Session “Best practice for the procurement of services” Award of construction-related services...

Session “Best practice for the procurement of services”

Award of construction-related services (architect-engineer services, project management, local

construction supervision, etc) – practical examples

Wolfgang Berger & Manfred EssletzbichlerEBRD-Consultants, WOLF THEISS

Kiev, November 2012

1

Agenda

Intellectual services - refresher

Table for the assessment of descriptiveness vs. non- descriptiveness

Case Studies Case study I: Local construction supervision for a hospital project Case study II: Structural planning for renovation of a motorway

bridge

Best practice examples – lessons learned

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Intellectual services – refresher (1)

“Services […], insofar as the nature of the services to be provided is such that contract specifications cannot be established with sufficient precision to permit the award of the contract by selection of the best tender according to the rules governing open or restricted procedures” (Art 30 (1) c EU-PPD)

Characteristics of “intellectual services”

Services which do not (necessarily) result in the same outcome

Main objective is the solution to an assignment by intellectual “work”

Creative or innovative element in order to solve the problem / the task to be performed

Conceptual activity

Complete and exhaustive (prior) description is impossible (however, outcome or assignment can be described)

Clear and definite description of service would “anticipate” the solution and therefore “torpedo” the purpose of the tender

Bids are not comparable without negotiations 3

Intellectual services – refresher (2)

Indicators for “Non-descriptiveness” (1)

Bidders determine the exact scope of services and quality through their bids !

Various possible solutions !

Solution depends on bidder !

Unclear allocation of risks !

No “standardized” behaviour or process for bidder

High complexity of the scope of services

High number of different interests

Size (and complexity) of project

Number of components and parts

Number of parties involved

Number of planning stages and coordination rounds

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(Non-) Descriptiveness (1)

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descriptive / indescriptive

very low low average high very high

1-2 3-4 5-6 7-8 9-10 Points

A Complexity of organization

B Variety of peculiarities

C Risk of realization

D Number of editing stages

very high high average low very low

1-2 3-4 5-6 7-8 9-10 Points

E Repetition of project

F Repetition of organization

Total sum of assessment points

Table for assessment of descriptiveness as to design of works (1)


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1-2 3-4 5-6 7-8 9-10 Points

A Complexity of organization

B Variety of peculiarities

C Risk of realization

D Number of editing stages


1-2 3-4 5-6 7-8 9-10 Points

E factor of repetition of projects

F Factor of repetition of organization

Total sum of assessment points

Variety of CAs, users, planners, etc; reconstruction…

Difficult circumstances on premises; number of building parts, stages of realization…

Project execution with high level of innovativeness or risk potential; monument preservation requirements…

extensive single step works (partial works, phases of works)…


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1-2 3-4 5-6 7-8 9-10 Points

A Complexity of organization 1 1

B Variety of peculiarities 2 2

C Risk of realization 1 1

D Number of editing stages 4 4


1-2 3-4 5-6 7-8 9-10 Points

E Repetition of project 2 2

F Repetition of organization 2 2

Total sum of assessment points 12

Example: basement of modular home

Manufacturing costs € 5.000,-; plain premise; topographical survey is available; harmonized placing of object and test sounding; established ground water surface


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1-2 3-4 5-6 7-8 9-10 Points






1-2 3-4 5-6 7-8 9-10 Points




Example: annex to kindergarden

Manufacturing costs € 110.000-; difficulties in obtaining permits; inventory documents available; reconstruction of heating; structurally simple solution; inclusion of kindergarden in reconstruction; works during school vacation


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1-2 3-4 5-6 7-8 9-10 Points






1-2 3-4 5-6 7-8 9-10 Points




Example: airport terminal

Manufacturing costs € 22 Mio,-; reconstruction during business operations; all general planning services (architecture, structural-constructive adaptation, building physics, HVAC, luggage conveyor belt)…


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Table for assessment after evaluation

Only „supporting argument“!

Verbal reasoning is always necessary!

Descriptiveness

1 Point

2 Points

3

4

5

6

7

8

9

10

11

12

13

14

Grey Area

15

16

17

18

Non-descriptiveness

19

20

21

22

23

24

25

26

27

28

29

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Case Study I - General (1)

Project: construction of a public hospital in the north of Vienna

800 beds on a total area of 120.000m²

Contracting entity

Hospital Association owned by the city of Vienna ( “classic” contracting entity)

Subject matter of the tender

Local construction supervision (LCS)

Estimated contract value

Aggregated contract value of entire project approx. EUR 300 million

Value of services

EUR 15 million (based on the Chamber of Architect and engineer consultant's fee guidelines)

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Case Study I - General (2)

Kind of service

Priority services according to Annex II to the EU public procurement directives

Architectural services; engineering services and integrated engineering services (etc)

Tender procedure

Negotiated procedure (two stages) with prior EU-wide publication !

Pre-qualification stage

Tender stage

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Case Study I - Pre-qualifcation stage (1)

Deadline for submission of request to participate (RTP)

40 days

3 candidates proceed to second stage

Proof of suitability

Suitability to pursue professional activity

Proof of trade registry or “list of architects and civil engineers” enrollment

General professional reliability

Confirmation by competent fiscal authority

Excerpts from the criminal register in respect of all natural person in the candidates management

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Case Study I - Pre-qualifcation stage (2) Financial capability

Annual turnover (2007-2009) of at least EUR 5 million per year (excl VAT)

Professional indemnity insurance with indemnity limit of at least EUR 1 million per damage

Technical capability (1) Reference projects construction cost >EUR 30 million in health

sector Categories for reference projects

(general) LCS LCS for technical building installations in the area of

plumbing LCS for technical building installations in the area of

electrical engineering LCS for technical building installations in the area of medical

technology14


Technical capability (1)

Reference projects

Evaluation for reference projects (maximum of 8 reference projects 2 per category)

Construction costs

>EUR 30 million 3 points

>EUR 70 million 7 points

Relevance of reference project

reference project was hospital, geriatric or rehab facility points multiplied by 1,3

Additional point if project included (i) an surgery room, (ii) an ICU and/or (iii) was covered by the Austrian Public Procurement Act

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Key personnel

Project leader

At least 10 years of relevant work experience LCS and min 2 years with construction projects >EUR 30 million in health sector

Project manager for each of the (remaining) three categories

At least 8 years of relevant work experience and min 2 years with construction projects >EUR 30 million in health sector

At least 50 employees for the last 3 years (2007-2009) on average

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Case Study I - Tender stage

Award criteria

Price (weighting 25%)

“Professional interview” with key personnel (weighting 75%)

(General) LCS project manager (max 30 pts)

Answers time scheduling and schedule tracking

Compliance with costs and deadlines

Project manager LCS for technical building installations in the area of plumbing (max 10 pts)

Project manager LCS for technical building installations in the area of electrical engineering (max 10 pts)

Project manager LCS for technical building installations in the area of medical technology (max 10 pts)

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Case Study II - General (1)

Project: renovation of a motorway bridge (under traffic)

Bridge length: 237m

Contracting entity

ASFINAG ( “classic” contracting entity)

Subject matter of the tender

Structural planning for the renovation of a motorway bridge

Estimated contract value

Aggregated contract value of entire project approx. EUR 12 million

Value of services

EUR 300.000 (based on the Chamber of Architect and engineer consultant's fee guidelines for bridge constructions HOB-B)

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Case Study II - General (2)

Kind of service

Priority services according to Annex II to the EU public procurement directives

Architectural services; engineering services and integrated engineering services (etc)

Tender procedure

Negotiated procedure (two stages) with prior EU-wide publication !

Pre-qualification stage

Tender stage

19

Case Study II - Pre-qualifcation stage (1)

Deadline for submission of request to participate (RTP)

40 days

5 candidates proceed to second stage

Proof of suitability

Suitability to pursue professional activity

Proof of trade registry or “list of architects and civil engineers” enrollment

General professional reliability

Confirmations by competent fiscal authorities (no outstanding payments for taxes or social insurance; no insolvency proceedings)

Excerpts from the criminal register in respect of all natural persons in the candidates´ management

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Case Study II - Pre-qualifcation stage (2) Financial capability

Annual turnover (2007-2009) of at least EUR 5 million per year (excl VAT)

Professional indemnity insurance with indemnity limit of at least EUR 1,5 million per damage

Technical capability (1) Statement of the annual manpower for the last 3 years: >10 1 Reference project in the following categories

Planning for bridge construction projects: >50m Planning for road construction: >3km Planning and/or LCS for other construction projects: >EUR 20

million Creation of plans in the field of bridge construction: >50m Creation of plans in the field of road construction and guidence of

traffic: >3km

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Case Study II - Pre-qualifcation stage (3)

Selection Criteria

Technical capability (1)

Manpower: >25 (10 points)

Reference projects (90 points; full points for 3 reference projects in all categories)

References planning and LCS (45 pts)

Bridge construction (25 pts)

Road construction (15 pts)

Other construction projects (5 pts)

References creation of plans

Bridge construction (25 pts)

Road construction (20 pts)22

Case Study II - Tender stage

Award criteria

Price (weighting 25%)

Quality criteria (75%)

Concept for the construction works incl construction phases (30%)

Economic efficiency (20%)

Operation and maintenance (20%)

Esthetik (5%)

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Case Study II - Tender stage

Subject of negotiations

Content of the planning contract (specification of the content)

Contractual conditions (liabilities, contractual penalties)

Price

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Lessons learned – selection of the procedure

Selection of the award procedure

Local construction supervision (standardized contract)

open procedure or

restricted procedure (in case of a hearing)

Planning services and LCS (non-standardized contract)

negotiated procedure

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Lessons learned – provisions for conflicts of interests

In order to prevent conflict of interests, bidders should be excluded from the award procedure if they may have such a conflict.

Case 1: Contractor has a supervisory role (LCS) and an executive role (planning services or contraction works) in the same project.

Case 2: Contractor has a supervisory role (LCS) and a (sub)contract with a contractor who has an executive role (planning services or contraction works) in the same project.

Case 3: Contractor for planning services is the subcontractor of the construction company.

All these constellations should be forbidden in the contract.

In case of a breach:

contractual penalty and

right to withdraw from the contract.

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Lessons learned – principles financial and technical capability – award criteria

The references for the financial and the technical capability should be appropriate for the provided services (-> impact on the number of bidders, competition and prices).

The required references and award criteria shall not discriminate economic operators.

ASFINAG uses for its projects standardized tender documents, that outline or in special cases even specify perimeters for the references and the award criteria:

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Lessons learned – financial and technical capability (1)

References for financial capability:

Annual turnover: max 2-3 times of the annual agreement price (excl VAT)

Professional indemnity insurance limit: depends on the project volume: liability range: EUR 750.000 to 3 million

Minimum < project volume 3 million

Maximum > project 60 million

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Lessons learned – financial and technical capability (3)

References for technical capability:

Number of the average annual manpower for the last 3 years: max 1 or 2 times the manpower required.

Reference projects:

One reference project with half the size of the tender project should be sufficient

Projects completed before (up to) 10 years have to be accepted

Personal references rather than company references (exception: large projects)

The project reference hast to be completed or assigned at least since one year (most of the project has to be completed).

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Lessons learned – award criteria (1)

Relation price/quality:

Planning services (intellectual service): 30/70

LCS-services or project management: 50/50

Quality criteria:

Education and experience of the key personal

Personnel development

Reference projects

Hearing (LCS): Competence of the key personal

Quality of concepts (planning services)

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Evaluation by a Jury


Reference projects:

Principle: With two projects half the size of the tender project the bidder should be able to reach the full points

Examples: Specific perimeters for reference projects:

Length of a motorway: max 10km

Length of a tunnel: max 1000m

Length of bridge: max 80m

-> no technical reason for projects with more length.

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Example evaluation table:

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Criteria max. points weighting in %

Qua

lity R

efe

renc

es

LCS-Project Leader (PL)

Reference Project A 100 7 14

50

100

Reference Project B 100 7

Subst. PL Reference Project A 100 6

12 Reference Project B 100 6

Technicien Reference Project A 100 5

10 Reference Project B 100 5

Education and experience

LCS PL 100 4

9 Subst. PL 100 2,5

Technicien 100 2,5

Personnel development

LCS PL 100 2

5 Subst. PL 100 1,5

Technicien 100 1,5

Pric

e Price Modul: (relevant price: 100% of the awarded contract + 50% of the option)

100 50

Lessons learned – award criteria for LCS (1)

Hearings:

will only be used for large projects (increased time and evaluation effort)

Restricted procedure (max 5 hearings)

Purpose: evaluation of the competence of the key personal

the project leader of the contracting authority organizes the preparation of the questions and answers for the hearing. The members of jury and the tenderers get the questions during the hearing.

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The hearing is structured in 3 topics

a) Structure of the procurement procedure of the construction works and the tasks of the LCS-contractor

b) Structure of the construction contract, anti-claiming, the tasks of the LCS-contractor

c) Specific technical details of the project

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Combination hearing and multiple choice test:

Multiple choice test for questions about topic a) and b).

All the questions and answers, that could be asked, are available on an electronic platform.

The questions for each tenderer are randomly chosen by a computer program.

Questions about topic c) will be asked and answered orally.

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Lessons learned – award criteria

All the quality criteria (e.g. key personal, reduction of the delivery time etc) have to be a part of the contract and enforceable

Worst case:

70% weighting of the references of the key personal and

this personal gets changed after the award of the contract

-> contractual penalties for changing the key personal

Penaltie cap: 50% of the agreement price

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Contact

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Dr. Wolfgang BergerTel: + 43 / 050 / 10810686

Fax: +43 / 050 / 10810682

E-Mail: [email protected]

ASFINAGRotenturmstraße 5-91011 ViennaAustria

Contact

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Mag. Manfred EssletzbichlerTel: + 43 / 1 / 51510 – 5350

Fax: +43 / 1 / 51510 – 665350

E-Mail: [email protected]

WOLF THEISS Attorneys-at-LawSchubertring 61010 ViennaAustria

Session “Best practice for the procurement of services” Award of construction-related services...

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