Project Procurement Management

PROJECT PROCUREMENT MANAGEMENT

BY
Engr. Dr. Attaullah Shah
PhD (Civil Engg.) , MSc ( Str Engg.) , MBA , MA ( Eco) , MSc Envir design
BSc Civil Engg (Gold Medal) , Post Grad Dip in computer ( Gold medal)

Project Director Allama Iqbal Open University

Islaamabad Pakisatn.
pdaiou@yahoo.com
pd@aiou.edu.pk
Cell: +92-333-5729809
Tel:+92-51-9057212
Fax:+92-51-9250100
 Property may be destroyed and money may lose its
purchasing power; but character, health, knowledge and
good judgment will always be in demand under all
conditions. Roger Babson

Men use care in purchasing a horse, and are neglectful in

choosing friends John Muir.

Purchasing power is a license to purchase power. Raoul

Vaneigem

Excellence in any department can be attained only by the

labor of a lifetime; it is not to be purchased at a lesser
price. Samuel Johnson

The friendship that can cease has never been real. St.
Jerome

Sell not virtue to purchase wealth, nor liberty to purchase

power. Benjamin Franklin
 Passion can never purchase what true love
desires: true intimacy, self-giving, and
commitment

Experts agree that the best type of computer for

your individual needs is one that comes on the
market about two days after you actually
purchase some other computer. Dave Barry

I saw a boy of the crew purchasing javelins of

them with bits of platters and broken glass.
Christopher Columbus
 Procurement Management
Procurement is acquisition of goods and services.

Project Procurement Management includes the

contract management and change control
processes required to administer contracts or
purchase orders issued by authorized project team
members.
 Procurement Cycle
Plan Purchases and Acquisitions. Determining
what to purchase or acquire and determining when and
how.
Purchase of equipment
Procurement of works
Procurement of supplies etc

Plan Contracting documenting products,

services, and results requirements and identifying
potential sellers.
Developing the requisite documents
Specification
No and make etc.
 Request Seller Responses.
obtaining information, quotations, bids, offers ,or proposals, as
appropriate.
Inviting bids
Inviting quotations
Request for Proposals ( RPFs)
Expression of Interest ( EOI) etc.

Select Sellers.
Reviewing offers, choosing among potential sellers, and
negotiating a written contract with each seller.
Tender/bids opening
Evaluation and Assessment of bids
Negotiation if required and allowed
Selection of the seller/contractor
 Contract Administration
Managing the contract and relationship between the buyer and
seller.
Reviewing and documenting how a seller is performing or has
performed to establish required corrective actions
Provide a basis for future relationships with the seller,
Managing contract-related changes and, when appropriate,
Managing the contractual relationship with the outside buyer.
Contract Agreement

Contract Closure
completing and settling each contract, including the resolution
of any open items,
Closing each contract applicable to the project or a project
phase.
Definition of Government
Procurement
Procurement by government agencies
Public Sector Organizations
With major Govt. Equity
With minor Govt. Equity

Under control of Govt. (No Govt. Equity)

Orgs with other forms of Govt. funding

Objectives of Procurement
Reforms
Economy (Value for money)
Efficiency

Transparency

Accountability

Competitiveness

Fairness
Past Regulatory Environment
Procurement under GFR
Procurements by Corporate Sector

Procurements by Statutory Bodies

Classified Procurements
Present Regulatory Framework
Enabling Legislation
PPRA Ordinance 2002
Subsidiary Legislation
Public Procurement Rules, 2004
Public Procurement Regulations
Composition of PPRA Board
Secretary, Finance Division: Chairman
Secretary, MoI &P: Member
Secretary, D P Division: Member
Secretary, MoW & P: Member
Secretary, Mo H & W: Member
Secretary, M o C: Member
Syed Nizam Shah: Private Member
Mr. Javed Hussain: Private Member
Mr. Munawar Hameed: Private Member
Managing Director (PPRA): Member
 Functions of PPRA
Monitor application of the procurement laws,
rules, regulations, policies and procedures;
Monitor the implementation of and evaluate
laws, rules, regulations, policies and procedures,
inspections and quality of goods, services and
works and recommend reformulation thereof;
Recommend to the Federal Government
revisions in or formulation of new procurement
laws, rules and policies;
 Functions (Contd.)
Make regulations and lay down code of ethics
and procedures for public procurement;
Monitor public procurement practices and make
recommendations to improve governance,
transparency, accountability and quality of public
procurement;
Monitor overall performance of procuring
agencies and make recommendations for
improvements;
 Functions (Contd.)
Provide and coordinate assistance to procuring
agencies for developing their institutional
framework;
Call any functionary of procuring agencies to
provide assistance.
Steps Involved in Redesigning
New Procedures
Study of Existing Procedures
Identification of Redundant & Non
Transparent Procedures
Redesigning New Procedures

Emergency Procedures
 Procurement Cycle
Contract Planning/Designing
Administration specifications

Payments

Pre-qualification

Grievance Solicitation of
Redressal Bids

Contract Bids opening

Award and Evaluation
Public Procurement Rules, 2004
Main Features
Protection to Intergovernmental
commitments & International Agencies
Integrity Pacts. Rs 10 million and above

Procurement Planning

Limitation on Splitting of Tenders

Promotion of stipulating generic

specifications
Bid Evaluation Criteria to be stated in
Invitation to Bids
Methods of Advertisement
Public Procurement Rules, 2004
Main Features
Limitation on Negotiations
Date of Exchange Rates to be prescribed in
the bidding documents
Grounds for rejection of bids to be intimated
to unsuccessful Bidders
Prequalification/Qualification &
Disqualification of Contracts
Relevant Experience
Capabilities Personnel/Equipment
Financial Position
Managerial capabilities of the contractor
Disqualification & Blacklisting of
consultants and contractors
Solicitation of Proposals
Selection of Appropriate bidding
process
Wide advertisement for competitive
bids
Evaluation criteria declared in advance
Selection of Appropriate Bidding
Documents
Procedures of Open Competitive
Bidding
Open Competitive Bidding, Principal Method
Single Stage. Two Envelope Procedure.
Two Stage Bidding Process.
Technical proposal without price for uniform
specifications.
Price proposals on the basis of uniform technical
specifications.

Two Stage Two Envelope Bidding

First stage technical proposal & financial proposal
Second Stage Revised Technical Proposal
Supplementary Financial Proposal.
 Alternative Methods of
Procurement
Petty Purchases
Request for Quotations
Direct Contracting
Negotiated Tendering
 Implementation

Information Dissemination
Advisory Services
Complaint Redressal
Preliminary Dispute Resolution Mechanism
 Monitoring

Internal Pre/Post Audit Procedures

Audit by the Auditor General
Procurement Audits by Private Sector
Auditors
Grievance Redressal

Committees within procuring entity

2nd tier grievance redressal
Mohtasibs office
Judicial Remedy
Payment Regulations

On account payments
Closing of Contracts
Closing of Contracts

Resolution of Contractors Claims

Completion of Project Reports
Historical Files to Retain: Requirements
of Auditor General
Post Completion Evaluation
Contract Administration

Execution & Management of Contracts

Appropriate Funds Availability
Payments to Contractors
Tracking Supply Schedules
Management of changes/variations to
Procurements
 PPRA Approach
Two Step Regulations
General Regulations applicable on all Public
Sector Procuring Agencies
Advertisement of Requirements, Time for
submission of bids, Bid evaluation criteria and its
publicity, level of advertisement, etc

Organization Specific Regulations

Specific circumstances of PSEs Delegation

of Powers, Declaration of Emergency and
Emergent Procurement Procedures, Payment
Procedures etc.
 Procedures of Open competitive Bidding under PPRA
Rules 2004.
One Envelope Procedure
Each bid shall comprise one single envelopes containing, separately,
financial proposal and technical proposal (if any)
Open competitive bidding procedure used for most of the procurement.

where the scope and technical specification of the procurements are very
clear and unambiguous.

For projects of repetitive nature and where a pool of registered contractors

with the departments is available sometimes.

In this procurement mode, the financially lowest bid is generally selected.

Such procurements become victim of low bidder dilemma as the bidding

firms.

Poor history of successful procurements by this method.

Preferred for small and clear procurements.

 Two Envelops Procedure
i) The bid shall comprise a single package
containing two separate envelopes. Each
envelope shall contain separately the
financial proposal and the technical
proposal:
ii) The envelopes shall be marked as
FINANCIAL PROPOSAL and
TECHNICLA PROPOSAL in bold and
legible letters to avoid confusion.
 Two Stage Bidding Procedure

First Stage (Tech Proposal )

i) The bidders shall submit, according to the required
specifications, a technical proposal without price,

i) The technical proposal shall be evaluated in

accordance with the specified evaluation criteria and
may be discussed with the bidders regarding any
deficiencies and unsatisfactory technical features.
 Continued
iii) After such discussions, all the bidders shall be permitted to
revise their respective technical proposals to meet the
requirements of the procuring agency;

iii) The procuring agency may delete, modify or add any aspect
of the technical requirements or evaluation criteria, or it
may add new requirements or criteria not inconsistent with
these rules.
 Continued
Such revisions, deletions, modifications or additions are
communicated to all the bidders equally at the time of
invitation to submit final bids, and that sufficient time is
allowed to the bidders to prepare their revised bids:

Such allowance of time shall not be less than fifteen days

in the case of national competitive bidding and thirty days
in the case of international competitive bidding;
 Continued
v) Those bidders not willing to conform
their respective bids to the procuring
agencys technical requirements may be
allowed to withdraw from the bidding
without forfeiture of their bid security.
 Second stage (Revised Tech Proposal)

i) The bidders, whose technical proposals

or bids have not been rejected and who
are willing, to conform their bids to the
revised technical requirements shall be
invited to submit a revised technical
proposal along with the financial
proposal.
 Continued
ii) The revised technical proposal and the
financial proposal shall be opened at a time
date and venue announced and communicated
to the bidders in advance; and
iii) The revised technical proposal and the
financial proposal shall be evaluated in the
manner prescribed above. The bid found to be
the lowest evaluated bid shall be accepted.
 Best for projects of technical nature.
Where the firms capacity to deal with the complexity of the
project is critical to the successful implementation of the project

The scaling of technical and financial score depends on the

nature of the project and relevant importance of the of each
major criteria

Typical range from 50:50 to 70:30 for technical: financial

respectively.

For mega IT projects, where the technical expertise, global

partnership and relevant experience of the firm are of paramount
importance, the technical part can be given a score of 70 or even
80.
Technical Evaluation for ICT project at AIOU
Criteria Nature of Firm Offices and Methodology and Experience of similar works References. Financial Key personnel Total Marks
( 10) Outreach approach ( 10) soundness and for the project ( 100)
( 10) ( 20) bank references ( 10)
( 10)
In hand Completed
(25) ( 15)
Marks Max Islamabad For Min For Min four National: 05 Team leader: Obtained.
Individual firm: 02 office: 05 two similar works: 05 Intnl; 5 Balance sheets: 05
Partnership: 03 Other: 01 works: 10 Add 01 marks 05 Core team
Company: 05 marks per Add 2 for add work Income Stat:03 members: 10
Add 1 mark per year office max: 05 marks per Bank reference:
since establishment Max work. 02
5 marks
 One Stage Two envelope
bidding procedure:-
i) The bid shall comprise a single package
containing two separate envelopes containing
separately the financial proposal and the
technical proposal;

i) The envelopes shall be marked as FINANCIAL

PROPOSAL and TECHNICAL PROPOSAL in bold
and legible letters to avoid confusion;
 Continued
iii) initially, only the envelope marked TECHNICAL
PROPOSAL shall be opened;
iv) The envelope marked as FINANCIAL PROPOSAL shall
be retained in the custody of the procuring agency
without being opened.
v) The technical proposal shall be evaluated on the laid
down criteria.
vi) The financial bids of the firm fulfilling the criteria are
opened and remaining are returned un-opened.
vii) The lowest evaluated bid based on the technical and
financial bids is approved.
 Performance Guarantee
Where needed and clearly expressed in
the bidding documents, the procuring
agency shall require the successful bidder
to furnish a performance guarantee which
shall not exceed ten per cent of the
contract amount.
Two Stage Bidding Procedure
First Stage (Tech Proposal)
The bidders shall submit, according to the required
specifications, a technical proposal without price,
The technical proposal shall be evaluated in
accordance with the specified evaluation criteria and
may be discussed with the bidders regarding any
deficiencies and unsatisfactory technical features,
After such discussions, all the bidders shall be
permitted to revise their respective technical
proposals to meet the requirements of the procuring
agency;
The procuring agency may delete, modify or add any
aspect of the
 technical requirements or evaluation criteria, or it may
add new requirements or criteria not inconsistent with
these rules.

Such revisions, deletions, modifications or additions are

communicated to all the bidders equally at the time of
invitation to submit final bids, and that sufficient time is
allowed to the bidders to prepare their revised bids:

Such allowance of time shall not be less than fifteen

days in the case of national competitive bidding and
thirty days in the case of international competitive
bidding;

Those bidders not willing to conform their respective

bids to the procuring agencys technical requirements
may be allowed to withdraw from the bidding without
forfeiture of their bid security.
 Second Stage:
The bidders, whose technical proposals or bids have
not been rejected and who are willing, to conform
their bids to the revised technical requirements shall
be invited to submit a revised technical proposal
along with the financial proposal.

The revised technical proposal and the financial

proposal shall be opened at a time date and venue
announced and communicated to the bidders in
advance; and

The revised technical proposal and the financial

proposal shall be evaluated in the manner prescribed
above. The bid found to be the lowest evaluated bid
shall be accepted.
 Best for
Best suited for Large Civil Works
projects, heavy equipment and complex
projects
Where the available information and in-house
expertise of the procuring agency is not
enough to deal with.
The feedback of the firm may provide some
additional information on the procurement.
 Procurement Policy Guidelines
PAKISTANI SUPPLIERS ARE TO BE PREFERRED
A DOMESTIC WEIGHTING OF 15% IS TO BE GIVEN TO ANY PAKISTANI
SUPPLIER IN COMPETITION WITH A FOREIGN SUPPLIER
GOODS SHALL BE SOURCED DIRECT FROM MANUFACTURERS
WHENEVER POSSIBLE
BIDS SHOULD BE EVALUATED ON THE BASIS OF BEST VALUE FOR
MONEY RATHER THAN LOWEST PRICE
WHEN PURCHASING GOODS, SERVICES ESPECIALLY IN CASE OF
EXPENSIVE & TECHNICALLY COMPLEX EQUIPMENT PROCURING
AGENCIES SHOULD PRE-QUALIFY BIDDERS
WHEN PURCHASING GOODS & SERVICES PROCURING AGENCIES
SHOULD EVALUATE TENDERS ON THE BASIS OF APPROPRIATE
QUALITY RATHER THAN LOWEST PRICE
WHEN THE SAME KIND OF GOODS IS REQUIRED ON A REGULAR
BASIS, PROCURING AGENCIES SHOULD NEGOTIATE FRAMEWORK
CONTRACTS ALLOWING REGULAR CALL-OFF OF FRESH STOCK.
 WHERE THE PROCUREMENT OF GOODS AND SERVICES IS ALREADY
PRE-APPROVED BY THE PLANNING COMMISSION AND LISTED
PROCURING AGENCYS PC-1, THERE IS NO FURTHER NEED TO OBTAIN
CONCEPTUAL APPROVAL TO PROCURE. THE PA CONCERNED MAY
PROCEED TO INITIATE THE PROCUREMENT.
PRODUCTS PURCHASED BY PAs PROGRAMMES SHOULD HAVE BEEN
AVAILABLE IN THE MARKET FOR A MINIMUM PERIOD OF TWO YEARS.
RESPONSE TIMES ALLOWED TO BIDDERS SHOULD BE AS STATED IN
THE PPR-2004.
THE AMOUNT OF SECURITY REQUIRED FOR BIDS SHOULD NOT
EXCEED 5% OF THE BID PRICE IN SINGLE STAGE TENDERS.
WHEN TWO-ENVELOPE BIDDING IS EMPLOYED THE BID SECURITY
SHALL BE SUBMITTED WITH THE FIRST (TECHNICAL PROPOSAL)
ENVELOPE TO BE OPENED, SO THAT NON-RESPONSIVE BIDS MAY BE
IMMEDIATELY REJECTED BEFORE TECHNICAL EVALUATION.
 WHEN TWO-ENVELOPE BIDDING IS EMPLOYED THE AMOUNT OF
BID SECURITY REQUIRED SHALL BE A FIXED AMOUNT COMMON
TO ALL BIDDERS. THIS FIXED AMOUNT SHALL NOT EXCEED 5%
OF THE PAS BUDGET FOR THE PROCUREMENT CONCERNED.

THE AMOUNT OF SECURITY REQUIRED FOR PERFORMANCE

GUARANTEES SHALL BE STANDARDISED NOT EXCEEDING 10% OF
CONTRACT VALUE
Thank You