Contracts and Management

8/12/2019 Contracts and Management

1/40

Project Implementation: Procurement &Contract Management

April 2012


2/40

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


3/40

2

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


4/40

3

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. . .


5/40


6/40

5

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


7/40

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

6


8/40

7


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


9/40

Direct Contracting (5):

Extension of/ addition to an existing contractStandardisation of goods with existing project assets

Note: Competitive process is not required


8


10/40

9

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


11/40

10

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 . . .


12/40

11

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


13/40

12

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


14/40

13

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


15/40

14

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)


16/40

15

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)


17/40


18/40

17

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)


19/40

18

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



20/40

19

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



21/40

20

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



22/40

21

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


23/40

22

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)


24/40

23


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


25/40

24


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, )


26/40

25

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


27/40

26

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


28/40

27

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


29/40

28

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


30/40


31/40

Project implementation: Contract ManagementFive Stages of Contract Management

Monitoring & Control of performance

Change Management

Dispute Resolution

Financial Management & Payment

Contract Administration

30


32/40

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

31
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.doc


33/40

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

32


34/40

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

33


35/40

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

34


36/40

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

35


37/40

Project implementation: Contract ManagementRemedies

Termination

Dispute resolution

seek legal advice

determine if liquidated damages should apply inaccordance with contract

negotiation

arbitration

36


38/40

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

37


39/40

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

38


40/40

Contracts and Management

Documents

Transcript of Contracts and Management