Property may be destroyed and money may lose its

purchasing power; but character, health, knowledge and

good judgment will always be in demand under all
conditions. Roger Babson

Men use care in purchasing a horse, and are neglectful in

choosing friends John Muir.

Purchasing power is a license to purchase power. Raoul

Vaneigem

Excellence in any department can be attained only by the

labor of a lifetime; it is not to be purchased at a lesser
price. Samuel Johnson

The friendship that can cease has never been real. St.
Jerome

Sell not virtue to purchase wealth, nor liberty to

purchase power. Benjamin Franklin

Passion can never purchase what true love

desires: true intimacy, self-giving, and
commitment
Experts agree that the best type of
computer for your individual needs is one
that comes on the market about two days
after you actually purchase some other
computer. Dave Barry

I saw a boy of the crew purchasing javelins

of them with bits of platters and broken
glass. Cristopher Columbus

Procurement Management

Procurement is acquisition of goods and

services.
Project Procurement Management includes
the contract management and change
control processes required to administer
contracts or purchase orders issued by
authorized project team members.

Procurement Cycle

Plan Purchases and Acquisitions.

Determining what to purchase or acquire and

determining when and how.
Purchase of equipment
Procurement of works
Procurement of supplies etc

Plan Contracting documenting products,

services, and results requirements and
identifying potential sellers.
Developing the requisite documents
Specification
No and make etc.

Request Seller Responses.

obtaining information, quotations, bids, offers ,or
proposals, as appropriate.

Inviting bids
Inviting quotations
Request for Proposals ( RPFs)
Expression of Interest ( EOI) etc.

Select Sellers.
Reviewing offers, choosing among potential
sellers, and negotiating a written contract with
each seller.
Tender/bids opening
Evaluation and Assessment of bids
Negotiation if required and allowed
Selection of the seller/contractor

Contract Administration
Managing the contract and relationship between the
buyer and seller.
Reviewing and documenting how a seller is performing
or has performed to establish required corrective
actions
Provide a basis for future relationships with the seller,
Managing contract-related changes and, when
appropriate,
Managing the contractual relationship with the outside
buyer.
Contract Agreement

Contract Closure
completing and settling each contract, including the
resolution of any open items,
Closing each contract applicable to the project or a
project phase.

Procurement Planning
Make-or-Buy Analysis
Whether a particular product or service can be
produced by the project team or can be
purchased.
Expert Judgment
Expert purchasing judgment can also be used to
develop or modify the criteria that will be used to
evaluate offers or proposals made by sellers.
Contract Types
Different types of contracts are more or less
appropriate for Different types of purchases.

Fixed-price or lump-sum contracts.

Cost-reimbursable contracts.( cost Plus)
Time and Material (T&M) contracts.

Fixed Price contracts

Fixed price or lump sum

Cost price with re-determination
Fixed price plus incentive fee.
Fixed price plus economic price adjustment
Fixed price with successive targets incentives
Fixed price for service material and labor at cost.
Time and material labor hours only.

Others methods:

Turnkey
Bonus - Penalty
Joint venture
Combination of the above
BOOT ( Build Operate Own and Transfer
BOT ( Build Operate and Transfer)
Build Lease and Transfer ( BLT)

Plan Contracting: Outputs

Procurement Documents

Procurement documents are used to seek

proposals from prospective sellers.
A term such as bid, tender, or quotation is
generally used when the seller selection decision
will be based on price (as when buying commercial
or standard items),
A term such as proposal is generally used when
other considerations, such as technical skills or
technical approach, are paramount.

Evaluation Criteria

Evaluation criteria are developed and used to rate

or score proposals. They can be objective or
subjective Evaluation criteria are often included as
part of the procurement documents.

Other Selection criteria

Understanding of need. How well does the sellers proposal

address the contract statement of work?
Overall or life-cycle cost. Will the selected seller produce
the lowest total cost (purchase cost plus operating cost)?
Technical capability.
Management approach.

Technical approach.
Financial capacity. Does the seller have, or can the seller
reasonably be expected to obtain, the necessary financial
resources?
Production capacity and interest. Does the seller have the
capacity and interest to meet potential future requirements?

Business size and type.

References. Can the seller provide references from prior

customers verifying the sellers work experience and compliance
with contractual requirements?
Intellectual property rights. Does the seller assert
intellectual property rights in the work processes or services
they will use or in the products they will produce for the project?
Proprietary rights. Does the seller assert proprietary rights in
the work processes or services they will use or in the products
they will produce for the project?

Request Seller Responses: Tools and Techniques

Bidder Conferences
Meetings with prospective sellers prior to preparation of a
bid or proposal.
To have a clear, common understanding of the
procurement
All potential sellers are given equal standing during this
initial buyer and seller interaction to produce the best bid.

Advertising
Develop Qualified Sellers List
Qualified sellers lists can be developed from the
organizational assets if such lists or information are
readily available. Whether or not that data is available,
the project team can also develop its own sources.

Select Sellers

Selection decision process:

cost can be the primary determinant for an off-the-shelf item,
Proposals are often separated into technical (approach) and
commercial (price) sections, with each evaluated separately.
Multiple sources could be required for critical products,
services, and results to mitigate risks that can be associated
with issues such as delivery schedules and quality
requirements.
Select a single seller that will be asked to sign a standard
contract.
Establish a negotiating sequence by ranking all proposals by
the weighed evaluation scores assigned to each proposal.

On major procurement items, the overall process of

requesting responses from sellers and evaluating sellers
responses can be repeated.
A short list of qualified sellers can be established based on a
preliminary proposal. A more detailed evaluation can then be
conducted based on a more detailed and comprehensive
proposal that is requested from the sellers on the short list.

Select Seller Techniques

Weighting System
Independent Estimates
Screening System
Contract Negotiation
Seller Rating Systems
Expert Judgment

Contract
A contract is awarded to each selected seller.
The contract can be in the form of a complex
document or a simple purchase order.
Regardless of the documents complexity, a
contract is a mutually binding legal agreement
that obligates the seller to provide the specified
products, services, or results, and obligates the
buyer to pay the seller.

Contract Administration: Tools and Techniques

Contract Change Control System

A contract change control system defines
the process by which the contract can be
modified.
Buyer-Conducted Performance
Review
Inspections and Audits
Performance Reporting

Contract Closure

The Contract Closure process supports

the Close procurement process since it
involves verification that all work and
deliverables were acceptable.
Contract Closure: Tools and Techniques
Procurement Audits
A procurement audit is a structured review
of the procurement process from the Plan
Purchases and Acquisitions process
Records Management System

Procedures of Open competitive Bidding under

PPRA Rules 2004.
One Envelope Procedure

Each bid shall comprise one single envelopes containing,

separately, financial proposal and technical proposal (if any)
Open competitive
procurement.

bidding

procedure

used

for

most

of

the

where the scope and technical specification of the procurements are

very clear and unambiguous.

For projects of repetitive nature and where a pool of registered

contractors with the departments is available sometimes.

In this procurement mode, the financially lowest bid is generally

selected.

Such procurements become victim of low bidder dilemma as the

bidding firms.

Poor history of successful procurements by this method.

Preferred for small and clear procurements.

Two Envelops Procedure

i)

ii)

The bid shall comprise a single

package containing two separate
envelopes. Each envelope shall
contain separately the financial
proposal
and
the
technical
proposal:
The envelopes shall be marked as
FINANCIAL PROPOSAL
and
TECHNICLA PROPOSAL in bold
and
legible
letters
to
avoid
confusion.

Two Stage Bidding Procedure

First Stage (Tech Proposal )

i) The bidders shall submit, according to the
required specifications, a technical proposal
without price,
i)

The technical proposal shall be evaluated in

accordance with the specified evaluation criteria
and may be discussed with the bidders regarding
any deficiencies and unsatisfactory
technical
features.

Continued
iii)

iii)

After such discussions, all the bidders shall be

permitted to revise their respective technical
proposals to meet the requirements of the procuring
agency;

The procuring agency may delete, modify or add

any aspect of the technical
requirements or
evaluation criteria, or it may add new requirements
or criteria not inconsistent with these rules.

Continued

Such
revisions,
deletions,
modifications
or
additions are communicated to all the bidders
equally at the time of invitation to submit final
bids, and that sufficient time is allowed to the
bidders to prepare their revised bids:
Such allowance of time shall not be less than
fifteen days in the case of national competitive
bidding and thirty days in the case of international
competitive bidding;

Continued
v)

Those bidders not willing to

conform their respective bids to the
procuring
agencys
technical
requirements may be allowed to
withdraw from the bidding without
forfeiture of their bid security.

Second stage (Revised Tech Proposal)

i)

The
bidders,
whose
technical
proposals or bids have not been
rejected and who are willing, to
conform their bids to the revised
technical requirements shall be
invited
to
submit
a
revised
technical proposal along with the
financial proposal.

Continued
ii)

iii)

The revised technical proposal and the

financial proposal shall be opened at a
time date and venue announced and
communicated
to
the
bidders
in
advance; and
The revised technical proposal and the
financial proposal shall be evaluated in
the manner prescribed above. The bid
found to be the lowest evaluated bid
shall be accepted.

 Best for projects of technical nature.

Where the firms capacity to deal with the complexity of
the project is critical to the successful implementation of
the project
The scaling of technical and financial score depends on
the nature of the project and relevant importance of the
of each major criteria

Typical range from 50:50 to 70:30 for technical: financial

respectively.
For mega IT projects, where the technical expertise,
global partnership and relevant experience of the firm
are of paramount importance, the technical part can be
given a score of 70 or even 80.

Technical Evaluation for ICT project at AIOU

Criteria

Marks

Nature of Firm
( 10)

Max
Individual firm: 02
Partnership:
03
Company:
05
Add 1 mark per year
since establishment Max
5 marks

Offices
and
Outreach
( 10)

Islamabad
office: 05
Other:
01
marks
per
office max: 05

Methodology and
approach
( 20)

Experience of similar works

In hand
(25)
For
Min
two similar
works: 10
Add
2
marks per
work.

Completed
( 15)
For Min four
works: 05
Add 01 marks
for add work

References.
( 10)

National: 05
Intnl; 5

Financial
soundness and
bank references
( 10)

Balance sheets:
05
Income Stat:03
Bank reference:
02

Key personnel
for the project
( 10)

Total Marks
( 100)

Team leader:
05
Core
team
members: 10

Obtained.

One Stage Two envelope

bidding procedure:i)

i)

The bid shall comprise a single package

containing
two
separate
envelopes
containing separately the financial proposal
and the technical proposal;
The envelopes shall be marked as
FINANCIAL PROPOSAL and TECHNICAL
PROPOSAL in bold and legible letters to
avoid confusion;

Continued
iii)

iv)

v)

vi)

vii)

initially, only the envelope marked TECHNICAL

PROPOSAL shall be opened;
The envelope marked as FINANCIAL PROPOSAL
shall be retained in the custody of the procuring
agency without being opened.
The technical proposal shall be evaluated on the
laid down criteria.
The financial bids of the firm fulfilling the criteria
are opened and remaining are returned unopened.
The lowest evaluated bid based on the technical
and financial bids is approved.

Performance Guarantee

Where needed and clearly expressed

in the bidding documents, the
procuring agency shall require the
successful bidder to furnish a
performance guarantee which shall
not exceed ten per cent of the
contract amount.

Two Stage Bidding Procedure

First Stage (Tech Proposal)

The bidders shall submit, according to the

required specifications, a technical proposal
without price,
The technical proposal shall be evaluated in
accordance with the specified evaluation criteria
and may be discussed with the bidders
regarding any deficiencies and unsatisfactory
technical features,
After such discussions, all the bidders shall be
permitted to revise their respective technical
proposals to meet the requirements of the
procuring agency;
The procuring agency may delete, modify or add
any aspect of the

 technical requirements or evaluation criteria, or it

may add new requirements or criteria not
inconsistent with these rules.
Such revisions, deletions, modifications or
additions are communicated to all the bidders
equally at the time of invitation to submit final
bids, and that sufficient time is allowed to the
bidders to prepare their revised bids:

Such allowance of time shall not be less than

fifteen days in the case of national competitive
bidding and thirty days in the case of international
competitive bidding;
Those bidders not willing to conform their
respective bids to the procuring agencys technical
requirements may be allowed to withdraw from
the bidding without forfeiture of their bid security.

Second Stage:

The bidders, whose technical proposals or bids

have not been rejected and who are willing, to
conform their bids to the revised technical
requirements shall be invited to submit a
revised technical proposal along with the
financial proposal.
The revised technical proposal and the
financial proposal shall be opened at a time
date and venue announced and communicated
to the bidders in advance; and

The revised technical proposal and the

financial proposal shall be evaluated in the
manner prescribed above. The bid found to be
the lowest evaluated bid shall be accepted.

Best for
Best suited for Large Civil Works
projects, heavy equipment and
complex projects
Where the available information and inhouse expertise of the procuring agency
is not enough to deal with.
The feedback of the firm may provide
some additional information on the
procurement.

Construction of Academic complex

at AIOU at PKR 200 Million

Total application received: 60

No of firm pre-qualified on the basis of technical evaluation: 15
Tenders issued: 05
Tenders received: 02
The lowest bid was found technically and financially sound and
was referred to PPRA for guidance.
The PPRA authorities clarified that they are not vetting or
verifying authorities
For all procurements, PPRA Rules 2004 must be strictly followed.
They further clarified that there is no bar of minimum 3 number
of bidders required for any procurement.

even one bid can be accepted if it is found reasonable and

the PPRA rules are followed in true spirit.

Procurement of 50 Million or more to be reported to NAB?

Thank You