Bid Documents, Bid Evaluation & Contract Award PDF

Bid Documents, Bid Evaluation & Contract Award Dr. Ahmed Hammad 2 Traditional Procurement Construction project management involves: Identifying project requirements (Scope definition) Addressing the various needs, concerns, and expectation...

Bid Documents, Bid Evaluation & Contract Award Dr. Ahmed Hammad 2 Traditional Procurement Construction project management involves: Identifying project requirements (Scope definition) Addressing the various needs, concerns, and expectations of all project stakeholders Balancing competing project targets/constraints (scope, cost, time, quality, safety, health, environment, etc.) Majority of construction projects, Quality specially in public sector, utilize: Design Bid Build (DBB) as their traditional project delivery method (PDM) Cost Large number of project owners believe that selection of contractors using DBB minimizes Time subjectivity and corruption in the decision-making process 2 3 Purpose of Bidding Owners go for bidding to obtain the lowest cost of completing a project on schedule, according to specifications by a qualified contractor Major decisions by Owner during bidding: Which contractors are allowed to bid? What to include/exclude in the scope of work? Which bids are acceptable? Which bidder is selected to execute the scope of work? Major decisions by Contractor during bidding: Which bids to submit for (Bid / No-Bid Decision)? What are the risks inherited in the bid documents? What is the bid price? 3 4 Pre-award Bidding Process Owner & A/E prepare: Drawings & Specifications Bid Documents Prequalification Requirements Bid Schedule / Selection method Bid Evaluation Criteria Issue Invitation to Bid (ITB) Hold briefing meetings Site Visits Respond to bidders’ questions Receive bids Shortlisting (Exclude noncompliant bids) Bid Evaluation https://i.pinimg.com/originals/2c/62/cc/2c62cca4857b03b65ec76e12b362a9b9.png https://www.zemaitis-uk.com/wordpress/wp-content/uploads/2013/10/Tender- Contract Award Procurement-Process.jpg 4 5 Contractors Pre-Qualification Most owners maintain a list of approved prequalified vendors (suppliers & contractors) The list classifies vendors in categories specifying which projects they can bid for Some mega projects will require a specific prequalification process The process involves multiple criteria including: Safety records, financial stability and annual cash-flow Technical capabilities and previous performance (evaluation forms, reference letters, history of claims) Quantity and quality of labour resources Availability of equipment, software, workshops, fabrication facilities, module yards, etc. Global presence 5 6 Pre-award Bidding Process From Contractor side: Obtain bid advertisement Bid/no-Bid decision Obtain bid documents Bill of Quantities (BOQ) Obtain budgetary quotes from suppliers and subcontractors Preliminary schedule Calculate direct & indirect costs including overheads Add contingency & profit Review & approve bid Submit legal bid on time 6 7 Bid Documents Scope of Work (SOW) Definition Documents: Design drawings and documents Applicable building codes and regulations: Alberta Building Code (ABC), 2014 National Energy Code of Canada for Buildings, 2011 Industry Standards: International Organization for Standardization (ISO) American National Standards Institute (ANSI) Canadian Standards Association (CSA) European Standards (Eurocodes) British Standards Institution (BSI) Standardization Administration of China (SAC) Bureau of Indian Standards (BIS) Project Specifications 7 8 Scope Definition & Estimate Accuracy Level of scope definition depends on the amount of available information: The progress of Design The Association for the Advancement of Cost Engineering (AACE) https://web.aacei.org/ utilizes levels of project definition to define the class of each cost estimate Availability of more project definition increases the accuracy of each estimate 8 9 Scope Definition Rating Index The Construction Industry Institute (CII) at the University of Austin, Texas https://www.construction- institute.org/ utilizes the Project Definition Rating Index (PDRI) to measure the degree of scope development They developed a specific PDRI for each category of projects 9 0 Bid Document Other Bid Documents: Invitation to Bid / Tender (ITB / ITT) Instructions to Bidders Form of Tender Bid Bond Performance Bond General Terms & Conditions (T&C) Contract Form Certificate of Insurance Supplementary Special Conditions Additional Instructions to Bidders Special Provisions 10 1 Invitation to Bid (ITB) Bid is a formal offer to perform a project “scope of work” based upon certain specifications, terms and conditions Invitation to Bid (Notice to Bidders / Invitation to Tender) states the requirements and procedures for a responsive bid and gives additional information pertaining to the contract itself 11 2 Instructions to Bidders Establishes the procedure that all bidders must follow to ensure all competitors bid under the same conditions It includes instructions on: Bid Documents Required support documents Forms to be completed Bid Delivery & Withdrawal Local preferences Insurance & Bonds Language & Currency Bid Evaluation Criteria Acceptance & Rejection Procedure after winning 12  Form of Tender The form of tender is prepared by the owner or their consultants, completed and signed by the tenderer It is a formal acknowledgement that the tenderer understands and accepts the terms and conditions of the tender documents and any other requirements that are stipulated Usually includes tender price, price currency and the date the price remains valid May also include special conditions or proposals 13 14  Bid Bonds Before submitting any bid, a contractor must obtain: Bid Bond Performance Bond Labour & Materials Payment Bond (Optional) All necessary insurances A bid bond assures the project owner that the winning bidder will sign the project contract at https://www.suretybondprofessionals.com/wp-content/uploads/2018/05/BidBond- the agreed price Infographic.jpg It is submitted with each bid & returned to unsuccessful bidders Bid bond pays for the cost of replacement if winning bidder withdraws from performing the project scope of work It prevents contractors from bidding jobs above their capacity Bid bond % (max of 10%) depends on project size Cost of buying bid bond from a Surety company depends on contractors previous history & financial strength 15  Performance Bonds A Performance bond is submitted by the winning bidder and before signing the contract It guarantees that: The contractor will fulfill the contractual obligations as per the contract Terms and Conditions (T&C) The contractor will complete the awarded project scope of work according to the required quality as per owner’s drawings and specifications They also protect the owner if contractor files for bankruptcy Losses must be quantified in order for owner to receive payment from the surety company http://getsafeharbor.com/wp-content/uploads/sites/105/2017/09/Surety- Bonds.png 16  Terms & Conditions Majority of owner organizations maintain a standard set of Terms & Conditions (T&C) to be used in all their construction contracts T&C cover general & legal issues such as: Contract Definitions, Terminology & Applicable Laws Subcontracting, Safety & Security on site Insurance & Bond requirements Permits to work, soil conditions, utilities & access to site Ownership of engineering design and construction materials Work acceptance, progress measurement, performance evaluation, project reporting, payments and invoices Management of Change (MoC) and Contract Amendments Public relation and exposure to Media Operation Manuals, As-builts & Project Warranties Suspension of work & contract termination Management of conflicts, disputes & claims Settlement of disputes and ADR 17 Terms & Conditions Example 18 Terms & Conditions Example 19  Contract Form Example of First Page Example of Last Page 20  Bid Schedule & Milestones Owners typically advertise bids in: newspapers, trade journals, on-line websites & Trade Association Bulletins such as: Edmonton Construction Association Other methods include: Letters of invitation (especially for private sector), Verbal requests (especially for subcontractors), Requests for Prequalification or Requests For Proposals (RFP) After that, contactors have to decide to bid or not… 21  Bid / No Bid Decision Main factors involved in this critical decision: External: Market Conditions (Economic, Political, Safety, Laws, Corruption, etc.) Expected number of competitors Capabilities of competitors Internal: Owner: Financial capacity Previous experience of owner-contractor working together Contractor: Current workload and future strategy Availability of required resources including cash and bonds Past experience with similar projects Project / Contract Project size, duration, location, complexity & Risks Hybrid decision support system for Bid/No Bid decision Contract Type M. Emad, P. Jafari and A. Hammad, 2020 Expected Profit 22  Bid Clarifications & Bid Addenda During bidding processes, owners typically start with arranging briefing pre-bid meetings with all the bidders to explain the project to them In briefing meetings, team leads from Owner/Engineer side provide presentations to explain all aspects of the project including: scope, design, specifications & expectations Site visits are arranged for further understanding Each bidder has the right to ask questions during clarification period Answers to clarifications have to go to all bidders Owners may issue Bid Addenda (Tender Bulletins) to modify the bid if needed Each bidder has to submit complete legal bid (correct signed forms with acknowledgement of all addenda and a valid bid bond) by date and time of closing at specified location Bids opening may be: Public bid opening (typically for lowest price bids) Closed bid opening (when using best value selection) 23  Bid Evaluation & Contract Award After screening all received bids, legal bids go through: Technical Bid Evaluation (TBE) Commercial Bid Evaluation (CBE) TBE committee forms subcommittees to evaluate each bidder in light of the predefined evaluation criteria Technical bid evaluation criteria typically includes: OHS Management Plans Quality Management Plan Project services (communication plans, project management systems, schedule control, cost control, risk management plan, proposed reporting templates & calendars, etc.) Some owners may include environmental and social aspects CBE committee ranks bids according to price after: Making sure all bidders are compared on fair grounds Bid prices are based on complete and correct scope of work with no unpriced Inclusions or Exclusions Lowest legal bid (or bid with highest score when using best value) is awarded the contract via Notice to Proceed (NTP) or Letter of Intent (LOI) to start working until contract is signed 24