PROCUREMENT METHODS Dr.imamjomezadeh
A Review by Amir Radaiee
TARBIAT MODARES UNIVERSITY
REFERENCES 1. PMBOK®Guide-Fourth Edition
2. The Standard for Program Management - Third Edition ©2013 Project Management Institute.
3. ICB version 3.0
4. CMAA Owner's Guide to Project Delivery Methods - August 2012
5. Supplemental Architectural Services ©2000 AIA - May 2011
6. AIA/AGC Primer on Project Delivery Second Edition - 2011
7. Qualifications Based Selection of Contractors © 2009 AGC - August 2009
8. Best Practices for Use of Best Value selections ©2008 AGC of America & NASFA
9. Public procurement in the European union: guide to the community rules on public works contracts
10. Regulations of the government of the Hong Kong special administrative region: Stores and procurement regulations - December 2010
INTRODUCTION procurement
CONTENTS
Review of
Procurement Alternatives
Award criteria
Award procedure
Contracting Alternatives
DEFINITION: PROJECT PROCUREMENT MANAGEMENT
Purchasing or Acquiring
(from outside of the project organization)
Products Services Results
PMBOK®Guide-Fourth Edition
PROCUREMENT INVOLVES:
obtaining the
best value for money from suppliers of goods or services
to the project.
ICB version 3.0
IT IS ABOUT THE NEEDS
Accomplish by the project team Acquire from
outside of the project organization
?
PMBOK®Guide-Fourth Edition
LIFECYCLE
Plan Procurements
Conduct Procurements
Administer Procurements
Close Procurements
PMBOK®Guide-Fourth Edition
PLANNING PROCESS
Whether to purchase or lease ?
What to acquire ?
How to acquire it ?
How much is needed ?
When to acquire it ?
Whether to acquire outside support ?
PMBOK®Guide-Fourth Edition
PROCUREMENT ALTERNATIVES
PROCUREMENT
Selection criteria
⢠Low bidder ⢠Best
qualifications
⢠Best value
Process
⢠one-step ⢠two-step process
⢠1-Qualification submittal
⢠2- Price proposal
Project award
⢠single ⢠Multiple
⢠(IDIQ) ⢠(MATOC) ⢠(SATOC) ⢠(JOC)
CMAA Owner's Guide to Project Delivery Methods - August 2012
AWARD CRITERIA
EUROPEAN UNION
Award criteria
1- Lowest price
2- The most economically advantageous
tender
Public procurement in the European union: guide to the community rules on public works contracts
(price, technical merit,â¦)
CMAA
Procurement Alternatives
1- Priced based
2- Qualifications based
3- Best value (1+2)
CMAA Owner's Guide to Project Delivery Methods - August 2012
AIA/AGC
Procurement Options
Contractor Procurement
Options
Architect Procurement
Options
Public procurement in the European union: guide to the community rules on public works contracts
Contractor Procurement
Options
Best Value: Fees
Direct Negotiation
Qualifications Based Selection
(QBS)
Best Value: Total Cost
Low Bid
AIA/AGC Primer on Project Delivery Second Edition - 2011
AIA/AGC
Architect Procurement
Options
Best Value: Fees
Direct Negotiation
Qualifications Based Selection
(QBS)
Low Fee
AIA/AGC Primer on Project Delivery Second Edition - 2011
AIA/AGC
Procurement Options Criteria
1- Direct Negotiation reputation, experience and/or past
performance
2- Qualifications Based
Selection (QBS)
demonstrated competence and qualifications
only
3- Best Value: Fees weighting of a combination of qualifications
and fees
4- Best Value: Total Cost weighting of the total cost and other criteria
such as qualifications
5- Low Bid lowest total cost
6- Low Fee lowest fee
AIA/AGC Primer on Project Delivery Second Edition - 2011
CMAA Owner's Guide to Project Delivery Methods - August 2012
COMPETITIVE SEALED BID (Low Bid)
Qualifications Based Selection of Contractors © 2009 AGC - August 2009
Competitive Sealed Bid (Low Bid)
Total Construction
Cost weighting = 100 %
Separate design &
construction contracts
could be combined in
Design-Build
QUALIFICATIONS BASED SELECTION (QBS)
Qualifications Based Selection of Contractors © 2009 AGC - August 2009
Qualifications Based
Selection (QBS)
Total Construction
Cost weighting = 0 %
Separate design &
construction contracts
could be combined in
Design-Build
QUALIFICATIONS BASED SELECTION (QBS)
Qualifications Based Selection of Contractors © 2009 AGC - August 2009
QBS criteria for selection
Demonstrated competence
Qualifications
Qualifications Based Selection of Contractors © 2009 AGC - August 2009
QBS other selection criteria
Experience and past
performance
Capacity to perform the
work
Financial strength
Bonding capability
Management plan
Subcontractor relationships
Technical capabilities
Firm Assigned
individuals
Desired delivery system
QBS CANNOT INCLUDE ITEMS SUCH AS:
Qualifications Based Selection of Contractors © 2009 AGC - August 2009
- Fees,
- price,
- work-hours
- or other cost information.
ï¶ These and other price-related terms are negotiated after selection.
Qualifications Based Selection of Contractors © 2009 AGC - August 2009
Benefits of QBS for a
Project
Best project team
Cooperation & collaboration
Lower design & construction
costs
Higher quality work result
QBS AS COMPARED WITH OTHER SELECTION METHODS
Qualifications Based Selection of Contractors © 2009 AGC - August 2009
Selection Method Basis of Final Selection Delivery Method
Competitive Sealed Bid - Low
Bid
Low Bid of Total Construction Cost DBB
B e
st V
a lu
e
(Q ua
lif ic
a ti
o n
s/ P
ri ce
) A) Best Value Bid Technical Score & Total Construction Cost DBB, DB
B) Best Value (JOC) Technical Score & Coefficient Applied to Unit Price
Book
JOC
C) Best Value Proposal Technical Score / Sum of Fees, General
Conditions, etc.
CMAR, DB, Non-
Multi Party IPD
Qualifications Based Selection
(QBS)
Demonstrated Competence and Qualifications,
Excludes Fees, Price, Work-Hours, etc.
CMAR, DB, IPD,
JOC
BEST VALUE SELECTION (Competitive Sealed Proposal)
Best Value Selection
(Competitive Sealed
Proposal)
Total Construction
Cost weighting = X %
Other criteria weighting = (100-X)%
Completed Design
Separate design &
construction contracts
could be combined in
Design-Build
Best Practices for Use of Best Value selections ©2008 AGC of America & NASFA
PROCESS
RFQ Short list RFP Final
Selection
Best Practices for Use of Best Value selections ©2008 AGC of America & NASFA
Types of submittals
Technical
Qualifications
Price
Pass/Fail (objective)
Scored (subjective)
Best Practices for Use of Best Value selections ©2008 AGC of America & NASFA
What is a "Best Value Selection?
SELECTION TYPES "Price"
Definition Qualifications?
Designer & Contractor
2 separate contracts
1. Competitive Sealed Bid - Low
Bid
"Price" only criteria for final
selection
Total Construction Cost
(TCC) No
Design-Bid-Build
Low Bid
2 .
C o
m p
e ti
ti ve
S e
a le
d
P ro
p o
sa l
- B
e st
V a
lu e "Price" and other
criteria in the
final selection;
Price=TCC
Total Construction Cost
(TCC) yes Best Value Bid?
"Price"= Fees/General
Conditions, etc.
(no TCC)
Fees, General Conditions,
Contingency, Etc. yes Best Value Proposal?
3. Qualifications Based
Selection
"Price" is not a factor in the final
selection criteria
NO YES CM at-Risk QBS
Best Practices for Use of Best Value selections ©2008 AGC of America & NASFA
EVALUATION METHODOLOGIES
Tradeoff Analysis Approaches
Formulaic Approaches
Best Practices for Use of Best Value selections ©2008 AGC of America & NASFA
EVALUATION METHODOLOGIES
Tradeoff Analysis
Approaches
Formulaic
Approaches
P R
O P
O S
A L
T Y
P E
S Non-Price Criteria
(Qualifications
or Technical
Proposal)
Rank or Score with
Points (optional)
Score with Points
(required)
Price Proposals
No Scoring (no points)
Or Score with Points
(optional)
Score with Points
(usually required)
Best Practices for Use of Best Value selections ©2008 AGC of America & NASFA
AWARD PROCEDURE
HONG KONG
TYPES OF TENDERING
1- Open 2- Selective 3- Single and
restricted 4-
Prequalified
Stores and procurement regulations - December 2010
EUROPEAN UNION
AWARD PROCEDURES
1- Open 2- Restricted 3- Negotiated
Public procurement in the European union: guide to the community rules on public works contracts
SINGLE & MULTIPLE PROJECT AWARD
CMAA
Project award
single Multiple
IDIQ
JOC
MATOC
SATOC
CMAA Owner's Guide to Project Delivery Methods - August 2012
M U
LT IP
LE P
RO JE
CT A
W A
RD
M ET
H O
D
Owner
Project 1, price 1
Project 2, price 2
Project n, price n
Firm 1
Firm 2
Firm i
Services
1- Of
by
2- To perform
A single contract vehicle
Procures
CMAA Owner's Guide to Project Delivery Methods - August 2012
IN D
EF IN
IT E
D EL
IV ER
Y /
IN D
EF IN
IT E
Q UA
N TI
TY (
ID IQ
)
Owner
Firm 1 Firm 2 Firm n
awards
master IDIQ agreement
To each
Billing rates
pr e-
es ta
bl is
h
proposal proposal proposal
submits submitssubmits
Ba se
d on
To
CMAA Owner's Guide to Project Delivery Methods - August 2012
M U
LT IP
LE A
W A
RD T
A SK
O RD
ER
CO N
TR AC
T (M
A TO
C )
Owner
Firm 1 Firm 2 Firm n
awards
master IDIQ agreement
To each
Billing rates
pr e-
es ta
bl is
h
proposal proposal proposal
submits submitssubmits
Ba se
d on
To
CMAA Owner's Guide to Project Delivery Methods - August 2012
SI N
G LE
A W
A RD
T A
SK O
RD ER
CO
N TR
AC T
(S A
TO C
)
Owner
Selected design-builder/ constructor firm
awards
submits
master IDIQ agreement
To
proposal
To
Billing rates
Based on
pre-establish
CMAA Owner's Guide to Project Delivery Methods - August 2012
JO B
O RD
ER C
O N
TR AC
TS (J
O C
)
Owner
Selected JOC contractor firm
1- awards
3- submit
pricing guide
pre-establish master IDIQ agreement
to
Pricing proposal (Rate*fixed pricing factor)
to
based on the rates in
Each tasks
2- assign
to
CMAA Owner's Guide to Project Delivery Methods - August 2012
CONTRACTING ALTERNATIVES
PMI
PMBOK®Guide-Fourth Edition
Contracting Alternatives
Fixed-price Time and Material (T&M)
Cost- reimbursable
Cost Plus Fixed Fee (CPFF)
Fixed Price Incentive Fee (FPIF)
Cost Plus Award Fee (CPAF)
Cost Plus Incentive Fee (CPIF)
Fixed Price with Economic Price
Adjustment (FP-EPA)
Firm Fixed Price (FFP)
Contracting Alternatives
Reimbursable
Guaranteed Maximum
Price (GMP)
Fixed Price or Lump Sum (LS)
Unit Price
Cost Plus Incentive Fee
Cost Plus Award Fee
Cost Plus Fixed Fee
Time Spent
Time and Materials
CMAA Owner's Guide to Project Delivery Methods - August 2012
CMAA
LUMP SUM CONTRACTING
Owner An entity
fixed scope of work
lump sum payment
in exchange for
Contracts with
CMAA Owner's Guide to Project Delivery Methods - August 2012
GUARANTEED MAXIMUM PRICE CONTRACTING
Owner An entity
fixed scope of work
a base cost + contingencies
in exchange for
Contracts with
CMAA Owner's Guide to Project Delivery Methods - August 2012
REIMBURSABLE CONTRACTING
Owner An entity
Fixed/variable scope of work
Payment calculation
method
in exchange for
Contracts with
CMAA Owner's Guide to Project Delivery Methods - August 2012
CMAA Owner's Guide to Project Delivery Methods - August 2012