Chapter two

Procurement Management
 Definition, Types and Developments
•

Procurement and Contract Delivery system is the way Project

Owners together with Project Regulators and Financiers
determine the assignment of responsibilities to Project
Stakeholders along the Construction Process.
Procurement and Contract Delivery system is often determined
during the Basic Planning phase of Construction Project
Procurement and Contract delivery systems are developed
overtime.
The development was based on problem solving for the previous
type and the Development of the Construction Industry
technologically and management wise.
 Introduction and Purposes
•

Procurement is a process used to select the lowest competitive and

qualified bidder for procuring services or works or goods from
potential competitors based on reasonable relevant criteria.
It can also be expressed as a method used to employ or buy
services or works or goods for the value (in the form of money)
which includes reasonable profit.
Essentially, a bid or tender is a binding offer or proposal to furnish
certain specified promises for the amount stated in the tender.
Physical infrastructures are cost extensive and appropriate savings
obtained through competition are the main factor behind the
procurement process.
An effective and efficient procurement method ensures the
following rights called the "Five Rights". The Right Quality, The
Right Quantity, The Right Cost / Price /, The Right Counterpart
and The Right Time.
 The purposes of a Procurement Management System can be
summarized into two major points:
1. To satisfy the need for economy and efficiency, and
2. To provide equal opportunity to competitive bidders.
• The successful achievement of these purposes requires the
following seven characteristics
3.Neutrality: When the 1. Notice of advertisement:
specifications are prepared The advertisement shall be
care shall be taken to avoid made on an official newspaper,
preference to limited mass media, and notice boards
alternatives, provided etc. which can enable the
quality is not compromised advertisement to reach wide
range of competitors
4. Accessibility:
The place where bid 2.Proof of Competition:
documents are Tendering shall be as
purchased shall be much as possible proof of
clearly indicated. The competition. Unless
bid documents shall be otherwise conditions such
complete and clear as complexity,
specialisation of projects
require restriction to open
5.Impartiality competition, tenders should
6. Formality be unlimited competition
7. Avoidance of
subjectivity
 Procurement Methods
Procurement types can be classified based on the things to be procured and
the way how they are procured.
There are six bases for classifying procurement methods. These are:

Things Bidders’ Geographical Procurement Procurement

Bases
Procure Coverage Coverage Awareness Steps
d

Types Goods Competitive International General PN Single

Services Negotiated Regional Request for EoI Two Staged
Works National Specific PN Pre – Qualification
Local Post - Qualification
 Preliminary Evaluation
Procurement Team Detail Evaluation
Tender Document Award Recommendations
Approval of Tender Docs

Tendering
Procurement (Invitation - Opening) Tender
Preparation Evaluation

Invitation
Clarification
Submission and Opening

Procurement Management Process

Procurement Preparation phase
is meant for the formation of a Procurement Team;
the preparation of Tender Documents and
their approval for procurement implementations.
Procurement Team: Ethiopian Procurement Regulation states that a
Procurement team consisting of a minimum of five members shall be
established.
As Tender Evaluation is a joint technical and commercial exercise, the project
owner shall consider that the necessary experts shall be composed in the
procurement team.
Tender Documents are prepared to:
•Instruct bidders on the procedures for the preparation and submissions of bids,
•Inform prospective bidders about the nature of things to be procured,
•Inform bidders about the criteria for evaluation and selection of the successful
bidder, and
• lay down the contract conditions, delivery system, procurement methods and
contract types of the project.
Tender documents include:
• Form of Invitation to Tender or Request for Proposals;
• Instruction to Tenderers (Standard and / or Particular information) or
Terms of References;
• Prequalification Documents if necessary
• Forms of Tender
• Forms of Contract Agreement;
• General and Particular Conditions of Contract;
• Bill of Quantities and Drawings;
• Technical Specifications & Methods of Measurement; and
• Other Forms, Formats and Schedules.
Form
FormofofInvitation
Invitationfor forTender
Tender(IFT)(IFT)isisaarequisition
requisitionfor
forinterested
interestedbidders
bidderstoto
participate
participatefor
forthe
theprocurement
procurementofofservicesservices/ /works
works/ /goods.
goods.
They
Theyshall
shallbe:
be:
•in
•inaccordance
accordancewith withthetheapproved
approvedprovisions
provisionsofofthe
thecontract
contractplanning
planningphase
phase
and
andapplicable
applicablelaws
laws
•made
•madepublic
publicthrough
throughthe thewide
widecovering
coveringmedia,
media,newsletter,
newsletter,notice
noticeboards,
boards,etcetc
Usually
UsuallyInvitations
InvitationsforforTender
Tenderinclude:
include:
•Name
•Nameand andaddress
addressofofInstitutions
Institutionsissuing
issuingthetheinvitation
invitationand
andClarification
Clarificationifif
requested,
requested,
•Objective
•ObjectiveandandRequirements
Requirementsofofthe theInvitations,
Invitations,
•Stages
•Stagesandandaccordingly
accordinglyqualification
qualificationterms
terms
•Brief
•Briefdescriptions
descriptionsofofthe theproject
project
•Sources
•SourcesofofFund
FundandandEligibility
Eligibilityrequirements
requirements
•Completion
•Completiontime,
time,ififnecessary
necessary
•Date,
•Date, Place,
Place, Time
Time and and Conditions
Conditions toto get,get, submit
submit andand open
open tender
tender
documents.
documents.
Tendering Phase :
includes Invitation, Clarification, Submission and Opening of tenders.
Normally open tenders are floated for a period between 30 to 45 days.
Limited and Negotiated tenders can be invited between 7 to 15 days.
Invitations shall widened opportunities to the project owner by reaching all
potential and eligible competitors.
The invitation to tender shall clearly state:
the owner and his desirous service or works
eligibility requirements,
place to get further information,
where to purchase & submit tender documents,
how long the tender will be floated,
how should the tender offer be packed, and
when and where submission and opening of tender will
take place.
Clarifications:
can either be requested by interested bidder or carried out using a
pre - tender clarification meeting. In both cases, issues clarified shall
be sent (written) to all bidders participating for the intended services
or works.
The bidders shall submit their offer on or before the submission date
and time. Late bids are automatically rejected.
Tender Opening: Bids shall be opened in public on the date, at the
time and place mentioned in the invitation to tender and stipulated in
the tender documents.
Ethiopian practice in tender opening for public construction projects
is that, two representatives from MWUD in addition to the Project
Owner, Consultant (if available), and Contractors (Who wish to
attend) representatives shall attend during the tender opening
ceremony.
The following will be carried out during tender opening:-
Tender Attendee members shall take their place and be registered,
Tender box opened and checked for faulty things,
 Check the tender is the right one,
 Bids will be opened one after the other,
 All necessary data which deem useful such as Project Name, Name of
bidder, Bid Bond Amount, Tender Price, etc.
 will be read aloud and recorded at the opening of bids.
 Bidders representative shall sign a register to attest their presence
during opening, and
 Tender committee members shall sign on the Tender documents .
 Sample for Bid Recording Format for Basic Data during tender
opening
Project: _____________________________Bid Opening Date------
Employer:_______________________ Bid Submission Date_____

Bidders Tend Compl Currenc Perfor Alt. Ten Adva Othe

’ Name er etion y mance Offer der nce Reb r
Offer Time Require Securit w/Am Sec Paym ate Rem
ments y ount urity ent arks
Procurement Team
Bidders Who Choose to Attend
Others

Name Signature
Tender Evaluation Phase:
Is made to determine and make award recommendation for the least
evaluated bidder using preliminary and detail evaluations.

The recommended winner may or may not necessarily be the lowest

bidder. Factors such as technical qualification, completion time,
commercial terms of the offer, etc are used in determining the least
evaluated bidder.

Preliminary Evaluations are made for Eligibility and Arithmetic

Review requirements.
Before commencing the actual evaluation, it is useful and
recommended to complete a Basic Data Sheet for each tender to
record key information and enable coding .
Eligibility Requirements: Tenders are subjected to eligibility qualifications
before they enter to bid and their respective evaluations.
Most often sited issues considered in eligibility requirements are:
Valid & Up to date Trade and Professional License,
Valid & Up to date Membership to Financier Organizations,
Valid provision of Bid Security or Bond,
Completeness and submittals of all required documents,
Turnover requirements fulfilled
Power of Attorney, Signature and Sealing Requirements, and
Appropriate Invitation, Packaging and Submission Requirements .

These eligibility requirements together with basic alterations of the

conditions of the tender will be considered for responsiveness or
not. If the bidder offer provided weighs a major deviation from the
tender condition, the tender will be considered non - responsive
and could not be further considered