Paper No.
670
vi. Recommend usage of separate criteria for
technical and financial capacity evaluation.
vii. Experience has been recommended as a
proxy for technical capacity assessment while
net-worth could be approximated as a proxy
for financial capacity.
viii. Technical evaluation should precede the
bidding stage and restrict bid stage to
financial bids only.
ix. Social infrastructure projects can amend
these principles to suit the sector-specific
requirements.
The procurement process can be divided into two
distinct phases – prequalification (RFQ/EOI) and
bidding stage (RFP). The PQ of bidders is normally
done to assess the technical capacity and financial
strength of the bidders. Planning Commission
17 suggests that, to guide the PQ process of PPP
projects, experience has been recommended as
a proxy for technical capacity assessment while
net-worth could be approximated as a proxy
for financial capacity. It also recommends that
technical evaluation should precede the bidding
stage and restrict bid stage to financial bids only.
It could be observed that technical capacity and
financial capacity are the only two parameters used
for PQ of PPP highway projects. For PQ of the
private entities, threshold technical capacity and
threshold financial capacity are set by the
procuring authority as a certain percentage of
the estimated project cost. Financial capacity is
measured in terms of parameters like minimum
annual turnover, minimum net worth, and
minimum net cash accruals. Net worth of the
private players has been used as the main criteria
to measure the financial capacity of the private
parties. Net Cash Accruals statement is also sought
from the private players during the RFQ stage.
And, in order to estimate the technical capacity,
the private party should furnish information about
the amount - (a) paid for, or received payments
for construction of eligible PPP Project (b) and/
or commissioned received and paid for execution
of Eligible PPP projects (c) and/ or collected and
appropriated revenues of eligible PPP projects.
The sum of the value of payments relating to the
96 Journal of the indian Roads Congress, July - September, 2017
above-mentioned category should be more than
the threshold technical capacity18.
Given the procurement process and principles set
by Government of India, the current study tries
to identify and analyse the prequalification limits
based on the samples drawn from Indian projects.
The next section describes the methodology used
to address the research objectives.
5. Research Design
The study aims at gaining insights of pre-
qualification in India. The objective of this study is
to assess the trends of prequalification limits used
by the Granting Authorities for prequalification
of the bidders in National Highways PPP projects
in India. The research is done to answer the
questions: What prequalification limits has been
used by the Granting Authority to prequalify the
private parties? Whether there is any variation
of prequalification limits across the projects
and if there is, what are the various factors that
triggers such variation? Information and data was
gathered from the Request for Qualification (RFQ)
documents of various National Highway Projects
released by National Highway Authority of India,
Government of India. The sample for highway
projects consists of 258 projects carried between
the year 2008 and 2015. Statistical analysis was
carried out to understand the trend of PQ limits
observed in highway projects. Regression analysis
was then carried out in IBM SPSS Version 20.
6. Regression Model
For the regression analysis of the Highways
dataset, simple regression equations have been
developed for technical capacity limits and
financial capacity limits for PQ. The general
representation of simple multiple linear regression
equation is y = β0 + β1x1 + β2x2 +..+ βnxn, where
the β terms are constants. Table 2 presents
the regression equations and corresponding
coefficients. Theoretically, the variables used in
the regression modelling were not collinear. This
is because the variables – technical limit and
financial limits – are checked for the past projects
(ex-ante) and are applied in terms of project cost
to the future (ex-post), more precisely, the project
in hand.