Procurement Methods general

Essay by aradaieeUniversity, Ph.D. November 2014

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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,…)

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.

 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