WOLAYITA SODO UNIVERSITY

3. PROCUREMENT MANAGEMENT

Betelhem A.
OCTOBER 2019
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 3.3 Procurement Management Processes
Procurement Management process can be idealized into three
major processes. These include Preparation, Tendering, and
Evaluation Processes

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 3.3.1 Procurement Preparation

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.
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 Tender document
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.

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 Tender document cont.…
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;
Other Forms, Formats and Schedules.

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Tender document cont…

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 Tender document cont.…
Invitation for Tender (IFT): is a requisition
for interested bidders to participate for the
procurement of services / works / goods. It
shall be:
in accordance with the approved
provisions of the contract planning
phase and applicable laws
made public through the wide
covering media, newsletter, notice
boards, etc

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 Tender document cont.…
Usually Invitations for Tender include:
Name and address of Institutions issuing the
invitation and Clarification if requested,
Objective and Requirements of the Invitations,
Stages and accordingly qualification terms
Brief descriptions of the project
Sources of Fund and Eligibility requirements
Completion time, if necessary
Date, Place, Time and Conditions to get, submit
and open tender documents

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 Tender document cont.…
• Instruction to Bidder (ITB)

shall provide all the necessary

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 Tender document cont.…
The ITB document includes:
Introductory Parts covering sources of fund,
description of the project, eligibility and
qualification requirements, and necessary
obligations concerning the cost of tendering, site
visits, etc.
Tender Document Parts eliciting the contents,
clarification and amendment processes.
Tender Preparation Parts which states the
language, documents comprising and their
precedence, form of tender and appendix
requirements.

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 Tender document cont.…
The ITB document includes:
Tender Submission part stressing sealing and
marking of bids, deadline for submission of
tenders, and modification and withdrawals.
Tender Opening and Evaluation Parts covering
procedures and criteria for opening and
evaluation of tenders, and preference for
domestic or regional preferences.
Tender Award Parts stating Award criteria and
procedures, and Rejection Rights and Obligations

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 Approval of Tender Documents
Regulatory requirements enforced for:
Budgeting, Credit, Assistance and
Grant Policies;
Health, Safety and Environmental
Requirements;
Professional, Ethical and Legal
Requirements
demand checking, renewal and
approvals of Tender Documents. Check
list for review is the best practice used
for Tender Documents approval.

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 3.3.2 Tendering Phase
Invitation:
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. 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.

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 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
The bidders shall submit their offer on or
before the submission date and time.
Late bids are automatically rejected.

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 Tender Opening
Bids shall be opened in public on the date, at
the time and place
Ethiopian practice in tender opening for
public construction projects is that
 representatives from MoWUD
 Project Owner,
 Consultant ( if available) and
 Contractors (Who wish to attend)

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 Tender Opening
The following will be carried out during tender opening:-
Tender Attendee members shall take their place,
be registered and shall sign to attest their
presence during opening
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 will be read
aloud and recorded at the opening of bids.
Tender committee members shall sign on the
Tender documents.

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3.3.3 Tender Evaluation Phase
It 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 to be considered in determining the
least evaluated bidder are.
technical qualification,
completion time,
commercial terms of the offer

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 Preliminary Evaluations
Preliminary Evaluations are made for Eligibility
and Arithmetic Review requirements
Eligibility Requirements:
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,

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 Preliminary Evaluations cont.…
issues considered in eligibility requirements are:
Completeness and submittals of all
required documents,
Turnover requirements fulfilled
Power of Attorney, Signature and Sealing
Requirements, and
Appropriate Invitation, Packaging and
Submission Requirements.

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 Preliminary Evaluations cont.…
Arithmetic Review:
Tenders are not arithmetic error free. Therefore, it is a
formal evaluation process to review arithmetic before
carrying out detail evaluations.
Arithmetic review can be done if and only when
financial proposals are opened.

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 Detail Evaluations
Detail Evaluations include Technical, Commercial and
Financial Qualification requirements.
Technical requirements:
at this stage eligible bidders evidence of their ability to
perform the services required by the employer is to be
examined.( see per-qualification part )
Commercial Evaluation:
This includes
Benefit Forgone due to Completion Time;
Additional Costs due to differences in Foreign Currency
Exchange and Advance Payment requirements; and
Provisions of Domestic or Regional Preference Margins.

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Detail Evaluations Cont.…
Benefit Forgone due to Completion Time:
When tenders are offered with different completion
times, comparisons are made to determine the benefit
forgone taking into account the least acceptable
completion time as a basis for competitions.
Additional cost due to
Foreign Currency Exchange requirements
– When tenders have provisions to quote different
currencies, their comparison will be made based on
determining their effects due to the additional cost
incurred for variations in currency exchange
requirements.(convert all tender into one currency)

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 Detail Evaluations Cont.…
Advance Payment
• When different amounts of advance payment
are requested as part of the tender offer, this
does not give the same basis for evaluation. so
that, there shall be the same basis for proof of
competition
• Therefore, the evaluation should take minimum
advance payment request as a basis and
consider others for additional cost incurred due
to different mobilization advance requirements.

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Detail Evaluations Cont…
Domestic and / or Regional Preference
Domestic or regional preference margin is a
provision to give preference to local companies
even if their bid offer is not over by a
percentage often equals 7-10 % for construction
works
A contractor can be eligible for such preference
margin if and only if;
Its legal constitution is in accordance with the
Employers’ Country / Region
It is registered according to rules and regulations
of the Employers’ Country / Region

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Detail Evaluations Cont.…
A contractor can be eligible for such preference margin if and
only if;
It has proof that its majority of works are undertaken
in the Employers’ Country / Region
Its majority of capital shares are held by the
Employers’ Country / Region nationals
Its majority of the board of directors members are the
Employers’ Country / Region nationals
Its 50 % key personnel are nationals of the Employers’
Country / Region
Its arrangement to execute the work should not
involve major part of its work or net profit other than
the Employers’ Country / Region Nationals or Co -
Companies

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Detail Evaluations Cont…
Financial Offer Comparison:
After all commercial comparisons are considered on the
same bases; the Tender offer will be adjusted based on
the Cost - Benefit principle which involves adding costs
and benefits foregone. Besides, the preference margin
will also be added and Least evaluated Bidder is
Determined. That is:
TO evaluated = (TO + BFCT + ACAP + ACFE + ACPM)
Besides, Financial offers per groups of trades of works
are compared in order to evaluate whether tenders are
front loaded or not. Front loading often cause
disruption of projects or over zealous contractual
negotiations.

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Rejection of All Tenders
Rejection of All Tenders is solely the power of the
employer to decide, for the sake of fairness. it is
recommended that such rights shall be exercised in the
following cases:
All Tenders are found non – responsive during the
Preliminary evaluations
Evidences of lack of competitions such as
collusion among bidders, monopoly, etc
Lowest responsive offer is found unreasonably
high.
The following procedural Flow Chart is recommended
for Tendering following the Pre-Qualification procedural
flow chart shown previously.

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Detail Evaluations Cont…

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