or AVLS for Lead Member
    • Presence in Information Technology Industry
    • Criteria for Size (Financial Turnover),
procurement strategies1
Procurement Strategies

There are various methods of procurement, some of them are:

  • International Competitive Bidding
  • National Competitive Bidding
  • Limited International Competitive Bidding
  • Shopping
  • Direct Contracting
  • Procurement from Specialized Agencies
  • Procurement in Loans to Financial Intermediaries'
  • Performance based Procurement
  • Procurement under Disaster and Emergency Assistance

International Competitive Bidding (ICB)

Appropriate method of procurement for large contracts & for specialized technical inputs

ICB is in most cases employed when the contract value is beyond a threshold value

It is the accepted mode of procurement as per most of the multi-lateral agencies and for contracts such as concessions, BOT, BOOT etc

National Competitive Bidding (NCB)

  • NCB is efficient and economical way of procurement which, by their nature or scope, are unlikely to attract foreign competition.
  • NCB may be the preferred method of procurement where:
      • The contract values are small
      • Works are scattered geographically or spread over time, and labour intensive
      • The goods or works are available locally at prices below the international market.

Limited International Competitive Bidding (LIB)

  • Direct invitation without any open advertisement
  • It is suitable where there is only a limited number of suppliers
    • Amount of contract is not large enough to attract foreign suppliers and contractors
  • Under LIB, borrowers seek bids from list of potential suppliers broad enough to assure competitive prices

Shopping (International/National)

  • Based on comparing price quotations obtained from several suppliers; usually at least 3
  • It is an appropriate method when:
      • The procurements is of readily available off-the-shelf goods or standard specification commodities
      • The procurement is of small value
  • International shopping shall solicit quotations from at least 3 suppliers from 2 different countries. While, National shopping may be used where the desired goods are ordinarily available from more than one source in the country
direct contracting
Direct Contracting
  • Direct contracting without competition (single source) may be an appropriate method under the following circumstances:
    • There is an existing contract which might be extended for related goods and services
    • The equipment compatible with existing assets of the procurer is available only from a single supplier
    • The contractor responsible for a process design requires the purchase of critical items from a particular supplier as a condition of a performance guarantee.
    • In exceptional cases, such as in response to natural disasters.
procurement method choice of appropriate method
Procurement method: choice of appropriate method
  • For a corridor level project, the project team should invariably consider International Competitive Bidding (ICB) unless
    • The costs of international competitive bidding is prohibitive
    • The domestic market is of international standards and has adequate level of competition
    • The contract is of comparatively low value
    • There are exceptional circumstances disallowing the project team to use ICB.
  • The project team might consider the National Competitive Bidding method only in case of contracts of comparatively small value
  • The non competitive bidding methods should be followed only in exceptional circumstances
e procurement

E-Procurement is a solution designed to electronically handle the process of public tender for the acquisition of specialized goods, works, and consulting services that are of high value and low volume. Introduction can be phased and provides wide exposure to e-GP at low incremental cost.


E-Procurement - Components

  • E-Purchase
    • Registration
    • Store coding
    • Technical Particulars
    • Evaluation of Bids
    • Award of Rate Contract
  • E-Inspection / Supply
    • Supply Order
    • Inspection
    • Dispatch Details
    • Receipt Details
  • E-Tendering
    • Tender Notice
    • Tender enquiry
    • Bid submission
    • Bid opening
  • E-Payments
    • Bill submission
    • Processing
    • Payments
    • Debit Adjustments
    • Status
    • Complaints
types of contracts
Types of Contracts
  • Firm fixed-price (Lump Sum) contracts
  • Maximum incentive, Maximum risk and full responsibility on the Contractor/ consultant
  • Highly suitable for works and services where:
    • Adequate price competition exists
    • Reasonable price comparisons are available
  • Fixed-unit-price contracts
  • Upward or downward revision of the contract price based upon actual quantities of work performed by Contractor
  • Highly suitable where quantities cannot be determined with reasonable accuracy prior to actual works
  • Combined firm-fixed/unit-price
    • This is a variation of lump sump contract where :
      • Unit-rate price is offered for some of the items for which quantities cannot be determined in advance with reasonable accuracy
  • Fixed-price with price adjustment
  • Upward or downward revision of the contract price upon contingencies that are beyond the control of the contractor and are specifically defined in the contract
  • Appropriate when serious doubt exists as to the stability of the market or labor conditions
  • Time-and-materials contracts
  • Procurement of goods and services on the basis of direct labor hours at specified hourly rates
  • Used when it is not possible at the time of placing the contract to estimate the extent or duration of the work or to anticipate costs with any substantial accuracy.
  • Cost-reimbursement contracts
  • Payment to contractor is based on allocable and allowable costs and a fee (profit)
  • Used when nature and complexity of procurement are such that the costs of performance cannot be estimated with the accuracy
expression of interest eoi
Expression of Interest (EoI)
  • EoI is used to shortlist the Bidders that would participate in the RFP Stage as per terms and conditions that may be specified thereof.
  • Contents for call of an EoI
    • The description of the Project
    • The request for expressions of interest
    • A closing date for seeking clarifications
  • Applicants shall be asked to provide details including but not limited to the following:
    • Experience of the Firm
    • Qualification details and Professional staff
    • Financial strength
    • Name of the organisation;
    • Contact person with designation;
    • Address; Telephone and Fax numbers; and E-mail address.
  • Concessioner must respond to any questions or requests for clarification, made by bidder.
how to prepare rfp for the procurement of consultant services
How to Prepare RFP for the procurement of consultant services ?
  • Contents of an RFP document are different for consultant services
  • An RFP document for consultants should contain the following :
      • A Letter of Invitation (LoI)
      • Information to Consultants;
      • Instructions to bidders; form of bid; form of contract; conditions of contract,
      • Delivery time or schedule of completion; and necessary appendices.
      • Basis for bid evaluation and selection of the lowest evaluated bid
      • If a fee is charged for the bidding documents, it shall be reasonable and reflect only the cost of their printing and delivery to prospective bidders
      • Terms of Reference (ToR) of the project
      • The proposed contract agreements
how to prepare rfp for ppp project
How to prepare RFP for PPP Project ?
  • RFP document for a PPP Project should contain the following:
    • Feasibility Report/ Project Information Memorandum
    • Project Objectives, Rationale, Scope and Outcomes
    • Site Details
    • Role of key agencies and stakeholders
    • Instruction to Bidders
    • Technical specifications and Bill of Quantities
    • Draft Concession Agreement
  • The provisions of the draft Concession Agreement shall necessarily cover :
    • Recitals- identifying the parties to the contract, offer and acceptance;
    • Definitions- defining the key terms of the contract to ensure uniformity of usage
    • Scope of the Project
    • General and Specific Conditions of Contract
bid process management1
Bid Process Management
  • Bid process management is a systematic process to identify, technically and financially sound bidder, for operation/ construction/ consultancy of a project

Evaluation Criteria for selection of Consultant/ Contractor

  • Technical Evaluation
    • Past Experience of similar projects in terms of quantity or value is considered
    • Technical Capacity is also evaluated in terms of the required. Technical Resources for the project in terms of Equipment, Key Personnel, etc.
  • Financial Evaluation
    • Financial Capacity of the Consultant is evaluated in terms of:
      • Average Annual Turn Over as a Consultancy Fee
      • Net Worth, Turnover and Net Cash Accruals

Key Evaluation Criteria for Procurement of Goods as per World Bank guidelines

  • Minimum annual financial turnover usually not less than 2.5 times the estimated annual payments in the contract
  • Satisfactorily completed (not less than 90% of contract value) as a prime contractor of at least one similar work of value not less than Rs........ @ (usually not less than 50% of estimated value of contract)
  • Executed in any one year, minimum quantities of work (usually 80% of the expected peak rate of construction)
  • Availability of critical equipment and project manager
  • Availability of required liquid assets and/or credit facilities from banks
  • Available bid capacity of the bidder is more than the total bid value
    • Assessed Available Bid capacity = ( A*N*2 - B )
      • A = Maximum value of works executed in any one year during the last 5 years
      • N = No. of years prescribed for completion of the works for which bids are invited
      • B = Value of existing commitments works to be completed during the next.......years
contract monitoring and evaluation
Contract Monitoring and Evaluation

Contract Monitoring Framework

  • What to Monitor? – Cost, Time, Quality
  • Who will Monitor?
  • Frequency of Monitoring
  • Achievement of Project Purpose/ Objectives
  • Resources for Monitoring
  • Format for Reporting/ Monitoring
  • Grievance Rederesal Mechanism
  • Action Taken Report
  • Lessons Learned
contract management1
Contract Management
  • Aim of Contract Management is to obtain product as agreed in the contract and achieve value for money.
  • Factors essential for Contract Management
    • Good preparation of bid document
      • Scope of work
      • Eligibility criteria
      • Evaluation procedure
    • Right Contract form
      • Specifications/ BoQ
      • Contractor bonus
      • Liquidated damages
      • Time period
      • Price adjustment procedure
      • Variation control
      • Foreclosure / Termination

Strong Project Team

Professional assistance

Good Communications


Contract Management

  • Key to the process is that the procurement officers must plan, do, check and act. (PDCA)
    • ‘plan’ stage refers to the phases prior to the award of the contract
    • ‘do’ stage refers to the activity of the operator throughout the life of the contract.
  • ‘check’ refers to the checks and controls that are introduced to monitor performance,
  • ‘act’ refers to the activities necessary to ensure that any performance that has moved out of line is brought back within the required parameters

Contract Management

  • Contract management activities can be broadly grouped into three areas, which span the do, check and act stages of PDCA
    • Service delivery management: It ensures that the service is being delivered at the required level of performance and quality, as per the contract.
    • Relationship management: Seeks to keep the relationship between the operator and the contracting authority open and constructive, aimed at resolving or easing tensions and identifying potential problems at an early stage
    • Contract administration:Contract administration handles the formal governance of the contract and changes to documentation during the life of the contract.
role of project management consultant in contract management
Role of Project Management Consultant in Contract Management
  • Scrutinize the implementation schedule submitted by the Contractor
  • Review month wise cash flow statement in relation to BoQ
  • Examine and approve construction methods
  • Monthly review on progress on works and submit monthly progress of report
  • Ensure timely delivery of drawings/clarification/instructions, if any due to site conditions
  • Submit monthly Environmental audit report and safety audit report

PMC shall perform duties as Engineer-in-Charge for monitoring performance of contractor

Project Control and Monitoring

Contract Management

  • Day to Day correspondence on behalf of client
  • Maintain all the requisite records and scrutinize requests for extension of time
  • Collect and deliver to client all guarantees/ warranties stipulated in contracts
  • Receive and examine contractual claims
  • Assisting client in solving contractual claims and arbitration proceedings
role of project management consultant in contract management1
Role of Project Management Consultant in Contract Management….
  • Ensure quality execution
  • Scrutinize and approve quality assurance plans
  • Approve/supervise testing arraignments
  • Ensure removal of sub standard /defective materials from site
  • Carryout periodical safety audits and issue necessary instructions
  • Monitor implementation of social and environmental management plan
  • Ensure construction safety
  • Supervision and quality control
  • Post completion activities
  • Check and certify the “As Built Drawings” & final bill submitted by contractor
  • Assist in handing over completed works to the client
  • Preparation of maintenance manual
  • Preparation of contractual disputes and claims giving reference to the relevant records