PRINCIPLES OF PROCUREMENT

After the completion of this chapter you should

be able to:
 Define public Procurement
 Understand objectives and significance of Public
Procurement;
 Mention the difference between purchasing and
procurement;
 Appreciate the principles of Public Procurement;
 Identify Pillars of Public Procurement.
What is Public Procurement?
WHAT IS PROCUREMENT ?
1. Acquiring, hiring or obtaining by any other
contractual means of Goods, Works and Services.
2. It is the process by which we acquire
 Goods

◦Computers, Vehicles, Books, Equipment etc.

 Works

◦ Buildings, Bridges, Roads etc.

 Consultancy Services

◦Design, Feasibility Study, Assessment, Review,

Advisory Service
 Non Consultancy Service

◦Insurance, Transport, Repair work etc.

 What is
procured?

1.Goods
3.works
2.Services

Consultancy Service Non consultancy service

 Generally, Public procurement is defined as procurement
made by a public authority using public funds to obtain
goods, works and services to fulfill the needs of a public
authority to carry out its business.
 It refers to the contracts awarded by a public purchaser to a

supplier, contractor or service provider.

 Therefore, all procurement by the government is also called

public procurement.
 Wheredoes public
procurement start and end?
Goods:
 Raw materials, products, machinery, spare parts,

equipment, petrochemicals, manufactured articles,

commodities and the like in solid, liquid or gaseous
forms which are normally delivered in finished
conditions to specified standards as well as
installation, transport and maintenance.
Eg - Computers, Vehicles, Books, Equipment, etc.
 Consulting Services:
Professional skills required to carry out projects
(including individual specialists, consulting firms,
construction managers and other specialists are
consultancy services.
Eg- Design, Feasibility Study, Assessment,
Review, Advisory Service, etc
 Non-Consulting Services:
Services that are not related to professional skills
like Transportation, Insurance, Repair work, Printing
and duplicating books and other documents, cassette
recording, etc. can be examples of non-consulting
services.
 Works:
Building, Transport and Water projects and related
Infrastructures that normally require construction
at a specified site over a period of time, with a
targeted budget involving integrated management
and technical skills, labor, materials, tools, and
equipment are called Works.
 Supplier:
 a physical or juridical person under contract with a
procuring entity to supply goods, works or services;
 Candidate:
a physical or juridical person invited to take part in the
bid.
 Bidder:
a physical or juridical person submitting a bid
 Bid Documents:
the documents prepared by the purchaser to bidders
 Person: natural or juridical person
 Contract:
A written or spoken agreement between two or
more parties intended to be enforceable by law .
A participant is one who takes a part or share in something.

Participants For construction/works

•The client/Employer: who requires the project
to a contract •The contractor: who will carry out the work
There are only two
parties to a
contract.
For services
•The client/employer: who require the service
•The consultant: who will carry out the service

For goods
•Supplier: who will supply the goods
•Purchaser: who requires the goods
1. Value for Money
• This is an essential test against which the

governments justify a procurement outcome.

• Price alone is often not a reliable indicator and

organizations will not necessarily obtain the

best value for money by accepting the lowest
price offer that meets mandatory requirements.
• Best value for money means the best available

outcome when all relevant costs and benefits

over the procurement cycle are considered.
 Procuringentities, whether centrally located
or devolved to individual departments,
should:
• Avoid any unnecessary costs and delays for
themselves or suppliers;
• Monitor the supply arrangements and reconsider
them if they cease to provide the expected
benefits; and
• Ensure continuous improvement in the efficiency of
internal processes and systems.
Generally, the purpose of public procurement
is to obtain the best VFM and
 to do this, it is important to consider the

optimum combination of “whole life cost”

- acquisition cost,
- cost of maintenance,
- running costs,
- disposal cost.
 The definition of BVFM enables contracting
authorities to compile a procurement
specification which includes:
 social,
 economic and
environmental policy objectives as well.
 When procuring goods or services, the task is to
determine which supplier, offer or mode of supply will
provide the best value for money.
 Asking the following two questions assists to assess

value for money:

◦ What non-cost factors affect value for money?
◦ What is the real cost of the goods and/or services?
 Deciding which offer provides best value for
money will also include judgments about a
range of non-cost factors related to the
supplier and the functionality of the goods
or services offered.
 Non-cost factors include:

◦ Fit-for purpose;
◦ Technical and functional issues;
◦ The benefits to be obtained from the purchase;
What is The Real Cost of the Goods and/or
Services?
 Depending on the nature of the goods or services to be
acquired, both
◦ whole-of-life costs and
◦ transaction costs will need to be determined.
Whole-of-life costs
 These costs include the initial purchase cost as well as

costs arising from holding, using, maintaining and

disposing of the goods or services.
 Elements in whole-of-life costing assessments that

need to be considered include:

◦ Acquisition costs - includes price, freight, legal fees,
warehousing costs, initial training costs etc.
◦ Operating costs - fuel or energy costs, safety costs, performance
monitoring costs, cleaning costs etc.
◦ Maintenance costs - consumables, spare parts, repair labor, loss
of productivity or revenue during maintenance etc.
◦ Alteration /refurbishment costs - upgrade costs, modification
costs, re-training costs etc.
◦ Support costs - insurance, and taxes, management fees etc.
◦ Disposal - residual value, disposal method costs etc.
 2. Open and Effective Competition
 This requires:
 A framework of procurement laws, policies, practices and
procedures that is transparent, i.e. they must be readily
accessible to all parties;
 Openness in the procurement process;
 Encouragement of effective competition through procurement
methods suited to market circumstances; and
 Observance of the provisions of the Preferential Procurement
Policy Framework of the organizations.

  tender opportunities must be advertised widely enough
to ensure competition
3. Ethics and Fair Dealing
 In procurement, if all parties comply with ethical
standards they can:
 Deal with each other on a basis of mutual trust and respect; and
 Conduct their business in a fair and reasonable manner and with
integrity.
What ethical standards do expect from procuring entity? What do
you expect from suppliers?
 All government staff associated with procurement, particularly
those dealing directly with suppliers or potential suppliers, are
required:
 To recognize and deal with conflicts of interest;
 To deal with suppliers even-handedly;
 To ensure that they do not compromise the standing of the

state through acceptance of gifts or hospitality;

 To be scrupulous/careful in their use of public property; and
 To provide all assistance in the elimination of fraud and corruption.
 4. Accountability and Reporting
 This involves ensuring that individuals and
organizations are answerable for their plans,
actions and outcomes.
 Openness and transparency in administration,

by external scrutiny/inspection through public

reporting, is an essential element of
accountability.
 5. Equity
 This is vital to public sector procurement.
 comparable situations must not be treated

differently
 different situations must not be treated in the

same way, unless such treatment is objectively

justified
 How is fairness and impartiality achieved?
6. Confidentiality/Accuracy of Information/
Protection of Intellectual Property –
 Respecting the confidentially of information

acquired in the course of performing their

duties and
 not disclosing any such information without

having proper and legitimate authority to do

so.
The importance of effective and efficient
procurement are:
 To provide uninterrupted flow of materials,
supplies and services required to operate the
organization
 To keep inventory investment cost loss at a

minimum
 To provide quality products and services
 To find dependable sources of supply
 To purchase the required items and services at

lowest prices
 To create harmonious and smooth relationship

among units within the organization

 To minimize administrative cost of purchasing
The basic principle of procurement from the
stand point of the Management can be regarded
as the provision of the required materials of :
The Right Quality:

What is quality for you?

 The right quality is concerned with
determining what is required and why it is
needed.
 If it is suitable to the desired purpose then

it is the right quality.

 Right quality implies conformity with

requirements.
 Generally, When we say quality in

procurement we mean “fit for intended

purpose or use.”
 "Quality is the totality of features and
characteristics of a product or service that
bear on its ability to satisfy stated or implied
needs."

10/19/23
 The Right Quantity:
 Right quantity implies that the amount of

materials required should be determined.

 The right quantity is one of the most

important parameters of procurement.

 The right quantity does not mean

acquisition of materials in excess

 . Similarly, it does not mean shortage of

materials
 The Right Supplier
Who is the right Supplier?
 The right supplier is a supplier that can
provide uniform quality materials and is
punctual in delivery time.
 The right supplier is a supplier that supports

organizational operations by providing the

required goods and services with additional
services.
 The right supplier is also dependable and
reliable.
 The right supplier must be reliable in terms of

financial resources.
 It must possess the necessary organization

Setup to handle the commitments.

 Technical ability,
 located at the convenient site for the

purchaser.
 free from strikes and slow-downs.
 The Right Time:
 Right time implies prior determination of

delivery date and delivery schedule for each

type of material.
 The Right Price:
What is the right price for you?
Is the lowest price the right price?
What are the factors that determines the price?
 The right price is not necessarily the lowest
price.
 The right price in most cases is dependent on

the cost of an item.

 The lowest price may not provide the quality

and service needed by the organization

 The right price should, therefore, be

determined in combination with other factors

such as:
 Quality and quantity required.
 Urgency of requirement.
 Demand and supply of the materials in

market
 After-sales services.
 Product cost structure.
Procurement Planning and
Budgeting
By the end of this session, the participants should be able to:
 Define procurement planning;
 Identify procurement needs;
 Clarify the responsibility of procurement planning;
 Integrate planning and budgeting concepts and

procedures;
 Explain the key components of the procurement cycle;
 Understand procurement planning as a process; and
 Use formats to prepare procurement plans.
What is the need for Procurement planning in public
organization?

Does your organization have a procurement plan?

How often your organization procures the required goods,

works and services based on the plan?
 Procurement planning is a critical element in
the procurement process.
 Many procurement problems result from the

failure of procurement planning at the outset.

 Proper procurement planning must be fully

integrated with the strategic planning and

budgeting process of the public
administration.
 The ultimate goal of procurement plan to
coordinate and integrate procurement
activities to fulfill a need for goods, services
or works in a timely manner and at a
reasonable cost.
 Early and accurate planning is essential to

avoid last minute, emergency or ill-planned

procurement, which is contrary to open,
efficient and effective .
 In addition, most potential savings in the
procurement process are achieved by
improvements in the planning stages.
 Even in situations where planning is difficult,

such as emergencies, proactive measures can

be taken to ensure contingency planning and
be better prepared to address upcoming
procurement requests.
 For example:
◦ Advance identification of suitable suppliers of potential
products frequently requested in emergency
operations, including confirmation by suppliers on
willingness to respond on short notice.
◦ Development of standard specifications/TOR/SOW for
products/services/works requested in emergency
operations.
 Good procurement plan is essential to
optimize the contribution of the procurement
function towards achieving the overall goals of
the organization.
 It supports:

◦ Transparency.
◦ Development of Key Performance Indicators (KPIs)
according to milestones and accountabilities set in
the procurement plan and
◦ Monitoring performance.
◦ Effective and timely solicitation of offers, award of
contracts and delivery of the goods, services and
works required.
◦ Early requisition to reduce any delays in
procurement and timely delivery to project sites.
◦ Early identification of right commodities and
quantities to meet program needs.
◦ Sourcing the right suppliers on time to avoid
cutting corners under rush procurement to meet
deadlines or budget expenditure.
◦ Effective supply strategy and timely programme and
project implementation.
◦ Avoidance of unnecessary exigencies and urgencies,
enabling full competition and full compliance with
standard rules and procedures.
◦ Sufficient time to fully explore alternative
procurement approaches, such as joint bidding with
other organizations.
◦ Strengthening procurement power vis-à-vis
suppliers.
◦ Obtaining best prices for aggregate
requirements.
◦ Establishment of criteria to measure
effectiveness of the procurement function.
◦ Systematically and procedurally correct
procurements.
◦ Development of long term agreements.
 Sound planning of procurement is crucial for
the procuring entities to determine:
- what goods, works, services are needed to carry
out the project,
◦ when they should be delivered,
◦ what standards are required,
◦ the need for co-financing and
◦ which procurement and contracting procedure is
most suitable for each contract.
 Theprocurement plan should be prepared in such a
way as to enable the attainment of the following
objectives:
To ensure compliance with principles of public
procurement.
 To achieve the work program of the Public Body,
 To ensure economy and efficiency in the operation
of the Public Body by discouraging piecemeal
purchase,
To Exercise prudence and make the necessary
preparation to forestall(prevent) problems that might
be encountered in the execution of procurement.
 The first step in the planning process is to
identify the desired outcomes and objectives of
the procurement.
 However the process is not necessarily linear.
 In some cases information obtained in the

informational gathering stage will also have an

impact on the identification of objectives.
In the preparation of their procurement plan:
 Public bodies have to select and indicate the appropriate

procurement methods to be used in respect of each type

of procurement
 A Public Body has to ensure that the plan is inclusive of

all of its identified procurement needs and the

appropriate procurement method is selected for each
procurement.
 What should be the content of procurement plan?
Data collected varies from organization to
organization, but as a minimum would include:
 expected requirement for goods/services/works
 Quantities
 delivery time requirements
 Estimated budget.
 It is good practice to publish these
consolidated procurement plans.
◦ for example on the organization’s website.
 This provides advance information to the
outside world of upcoming procurement
activities and
 Advances the key principle of transparency in

procurement.
An ideal procurement planning process
involves the following:
1.Obtaining early involvement of all
stakeholders;
2. Identifying the priorities by determining the
key requirements;
3. Setting a calendar of activities and adhering
to it.
 ◦ Setting a sequence to the events, particularly those
that are dependent on one another and being
realistic and avoid scheduling too tightly;
4. Agreeing to a regular meeting schedule to
gain commitment for making decisions in a
timely manner;
5. Clarifying the evaluation criteria
6. Reviewing available pre-qualified lists
and/or shortlists;
7. Determining contracting, legal and
documentation requirements; and
8. Making the SBDs available in proper format.
The key functions of the User Department/Units
are:
 To initiate procurement and disposal

requirements;
 Provide technical specifications, when

necessary; and
 Prepare a work plan for procurement based on

the approved budget.

 The procurement plan to be prepared by public bodies accordingly
shall contain the following:
 The Procurement reference number

 Description of the procurement

 Quantity of the procurement

 Procedures to be followed in the execution of the procurement

 The schedule of main activities to be carried out to complete the

procurement
 The budget and source of finance of the procurement

 The type of contract appropriate to the procurement,

 The roles of main parties involved in the procurement

 Other matters which are important depending on the nature of the

Public Body.
10/19/23
Analysis of Requirement and
Development of Specification
By the end of this session, the participants should be able
to:
 Define procurement requirements and specifications;
 Clarify the requirement analysis;
 Understand the technical, functional, and performance

based specification;
 Identify the content of specification;
 Prepare specification for goods and TOR for service
 Prepare SOW, BoQ, and Technical specification for

work;
 Analyze requisition;
 Requirement definition involves defining and
describing what is needed and will be
procured, collecting information, identifying
appropriate solutions and specifying these:
◦ in specifications for goods and equipment,
◦ terms of reference (TOR) for services, or
◦ statement of works (SOW) for works
 Specifications, TOR and SOW constitute the
technical basis for the solicitation and the
evaluation of offers to determine if they
satisfy the requirements as stipulated in the
solicitation documents.
 They become the “heart” around which the

eventual contract is written and later

administered.
 They have an effect on the procurement that
lasts its entire lifetime —from planning,
through bid evaluation, award and contract
performance up to completion and post-
contract evaluations.
 A clear and appropriate definition and

description of the need is of utmost

importance.
 Requirements should be defined with the aim
of opening up competition, i.e. no use of
brand names or other unnecessary
restrictions.
 Requirement definition should identify the

exact need (technical and quality), aiming at

avoiding
◦ over-specifications (as this may increase the cost) or
◦ under-specifications (where needs will not be met),
◦ as well as “when” it is needed (timing),
Who is Responsible for Requirement
Definition?
What is the Practice in Your
Organization in preparing the
specification?
 Requirement definition is formally the
responsibility of the requisitioner/the user.
 However, the procurement officer is

responsible for ensuring the technical

description provided by the requisitioner is
◦ free of ambiguities,
◦ clear and generic, and
◦ promotes fair competition among the suppliers.
The procurement officer plays a support role to
the requisitioner in the following areas:
 Provide information on previous, current and

upcoming procurement activities for similar

products or services.
 Review of the requisition for completeness and

ensure that the specifications or descriptions

are not restrictive or biased towards a specific
supplier.
 Assist in market studies to identify:
◦ Sources of supplies,
◦ Pricing and availability of information and
◦ Extent of competition.
 Provide advice on choosing the best
method to obtain goods and services
in a timely manner, at the best
possible price.
 Defining the requirement starts when a need is
identified and is an integral part of the
individual planning activities.
 A systematic and team approach between
program/project and procurement officers is
recommended to develop a generic technical
description.
 Early involvement of the procurement officer
can add value due to experience with similar
types of requirements.
 At the conclusion of this process, the
requisitioner should review the finished
description to ensure that it responds to the
need identified.
 The final requirement definition should then

be submitted including funds certification as

part of a requisition to the procurement
function.
 During this phase the requisitioner will identify
the requirements, i.e.
◦ What is the list of functions, performances, and
technical characteristics needed to be included in the
Specification/TOR/ SOW. For example, the
requirements for buying a generating set include:
 ◦ Where will it be used?
◦ Under which weather conditions?
◦ What is the minimum power requirement in KVA (Kilo
Volt-Ampere)?
◦ Is a local representative needed? etc.
For services the objectives should be identified.
 For works, what should be constructed, where,

and for what purpose, should be defined.

Once the requirement has been defined,
information needs to be gathered on what is
available on the market, to define the
specification/TOR/SOW.
 For services, information should be sought

on the current situation:

◦ Which activities and outputs are required to
achieve the objectives defined,
◦ What input is required to perform the activities,
etc.
 For works, information should be sought on
the
◦ construction site,
◦ soil conditions,
◦ access to the site,
◦ materials to be used,
◦ possible drawings,
◦ local conditions that must be adhered to,
◦ permissions that need to be sought etc.
 Developing specifications/TOR/SOW require
consultation with the requisitioner, and with
procurement officers who have been buying
similar products or services, technical
specialists, other users of similar goods, etc.
 Request for information can be used to obtain
information from potential suppliers on
◦ Specifications of their latest products,
◦ Price indications, or
◦ Any other information that could be used.
 This tool is mostly used in the sourcing
process, but can also be used specifically to
obtain information for developing
specifications/TOR/ SOW.
 It is not used to design specifications
which suit a specific supplier
 Rather to learn and broaden the

knowledge of what is available on the

market.
What is a Specification?
 In a purchasing context, a specification can be defined as a
statement of needs.
 It defines what the purchaser wants to buy and, consequently,
what the supplier is required to provide.
 Specifications can be simple or complex depending on the
need.
 The success of the procurement activity relies on the
specification being a true and accurate statement of the
buyer’s requirements.
Specification will also form part of any future
contract that might result from offers
received.
 The specification forms part of an “Invitation

to tender” document.
 Specifications or the description of physical or
functional characteristics of tangible goods
must provide a detailed description of the
requirements.
 They should be generic in nature to enable

the broadest possible competition.

 Specifications may be stated as one or a

combination of the following:

 Concentrates on what a product is to do and is
less interested in materials and dimensions.
Example: Dry erase markers for use on
porcelain and dry erase boards, glass,
unpainted metal, and glazed ceramics.
 Describes what is to be achieved rather than
providing a fixed description of how it should
be done.
 To ensure the quality, a reference to the

concerned product standards (e.g. ISO) and

environmental requirements (e.g. Energy Star),
should be made.
◦ Example: fine tip dry erase markers; durable tip will
not soften or spread; quick-drying inc; wipes off
easily; certified non-toxic by marker industry (AP)
standards.
According to Manik and Gopalakrishanan (2007),’The
contractors’ primary motivation is that, unlike the
traditional specifications where an owner specifies
how the design is to be done and construction
quality is to be ensured, performance specifications
define the performance or the end-result without
telling the contractors how to do the work.
 “Tell me what you want, but don’t tell me how
to do it,” is how the approach is described, the
suggestion being that the traditional
prescriptive method of specifications restrict
contractors or suppliers’ freedom to innovate
new ideas and products.’

 In performance specification, the supplier is

responsible to all the risks.
 It also encourages innovation
Defines exact design and details of a good (i.e.
the physical attributes, material to be used,
power input and output, the manufacturing
process required, or in the case of a service, the
working methods to be used).
 Due to its uniqueness, design specifications

may limit competition because of differences in

engineering practices.
 If
one considers the famous quote
from Levitt where ‘‘the customer
really doesn't want a drilling
machine, he wants a hole-in-the-
wall’’

10/19/23
 All three specification types can be
combined.
 It is better, whenever possible; to use

performance and functional specifications

rather than technical specifications as this
allows suppliers to offer alternative and
innovative ideas and solutions to problems,
which often results in a more cost effective
use of the resources.
 However, depending on the products and end-
user needs, certain requirements may not be
adequately defined in functional and performance
terms alone.
 In addition, minimum requirements should be
stated.
 The supplier should never be put in the position
of having to decide on which physical attributes
are essential and which are not.
 Instead of minimum requirements, the
requisitioner may accept equipment within a
limited range of specifications.
 Bidders can offer alternative and innovative ideas and
solutions;
 Bidders can focus on providing the best solution; and
 The focus on outcomes should result in better value for

money;
 At times simple requirements can be better defined in

technical terms.
Brand names or similar references should be
avoided.
 If it is necessary to cite a brand name, the

words “or equivalent” should be included (e.g.

Expo®Fine Tip Dry-Erase Marker or equal dry
erase marker).
It is sometimes more practical to specify a
brand name for the purpose of defining
acceptable functional, performance and/or
technical standards.
 However, specifying brand names should be

avoided as much as possible.

 The specification should clearly invite offers of
equivalent products
 The specification should clearly indicate that

no particular preference will be given to the

specified brand names when evaluating the
offers.
 For some products it may be necessary for

◦ the procuring entities to provide a sample of the

item required with the specifications,
◦ asking suppliers to propose goods in accordance
with the sample.
 Samples should be accompanied by
specifications (whenever needed).
 Drawings can be used in a specification to
provide guidance to suppliers.
 Drawings are useful for example, to describe

a site where products are to be installed.

 Drawings also help suppliers understand how

the various products will interact.

Use of samples and/or drawings in
specifications involves the following risks:
 Providing a sample or drawing of a specific

product can be like specifying a brand name,

i.e. it might limit the competition.
 If the supplier manufactures the products as

per the drawing provided and if there was a

mistake in the drawing, the buyer is
responsible for the mistake.
 This limits innovative thinking as suppliers
are limited to offering a product which
conforms to the sample/drawing.
 Always check whether it is allowed to include

a sample/drawing in a specification as the

use of the sample/drawing could be
restricted due to copyright.
Title:
 Use a simple and broad description of the

specified goods for the title.

For example, “Steel Reinforcing Bar”.
 Potential suppliers may decide not to make

an offer only on the basis of the title

Background information:
 A well-written introduction usually increases

potential suppliers’ interest in the invitation

and help them understand the needs.
 Further, an understanding of the purpose can

be useful to ensure that offered products are

“fit for purpose”
Standards:
 Standards are the most common document

referred to in a specification.
 Refer as much as possible to international

standards such as ISO, EN, etc. rather than

national standards as this might limit the
competition.
 If national competition is foreseen, national

standards might be the appropriate

solution.
 If a specific standard is not mandatory,

indicate “or equivalent standards”.

Specific constraints and limitations:
 Operating conditions e.g. maximum and

minimum temperatures, noise, pressure,

humidity, wind velocity, altitude, dust, etc.
 Physical space available for installing

equipment.
 Compatibility with existing equipment,

systems, etc.
 Availability of power supply.
 Servicing or maintenance requirements or

limitations etc.
Marking:
 Possible marking requirements (to be agreed

with end-user or project coordinator) are:

◦ identification marking
◦ manufacturer’s name
◦ model number
◦ manufacturing standard
◦ Warnings (e.g. if fragile equipment).
Packing:
 If special packing is needed this must be

specified: cartons, wooden box, wooden

crates, containers, etc.
 If a particular size or condition of the

container is required, this must be specified

 If the organization wants to keep the

containers, pallets or other packing material,

this should also be specified.
Testing:
 By the supplier (the buyer should specify the

test requirements).
 By a third-party organization.
 If testing is specified, the provision of test

results should be specified as well.

Good practice
 State the requirement clearly, concisely and
logically in functional and performance terms
unless specific technical requirements are
needed.
 Include enough information for suppliers to
identify what is required and to cost it
accordingly.
 Provide equal opportunity for all potential
suppliers
 Do not over-specify requirements as this
might limit the number of responses
 Do not include unnecessary features that
might prevent some suppliers from offering.
 Indicate requirements regarding delivery and

after sales service etc.

 Whenever possible, indicate the final use (e.g.

pipes: for construction of buildings, for water

supply, gas supply etc).
 Do not allow the product requested to be

covered by sole patent rights.

 The TOR for services should define
◦ the scope of work required
◦ stakeholder responsibilities.
 Adequate and clear TOR is imperative for an
understanding of the assignment, and to
minimize any risk of ambiguities during the
preparation of suppliers proposals,
negotiations and execution of services.
 Standards in writing of TOR can vary between
organizations.
 To be as clear and precise as possible, the

TOR should include:

◦ Background- Briefly describe the national context
in which this specific consultancy will operate
◦ Justification for consultancy- explain the reasons
for undertaking the assignment and why it is
designed.
◦ Development objectives- represents the overall
development goal
◦ Outputs- the results that can be guaranteed by the
consultancy as a consequence of its activities .
 In parallel to the development of TOR, the budget
should be reviewed to ensure that the budget and
TOR are aligned.
 The budget should include the following breakdown

of costs:
◦ Suppliers’ fees (international and national), listed as
number of working months/weeks/days x fee per working
month/week/day.
◦ Daily subsistence allowance (DSA) multiplied by the
number of days.
◦ International transportation costs
◦ Local transportation costs
◦ Other relevant costs such as communication and
printing costs, costs for translation of reports and,
costs in relation to workshops and/or training
courses
 SOW includes
◦ design/drawings,
◦ bill of quantities (BoQ) and
◦ technical specifications, that can describe the works in
sufficient detail to identify the location, nature and any
complexities involved.
 Expected construction period and time in weeks or
months, or where alternative time schedules are
permitted,
 the range of acceptable construction periods,
should be defined.
 In addition, information should be provided on
the:
◦ topography,
◦ geotechnical conditions,
◦ access to site,
◦ transportation and communication facilities,
◦ project layout,
◦ services to be provided by the procuring entity,
◦ method of measurement and payment of completed
works.
 It is common practice to use the services of a
consulting engineer to help in the completion
of technical specifications for large and/or
complex works
Content of statement of works (SOW):
◦ Background- Describe the project, its purpose and
functionality
◦ General Information- Give all necessary general
information about location, legal status, site
ownership, designs/drawings, right of way, budget,
etc
 BoQ is the list of all main components of the project
◦ buildings,
◦ roads,
◦ sidewalks,
◦ lighting,
◦ equipment, etc
 In addition, estimated quantities for each line item
(excavations, structures, roofing, floors, sanitation, etc)
 information on the way it will be paid (e.g. lump sum or unit
price).
 In addition to the BoQ, technical
specifications need to be developed.
 These describe in detail the specification for

each construction item e.g. type of cement

mix, type of iron rods, bricks, etc.
 The technical specifications should follow the

order of the main components as described in

the BoQ for easy reference.
 The following items should be defined:
◦ Lab methods for “quality control” of each item, when
relevant.
◦ Rules to accept or reject materials or works.
◦ Methods for measurement and payment of each item.
(What works, materials, etc, are included in each item
and the criteria to measure them).
◦ Environmental conservation policies and
responsibility of supplier to adhere.
◦ Quality assurance programme.
 When the specifications/TOR/SOW has been
finalized, a formal requisition can be created.
 Most public organizations use a formal

requisition process for all procurement

activities.