Works and Service Procurement Manual For Con Association

Procurement Training Manual
Table of Contents
1 THE APPROACH TO THE MANAGEMENT OF PROCUREMENT 1-3
1.1 INTRODUCTION 1-3
1.2 MOVING FROM ONE STAGE TO ANOTHER 1-1
1.3 Definitions of Procurement 1-1
1.4 Safeguarding the Position of the Investor 1-1
1.5 Principles of Procurement 1-2
1.6 Procedures and Contract Forms 1-3
1.7 Public and commercial (private) Procurement: Comparison 1-4
2 THE PROCUREMENT PLAN 2-5
2.1 General 2-5
2.2 Public procurement Organisation 2-6
2.3 Preparation 2-6
2.4 Contract Packaging 2-7
2.5 Bulking of Orders 2-7
2.6 Local Supply Capabilities and International Interest 2-7
2.7 Procurement Scheduling 2-7
2.8 Procurement Time Requirements 2-8
2.9 Choice of Procurement Methods 2-8
2.10 Plan Presentation 2-10
2.11 Plan Monitoring and Updating 2-10
3 PROCUREMENT OF CONSULTANCY SERVICES 3-11
3.1 GENERAL REQUIREMENTS 3-11

3.1.1 Conflict of Interest 3-11
3.1.2 Joint Ventures or Sub-consultancies 3-11
3.1.3 Methods of Selection 3-11
3.2 PROPOSAL PREPARATION & SUBMISSION 3-14

3.2.1 The Employer’s Requirements 3-14
3.2.2 Preparation of the Terms of Reference 3-15
3.2.3 Quality and Cost Based Selection (QCBS) 3-21
3.2.4 Setting the Evaluation Criteria 3-24
3.3 THE REQUEST FOR PROPOSALS 3-29

3.3.1 Preparation and Issuance of the Request for Proposals (RFP) 3-29
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3.3.2 Letter of Invitation (LOI) 3-30

3.3.3 Information to Consultants (ITC) 3-30
3.3.4 Data Sheet 3-30
3.3.5 Evaluation Methodology and Criteria 3-32
3.3.6 Technical and Financial Proposal Standard Forms 3-32
3.3.7 Terms of Reference 3-32
3.3.8 Standard Forms of Contract 3-32
3.3.9 Receipt of Proposals 3-36
3.4 PROPOSAL EVALUATION & AWARD 3-36

3.4.1 Evaluation Committee 3-36
3.4.2 Receipt and Opening of Proposals 3-38
3.4.3 Main Considerations 3-39
3.4.4 Evaluation of Proposals 3-39
3.4.5 Technical Evaluation Report 3-47
3.4.6 Notification to Consultants 3-47
3.4.7 Evaluation of Financial Proposals 3-48
3.4.8 Combined Evaluation and Final Score 3-48
3.4.9 Rejection of All Proposals 3-49
3.5 NEGOTIATIONS AND AWARD OF CONTRACT 3-49

3.5.1 Preparations for Negotiation 3-49
3.5.2 Matters Subject to Negotiation 3-49
3.5.3 Negotiation Procedures 3-50
3.5.4 Limits of Negotiations 3-50
3.5.5 Negotiation of Contract Conditions 3-51
3.5.6 Tender Acceptance and Contract Award 3-51
4 PROCUREMENT OF CONSTRUCTION WORKS 4-1
4.1 GENERAL REQUIREMENTS 4-1

4.1.1 Bidding Process 4-1
4.1.2 Method of Procurement 4-1
4.1.3 Competitive Bidding 4-2
4.1.4 Forms of Contract 4-3
4.2 PREQUALIFICATION 4-5

4.2.1 Prequalification benefits: 4-5
4.2.2 Prequalification disadvantages 4-5
4.2.3 Prequalification Process 4-6
4.3 POST-QUALIFICATION 4-10
4.4 BID DOCUMENT PREPARATION 4-11

4.4.1 Typical Tender Documents 4-11
4.4.2 Document Preparation 4-14
4.4.3 Standard Documents 4-14
4.5 BID PREPARATION & SUBMISSION 4-16

4.5.1 Tender Documents 4-16
4.5.2 Contents of each section of the Tender document 4-17
4.5.3 Tender Management 4-20
4.6 BID EVALUATION & AWARD 4-22

4.6.1 Tender Assessment 4-22
4.6.2 Contract Award 4-30
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1 THE APPROACH TO THE MANAGEMENT OF

PROCUREMENT
1.1 INTRODUCTION
Within the context of public entities, Procurement is the process by which those entities purchase
the inputs for public-sector investment, and thereby procurement plays a significant and important
role in a nation’s development. The quality, timeliness, local appropriateness and affordability of
those procured inputs can largely determine whether the public investment will be successful or
not. The cost of procurement can be considerable, resulting in the use of precious capital and other
resources.
It is essential that Procurement is well planned and managed as it is an expensive procedure that
can potentially end in the wastage of scarce resources, or even complete failure
Public procurement usually takes the form of acquiring, works, services, or goods, all of which can
be deemed to be a Project.
A Project can be considered to only exist for a finite period of time and can be said to have a life
cycle, during which it goes through several stages of development from the original idea to the
commissioning of the finished product.
In a particular project environment, the life cycle is recognised as a specific sequence of events and
actions, which lead from the original concept, through the delivery of the project to the use of the
project by the Employer. It is important to understand the project life cycle, as it will:
• Remind those working on the project of the initial intention of the project;
• Ensure that the project does not move prematurely from one phase to another; and
• Provide a focus for keeping the project moving.
A project life cycle can be defined as a “sequence of defined stages over the full duration of a
project.” The basic project life cycle can be characterised in general by four fundamental stages:
1) Germination - Proposal initiation
2) Growth - Design and appraisal
3) Maturity - Execution and control
4) Death - Finalisation and close-out
During this life cycle, the management emphasis will change. The definition of the project evolves
in a controlled manner, so that money and resources are committed only as the risk and uncertainty
is reduced.
The emphasis in the first two stages is to define the project, only committing resources to later
stages as the project is shown to be viable to the current degree of accuracy.
The emphasis of the third stage is to undertake the project work in a timely and cost-effective
manner.
The emphasis of the last stage is to complete the project, also in a timely manner and to ensure that
the facility is used to obtain the project benefits, and to ensure accurate records are taken for future
use.

1.2 MOVING FROM ONE STAGE TO ANOTHER

The Project Life Cycle provides a logical view of the sequence of stages, which a project must go
through to fulfil its objective or objectives. Each stage involves specific activities, all of which
must be completed before the project is allowed to move to the next stage. There is, in the
enthusiasm to complete a project, a tendency to want to rush the project on to the next stage but this
can cause serious problems for the project. Thus, the idea of a “gate” between stages must be
introduced and project managers must ensure that all that is needed before progressing through the
gate has been done. Some typical problems, which occur as a result of moving on too quickly, are:
• Authorisation for spending may not be approved thus causing later difficulties with the
Employer.
• Design may not be sufficiently completed before construction starts, leading to changes
and increased costs later.
• Statutory approval may not be in place, causing delay whilst this is subsequently sorted
out.
• Missing the minimum time given for each stacge of the process especially on the
procurement proceedings as per the regulations
. . . and there are many more.
1.3 Definitions of Procurement

Procurement is defined in different ways due to different perspective. Some of the definitions are as
shown below.
The purchasing, hiring or obtaining by any other contractual means of goods, works and
services. (Proc. No. 430/2005)
Procurement is the framework within which construction is brought about, acquired or

obtained (McDermott)
The acquisition of goods or services at the best possible total cost of ownership, in the right
quality, at the right time, in the right place for the direct benefit or use of government,
corporation or individuals generally via, but not limited to a contract.
(wikipedia.org/wiki/procurement)
1.4 Safeguarding the Position of the Investor

Ways in which the interests of different groups under the procurement process are protected
include:
• The adoption of transparent and objective procedures for all of the project
development and procurement.
• The introduction participatory procedures for project design.
• The early involvement of potential funding agencies to foster a spirit of project

‘ownership’ and commitment.
February 2017 1-1

• The use of effective contractual arrangements for implementation – incentives to

deliver good quality standards, economically and on time.
• The introduction of speedy reporting systems on progress and cash flow during
implementation.
1.5 Principles of Procurement

• economy;
• efficiency;
• fairness;
• reliability;
• transparency;
• accountability; and
• ethical standards.
Economy: Procurement is a purchasing activity whose purpose is to give the purchaser best value
for money. For complex purchases, value may imply more than just price, for example, quality
issues also need to be addressed. Moreover, lowest initial price may not equate to lowest cost over
the operating life of the item procured. But the basic point is the same: the ultimate purpose of
sound procurement is to obtain maximum value for money.
Efficiency: The best public procurement is simple and swift, producing positive results without
protracted delays. In addition, efficiency implies practicality, especially in terms of compatibility
with the administrative resources and professional capabilities of the purchasing entity and its
procurement personnel.
Fairness: Good procurement is impartial, consistent, and therefore reliable. It offers all interested
contractors, suppliers and consultants equal opportunities to compete and thereby, directly expands
the purchaser’s options and opportunities.
Transparency: Good procurement establishes and then maintains rules and procedures that are
accessible and unambiguous. It is not only fair, but should be seen to be fair. Transparency is best
achieved by government agencies through the use of effective advertising, public bid opening,
objective bid evaluation criteria, independent evaluation consistent with the stipulations of the
bidding documents, award to a qualified bidder having submitted the lowest evaluated bid without
negotiations, publication of award results, fair and speedy protest handling process, and disclosure
of signed contracts and prices.
Most procurement procedures are relatively transparent so that there is confidence that the
procedures are being implemented fairly. Transparency should reassure the investors and other
stakeholders. Procedural rules play an important role, particularly when it comes to open
competitive bidding. In turn, these procedural rules impose the use of well-formulated bidding
documents that will result in bid submissions free from qualifications. The same rules should
exclude any provision or mechanism that could affect the transparency of the process. Procurement
procedures other than open competitive bidding must be restricted within appropriate limits.
The general principles of the procurement process are used to ensure that:
• The tender and contract documents are unambiguous and clearly set out the rights
and obligations of the parties to the contract;
• The selection and appointment of the consultant or the contractor is carried out in a
fair and impartial manner that will withstand subsequent scrutiny;

• The consultant or contractor has the appropriate technical knowledge, experience,

and resources to undertake the works;
• The consultant or contractor has adequate financial resources to undertake the
works;
• The consultant or contractor is eligible in accordance with the rules of the
Employer and/or the funding agency;
• The consultant or contractor has a good understanding of the works to be
undertaken and any special features of the contract; and
• The cost to the Employer/funding agency will be reasonable for the works
envisaged
Accountability and Ethical Standards: Good procurement holds its practitioners responsible for
enforcing and obeying the rules. It makes them subject to challenge and to sanction, if appropriate,
for neglecting or bending those rules. Accountability is at once a key inducement to individual and
institutional probity, a key deterrent to collusion and corruption, and a key prerequisite for
procurement credibility.
Additionally to ensure the above principles are reflected in any public procurement in Ethiopia, it is
also essential that the laws and regulations of Ethiopia are also followed. The laws addressing
procurement are specified in Federal Government of Ethiopia’s Proclamation No.
649/2009(Determining Procedures of Public Procurement and Establishing its Supervisory
Agency.) and the Ministry of Finance and Economic Development’s Federal Public Procurement
Directive of 2010.
In addition to the above and when an external funding agency is involved, it is important to also
comply with the particular funding agency’s rules and regulations. This implies that even if the
above procurements principles are applicable for most of the procuring entities, it could also be
customized or amended depending on the procuring entities or the financing agency.
1.6 Procedures and Contract Forms

At the initiation of a project it is important that all possible procurement options are consider with the
objective of selecting the most appropriate procurement strategy for the project. It will be necessary to
consider how contracts will be packaged (within a project and for individual contracts), how design
responsibility will be allocated and how the contract price will be established. In addition, once these
decisions have been made a choice on which General Conditions of Contract should be used has to be
made.
There are many approaches to the procurement of works, which have been developed in the past fifty
years or so. Major building contracts are often of a lump sum form where there is no requirement to re-
measure the works and the Drawings, Specifications and Bill of Quantities documents, provided by the
Employers architects and engineers, are for the guidance of the contractor when submitting his lump
sum tender price.
For a number of reasons, there has been an increase worldwide over the past couple of decades, in the
use of forms of contract that move the responsibility for detailed design of all of the works from the
Employer to the Contractor. Such contract forms are quite common in the construction of a large
shopping or office complex. Two reasons for this shift for road and bridge contracts are the relative
success of such contract arrangements for many private sector funded BOT (Build Operate Transfer)
projects and a long-standing dissatisfaction with certain aspects of ‘traditional’ contract forms used in
road and bridge projects.
Notwithstanding the above comments it should be recognised that during the current and foreseeable
extensive ERA road development programme it will be the ‘traditional’ BOQ/Remeasurement contract
that is likely to prevail as the preferred form of contract, although alternatives should always be

considered. A significant contributor to the development of many of the currently used conditions of
contracts is the International Federation of Consulting Engineers (FIDIC).
1.7 Public and commercial (private) Procurement: Comparison

Differences
◼ Length and intimacy of relationships
◼ Transparency
◼ Policy objectives – public includes social and political objectives
Similarities
◼ Economy
◼ Organisation
◼ Systematic approach to planning, selection and follow-up

2 THE PROCUREMENT PLAN
2.1 General
The Procurement Plan can be central in the success of a project. It is a plan that should be used
throughout the project cycle to aid the main stakeholders in the management of the project.
The Procurement Plan, should be updated as necessary during the project, but at least on an annual
basis and in the initial stage of a long project should cover a period of at least eighteen months.
In determining its annual procurement needs arising from its various departments, a Public Body
has to adhere to the following procedures:
a) Require end users in the public body to submit their annual procurement needs,
b) Identify the need submitted by end users by type of procurement, quantity, quality and
source.
c) Identify goods, works and or services to which the public body gives priority and special
attention.
d) Ascertain that there are adequate suppliers for the needs
e) Determine the cost estimate for each type of procurement by reference to survey conducted
by the public body or price information obtained from other sources.
f) Ascertain that technical specification is prepared or will be prepared by end users.
Public bodies have to organize their procurement needs in packages based on procurement
needs data collected from end users and market price survey, and taking into consideration the
following points:
a) Where a situation arises in which a procurement comprises goods, services and works, the
public body shall classify such procurement on the basis of the value of the
component representing more than 50 % of the value of the procurement.
b) Assort, as far as possible, similar and related needs.
c) In respect of bulk purchase, ensure that there are adequate suppliers in the market or
classifying the procurement into lots based on category of supplies, which can attracts
competition.
d) Ensure that the procurement is convenient for execution and there are no hurdles
obstructing the procurement.
e) Organize the procurement in such a way as to open up opportunity for as many local
producers as possible to participate in the procurement.

2.2 Public procurement Organisation

Essential requirements:
Procurement Arm
◼ Respect for Regulations

◼ Record of Actions/Decisions
◼ Proper Accounts
Enforcement/Review Arm
◼ Prior Review
◼ Audit
Monitoring Body
◼ control of major procurements

◼ draft/update regulations
◼ general guidance to contracting agencies
◼ staff development and training
2.3 Preparation
In the Plan’s preparation certain fundamental decisions have to be taken. It is much more than
simply selecting the methods of procurement to use and programming the necessary actions,
although these will ultimately need to done. Initially you must consider: What will be the most
effective procurement procedure to accomplish the project’s aims?
It should be remembered that the planning process will not necessarily be sequential but iterative in
nature and may look at a variety of alternatives. The detail of the necessary planning will also vary
depending on whether the project is a specific scheme or contract.
No matter what type of project, or the level of detail and effort that has gone into the Procurement
Plan, it will be necessary throughout the project cycle to review and revise the Plan. Such issues as
timing, capacity constraints, and priority changes will inevitably lead to the need for modification
of the Plan. The need for such changes does in no way invalidate the Plan; it illustrates the dynamic
nature of the planning process.
The standard approach for specific projects, (i.e. fixed projects of known design and scope), is to
start by put together a list of all known requirements (goods, works and services) needed to
complete the project. This list then becomes the basis for deciding how these items should be
combined or divided into contract packages, what method of procurement should be used for each,
and the scheduling for procurement activities. This apparently simple preparation of the list of
requirements entails strategic decisions to be made on how the procurement and contracting will be
done.
An example might be a project to connect city A to city B that is 200 kilometres apart and will
include a tunnel and various major bridges, including reinforced earth structure. The project could
be undertaken using a design/build form of contract for the whole of the road’s length, including all
tunnel and bridge works, as a single contract. In such a case, the list would consist of the single
contract only. Alternatively, the project could be broken down into separate contacts for the design,
the consulting supervisory services, and construction contracts for less than the whole 200
kilometre project length. In this latter scenario, the procurement list would comprise of each
individual contract. Even further breakdowns involving the letting of separate contracts for the
tunnel and some if not all of the required structures. This would make the list even longer. The
level of detail in the list will obviously depend on how the project will be executed.

2.4 Contract Packaging

The aim in contract packaging is to group the procurement requirements in such a way as to ensure
economy and efficiency in processing and the delivery of the “right” goods and services at the
“right” time for the project. The first obvious step in grouping, unless this is a turnkey project, is to
separate needs into goods, works and services categories. Normally contracts will be awarded
within a single category, i.e. design, supervision, construction, etc.
2.5 Bulking of Orders

Within each category, needs should be examined to see whether it is possible and sensible to
combine similar or related items in a single package. Although, on the surface, this sounds as if it
would be desirable to do, several questions need to be considered before coming to this conclusion:
• Does the project involve co-financing with restrictions on the use of the funds; i.e., on the
particular kinds of contracts that can be financed?
• Are the goods needed at more or less the same time, or will there be long gaps between
the desirable delivery times?
• Are the goods intended for ownership and use by the same party or will there multiple
owners and users, making it simpler to let each party contract for its own goods?
In the past, conventional wisdom held that substantial savings could be achieved through bulking
of orders for like goods by getting economies of scale. With present order processing and shipping
methods, significant price differences occur only with very large differences in quantities.
2.6 Local Supply Capabilities and International Interest

The capacity and capability of local suppliers of goods and services to provide project
requirements, together with the potential interests of international bidders to participate in
a project are some of the things to be considered when deciding on contract packaging. If
there are well established local civil works contracting and goods supply capabilities, the
scope and sizes of contract packages should be set in such a way that permits local firms to
compete effectively. If international interest in bidding for contracts is low, for example,
because they are not established in the country or because of the known competitiveness of
local firms, package sizes can generally be set to match those local capabilities. However,
if there are reasons of economy or efficiency in choosing larger contract packages or if it is
known or believed that foreign bidders will be interested in bidding, these should be the
determining factors in contract packaging and sizing.
If there are local and foreign interests and capabilities to supply project procurement needs,
it may be possible to meet both of these by appropriate sizing and timing of contract
awards. Works contracts for roads, drainage structures, etc., may be divided into individual
packages that can be undertaken by local bidders and then calling for bids for 5 or 10 of
these packages at the same time (“slicing and packaging”). A local contractor can bid for
one or however many slices it can handle, and a large foreign bidder can bid for all slices
in the entire package, offering a discount if all or a specified number are awarded to it.
2.7 Procurement Scheduling

One of the considerations in choosing contract packaging is the timing when goods or
services are needed. After preliminary packaging plans have been formulated and, by
implication, the method of procurement to be used for each is tentatively determined by the
nature and size of the packages, it is necessary to verify that these combinations will permit
the goods or services to be delivered at the times they are needed for the project. The best
way to check this is to work backwards from the desired date of delivery to determine
whether sufficient time is available to carry out the necessary procurement steps for each
element.
2.8 Procurement Time Requirements

Each method of procurement involves different steps and/or different time requirements from the
time the procurement process is started until a winner is selected and a contract signed.
In some cases, it may be possible to modify certain contract packages and procurement methods
and shorten the time needed until delivery in order to meet desired schedules, provided that the
modified approach is still consistent with the procedures required and the types of approaches
permitted by funding agency policies and guidelines. In other cases, it will have to be recognized
that no other approach is permissible for that particular project component and that the time
required cannot be shortened by changing packaging or procurement methods. However, other
possibilities may exist for achieving deliveries at the desired time.
2.9 Choice of Procurement Methods

As can be seen from the foregoing sections, contract packaging, scheduling and choice of
procurement methods are all interlinked. In most cases, arriving at the procurement plan requires
iterative adjustments in all three of these aspects. It is impossible, for example, to think about what
contract packaging would be appropriate without having in mind how this affects the choice of
procurement method and the time that will be needed to carry it out.
Depending on the nature and size of the project and its procurement elements, procuring
entity may use any of the methods to procure goods, works and services. The choice of
procurement method depends on:
• the nature of the goods and services to be procured;
• the value of the procurement;
• the likelihood of interest by international bidders, which is a function of the local

availability and cost of goods and services;
• critical dates for delivery; and
• Transparency of procedures proposed.
Table 2.1 is a matrix of the available options and their characteristics.
Table 2.1: Matrix of the available options and their characteristics
Approximate/ Indicative
Procurement Method Suitable Applications Range of Times for each
Method
• The usual preferred method of Procurement, for • ICB for works with
International Competitive large contracts for goods, works and services prequalification
Bidding (ICB) usually valued at US dollars $10 million or more. needs: 16-20 months
• There is an interest by foreign suppliers or • ICB for works without
contractors in supplying the required goods or prequalification needs:
works. 8-12 months
• The requirements for the procurement aspect of • ICB for goods: 8-10
the project are widely available. months

• Although efficiency is important, there is no
specific urgency in processing the procurement.
• There are only a few known suppliers. All 5-6 months
Limited International eligible suppliers should be invited to bid.
Bidding • Small amounts of money are involved e.g. in
procurement of a small number of vehicles or
machine tools; or
• Exceptional reasons such as emergency actions
related to a major natural disaster, which may
justify the waiving of advertising of competitive
bids.
• LIB may be used for procurement of goods such
as pharmaceuticals, or highly specialized
equipment for construction of dams or works
facilities for offshore petroleum mining, where
there are only a limited number of known
suppliers or manufacturers.
• The values of goods and services being procured
National Competitive are small in relation to the effort that bidders need 5-6 months
Bidding (NCB) to tender;
• The capability and competitiveness of local
bidders makes it unattractive for foreign bidders
to compete for contracts below a certain value;
• The contract involves a significant transportation
component and are labour intensive;
• In the case of works, they are spread
geographically over time in a manner that upsets
the economies of scale;
• The costs involved in implementing ICB are
clearly and disproportionately high; and
• The goods or works are available locally at prices
significantly below those in the international
markets.
• Where extension of an existing contract is
Direct Contracting necessary as works are already underway; Direct contracting: 1-3
• Similar goods as those purchased under an months
existing contract are required (subject to
reasonableness of price and where no benefit can
be gained from competition);
• Standardization of equipment and spare parts of
compatibility with existing equipment is required;
• Equipment required by the Employer is
proprietary and there is only one source and no
alternative equipment or products with equivalent
performance characteristics are available;
• Critical components or materials from a particular
supplier are required by the contractor
responsible for a process design as a condition for
the guarantee for performance; and
• Direct contracting is also used where, in
exceptional cases, early delivery of essential
goods is needed in emergency operations.
• Goods required are readily available off-the-shelf
Shopping goods or standard commodities in quantities of Shopping goods: 1-2
small value; months
• In some cases, small simple works for e.g. for
essential repairs to restore a basic industry or
service, or other reconstruction work after natural
disasters where delays may result in greater
damage and loss of life or property; desired goods
are ordinarily available from more than one

source in the country.

• The Employer has ascertained that a schedule of
Force Account rates, cost - plus or target contract let Force account: 1-3 months
competitively would not be feasible, as quantities
of work to be carried out cannot be defined in
advance;
• Works are small and scattered or in remote
locations with no local contractors and
demobilization costs for outside contractors
would be too high;
• Works must be carried out without disrupting
existing operations by the Employer’s crew
familiar with those operations;
• The risk of unavoidable work interruptions is
better borne by the Employer than by a
contractor;
• No contractor is interested in conducting the
work at a reasonable price;
• It has been demonstrated that Force Account is
the only practical method for constructing and
maintaining works under special circumstances;
• Where national security would be compromised if
any other method was used.
2.10 Plan Presentation

For specific investment projects such as large infrastructure, proposed procurement arrangements
for all main components should be covered in the plan, including the overall procurement strategy,
methods of selection and timing sequence for the major contracts. For projects consisting of many
small elements and program financing, the plan description should emphasise the procedures that
will be used to choose sub-projects, how procurement decisions will be made, and by whom.
2.11 Plan Monitoring and Updating

During project execution, the original procurement plan should be regularly monitored and
updated. In the case of “standard” investment projects, the purpose is to see how actual
performance compares with the planned activities and to make changes in the plan if necessary. If
slippage occurs in the award or execution of one major contract, it may require rescheduling of
other related contract awards and deliveries of products.
The objective of procurement monitoring situations is not fault finding but rather to:
• gain better understandings of what causes delays or changes in plans,
• maintain efficiency in procurement operations, and
• improve forecasting and planning for other similar operations.

3 PROCUREMENT OF CONSULTANCY SERVICES
3.1 GENERAL REQUIREMENTS

Unlike in the procurement of goods and works in which all interested bidders are publicly invited
(sometimes through prequalification) to present their bids, the process of consultant selection is
normally based on obtaining a limited number of proposals from a shortlist prepared by the
Employer. Because it is too time consuming and expensive for Employers to invite and evaluate
proposals from all consultants who want to compete, selection is based on limited competition
among qualified firms that, in the Employer’s view or experience, are capable of delivering the
required services and desired level of quality.
From the consultants’ point of view, the use of a shortlist reduces the number of proposals to be
prepared, raises proposal quality, and increases the chances of the consultant winning the
competition. For the Employer, it is an effective way of attracting the best candidates for the
assignment.
3.1.1 Conflict of Interest

A consultant must not be hired whose independence is compromised by other interests. An advisor
on purchasing should not be linked to a supplier. Similarly, a consultant who is employed at design
stage may be excluded for implementation, (this Condition may vary between major funding
agencies). If this is understood in advance then the writing of Terms of Reference will not be
designed in favour of the design consultant.
3.1.2 Joint Ventures or Sub-consultancies

There is no general restriction on joint ventures of consultancy firms being on a shortlist, or on
such a grouping being submitted following a single firm being short listed. The tender documents
will normally provide some information concerning two or more of the short listed firms forming a
joint venture. This is sometimes forbidden on the grounds that it will reduce competition. The joint
venture is normally permissible with the approval of the Employer if it is initiated after the
invitation to submit proposal.
The advantage of joint ventures is the broadening of experience and skills that this usually brings to
a bid. The main disadvantage is clarity of management of the project. There have been cases of
failures due to partners falling out. Issues such as these must be taken into account when making a
decision on specific joint venture arrangements.
3.1.3 Methods of Selection
3.1.3.1 Quality and Cost-Based Selection (QCBS)

Quality and Cost Based Selection (QCBS) is based on both the quality and the cost of a
consultant’s proposal and is the most favoured and ‘traditional’ competitive process for the
employment of consultants. Because the cost is a factor in the selection, the approach is appropriate
when:
• the scope of work of the assignment can be precisely defined and the TOR are well
specified and clear; and
• the Employer and the consultants can estimate with reasonable precision the staff time as
well as the other inputs and costs required of the consultants.
QCBS is appropriate for assignments such as:

• feasibility studies and designs where the nature of the investment is clear and well defined,
known technical solutions are being considered, and the evaluation of the impacts from the
project are not uncertain or too difficult to estimate;
• preparation of bidding documents and detailed designs;
• supervision of construction of works and installation of equipment;
• technical assistance services and institutional development of Employer agencies; and
• procurement and inspection services.
3.1.3.2 Other Methods of Selection
Other methods of procurement of consultant services include:
• Quality Based Selection (QBS) is based on an evaluation of the quality of the proposals
and awarding the contract with the consultant who submitted the highest ranked technical
proposal.
QBS is appropriate if
o the downstream impact of the assignment is so large that the quality of the services
becomes of overriding importance for the outcome of the project;
o the scope of work of the assignment and TOR are difficult to define because of the
novelty or complexity of the assignment, or the need to select among innovative
solutions, or due to particular physical, social, or political conditions;
o the assignment can be carried out in substantially different ways such that cost
proposals may not easily be comparable; and
o the introduction of cost as a factor of selection renders competition unfair.
QBS should be adopted for assignments such as
o complex country sector and multidisciplinary investment studies;

o strategic studies in new fields of policy and reforms;
o master plans, complex pre-feasibility and feasibility studies, and design of complex
projects;
• Selection Under a Fixed Budget (SFB) is based on disclosing the available budget to
invited consultants in the RFP and selecting the consultant with the highest-ranking
technical proposal within the budget.
Because consultants are subject to a cost constraint, they will adapt the scope and quality of
their services to that budget. The Employer must therefore ensure that the budget is
compatible with the TOR and that consultants will be able to perform the tasks within the
budget. SFB is appropriate only when:
o the budget is fixed and cannot be exceeded,

o the TOR are precisely defined, and
o the time and staff-month effort required from the consultants can be assessed with
precision.
To reduce the financial risk for consultants and avoid receiving unacceptable technical
proposals or no technical proposals at all, SFB must only be used for well-defined and
simple assignments with a low financial risk for the consultants. SFB is frequently used by

Bank Borrowers when there is lack of flexibility in funds allocation and by the Bank itself
when funding is available only in fixed amounts from donor grants and from trust funds.
Typical assignments awarded under SFB are:
o sector studies, market studies, and surveys of limited scope;

o simple pre-feasibility studies and review of existing feasibility studies;
o review of existing technical designs and bidding documents; and
o project identification for which the level of detail can be matched with the available
funds.
• Least-Cost Selection, LCS; Under Least Cost Selection (LCS) a minimum qualifying
mark for quality is established and indicated in the RFP. Shortlisted consultants have to
submit their proposals in two envelopes. The technical proposals are opened first and
evaluated. Proposals scoring less than the minimum technical qualifying mark are rejected,
and the financial envelopes of the rest are opened in public. The consultant with the lowest
evaluated price is selected.
The LCS method is more appropriate for small assignments of a standard or routine nature
where well-established practices and standards exist and from which a specific and well-
defined outcome is expected, which can be executed at different costs, for example
o standard accounting audits,

o engineering designs and/or supervision of simple projects,
o repetitive operations and maintenance work and routine inspections, and
o simple surveys.
Employers may adopt this selection method when they wish to capture cost benefits from
mature technologies or new methods for which quality risks for the final output are
considered negligible.
• Selection Based on Consultants Qualifications, SBCQ; The Selection Based on

Consultant’s Qualifications (SBCQ) method applies to very small assignments for which
the cost of a full-fledged selection process would not be justified. Under SBCQ the
Employer first prepares the TOR then requests expressions of interest and qualification
information on the consultants’ experience and competence relevant to the assignment. The
Employer establishes a shortlist and selects the firm with the best qualifications and
references. The selected firm is asked to submit a combined technical and financial
proposal and is then invited to negotiate the contract if the technical proposal proves
acceptable.
The SBCQ method aims at reducing the cost and time needed to hire a consultant. This
approach does not, however, disregard quality, since some very small assignments are very
important (highly specialized advisory services with a limited scope and duration or
assignments that, although small, require consultants with the best possible qualifications).
SBCQ may be considered for assignments such as
o brief evaluation studies at critical decision points of projects (review of alternative

solutions with large downstream effects);
o executive assessment of strategic plans;
o high level, short-term, legal expertise;
o participation in project review expert panels; and
o trainings
• Single Source Selection, SSS; Under Single Source Selection (SSS) the Employer asks a
specific consultant to prepare technical and financial proposals, which are then negotiated.
Since there is no competition, this method is acceptable only in exceptional cases and made
on the basis of strong and convincing justifications where it offers clear advantages over
the competition. This is because:
o the assignment represents a natural or direct continuation of a previous one awarded

competitively, and the performance of the incumbent consultant has been satisfactory;
or
o a quick selection of the consultant is essential, for instance, in emergency operations
such as natural disasters and financial crisis; or
o the contract is very small in value; or
o only one consulting organisation has the qualifications or experience of exceptional
worth to carry out the assignment.
o When it is ascertained that the spare parts required for the equipments used by the
procuring entity are supplied only by the original supplier.
o Where it is technically justified that goods or services procured from a different
supplier will not be compatible with existing equipment or services of the procuring
entity.
The selection of the most appropriate method is made following consideration of the size,
complexity and character of the project in question. The technical and financial aspects also need to
be considered, and to do this it is important that the assignment’s objectives, aims and scope are
clearly defined and understood prior to any decision being made with regard the method of
selection.
3.2 PROPOSAL PREPARATION & SUBMISSION
3.2.1 The Employer’s Requirements

A crucial issue in the procurement of consultancy services is that the Employer is very clear what is
required of the consultant and that this information is transmitted as clearly as possible. The main
means of transmission is through the Terms of Reference (TOR).
The TOR needs to contain adequate background information on the project to allow the consultants
to prepare a responsive proposal. It is also important that the required scope of work is consistent
with the available budget.
The TOR should generally include the following sections:
• Background to the project;
• Objectives and Issues;
• Scope of the Work;
• Timetable;
• Outputs and Deliverables;
• Staffing;
• Inputs Provided by the Employer (Employer);
• Management Procedures;
• Budget (if appropriate);
• Proposal Requirements; and
• Appendices (if appropriate).
3.2.2 Preparation of the Terms of Reference
The procuring entity is responsible for preparing the TOR for the assignment. The TOR should be
prepared by a person(s), or firm specialised in the area of the assignment. It is important that the
scope of the services described in the TOR shall be compatible with the available budget. The TOR
should define clearly the objectives, goals, and scope of the assignment and provide background
information (including a list of existing relevant studies and basic data) to facilitate the consultants
preparation of their proposals. If transfer of knowledge or training is an objective, it should be
specifically outlined along with details of number of staff to be trained, and so forth, to enable
consultants to estimate the required resources.
The TOR should list the services and surveys necessary to carry out the assignment and the
expected outputs (for example, reports, data, maps, surveys). However, the TOR should not be too
detailed and inflexible so that competing consultants may propose their own methodology and
staffing. Firms should be encouraged to comment on the TOR in their proposals. The Employers
and consultants respective responsibilities should be clearly defined in the TOR.
3.2.2.1 Background to the project
The background needs to summaries the main aspects of the project and to describe the projects
objectives and aims. It should:
• Describe the project;

• Identify the Employer and the Employer organisation;
• Describe the rationale behind the project;
• Define the role of the consultants;
• Identify the source of finance;
• Set the assignment in context – what problem or problems was it set up to address? – what
is the history of the project? – how does the project fit in with sector strategy or other
projects?; and
• Give supporting facts and figures
3.2.2.2 Objectives and Issues
The TOR should precisely describe the projects objectives and the expected results so that
consultants are not misled. This description should include:
• The objectives, stated in a way which stresses the benefits of the project;
• Issues that need to be resolved. This will often include potential constraints on the project.
Typical objectives of a project could be:
• Preparation of a development programme;
• Determination of a project's feasibility (before an investment is made);
• Design of projects;
• Preparation of bidding documents;
• Supervision of work; or
• Provision of training.
Where necessary a Logical Framework approach, which identifies a hierarchy of measurable

objectives, could be used.

3.2.2.3 Scope of Work
This section of the TOR details all main activities to be conducted by consultants and the expected
results. The TOR should describe only the activities, not the approach or methodology by which
the results are to be achieved, since these are the task of the bidding consultants. Nevertheless, the
TOR may provide suggestions on the approach or the methodology that consultants could or should
use to execute the assignment and, under certain selection methods, can indicate the estimated staff
months required.
Often the project may require phased consultant assignments. In such cases, the TOR should be
more detailed for the first phase and less detailed for the following ones. The TOR details for the
subsequent phases will be refined as needed on the basis of the outcomes of earlier phases.
In a TOR, the scope of work of the assignment is usually defined by addressing the following
issues:
• Identify the principal component parts of the project;

• The components should each have a clear set of tasks and outcomes;
• Provide a minimum specification for the tasks required. For example, use the phrase ‘The
tasks to be undertaken shall include but not be limited to…’; and
• When listing and describing tasks, the following information should be considered:
o You will need to describe the technical content
o Do you (the Employer) require a particular method or approach?
o Identify aspects where you require the consultant to be innovative
o Explain any necessary relationships with other bodies and the need for consultation
o Identify any particular national or international standards which are required
o Describe the expected outcome of the work in general terms
o Avoid being too prescriptive, for example try to avoid listing the detailed staffing
requirement to undertake a task
Phased assignments are likely to require that the scope of work be modified depending on
intermediate results. For instance, the scope of work for a feasibility study originally covering a
number of alternatives will be reduced if, during execution of the assignment, some alternatives
prove unviable. Similarly, the scope of work can be expanded if more accurate studies than initially
anticipated become necessary. In such cases, the TOR should clearly indicate the circumstances
under which a decision will be made by the Employer to modify the scope of work.
3.2.2.4 Timetable
• The TOR should include the expected duration of the services, the required or preferred
start date and completion dates;
• Other key dates that may be included relate to the various phases of the project or project
‘milestones’. Similarly there could be included the time required for the Employer to
review or approve reports or other deliverable; and
• Where the timing of a particular activity or task is vital then this should be clearly stated
in the TOR.
3.2.2.5 Outputs and Deliverables

• Outputs are the benefits which the project is designed to provide to the Employer in order
to achieve the project objectives;

• The deliverables are best structured as a schedule that shows the performance targets for
the consultant; and
• Remember that the requirements with regard to submission of reports should be very
carefully drafted. It is always good practice to give guidance on format, content and size of
report. It is also necessary to make clear that the requirement is to produce and submit an
approved or agreed report. This then makes clear that the consultant will not be paid until
the report has been approved and that he will not be paid extra for amending or revising a
report. It is also good practise to state a time limit for the Employer to make written
comments on a submitted report.
3.2.2.6 Staffing
• This section of the TOR describes the staffing resources that are expected to be applied to
the work. We sometimes think of professional staff only in terms of qualifications and
specific technical or professional expertise. It is useful to consider defining the staffing
requirements more broadly with a focus on the competences required. Technical expertise
may be very important, however many projects may require skills for example in
interpersonal relations, team leadership and management, team working, training skills or
public consultation. There is often a ‘trade-off’ between formal qualifications and practical
experience and those preparing TOR should question the value of a staff member who may
have a high level academic approach in a role which may be more suited to an experienced
practical problem solver;
• When a team of consultants is to be employed there must be a focus on the competencies
required of the team leader;
• For a complex project it is usual for a core team to be reasonably well defined in terms of
expertise and period of input but for other shorter staffing inputs to be less well defined, for
example a list of possible professions with an overall time allocation. The CV’s could be
requested for all proposed staff but perhaps only the core staff will be evaluated;
• Where there is a considerable requirement for employment of local staff it is important to
explain clearly who is responsible for nominating the local staff, if anyone, and under what
terms and conditions they will be employed. When this area is uncertain and the Employer
has, for example taken responsibility for nominating staff, then the lines of responsibility
can be unclear. This in turn can lead to future conflict between the Employer and the
consultant; and
• It should be stated whether it is necessary for the entire consultant’s staff to be full time
members of staff of the firm. There are advantages in preferring to use permanent staff but
the reality of a complex project may be that sub-consultants or freelance consultants give a
necessary balance of expertise and experience. It is usual to insist that the team leader is a
permanent member of the consultant’s staff.
3.2.2.7 Inputs Provided by the Employer
Although items or services provided by the Employer are usually indicate in Information to
Consultants of the RFP, the TOR should also include the details of the facilities.
• Many projects include the provision of office facilities by the Employer. There can be
advantages in this arrangement. Such accommodation should be:
o Dedicated to the project;
o Appropriately equipped with modern office equipment – make it clear who is to
take responsibility for purchasing equipment, maintaining it and paying for running
costs, e.g. telephone;
o Secure;
o Accessible out of normal office hours if required.

• For a project which includes training then other inputs from the Employer include training
rooms;
• Other inputs provided by the Employer could include vehicles and drivers, laboratory
facilities, photocopying or other secretarial support etc; and
• An important area is that of local counterpart staff. The TOR should make it clear what the
qualifications, experience and proposed role are for such counterparts. It should be clear
what costs for such staff will be borne by the consultant.
3.2.2.8 Transfer of Knowledge
If transfer of knowledge is an objective of the assignment, the TOR should provide specific details
on the characteristics of the required services and ask consultants to propose training approaches
and methods
3.2.2.9 Proposal Requirements
This aspect may be included in the Request for Proposal under the Letter of Invitation or
Information to Bidders sections. The function here is to clarify what is required in the proposal
submission. The purpose of the procurement process is to select the consultant who is able to
deliver the best results. This means that proposals have to be evaluated fairly against criteria that
best reflect the needs of the project. Establishing very clear guidelines on how the proposal has to
be submitted does this. If this is not clear then proposals are not likely to be comparable and fair
evaluation will be difficult. Proposals should include:
• Consultant or consultants to be clearly named. If a joint venture is being proposed then the
lead firm must be identified;
• Consultants must provide relevant information about their company background and
experience of similar work, including references. The required format may be given;
• Consultants to provide information in the form of CV’s that relate their qualifications and
competencies to their project responsibilities, together with a description of their proposed
professional roles. Required formats are usually provided;
• A schedule showing all the staffing inputs proposed in terms of staff-days or months. The
schedule should include a summary estimate of all the chargeable time to be spent on the
project;
• The consultants understanding of the issues, and the strategy and approach they will adopt
to undertake the project;
• A statement of the technical methods and procedures that they will apply to the project;
• An indication by the consultants of how they will meet deadlines and achieve objectives;
• Price information. Different organisations have varying approaches on how they wish
consultants to present their price information. It is usual to provide a form for this financial
information; and
• Comments on the TOR are usually requested. This can assist the Employer in that issues
can be raised that may help with project logistics or clarify areas of uncertainty.
3.2.2.10 Appendices
Appendices can include:
• Forms and examples of formats;

• Extracts from reports, plans and policy documents;
• Maps and drawings;

• Statistical data;
• Lists of documents available for inspection;
• Lists of statutory authorities or other organisations who need to be consulted during the
project;
• Survey findings;
• Design criteria if appropriate;
• Detailed technical requirements; and
• A draft contract.
Table 3.1: checklist for Drawing up a TOR.
Requirement Done ✓
1 Background to the project
Describe the project
Identify the Employer and the Employer organisation
Describe the rationale behind the project
Define the role of the consultants
Identify the source of finance
Set the assignment in context
Give supporting facts and figures
2 Objectives and issues
The objectives
Issue that need to be resolved
3 Scope of Works
Identify the principal component parts of the project
The components set of tasks and outcomes
Provide a minimum specification for the tasks required
List and describe tasks:
Describe the technical content
Do you require a particular method or approach?
Identify aspects requiring the consultant innovative
Explain any necessary relationships with other bodies & need for consultation
Identify particular national/international standards required
Describe expected outcome of the work in general terms
4 Timetable
Expected duration of the services
Preferred start date
Preferred completion dates
Milestone dates
Time to review or approve
Timing of vital tasks or activities
5 Outputs and deliverables
Requirement Done ✓
Benefits which the project is designed to provide
Schedule of performance targets for the consultant
Requirements for submission of reports
6 Staffing
Describes the staffing resources that are expected to be applied to the work
Requirement for employment of local staff
7 Inputs to be provided by the Employer
Provision of office facilities
Provision of vehicles/drivers, laboratory facilities, equipment or secretarial support
Provision of local counterpart staff
Any other inputs
8 Consultant’s Obligations
Supply of vehicles
Supply of Computer equipment
Supply of any other items of equipment
Any other specific requirements
9 Management procedures
Management responsibilities;
Employer management personnel;
Steering group (where appropriate);
Management communication
Team induction if required;
Management review procedures;
Progress and Review meetings
Project Management Applications
Maintenance of Project Records
Location of Work
9 Budget
Decide if budget figure is appropriate or not (dependent on funding agency)
10 Transfer of knowledge
Characteristics of the required training, including numbers to be trained.
11 Proposal requirements (May be included elsewhere in the RFP)
Establishing very clear guidelines on how the proposal has to be submitted
12 Appendices (May be included elsewhere in the RFP)
Include if necessary

3.2.3 Quality and Cost Based Selection (QCBS)
3.2.3.1 The Selection Process
QCBS uses a competitive process among shortlisted firms that takes into account the quality of the
proposal and the cost of the services in the selection of the successful firm. Cost as a factor of
selection shall be used judiciously. The relative weight to be given to the quality and cost shall be
determined for each case depending on the nature of the assignment.
The selection process shall include the following steps:
• preparation of Terms of Reference (TOR);

• preparation of cost estimate and the budget;
• advertising;
• preparation of the short list of consultants;
• preparation and issuance of the Request for Proposals (RFP);
• Letter of Invitation (LOI);
• Information to Consultants (ITC);
• proposed contract;
• receipt of proposals;
• evaluation of technical proposals: consideration of quality;
• evaluation of financial proposal;
• final evaluation of quality and cost; and
• negotiations and award of the contract to the selected firm
To increase the likelihood of receiving responsive proposals, the RFP under QCBS indicates the
expected staff time estimated by the Employer to carry out the assignment. However, this estimate
does not bind the consultants, and they should propose the level of inputs that they consider
appropriate. But for fairness of the competition, sometimes it is advisable to fix the minimum input
of staff and allow bidder to propose any beyond the minimum requirement.

Figure 3.1: Flow Chart for QCBS
Finalise TOR
Finalise Cost Estimate and Budget
Call for EOI
Prepare Shortlist
Bank’s No-objection
Define Evaluation Criteria and

Minimum Qualification Marks
Prepare RFP
Send RFP
Prepare and Submit Technical and

Financial Proposals
Evaluate Technical Proposal
Public Opening of Financial Proposal if

Score of Technical Proposal is ≥min
qualifying mark
Perform Combined Evaluation
Negotiate with Highest Scoring Proposal

Contract Award
Start Assignment

3.2.3.2 Advertising
To obtain expressions of interest, the Employer should include a list of expected consulting
assignments in the General Procurement Notice. A Request for Expression of Interest (REI) for
large value contracts (depending on the limit given by the public procurement directive or the
financer guideline) shall also be advertised in a national newspaper and. In addition, Employers
may also advertise these contracts in an international newspaper or a technical magazine, seeking
‘expressions of interest.’ The information requested should be the minimum required to make a
judgement on the firm’s suitability and not be so complex as to discourage consultants from
expressing interest. Sufficient time (depending on the limit given by the public procurement
directive or the financer guideline) should be provided for responses, before preparation of the
shortlist.
3.2.3.3 Shortlist of Consultants
The Employer is responsible for preparation of the shortlist. The Employer should give first
consideration to those firms expressing interest that possess the relevant qualifications. Shortlists
should comprise three to six firms with a wide geographic spread relevant to the particular funding
agency; with no more than two firms from any one country and at least one firm from a developing
country, unless qualified firms from developing countries are not identifiable or other limitations
and procedure given by the procurement directive. For the purpose of establishing the shortlist, the
nationality of a firm is that of the country in which it is registered or incorporated. All firms that
expressed interest, as well as any other firm that specifically requests, should be provided with the
final shortlist of firms.
The shortlist may be comprised entirely of national consultants (firms with majority national
ownership and registered or incorporated in the country), if the assignment is small, a sufficient
number of qualified firms (at least three) are available at competitive costs, and competition
including foreign consultants is prima face not justified. However, if foreign firms have expressed
interest, they should not be excluded from consideration.

3.2.4 Setting the Evaluation Criteria
The project objectives and the underlying TOR determine the qualifications and experience
required from the consultants who will carry out the assignment. In adopting evaluation criteria, the
Employer seeks to ensure that the proposal selected will offer the best quality for the services
required. The following criteria are normally used as a basis for evaluation of technical proposals:
• specific experience of the consultants relevant to the assignment;

• adequacy of the proposed methodology and work plan in responding to the TOR; and
• key staff’s qualifications and competence for the assignment.
Depending on the particular project and its objectives, it may be necessary to include additional
criteria to aid the evaluation. Two typical criteria used when the project includes substantial
training or transfer of technology, or the encouragement of domestic capacity are:
• suitability of the transfer of knowledge programme (training); and

• participation by nationals among proposed key staff.
Details of the of the evaluation criteria is normally indicated in the Data Sheet contained in the
Instruction to Consultants (ITC) of the RFP. Table 3.2 below shows a range of points within which
the above evaluation criteria are normally allocated, with the actual distribution would depend on
the type of assignment under consideration.
Table 3.2: Typical Criteria Range of Points Allocation
Evaluation Criteria Points (weight)
Specific experience of the consultants 5 to 10

Adequacy of the proposed methodology and work plan 20 to 50
Qualifications and competence of key staff 30 to 60
Suitability of the transfer of knowledge program (training) - optional 5 to 10
National participation (nationals among key staff) - optional 5 to 10
Total 100
The criterion “qualifications and competence of key staff” is usually divided into the following
three sub-criteria:
• general qualifications;
• adequacy for the assignment; and
• Experience in region.
The other four evaluation criteria may also be divided into sub-criteria, although excessive detail
should be avoided.
When sub-criteria are provided, which is always the case for “adequacy of the proposed
methodology and work plan” and “qualifications and competence of key staff”, for practical
reasons the number of sub-criteria should be kept to a minimum (typically no more than three for
each criterion).
All adopted sub-criteria should be specified in the RFP. The points allocated to each of the sub-
criteria under “qualifications and competence of key staff” must be indicated in the RFP. It is also
recommended to disclose the points allocated to the sub-criteria of “adequacy of the proposed
methodology and work plan” and “suitability of the transfer of knowledge programme”, since it
increases the transparency of the evaluation.
In defining the weights there is the question as to whether the methodology and work plan, or
quality of staff, is more important. This will depend on the type of assignment. Since methodology
and work plan are usually less important in the final stages of the project (such as construction
supervision) and therefore warrant fewer points, key staff weight may be increased. Conversely,
since methodology and work plan are more important in the initial stages (such as master plans and
feasibility studies) and should therefore be allocated extra points, fewer points are therefore left to
key staff.
When cost is a factor of selection, the RFP has to indicate the relative weight assigned to the
technical and financial proposals. For standard assignments, the weight for quality is normally 80
percent with 20 percent given to cost. More than 20 percent weight to the cost of the services is
justified only in relatively routine and straightforward assignments (such as design of very simple
structures), whereas in no cases should it exceed 30 percent.. For assignments in which quality
considerations are relatively important, a minimum weight of 10 percent should be given to cost,
and when considerations of quality are of primary importance, QBS should be the preferred to
QCBS as the method of selection. The WB’s policy is that the weight of price should not be less
than 10 percent, or benefits of price competition would be minimal for the Employer compared
with the disadvantage of not being allowed negotiation of remuneration rates. However, the 80/20
weighting is a fixed requirement as per the federal public procurement and property administration
Agency (PPPAA) directive and no amendment is allowed with this regard.
It is not compulsory to apply a pass or fail threshold when evaluating technical proposals.
However, if cost is a feature of selection, a minimum technical qualifying mark may be specified in
the RFP to avoid the risk of accepting low-grade proposals at a very low cost. A qualifying mark in
the range of 70 and 80 percent is normal. Any technical proposal with a score below this threshold
is rejected, and the financial envelope is returned unopened. Setting the threshold too high
increases the risk of rejection of a majority of proposals. A non-responsive technical proposal shall
be rejected regardless of whether there is a pass or fail threshold.
3.2.4.1 Specific Experience
WB and PPPAA suggests a maximum of 10 points is allocated to the specific experience of

consultants in the field of the assignment because the Employer has already short-listed them on
the basis of their capabilities, that is, relevant qualifications and experience in projects of a similar
nature. Ideally, there should be little difference in the level of quality between short-listed
competitors from the point of view of their specific experience. However, the experience of short-
listed consultants must be evaluated to identify more specific aspects of their qualifications that
make them suitable candidates for the assignment. Depending on the importance of such specific
aspects, the Employer will decide how many points (between 5 and 10) to allocate to this criterion.
However, other financing agencies may allocate higher point for specific experience according to
their guideline. The aspects most frequently considered for evaluating specific experience are:
• Experience in Similar Projects. Evidence of having successfully carried out similar

assignments;
• Experience in Similar Areas and Conditions. The consultants have worked in regions or
countries with physical, cultural, social, and institutional characteristics comparable to
those of the country of the assignment;
• Size, Organization, and Management. The consultants have the capacity—for instance,
staff, organization, and managerial skills—to carry out the assignment. For some
assignments, consider how long the consultants have been established;
• Specialisation. For some assignments it may be important to evaluate the consultants’
specialised skills and access to particular technologies related to the assignment;
• Experience in Transfer of Knowledge and Training. The consultants’ experience in
transfer of knowledge and training of Employer’s personnel (if relevant); and
• Quality Management. The availability of a well-established QM system may be taken into
account for large and complex assignments.
3.2.4.2 Methodology and Work Plan
The methodology and work plan is a key component of the technical proposal and should be
evaluated carefully. Sub-criteria for evaluating this component of the proposal should include the
following:
• technical approach and methodology;
• work plan; and
• organisation and staffing.
Technical Approach and Methodology. Here consultants explain their understanding of the
objectives of the assignment, highlight the issues and their importance, and explain the technical
approach they would adopt to address them. They should then explain the methodologies they
propose to adopt, demonstrate the compatibility of those methodologies with the proposed
approach (for instance, the methods of interpreting available data; carrying out investigations,
analyses, and studies; and comparing alternative solutions), and address any modifications to the
TOR proposed by the consultants. In case the TOR requires the consultant to provide a Quality
Plan and carry out the assignment according to its provisions, an outline of the Quality Plan (its list
of contents, for example) should be included in this section of the proposal.
Work Plan. Here consultants propose the main activities of the assignment, their content and
duration, phasing and interrelations, milestones (including interim approvals by the Employer), and
delivery dates of the most important reports. The consistency of the technical approach and
methodology with the proposed work plan is a good indication that consultants have understood the
TOR and are able to translate them into a feasible working plan. A list of the final documents,
including reports, drawings, and tables to be delivered as final output, should be included here.
Organisation and Staffing. In this section the consultants propose the structure and composition of
their team. It will list the main disciplines involved, the key expert responsible, and any proposed
technical and support staff. The roles and responsibilities of key experts should be set out in job
descriptions. In case of association, this section will indicate how the duties and responsibilities
will be shared. Completion of the organisation and staffing section will allow consultants to
summarize the team composition and task assignments and prepare the time schedule for
professional personnel. An organisation chart illustrating the structure of the work team and its
links to the Employer and institutions involved in the project should also be provided. The
importance of organisation and staffing increases with the size of the team; in fact, larger teams,
such as those required by multidisciplinary projects, are far more difficult to manage.
The methodology, work plan, and organisation are all integrated. The work plan depends on the
technical approach and methodology adopted, and those in turn determine the required
organization.
3.2.4.3 Qualifications and Competence of Key Staff
Key staff refers to the consultant staff that have management responsibilities or have key
qualifications needed for the assignment. The key staff members are evaluated based on the
qualifications and experience shown in their curriculum vitae (CV). The evaluation is carried out
using the three sub-criteria indicated in the Instructions to Consultants
• General Qualifications. This sub-criterion covers the general experience of the candidate
(total duration of professional activity), level of education and training, positions held by
the candidate, time spent with the consultant as staff, experience in the region where the
assignment is to be carried out, and so on;
• Adequacy for the Assignment. This relates to the education, training, and experience of
the candidate in the specific sector, field, subject, and so on directly relevant to the
assignment and the proposed position. This factor is critical and should be given the
highest weight among the three sub-criteria; and

• Experience in the Region and Language. This illustrates the candidate’s knowledge of
national or local conditions, including culture, administrative systems, and government
organizations, and his or her ability to communicate in the national language.
The points allocated to the criterion “qualifications and competence of key staff” are distributed
among the above sub-criteria according to the percentages set out in Table 3.3 below.
Table 3.3: Range of Points Allocation of Key Staff
Evaluation Criteria Points (weight)
General Qualifications 20 to 30
Adequacy for the assignment 50 to 60
Experience in region and language 10 to 20
Total 100
The RFP should indicate the distribution of points and what fraction of the total refers to the team
leader and to the remaining key staff. Since the success of the assignment depends to a large extent
on the performance of the team leader, in no circumstances should he or she be given less weight
than any other staff member. In small teams the team leader may be given more than 50 percent of
the points.
The evaluation of key staff may require interdisciplinary weighting, particularly for assignments
requiring large teams. In this case, the RFP should indicate not only the weight relevant to the team
leader but also the weight given to each of the most relevant staff members. The proposal should
group the experts by discipline (or activity), and the Employer should evaluate them by applying
the established weight to each group.
The following example illustrates the interdisciplinary weighting of key staff for an assignment
relevant to the feasibility study of a new seaport. The weighting indicated in the RFP is supposed to
be as follows:
• The main criterion “qualifications and competence of key staff” is allocated 50 points, and
the three sub-criteria are allocated the following points:
– General qualifications: 10
– Adequacy for the assignment: 30
– Experience in region and language: 10
Total: 50
• The RFP states that, besides the management of the assignment entrusted to the team
leader, the most important disciplines are traffic forecast studies, alternative layout
analyses, and geotechnical studies. The relative weights indicated in the RFP are the
following:
– Team leader: 40%
– Traffic forecast studies: 10%
– Analysis of alternative layouts: 30%
– Geotechnical studies: 20%
The detailed point allocation resulting from the breakdown above is summarized in Table 3.4.
According to Table 3.4, the team leader can be given a maximum of 12 points under “adequacy for
the assignment.” Similarly, the geotechnical expert can be assigned a maximum of two points
under “general qualifications.” When more than one expert is proposed for the same activity, the
relevant points are evenly distributed among them. For instance, if in the above example a
consultant proposes three traffic forecast experts, each of the three is evaluated according to the
table, and then the total score is divided by three.
Table 3.4: Distribution of points between Team leader and other Key Staff
Team Leader Traffic Alternative Geotechnical

Forecast Layout Expert Expert
Expert
Sub-criteria Points Relative weight Relative weight Relative weight Relative weight
40% 10% 30% 20%
General 10 40% of 10 = 4 10% of 10 = 1 30% of 10 = 3 20% of 10 = 2

Adequacy 30 40% of 30 = 12 10% of 30 = 3 30% of 30 = 9 20% of 30 = 6
Experience in 10 40% of 10 = 4 10% of 10 = 1 30% of 10 = 3 20% of 10 = 2
Sub-total 20 5 15 10
3.2.4.4 Transfer of Knowledge (Training)
When transfer of knowledge is an important component of the assignment, more than 10 points can
be allocated to this area. This area could be divided into the following sub-criteria:
• Relevance of Program. Transfer of knowledge should cover in sufficient depth important

developments in a given sector that will benefit the Employer;
• Training Approach and Methodology. This refers to the methodology and work program
proposed to achieve the objectives specified in the TOR and ensure lasting results for the
Employer; and
• Qualifications of Experts and Trainers. This covers the qualifications in training of the
proposed specialists.
3.2.4.5 National Participation
Most funding agencies encourage consultants to maximise the use and expertise of nationals by
factoring it into the evaluation of proposals with a specific criterion. Depending on the importance
given to participation of nationals and the characteristics of the assignment, a maximum of 10
points may be given to this criterion. National participation is assessed on the basis of the
percentage share of national consultants covering key positions in terms of staff months over the
total staff months of key staff proposed for the assignment. Foreign consultants may satisfy
national participation requirements either by associating (joint venture or subcontract) with their
national branch, if one exists, or with independent national firms, or incorporating national
individual experts into the work team. In all cases, for national participation to be effective and
rewarded in the evaluation of proposals, national experts of the Employer’s country should be part
of the key staff.
3.2.4.6 The Point System
The allocation of points to the main evaluation criteria might fall within the ranges indicated in
Table 3.5, depending on the specifics of different assignment types.

Table 3.5: Allocation of Points Main Criteria
Specific Adequacy of Key Staff Transfer National Total

Experience Methodology Qualification of Participation Points
Work Plan Knowledge (Optional)
(Optional)
Guidelines 5-10 20-50 30-60 0-10 0-10 100
Type of assignment
Tech. Assistance/Training 5-10 20-35 50-60 0-10* 0-10 100
Design 5-10 30-45 40-50 0-10 0-10 100
Implementation/Supervision 5-10 20-35 50-60 0-10 0-10 100
* When training is an important component of the assignment, more points can be given to this criterion, and points of
the other criteria are reduced accordingly.
3.3 THE REQUEST FOR PROPOSALS
3.3.1 Preparation and Issuance of the Request for Proposals (RFP)

The RFP gives the short-listed consultant all the necessary information to prepare their proposals.
A PPPAA or other funding agency’s standard RFP format is normally mandatory and can be
adapted to suit any chosen selection method and includes the following sections:
As per the World Bank Standard

• Letter of Invitation (LOI)
• Information to Consultants (ITC),
• the Data Sheet
• Evaluation Methodology and Criteria
• Technical Proposal – Standard Forms
• Financial Proposal – Standard Forms
• the TOR/scope of works and
• Standard Conditions of Contract, and appendices
As per PPA Standard

• Part 1 Bidding Procedures
Section 1. Instructions to Bidders
Section 2. Bid Data Sheet
Section 3. Evaluation Methodology and Criteria
Section 4. Bidding Forms
Section 5. Eligible Countries
• Part 2 Schedule of Requirement
Section 6. Schedule of Requirements
• Part 3 Contract
Section 7. General Conditions of Contract
Section 8. Special Conditions of Contract
Section 9. Contract Forms

3.3.2 Letter of Invitation (LOI)
The LOI shall state the intention of the Employer to enter into a contract for the provision of
consulting services, the source of funds, the details of the employer and the date, time, and address
for submission of proposals.
The LOI also instructs consultants to indicate whether they intend to submit their proposal alone or
in association with other short-listed consultants and to ask Employer’s permission to the
association. This information is necessary to allow the Employer to invite other consultants in case
one or more short-listed consultants decline the invitation or decide to associate, thus reducing
competition. In these cases, the deadline for submission of proposals may have to be extended.
3.3.3 Information to Consultants (ITC)
The ITC shall contain all necessary information that would help consultants prepare responsive
proposals, and shall bring as much transparency as possible to the selection procedure by providing
information on the evaluation process and by indicating the evaluation criteria and factors and their
respective weights and the minimum passing quality score. The ITC shall not normally indicate the
budget (since cost is a selection criterion), but shall indicate the expected input of key professionals
(staff time). Consultants, however, shall be free to prepare their own estimates of staff time
necessary to carry out the assignment. The ITC shall specify the proposal validity period.
3.3.4 Data Sheet

The Data Sheet is the part of the ITC that contains specific information relating to the Employer
and the assignment. The column marked “Clause Reference” refers to the clauses of the ITC under
which the Employer typically provides assignment-specific information to the consultants. The
clause number given in the examples below are for illustrative purposes only and may differ from
project to project.
The Data Sheet can be modified for specific country or project conditions that are not addressed by
the ITC standard text. For example, adding new clauses not provided for in the ITC. The following
paragraph provides clarifications to some of the references to the typical clauses that are normally
included in the Data Sheet.
Clause reference:
• Name, objectives, and description of the assignment. This should briefly set out the most
important features of the assignment.
• Pre-proposal conference. A pre-proposal conference is recommended for complex assignments

when the proposal preparation benefits from field visits and collection of documents. The
conference should be convened after consultants have had sufficient time to examine the RFP.
However, the conference should leave enough time for consultants to prepare their proposals,
taking into account the clarifications obtained during the conference. Minutes of the conference
should be made available to all short-listed consultants. Attendance at the pre-proposal
conference is normally optional.
• Inputs provided by the employer. A detailed list of the employer’s inputs is usually included
in the TOR or in the draft contract. Under this heading, the Employer should provide all
additional information needed for consultants to comprehend the form and the extent of the
employer contribution. Consultants may seek clarifications as necessary on such inputs because
any ambiguity in what the employer will provide may become an issue during technical and
financial evaluation of the proposals.

•
Clauses on fraud and corruption. The clause dealing with fraud and corruption in the
Standard Form of Contract should be indicated. For large contracts, if the Employer’s country
has an anticorruption programme that applies to all similar public selections of consultants, the
relevant laws may be listed.
• Validity period of the proposal. The validity period should allow for an adequate period for
negotiation of the contract with the successful consultant. It should also allow for possible
negotiations with the consultant ranked second in the event that the negotiations with the first
are unsuccessful. However, excessive time for the proposal’s validity poses a strain on
consultants, who have to keep their staff available for the assignment for an indefinite period. If
the period is too long, the risk of staff substitution increases considerably. Usually, a reasonable
period is between 60 and 90 days after the proposal submission date.
• Request for clarifications. The deadline for requesting clarifications should allow the
Employer sufficient time to prepare responses and permit the consultants enough time to take
them into account before submitting their proposals. Therefore, no less than 10 to 15 days
should be provided.
• Language(s) of proposals. Apart from a funding agency official languages (normally English),
the language specified in the Data Sheet may be the Employer’s national language. Only the
official national language (if widely used), not just a commonly used language, can be
prescribed.
• Associations among short-listed firms. To encourage competition, associations should not be

allowed when only three consultants have been invited to submit proposals. Under this heading
the consultant should be provided the following information:
• In case of joint ventures, one of the consultants should be designated as leading partner,
and a power of attorney for such leading partner should be provided by the associated
consultants along with their proposal, and each of the partners should sign the proposal.
• In case a consultant engages other consultants as sub-consultants for clearly identified

tasks, the former prepares and signs the proposal, and remains liable for the execution of
the services by the sub-consultants.
• Estimated number of professional staff months required for the assignment. Only the
estimated total of professional staff months, not the individual staff months, should be indicated.
Staff months should never be disclosed when the available budget is given.
• Taxes. Since consultants are required to estimate in their financial proposals all identifiable
local taxes as a separate amount, they should be made aware of the Employer’s tax regimen
and any agreement existing between the Employer and the funding agency concerning taxation,
or they should be told where this information can be obtained.
• Proposal submission date. Employers should allow consultants a reasonable time for the
preparation of proposals. For small and simple assignments, four weeks between the invitation
and submission should suffice. For large and complex assignments, however, where the
consultants have to associate or visit the site, periods of up to three months are needed.
• Evaluation sub-criteria and relevant points. The Employer should indicate here the sub-
criteria selected for the following four criteria, together with their relevant points:
• specific experience
• adequacy of proposed methodology and work plan
• suitability of training program

• local participation.
The Employer should also indicate the points they have allocated to the three sub-criteria specified
under the criterion “qualifications and competence of key staff.” When interdisciplinary weighting
of key staff is required, the relative weights assigned to the team leader and to each one of the
experts responsible for the most significant activities should also be indicated here. This must be
consistent with clause 3.3 (iv) of the Data Sheet.
• Single currency for price conversion. This would be Ethiopian Birr in the case of Ethiopian
projects.
Source of the official exchange rate. This should be an official source, such as the central bank, a
commercial bank, or a internationally circulated publication.
Date of exchange rate. This date should not be earlier than four weeks prior to the deadline for
submission of proposals, or later than the original date of expiration of the period of validity of the
proposals.
3.3.5 Evaluation Methodology and Criteria
• Formula for determining the financial score. The Data Sheet proposes the following
inversely proportional formula: Sf = 100 x Fm/F, where
• Sf means financial score
• Fm means lowest price offered
• F means the price of the proposal under consideration.
3.3.6 Technical and Financial Proposal Standard Forms

The objective of these forms is to allow the requested information to be presented in a clear and
readily comparable manner and to allow Employers to easily understand and evaluate proposals in
accordance with the established criteria.
3.3.7 Terms of Reference
See Section 3.2.2 of this Manual.
3.3.8 Standard Forms of Contract

The form of contract should be prepared by the Employer on the basis of one of the Standard
Forms of Contract annexed to the Standard Request for Proposal, or other forms agreed upon when
the standard forms are not suitable for the specific assignment. Although the General Conditions of
Contract (GCC) of the Standard Forms cannot be modified, the Special Conditions of Contract
(SCC) may be modified by the Employer before issuing the RFP to adapt them to the specific
requirements of the assignment or to add new clauses that the Employer considers necessary (for
example, a penalty clause for failure on the part of the consultant to submit contractual deliveries at
the time due).
Employers need to consider how best to structure contracts for required services. Two main
considerations determine what type of contract to adopt in consultant assignments:
1) the nature and degree of definition of the assignment; and
2) the distribution of risks between the Employer and the consultants.

The level of contract supervision the Employer will be able to provide may also factor in the
decision.
The following types of contracts are normally considered:
• lump sum
• time-based
The first two types of contract are described briefly in the following paragraphs.
3.3.8.1 Lump-Sum Contracts
Lump-sum contracts are used mainly for assignments in which the content and length of the
services and the required output of the consultant are precisely specified, and for these reasons the
consultant can generally control the scope of work and duration of services. Under a lump-sum
contract, the Employer agrees to pay the consultant a fixed sum of money for certain products of
specified technical characteristics, such as study report, project design, and tender document, to be
delivered within a specified deadline, the quality of which can usually be readily assessed.
Lump-sum contracts are often used in relatively simple and clearly defined assignments such as
planning and feasibility studies, environmental studies, detailed design of infrastructures,
preparation of databases, and surveys. Lump-sum contracts are also adopted in cases of
sophisticated and clear-cut assignments in which external factors generally do not influence (delay
or substantially change) the outcome of the advice or study being provided.
Remuneration is fixed for the life of the contract, and no physical or price contingencies are
normally provided. Payments are made in accordance with a contractually agreed upon schedule at
the delivery of an agreed upon product. If payments are made against a schedule of percentage of
work completed, then, as a minimum, a progress report and supporting evidence that the work has
been completed should be submitted.
The lump-sum contract is easy for the Employer to administer and requires little technical
supervision, as no matching of inputs to payments is required. This type of contract is also
indicated for employers with relatively small or weak administrative and managerial structures.
A lump-sum contract transfers cost risk to the consultants and gives Employers certainty about the
costs involved in procuring consulting services. However, they can increase the risks for the
Employer on the quality of the advice. Because fees are fixed, after the contract is awarded
consultants have the opportunity of internalising efficiency gains and have incentives to reduce
inputs against levels they had originally planned to increase profit margins.
These incentives can be offset by the Employer’s ability to assess and enforce quality standards.
The Employer can engage peer reviewers to monitor the quality of advice and ensure that important
issues are completely covered. This activity requires relatively little time or expense. If quality is
not easy to assess, the timely delivery of the agreed upon output may be a substitute means of
assessment.
Before committing to a lump-sum contract, consultants should evaluate the main technical,
institutional, and where necessary, political risks that may affect their capacity to manage these
parameters, and they should make sufficient provision for them in the contract.
3.3.8.2 Time-Based Contracts
Under this type of contract, the consultant provides services on a timed basis according to quality
specifications, and consultant’s remuneration is based on:
1) agreed upon unit rates for consultant staff multiplied by the actual time spent by the staff in
executing the assignment
2) reimbursable expenses using actual expenses and/or agreed unit prices.
Time-based contracts transfer cost risk to the Employer. They require a system to monitor and
control assignment progress and costs because consulting firms have incentives to put more
resources on the job, including more senior resources.
Time-based contracts are recommended when:
• the nature and scope of the services are such that the TOR cannot be established with
sufficient precision, as may be the case for complex or unusual assignments that are
difficult to define, such as management of complex institutions or studies of new
approaches
• the duration and quantity of services depends on variables that are beyond the control of
the consultants, or the services are related to activities by third parties—for instance,
supervision of implementation assignments
• the output required of the consultants is difficult to assess, such as for technical assistance,
institutional development, or emergency situations, in which the Employer’s needs for
assistance may evolve during execution of the assignment
• transfer of knowledge and training between the consultant and Employer trainees is
required.
The Employer has only a limited number of ways to manage cost risks. In particular, time-based
contracts normally include a ceiling on the payments to consultants, and consultants will stop work
unless a change in the scope of work is authorised or the deadline for the completion of the services
is extended. This ceiling should include a contingency allowance for unforeseen work and its
duration and a provision for price adjustment where appropriate. An allowance for price escalation
should normally be provided if the contract lasts for more than 18 months, or if the foreign and
local inflation are estimated to exceed a certain rate, say, 5 percent per year. Another option
includes an agreement to reduce unit fee rates if the volume of work exceeds an agreed upon level.
This type of contract requires the Employer to closely supervise consultants and to be involved in
the daily execution of the assignment. The Employer is usually aware of who is working on the job
and the nature of each expert’s task. Key staff and their tasks are usually named in the contract.
Administration of this type of contract requires considerable administrative efforts and contract
management capacity on the part of the Employer.
3.3.8.3 Important provisions in the contract
The following provisions as the most important; presumably on the basis that they are the most
likely to cause problems:
• Currency - There needs to be clarity as to the balance between local and foreign currency
elements in the tender documents;
• Payment provisions - These have to be agreed with the successful bidder during
negotiations. Advance payment for mobilisation is usual for larger consultancy projects.
The normal limit is 20% and payment 10% or over should require an advance payment
guarantee from the consultant. These payments are offset against future accounts so that
they are, in effect, repaid within, say, half the contract period;
• Bid and performance securities - These are not recommended for consultants’ services;
• Conflict of Interest – The consultant or an affiliate may:
o not receive any remuneration in connection with the assignment other than as
provided for in the contract;
o not engage in any conflicting activities;
o be prohibited or limited in future directly related work.
• Professional liability - This can be a complex matter to untangle should there be a serious
default on the part of the consultant. It should be clear to all parties what the extent of such
liability is. Ultimately such matters are dealt with under provisions in the applicable law;
• Staff substitution - In the bidding documents there are strict provisions concerning the
availability of staff originally proposed and whose CV’s were submitted for key posts
within the project. However if there are long delays in the implementation of a project then
it is possible that some of the original staff submitted will become unavailable. Employers
should be concerned about substitution at this early stage and it is important that any need
for substitution is adequately substantiated and proposed replacement candidates fully meet
the stipulated requirements. Later substitution, as long as it is justified, is generally less of
a problem for both parties since there should be a good working relationship during project
implementation;
• Applicable law and settlement of disputes - Contract documents must include provisions
dealing with applicable law and resolution of disputes. Most Funding agencies encourage
the use of international commercial arbitration for the final settlement of disputes.
3.3.8.4 Selection of the Appropriate Contract Form
The type of contract to be chosen should normally relate to both the scope of work of the
assignment and the method adopted for the selection of the consultants. When the scope of work is
clearly defined and the estimates of both staff-month input and cost of the assignment are
considered accurate, selection of consultants is usually based on QCBS. In these cases the lump-
sum contract may be adopted. When these conditions are not met, QBS and time-based contracts
are more appropriate. When the nature of the assignment requires the use of SFB or the LCS, the
lump-sum contract should normally be used.
The type of contract may also depend on the interest of the Employer in directly supervising
consultant activities and on the desire that transfer of knowledge takes place through a close
interaction between Employer and consultant staff. For control and training purposes, a time-based
contract is more appropriate, assuming that the Employer enjoys a strong technical and institutional
set-up that allows for efficient supervision of the assignment. If this is not the case, a lump-sum
contract is preferable.
Table 3.6: indicates the correlations outlined above. They should be considered with some degree
of flexibility, depending on the size and characteristics of the particular assignment.
Table 3.6: Typical Contract Selection Methods and Forms of Contract
Type of Assignment/Scope of Work Selection Type of Contract

Method
Critical studies in the field of policy, strategy, and

management
Master Plans QBS Time-Based
Pre-feasibility studies
Complex feasibility studies
Studies and design of complex projects
Studies in new technology or human or social science.
Simple planning studies

Simple feasibility studies
Environmental studies QCBS Lump Sum
Contract and detailed design of infrastructure
Preparation of bid documents
Data processing
Clearly defined strategy and management studies
Technical Assistance for institutional development QBS & Time-Based

QCBS

Construction supervision QCBS Time-based

Procurement/Inspection QCBS Percentage
Simple, precisely defined assignment with a fixed SFB Lump sum
budget LCS Lump sum
3.3.9 Receipt of Proposals

The Employer should allow enough time for the consultants to prepare their proposals. The time
allowed should depend on the assignment, but normally recommended not be less than four weeks
or more than three months (for example, for assignments requiring establishment of a sophisticated
methodology, preparation of a multidisciplinary master plan). During this interval, the firms may
request clarifications about the information provided in the RFP. The Employer should provide
these clarifications in writing and copy them to all firms on the shortlist (who intend to submit
proposals). If necessary, the Employer should extend the deadline for submission of proposals.
If the RFP provides for a pre-proposal conference, clarifications should be recorded in the minutes
and sent to all attendees. Since attendance is not mandatory, the Employer should fax or e-mail the
conference minutes, followed by letter copy, to those consultants who did not attend the conference
but who confirmed their intention to submit proposals.
The technical and financial proposals shall be submitted at the same time. No amendments to the
technical or financial proposal shall be accepted after the deadline. To safeguard the integrity of the
process, the technical and financial proposals shall be submitted in separate sealed envelopes. The
technical envelopes shall be opened immediately by a committee of officials drawn from the
relevant departments (technical, finance, legal, as appropriate), after the closing time for
submission of proposals. The financial proposals shall remain sealed and shall be deposited with a
reputable public auditor or independent authority or other sustainable system until they are opened
publicly. Any proposal received after the closing time for submission of proposals shall be returned
unopened.
Consultants should prepare their proposals using the standard forms contained in the RFP and
should provide all the information and documentation requested.
3.4 PROPOSAL EVALUATION & AWARD

The following procedure for the evaluation of technical proposals is based Quality Cost Based
Selection, (QCBS) method. A similar procedure with minor modifications could be used with
projects being evaluated using Quality Based Selection, QBS, Selection under Fixed Budget, SFB,
or Least Cost Selection, LCS.
3.4.1 Evaluation Committee
The Employer appoints an Evaluation Committee of technical experts to evaluate the proposals.
The committee normally consists of between three to five qualified members, depending on the
size and complexity of the assignment. The competence and integrity of the members of the
Evaluation Committee are crucial for ensuring a fair and objective evaluation of proposals.
Committee members should be able to assess the technical and financial aspects of the assignment
and should have experience in evaluation. However, well-formulated proposals are usually
understandable by committee members who are not necessarily specialists.
To ensure the integrity of the selection process, members of the Evaluation Committee should
exercise their function in accordance with the highest ethical standards. To the extent possible the
Evaluation Committee should be composed of individuals of comparable hierarchical level. After
the committee has agreed upon sub-criteria definitions, and on rating and scoring methods, each
committee member should evaluate the proposals independently. Whenever possible, the
Evaluation Committee better include one or more members of the team responsible for preparation
of the TOR. If the Employer lacks the expertise to carry out the evaluation, it should hire an
independent consultant to assist the Evaluation Committee, as provided for in the Directive1 to
Proclamation 649/20092.
Members of the Evaluation Committee should not have any communication with shortlisted firms
from the date of their appointment to the date on which the contract is awarded. The Evaluation
Committee submits its report and recommendations to the designated decision making committee,
which is the Procurement Endorsing Committee, for review and award for contracts.
Figure 3.2: Preparation, Submission and Evaluation of Proposals (QCBS)3
Letters of Invitation issued

Technical Evaluation Report is
prepared by the TAC and
delivered to the Contract Award
Committee (CAC)
Request for
clarification Pre-bid Conference
CAC reviews the Technical

proposal Report, decides on
possible technical deviations, and
Evaluation Committee is approves the procedure
Appointed
ERA forwards the Technical

Tender Analysis Committee Evaluation Report to the
(TAC) meets to agree on rating Funding Agency for no-objection
system to adopt for evaluating
the Technical Proposal
TAC confirms that all members

fully understand the evaluation
process and method Following receipt of no-objection
the ERA notifies the consultants
of the date of opening of the
Financial Proposal
Technical & Financial Proposals

are received
Public opening of Financial
Proposals
Opening of the proposal by the

appointed official. Provision are
taken for the safe-keeping of the TAC evaluates the Financial
Financial Proposals Proposals, determines combined
scores and the recommendation for
award, and delivers the Final
Evaluation report to CAC
Each member of the TAC

independently evaluates the
Technical Proposal The CAC reviews the Final
Evaluation Report, decides on
recommendation for award, and
forwards the report to the funding
agency for no-objection
TAC meets to discuss and
consolidate the evaluation
On receipt of the no-objection ERA

invites the first ranked consultant to
1 Ministry of Finance and Economic Development’s Federal Public Procurement Directive ofnegotiations
July 2010
2 Federal Government of Ethiopia’s Proclamation No. 649/2009 (Determining Procedures of Public Procurement and
Establishing its Supervisory Agency.)
3 Adapted from Consulting Services Manual; A Comprehensive Guide to Selection of Consultants, World Bank 2002

The Secretary to the Committee is responsible for carrying out all administrative tasks connected
with the evaluation procedure. These will include:
• circulating and collecting the Declarations of Impartiality and Confidentiality if available;

• keeping the minutes of all meetings of the Evaluation Committee and the relevant records
and documents;
• Registering attendance at meetings and record the Evaluation Report and its supporting
annexes.
Any request for clarification requiring communication with the tenderers during the evaluation
process must be conducted in writing. Copies of any such communication must be annexed to the
Evaluation Report.
If a tender invades the formal requirements, the Evaluation Committee may use its discretion to
decide whether or not it should still be considered during the rest of the evaluation process, while
ensuring equal treatment of tenders and in accordance with the principle of proportionality.
Whatever the Evaluation Committee decides, this must be fully recorded and justified in the
Evaluation Report.
Tenders falling into the following situations should not be rejected:
• tenders submitted in fewer number of copies than required;

• tenders with the wrong presentation (but the correct templates used);
• tender with minor deviations
3.4.2 Receipt and Opening of Proposals

Under QCBS, (also SFB, LCS, SBCQ, and SSS), both technical and financial proposals must be
submitted at the same time. Under QBS, financial proposals may be submitted together with
technical proposals, but the more common practice is to require submission of the technical
proposal first, followed by submission of the financial proposal by the consultant whose technical
proposal is ranked the highest.
Proposals must be submitted at the designated place (exact address, office, and room number to
avoid any ambiguity), no later than the date and time indicated in the RFP. The Public Body shall
not consider any Bid Proposal that arrives after the deadline for submission of Bid Proposals. No
Bid Proposal shall be rejected at Bid Proposal opening except for late Bid Proposals. Under QCBS,
SFB, and LCS, since price is a factor of selection, proposals received after the deadline for
submission are disqualified and must be returned to the consultants unopened. (Any delay by a
specific firm in submitting its proposal could be used to tamper with other proposals or to allow the
firm to modify its proposal price.) Under SBCQ and SSS, where technical and financial proposals
are requested from only one consultant, a certain degree of flexibility is acceptable when a minor
delay occurs for reasons beyond the control of the applicant.
The Public Body shall not be responsible for misplacement, losing or premature opening if the
outer envelope is not sealed and/or marked as stipulated. This circumstance may be case for
Proposal rejection. If the Financial Proposal is not submitted in a separate sealed envelope duly
marked as indicated above, this will constitute grounds for declaring the Proposal non-responsive.
When submission of both technical and financial proposals is required, officials appointed by the
Employer open the technical proposals immediately after the deadline in the presence of
Consultants` designated representatives who choose to attend, and at the address, date and time
specified in the BDS. The opening of the Bid Proposal shall not be affected by the absence of the
Consultants on their own will. They verify that the financial envelopes are sealed and that they are
deposited in a safe place under the custody of a designated officer (auditor, legal counsel, and so
forth). The Employer should record the date and time each technical proposal was received and the
date on which they were made available to the Evaluation Committee. Minutes of the technical
proposal opening event are kept, including lists of the firms that presented proposals and of the
documents that were submitted. The technical proposals are handed over to the Evaluation
Committee for evaluation.
3.4.3 Main Considerations
After the Evaluation Committee has been appointed, its members should familiarise themselves
with the RFP (in particular the TOR), the evaluation criteria and sub-criteria specified in the data
sheet, and the selection procedure. The Evaluation Committee should meet shortly before the
deadline for submission of the proposals to confirm that there is a common understanding of the
evaluation method, the evaluation criteria and sub-criteria, and a joint definition of the rating
system, including the definition of the grades. It is important not to wait until after the technical
proposals are opened to define the rating system, since these definitions could be biased by the
knowledge of the contents of the proposals.
The Evaluation Committee should confirm that its members
• have no conflict of interest;

• understand the rating and scoring system;
• have been provided with evaluation worksheets; and
• agree on how to evaluate the proposals.
3.4.4 Evaluation of Proposals
3.4.4.1 Consideration of Quality and Cost
The evaluation of the proposals should be carried out in two stages: first the quality, and then the
cost. Evaluators of technical proposals should not have access to the financial proposals until the
technical evaluation, including any funding agency review and no objection, is concluded.
Financial proposals should be opened only thereafter. The evaluation should be carried out in full
conformity with the provisions of the RFP.
3.4.4.2 Technical Evaluation
After the technical proposals have been received and opened, the evaluation process begins. Each
evaluation should be carried out individually. The Evaluation Committee member first reviews
each proposal to confirm that it is substantially responsive, that is, that there are no important
omissions or deviations from the stated objectives, TOR, or other key requirements of the RFP. By
doing this initial check you may avoid doing unnecessary evaluation work on firms that have not
satisfied certain specified requirements.
By applying the criteria and sub-criteria specified in the RFP, Evaluation Committee members
should establish the absolute, not the relative, quality of the proposals. A relative evaluation singles
out the best proposal on a relative scale and still could leave the Employer with a poor choice. The
evaluation should instead single out the proposal with the best objective quality. The way to
establish such quality is to define the grades of the rating system as clearly as possible.
It is good practice for each evaluator to re-review each proposal after having rated all criteria and
sub-criteria, to check that scores are a reliable reflection of the absolute quality of the proposal.

The Evaluation Committee should not seek clarifications or additional information from the
consultants that could change the substance of the proposal. Proposals are evaluated based on what
has been submitted. Material issues to be clarified with the selected consultant will have to be
discussed during negotiations.
After each Evaluation Committee member has independently completed the evaluation, the
Evaluation Committee should meet to review, and discuss the merits of, individual evaluations and
scores. Large differences should be reviewed and explained since they often are caused by
improper or inaccurate use of the rating system. As a result of these discussions, a committee
member may revise some of his or her ratings and scores if necessary; these changes should be
recorded. For each proposal, the Evaluation Committee should then calculate the average of the
scores allocated by all members under each criterion, establish the technical ranking of the
proposals, and identify the best. The evaluation report must include the joint as well as the
individual evaluations.
During the meeting the Evaluation Committee also should comment on the strengths and
weaknesses of all proposals that have passed the minimum technical qualifying mark indicated in
the RFP. This will help identify any issues in the winning proposal that need to be clarified during
negotiations.
3.4.4.3 Rating System
The responsiveness of a proposal to the TOR is determined by its responsiveness to the criteria and
sub-criteria adopted for the evaluation and indicated in the RFP. These criteria include the
following:
• specific experience of the consultants in the field of the assignment;

• adequacy of the proposed methodology and work plan in responding to the TOR;
• qualifications and competence of key staff proposed for the assignment;
• suitability of the transfer of knowledge/training programme; and
• local participation.
The RFP should specify all adopted criteria and sub-criteria, together with the points to be allocated
to each of them for evaluation.
In the RFP the points assigned to a particular criterion (or sub-criterion) show the maximum score
(maximum number of points) that can be allocated to it when evaluating each proposal. The actual
score given indicates the degree to which the proposal being evaluated under that particular
criterion (or sub-criterion) meets the requirements, that is, its level of responsiveness.
As an example; the WB and PPPAA in their Consulting Services Manual describes a method of
evaluation that uses a grading system that revolves around the general descriptions of ‘Poor’,
‘Satisfactory’, ‘Good’ and ‘Very Good’.
Scoring technical proposals by the above method offers the following advantages:
• It provides the Evaluation Committee with a shared and precise definition of the
consultancy requirements, making the evaluation easier and comparable (this is
particularly helpful for less experienced evaluators);
• It minimises the risk of scoring inconsistencies and discretion;
• It binds each committee member to justify his or her evaluation on the basis of a common
definition of the consultancy requirements, discouraging intentionally biased evaluations;
and
• It adds transparency and fairness to the evaluation process, whilst providing sufficient
detail to demonstrate and defend evaluation decisions.

Defining the consultancy requirements to such a degree is a thorough exercise that requires a
detailed knowledge of the TOR, the main technical issues to be covered by the consultant
assignment, and the qualifications expected from the consultants. It is however, worth going to
such detail because it can significantly improve the quality of the evaluation. Evaluating proposals
without using agreed upon predefined requirements to assess responsiveness would leave the
definition of those requirements to each evaluator and very likely make the scoring subjective and
difficult to compare.
Each Evaluation Committee member should score the technical proposals in two steps. First, the
level of responsiveness of the proposals to each of the criteria or sub-criteria is estimated on a
percentage scale. Second, each percentage rating is multiplied by the maximum number of points
assigned to the relevant criterion (or sub-criterion) in the RFP to obtain the score (percentage rating
x maximum number of points = score). For example and assuming no sub-criterion is used, the
criterion “specific experience of the consultant in the field of the assignment” may have been
allocated a maximum of 10 points in the RFP. A proposal with a good level of responsiveness to
this criterion is given a 90 percent rating and therefore receives a score of 9 points.
In the event that the consultants’ approach and methodology do not fully satisfy all the conditions
set forth by one of the grade definitions, but that particular grade appears to reflect the overall
adequacy of approach and methodology better than the lower grade, the upper grade may be
assigned.

Example 3.1: Technical Assistance Consultancy
(i) Specific experience of consultants (firms) related to the assignment with in the
last five years. 10 Points
Sub criteria
• Experience in providing technical support in Contract 50%
Administration
• Experience and expertise in provision of Technical Assistance in

project planning and human resource development, and experience
in road and bridge design, tender document preparation, and
implementation of Social actions on road projects
50%
(ii) Adequacy of the proposed work plan and methodology in responding to the
Terms of Reference 20 Points
Sub criteria
• Firm’s Comments and Suggestions 10%
• Approach and Methodology 70%
• Adequacy of Work Plan and Staffing 20%

(iii) Qualifications and competence of Key Specialists in core team for the
assignment (ref. Table-1 for allocation among individual key staff) 60 Points
Sub criteria
• General qualifications in education and experience 30%
• Adequacy in experience and expertise (as per the TOR) in the 55%
respective field of assignment
• Experience in the region 15%

(iv) Suitability of the transfer of knowledge program (training) 10 Points
Sub criteria
• Methodology of On-Job-Training 40%
• Methodology on Stand-Alone Short-term local training 40%
• Methodology for training implementation 20%
TOTAL 100 Points
Number of points to be allocated among proposed key staff

Key staff Points
Highway Engineer P/M 15
Transport Economist 3
Contract Specialist 8
Material /Geotechnical Engineer 10
Structural Engineer 3
Claim Expert 10
Environmentalist 3
Sociologist 3
Human Resource Specialist 3
Change Management Specialist 2

Example 3.2: Design Review and Supervision (Domestic)
(i) Specific Experience of the Bidder related to the assignment. 10 Points

Sub criteria
• Experience in construction supervision of road projects
(Minimum 5 projects) 5 pts
• Experience in construction supervision of asphalt road
projects (Minimum 3 projects 3 pts
• Experience in consultancy service of road design or design
review projects(Minimum 3 projects) 2 pts
(ii) Adequacy of the proposed work plan and methodology 30 Points
Sub criteria
• Firm’s comments and suggestions
- On TOR 1 pt
- On data, services and facilities provided by 1 pt
Employer 3 pts
• Site knowledge and appreciation of project
• Methodology and Work Plan (25 pts)
- Approach and Methodology. 19 pts
i. Review of Detailed Engineering Design,
Contract Documents, and Design Modification 5 pts
ii. Surveying, work inspection and quality control 6 pts
iii. Contract management 8 pts
- Work plan and staffing 6 pts
i. Team composition & responsibility 2 pts
ii. Reporting (Type, content, submission and
timing) 2 pts
iii. Schedules
a) Activity schedule 1 pt
b) Manning schedule 1 pt
(iii) Qualifications and competence of Key Personnel for the assignment 60 Points
(Table-2 for allocation among individual key staff)
Sub criteria
• General qualifications 30%
• Adequacy in experience 70%
TOTAL 100 Points
Number of points allocated among proposed key staff
Resident Engineer………..……....14.0
Pavement/ Material Engineer …...10.0
Geotechnical Engineer ……….…..7.0
Highway Engineer …………….….9.0
Structural Engineer ……………….8.0
Quantity Surveyor ………………..6.0
Senior Surveyor …………………..6.0
Sub-total 60.0

Example 3.3: Design Review and Supervision (International)
(i) Specific Experience of the Bidder related to the assignment. 10 Points

Sub criteria
• Experience in construction supervision of road projects 5 pts
(Minimum 6 projects)
• Experience in construction supervision of asphalt road 3 pts
projects (Minimum 3 projects)
• Experience in road design / design review 2 pts
projects(Minimum 5 projects)
(ii) Adequacy of the proposed work plan and methodology in responding 30 Points
to the TOR
Sub criteria
• Firm’s comments and suggestions
- On TOR 1 pt
- On data, services and facilities provided by 1 pt
Employer 3 pts
• Site knowledge and appreciation of project
• Methodology for Services (25 pts)

- Approach and Methodology. 19 pts
i. Methodology on review of design, contract
documents and design modification 5 pts
ii. Methodology on surveying works inspection
and quality control 6 pts
iii. Contract management 8 pts
- Team composition timing and activity schedule 8 pts
i. Team composition and responsibility 2 pts
ii. Manning Schedules 1 pt
iii. Activity schedule 1 pt
iv. Reporting 2 pts
(iii) Qualifications and competence of Key Personnel for the assignment
(Table-3 for allocation among individual key staff) 60 Points
Sub criteria
• General qualifications 30%
• Adequacy in experience 55%
• Knowledge of national language & stable relationship with 15%
firm
TOTAL 100 Points
Number of points allocated among proposed key staff
Resident Engineer………..……....12.0
Assistant Resident Eng………… 10.0
Pavement/ Material Engineer ….... 8.0
Geotechnical Engineer ……….…..5.0
Highway Engineer …………….….6.0
Structural Engineer ……………….6.0
Claims Expert……………………..5.0
Quantity Surveyor ………………..4.0
Senior Surveyor …………………..4.0
Sub-total 60.0

3.4.4.4 Specific Experience of Consultants that Relates to the Assignment
Aspects to Consider for the Evaluation
The Evaluation Committee should consider the following aspects in evaluating the relevant
experience of the consultants:
• Experience in Similar Projects. Evidence of having successfully carried out similar

assignments
• Experience in Similar Areas and Conditions. The consultants have worked in regions or
countries with physical, cultural, social, and institutional characteristics comparable to
those of the country of the assignment
• Size, Organisation, and Management. The consultants have the capacity—for instance,
staff, organisation, and managerial skills—to carry out the assignment. For some
assignments, consider how long the consultants have been established
• Specialisation. For some assignments it may be important to evaluate the consultants’
specialised skills and access to particular technologies related to the assignment
• Experience in Transfer of Knowledge and Training. The consultants’ experience in transfer
of knowledge and training of Employer’s personnel (if relevant)
• Quality Management. The availability of a well-established QM system may be taken into
account for large and complex assignments
3.4.4.5 Adequacy of Proposed Methodology and Work Plan

The Evaluation Committee evaluates the quality and the adequacy of the proposed methodology
and work plan by considering such aspects as the following:
• Understanding of the Objectives of the Assignment: The extent to which the consultants’
technical approach and work plan respond to the objectives indicated in the TOR;
• Completeness and Responsiveness: Does the proposal respond exhaustively to all the
requirements of the TOR?
• Creativity and Innovation: Does the proposal suggest any new approaches to the
assignment or new methodologies that will help achieve better outcomes?
• Clarity: Are the various elements coherent and the decision points well defined?
• Efficiency and Resource Utilisation: Is the staffing schedule appropriate, with neither too
many short-term experts nor too many generalists? Is the proposed staff permanent or
formed by external consultants? In the latter case, check whether the external consultants
have worked on previous assignments with the consultants’ permanent staff. This aspect
should always be considered;
• Flexibility and Adaptability: Are the methodology and work plan flexible and easy to
adapt to changes that might occur during implementation of the assignment? This aspect
is especially relevant when the assignment takes place in potentially changing
environments;
• Technology: Does the methodology propose the use of appropriate technologies and the
adoption of innovative solutions?
• Timeliness of Output: Does the proposed activity schedule provide the requested outputs
in a timely manner?
• Logistics: If the consultants have to work at remote sites, the consultants’ approach to
logistics could also be considered; and

• Quality Management: Especially for large and complex assignments, the TOR may
include a requirement to provide a Quality Plan, or its detailed list of contents.
Evaluation When Sub-criteria are Provided

With the exception of small or simple assignments, the quality and adequacy of the proposed
methodology and work plan in general through the evaluation of the following three sub-criteria.
Additional sub-criteria may be specified in the RFP when there is a need to focus on particularly
important aspects of the assignment.
• Firm’s Comments and Suggestions;

• Approach and Methodology; and
• Adequacy of Work Plan and Staffing.
commonly the sub-criteria divided into a number of discrete marks allocated for particular facets of
the required works. With respect to the evaluation for the Adequacy of Proposed Methodology and
Work Plan,. this approach leads to a mechanical system which causes evaluation of the content
rather than understanding of the bidders’ approach. Therefore, it is not advisable to breach down
the sub criteria in to further minor divisions.
3.4.4.6 Qualifications and Competence of Proposed Key Staff
The Evaluation Committee should evaluate key staff by considering the following aspects:
• General Qualifications. It is important to consider the number of years of professional

experience of the staffs in the field to which they are assigned. For evaluation purposes, the
value of previous university education diminishes with age. Experts with more than 10
years’ experience should be evaluated on their current position and the level of
responsibility entrusted to them in previous projects rather than on their acquired university
degrees. Long-term experience in consulting assignments may be advantageous, but
evaluators should not give points to older candidates when age is not especially relevant for
the assignment. When knowledge of recent approaches, methodologies, and technologies is
critical, younger experts may be preferable.
• Adequacy for the Assignment. Is the expert suitable for the job and has he or she recently
held similar positions? Has the proposed team leader been a successful team leader before,
and has the team leader been proposed mainly because of leadership or professional skills?
How well do the knowledge and skills of the staff offered meet the needs of the
assignment? Appropriate capabilities, adequate professional skills, and experience should
always be the key evaluation aspects.
• Experience in the Region and Language. When evaluating experience in the region,
consider factors such as the number of assignments carried out in the country and/or in
countries with similar cultures, administrative systems, and government organisations. For
expatriate staff the RFP should specify, in addition to capabilities in one of the official
languages of the funding agency, local language requirements for adequate communication
in the country of the assignment, if needed. Scores should be given only for the local
language. In scoring national consultant staff, their knowledge of the language of the
contract should be evaluated instead of the local language.
Evaluate key staff in terms of their skill and suitability for the job, irrespective of their nationality.
The qualifications of the team leader should be carefully evaluated because that position plays a
crucial role in the success of the assignment.
3.4.5 Technical Evaluation Report
The Evaluation Committee members prepare a Technical Evaluation Report by recording and
explaining the scores given to each proposal. For each proposal, the report also should indicate
technical weaknesses and commercial deviations or alternative clauses in the SCC proposed by the
consultants, and comment on their acceptability.
A typical Technical Evaluation Report would contain the following:
• Introduction and Background;

• Objectives of Consultancy;
• Details of the RFP – when who was invited;
• Details of any Pre-proposal Meeting, Proposal Submission and Opening;
• Details of the Selection Procedure and Technical Evaluation Criteria;
• Detailed Explanation of how the Technical Evaluation Process was carried out;
• A detailed summary of the strengths and weaknesses of every consultant;
• Results of the Technical Evaluation; and
• The Evaluation Committee’s Conclusions and recommendations with respect to the
opening of the Financial Proposal.
Annexes normally include:
• Sample letter of invitation

• Minutes and attendance record of the opening of the Technical Proposal;
• Checklist for the Preliminary Assessment of Responsiveness;
• Copy of Minutes to any Pre-Proposal Meeting;
• Summary of the Technical Evaluation Scores for Each Firm;
• Technical Evaluation Scores of Evaluation Committee member;
• Any Correspondence after Proposal Receipt; and
The evaluation report is submitted to the Procurement Endorsing Committee for review and
approval.
This Procurement Endorsing Committee may ask the Evaluation Committee to explain the report,
but should not ask for scores to be changed. It should review the determination made by the
Evaluation Committee on the level of responsiveness of each proposal (technical, contractual, and
other aspects). If the Evaluation Committee finds a proposal non-responsive or to the minimum
demerit the firm for some issue, the Procurement Endorsing Committee may reject the TAC idea
this stage. However, both the decisions of the evaluators and the procurement endorsing committee
well be kept in the evaluation report unless there is agreement between the two committee.
After completing this review, the Employer will have kept the Technical Evaluation Report. The
Technical Evaluation Report is a confidential document and its contents must not be disclosed to
the participant bidders to notify the result and for invitation of the financial opening.
3.4.6 Notification to Consultants

The Employer notifies consultants whose proposals did not meet the minimum technical qualifying
mark specified in the RFP, or were found to be non-responsive, indicating that the consultant’s
financial proposals will be returned unopened at the end of the selection process. The Employer
simultaneously notifies consultants whose technical proposals were above the minimum technical
qualifying mark, and informs them of the date and time set for opening the financial envelopes. The
opening date should be at least five days after the notification date, to allow enough time for
consultants to make arrangements to attend the opening and to give compliant time on the
evaluation result.
If consultants were initially requested to submit financial proposals under QBS, the Employer
notifies the consultant with the highest-ranked technical proposal and indicates the date and time
set for negotiating the financial proposal and the contract.
3.4.7 Evaluation of Financial Proposals

On the date and time set for opening the financial proposals, the appointed Employer’s official
delivers them to the Evaluation Committee. The opening is public. The Evaluation Committee
verifies that the financial proposals have remained sealed and then opens them. The name of the
consultant, the quality scores, and the proposed prices are read aloud and recorded. The Employer
prepares the minutes of the public opening, which should be attached to the Financial Evaluation
Report.
The Evaluation Committee should first review the financial proposals for arithmetical errors and
consistency between the financial and technical proposals (for example, omissions of items
included in the technical proposals). In case of Time Based Contract, arithmetical errors should be
corrected, omitted items evaluated, and the corresponding adjustments made to the offered prices to
obtain the final evaluated prices. Whereas, for Lump-Sum form of contract, no corrections are
applied to the Financial Proposal in this respect except for clear arithmetic corrections.
For the purpose of comparing proposals, evaluated prices should be converted to a single currency
using the exchange rate, date, and source indicated by the Employer in the RFP. The scores of the
evaluated prices should then be calculated according to the formula provided in the RFP.
3.4.8 Combined Evaluation and Final Score
If QCBS is the method of selection, the Evaluation Committee weights and combines the scores of
the technical and financial proposals to obtain a final ranking of the proposals and recommendation
for award. These data are recorded in the Financial and Final Evaluation Report, which is delivered
to the Procurement Endorsing Committee. The Procurement Endorsing Committee reviews the
report, confirms the recommendation for award, obtains any additional clearance that may be
required under local regulations, and forwards the report to the funding agency for its information.
The Employer invites the selected consultant to negotiations and informs the other consultants that
they were unsuccessful and furnishes the name of the selected firm. If the Employer believes that
negotiations could fail or could go beyond the proposal validity period, he should ask the
consultants to extend the validity of their proposals.
After technical and financial negotiations are completed, the Employer shall furnish to the funding
agency, in sufficient time for its review, a copy of the initialled negotiated contract. If the
negotiated contract resulted in a substitution of key staff or any changes in the TOR and in the
originally proposed contract, the Employer shall highlight the changes and provide an explanation
of why these changes are necessary.
Once the contract is awarded, firms may want to learn the reasons why they were not selected. The
Employer should provide reasonable, prompt, and satisfactory replies to all such requests. The
Employer should not discuss the details of any other proposals. If the consultants are not satisfied
with the Employer’s explanation, they can request the appropriate agency following the required
procedure.

3.4.9 Rejection of All Proposals
The Public Body reserves the right to accept or reject any Bid Proposal, and to annul the bidding
process and reject all Bid Proposals at any time prior to contract award, without thereby incurring
any liability to Consultants. The new process may include revising the RFP (including the short-
list) and the budget. Calling for new proposals creates obvious delays and should be the last resort.
3.5 NEGOTIATIONS AND AWARD OF CONTRACT

The aim of negotiations is to arrive at a mutually satisfactory contract between the Employer and
the selected consultant. The parties will discuss the technical proposal submitted, agree on the
detailed scope of work, negotiate financial terms, and discuss and finalise contract conditions. A
good contract should protect the interests of both parties adequately.
The following paragraphs discuss in more detail the main items to deal with during negotiations
and offer examples of good practices to consider in different cases.
3.5.1 Preparations for Negotiation
With QCBS, the Employer should notify the successful consultant in writing and should invite that
firm for negotiations. The Employer should indicate in the announcement; the date and time for the
negotiations together with every issue or comment identified by the Employer on the consultants’
proposal to allow them to ready their response and to make any required arrangements. The
Employer should also inform those bidders whose proposals were not selected which consultant
was selected and inform them that negotiations will be held with that firm.
The Employer should select a negotiating panel whose members should be completely familiar
with the TOR, the consultant’s proposal, and the observations and comments of the Evaluation
Committee with respect to both the technical and financial evaluation reports. The negotiation team
should also be familiar with the recommendations of the Procurement Endorsing Committee. It is
also suggested that at least one member of the Evaluation Committee be included in the negotiation
team. For QBS, SBCQ, and SSS, where the financial conditions of the proposal can be negotiated,
the team should have independent information on rates and salaries of consultant staff in their
country.
Negotiations should have a mutually agreed agenda of the main items requiring negotiation or
confirmation that might normally include; methodology; work plan; proposed staff inputs; financial
terms; and any special conditions of the contract.
3.5.2 Matters Subject to Negotiation

Dependant upon the selection method used and the intended type of contract, technical and
financial items that may be negotiated, within the limits indicated below under paragraph Limits of
Negotiations, include:
• scope of work;
• technical approach and methodology;
• work plan and activity schedule;
• organisation and staffing, and time schedule for key staff;
• deliverables;
• counterpart staff;
• counterpart facilities and equipment;
• contract special conditions(as appropriate);

• staff unit rates (as appropriate);

• reimbursable expenses(as appropriate); and
• proposed contract price (as appropriate).
Under QCBS, SFB, and LCS, unit rates such as staff remuneration or unit rates proposed for
reimbursable expenses and proposal price cannot be negotiated unless there are exceptional
reasons.
Unless the consultant contract is tax exempt, the local tax liabilities should be clarified with the
consultant and adequate provisions arranged for them in the contract. If the Employer is to
reimburse the consultant for local taxes and levies, these, together with the method of
reimbursement should be specified in the contract.
3.5.3 Negotiation Procedures

The Employer should keep the minutes of the negotiations. During the course of negotiations, the
Employer and consultants may initially disagree on some important issues. In rare cases, agreement
between the Employer and the consultants may not be possible. If any issue remains unresolved
after being referred to the Procurement Endorsing Committee, the Employer invites the second-
ranked consultant for negotiations as appropriate.
If the validity period of the proposals is about to come to an end, the Employer should ask all
consultants for an extension. In that case, the consultants may propose staff modifications without
changing their price, or may withdraw their proposal. However, consultant staff can only be
replaced with staff that is equally qualified or better, that is, the new staff should be evaluated using
the criteria and points specified in the RFP and must receive equal or better scores.
3.5.4 Limits of Negotiations

Negotiations should begin by considering the requests, comments, and suggestions made by the
Evaluation Committee on both the technical and financial evaluation reports, and the
recommendations of the Procurement Endorsing Committee.
The technical aspects (approach, methodology, work plan, and staffing) are reviewed to reconcile
the consultant’s proposal and the views of the Employer. Technical negotiations can influence both
the quality and the cost of services to be provided. The financial proposal may only be negotiated
when price has not been a factor of selection (e.g. QBS) except for acceptance of the arithmetic
corrections.
As the quality of the technical proposal is the most important aspect in ranking the consultants, any
discussion should not significantly change such quality to cut the price of the proposal. If this is
done it is likely to influence the basis of the technical evaluation on which the ranking, and thereby
the selection was established.
Consultants have been known for QBS or QCBS where the financial element is relatively small, to
use a strategy sometimes referred to as “high balling”, in which the consultant purposely propose
over qualified methodologies and personnel to allow their selection and be invited to negotiate. At
negotiations the consultants might then propose to reduce the scope of work or the quality of their
proposal if their offered price is above budget. This practice should not be condoned and should be
rejected, even in the case where it might lead to calling for new proposals.
It is unacceptable for an Employer to attempt to negotiate arbitrary reductions of price from

consultants or force them to accept extensions of the scope of work without price adjustments.
These practices will undoubtedly lead in due course to the provision of reduced quality of service
and performance by the consultant.

Under Selection under a Fixed Budget (SFB), the cost of the services is indirectly taken into
account, since the best technical proposal within the given budget is selected. Therefore, as per
QCBS, negotiations should include only technical aspects.
Similarly, under Least Cost Selection (LCS), negotiations also should include only technical
aspects. However, a price increase related to technical improvements can be negotiated on
condition that the proposal remains the least costly.
3.5.5 Negotiation of Contract Conditions

The General and Special Conditions of Contract may be reviewed at the end of all other
negotiations to ensure both parties understand and agree to the terms and condition being imposed
by the contract. It should be remembered that the General Conditions cannot under any
circumstance be changed, and the Special Conditions, which have already been tailored for the
assignment, should only be negotiated in specific and justifiable circumstances.
The draft contract should include all necessary appendices and should supply the following
information:
• The TOR, including any negotiated changes – it should include the scope of works, any
agreed methodology, an organisation chart, and a programme of the work including all
relevant task completion dates;
• A schedule of required reports, giving format and contents, any required approval
procedures and dates for submission;
• A list of the key staff to be involved in the assignment, together with a staffing schedule;
• Details of all facilities, services, equipment, and counterpart personnel to be provided by
the Employer;
• An estimate of the contract amount, broken down into foreign and local currency
requirements. The monthly rates of both foreign and local staff should also be detailed
together with the reimbursable expenses; and
• If training forms part of the assignment, a programme of the training should also be
included.
3.5.6 Tender Acceptance and Contract Award

Tender acceptance and award of a contract can be puzzling for both parties if there is not a defined
and precise procedure for award of contracts. In Ethiopia the procedure is specified in GOE
Proclamation No. 649/2009(Determining Procedures of Public Procurement and Establishing its
Supervisory Agency.) and in the Ministry of Finance and Economic Development’s Federal Public
Procurement Directive of 2010. These documents provide a sequence of events based on the need
to be aware of bidders’ rights to appeal against the manner of the evaluation and the requirement
for a contract to be awarded as soon as is practical following a decision to award has been
approved. The following procedure is required under the Proclamation and Directives:
• The head of the Employer makes a contract award decision.
• The Employer notifies all bidders of the results of the evaluation.
• After a period of seven working days from the date bidders are notified of the result, if no
complaint has been received by the Employer, the Employer awards the contract to the
successful bidder or signing a contract (which is often done following the successful
conclusion of any negotiations).
• the contract will be confirmed by issue of a full conformed Contract Document.

The Employer should note that the Contract Document should not contain any provisions or
conditions which vary from those in the RFP, or the bidder’s Proposal, including any subsequent
clarifications or negotiations. Any such modifications should be agreed by the bidder in writing
before a contract award decision is made.

4 PROCUREMENT OF CONSTRUCTION WORKS
4.1 GENERAL REQUIREMENTS
4.1.1 Bidding Process

The procurement process for Works can be considered in three stages, as follows:
• The Prequalification Stage;

• The Tender Stage; and
• The Contract Award Stage.
4.1.2 Type of Procurement
The main means of procurement:
• International Competitive Bidding (ICB); ; and

• National (Local) Competitive Bidding (NCB )
4.1.2.1 International Competitive Bidding (ICB)
International Competitive Bidding is normally a requirement of the funding agencies for larger
projects funded or partly funded by them. Generally for multi-lateral agencies this approach often
includes open tendering where eligible pre-qualified bidders can come from any member country
or from the home country. In Ethiopia, as per procurement proclamation No 649/2009, the limit of
construction project to be floated in international tender is ETB 150 million and above unless there
is specific condition which dictates to go for NCB tendering as mentioned in the procurement
directive. Projects below ETB 150 million could be purchase through ICB procedure when there is
lack of capacity within Ethiopia, there is either no or only limited competition for the
provision of specific goods and related services and works and physical services,.
the procedure to be followed by public bodies shall be similar to Open Bidding Method as
described in the Proclamation and Directive, together with the specific instructions specified
below. Where appropriate, Pre-qualification shall first be undertaken, followed by Bidding.
The additional requirements for International Competitive Bidding are as follows:
• The bid advertisement and the bidding documents shall be prepared in English,
• The bid advertisement shall be published in a news paper that has wide circulation
and accessible to foreign bidders,
• Bidders must be given adequate time to prepare bid documents in response to the
invitation to bid.
• The schedule of requirements to be prepared shall comply with national standard and be
internationally acceptable.
• Bid prices offered by foreign bidders shall be quoted and bid securities required of such
bidders shall be furnished in a freely convertible currency used for payment in international
commercial transactions.
February 2017 4-1

• Where a foreign bidder uses local inputs to satisfy the required object of procurement
under the contract, the portion of the total contract price representing such local
expenditure shall be expressed in birr in the price schedule of the bidder.
• Contracts concluded for procurements to be made by means of international

competitive bidding may incorporate standard terms and conditions applicable in
international commercial transactions to the extent that such terms and conditions are not
in conflict with the Proclamation, Directive and other documents governing public
procurement
4.1.2.2 National Competitive Bidding (NCB)
National (or Local) Competitive Bidding has similar extensive procurement procedures like the
International Competitive Bidding. Usually the value of the work will be less within the limit of the
directive, and the required object of procurement is available only locally notwithstanding that, the
cost of the procurement exceeds the threshold of the Directive. This tender is not attractive to
international firms and all bidders are likely to be nationals of the project country or be companies
established locally and generally run by local staff.
Funding agency guidelines generally do not exclude international firms however although local
registration provisions may apply whereby involvement of international firms can be restricted.
4.1.3 Competitive Bidding
In a developed free market economy, it is generally accepted that competition will lead to an
Employer getting value for money. A further benefit of competition is the pressure to innovate and
for the competing organisations to find the most efficient and effective way of doing the work.
A public body, national or local government, or funding bodies, are accountable for how they spend
money. There are usually strict regulations or ‘standing orders’ about procurement practice. Such
employers or funding bodies will always favour competitive methods.
The negative side of free market competition is the profit motive which if not constrained may lead
to quality problems.
The problem is to ensure that the competitive bidding approach does lead to a ‘win-win’ outcome,
e.g. the Employer gets an economic high quality and timely product and the contractor makes a
reasonable profit.
For competitive bidding to work the procedures and documentation have to create a legally
enforceable framework that will deliver an economic, high quality and timely project. For
sustainability of the system, the project must be profitable for the contractor.
4.1.3.1 Open Tendering and Selective Tendering
The principle behind open tendering is to provide maximum competition. This is an approach that
enables any pre-qualified contractor to bid for the works. In selective tendering a shortlist of, say,
six bidders is invited to tender following the prequalification process.
An apparent advantage of an open tendering approach is the likelihood of getting an economic

winning bid since competition is greater. However tendering is expensive and in the long term the
overall costs of tendering are going to be higher to a contractor under an open tendering system.
Open tendering may give a contractor a one in many chance of success. Selective tendering may
give a one in six chance of success.

A further advantage of open tendering is the concern that in selective tendering the selection
process may not be transparent. There is less likelihood of a cartel, or a price fixing group, forming
in an open tendering approach.
A disadvantage of open tendering, when compared with selective tendering is that the task of
tender assessment and evaluation is much more involved due to the greater numbers of bidders.
4.1.4 Forms of Contract

There are numerous forms of contract that are used for carrying works, although in these
guidelines we shall mention only three which are the major once and implemented widely
in construction contracts;
• the Bill of Quantities (BOQ), or admeasurement (sometimes called re-
measurement); and
• Lump Sum
4.1.4.1 Bill of Quantities Contracts

A BOQ Contract is a very common type of contract, and generally the most appropriate for all types of
construction. The project is broken down into individual items of work and the amount, or quantity, of
each item is computed at design stage. During the ‘Tender Stage’ competing Contractors will insert
their unit rates for items of work that are then extended and totalled to give the total bid price for the
Works. This is the ‘Tender Total’ or ‘Contract Sum’, which a Contractor may expect to be paid.
However, in civil engineering, quantities are usually approximate and subject to re-measurement.
The general practice is to keep Bill items relatively brief and to provide necessary additional
information in the drawings, and in the specification. In order to achieve standardisation in the layout
of the Bill and in the measurement of work a ‘Method of Measurement’ may be used.
Alternatively, Bill items could be longer and more fully describe the approach to measurement, or
measurement information could be provided as part of the Specification. The Preamble at the
beginning of a Bill of Quantities will normally explain whether or not the Bill was prepared in
accordance with a particular Method of Measurement. Alternatively, the preamble may itself provide
all the necessary information to guide the preparation of the Bill and to assist the Contractor and the
Engineer in the measurement of work on site.
Advantages of a Bill of Quantities contract are:

• It provides a common basis for assessing competitive tenders;
• It gives reasonable guidance on the likely construction cost of the project;
• It provides the basis for paying interim and final accounts; and
• Variations have a basis for valuation.
The major disadvantage is that the design, including most of the drawings, has to be completed before
the Bill of Quantities can be produced, and consequently the lead in time to the start of construction
can be considerable.
4.1.4.2 Lump Sum
The agreement is based upon a fixed amount of money. This form of contract is usually considered
where the scope of the work is limited and there is little risk of major changes in the quantities.
One of the main type of contract from Lump Sum contract is a Design and Build Contract. The
difference between this and the traditional contract is that one entity replaces the different entities
that in traditional design bid and build projects, design and construct. The Employer therefore has
one party to look to for overall responsibility for the design and for the built work. It is essential
that the employer establishes clearly his requirements in advance because the absence of an
independent design professional that has the Employer’s interest at heart can cause problems to the
unsophisticated Employer who may be faced with sub-standard design or sub-standard
construction. Equally, design flexibility (i.e. to change design during the contract) is likely to be
more costly to obtain in a design and build system.
Advantages:
• Minimum Employer staff required;

• Fast tracking capability;
• Single contract responsibility; and
• Guarantees on project performance, programming and cost more easily obtained.
Disadvantages:
• Absence of independent professional consultant, no checks and balances;

• Dependent on one entity;
• Costly; and
• Variation or change orders expensive.
4.1.4.3 Cost Reimbursement (Cost Plus)
Sometimes known as cost plus contracts, these are based on the contractor being reimbursed actual
costs together with an amount for overheads and profit. This form is useful when the scope of the work
is difficult to determine, or for emergency work. Cost reimbursement contracts can have the major
disadvantage of offering little incentive to the contractor to contain costs. Various types of cost
reimbursement contracts can be used. In some cases such contracts are bid competitively but
commonly they are arranged by negotiation.
4.1.4.3.1 Cost plus percentage
Actual costs reimbursed plus an agreed percentage to cover overheads and profit. There is little
incentive to contractor to contain costs or complete quickly.
4.1.4.3.2 Cost plus fixed fee
Actual costs reimbursed but the fee is a lump sum with the intention of trying to get the contractor to
complete more quickly
4.1.4.3.3 Cost plus fluctuating fee
Actual costs reimbursed but fee is on a sliding scale whereby the contractor receives a larger
percentage if the costs are kept down. The percentage paid may be reduced in bands as the costs
increase.
4.1.4.4 Factors Affecting Choice of Forms of Contract
There are different factors, which affects the choice of contract form. Some of them are as
mentioned below:
• Nature and Complexity of Works

• Size and Duration of Contract
• Degree of Definition/Risk/Uncertainty
• Status of Design

• Technical/Supervisory Resources of Employer

• Budgetary/Financing/Borrowing constraints
• Previous experiences of employer
• Standard Documents of Funding Agency
4.2 PREQUALIFICATION
The successful execution of contracts for large civil engineering projects requires that contracts be
awarded only to bidders (single contractors, or joint ventures), that are suitably experienced in the
variety of work concerned, that are financially and managerially able, and that can provide all
necessary financial and technical resources in a timely manner. The assessment by the Employer of
suitable companies to undertake a specific contract prior to being invited to tender is a process known
as prequalification.
Nearly all funding agencies require prequalification of bidders for the construction of large or very
complex Works contracts. The prequalification process cannot be used to effectively shortlist a
predetermined number of bidders and all qualifying bidders that meet the required standard of
prequalification must be allowed to bid.
Prequalification has both benefits and disadvantages.
4.2.1 Prequalification benefits:

• It allows inadequately qualified potential bidders to avoid the expense of preparing a bid,
and may encourage such bidders to form a joint venture with another entity (domestic or
international) that may then provide the required qualifications. Such joint ventures result
in the building of domestic capacity in the construction industry.
• The Employer is able to assess the interest from qualified bidders and thereby if
necessary modify the contract to address issues perceived to be arduous by likely bidders.
• Pre-qualified bidders are able to bid with the knowledge that they are competing against
able and qualified bidders, and thereby avoid competing with unrealistic low bids from
inexperienced and poorly qualified bidders.
• It can reduce the amount of work by the Employer or their consultant in evaluating bids
from unqualified bidders.
• It can provide advanced warning of any potential conflict of interest between potential
contractors and consultant involved with the project.
• It avoids possible difficulties of having to reject low bids from unqualified and potential
acquisitions of unfairness.
4.2.2 Prequalification disadvantages

• It can increase the lead time for the procurement process if not programmed correctly.
• All of the submitted prequalification applications have to be assessed by the Employer, if
post-qualification is used only the preferred or winning bidder has to be assessed (note
there may be more bids to be evaluated using post-qualification).
• It is easier for collusion between bidders with a smaller number of identified bidders.
• It is possible that subjectivity by the Employer’s in making judgements during the
prequalification exercise might be a problem and deviate from the necessary impartiality
expected.

Taking the above pros and cons into account and using transparent procedures, most funding
agencies generally favour the use of prequalification process for the execution of large Works
contracts.
No limit on the maximum number of pre-qualified bidders should be imposed, but if the initial
response to call for applicants is too few to guarantee real competition, it will be necessary to re-
valuate the circumstances. It may be necessary to:
• Re-advertise for prequalification submissions

• Extend the closing date for application submission
• Assess the contract conditions with a view to possible adjustment of risk from the bidder
• Offer improved financial incentives such as increased mobilisation advances
• Re-package the contract to reduce its overall size or complexity
Following prequalification, the bidders are invited to submit bids and the Employer is normally
required to award the contract to the bidder tendering the lowest evaluated responsive bid. The
Employer should ask bidders to confirm and update essential pre-qualification information at the
time of bid submission. The lowest apparent evaluated responsive bidder may be denied the
contract if evaluation of the updated information indicates that the bidder, no longer possesses the
necessary capabilities. This could occur because of changed financial situation, loss of equipment
or key personnel, or reduced capacity because of additional contract obligations and workload.
4.2.3 Prequalification Process

The prequalification process normally consists of:
• Preparation and issue of the Prequalification Notice;

• Preparation of prequalification documentation;
• Issue of the Prequalification Document to applicants;
• Receipt of applications for prequalification;
• Assessment of applications for prequalification;
• Preparation of the Prequalification Report and recommendations for prequalification; and
• Notification of successful and unsuccessful applicants.
4.2.3.1 Prequalification Notice
The Prequalification Notice is the means of advertising that a project is in the offing. There may be
specific requirements of the Employer as to the content and/or circulation of the Notice. The means
of distribution of the Prequalification Notice will be dependent on whether the contracts are to be
let under international or local competitive bidding.
Some Employers may consider it essential to ensure that all eligible contractors, perhaps widely
dispersed around the world, are given equal opportunities to become aware of a project and thus
apply to pre-qualify for contracts under it.
The Prequalification Notice should contain the following information:
• A brief description of the Works to be procured;

• The contract conditions;
• The projects funding source;

• The eligibility requirements of the potential bidders; and

• The time and place where the prequalification documents may be obtained.
4.2.3.2 Prequalification Documentation
The Prequalification Document is the means by which potential contractors are informed of the
nature of the project, the scope of the contract(s) involved, and the information that they are
required to provide for assessment purposes. In general requests for the Prequalification Document
would be expected soon after the Prequalification Notice is published and the Document should be
completed (including approval, if required by the Employer) so that it is available for issue at the
time the Notice is published. This document should describe the following:
• the proposed procurement;

• the estimated value of the contract and major quantities of work;
• location of the work;
• eligibility requirements including, eligibility requirements for domestic preference;
• procurement scheduling of goods or works to be procured;
• abbreviated specifications and conditions of contract;
• main quantities to be procured;
• delivery or implementation schedules;
• requirements for bid and performance securities;
• how the project is to be financed;
• payment terms;
• price adjustment provisions;
• the language and governing law of the contract;
• other information in sufficient detail to enable bidders to assess their interest and respond
appropriately; and
• the name and address of the Employer and of the Employer’s official in charge of the
procurement with a statement of their roles.
For purposes of evaluating the applicants, the prequalification documents should include a
questionnaire, requiring applicants to reply to direct questions as well as to complete a series of
forms. The information asked for and the number of forms to be filled should be the minimum
required to make an objective decision as to the bidder’s capabilities.
The Employer should avoid requesting excessive form-filling, testimonials, and affidavits from
bidder’s former or current Employers. Notarised documents and other non-essential documents and
information may discourage some qualified bidders from applying. Appropriately designed and
completed, the questionnaire should provide the Employer with a good framework for evaluation,
while encouraging applicants to provide full pertinent details on their capabilities.
If the Prequalification Document is being prepared for a multi-contract project and there are
different types of work in different contracts, then consideration should be given to tailoring a pro-
forma for each type of work as appropriate. For example the information on experience one would
require from applicants who wish to undertake a design-and-construct contract would differ from
that required for a contract to be constructed to a completed (“Engineer’s”) design
The Prequalification Document should also identify any other points relevant to either the
prequalification or the tender processes. These could include matters such as particular
prequalification criteria for joint ventures, or the use of domestic preference in tender assessment.
The precision with which assessments of prequalification submissions can be carried out is
dependent on the quality of the information received from applicants. This in turn is dependent
upon the clarity and comprehensiveness of the Prequalification Document, so it is important that
care is taken over its preparation. It must also identify the criteria that will be used in the
assessment procedure, as it would be unfair to introduce criteria later of which the applicants were
unaware. The World Bank, for example, has a specific requirement that no criteria may be used
that have not been published previously.
4.2.3.3 Issue of Prequalification Document
Following publication of the Prequalification Notice the Prequalification Document is to be issued

to those companies who wish to be pre-qualified for contracts under the project. They may apply in
person or request that the documents be sent to them but, either way, a register should be
maintained of all applicants with details of contact names and addresses.
4.2.3.4 Receipt of Prequalification Submissions
When submissions are delivered, they should be properly recorded; this can best be done on the
register of purchasers of the Prequalification Document.
4.2.3.5 The Prequalification Evaluation Document
This document sets out the principles and, where appropriate, scoring to be adopted in assessing
prequalification submissions, together with the procedures to be followed when assessing
submissions. It may require the approval of the Employer before it is finalised. It is usually a
confidential document and as such would only be distributed to the Employer, the funding agency,
and those involved with the assessment of submissions, but not to the applicants.
Assessment of prequalification submissions should be made as objective as possible, and several of

the major funding agencies have produced guides to prequalification assessment which attempt to
reduce the subjectivity of the process. The adoption of some form of scoring system can assist in
converting qualitative judgements into quantitative scores, which will facilitate comparison and
ranking of submissions.
4.2.3.6 Assessment of Prequalification Submissions
Those responsible for carrying out assessment of prequalification submissions should ensure,
before they commence their work, that they are familiar with the Prequalification Document and
Evaluation Document.
To remove any possibility of accusations of collusion against the assessor(s), it is advisable for the
Summary of Assessment to be signed by all those involved in the assessment confirming that they
have no commercial interest in any of the applicants.
Assessment of prequalification submissions can produce a significant quantity of paper in the form
of completed pro-formas. It is important that these are properly filed and stored, together with the
submissions, so that they may be reviewed in the event of queries or disputes at a later date.
The criteria should also be objective; ambiguous requirements such as “general reputation” are not
acceptable and thus should not be used by the Employer. Likewise the criteria should not be
unfairly discriminatory. Examples of the type of essential criteria for prequalification of civil works
contractors that Employers may require include:
Experience: Having carried out a specific volume of work, comparable to that required for the
critical items of the contract (for instance X million cubic meters of earthmoving plus laying Z
kilometres of asphaltic concrete paving), measured annually, in at least two of the last five years.

Experience in Ethiopia is not usually a relevant criterion; however, experience in countries with
similar climatic, hydrographic, topographic or cultural conditions may be relevant in some cases.
Financial Resources: Demonstrating availability of the financial means to fully finance the
estimated contract cash flow for a specified period of N months, net of requirements for other
known commitments over the period of construction. N is determined as the time, from the end
of the month being invoiced, required by the Employer to pay the bidder/contractor, including
the time needed by the Engineer to issue the interim/monthly certificate, plus two months. (A
straight line cash flow is assumed, neglecting any advance payments and retentions.)
Personnel Resources: Having a pool of experienced staff capable of performing the key
functions required for the project, from which contract personnel will be drawn. The
prequalification document should list the essential functions, and the number of years of relevant
experience of the personnel to be detailed in the submission. At least two staff members for each
essential position should be available. The Employer should avoid using words such as
“qualified” or “licensed” as well as “university degrees”, unless they are essential for a specific
function.
Equipment Resources: Having available specialised equipment essential for the execution of
the contract. The list should be limited to highly specialised or heavy equipment which would be
critical to the execution of the contract, and may not easily be purchased, hired or leased in the
market, or readily manufactured for the task.
4.2.3.7 Preparation of the Prequalification Report and Recommendations for

Prequalification
The Prequalification Report should:
• Briefly set out the background to the prequalification process, with reference to the
publication of the Prequalification Notice;
• Identify the number of companies that purchased the Prequalification Document and that
made submissions for assessment;
• Give a brief report on each submission received and its success or otherwise in the
assessment process;
• Identify those companies that have successfully passed the assessment process and can be
considered as pre-qualified for contracts under the project;
• Provide a list of disqualified bidders and an explanation for their disqualification; and
• Provide a list of any conditionally pre-qualified bidders, together with the conditionality.
4.2.3.8 Notification of Successful and Unsuccessful Applicants
Once the prequalification assessment has been completed and the recommendations accepted by
the Employer, applicants should be notified. This should be done on an individual basis, rather than
by circulating lists of successful and unsuccessful companies.
4.2.3.9 Contents of Prequalification Document
A prequalification document has the following parts and content as per the World Bank standard
prequalification document.

PART 1 – Prequalification Procedures
Section I. Instructions to Applicants – This Section specifies the procedures to be followed

by Applicants in the preparation and submission of their Applications for
Prequalification (AFPs). Information is also provided on opening and evaluation of
AFPs. Section I contains provisions that are to be used without modification.
Section II. Prequalification Data Sheet - This Section consists of provisions that are specific
to each prequalification and supplement the information or requirements included in
Section I, Instructions to Applicants.
Section III. Qualification Criteria and requirements - This Section contains the methods,
criteria, and requirements to be used to determine how Applicants shall be prequalified
and later invited to bid.
Section IV. Application Forms - This Section contains the forms for the Application
Submission Form and all the forms required to be submitted with the Application.
Section V. Eligible Countries - This Section states the country eligibility policy of the World
Bank, and provides lists of ineligible countries
PART 2 – Works Requirements
Section VI. Scope of Works - This Section includes a summary description, delivery and
completion schedules, technical specifications and drawings of the Works
subject of this prequalification.
4.3 POST-QUALIFICATION
An alternative to undertaking the prequalification exercise prior to the actual bidding, the
prequalification documents will be sent out at the same time as the tender documents, in which case
the process is known (slightly misleadingly) as Post-qualification. The use of the prefix “post”
instead of “pre” refers to the timing of the issue of the Prequalification Document relative to the
preparation of the tender list. However although such post-qualification is not encouraged by the
major funding agencies it may be used under certain circumstances, such as for lower value Local
Competitive Bidding contracts, but its use will be defined if approved in the relevant loan
agreement.
In government procurement, post-qualification implemented for many of its GOE funded projects.
The post qualification done with two systems:
• Post qualification with One envelop
• Post qualification with One envelop
On two-envelope method of tendering, the one envelope containing the qualification application is
opened first; and the second envelope containing the tender submission is only opened if the
Contractor is found qualified on the qualification assessment. Whereas, in one envelope system;
both the qualification application and the financial offer opened together and evaluated together.

4.4 BID DOCUMENT PREPARATION
4.4.1 Typical Tender Documents

FIDIC has been, and looks likely to remain the most widely used international form of contract for
Civil Engineering Works.
Previously the FIDIC 4th Edition form of contract has been the most widely used conditions of
contract, but with the recent move to the harmonisation of standard bidding documents by the
Multilateral Development Banks, it is almost certain that the FIDIC Conditions of Contract for
Construction, 1st Edition 1999, will form the basis for a substantial share of future funding agency
financed projects. the MDB’s are using their own licensed (by FIDIC) conditions known as;
“Conditions of Contract for Construction for Building and Engineering Works Design by the
Employer - MDB Harmonised Edition”.
As a result of this, World Bank (WB) issue a new standard bidding document; Standard Bidding
Document – Procurement of Works and User’s Guide.
In both of the above form of conditions, FIDIC 4th Edition and FIDIC 1999, the Employer or the
Employer’s consultant designs the works. All documentation is detailed and complete before the
main tendering process starts.
FIDIC 1985 developed for design and Build type of contracts and it is widely implemented on the
construction sector. Furthermore, FIDIC has alao other forms of contract depending on the choice
of the contract type.
Based on the WB’s standard bidding document for small works the Federal Democratic Republic
of Ethiopia, Public Procurement and Property Administration Agency (PPPAA) has developed its
own standard bidding document for ICB and NCB contracts. The recently updated standard bidding
document of PPPAA issued in 2011 and it is currently in use for most of the construction works.
Furthermore, most of the financing institutions have their own bidding document but FIDIC is the
common standard conditions for most of the bidding documents.
The Tender or Bid Stage will include the following elements:
• Preparation of Tender Documents;

• Preparation of prequalification documents;
• Prequalification of tenderers;
• Issue of Invitations for Tender and Tender Documents;
• Management of the tender process, e.g. handling tenderers’ queries and issuing tender
notices and addenda;
• Management of pre-tender site visits and meetings;
• Receipt of tenders;
• Opening of tenders; and
• Assessment of tenders and making recommendations for award.
It must be remembered that a substantial proportion of the tender documentation will subsequently
be incorporated into the contract documentation and, as such, it is of vital importance that it is
properly prepared. Poor preparation of documents, at this stage, is a major source of claims or
disputes during the construction contract.

The documents to be prepared for the purposes of tendering are as follows:
• Invitation for Tenders, (Bids);

• Instructions to Tenderers, (Bidders);
• Tender (BID) Form of Tender and Appendices
• Conditions of Contract (Part 1 and Part 2) together with any required forms;
• Specification;
• Drawings;
• Bills of Quantities or Schedule of Prices; and
• List of additional information required from tenderers
A number of the above documents are very standard in content and may be quite brief. The
documents that are more specific to the particular project and are generally the focus of attention
for the tenderer are:
• Conditions of Contract - these set out the rights, obligations and risks of each party to the
contract (it should be noted that the Engineer, despite his/her many duties in connection
with the management under both the FIDIC 4th Ed and the MDB Harmonised Edition
forms of contract, is not a party to it). Both forms of contracts include two parts to the
Conditions of Contract, the General Conditions and the Particular Conditions. With the
MDB Harmonised tender documents, the Particular Conditions are divided into Part A,
Contract Data and Part B Specific Conditions.
• Specifications - these set out the standards for materials and workmanship to be
incorporated in, or used in the execution of, the Works
It is common practice, and recommended as good practice, to prepare specifications in two

parts, a General Specification and a Special or Particular Specification especially on multi-
contract projects. The General Specification would typically be a standard document that
may have been prepared by the relevant authority and would be included in the tender and
contract documents for all contracts. The Particular Specification would be prepared for
each individual contract and would supplement and amend as necessary the General
Specification.
• Drawings - these set out in graphical form details of the Permanent Works to be
constructed and any Temporary Works designed by the Engineer. They generally contain
many references to, and should be read in conjunction with, the Specification.
Preparation of the Drawings is the responsibility of the designer but, as with the
Specification and Bills of Quantities, a contractual over-view is required. A particular
feature of this over-view would be checking cross-references to the Specification and
nomenclatures, such as materials descriptions, included on the Drawings to remove any
anomalies or inconsistencies.
• Bills of Quantities - these set out how the Works are to be measured for payment
purposes, and are the vehicle by which tenderers price the different items of work to arrive
at their tender price. The Preambles to the Bill of Quantities identify the method of
measurement used and ensure that the work coverage of the Bill items is clearly defined; if
a standard method is not used then details must be provided of the work to be covered by
the Bill items. It is recommended that, whenever practicable, all matters relating to
measurement of the Works for payment purposes should be included in the Bills of
Quantities.

The other documents may be less bulky but also are significant to the effective working of the
contractual arrangements:
• The Invitation for Tenders (Bids) (IFB), or Specific Procurement Notice (SPN), shall be
issued by the Employer and advertised in conformity with the rules of Employer and the
involved funding agency(ies).
The IFB should contain the following:
o a brief description of the scope of the works;

o an indication of the conditions for obtaining the documents;
o date for the IFB;
o bid closing as well as bid opening date, hour and place;
o name of the person responsible and complete address of the procuring entity, the
executing agency;
o any restrictions on procurement in terms of eligibility; and
o the source of financing.
• Instructions to Tenderers - It is a common belief (particularly on the part of some

Employers) that Instructions to Tenderers are to be incorporated into the ensuing contract.
This belief however is mistaken, and the Instructions are no more than their title suggests.
Their intent is to set out particular requirements that tenderers must satisfy when preparing
and submitting their tenders, and as such they cease to have any relevance once a contract
has been awarded.
However, this is a very important document in that it may include all the relevant
procurement requirements of the funding body. The Instructions must make clear the role
of the consultant, if employed, during the tender process and the powers and
responsibilities that are (or are not) delegated to him by the Employer. These could cover,
for example, the issue of tender documents, receipt of tenderers' queries and issue of
notices and addenda, receipt of tenders, assessment, etc.
If the tender assessment is to incorporate any form of scoring, or if there are any specific
elements that are to be reviewed in detail, then it is essential that this necessary information
required to do this, is provided by tenderers. Preparation of the Instructions to Tenderers
should therefore be carried out with the requirements of the assessment procedures in
mind.
• Form of Tender/Letter of Bid - From a legal/contractual point of view the Form of

Tender/Letter of Bid could be considered as the most critical component in a tenderer’s
submission as it is where the bidder commits itself to its offer. It is usually a short
document - one or maybe two pages - and standard forms are available from the funding
agencies that need only minor modifications to tailor them to a particular contract.
• The Appendix to Form of Tender – The content of this document has changed slightly in
the MDB harmonised bidding documents with contract-specific information on matters
such as the completion period, level and limit of delay damages, details, etc. now being
included in Part A of the Particular Conditions. However, details of the method for
reimbursing price fluctuations, summary of payment currencies, etc. are still being
included in the Appendix to Tender (Bid). This part of the bidding document is not part of
the standard bidding document of PPPAA and amendments, which made on this section,
will be reflected on the special conditions of contract.
• Forms of Security, etc - When a contract is awarded there are several formalities to be
completed such as the signing of a contract agreement, provision by the contractor of

performance bonds, etc. Employers usually have standard forms for these and samples are
often included in the tender documents to familiarise tenderers with the commitments they
would be required to enter into. In the MDB harmonised bidding documents these forms
are now included in the Annex to Particular Conditions.
There will often be other information, for example ground investigation data, which is provided for
the tenderers either by being issued with the tender documents or by being made available for
inspection. It is important to note that in general such information should be limited to factual data
and not include any interpretative conclusions.
4.4.2 Document Preparation

As discussed above a number of the contract documents are brief and very standard in format.
Other of the documents will require a substantial effort to make sure that they convey as clearly as
possible the requirements of the employer.
4.4.3 Standard Documents
Standard Documents are intended to ensure that:
• Parties adopt a common approach to contracts;

• Contracts are interpreted correctly and efficiently; and
• Time and effort are not wasted preparing a new contract for each project.
Standard documents are usually published by funding agencies, or by large employers or the
government agency to suit their own requirements.
A key issue with regard to the Contract Documents under FIDIC or similar Conditions is that their
preparation should be carefully coordinated. When preparing tender documents it is beneficial to
bear in mind the role of each of the major documents that will be incorporated into a contract. This
will help to clarify, in the event of doubt; into which document a particular requirement should be
incorporated. Some notes on the preparation of some of the key documents follow:
4.4.3.1 Conditions of Contract
For projects procured using the International Competitive Bidding (ICB) approach it is suggested
that the conditions of contract should be based on widely (worldwide) recognised conditions of
contract. It is further suggested that the same conditions of contract should also be used as the basis
for projects procured using National Competitive Bidding (NCB). By taking this approach a degree
of standardisation would be achieved that would be beneficial to both the Employer and the
tenderers.
4.4.3.2 Specifications
Specifications set out the standards for materials and workmanship to be incorporated in, or used in
the execution of, the Works. Most Employer organisations would use an accepted General
Specification, for a category of work, and a Particular Specification that is prepared to focus on the
needs of the particular contract.
In the contract document it is common practice to refer to, but not include, the published General
Specification and it is expected that each tenderer would have a copy. If necessary the Employer
should be able to supply (at a cost) copies on request and this should be stated in the document.
For preparation of a Particular Specification it is useful for the Employer organisation to have an
up-to-date library of materials that can be accessed easily for incorporation into the Particular

Specification document. Any large Employer should be involved in a regular systematic review of
standards and specifications with all relevant data held in the library.
There are two broad categories of specification in Civil Engineering:
• Method Specification; and

• Performance Specification.
Method specifications describe the particular method, or alternative methods, which should be used
to undertake a task and the supervision is focused on making sure that the method is followed – an
example is in compaction where the layer thickness, the roller type and the number of passes of the
roller are specified. This approach is useful when the contractor may be inexperienced or when
working in remote areas where scientific testing is difficult.
Performance specification stresses the end result in terms of some scientific calculation that can be
tested. In the compaction example a performance specification would give the final required
density of the compacted material and the contractor would be free to use any method to achieve
that result. The supervision focus is then on undertaking tests to ensure that the performance has
been achieved.
In practice many specification documents include aspects of both approaches.
4.4.3.3 Drawings
These set out in graphical form details of the Permanent Works to be constructed and any
Temporary Works designed by the Engineer.
No matter how much care is given to the preparation of a design, it is unlikely to be properly
executed if the contractor and the site supervision staff are not provided with a coherent set of
drawings to work from. Far worse however is the situation when designers are not given adequate
time and facilities to develop a fully detailed design prior to issue of the tender documents. This
can lead to last-minute preparation of the documents, with the result that shortcuts are taken and,
possibly, a set of documents from a previous contract taken off the shelf and hurriedly adapted in a
few days. This will not only cause mistakes to be made in the documents but also probably carry
forward mistakes already occurring in the documents being used as the base.
If it is apparent that the design will not be completed by the time the contract is due to be awarded
it is then possible for the documents, specifically the drawings, to be prepared so as to allow for the
detailed design to be finalised later during the early part of the implementation of works, but care
must be taking in doing this. In some countries the practice has developed of producing ‘tender’
drawings that are not intended to be adequate for construction. It is far better practice to produce a
set of detailed design drawings and specifications for issuing at the time of tender if possible.
4.4.3.4 Bill of Quantities
The Bill of Quantities (BOQ) is a schedule of items of work against which are listed the amount of
each work item, the quantity. Item descriptions are usually generated in a standard manner using a
Method of Measurement. If a Method of Measurement is not included then details on how the Bill was
prepared must be included in the Preambles to the Bill of Quantities. The general practice is to keep
the bill items relatively brief but to include all the information about item coverage and how the
measure is to be done in the Method of Measurement or Preambles. The contractor, during the
tendering process, will enter rates against each of the bill items. Totals for each item are summed to
provide a tender total.
The role of the bill of quantities in a re-measure contract form (e.g. both FIDIC 4th Ed and FIDIC
1999), is to give guidance to the contractor at the time of tendering to enable him to understand the
scope of the work and to price for doing that work. It also provides guidance and is the basis, at a later
stage, for the measurement and subsequent payment of the works. It is made clear in both contract
forms that all the quantities are not to be taken as accurate and are subject to re-measure. This should
also be re-stated in the BOQ.
In some documents the method of measurement is given in the specifications. It is certainly clearer and
makes reading the documents easier if all the measurement information is kept in one document, the
BOQ.
4.5 BID PREPARATION & SUBMISSION
4.5.1 Tender Documents

The Tender Documents that will have been issued to the Tenderers may vary slightly depending
upon the means of procurement, i.e. ICB, NCB and the financing agencies. A typical list of
documents for a tender is given below.
BIDDING DOCUMENT VOLUME I (WB)
Section I Invitation for Bids
Section II Instructions to Bidders
Section III Bidding Data
Section IV Conditions of Contract Part I – General Conditions
Section V Conditions of Contract Part II – Conditions of Particular Application
Section IX Form of Agreement, Performance Security, Advance Payment Guarantee
Section XI Explanatory Notes
Section XII Post-qualification (May not be used if prequalification used)
Section XIII Dispute Resolution Procedure
Section XIV Eligibility
BIDDING DOCUMENT VOLUME II
Section VI Technical Specification
BIDDING DOCUMENT VOLUME III
Section VII Form of Bid, Appendix to the Form of Bid and Form of Bid Security
Section VIII Bills of Quantities
Section XV Schedule of Supplementary Information
BIDDING DOCUMENT VOLUME IV
Section X Drawings

BIDDING DOCUMENT VOLUME I (PPPAA)
In General SBD has 3 parts & 9 sections;

◼ Part 1- Bidding procedures;
◼ Part 2- Schedule of Requirements;
◼ Part 3- Contract
Part 1- Bidding procedures;
◼ Section 1 - Invitation for Bids;
◼ Section 2 - Bidding Data;
◼ Section 3 – Evaluations and Qualification Criteria ;
◼ Section 4 - Bidding forms;
◼ Section 5 – Eligible countries;
Part 2- Schedule of Requirements;
◼ Section 6- Schedule of Requirements;
Part 3 – Contract;
◼ Section 7 – Conditions of Contract Part I – General Conditions
◼ Section 8 – Conditions of Contract Part II – Conditions of Particular Application
◼ Section 9 – Contract Forms;
4.5.2 Contents of each section of the Tender document
◼ Section 1 - Invitation for Bids;

• Provides information to help bidders prepare their bids;
• ITB contains provisions that are to be used without modifications;
• ITB will not be part of the final contract;
• It is procedural & instructional information used during bidding process.
• Evaluation and comparison of Bids;
• Award of contract
◼ Section 2 - Bidding Data;

• Supplements the ITB by specifying individual bidding document;
• All clauses refer to Section 1 and are prepared for each specific contract;
• The BDS will not be part of the resulting contract document;
• Any change/qualification to be made to the standard ITB is made here and it is wise to
see it with care.
• Any information in the BDS precedence over the one in ITB;

◼ Section 3 – Evaluations and Qualification Criteria ;

• This section contains all the criteria that the employer shall use to evaluate bids &
qualify bidders;
• This is again to modify ITB and provide figures and details for the qualification criteria
to the particular contract.
• Evaluation;
• Adequacy of Technical proposals/method statement;
• Multiple contracts;
• Completion time, if permitted in ITB;
• Technical alternatives, if permitted in ITB;
• Margin of preference;
• Qualification
o General Qualification
▪ Legal Status
▪ Eligibility
o Technical Examination
▪ Major Equipment
▪ Key personnel
▪ Proposal of work methods and programs
o Historical Contract Non-Performance
▪ History of Non-Performing Contracts
▪ Pending Litigation
o Financial Situation
▪ Historical Financial Performance
▪ Current Contract Commitments
▪ Annual Construction Turnover
o Experience
▪ General Construction Experience
▪ Specific Construction Experience
In a pass or fail tendering system, the criteria under section three are divided in to two
groups. Some of them (General Qualification, Historical Contract Non-Performance,
Financial Situation and Experience) are “Must Meet” criteria and should be fulfilled
during the tender submission. Whereas, the others (Technical Examinations) are ‘Has to
Meet’ criteria, which are not a must meet at the tendering time and the successful bidder
can fulfil them during implementation time or with clarification, where as this approach
may be modified if the qualification is structure with a point merit system.
◼ Section 4 - Bidding forms;
• This is again standardized forms to assist the bidders for submission of

responsive/complete bid; This may include forms for:

o Letter of Bid/bid submission form;

o Schedules (price schedules);
o Bid security (Bank Guaranty/ Bid Bond);
o Technical proposal Form;
o Forms for Personnel;
o Forms for Equipment;
• Bidder’s Qualification forms;
o Bidder information sheet;
o Party to JV information Sheet;
o Historical contract non – performance
o Current Contract Commitments
o Financial Situation
• General Experience form
• Specific experience form
◼ Section 5 – Eligible countries;

• Prohibitions of commercial relations;
• If a firm is declared ineligible;
• Conflict of interest
• Legal and commercial status
◼ Section 6- Schedule of Requirements;

• Specifications;
• Drawings;
• Supplementary information;
• BoQ;
◼ Section 7 – Conditions of Contract Part I – General Conditions

• GCCs are standard, that have been evolved over years;
• The rights and obligations of the parties to the contract is defined GCCs;
◼ Section 8 – Conditions of Contract Part II – Conditions of Particular Application

• COPA complements the GCC;
• COPA complements GCC in a manner similar to BDS complements ITB;
• COPA provisions take precedence over those in GCC;
• Legal advices is recommended when amending provisions;
◼ Section 9 – Contract Forms;

• This section contains forms, which, once completed, will form part of the contract.
This forms are:
o Letter of Acceptance;
o Contract agreement;
o Performance Security;
o Advance payment Security;
• All these forms are not filled and submitted during bid submission
4.5.3 Tender Management
4.5.3.1 Pre-Tender Site Meeting
Under many standard conditions of contract, a contractor is “deemed” to have visited the site while
preparing his tender (i.e. in law he is assumed to have done so, whether in fact he has or not). This
is so in both FIDIC 4th Ed (Clause 11.1) and with the MDB Conditions of Contract (Clause 4.100.
It is however of benefit to all concerned if a pre-tender site visit and meeting (sometimes called a
pre-tender conference) are organised by the Employer or its consultant to which all tenderers are
invited and required to attend.
The details with regard to date and location of meeting, limit on numbers of attendees per tenderer,
etc. should be set out in the Instructions to Tenderers. Minutes should be taken of the meetings and
circulated to all those attending as soon as possible after the meetings have concluded.
4.5.3.2 Tenderers’ enquiries
In the event that amendments are required to any of the Tender Documents, these will be handled
by means of Tender Notices (clarification) or Tender Addenda. When making any such
amendments it is important to distinguish between those Tender Documents that will ultimately be
incorporated into the Contract, and those (such as the Instructions to Tenderers and Notes for
Guidance) that are for tendering purposes only.
These may be received either orally or in writing, but a record must be kept of all communications
and responses must always be in writing. In some cases a query may highlight an error in a
document that requires an addendum to be issued to correct it. Responses must be circulated to all
tenderers, but without any indication of the source of the enquiry. It is advisable to state a date
(quoted as a number of weeks before the tender return date) in the Instructions to Tenderers after
which no queries from tenderers will be entertained. In fixing this date allowance should be made
for time to prepare the response to the query (which may be not inconsiderable) while still
complying with the latest date for issue of addenda.
It is important to distinguish between Tender Notices and Tender Addenda. Tender Notices are the
means of communication from the Employer to tenderers during the tender period, whereas Tender
Addenda are the mechanism by which amendments are made to those Tender Documents that will
subsequently be incorporated into the Contract. Tenderers must take account of both Tender
Notices and Tender Addenda when preparing and submitting their tenders.
4.5.3.3 Tender Notices
These may cover any matters relating to the preparation and submission of tenders and do not
become part of the Tender Documents. They may amend the Instructions to Tenderers or Notes for
Guidance, or they may cover the issue of Tender Addenda.

4.5.3.4 Tender Addenda
These will become Tender Documents and their contents will be incorporated into the subsequent
contract. As noted above they are only to be used to make amendments to those Tender Documents
that will subsequently be incorporated into the Contract. Such changes may be required, for
example, when it becomes apparent that there is an error in the Tender Documents issued, or when
the Employer wishes to make a change to some aspect of the works. Tender Addenda must not be
used for revising the Instructions to Tenderers or Notes for Guidance; these would be handled by
means of Tender Notices. Tender Addenda should always be issued under cover of a Tender
Notice.
Tender Notices must be sequentially numbered and a record kept of their issue. Tender Addenda
must also be sequentially numbered, but separately from Notices. This could lead to the situation
where, for example, Addendum No. 2 is issued under cover of Notice No. 3, but this is not
considered to be a problem. Pro-formas should accompany Notices for tenderers to sign and return
confirming receipt thereof and acknowledging that they will take full account of the Notice (and
Addendum if appropriate) in their tender. In practice the consultant often handles the preparation
and issue of Notices and Addenda.
When issuing Addenda due account should be taken of the magnitude of the change and the
potential effect on tenderers’ work in preparing their bids. It is not reasonable to issue, close to the
tender return date, an Addendum that will have significant or wide-ranging effects on tenderers’
submissions. If tenderers are not able to assess these effects fully there is a danger that they will
price high for the change owing to indeterminate risks. It is not uncommon for a deadline to be
stated after which no Addenda will be issued; this should not be less than four weeks before the
date set for return of tenders. If it is essential that an Addendum be issued after this date then the
tender period should be extended.
When Tender Addenda that modify Tender Documents such as the Specification or Bills of
Quantities are issued, it is recommended that this be done by issuing a complete new page to be
inserted as a substitute page in the relevant document. Identification should be included on the page
(by means of a header or footer) to indicate the Addendum under which it has been issued. If the
effect of the change is such as to cause text on that page to overrun on to the next page this should
be accommodated by means of an additional page (identified by an “A” after the page number) to
obviate having to re-print all the following pages. Similarly if the change drastically reduces the
quantity of text on a page such that text from the following page is brought forward, a page break
should be inserted at the end of the original text. To assist tenderers in identifying the changes that
have been made, a second version of the page should be issued for information purposes with the
changes identified, for example by italics or scoring-out.
4.5.3.5 Extensions to Tender Period
Tenderers frequently request extensions to the tender period. It is not possible to lay down explicit
rules as to how such requests should be handled. Some tenderers will put in a request almost as a
matter of course, and if only one or two out of all the tenderers request an extension it could be
considered in this light. However if the majority of tenderers request an extension then the position
should be reviewed. It may be that the period set was unduly optimistic considering the
complexities of the contract and, if the Employer has no overriding requirement for the contract to
be completed by a set date, the requests could be considered favourably.
Late issue of a tender addendum may be adequate grounds for extending the tender period, and in
such an event the extension could be made when the addendum is issued without waiting for
requests from tenderers.

4.5.3.6 Receipt of Tenders
It is important that the receipt of tenders is properly managed, with all tenders being logged in with
the time of delivery. If tenders are delivered some hours (or even days) in advance of the closing
time then they must be kept unopened in a safe secure place until the specified time for opening.
Tenders should be submitted double-wrapped so that late submissions can be returned unopened.
The outer cover should only bear the contract reference, and no indication of the identity of the
tenderer. The inner cover should bear both the contract reference and the tenderer’s name and
address. This retains the anonymity of submissions when first received, and yet allows for late
submissions to be returned to the tenderer unopened. The outer cover should also carry a statement
to the effect that it is not to be opened before the due time and date; the instructions for this would
be included in the Instructions to Tenderers.
4.5.3.7 Tender Opening Procedures
Employers may specify the procedure for the opening of tenders, and whether it is to be public, in
the presence of tenderers’ representatives, or confidential. As a minimum, the tenderers’ names,
prices and any adjustments submitted should be recorded. It is important that any specified
procedures are strictly followed, particularly with regard to alternative tenders or offers of
discounts, as these may inadvertently be disqualified if not properly handled at the opening. The
figure below details a typical tender opening and evaluation procedure.
In the event that a tenderer has exercised his right to make additional submissions modifying or
withdrawing his tender, it is imperative that these submissions are opened or otherwise dealt with
in the correct order. Submissions marked “Withdrawal” should be opened first and, if found to be
in proper order, any earlier submissions made by that tenderer should be left unopened. Likewise
submissions marked “Modification” should be opened before consideration of any earlier
submission and a decision made on further action based on the contents.
4.5.3.8 Security
Once tenders have been opened, and throughout the ensuing assessment process, it is important that
the documents are kept secure. Tenders contain commercially sensitive information and the
assessment team have a duty to the tenderers to ensure that confidentiality is maintained. For this
reason the number of copies of tenders requested should be kept to a minimum. The original
tenders should, after verification that the copies are identical, be kept in the Employer’s office and
only the copies referred to during assessment.
4.6 BID EVALUATION & AWARD
4.6.1 Tender Assessment
The Employer generally carries out tender evaluation itself using a team of experienced staff
members. This committee is commonly known as the Tender Analysis Committee or TAC. The
committee normally consists of three to five qualified members, depending on the size and
complexity of the assignment. The competence and integrity of the members of the Evaluation
Committee are crucial for ensuring a fair and objective evaluation of tenders.
To ensure the integrity of the selection process, members of the Evaluation Committee should
exercise their function in accordance with the highest ethical standards. To the extent possible the
Evaluation Committee should be composed of individuals of comparable hierarchical level. After
the committee has agreed upon evaluation criteria, each committee member should evaluate the
proposals independently. Whenever possible, the Evaluation Committee should include one or
more members of the team responsible for preparation of the tender documents.

When the Employer lacks staff with the necessary expertise to carry out the evaluation, that an
independent consultant is used to assist the Evaluation Committee.
Evaluation is principally by comparison of offers on an even footing. Qualification of tenders is not

permitted. Tenders are either disqualified by qualification (if the Instructions to Tenderers have
stated so) or Tenderers may be requested to remove the qualification (at no change in the offer
price).
Evaluation is carried out by examining the technical, contractual and commercial aspects of each
tender. Clarification can be sought from Tenderers during the evaluation process, but tenderers
should not be given the opportunity to amend their price. Usually not all tenders are examined in
this detail and the assessment should normally be carried out in two stages.
The first stage should be a preliminary examination of all submissions leading to a rejection of any
non-responsive tenders. The remaining tenders would then in the second stage be subjected to
detailed review. An interim report may be submitted to the Employer at the end of the first stage
with recommendations for the tenders to be rejected and those that are to remain for detailed
review.
4.6.1.1 Tender Evaluation Procedures
General
Tender Evaluation should be carried out in a manner consistent with the ‘Instruction to Tenderers’ and
must adhere to any requirements. The evaluation procedures can if appropriate, be based on the
assumption that all tenderers have been pre-qualified and thus only limited assessment of the tenderers'
technical or financial capacity is required.
It should be remembered that the submitted tenders are commercial confidential documents and should
be examined by those people actually carrying out the evaluation. The documents should be kept in a
secure place at all times.
Evaluation should be carried out using the copies provided by tenderers with the original tender kept
unmarked and used as a master for reference only.
A preliminary examination should be carried out and all documents checked for completeness (all
required information submitted, signed, dated, amendments initialled, etc.).
All deficiencies identified from the preliminary check should be listed.
All tenderers passing the preliminary examination phase should be subjected to more thorough
evaluation and further clarification sought where necessary.
Tenders should be examined to confirm the following:
• That they conform to the requirements in the ‘Instructions to Tenderers’;

• That no amendments have been made by the tenderer to the tender documents;
• That the tender price is the arithmetical correct sum of all the price components;
• That the tenderer has offered a technically sound offer; and
• That the tenderer’s proposal will permit the permanent Works to be completed in the
Time for Completion
Although the total tender price may be considered the dominant factor, it is essential that all financial
implications be examined. An arithmetic check of the Bill of Quantities (BOQ) on a rate-by-rate basis
should be carried out and discrepancies between tenders and the Engineer's Estimate should be
identified. Appropriate risk analyses should be carried out.
Any financial details available since the prequalification assessment was carried out should be
analysed to reconfirm the tenderers' financial capacity.
All qualifications, conditions and deviations should be listed and an assessment made of the influence
of these.
It may be necessary during the course of tender assessment to send questions to some tenderers to
seek clarification of some aspect of their submissions. Standard forms should be prepared for these
questions, including a box in which the tenderer can enter his reply. Each question should have a
discrete number, and a register maintained of all questions issued. It is important to note that such
issue of questions should not allow tenderers to alter their tender prices unless the question revises
the work content of the contract. Requests for Clarification (RFCs) should be issued only to obtain
missing information or to allow tenderers to correct non-material deficiencies.
Any commercial and technical alternatives, if allowed under the conditions of tendering, should be
evaluated and a recommendation made as to whether they should be further considered.
Technical submissions such as construction methods, specialised plant and equipment, construction
programming, staff, subcontractors, quality assurance and alternative tenders should be evaluated to
determine their suitability and the tenderers' understanding of the scope of the work. This will
generally involve any update of the prequalification information if required.
A draft report should be submitted to the Employer for ultimate consideration by their tender award
committee and to the funding agency when applicable. The report should include recommendation of a
preferred tenderer and set out matters that may need to be negotiated with the preferred tenderer.
Following negotiations with the preferred tenderer, a final report should be submitted for final
approval before award.
Preliminary Evaluation
The evaluation process should begin immediately after tender opening. The tenders should be
checked for compliance with the requirements of the Instructions to Bidders/Tenderers. The
purpose of the preliminary examination is to identify and reject tenders that are incomplete, invalid, or
substantially non-responsive to the tender documents and therefore are not to be considered further.
All documents lodged with the tender, and in particular those parts of the originally printed document
that the tenderers may have reproduced, will be examined to ensure that the tenderers have not omitted
or altered any part of the tender documents. Any alteration to the documents should be treated as a
qualification to the tender.
Consideration should be focussed on possible deficiencies that, if accepted, would provide unfair
advantages to the tenderer. Good judgment must be used: for example, simple oversights or
mistakes due to human error should not be a basis for dismissal of the tender. Hardly ever is a bid
faultless in all respects. However, the validity of the tender itself, e.g. its signatures, must not be in
doubt. If the tenderer is a joint venture, the joint venture agreement must be submitted. All
submitted copies of the tender should be compared with the original and corrected accordingly, if
necessary. After that, the original should be kept in a safe place, and only the copies should be used
for evaluation.
Any qualifications set out by a tenderer should be reviewed. In general qualified tenders should not
be accepted although in practice it is usual to examine any qualifications to assess their financial
and contractual effects and to ensure that they do not confer a tendering advantage on the tenderer.
A summary of all qualifications by individual tenderers should be recorded; Figure 4 shows a
suitable format for listing the qualifications.
Whilst it is preferable that tenders be unconditional, qualifications to, or conditions on, the tender
should not rejected outright unless they are considered to be a material deviation, in which case the
tender is to be rejected. As a general rule, material deviations are those that, if accepted, would not
fulfil the purposes for which the tender is requested, or would prevent a fair comparison with tenders
that are properly compliant with the tender documents.
Conditions expressed by the tenderer in vague terms, such as "we would like an increase in the amount
of mobilisation advance" or "we wish to discuss changes in the completion schedule" should ordinarily
be ignored in tender evaluation. However, a categorical statement by the tenderers taking exception to
a requirement in the tender documents should be treated as a qualification.
Tenders that contain non-material qualifications may be considered substantially responsive if the
qualifications can be assigned a monetary value that could be added as a penalty during the detailed
evaluation process and if such deviations would be acceptable in the eventual contract.
Where it has been determined that a qualification is unacceptable, the tenderer should be requested to
remove the qualification, by way of a Request for Clarification (RFC). The removal of qualifications
should not give any tenderer the opportunity to alter the price or substance of the tender. If a tenderer
attempts to change the tender price or substance, this becomes a new offer and cannot be accepted. The
tenderer must be requested to maintain the original tender price (with no qualification) or withdraw the
tender.
Tenders not including all of the required items should normally be regarded as non-responsive.
Though, under works contracts, missing prices for infrequent items are deemed to be included in
prices of other related items. If any erasures, interlineations4, additions, or other changes have been
made, they should be initialled by the tenderer. They could be acceptable if they are corrective,
editorial, or explanatory. If they are not, they should be treated as deviations and should be
scrutinized. Absent pages in the original copy of the tender may be grounds for rejection.
Where the tenderers omit required details or provide insufficient, inconsistent or unclear information,
RFCs should be issued.
Key variations to the commercial requirements and technical specifications are a basis for the
rejection of tenders. As a rule, key variations or deviations are those that, if accepted, would not
fulfil the objective and purpose for which the tender was requested, or would inhibit a fair
comparison with tenders that are compliant with the bidding documents. Examples of key
deviations include:
• Stipulating price adjustment when fixed price tenders were required

• Failing to respond to specifications by proposing a different design or product that does
not offer equivalent performance
• Programming of contract start-up, delivery, installation, or construction that does not
comply with required times
• Subcontracting in a significantly different quantity or method than that allowed
• Declining to take vital responsibilities and liabilities as allocated in the tender
documents, e.g. performance guarantees and insurance coverage
• Taking exception to critical provisions e.g. applicable law, taxes and duties, and
dispute resolution procedures
Up-dated pre-qualification data (if requested) should be reviewed to confirm the tenderers’
continued acceptability.
Part of the assessment is to confirm that changes made under Tender Addenda have been allowed
for in the tender. On completion of the preliminary evaluation, a summary of the findings should be
recorded on an appropriate form.
4
to write or print words between the lines of writing or printing in a text or document
Financial Evaluation
Only those tenders surviving preliminary examination need to be examined in this phase.
Financial evaluation may include consideration of:
• Capital costs, including corrections for error (if appropriate) and any discounts offered
• Payment schedule
• Currencies
• Escalation indices
• Dayworks rates; etc
• Submissions for base prices for materials if the tender documents contain provision for
price fluctuations to be reimbursed on the basis of invoices rather than indices including
if applicable sources of materials
The tender Bills of Quantities will be checked to verify arithmetic correctness and to identify
omissions and other inconsistencies.
The tenders may contain provisional sums set by the Employer for contingencies or for nominated
subcontractors, etc. As these sums are the same for all tenders, they should be subtracted from the
read-out prices to allow for a proper comparison of tenders in subsequent steps. However, any
provisional sums set aside for Daywork and priced competitively, should not be included in the
deductions
In accordance with the conditions of tendering (as laid out in the Instruction to Bidders), tenderers are
permitted to submit, before the tender opening, modifications to their original bid. The influence of
any modification needs to be fully considered in the examination and evaluation of the tenders.
These modifications may include either increases or discounts to the bid amounts that reflect last-
minute business decisions. Consequently, the original tender prices should be modified at this stage
in the evaluation. Discounts offered in accordance with the Instruction to Bidders that are
conditional on the simultaneous award of other contracts or lots of the contract package (cross-
discounts) shall not be incorporated until the completion of all other evaluation steps.
Inclusion of tenders for second-stage assessment from those that clear the first-stage review would
usually be done based on the lowest corrected tender prices. Essentially the selection would include
those tenders with a realistic chance of being appointed. In general it is recommended that the three
lowest tenders are carried forward, but this may vary depending on the relative tender prices. For
example if the prices of the third and other tenders are very close it may be advisable to include all
closely placed tender. Some Employers, however, may require that all compliant tenders be
subjected to detailed assessment.
The tenders after correction of computational errors and adjustments for discounts should be converted
to a common evaluation currency, as described in the conditions of tendering. There are generally two
different currency options for tendering/payment, each requiring a different conversion methodology:
• the use of multiple currencies, in which the tender price is expressed in a number of
currencies; and
• the use of a single currency option, in which the tender price is expressed entirely in a
specific currency, with other foreign currency requirements stated as percentages of the
tender price, together with the exchange rates used by the tenderer to determine the
percentages.

If any preference margin is applicable, appropriate loadings will be calculated and adjustments made to
tender prices.
Exchange rates proposed by tenderers will be checked and recorded.
A second spreadsheet containing comparisons between tendered rates and prices will be prepared. An
example of such a spreadsheet is shown at the end of these notes.
Examination should investigate “tendermanship” and identify where certain offers may result in a risk
of the tender price being increased due to the way in which the tender has presented his tender.
The Bills of Quantities, particularly the Preliminaries, need to be checked to determine if there is
excessive front-end loading that would lead to large payments being made early in the Contract.
Alternatively, a tenderer may be asked to provide an increased Performance Bond to protect the
Employer from the risk of a contractor defaulting after several large payments have been made.
Tenderers are, by the nature of competitive tendering, forced to keep their Tender Sum as low as
possible. The lowest tender is probably (particularly with pre-qualified tenderers), the tender that will
be accepted. If, therefore, a tenderer can discover weaknesses in the tender documents that can be
exploited, they will look at ways to develop these weaknesses to increase income. Provided the risks of
not being able to develop these weaknesses are small, it becomes a reasonable risk to reduce the tender
price by an amount approaching the additional income likely to be developed through the weakness in
the documents – this will improve the competitiveness of the Tender. Similar ploys exist in pricing
individual items. In these instances, the tenderer may note that there is a probability that one significant
item will in fact turn out to be measured as a greater quantity than that billed. The tenderer will then
adjust the rates of these items so that a high rate is set against the item likely to increase and a low rate
against the item likely to remain constant and such that the total amounts of the combined items are the
same as the original combined amounts – i.e. the tender price is unchanged but the chance of a high
return is increased. Such ‘tendermanship’ can be restricted by the use of a suitable Preamble to the
BOQ and a suitable Method of Measurement, but mistakes in the Bill Items must be guarded against
through rigorous checking at design stage.
4.6.1.2 Risk Assessment
Traditionally tender evaluation has been dominated by the principle of acceptance of the lowest priced
tender as most Employers are publicly accountable and must demonstrate that value for money is
being obtained.
It is generally accepted that there is no definite relationship between a low tender price and a low final
cost and risk analysis is increasingly being required by Employers to identify and evaluate occurrences
which can have an impact on the success of the project.
Risk analysis consists of identifying the risk, determining the probability of the risk being realised and
the potential impact if it does occur.
Some of the more common risks associated with a conventional tendering process are those arising
from:
• unbalancing of tender prices;

• unreasonably low tender prices; and
• Changes in quantities; delays, etc.
One of the more common methods of assessing the impact of change has been sensitivity analysis,
however this technique has limitations in that it requires that variables be considered independently,
the risk cannot be quantified and little regard is given to the possibility that changes in some items are
more likely than in others.

Probabilistic risk analysis overcomes the limitations of the sensitivity analysis technique by using a
Monte Carlo simulation, where random probabilities are assigned to different values for each variable
and the frequency of occurrence of a particular value across the given range of values is determined.
The information obtained from the various analyses should be examined closely to identify items that
could cause concern, either by tenderers attempting to take advantage of perceived deficiencies in the
tender documents (see ‘tendermanship’ above), or where tenderers may have misinterpreted the
specified requirements.
4.6.1.3 Technical Evaluation
Only those bids surviving preliminary examination need to be examined in this phase.
Tender documents have required that tenderers provide details of a number of technical aspects of the
work. These include:
• Method statements to assess its suitability as an indication of how the Works would be
executed, and to ensure that there are no qualifications hidden within it;
• Key personnel;
• Supervision and labour;
• Proposed site management structure;
• Proposals for the deployment of plant;
• Subcontractors and sub-contracting as a percentage of the total work;
• Construction programme to assess its suitability for the execution of the Works;
• Quality Assurance; and
• Alternative tenders (e.g. alternative design, revised completion dates) if appropriate.
A check must be made to verify that all required technical information has been submitted and that the
information is technically acceptable and will not cause any contractual problems.
4.6.1.4 Determination of Preferred Bidder
Subject to application of any domestic preference, any discounts, consideration of alternative tenders
and post-qualification evaluation, or, if pre-qualification has occurred, confirmation of pre-
qualification information, the preferred tenderer will be the tenderer with the lowest total tender price.
• Domestic Preference: If domestic preference is allowed in tender evaluation, the detailed
procedures set out in the conditions of tendering will be used in determining the eligibility
for preference and the amounts.
• Cross-Discounts: These are conditional discounts offered in the event that more than one
contract package will be awarded to the same tenderer. Tender evaluation in such cases can
be quite complicated, particularly where domestic preference may apply. The sizes of cross-
discounts offered by each tenderer may vary with the potential number of contracts awarded.
The evaluation should consider the optimum combination of awards based on least overall
cost of the total contract package, consistent with the qualification criteria. Presentations of
the calculations should be made on an attachment to the evaluation report, which should
include the tender evaluation(s) for the other contracts, if they have been evaluated
separately.
• Qualification: If pre-qualification was conducted, the tenderer whose tender price is the
lowest evaluated should be the preferred tenderer, unless the tenderer's qualifications have
since materially deteriorated or the tenderer has since received additional work that over-
stresses its capacity. The rejection of a tender for reasons of qualification requires substantial

justification, which should be clearly documented in the evaluation report. A history of poor
performance may be considered a substantial justification.
• Alternative Tenders: The conditions of bidding may allow alternative tenders under certain
stipulations.
o If a recommendation of acceptance of any alternative tender is made, detailed
justification for doing so should be provided
o Calculations for the evaluation of alternatives should be provided in the evaluation
report
• Rejection of all Tenders: If none of the tenders are found to be responsive, or tenders are
unreasonably high in price compared with earlier estimates, or none of the tenderers are
qualified, with the prior concurrence of the financing agency, all tenders may be rejected.
4.6.1.5 Tender Evaluation Report
Upon completion of the tender assessment a report would be prepared and submitted to the
Employer setting out the background to the tender procedure; information on the number of
invitations to tender issued and tenders received; any major points of concern, and details of the
assessment process. It would also of course include a recommendation for award of the contract.
Tender evaluation reports will contain commercially sensitive material and circulation of the reports,
and the numbers printed, must be restricted. Generally, circulation will only be to the Employer and
financing agency.
Care must be taken over the wording used in reports. Where a fact is being stated, it should be clear
that it is a fact. Where supposition is included it should not be worded such that it can be interpreted to
be a statement of fact or opinion of the report writer. Where an opinion is being stated it must not be
worded such that it can be interpreted as a statement of fact, but clearly identified as an opinion.
The following information must be included in the report:
• A copy of the tender opening record, if not previously submitted

• An explanation of any inconsistencies between prices and modifications to prices read out at
tender opening (and written into the record)
• Details of any tenders rejected during preliminary examination
• An explanation of any substantial corrections for computational errors
• Details of eligibility for domestic preference
• Details of additions, adjustments, and priced deviations
• If applicable, detailed reasons for not awarding a contract to a party other than the lowest
evaluated tenderer
• If an alternative tender is accepted, a detailed explanation of the reasons for its acceptance,
addressing issues of timeliness, performance, and cost implications
• Copies of any correspondence from tenderers that raise objections to the tendering and
evaluation process, together with detailed responses
• Copies of any letters to tenderers requesting clarifications and copies of responses.
The report should recommend a preferred tenderer. If the recommended tenderer is not
the lowest priced, detailed justifications must be included.

4.6.2 Contract Award
Following acceptance by the Employer, certain formalities need to be completed.
Documenting agreements reached
• Adjustments to the final price and scope of the contract to correct for acceptable omissions
and qualifications in the tender may be negotiated with the preferred tenderer
• After agreement has been reached on acceptance or otherwise of qualifications, etc., the
details of the agreements made should be documented for inclusion in the Contract. This is
normally done by inclusion in the Letter of Acceptance
Letter of Acceptance
• The notification by the Letter of Acceptance constitutes the formation of the Contract. As
well as documenting agreements reached, the Letter should describe the Contract and state
the Contract Price. The letter of acceptance is not a binding as per the Federal Procurement
Directive for the formation of the contract.
Preparation of the Contract Agreement
• The Contractor will normally be required to sign a contract agreement with the Employer.
This should be prepared for signature using the format provided in the tender documents
• The Contract Agreement should be signed in conjunction with, or shortly after, the issue of
the Letter of Acceptance. This does not always happen and considerable delays do occur –
this should be avoided.
Performance Security
• It is generally a requirement that the Contractor furnish a performance security within a

prescribed time of the date of the Letter of Acceptance. Once this security has been provided,
the tender security of the successful tenderer can be returned.
Notification of unsuccessful tenderers
• After the furnishing of the performance security by the successful tenderer, other tenderers
should be advised that their tender has not been successful. At the same time, any tender
securities of the unsuccessful tenderers should be returned.
Within the context of the Procurement Procedures there is no clear distinction between completion
of the Tender Stage and commencement of the Contract Award Stage, and the latter has been taken
to mean the formalities required to finalise the award of the contract after the Employer and any
funding agency have accepted the recommendation of the tender assessment.
4.6.2.1 Tender Acceptance and Contract Award
Tender acceptance and award of a contract can be puzzling for both parties if there is not a defined
and precise procedure for award of contracts. In Ethiopia the procedure is specified in GOE
Proclamation No. 649/2009(Determining Procedures of Public Procurement and Establishing its
Supervisory Agency.) and in the Ministry of Finance and Economic Development’s Federal Public
Procurement Directive. These documents provide a sequence of events based on the need to be
aware of bidders’ rights to appeal against the manner of the evaluation and the requirement for a
contract to be awarded as soon as is practical following a decision to award has been approved. The
following procedure is required under the Proclamation and Directives:
• The head of the Employer makes a contract award decision.

• The Employer notifies all bidders of the results of the evaluation.
• After a period of seven working days from the date bidders are notified of the result, if no
complaint has been received by the Employer, the Employer awards the contract by either
issuing a Letter of Acceptance to the successful bidder or signing a contract (which is
often done following the successful conclusion of any negotiations).
• Where a Letter of Acceptance is issued, the contract will be confirmed by issue of a full
conformed Contract Document.
The Employer should note that the Letter of Acceptance and the Contract Document should not
contain any provisions or conditions which vary from those in the bidding document, or the
bidder’s Proposal, including any subsequent clarifications or negotiations. Any such modifications
should be agreed by the bidder in writing before a contract award decision is made.

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Procurement Training Manual

1 THE APPROACH TO THE MANAGEMENT OF PROCUREMENT 1-3

1.1 INTRODUCTION 1-3

1.2 MOVING FROM ONE STAGE TO ANOTHER 1-1

1.3 Definitions of Procurement 1-1

1.4 Safeguarding the Position of the Investor 1-1

1.5 Principles of Procurement 1-2

1.6 Procedures and Contract Forms 1-3

1.7 Public and commercial (private) Procurement: Comparison 1-4

2 THE PROCUREMENT PLAN 2-5

2.1 General 2-5

2.2 Public procurement Organisation 2-6

2.3 Preparation 2-6

2.4 Contract Packaging 2-7

2.5 Bulking of Orders 2-7

2.6 Local Supply Capabilities and International Interest 2-7

2.7 Procurement Scheduling 2-7

2.8 Procurement Time Requirements 2-8

2.9 Choice of Procurement Methods 2-8

2.10 Plan Presentation 2-10

2.11 Plan Monitoring and Updating 2-10

3 PROCUREMENT OF CONSULTANCY SERVICES 3-11

3.1 GENERAL REQUIREMENTS 3-11

3.2 PROPOSAL PREPARATION & SUBMISSION 3-14

3.3 THE REQUEST FOR PROPOSALS 3-29

Octover 2018 Frew B 1-1

3.3.2 Letter of Invitation (LOI) 3-30

3.4 PROPOSAL EVALUATION & AWARD 3-36

3.5 NEGOTIATIONS AND AWARD OF CONTRACT 3-49

4 PROCUREMENT OF CONSTRUCTION WORKS 4-1

4.1 GENERAL REQUIREMENTS 4-1

4.2 PREQUALIFICATION 4-5

4.3 POST-QUALIFICATION 4-10

4.4 BID DOCUMENT PREPARATION 4-11

4.5 BID PREPARATION & SUBMISSION 4-16

4.6 BID EVALUATION & AWARD 4-22

October 2018 Frew B. 1-2

1 THE APPROACH TO THE MANAGEMENT OF

• Provide a focus for keeping the project moving.

1) Germination - Proposal initiation

2) Growth - Design and appraisal

3) Maturity - Execution and control

4) Death - Finalisation and close-out

October 2018 Frew B. 1-3

1.2 MOVING FROM ONE STAGE TO ANOTHER

. . . and there are many more.

1.3 Definitions of Procurement

Procurement is the framework within which construction is brought about, acquired or

1.4 Safeguarding the Position of the Investor

• The introduction participatory procedures for project design.

• The early involvement of potential funding agencies to foster a spirit of project

February 2017 1-1

• The use of effective contractual arrangements for implementation – incentives to

1.5 Principles of Procurement

October 2018 Frew B. 1-2

• The consultant or contractor has the appropriate technical knowledge, experience,

1.6 Procedures and Contract Forms

October 2018 Frew B. 1-3

1.7 Public and commercial (private) Procurement: Comparison

◼ Length and intimacy of relationships

◼ Policy objectives – public includes social and political objectives

◼ Systematic approach to planning, selection and follow-up