Chapter- 2+7

Concept of Procurement

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A Journey of Thousand Miles
begin With a Single Step :
Procurement

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 Procurement
• Procurement is concerned with acquiring all
of the goods, services and works with the
processes involved such as selecting of
vendors , establishing payment terms ,
strategic vetting , negotiation of contracts
and actual purchasing of products.
• Purchasing: is a sub-set of procurement. It
generally simply to buying goods or
services. It includes receiving and payment
as well.
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 Difference Between Procurement
and Purchasing
• Purchasing is a process within overarching
or umbrella procurement process.
• Procurement deals with sourcing activities ,
negotiation and strategic selection of goods
and services that are usually important to
organization. Purchasing is the process of
how goods and services are ordered.
• A transactional function of procurement.
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What is Public Procurement?
Public Procurement: is defined as the
acquisition of goods, services works and non-
consulting services with use of public funds; to
support government operations intended for
public use.
Goal: To award timely and cost effective
contracts to qualified contractors , suppliers and
service providers for the provision of goods and
services to support government and public
service operations in accordance with the
principles and procedures established the rules.5
 Private Procurement:
This is procurement that is
completed within the context of
for-profit organizations (FP’s).
Private procurement happens
within privately owned companies;
also known as the private sector 

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7
 Public Vs Private Procurement
Definition
Public Procurement:
This is procurement that is completed within the context of not-
for-profit organizations (NFP’s). Also known as the public
sector, the procurement that occurs in this context is typically
government affiliated, which can be central, state, or local.
Private Procurement:
This is procurement that is completed within the context of for-
profit organizations (FP’s). Private procurement happens within
privately owned companies; also known as the private sector 

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Budget

Motivation

Regulation

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 Actors, Stakeholders and
Beneficiaries
• Actors: Public Entiries/Procurement
Practitioners
• Stakeholders: Those who get benefit from
the result of public procurement. Also those
who might be directly or indirectly affected
by a particular procurement action.
• Beneficiaries: All inhabitants of the country

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Principles of Public Procurement
• Transparency: Information on the public
procurement process made available to all
public procurement stakeholders, bidders,
suppliers, service providers and the public
at large.
• Integrity: is reliability: of two fold. One on
the integrity of the procurement process and
other your integrity as a procurement
practitioner. 11
 Principles cont.
• Economy: synonymous with efficiency,
value for money and commercially
reasonable price.
• Openness: Access to information pertaining
to public procurement requirements to all
qualified organizations and individuals.
• Fairness: Impartial and reasonable, should
have right to challenge the procurement
process. 12
 Principles cont.
• Competition: Public procurement
requirements should be widely
disseminated to increase the chances of
good market response leading to the award
of reasonably priced contracts.
• Accountability: person responsible for their
actions and decisions with respect to public
procurement process.
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 Procurement Principles
There are 4 main principles:
1. Economy: Value for money - Finance Ministry’s concern
2. Efficiency: quick procurement - Project’s concern
3. Fairness: No discrimination – Bidders’ concern
4. Transparency: Bidders’ concern, Auditor’s concern
All of these 4 parameters should be met 100%, but in practice it is
not possible. Attempt should be to be in the nearest of this,
while meeting the project’s objectives.
Procurement should not be done for the
pleasure of the procurement.
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Procurement Management
The Procurement management is the process of
Planning,
Organizing,
Sourcing,
Mobilizing ,
Controlling ,
Contracting and
Closing the Contract
for acquiring the Works, Goods , Consulting Services and
Non-Consulting Services
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 Procurement Categories
• Works: Infrastructure related works
including renovation, extension, repairs.
• Goods: Physical products either finished or
manufactured.
• Consulting Services: Technical services
whose output is not equipment intensive.
Advisory and project related services
• Non-Consulting Services: involve the use of
equipment and standard methodology for
achieving the objective: equipment maint. 16
17
 Procurement Cycle

Identification of
Preparation of
Works/Goods/S Procurement Plan
ervices
Completion or
Termination of
Contract Pre-qualification/
Short listing
Preparation and
Contract
Implementation
Approval of
Start Designs, Cost Issuing Bid/RfP
Estimates, PQ Documents
Award of Contract and Bid
/RfPDocuments
Pre-Bid Meeting
Contract
Negotiations

Bid/RfP Evaluation or
Post Qualification Bid/RfP Submission
and Opening
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 Things to do quickly become
Efficient Public Procurement
Practitioner
• Study the Public Procurement Rules : Legal
Frame work
• Understand the Public procurement system
• Develop and use checklist
• Get organized
• Find a Mentor
• Strive to continually improve.
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• Study the Public Procurement Rules : Legal
Frame work
• Understand the Public procurement system
• Develop and use checklist
• Get organized
• Find a Mentor
• Strive to continually improve.

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 Causes of Delays in Procurement
Process
 Delays in Preparing Technical Specification, Scope of
works, ToR
Extension of bid or proposal submission date
Delay in opening bids or proposal received
 Delay in evaluation
Delay in approval
Delay in contract negotiation
 Challenges by the contractor/supplier/ consultants in
procurement process.

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 Conflict of Interest in Public
Procurement

• Occurs when the public

procurement practioner is in
position to be influenced or appear
to be influenced by a private or
personal interest ; to gain personal
advantage or disadvantage.
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 Code of Conduct In Public
Procurement
A code of conduct for procurement
practioner sets out values and clear
guidance on expected behaviors.

Clear and known rules of behaviors

applicable to all will foster mutual
respect and increase public
confidence in practioner . 23
Plan
A plan is typically any diagram or list of steps with
details of timing and resources, used to achieve
an objective to do something. 
Planning
The term planning implies the working out of sub-
components in some degree of elaborate detail. Broader-
brush enunciations of objectives may qualify as
metaphorical roadmaps. Planning literally just means the
creation of a plan; it can be as simple as making a list. It
has acquired a technical meaning, however, to cover the
area of government legislation and regulations elated to
the use of resources. 24
Plan Vs Planning
Plans are of little importance, but
planning is essential -
Winston Churchill
Plans are nothing; planning is
everything. – Dwight D. Eisenhower
A good plan, violently executed now, is
better than a perfect plan next week. – 
George S. Patton

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 Plan, Programme and Project
A Plan is typically any diagram or list of steps with timing and
resources, used to achieve an objective to do something. It is
commonly understood as a temporal set of intended actions
through which one expects to achieve a goal. For spatial or planar
topologic or topographic sets see map.
Example: Five year Plan, Interim Plan, Sector Plan, Regional Plan
Area Plan
A Program normally comprises a series of projects.
Projects: National Level and Local Level
Project Features:
Objective-Output-Activities-Inputs
Objective- Output-Activities-Input
Causal Relationship of features: In a project inputs enable
activities to be undertaken which will produce outputs which
taken together will lead to the achievement of the objectives.
 Procurement Plan
The product of procurement planning process
Required to :
list all requirement expected to be procured over a period of time.
 schedule the procurement
 identify the resources
monitor the procurement process
Enhance the transparency and predictability of the procurement
process

“ Failing to Prepare is generally speaking

very well to do the wrong things”
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 Procurement Planning
The process of what to procure/buy . Basically
deals with “ WHEN”
Important Because:
Allows planners to determine if expectations are realistic
Opportunity for all stakeholders involved in the processes to meet
in order to discuss the particular procurement requirements
Permits to create procurement strategy for procuring each
requirement to be included in the Procurement plan.
Estimates the time required to complete the procurement process.
Assess the technical expertise to develop technical specifications /
or scope of the work
Assess the feasibility of combining or dividing procurement 28
requirements into different packages.
 Procurement Strategy Development
Deals with:
 What to buy?
Why to buy?
How to buy ?
 What purpose does it serve?
 How much does it cost ?
Where can it be the sources?
How many sources are available?
What is the risk?
What is the requirements into different packages. 29
 Preparation of Procurement Plan
1) Annual Procurement Plan: Every Year
2) Multi-Year Procurement Plan/Master Procurement
Plan
• To be revised at every 3-6 months

PP is live Document.
Note:

PP is Monitoring Tool
 Elements of A Procurement Plan
 A reference number / Contract ID
 Brief description of requirement
 Estimated value of the requirement
 Procurement Method
 Date of estimate approval
Date of IFB/ EoI
 Date of Bid Submission
Date of Bid /RfP Opening
Date of Bid / RfP Evaluation
Date of Contract Award 31
 S N o.

D is tric t

D e s c rip ti o n o f W o rk s & C o n tra c t ID N o .

P rio r/ P o s t R e v ie w Project Name & ID:

P P S ta tu s

C o s t E s ti m a te ( N R s M illio n )

M e th o d o f P ro c u re m e n t

P ro c . p ro c e d u re : G o N o r W B ?

B id d o c u m e n t to W B

W B ’s N O L to B id D o c u m e n t

B id In v ita ti o n

P u b lic O p e n in g o f B id s
Executing Agency:
Credit/Grant No.:---------------------------- Implementing Agency:

B E R & A w a rd R e c o m m e n d to W B
Procurement Plan (PP) for Works :

W B ’s N O L to A w a rd R e c o m m e n d a ti o n

C o n tra c t s ig n in g

C o m p le ti o n o f th e c o n tra c t

P ro c u re m e n t a t c e n te r o r d is tric t
Standard Format of PP of Works and Goods

R e m a rk s
1
SNo

---
Description of Services &

2
Contract ID No.

3
Prior/ Post Review

4
PP Status

Project Name & ID:

5
Cost Estimate (NRs M illion)

6
M ethod of Selection

7
Pro. Procedure: GoN or WB?

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Adverti sing for EOI

Cost Estimate, Short list & RFP

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to WB

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WB’s NOL to SL & RFP

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RFP Issued

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Proposals Submission

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TP Eval. Report to WB

14 WB’s NOL to TP EVal. Report

Executing Agency:
Services

15

Public Opening of FP
Loan/Credit/Grant No.:IDA Grant Number: ------ Implementing Agency:

FER & Award Recomm. to WB

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for info.
17

Negotiated Contract to WB
Procurement Plan (PP) for Consulting Services -

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WB’s NOL to Nego. Contract

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Contract Signing
Standard Format of PP for

Completi on date of the

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contract

Procurement at Center/
21

District
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Remarks
 Method of PP Preparation

• Procurement Entity-W/G/S/Procurement
Method-S.No.-Nature of Works-F.y.
Description of Services:Rajmarg-Budha-Jhajpur-
Gauji-Bridhasharam Rd. ( 6.50 Km) Upgrading
with Graveling, Structures etc.
SNRTP-KAN-W-NCB-1.1-UG-071-72
SNRTP-PMU1-G-DP-2-071-72
 Market Study In Public Procurement
Also Known as :Market analysis, market assessment, market
sounding, market research
Useful when
Defining requirements
Preparing budgets
Choosing procurement methods
Planning and scheduling the procurement of requirements
 justifying amendments in bid /contract documents
Expected results:
Identification , interest and availability of suppliers, contractor or
service providers
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Implementation Arrangement
Executing Agency Level:
 Concerned Ministry
Concerned Department
Central Level Coordinating Agencies

Implementing Agency:
Project Management Unit/Office
 Methods of Procurement
For Works, Goods and Non-Consulting Services
Open Competitive Bidding
Limited Competitive Bidding
Sealed Quotations
Direct Procurement
Community Participation
Force Account
Others : NGO,Total Cost bidding Process,
Catalog Shopping method, Buy Back Method
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 Open Competitive Bidding (OCB)

An open competitive bidding is the approach as it provides

all eligible prospective bidders with timely and adequate
advertisement of a Employer’s requirements and equal
opportunity to bid for the required Works, Goods or Non-
Consulting Services. It may be

NCB ICB
National Competitive Bidding International Competitive Bidding
(Competition among the Local Bidders) (Competition among the International
& Local Bidders)
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 OCB with Pre-Qualification and Post Qualification

Pre-Qualification:
 Used to shortlist the bidders
Ensures that only those with appropriate and adequate
capacity , capability and resources are invited to submit
the bids.
Appropriate for large or complex contracts or in other
circumstances , such as the need for custom designed
equipment, plant, IT equipment, Design and build ,
procurement under turnkey, management contracting in
which high cost of preparing detailed Bids required.
Qualification of sub-contractors /subsidiaries/parent 39
entities
 Pre-Qualification --- contd.
Is optional depending upon the nature and
complexity of the goods, works or non-
consulting services.
Minimum requirements are normally assessed
on a pass /fail basis against such criteria as
eligibility, experience, technical capability and
financial resources
All bidders that substantially meet the
minimum qualification requirements are invited
to submit a financial bid
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 Post Qualification
 No pre-qualification
Generally preferred
Qualification criteria specified in the bid
document
The assessment of a firm’s qualification shall
not into consideration of the qualification of other
firms such as its subsidiaries, parent entities,
affiliates, sub-contractors ( other than specialized
sub-contractors if permitted in the request for bid

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Stage of Bidding
Single Stage One Envelop(IS1E) :
Most appropriate when the specification and
requirements are sufficient to enable
submissions of complete bids.
IS1E procurement requires submission of
both technical and financial bids in one
envelop
Single Stage Two Envelop (IS2E):
One Envelop- Technical bid
Other Envelop- Financial Bid ( Price Bid)
Evaluated Sequentially. 42
 Limited Competitive Bidding(LCB)
A limited competitive bidding is bidding process by
invitation without open advertisement.
This is appropriate where
 There are only a few well known contractors/ suppliers
e.g. for complex industrial plants or highly specialized
works or equipments.
 Small quantities are involved e.g. procurement of
special items such as telecommunication facilities ,
airfield lighting etc.
Other exceptional reasons e.g. emergency actions
required in a natural disaster that justify waiver or
departure of OCB
Generally for ICB 43
 Sealed Quotation (SQ)
•Any works or Goods cost exceeding more than NPr
500,000 and up to NPr 2 million can be procured by
inviting sealed quotations from eligible bidders.
• Notice of Invitation of SQ is published in a National
Daily or Local Daily widely circulated newspaper.
• Minimum 15 days are given to the potential bidders to
prepare and submit their
• SQ validity period 45 days from the date of submission
of SQ.
•SQ security amount 2 to 3 % of Cost estimate.
• Security validity period 75 days
• Awarded to the lowest priced bidder within Cost
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estimate.
 Direct Procurement (DP)
•Any works or Goods cost and up to NPr 500,000 can be
procured by inviting a particular or limited nos. of
bidder/vendor/supplier.
• May be appropriate when there is only one suitable
firm or there is justification to use a preferred firm
•DP is suitable under the following circumstances:
The procurement is of both low value and low risk
No advantage could be obtained by competition
The Case is exceptional as emergency
The required goods is proprietary and obtainable from
only one source
The firm’s past performance is satisfactory. 45
 Community Participation
•Also called users’ Committee or Consumers’ Committee.
• Adopted in the Community Driven Development (CDD)Projects
where large number of small value of works, goods and non-
consulting services with labor intensive are outlined.
•CP is suitable under the following circumstances:
Large nos. of small works are scattered in the remote areas.
To increase the utilization of local know- how, appropriate
technologies and materials/goods.
To provide employment and income directly to the persons living
in the project area.
If the projects after completion are to be operated and maintained
by the community.
 According to GON’s rules of Public Procurement , CP is adopted
for the cost of the works up to NPR 10 million without use of heavy
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equipment.
 Forced Accounts
•Forced Account, which refers to works such as construction and
installation of equipment and non-consulting services carried out by
a government department using its own personnel and equipment.
•It may be practical method of procurement under following
circumstances:
The size, nature and location of the works make it unsuitable to
adopt competitive bidding, e.g. maintenance and repairs of roads
and where the cost is difficult to estimate accurately or control.
The construction and installation works are small and scattered or
in remote areas , so that qualified contractors are unlikely to bid at
reasonable prices.
The risks of unavoidable work interruption are better born by the
implementing agency than by a contractor .
Emergency needing prompt attention specially where private firm
may not be interested in conflict areas..
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Institutional development e.g. training of maintenance crews.
 Others Methods of Procurement:
Procurement Through NGOs:
The trainings like people awareness, orientation, strengthening ,
main streamlining ; which by engagement of local or national NGOs
may be efficient, effective and economical ; can be accomplished
through NGOs.
Total Cost Procurement Method:
This refers the completive bidding based on the percentage more or
less than total cost of the whole work .
Catalog Shopping Method:
This is the completive bidding based on the prices of goods ,made
public by the concerned manufacturer or authorized seller/dealer.
Buy Back Method: Refers the replacement of new goods by old
one to concerned manufacturer after the old goods becomes
irrational to use and store from the perspective of environment. 48
 Types of Contract
Unit Price Contract (Unit Rate Contract)
Lump Sum Contract
Cost Reimbursable Contract
Time and Material Contract
Design and Build Contract
BOOT, BOT Contract

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Unit Price Contract (Unit Rate Contract
It is simply a type of contract where the client pays the contractor
based upon the rate for the particular item of work which the
contractor executed or worked.
Generally it is the most preferred type of contract for building
construction where client pays the contractor monthly or interim (in
general) based upon the decisions made during contract agreement.
To give you an example:
Item: Concrete work (M60 grade)
Rate: Rs. 5100 (per Cum)
Total quantity: 1000 cum (for whole project according to BOQ)
At the end of one month
Quantity done by Contractor: 100 Cum
So, contractor claim 100 * Rs. 5100 = RS. 510000 to client
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 Lump Sum Contract
A contract under which a principal (customer or owner)
agrees to pay a contractor a specified amount for
completing work without cost breakdown.
It is the traditional means of contract procuring  and
involves a single ‘lump sum’ price for all the works being
agreed before the works begin.
It is generally considered a beneficial contract agreement
if the work is well defined when tenders are sought and
significant changes to requirements are unlikely. This
means that the contractor is able to accurately price the
works they are being asked to carry out.

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 Advantages of Lump Sum Contract
Lump sum contracts can be seen to reduce client risk as the price is
fixed (although in reality it is still likely to vary, but not by as much
as some other forms of contracting).
It is widely accepted and understood as a method of contracting.
The bidding analysis and selection process is relatively straight-
forward.
The greater degree of certainty on the part of the client can make it
simpler and easier to secure a construction loan.
Change orders are minimized.
The management required by the client is reduced.
There can under certain circumstances be a greater margin for profit
 for the contractor.
Lump sum payments are made in regular, predictable installments,
providing the contractor with a reliable and stable cash flow and52
making financing simpler for the client
 Disadvantages of Lump Sum Contract
It can give greater risk to the contractor than some other contract
 forms, as there are fewer mechanisms available for them to vary
their price.
As a result of the additional risks faced by the contractor, they may
increase their tender price.
Careful documentation and record keeping of change orders is
required, which can be time-intensive.
Preparing the tender may be more expensive for the contractor.
As a result, there may be a slower tender process than for
other contract forms.
The employer may have to pay a higher price for any alteration or
additions that are required that are beyond the scope of the contract.
Disputes can arise relating to change orders, scope and design
changes, and so on
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 Cost Reimbursable Contract
A cost reimbursable contract, also known as a cost-plus contract, allows an
employee or contractor to protect their profits and assets with minimum hassle.
The purpose of the contract is to allow a contractor to either stop working after
available funds have been spent, or if necessary to receive additional funding to
continue the project.
Uses
A cost reimbursable contract may be used by almost any type of contractor or
contract employee and is not limited to construction work. Depending on the job,
the concerns of the employer and employee and local laws, a different type of cost
reimbursable contract may be used for each individual.
Limitations
In most cases a cost reimbursement contract will hold legal limitations to prevent it
being abused or misappropriated by either party involved. Limitations often
include allowable fees, meaning only fees that would logically incur from the
contract can be applied to the reimbursement. The contractor generally must be
able to account for the costs and must consent to monitoring during construction.

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 Different forms of Cost Reimbursable Contract
Cost –plus-a –fixed- fee type contract: The owner pays
for the actual cost of construction and agreed lump sum
amount as compensation for the contractor’s profit agreed
to at the time of entering into the contract.
Cost –plus-a –percentage –of cost type contract The
owner pays for the actual cost of construction and a certain
percentage of this cost for profit portion agreed to at the
time of entering into the contract.
Cost –plus-an-incentive-fee type contract The owner
pays for the actual cost of construction and for his profit ,
the contractor is paid an incentive amount worked out by
an pre-agreed formula in such a way that it is more if the
target costs are met , but less if otherwise. 55
 Time and Material Contract (T & M Contract)
Time and materials (T&M) is a standard phrase in
a contract for construction, in which the employer agrees to pay
the contractor based upon the time spent by the contractor's
employees and subcontractors employees to perform the work, and
for materials used in the construction , no matter how much work is
required to complete construction. Time and Materials is generally
used in projects in which it is not possible to accurately estimate the
size of the project, or when it is expected that the project
requirements would most likely change.
This is opposed to a fixed-price contract in which the owner agrees
to pay the contractor a lump sum for fulfillment of the contract no
matter what the contractors pay their employees, sub-contractors and
suppliers.
Many time and materials contracts also carry a guaranteed maximum
price, which puts an upper limit on what the contractor may charge,
but also allow the owner to pay a lesser amount if the job 56 is
completed more quickly.
 Time and Material Contract (T & M Contract)
The highest risk for the owner and the most secure way for a contractor. Time and
materials contracts are the least desirable contract type for the federal government.
When using time and materials contracts, the following items could be negotiated:
Labor Rate: Specifying a fixed rate for all labor including administrative
personnel. If you are using T&M on large projects, be sure to offer discounted
labor rates to reduce total project cost.
Material Mark-Up: T&M contracts usually add between a 15 and 35 percent onto
material prices.
Not-to-Exceed: The Time and Material not to exceed, is a contract in which the
contractor can bill the work being performed but there is a cap that could be used
as the maximum amount being charged by the contractor. This type of
variation can be used to increase contractor’s efficiency, and it assumes the
excessive costs. It also provides the owner with a cap that will guarantee that
contractor will not exceed that cap.
Maximum Labor Hours: In addition to the not-to-exceed condition, time and
material contracts, a maximum number of labor hours could be set. When the
contractors exceed a specified amount, those additional hours shall not be billed to
the other party. This avoids the “less efficiency = more money” issue of time and
materials contracts. 57
 Time and Material Contract (T & M Contract)
Time and Material Contracts Drawbacks
Profit Limits: Some savvy customers will try to establish not to
exceed conditions, will try to reduce mark-up on materials and even
negotiate reduced billable per hour rates.
Ignored Market Prices: Sometimes companies will set lower prices,
based on their internal cost structure, than actual market rates or even
vice-versa.
Reduced Business: Customers are not used to work on time and
material contract, so finding new business opportunities could be
challenging. Customers will likely prefer fixed price contracts.
Billing: Time and materials contracts should be structured in such
way that the company will be able to bill sufficient amount of money
to cover fixed costs. When the billing hours are reduced, fixed costs
must also be reduced at the same rate as the billable hours.
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 Design and Build Contract (DB Contract)
)
Design-build contracts are an excellent contracting method widely
used around the world. As the name implies, this type of contract is
used when both design and construction take place simultaneously
throughout the length of the contract. However, many owners tend to
select other contracting methods instead because a design-build
contract can present some challenges and situations in which the
final cost cannot be easily determined or projected.
When Design-Build Contracts Are Used
Primarily, design-build is used when an opportunity exists for the
owner or agency to save time by having construction begin before
the final design has been completed. The traditional system of
design-bid-build has been used for many years. It is based on the
assumption that the owner has the design plans in hand before
bidding out the construction on a project to the lowest bidder. Many
projects could be more cost-effective if they could be implemented
faster, thus the evolution of design-build. 59
 Design and Build Contract (DB Contract)
Design-Build Characteristics )
Deign-build contracts are usually written by the contractor who is in
charge of the design and is also responsible for building the project.
Typically the owner prepares a request for qualification where
sources are analyzed under fair competition based on certain criteria
and weighed factors. A design-build contract is usually the preferred
contracting method under a tight schedule as it's intended to save
time.
This contracting method is also preferred by federal agencies with a
need to fast track schedules as the final project can be obtained
faster, and the return on investment is capitalized sooner.
Using a design-build contract, designers and builders work hand-in-
hand to produce construction drawings and analyze a logical
construction sequence.
The design process is scheduled in phases, just as the builder is ready
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to start that particular phase.
 Design and Build Contract (DB Contract)
Advantages )
Reduces design time.
•Simplifies construction drawings.
•Value engineering alternatives are always up for discussion and analysis
•Reduces construction calendar.
•Minimizes communication channels with a single point of contact.
•Minimal change orders.
•Fast track schedule.
•Customized to actual site conditions easily.
•Identify long lead items earlier.
•Allows for the project to be repeated.
Disadvantages
•The project outcome might not produce the expected result.
•A project that is not scheduled properly might be substantially delayed.
•Final costs can be reasonably higher than original estimates.
•Eliminates the possibility of using an integrated design.
61
•The architect’s vision could appear to favor the contractor.
 Public Private Partnership (PPP, 3P, P3)
Definition: PPPs or public private partnerships are long-term
contracts between the public and private sector. The main objective
of PPPs all over the world is to ensure the delivery of well
maintained, cost-effective public infrastructure or services, by
leveraging private sector expertise and transferring risk to the
private sector

Three basic tests for PPPs: There are three internationally applied
standard tests to determine whether a PPP is the appropriate vehicle
for procuring a public asset or service:
Can substantial risk be transferred to the private sector?
Is the project affordable to the procuring institution?
Does a PPP procurement option show value for money?
62
 Characteristics of PPPs
•A PPP is a clearly defined project, where the procuring institution
carefully defines its objectives.
•The contractual relationship spans a set length of time, which may
range from 5 to 30 years.
•The private party plays a key role at each stage of the project:
funding, development, design, completion and implementation.
•The funding structures of a PPP sometimes combine public and
private funds.
•Payment arrangements in PPPs are based on outputs, related to the
provision of services and/or infrastructure and services.
•They allow the procuring institution to spread payments for large
projects over the project’s lifetime.
•Direct user charges, like road tolls or water fees, may also
contribute to a project’s revenue.
•Risks are allocated to the party most able to carry them. This means
63
mitigating their impact and/or being able to absorb the consequences.
 Models of PPP Contract
Design-Build (DB): The private-sector partner designs and builds the infrastructure to meet the
public-sector partner's specifications, often for a fixed price. The private-sector partner assumes all
risk.
Operation & Maintenance Contract (O & M): The private-sector partner, under contract, operates
a publicly-owned asset for a specific period of time. The public partner retains ownership of the
assets.
Design-Build-Finance-Operate (DBFO): The private-sector partner designs, finances and
constructs a new infrastructure component and operates/maintains it under a long-term lease. The
private-sector partner transfers the infrastructure component to the public-sector partner when the
lease is up.
Build-Own-Operate (BOO): The private-sector partner finances, builds, owns and operates the
infrastructure component in perpetuity. The public-sector partner's constraints are stated in the
original agreement and through on-going regulatory authority.
Build-Own-Operate-Transfer (BOOT): The private-sector partner is granted authorization to
finance, design, build and operate an infrastructure component (and to charge user fees) for a
specific period of time, after which ownership is transferred back to the public-sector partner.
Buy-Build-Operate (BBO): This publicly-owned asset is legally transferred to a private-sector
partner for a designated period of time.
Build-lease-operate-transfer (BLOT): The private-sector partner designs, finances and builds a
facility on leased public land. The private-sector partner operates the facility for the duration of the
land lease. When the lease expires, assets are transferred to the public-sector partner.
Operation License: The private-sector partner is granted a license or other expression of legal
permission to operate a public service, usually for a specified term. (This model is often used in IT
projects.) 64
Finance Only: The private-sector partner, usually a financial services company, funds the infrastructure
 History of Public Procurement in Nepal
Country Procurement Assessment Review
2059: by The World Bank
Weakness observed in Financial Rules:
•Insufficient Time for Bid Preparation
•Availability of Bids related document to Bidder not established as right of the
Bidder
•No mandatory to evaluate the bids based on the pre-set evaluation criteria
•Bid opening at different Places and no fixed time for it
•No domestic preference in ICB
•Intention to award only to the lowest priced bidder
•No provision of modification, amendment and withdrawal in and of the bid
•Competition based on the classes of the bidder

65
 Suggestions of the review
• Endorsement of separate public procurement law
• Enforcement of this law to all public procurement law
• Immediate amendment in Financial rules ,2056
• Establishment of independent Public procurement Unit
• Establishment of Effective review Mechanism in Bidding
system
• Regular Monitoring of Bid related documents
• Training on Public Procurement at every level of GON officials

66
 PPA, 2063 & PPR 2064
Based on the UNCITRAL MODEL LAW ON
PROCUREMENT
•Has encompassed the provisions of WB
procurement Guidelines and Fidic
• 10 Parichhed, 76 Dafa in PPA, 2063
•15 Paricched , 153 Rules and & 7 Annexes in
PPR 2064
•63 processes in PPR
67
 Consult, Consultant and Consulting
Services
To consult is to give or get help or advice
A consultant (from Latin: consultare "to deliberate") is a
professional who provides expert advice in a particular
area such as security (electronic or physical), management,
education, accountancy, law, human resources, marketing
(and public relations), finance, engineering, science or any
of many other specialized ...
The legal definition of consulting services is simply the
provisioning of services by an independent contractor by
means of consultations. Over time, “consulting” ...

68
 Consult, Consultant and Consulting
Services
PPA, 2063/ 2 ( e) : The Consulting Services are
meant by study, research, survey, design, drawing,
supervision, Training, auditing, development of
software or any types of intellectual or professional
services.

WB/ADB : A wide variety of private and public

entities including international and national
consulting firms, engineering firms ,-------------
70
When could consultants be hired?
Consultants may be hired if: Ref : PPA 2063 , 29 (1)
 The services they would be providing is
beyond the capability of the Procuring
Entity to undertake, either because it does
not have the expertise or it could not devote
enough time to the work due to numerous
other assignments; and
Or

 As per Financing Agreement with The

Development Partners; subject to use of
foreign sources . 71
 Guiding Principles of Selection of
Consultants
• Need for high quality Services
• Need for Economy and Efficiency
• Need to give equal opportunities to all
eligible/qualified consultants to complete in
providing the services
• Encouraging the development and use of
national consultants in case of International
Consulting/ Consultants to be procured
• Need for transparency in the selection process
72
 Scope of Consultants
• Private and Public entities
• Consulting and Engineering Firms
• Management Firms
• Procurement Agents
• Inspection Service Providers
• Auditors
• UN Agencies
• Investment and Merchant Banks
• Universities and research instituitions
• Government Agencies
• NGOs
• Individuals 73
 Procurement Guidelines Used
• Guidelines : SELECTION AND EMPLOYMENT
OF CONSULTANTS
UNDER IBRD LOANS AND IDA CREDITS &
GRANTS
BY WORLD BANK BORROWERS
January ,2011
• Guidelines on The Use of Consultants by Asian
Development Bank and Its Borrowers
March, 2013
• Public Procurement Act 2063, & Public
Procurement Rules ,2064 ( Inclusive of
Amendment 2073)
74
Consultant’s Procurement
Cycle
Identification of
Preparation of
Services Procurement Plan

Completion or
Termination of
Contract Short listing

Preparation and
Contract
Implementation
Approval of
Start Designs, Cost Issuing EOI/RfP
Estimates, PQ Documents
Award of Contract and Bid
Documents
Pre-Proposal
Contract Conference
Negotiations

RFP Evaluation
RFP Submission
Technical /Financial
Opening 75
 Basic Requirement for Selection of
Consultants
• Procurement Plan required to
 Identify the types of services required
 establish the mode of procurement
 know the type of Consultant
( Individual, firm, National,
International )
 determine the ABC
• Approved Budget for Contract
(ABC) 76
 Methods of Selection of
Consultants
• QCBS: Quality Cost Based Selection
• QBS: Quality Based Selection
• FBBS: Fix Budget Based Selection
• LCBS: Least Cost Based Selection
• CQBS: Consultant Qualification Based
Selection
• SSS: Single Source Selction
• Individual Consultants
77
 Methods of Selection of
Consultants
• QCBS: Quality Cost Based Selection
• QBS: Quality Based Selection
• FBBS: Fix Budget Based Selection
• LCBS: Least Cost Based Selection
• CQBS: Consultant Qualification Based
Selection
• SSS: Single Source Selection
• Individual Consultants
78
 Quality Cost Based Selection
(QCBS)
• A competitive process among short-
listed firms
• Takes into account the quality of the
proposal and the cost of the services
• Cost as a factor of selection is used as
judiciously
• Weight to the quality and cost
depends upon the nature of the
assignment 79
 Quality Based Selection (QBS)
• Appropriate for complex or highly specialized assignments
• Difficult to define precise TOR and required input from
the consultants: examples: country economic or sector
studies, multi sector feasibility studies, design of
hazardous Waste remediation plant, Urban plan, financial
sector reforms competitive process among short-listed
firms
• Submission of TP with or without FP ( Two envelop
System)
• RFP either provides estimated budget or time inputs of key
experts
• Highest ranked Consultants will be asked to submit the FP
if not submitted
• Financial Negotiation include the negotiations of all
consultant’s remuneration and others.
80
 Fixed Budget Selection(FBS)
• Appropriate for simple assignments
• Budget is fixed
• Easy to define TOR and required input
from the consultants: examples
• Submission of TP with FP ( Two envelop
System)
• RFP provides available budget
• FP exceeding Budget rejected.
• Highest ranked Consultants will be asked to
negotiate
81
 Least Cost Selection(LCS)
• Appropriate for assignments of routine
nature such as audits, engineering design
where established practices and standards
exist
• Minimum qualifying mark for quality is
established Budget is fixed
• Submission of TP with FP ( Two envelop
System) from short list
• TP with less than qualifying marks rejected
• FP with the lowest price selected and
82
 Consultant Qualification
Selection(CQS)
• Appropriate for smaller assignments or
emergency situation
• Highly specialized expertise is required
• “ Boutique “ consulting firm that
provides depth of expertise in specific
area
• One Firm is selected from short-list.
• Asked to submit the TP and FP 83
 Single Source Selection(SSS)
• Prevents the benefit completion in
quality and cost
• Exceptionally used for
Natural continuation of previous work
Emergency works
Very small assignments
Only one firm or individual is
qualified.
84
 Individual Consultant
• No need of Advertisement
• But advantageous if advertisement is
done
• Comparison of Three Best CVs
• Selected on the basis of relevant
experience, qualification and capability
to carry out the assignment
• Negotiation .
85
 Selection Process under QCBS
Steps:
Preparation Of ToR
Preparation of Cost Estimate and Short Listing Criteria
Advertising for EoI
Preparation of Short List of the Consultants
Preparation and Issuance Of RFP which includes LOI, ITC, Data
Sheet, TOR, Proposed Draft Contract Agreement Document
Receipt of Proposals
Evaluation of Technical Proposal
Public Opening of Financial Proposal
Evaluation of Financial Proposal
Combined Evaluation Of TP and FP
Negotiation and Award of Contract to the selected firm 86
 TOR Preparation
Basic Elements of TOR: Rules 69
Introduction of the Project
Background of the Services
Objective of the Services : If transfer of knowledge and training
are objectives ; should be specifically stated
Scope of the Services
Qualification Required
Time for completion of the services
Client’s obligation to the Consultant
Deliverables and Reporting Obligations
 Selection Method
Types of Contract
Taxes
87
 Cost Estimate Format
S.N. Item Quantity Rate per Amount Remarks
Unit
Unit (NPR) (NPR)
Remuneration          
A

1
Sub-Total      
 
Remuneration (A)
Reimbursable        
B
Expenses
1 Travel
3 Trainings
Sub-Total Reimbursable      
 
(B)
Overhead/Office      
Management
C
Expenditure @ 5 % of
Total ( A+B)
Net Total      
D
Contingency @5% of      
E
Net Total A+B)
Total (D+E))      
F
VAT @13% of F      
G
88
Total with VAT      
H
 Cost Estimate
How do you compute the cost of consultancy?
The cost of consultancy shall be computed on the basis of cost to the consultant
of actual services to be rendered by the consultant plus a reasonable level of
management fee. The amount of management fee depends on the complexity
and magnitude of the project, and other direct expenses associated to the
undertakings. The cost of consultancy shall consist of the following and shall be
presented in the agreement in like manner:
1. Remuneration Costs
These are the remuneration to be paid to the consultant’s staff/personnel who are directly
engaged in the consulting services as per agreed manning schedule. It covers the basic
rates of the staff multiplied by a billing factor of the consulting firm.
a. Basic Rates
The basic rates represent the salaries actually being received by the professional staff from the consulting firms as
certified by the consultant with
a sworn statement to be submitted to the Procuring Entity. The basic rates of all individual members of the staff
shall be clearly indicated in the contract. In determining the basic rates, the following may be considered as bases:
i. Salary history;
ii. Industry rates; and
iii. Two hundred percent (200%) of the equivalent rate in the Procuring Entity as the floor. 89
 Cost Estimate
b. Billing Factor or Multiplier
The billing factor or multiplier shall be derived from the following to be
supported by audited financial statements prepared by an independent
auditing/accounting firm/entity and certified by the consulting firm with a
sworn statement:
i. Overhead Cost These are incidental and general administrative and management
expenses of the firm other than those directly related to the project, and are expressed in
percent of the total of the basic salaries of all the personnel of the firm.
ii. Social Charges
These are cost items for the welfare and benefit of the consultant’s staff in accordance with the
policies of the consultant and of the government. Their totality expressed as a percentage of the
basic rates of the consultant’s personnel, these cost items may include any or a combination of the
following, based on audited and sworn statement to be submitted by the consultant to the Procuring
Entity:
• Bonuses;
• Vacation/sick leave and paid public holidays;
• Medical Care;
• Pension plan – retirement and/or terminal pay;• Company insurance; and • Other benefits as
required by law. 90
2. Reimbursable Costs Cost Estimate
These include all other expenses associated with the execution of the
services. These costs may be classified into:
 Per Diems
International /Domestic Travel
Domestic Transportation
Communication Expenses
Cost of office/engineering supplies and cost of
preparing/reproduction drawings and other documents to be
submitted;
 Cost of field office either through rental or construction;
 Equipment rental and purchases whenever justifiable;
 Acquisition of software licenses; and
 Cost of other items deemed necessary for the project as certified
bythe agency concerned. 91
 Short list Eligible Consultants
Legal Reference: Act 30 (1), (2) (3) and Rules 70 (1) & (2) in
relation to the requirements for the procurement of
consulting services.>NPR. 2mill - 100 mill: NCB ; >NPR.100million :
ICB
What is short listing? The process of short listing determines
the most qualified consultants from those that submitted eligibility
documents to undertake the project.
Why is there is a need to short list? If all eligible bidders are
invited to submit proposals, the chance of a consultant being
awarded the contract diminishes greatly. Considering the substantial
costs incurred in preparing a proposal, this discourages a consultant
from participating in the bid. A short list of, say, 6-8 nos. greatly
increases the chances of a consultant and thus encourages it to put in
more time and effort in preparing a good proposal. In the end,
government, in general, and the Procuring Entity, in particular, 92
 Selection Process of Consultants Under QCBS
Steps 1 :Short-Listing :Notice for Expression of Interest EOI through National
Daily News Paper :Contents : PPR , 2064 /Rules 70 (3)
• Name and Address of Public Entity: For correspondence and submission of EoI
• General Description of Project/ Services
• Sources of Funding for intended Services
• Qualification of the firm/individual in terms of general and similar experience ,
organizational management capacity showing firm’s turn over , logistics , human
resources required
• Profile of the works of similar nature in last 7 years ( but for individual 4 years)
• Input ( PM / PD) of key personnel for the services
• Tentative service completion time
• Documents required to substantiate the Firm’s Qualification
• Last date and time of submission of EoI(16th day of Ist date of Publication of EOI
)
• If EOI is from the JV of firms
 Description of Firm
 In case of JV name, address description of all the JV indicating the lead /main
partner 93
 Selection Process of Consultants Under QCBS
Steps 2: Evaluation of EoIs with reference to Evaluation Criteria
approved before receiving EOIs
Major Evaluation Criteria: Rules 70 (5) (12)
 Qualification
 Experience
 Organizational/ Managerial Capacity (Turn Over): Not > 1.50 times the Cost
estimate of Services
• Selection of the Three top ranked EoIs : Rules 70 (8)
Issuance of Request for Proposal (RFP)
• RFP submission ( Minimum 15 days for NRs. 2 million and 30 days for >
2 million ) : Rules 71 (1)
• Technical Proposal Opening and Evaluation
• Financial Proposal Evaluation
• Combined Evaluation ( 80 % TP and 20 % FP)
• Selection of the Top Ranked Consultant
• Negotiation with Top Ranked Consultant and Award of Contract

94
 Contents of RFP
• Letter of Invitation ( LOI)
• Instruction to Consultants (ITC) : Standardized by the PPMO
• Data Sheet : to be prepared by the Client to modify/ add and
supplement ITC
•TOR to be prepared by the Client
• Technical Proposal (TP)) to be submitted by the Short Listed
Consultants
•Financial Proposal ( FP) to be submitted by the Short Listed
Consultants
• Contract Form
•General Conditions of Contract (GCC) : standardized by the
PPMO
•Special Conditions of the Contract (SCC) : to be prepared by the
Client to modify, add / supplement the GCC 95
 Qualification Criteria: Rules 71 (6)
• Consultant’s specific Experience : 25%
• Understanding of ToR and Methodology : 20-35%
• Qualification and Experience of Key experts 30-60%
• Transfer of Knowledge &Technology and Training : 0-
10%
• Participation by National Experts: 0-10 %
• Total ---------------------------------100
Minimum Pass Marks should be Stated (70-
80 )

96
 Results of a Sample Evaluation Summary Sheet of TP
Criteria Maximum Firm A Firm B Firm C Remarks : Pass Marks :
Marks 75

Specific Experience 15 12 10 11
of the Firm

Understanding of 25 18 17 17
TOR and
Methodology

Qualification and 45 40 42 42
Experience of the
key persons of the
firm

Transfer of 10 8 8 8
Knowledge and
Trainings

Participation of 05 5 4 4
National Consultant

Total 100 83 81 82 97
Result Qualify Qualify Qualify
 Evaluation of FP
Particulars Firm A Firm- B Firm C

Remuneration NPR 7.50 NPR 8.25 NPR 9.00

million million million
Reimbursable NPR 2.50 NPR 2.75 NPR 1.50
million million million
Total NPR 10 NPR 11 NPR 10.50
Million Million Million

98
 Selection of Consultant
Method of Winning g Firm Remarks
Selection
QBS Firm A Technically top
ranked
LCS Firm A Technically
qualified and
financially least
priced
FBS Firm A If the Budget is
NPR 12 Million

99
 Combined Evaluation for QCBS
Particulars Firm A Firm B Firm C Remarks : TP: FP =
80:20
Technical Score 83 81 82
Wt. of Technical 66.40 64.80 65.60 0.80 * Technical
Score (TS) Score

Financial Cost NPR 10 NPR 11 NPR 10.50

Million Million Million
Conversion Lc/Ic *100
Formula for Where Lc= Least quoted cost, Ic= Individual quoted Cost
Financial Score
Financial Score 100 90.90 95.23
Wt. of Financial 20 18.18 19.04 0.20 * Financial Score
Score (FS)
Combined Score 86.40 82.98 84..64 CS = TS +FS
(CS)
Rank of the I III II
Consultant
Winning Firm A Ist Ranked 100
Consultant Consultant
 Cancellation of the Proposal PPA Act , 2063
/Dafa 36 (1)
• Ifall the Proposals are substantially non-
responsive with respect to TOR;
• If the financial proposal of the
substantially responsive proposal is
substantially higher than the cost estimate
and available budget ;
• If no need of the Consultancy services ;
• If the proposals are in collusion
101
 Negotiation with Winning Consultant PPA, 2063
/Dafa 37 (1) (2) & (3) and PPR Rules 81 (5) & (6)
Time given to Consultant : 7 days for NCB and 15 days for
ICB
Boundaries of Negotiation
 ToR and Work Area
Client’s Obligation
Consultant’s reporting obligation
 Currency
Price Adjustment
Variation
Professional Liability
Conflict of Interest
Substitution of Experts
102
Mobilization of Experts, Mobilization Advance
 Important Note during negotiation
No negotiation on remuneration of professionals except QBS
Method of Selection
Negotiation can be done on reimbursable expenses
If negotiation fails with Ist called consultant , the next
negotiation will held with second ranked consultant in case
of QBS , FBS and QCBS except IInd low priced consultant in
case of LCS
 Minutes of Negotiation
Prepare the Negotiated Contract in Standard Form
Within 7 days of success of negotiation an
intention to accept the proposal is given to
successful consultant and other short listed
consultants :PPA Dafa 38 (2) 103
Contract Signing with respect to PPA
dafa 52
Prepare the Final Contract Agreement
Form and Signing by both Parties
Before Contract Signing : Follow the
PPA Dafa 47 , 49, 50, 51, and PPR
Rules 100, 101, 102, 103, 104, 105,
106, 107 and 108
After Contract Signing : Follow the
PPR rules 7 & 8 : Professional Liability Insurance
104
 Professional Liability Insurance
What Is Professional Liability Insurance?
More commonly known as errors and omissions (E&O
insurance), is a special type of coverage that protects
your company against claims that a professional service
you provided caused your client to suffer financial harm
due to mistakes on your part (errors) or because you
failed to perform some service (omissions).
Professional Liability Insurance definition in a
nutshell: Professional Liability Insurance protects you
both when your company performs insufficiently and
when you're not at fault. So even if a disgruntled client
brings a frivolous lawsuit against your small business,
you're still covered. 105
 Professional Liability Insurance Coverage
Legal fees. Usually, these run between $150 and $400
per hour a lawyer spends on your case.
Expert witness fees. This may include travel, meals,
and document costs.
Administrative costs. Shipping, document processing,
software licenses, and copying all costs money that gets
tacked on to your ever-growing legal bill.
Court costs. This includes filing and transcript fees.
Settlement costs. This is the lump sum you pay to avoid
future legal costs, plus the cost of a mediator if used.
Court judgments. If you lose at trial, this is the amount
the court orders you to pay. 106
 Professional vs. Ordinary Negligence
Professional negligence: If you are a professional or you market
yourself as an individual with a specialized skill set, your clients are
entitled to a standard of care. In other words, your clients expect you
to help them, not hurt them. If you breach those expectations, that's
professional negligence. Say you're an accountant preparing a client's
tax forms. You make an error, which triggers an audit from the IRS.
The client sues your business over the mistake because they should
be able to reasonably expect a professional accountant to check their
work.
Ordinary negligence: Basically, ordinary negligence means that a
person should take reasonable measures to avoid causing harm or
injury to others. Unlike professional negligence, this type of
negligence applies to the public at large. For example, say you back
your car out of the driveway, but you don’t check your rearview
mirror first. A stranger is walking their dog when your car's tire clips
the canine's paw. The owner sues you because you should have 107 taken
care to check your surroundings before reversing.
 Procurement of Works
Requirements
 Identification of Works
 Preparation of Procurement Plan: Annual /Multiyear
PP
 Pre-Feasibility/Feasibility Study
 DPR ( Detailed Project Report ) Preparation
 Detail Survey
Design
Drawing
Cost Estimate : PPR 2064, Rule 10 , Schedule – 1
 Management of Construction Site
Annual Works and Budget Program (AWBP)
108
 Format of Estimate : Schedule : 1 related with Rule 10
Item Unit Quantity Rate /Unit Amount
Item A Say Cu.m. a b a*b = x
Item B Say Sq.m. c d c*d = y
Item C Say R. M. e f e*f =z
Total X= x+y+z
Work Charge Staff expenditure @ 2.50 % of X = X1 0.025 X
Miscellaneous expenditure @ 2.50 % of X= X2 0.025 X
Net Total ( Y) = X +X1+X2
VAT @ 13 % of Y Z
Grand Total ( GT) Y+Z
Note: 10 % Physical Contingency and 10 % Price Contingency both of Y
should also be added for budget allocation and management.
109
 Calculation of Rate per Unit

Labor Expenditure ----- X

Construction Material Expenditure-----Y

Equipment including fuel and lubricants-----Z

Total (A) = X+Y+Z

Contractor’s Overhead @ 15 % of A = B

Net Rate per Unit (R) = A+ B 110

 Procurement Methods and Strategy
Estimate Amount ( NPR) Procurement Remarks
Method
Up to 500,000 Direct Purchase
> 500,000 and up to 2 million Sealed Quotations
> 2 million Sealed Bids  Pre-Qualification
 NCB Post Qualification
LCB IS1E
ICB IS2E
> 20 million and up to 1 billion  NCB among only IS2E
Domestic Bidders
> 1 billion and up to 5 billion ICB Foreign Bidder need to
IS2E have JV with Domestic
bidder
> 5 billion ICB Open to all 111
 Procurement Cycle

Identification of
Preparation of
Works Procurement Plan

Completion or
Termination of
Contract Pre-qualification/
Post Qualification
Preparation and
Contract
Implementation
Approval of
Start Designs, Cost Issuing Bid for Pre//Post
Estimates, PQ Qualification Documents
Award of Contract and Bid
Documents
Pre-Bid Meeting
Contract
Negotiations

Bid Evaluation for Pre-

or Post Qualification Bid Submission and
Opening
112
 BID DOCUMENT
•Bid: an offer to do something when you are competing with
other people to do it:
•Offer: an offer as "an expression of willingness to contract on
certain terms, made with the intention that it shall become binding as
soon as it is accepted by the person to whom it is addressed", the
"offeree".
•A Bid is the price selected by a buyer to buy a stock, while the Offer
is the price at which the seller is offering to sell the stock.
Bidder: a person or company
 who offers money for goods or property when competing with other
people to buy it, or someone who offers to do a job for a particular price
Bid Documents : required to be submitted in response to an
invitation for bid (IFB). These include the prescribed bid form,
drawings, specifications, time lines, charts, price breakdowns, etc.
Bids not accompanied by all the required documents are considered
incomplete bids, and are usually automatically rejected 113 .
 BID DOCUMENT
• IFB
•ITB
•BID Data Sheet
•BID Form
•BID Security
•Qualification Criteria
•GCC
•SCC
•BOQ
•Specification
•Drawing
114
 What is bid security?
• A bid security is a monetary guarantee
intended to dissuade bidders from
withdrawing their bids before the end of bid
validity period because they would
otherwise forfeit the bid security amount to
the procuring entity.
• Formats of the bid security:
– Unconditional bank guarantee
– Irrevocable letter of credit
– Certified check 115
 Bid Securing Declaration
• The bid securing declaration is a non-
monetary form of bid security. It is a
notarized sworn statement made by a bidder
committing to sign the contract if they are
selected before the end of the bid validity
period stipulated in the bid document.

116
Pre-Bid Meeting
ARE GATHERINGS SCHEDULED AFTER AN INVITATION FOR BIDS
OR REQUEST FOR PROPOSAL IS ADVERTISED.
OBJECTIVE: TO EXPLAIN THE DETAILS OF THE SOLICITATION
DOCUMENTS TO INTERESTED BIDDERS

TIME FOR PRE-BID MEETING: ONE WEEK OR MORE GENERALLY 14

DAYS AFTER IFB/RFP
VENUE: EASILY ACCESSIBLE
PROCEDURE:
OPENING REMARKS AND INTRODUCTION
PRESENTATION OF THE PROCUREMENT ASPECT OF THE
REQUIREMENT
QUESTION AND ANSWERS ON THE PROCUREMENT ASPECT
PRESENTATION ON THE TECHNICAL ASPECTS OF THE
REQUIREMENT
QUESTION AND ANSWER ON THE TECHNICAL ASPECT
CLOSING REMARKS
MINUTES AND CIRCULATION TO ALL THE
STAKEHOLDERS 117
ADDENDUM NOTICE
 Bid Submission
ONLY ACCEPTED TIMELY
SUBMITTED BIDS
TO BE CHECKED WHETHER THE
BIDS ARE SEALED
RECORDS OF SUBMITTED BIDS
SPECIFIED WITH DATE AND TIME
(SEPARATELY)
ALL THE BIDS MUST BE REGISTERED
WITH NUMBERS
RECEIPT OF THE BIDS SHOULD BE
118
GIVEN TO THE SUBMITTERS
 Bid Evaluation

The Purpose of Bid Evaluation in team

work is to select the lowest evaluated
substantially responsive bidder with
compliance of procurement principle

119
 Evaluation of Bids
• Process outlined covers: To be started Immediately
 Formation of BEC ( Ref PPA 71/PPR 147)
 Working Procedure /Code of Conduct to be framed and
approved by BEC
 Receipt and Bid opening minutes of bids opened
 First Visit the PPMO site for identification of Black listed
bidders
 Preliminary Examination of Bids
 Seeking clarifications from bidders
 Financial comparison of bids
 Detailed Examination of bids
 Examination of Post-qualification criteria of the responsive
bidders
 Finalization of the lowest evaluated substantially responsive
bidder
 Submission of Bid Evaluation Report (BER) with Bid Award
Recommendatio n

Bid Evaluation Must be completed with in Bid Validity Period 120

 Evaluation of Bids

Preliminary Examination:
Purpose: To identify and reject the bids that
are incomplete, invalid or substantially
non-responsive to the bidding documents.
Elements of PE :
 Verification
 Eligibility
 Completeness of Bid
 Substantially Responsiveness
121
 Evaluation of Bids
Verification:
 Bid submission/Opening in stipulated Date/time
 Bid opening minutes
 Same bid as sold
 Joint Venture Agreement
 Power of Attorney
 Qualification Documents
Eligibility
 Nationality
 Government Owned Entity
 Firm/Business Registration Certificate
 VAT/PAN Certificate
 Tax Clearance /Income statement/Certificate/Time Extension
for Tax Clearance
 Ineligibility based on a United Nations resolution or
Borrower’s country law
122
 Evaluation of Bids
Bid Security:
 Bid Security Format consistent with sample in Bid document
 Bid Security Amount
 Bid Security Validity Period
 Bank’s legal Status ( Development/Commercial/ banned by
NRB)
Completeness of Bid:
 Bid form signed
 Bill of Quantities /Price Schedule filled properly and signed
 One bid submitted
 Audited Balance Sheet
 Declaration Letter for eligibility
 Conflict of Interest
Substantially Responsive:
 Bid Validity Period
 Alternative bid
123
124
 Evaluation of Bids
Decision on for detailed evaluation of bids:
Based on the process mentioned above decision should be
made at this stage, to go for detailed examination:
• Committee should be agreed on:
 those bids which are substantially non-responsive and
should not be considered further;
 any clarification needs to be requested from bidders.
• A log of all requests for clarification and responses must be
kept. Requests for clarification can be sought at any time, up
to the contract award decision.

125
 Evaluation of Bids

Detail Examination:
• Correction of arithmetic errors
• Do not consider Provisional Sum
• Do not consider VAT
• Modification and discounts
• Analysis of prices for major items (to check whether the bid is
substantially balanced and to verify that the prices are not so low that the
bidder would incur substantial financial losses and fails to complete work
satisfactorily or reflection of misunderstanding of specifications)
• Priced deviations – time and advance etc.
• Domestic preference
• Qualifications (Financial, Equipment, Experience)
• Front loading and inconsistent rates (higher unit prices for earlier works,
higher unit rates for underestimated work items) 126
127
 Verification /Examination of Qualification Criteria

• Average Annual Turn over in last 3 years over 5/10

years
• Experience as a prime contractor in the projects of
similar nature of works in last 5 years
• Liquid Asset/ Credit Facility
• Equipments Requirements
• Manpower requirements

128
 Cartelling and Collusion

• Every Cartelling is collusion

but all the collusions are not
cartelling
• Intimidation is combination of
both cartelling and collusion.
130
 Verification of Intimidation,cartelling
and collusion
• Less no. of bid submission in against of more no. of bid
purchased.
• Same hand writing in BOQ
• Same item rate filled up
• Item rate only in figures for lowest bidder
• Bid security guarantee from the same Bank issued on the same
date.
• Same bid security guarantee amount
• Item rate inconsistent
• Line of credit and bid security guarantee from the different Bank
• Item rate similar to engineer’s estimated rate

131
Procurement of Goods

132 008)
 Meaning of Goods

In economics, goods are materials that satisfy

human wants and provide utility, for example, to
a consumer making a purchase of a
satisfying product

133
 GOODS
PPA, 2063/ 2 ( c) : The “Goods” are
meant by CHAL or ACHAL things and
non-consulting services related with
supply of that particular.

WB/ADB : A wide variety of tangible and

intangible commodities for the use of
private and public entities. 134
 Public Goods and its Procurement

Goods offered by government and its

entities for the use of common
people in the light of economic
development of country
The procurement of those goods
through public money – Public
Procurement of Goods 135
Goods' Procurement Cycle

Identification of
Goods
Preparation of
Completion or Procurement Plan
Termination of
Contract

Preparation and
Contract
Implementation
Approval of
Start Specification, IFB and Issuing of
Cost Estimates, Bid Documents
Award of Contract and Bid
Documents
Pre-Bid-Meeting
Contract
Negotiations

Bid Evaluation:
Technical and Bid Submission
Financial Evaluation Technical /Financial
Opening 136
 Guiding Principles of Procurement of
Goods
• Need for high quality Goods
• Need for Economy and Efficiency
• Need to give equal opportunities to all
eligible/qualified Vendors to compete in
supplying the Goods
• Encouraging the development and use of
national vendors in case of International
Competitive Bidding
• Need for transparency in the selection process
137
 Methods of Selection of Vendors

Principally ( Ref Act 8 (1) (K : 1-10)

 Through Competitive Proposals from the
respective vendors

No piecemeal procurement to limit the

competition : Ref Act 8(2)

138
 Procurement Guidelines Used
• Guidelines : Procurement of Goods, Works, and Non-
consulting services
UNDER IBRD LOANS AND IDA CREDITS &
GRANTS
BY WORLD BANK BORROWERS
January ,2011
• Guidelines on The Procurement of Goods by Asian
Development Bank and Its Borrowers
December , 2016
• Public Procurement Act 2063, & Public
Procurement Rules ,2064 ( Inclusive of
Amendment 2073)
139
Basic Requirement for Procurement
of Goods
• Procurement Plan required to
 Identify the types of goods
 establish the mode of procurement
 know the type of vendor ( Individual,
firm, National, International )
 determine the ABC
• Approved Budget for Contract
(ABC)
140
 Most Important : Specification
and Cost Estimate
• Ref : PPR 2063 ( Amended , 2074) Rules :
2
 (k): Actual purchasing cost of the similar
nature of goods purchased by the same
entity or others in the district in the
prevailing or previous years
 (Kh): Local Market Price
 (G) : Other market price including
transportation cost
 (Gh): Rate disseminated publically by
141
 Specification
What is a Specification?
The specification is one part of a bid document: either a Expression of Interest
(EOI), or a Request for Tender (RFT).
A specification can be defined as:"a document, primarily for use in procurement,
which clearly and accurately describes the essential requirements for goods,
products or services".
It may also include the procedures for determining that the requirements have been
met.
What is not included in a specification?
A specification does not include: conditions of tender ,conditions of contract
performans or questionnaires used by tenderers to submit offers.
Importance of a clear specification
Preparing a specification is a core process in tendering and contracting, and is
often considered a difficult task. Great care and consideration is required when
writing the specification because a poor description of requirements may mean that
the product or service is not delivered as required.
Minimising cost: The cost of the tender process is reduced if specifications are:
uniform for the same or similar requirements;
clear, complete and reliable (permitting tenderers to evaluate
and respond to the documents quickly and with assurance); and readily incorporated into
142 a
contract.
 Specification
Functional Specifications – Is the
documentation that describes the requested
behavior of a product or services. The
documentation typically describes what is
needed by the user as well as requested
properties of inputs and outputs.
Technical Specifications – Describes the
explicit technical characteristics of an item,
product or service required by the user. A
manufacturer’s data sheet is not a technical
specification. 143
 Specification
Before preparing a specification
Before you prepare a specification, you should:
identify customer or user needs through the business plan where
appropriate, and give full consideration to their requirements;
research the market, (by making general enquiries of suppliers,
purchasers or industry associations, or by placing formal
advertisements for Registrations of Interest) to determine currently
available solutions to problems, likely costings and time scales;
assess the risk of a supplier failing to fulfill specifications, against
the risks of continuing with the existing situation;
identify what is to be procured and confirm that the proposed
procurement will fulfill the customer or user needs;
determine the scope including the likely demands on a supplier and
the range of goods or services which will be required; and
determine the evaluation criteria, so that the specification clearly
indicates the relative importance of each requirement. 144
 Specification of Goods
Writing Principles, Techniques and Tips
•Leave out brochure language that cannot be objectively evaluated. Instead select only the
essential characteristics or features necessary to meet your requirements.
•Begin the description with a common name for the goods or services, if possible. Use
“facial tissue” instead of “Kleenex”)
•Include enough detail for the bidders to understand your requirements. Technical
specifications should contain enough detail to differentiate the level of quality or
performance required.
•Be clear and precise. Avoid ambiguity. You should always question if the specification
would answer all necessary questions if the roles were reversed and you were the vendor
trying to respond to the Invitation for Bid.
•Verify current availability of brand and model number if used in the specifications. All
brand and model numbers referenced must be in current production and available on the
market. If specifications indicate an acceptable brand and model or part number, invite
competitive brands by indicating “or equal”.
•When specifying compliance with certain industry test methods or standards, include
copies or indicate where copies may be obtained.
•When sizes, weights, speeds, etc. are a part of the specification, determine if a range is
acceptable then indicate minimums or maximums or approximates.
•If an item must fit into a given space, indicate the available space dimensions.
Sample requirements, if any, are to be clearly identified as a requirement in the
145
specifications with clear instructions on how to label the sample, when it is due,.
 Continued- ----
Writing Principles, Techniques and Tips
•Sample requirements, if any, are to be clearly identified as a requirement in the specifications
with clear instructions on how to label the sample, when it is due, and how it will be used in the
evaluation for award.
•Delivery warranty (ie. Parts, labor, and/or service requirements, etc.) and training requirements,
if applicable, are to be clearly defined.
•When bidding maintenance services, define the service requirements, advise if parts, labor,
travel, and service hours are required. Specify number of preventative maintenance inspections
required and any other inclusions or exclusions that are to be priced.
•Avoid using restrictive language such as “vendor must be located within a 20 mile radius of
-----. Instead, request a reasonable response time.
•Identify any instructional materials or service manuals that the contractor must furnish. Also,
incorporate into the specifications the type of training they must provide to the end users and
where this training is to take place.
•If compatibility with an existing piece of equipment is a factor, describe the equipment,
connectors, interfaces, brand and model of the existing equipment.
•Clearly state the packaging requirements, size, types of finish, color, etc.
Understand the use of the following words and use them properly:
"Shall" denotes the imperative
"May" denotes the permissive
"And" means it must have both or multiples
"Or" means either is acceptable
146
Indicate the appropriate unit of measure. Example: box – bxs, package – pkg., each – ea.
 Basis of Estimate Criteria
Catalog Listing or Industrial/Construction databases
Documented Vendor Estimate Based on Drawings/
Sketches and Specifications
Engineering Estimate Based on Drawings/ Sketches and
Specifications
Engineering Estimate Based on Similar Items or
Procedures
 Engineering Estimate Based on Analysis
 Expert Opinion (Engineering Allowance)
 Existing Lien
147
 InCoTerm
• Used by International Chambers of Commerce for the trade of Goods world
wide
• Give guide to importers , exporters , lawyers, transporters , insurers involved
in the trade
 EXW: Ex Works
- Seller delivers when it places the at the disposal of buyers at the seller’s
premises or at any other named places ( works, factory, warehouses )
- The seller neither loads the goods on any collecting vehicles nor clears the
goods for clearance
 FCA : Free Carrier
- Seller delivers goods to the carrier nominated by buyer at the seller premises
- Delivery point must be specified because risk passes to the buyer
 CPT: Carriage Paid to
- Seller delivers the goods to carriers nominated by the seller at agreed place.
Seller must contract for carriage cost up to the destination.
 CIP: Carriage and Insurance Paid to
- CPT with Insurance
 DAT : Delivered at terminal
 DAP: Delivered at Place 148
 DDP: Delivered and Duty Paid