Dire Dawa University

Institute of Technology
Construction Technology and Management
Chair
CHAPTER 2

Lesson on:

Definition and General terms

By: Tinsae M.
September, 2021
Chapter Outline …

- Bidding procedure

- Contract type

- General provision of Contract

 Objective of the chapter!

At the end of this Chapter , students should be

able to:
 Explain the bidding procedures for engineering
works and service contract.
 Mention the different types of tendering
 List the different types of service and works
contract.
 Understand the major components of contract
document.
Procurement & Contract Management (PCM)

• the processes required to acquire goods and services, to

attain project scope, from outside the performing
organization.
A Guide to the Project Management Body of Knowledge
(PMBOK Guide), Year2000 Edition'

Construction Industry involves procurement and

contract management systems in order to ensure fair:
 Competition and
 Distributions of obligations and rights among
stakeholders.
Procurement & Contract Management…

Competition helps:
 the Project Owners’ to acquire the five rights
(Counterpart, Cost, Time, Quality and Quantity) s/he
is entitled to
 the Project Financiers’ and Regulators’ to value
market principles and effective utilization of finance
such that lowest qualified bids takes the project , and
 the Project Providers’ to get impartial and neutral
Opportunity for business.
 Procurement & Contract Management Process

involves three major processes:

1. Contract Planning
2. Procurement Management and
3. Contract Management

Delivery System Contract Formulation

Procurement Method Contract Administration
Contract Types Contract Closing

Contract Procurement Contract

Planning Management Management

Procurement Preparation
Tendering
Tender Evaluation & Notice of Acceptance
 Contract Planning

 This phase often pass through the identification,

feasibility and financing stages of Programs or
Projects.
 Contract planning includes decisions on proposed
 Delivery Systems, to be followed and used
 Procurement Methods together with its provisions
 Contract Types for alterations.
 Ethical:
This is because
(Neutrality,
such Formality,
decisions are
and Impartiality);
related to regulatory
 Economical:
requirements such (Proof
as: of Competition, Least Qualified and
Evaluated Bidder);
 Accountable: (Obligations and Rights);
 HSE : (Health, Safety and Environment); and
 Transparent: (Accessibility and Notice of Advertisement).
 Procurement Management (PM)

 PM is a process of selecting individuals or organizations to

carry out the intended services and/or works.

 PM involves the preparation of procurement documents, their

invitation and submission of tender proposals, and Opening and
Evaluation of tenders.

The following issues are necessary for a successful PM phase:

 knowing and implementing procurement related National
and International laws, rules and regulations,
 Adherence to the provisions made during the contract
planning phase
 Adhering to the principles of Proof of competition
 Selection of procurement method

 Project Owners shall consider its own particular institutional and

technical SWOT (including access to financing) before selecting
which procurement and contract forms to adopt for its projects.

These include:

1. The design source

2. Allocation of coordination responsibilities and
3. The pricing methods.
 Contract Management (CM)

• is a process of reaching contractual agreement for

implementation, its administration and finally concluding
the contract.
The following issues are necessary for a successful CM phase:
 knowing and implementing procurement related National
and International laws, rules and regulations,
 Adherence to the provisions made during the contract
planning phase
 Identifying, recognizing and involving all potential or key
stakeholders to form a contract team
 Ability to administer changes, claims and disputes
 Understanding, mapping and monitoring all contract
conditions agreed upon
 Construction Contract

 Construction contracts are governed by the general law of

contract, with which most of you will be familiar.
A contract is a legally enforceable agreement.
 compliance with (a law, rule, or obligation).
compel compliance with (a law, rule, or obligation).
cause to happen by necessity or force.

An agreement is usually defined in terms of an ‘offer’

made by one party and an ‘acceptance’ of that offer by the
other.
 Standard Bidding Document

Purpose of the Standard Bidding Document (SBD)

 to provide Procuring Entities (PEs) with one standard draft
containing basic contractual provisions and safeguards
which are required by the Government of the Federal
Democratic Republic of Ethiopia in the execution of public
procurement and the use of public funds.

The key feature of the SBD is that it can be used with minimum
changes, as it does not contain explanations, footnotes or
examples that should not form part of the Bidding Document.
 Standard Bidding Document…

The significance of having standard bidding procedure, specially

for public funded projects is:
 To simplify the drafting of a specific bidding document
for Procurement of Works by procurement staff;
 To minimise the time required by the Tender Committee
to approve Bidding Documents prior to release;
 To reduce Bidders’ time and effort in the preparation of
Bids;
 To facilitate and simplify the evaluation and comparison
of bids and Contract award by the Procuring Entity
 Standard Bidding Document…

 To ensure this, for instance, the Ethiopian government

established an agency (PPA) that supervises procuring
entities and sets procedures of public procurement
[proclamation no. 430/2005] Proclamation 430-2005.pdf

Ctrl+Click
Public Procurement Agency
 When to Use the Standard Bidding Document for
Works

This SBD for the Procurement of Works is suitable for use

under:
National Tendering International Tendering
1. Open National Tendering, 1. Open International
either with or without Tendering and
pre-qualification 2. Restricted International
2. Restricted Tendering Tendering

can be used when the Procuring Entity intends to place either:

1. an Admeasurements contract (with a bill of quantities)

OR
2. a Lump Sum contract (with an activity schedule).
 Threshold

This SBD for the Procurement of Works is suitable for use

under:
National Tendering International Tendering
1. Restricted Tendering 1. Open International
For Works …..< 2,000,000.00 Tendering and
For Goods….. < 500,000.00 For Works……>50,000,000.00
For Consultancy….< 300,000.00 >> Goods……>10,000,000.00
For Service ….. < 4,000,000.00 >> Consultancy..>2,500,000.00
>> Service……>7,000,000.00
Asses threshold for NCB Tendering and Restricted Tendering
for International Bid?

Public Procurement Directive.pdf

Scope and Value of Contract
 SBD is suitable for a standard contract, where the works
have been fully designed by or for the Procuring Entity
(Employer), prior to bidding, and the Contractor will be
responsible for construction only.
It is suitable for works valued at up to US$10 million.
SBD for the Procurement of Works is not suitable for the
following situations:
 Complex works under US$10 million, such as large water
treatment plants;
 Works over US$10 million;
 Works designed by the Contractor, including turnkey
contracts.
Discussion
Is there any solution for the above mentioned limitations of SBD/PPA?
Scope and Value of Contract…

 For any of these requirements, the Procuring Entity should

find an alternative, more appropriate document, such as
an appropriate FIDIC standard form of contract.
Structure of the Standard Bidding Document

The Standard Bidding Document comprises:

Preface
Part 1 Bidding Procedures
Section 1. Instructions to Bidders (ITB)
Section 2. Bid Data Sheet (BDS)
Section 3. Evaluation and Qualification Criteria (EQC)
Section 4. Bidding Forms
Section 5. Eligible Countries
Part 2 Schedule of Requirements
Section 6. Schedule of Requirements
Part 3 Contract
Section 7. General Conditions of Contract (GCC)
Section 8. Special Conditions of Contract (SCC)
Section 9. Contract Forms
Rules for drafting Bidding Documents

It is important that Procuring Entities always use the original

Standard Bidding Document to commence drafting a new
Bidding Document for each new procurement requirement.
Therefore, the original SBD should not be amended in any way.

In drafting Bidding Documents using the SBDs, users should not:

1. Delete any Section or page breaks,
2. Make any changes to the headers of the
SBD,
3. Make any changes to the footers of the SBD.
Assignment -1 Individual

Prepare your own notes based on Rules for drafting Bidding

Documents with respect to each sections.
A minimum of 4 pages is Required
Reference
Public Procurement Agency (PPA)
August 2011
Addis Ababa
SBD.pdf
Summary of the Bidding Process

The Public Procurement Proclamation of 2010 and the

Procurement and Contracts Directives detail

 the full procurement processes,

 rules and procedures and
 the procurement methods to be followed by
Procuring Entities.
 The Proclamation and Directives must be complied with
at all times.
Summary of the Bidding Process…

The relevant parts of the bidding process are summarized here

as follows:

1. Selection of Bidders;
2. Preparation and Issue of Bidding Documents;
3. Bidding Period and Bid Receipt;
4. Bid Opening;
5. Bid Evaluation; and
6. Bid Acceptance, Contract Award and placement.
 Types of tender

Things Bidders’ Geographical Procurement Procurement

Bases
Procured Coverage Coverage Awareness Steps

Types Goods Competitive International General PN Single

Services Negotiated Regional Specific PN Two Staged
Works National Pre –
Local Qualification
Post -
Qualification
 Bid Qualification
Procedure

Competitive Negotiative Bid

Bid
Financial Proposal
Short-Listed Open Bid
Bid
Financial Pr.

One-Stage Procedure Two-Stage

Procedure
Financial Proposal

Pre-Qualification Post Qualification

• Technical Proposal
• Financial Proposal
• Financial Proposal
• Technical Proposal
Selection of Bidders

 The term tender means a formal invitation to trade under the

terms of offer and the documents associated with that offer.
 A contract is, generally speaking, a legally binding agreement
between parties, where there has been offer, acceptance
and consideration.
If I am unsuccessful, will you explain to me why my bid failed
and what can you tell me about the winning bid?

Yes and this could include a number of reasons. For example,

you might be too costly, or have insufficient skills or knowledge,
you may have failed to understand what is required or failed to
complete the documentation correctly. Whatever the reason, if
you ask for feedback we will provide it as far as we are able.
Selection of Bidders…

The method for selection of Bidders will depend on the

procurement method being used and whether or not a pre-
qualification has been conducted.
 Home Take Exam

What will happen if two parties got equal

scores of proposal evaluation?
Refer the Procurement Directive
Thank you!