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Project Implementation: Procurement &Contract Management
April 2012
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We would like to acknowledge the contribution of theProgramme Management Department in the
preparation of this presentation that will introducesome concepts and guiding principles for
Procurement & Contract Management
For more information on the topic please refer to the supervision training material of February 2012
Project Implementation: Procurement & Contract Management
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What are IFADs role and responsibilityin procurement for projects?
What are the tasks involved inprocurement supervision?
How is procurementsupervisionconducted?
How are contractsmanaged?
Project Implementation: ProcurementLearning Objectives
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Inefficient or ineffective procurement may have seriousconsequences:
expected project results and impacts not achieveddelays in project implementation
higher cost of implementation
Procurement is a sensitive activity:can be conducive to corruption and fraud
complexity of certain procurement actionscombined use of national & IFAD regulations / guidelines
Project Implementation: ProcurementIntroduction
Purchasing goods, services and works (procurement) is a
critical element of project implementation. . .
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Project Implementation: ProcurementTendering Process
Formation of Bid Evaluation Committee;N-O by IFAD
Prepare Specifications and tenderdocuments (Advertisement/ ITBs/RFPs/ RFQs as applicable) and No-
Objection (if required)
Key
ITB Invitation toBid
RFP Requestfor Proposal
RFQ Request forQuotation
Bid Evaluation and draft contractIFAD Prior Review and No-Objection (if
required)
Contract Award to best evaluated bid
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Project Implementation: ProcurementCommon Procurement Methods
International CompetitiveBidding (ICB): for high valuerequirements (1)
Advertise in widelycirculated newspapers,local representatives,Embassies, UNDevelopment ForumPre-qualificationPublic bid openingBid evaluation based onpoint scoring system(technical + financial)
National Competitive Bidding(NCB): for public procurement inBorrowers country (2)
Advertise in localnewspapers (note: foreign
suppliers may bid)
Same
SameSame
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Project Implementation: ProcurementCommon Procurement Methods
International Shopping (3):short-list at least three
reputable suppliers in atleast two member countries ofIFAD
issue ITB to the short-listed
suppliersreceive bids in original form(not faxed)
bid evaluation based onlowest cost for compliantoffers
sign contract
Local Shopping (4):prepare specifications andrequest for quotationsshort-list at least three reputablesuppliers
issue request for quotations tothe short-listed suppliers
Same
Same
Same
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Direct Contracting (5):
Extension of/ addition to an existing contractStandardisation of goods with existing project assets
Note: Competitive process is not required
Project Implementation: ProcurementCommon Procurement Methods
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Difference Between Procuring Goods and Works and SelectingConsulting Services . . .
GOODS, WORKS AND TECHNICALSERVICES
CONSULTING SERVICES
Product based Knowledge based
Open competition Selective competition
Public bid opening Non-public bid opening of technical offersPublic opening of financial proposals
Price is a major factor Quality is a major factor
Detailed specification Terms of Reference(general work program)
Single-stage procedure Two-stage procedure
Negotiations rarely Negotiations usual
Project Implementation: ProcurementGoods & Works vs. Consulting Services
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Procurement rules and proceduresapplicable to a particular project comefrom different sources:
national procurement rules andregulations
IFAD Procurement Guidelines project appraisal report loan agreement
Applicable rules, methods andprocedures are specified in the Letter tothe Borrower, as well as IFADprocurement review requirements
Project Implementation: ProcurementRegulatory Framework
Must adhere to regulatory framework . . .
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Procurement planning (in line withproject objectives and AWPB)
Preparation and issuance of biddingdocuments and invitation to bid
Opening and evaluation of offers
Negotiation, award and signature ofcontract
Monitoring of contract execution(technical and financial/administrative)
Delivery of goods/works/services
Payment
Project Implementation: ProcurementRole of Borrower/PMU in Procurement
PMU has overall responsibility for
Procurement
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IFADs Fiduciary responsibility:
Proper use of loan funds: IFAD must ensure loan proceedsare used only for intended purpose: while FMresponsibilities lie with CFS-Finance Officers, procurementrelated activities are in PMD, specifically CPM and SupportStaff
Economy and efficiency requirements in projectimplementation in general and procurement in particular:IFAD must ensure contract awards result from acompetitive process
IFAD must ensure equity, integrity,transparency and good governancein procurement process
Concept of no objection
Project Implementation: ProcurementImportance of Procurement IFAD Guidelines
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CPM must ensure:
coherence of procurement actions with project objectives, AWPB andprocurement plan, and timing within project implementation period
funds availability : cost of procurement must not exceed fundsallocated in loan agreement and annual budget
transparency and equity: procurement must be conducted incompliance with applicable rules and procedures
best value for money: procurement must be the result of a competitiveprocess
- IFAD staff must maintainneutrality and impartiality
- Flexibility is a must but knowrules and regulations
Project Implementation: ProcurementRole of IFAD in Procurement
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A complete financial and administrative procedures manual(Implementation/ Operations Manual)
A well-prepared start-up workshop with a technical sessionThe technical session should include discussions about theimportance of quality submissions, frequent causes of delays,timing issues
A procurement plansummarizing procurementmethods, applicable rulesand prior reviewrequirements as providedin the financing agreement
Project Implementation: ProcurementKey Tools for Successful Procurement (1)
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Assessment of procurement capacity at thenational/project level
Training of relevant PMU and national partners inall aspects of procurement
Procurement expertise at national/project level(complemented by on-going capacity building)
Procurement expertise atIFAD level (procurement
specialist to assist CPMin supervision)
Project Implementation: ProcurementKey Tools for Successful Procurement (2)
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I. Review of pre-qualification of bidders(for large/complex works or expected significant time/cost savings =>need advanced procurement skills)
Prior to issuance of invitations to pre-qualify, IFAD reviews:draft advertisement and invitation to pre-qualify
draft pre-qualification documents, including pre-qualificationquestionnaire and evaluation criteria and methodology
After borrowers evaluation of bidders submissions, IFADreviews:
draft evaluation report
list of pre-qualified bidders and statement of their qualificationsreasons for excluding any applicant from pre-qualification
Project Implementation: ProcurementPrior Review Procedures (1)
(refer to workflow 1 & checklists)
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II. Review of procurement of goods and works
Prior to issuance of invitations to bid, IFAD reviews: conformity of procurement with applicable rules/procedures,approved AWPB/procurement plan and funds availabilitydraft bidding documents, including invitation to bid, instructions tobidders, technical specifications, evaluation criteria, contractualconditionsproposed composition of the bid evaluation committee (forcomments)
After borrowers evaluation of bidders submissions, IFADreviews:
minutes of public bid openingbid evaluation report, including evaluation and comparison of bidsand award recommendationevidence of individual evaluations by each committee memberdraft contract
Project Implementation: ProcurementPrior Review Procedures (2)
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III. Review of procurement of consulting services
Prior to issuance of request for proposal (RFP), IFAD reviews: conformity of procurement with applicable rules/procedures, approvedAWPB/procurement plan and funds availabilitydraft RFP, including instructions to consultants, terms of reference,selection method and evaluation criteria, shortlist of consultants, costestimate, contractual conditions
After borrowers evaluation of technical proposals, IFAD reviews:technical evaluation report, including description of the process,summary of scores and award recommendationtechnical scores/ranking given to each consultant on each evaluationcriterion
scores given by each evaluation committee membercopy of proposals, if requested by IFAD
Project Implementation: ProcurementPrior Review Procedures (3)
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III. Review of procurement of consulting services using thefollowing methods:Quality and cost-based selectionSelection under a fixed budgetLeast-cost selection
After borrowers evaluation of financial proposals, IFAD reviews:minutes of public bid openingaccount of adjustments made to prices of the proposals anddetermination of the evaluated pricefinal evaluation report and award recommendation
(The above review step is not applicable for quality-based selection, selectionbased on consultants qualifications, single source selection or individual
consultant selection)
In all cases, IFAD reviews and provides No-Objection to thenegotiated draft contract
Project Implementation: ProcurementPrior Review Procedures (4)
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Project Implementation: ProcurementExample of Weights for Consultant Evaluation Criterion
EVALUATION CRITERION: POINTSConsultants / firms specific experience 5 - 10Methodology 20 - 50Key personnel (general qualificationsadequacy for the assignment) 30 - 60
Transfer of knowledge 0 - 10Participation by nationals 0 - 10
TOTAL 100
Could be divided into sub-criteria, but should be kept to the
essential For training - high points on key Personnel Points may be adjusted for specific circumstances
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At HQ Post-award review of procurement actions aspart of the withdrawal applications approvalprocess
Documents submitted by PMU mustinclude bidding documents, evaluationreports, award recommendations, signedcontracts and updated contract record
IFAD reviews conformity of procurementwith applicable rules/procedures, projectobjectives, approved AWPB/procurementplan and funds availability
Project Implementation: ProcurementEx-Post Review Procedures (1)
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Project Implementation: ProcurementEx-Post Review Procedures (2)
During IFAD supervision/Implementation supportmissions
Post-award review of procurement actionsbased on selection of a sample of transactions
PMU makes available to the supervision review team all procurement andpayments files, updated contract record and individual contract monitoringforms
Focus of supervision missionreview is conformity of procurementwith applicable rules/procedures,project objectives,approved AWPB/procurement plan,and funds availability
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Project Implementation: ProcurementEx-Post Review Procedures (3)
The IFAD supervision/Implementation mission teamalso:
assesses the physical and financial progress ofprocurement actions and the quality of final products(through site visits for works, review of consultantsreports, review of the contract monitoring forms, etc.)
identifies procurement issues and constraints
briefs/coaches borrower and/or PMU staff onprocurement issues
issues recommendations for improvement (e.g.training of staff, fielding of implementation supportmissions, streamlining of workflows, )
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Project Implementation: ProcurementHow to avoid delays in procurement (1)
Lack of procurement plan or inadequate/incomplete procurement plan
Poorly designed and/or unrealistic AWPB
Imprecise and ambiguous terms or documents for the bid evaluationmethod and selection criteria
Absence of confidentiality at various stages of the bid evaluation processand/or selection of winning bid
Failure to justify rejection of bids or non-selection of a competitive bid
Political interference in the procurement process
Corruption, fraud, conflicts of interest and miss-procurement
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Project Implementation: ProcurementHow to avoid delays in procurement (2)
Poor qualification of evaluation committee members
Lack of procurement capacity at borrower and/or project level
Poor understanding of IFAD procedures at borrower and/or project level
Confusion between national procedures and IFAD guidelines /loanagreement procedures
Cumbersome procedures and bureaucracy for approval of procurementdocuments at borrower level
Long delays in issuance of no-objections by IFAD
Long response time by IFAD to queries from PMU
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Project Implementation: ProcurementMonitoring of Procurement at HQ
Several source documents for monitoring procurement . . .
AWPB and updated procurement plan
Results of prior reviews and ex-post reviews at HQ
Supervision mission reports
Progress reports
Based on monitoring results, follow-up on issues and problems identified
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Project Implementation: ProcurementProcurement in Project Completion Process
To ensure that all goods are delivered/workscompleted/services rendered by the projectcompletion date:
Closely review and monitor the final procurement planand progress reports during the last year of the projectTake measures to facilitate completion of physicalexecution of contractsCancel contracts that cannot be executed within the
completion date
Ensure that only contracts executed by projectcompletion date are paid
Ensure that procurement files are completeand obtain missing documents from project
Report on lessons learned and makerecommendations for future projects
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Project implementation: Contract ManagementFive Stages of Contract Management
Monitoring & Control of performance
Change Management
Dispute Resolution
Financial Management & Payment
Contract Administration
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Project implementation: Contract ManagementMonitoring & Control of Contract Performance (1)
Establishment of Contracts Register
Establishment of Contract Monitoring Register
Establishment of Individual Contract Monitoring Sheet
Establishment of Contract Monitoring Form
Key tip
Contract management Guidelines- Service provider
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http://www.ifad.org/operations/finance/pack/refdoc/B_4.2_pg%2031b.xlshttp://www.ifad.org/operations/finance/pack/refdoc/B_4.2_pg%2031a.xlshttp://www.ifad.org/operations/finance/pack/refdoc/B_4.2_pg%2031c.doc8/12/2019 Contracts and Management
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Project implementation: Contract ManagementMonitoring & Control of Contract Performance
Key IndicatorsConsulting Services
Goods
Works
Timely delivery of key outputsResponsiveness to reasonable requestsThe quality services of services provided
The timeliness of deliveryQuantity deliveredCompliance with specifications
Timeliness of each stage of the worksCompliance with the bill of worksThe quality of the works
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Project implementation: Contract ManagementMonitoring & Control of Contract Performance
Tips
indicate actual delivery date of goods/ works/ services (or agreedmilestones)
written reminders to contractors/ consultants where there is adefault (including penalties)
file response from contractors/ consultants record agreed changes in delivery dates & penalties exactedInspection
As necessary, especially for works, it is necessary to ensure thatqualified independent oversight is provided to ensure that worksare constructed according to industry standards
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Project implementation: Contract Management
Acceptance
Service
Goods
Works
written confirmation that the required services
have been delivered on time & of an acceptable quality
completion of the Receipt and Inspection Report (RIR) . It may be necessary for the supply ofgoods to ensure that suitably qualified staff or
consultants are involved in the RIR
engineers report that timely construction ofacceptable standard has been completed
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Project implementation: Contract ManagementChange Management
Includes avoiding unnecessary changes as well as
incorporating necessary changes into contract
It is important is ensure necessary prior approval is
obtained including a no objection from IFAD if the value
of cumulative change exceeds 15% of contract value
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Project implementation: Contract ManagementRemedies
Termination
Dispute resolution
seek legal advice
determine if liquidated damages should apply inaccordance with contract
negotiation
arbitration
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Project implementation: Contract ManagementFinancial Management and Payments
Payments need to be made in line with the contract terms (normallywithin 30 days of submission of a valid invoice)
It is important to maintain an expected payment schedule as part
milestone of the Contract Monitoring Register to ensure that there is
sufficient liquidity in the Special Designated Account or to promptly
process request for direct payment
Delayed payments negatively affect the cost of future contracts wheredelayed payments are a regular feature, suppliers & contractors build in
margins to cover anticipated delays in payment or refuse to tender
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Project implementation: Contract Management
Performance Securities
Where required these should be provided by thesupplier/contractor in a timely manner. Theseshould be returned within 30 days of finalacceptance (contract completion as per
contract terms), including any warranty ormaintenance period
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