pps1 module 9 (c)

8/2/2019 PPS1 Module 9 (c)

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MODULE 9 (c)

Procurement of InfrastructureContracts

8/2/2019 PPS1 Module 9 (c)


MODULE 9(c) OBJECTIVES

To enable the participants to:

1. understand the scope, standards and outputs of detailed engineering – including surveys, plans, specifications, drawings, value engineering,quantity and cost estimates, and PERT/CPM;

2. screen and ascertain the adequacy of detailed engineering outputs as basicinputs for the preparation of BDs.

3. have the skills and knowledge required to manage the procurement processand the resulting contracts for infrastructure projects; and

4. gain basic hands-on skills to apply the principles, rules and procedures inthe steps in the procurement of infrastructure contracts – from preparationand review of BDs to contract approval and administration.

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MODULE 9(c) SCHEDULE

Day 1: Review of Modules 5-7 and Detailed Engineering:Lecture-Discussion and Group Workshop

Day 2: Preliminary Examination and Detailed Evaluation of Bids:Case Studies and Group Workshop

Day 3: Post-Qualification and Award: Case Studies and GroupWorkshop

Day 4: Contract Perfection and Applications of Contract

Conditions: Case Studies and Group Workshop

Day 5: Design-Build, Integration and Examination

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DAY 1 SESSION 1 OBJECTIVES


1. review the principles, procedures and rules in the

procurement of infrastructure contracts (Modules 5-7); and

2. gain a basic understanding of the scope of the initialaspects of detailed engineering – from design standards upto preparation of technical specifications – and determine

the adequacy or suitability of their outputs for use as inputsin preparing the BDs.

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OUTLINE OF SESSION 1

1. Review of Modules 5 to 7

2. Detailed Engineering2.1 DE as Prerequisite to Bidding

2.2 Scope of DE

2.3 Discussion of DE activities up to Specifications

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1-A. REVIEW OF MODULE 5

Module 5: Preparation of Bidding Documents

Purpose of BDs

DE as Inputs to BDs

Contents of BDs

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PREPARATION OF BIDDING DOCUMENTS

(BDs) –

1/8

Purpose of BDs – to define:

• Scope of work, approved budget, duration, outputs of the contract

• Minimum legal, technical and financial requirements to be eligible to bid• Documents and other requirements that bidder must include in his bid.

• Process and rules for submission and receipt of bids, evaluation of bids,post-qualification, and award of contract.

• Terms and conditions of contract.

Detailed Engineering (DE) as Pre-Requisite to BDs• Certification that DE has been done per requirements/ standards.

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PREPARATION OF BDs – 2/8

Summary of Contents of BDs for Infra Projects:• Part I

Sec. I - Invitation to Apply for Eligibility and to Bid (IAEB)

Sec. II - Eligibility Requirements (ER)

• Part II Sec. I - Instructions to Bidders (ITB), incldg Docs comprising bid

Sec. II - Bid Data Sheet (BDS)

Sec. III - General Conditions of Contract (GCC)

Sec. IV - Special Conditions of Contract (SCC)

Sec. V - Specifications Sec. VI - Drawings

Sec. VII - Bill of Quantities (BOQ)

Sec. VIII- Forms

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Part I, Sec. I – Invitation (IAEB)

Part I, Sec. II – Eligibility Requirements (ER)

• A. Eligibility Criteria• B. Prior Registration with Agency with Electronic Registry

• C. Submission of Letter of Intent (LOI)

• D. Eligibility Screening/Check

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Part II, Sec. I – Instructions to Bidders (ITB)

• A. Scope of Bid (ITB 1)

• B. Pre-Bid Conference (ITB 5)

• C. Contents of BDs (ITB 6)

• D. Documents to comprise the Bid (ITB 10)

• E. Bid prices (ITB 11)

• F. Bid validity (ITB 13)

• G. Bid Security (ITB 14)

• H. Receipt of Bids (ITB 18)

• I. Modification and Withdrawal of Bids (ITB 20)

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• J. Opening and Preliminary Examination of Bids (ITB 21)

• K. Detailed Evaluation of Bids (ITB 23)

• L. Post-Qualification of Bidder with LCB (ITB 25)

• M. Right of Procuring Entity to reject bids (ITB 26)

• N. Award Criteria (ITB 27)

• O. Notice of Award (ITB 28)

• P. Performance Security (ITB 30)

• Q. Documents comprising the Contract (DPWH-ITB 30)

• R. Signing and approval of the Contract (ITB 29)

• S. Notice to Proceed (ITB 31)

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Part II, Sec. II – Bid Data Sheet (BDS)Contract-specific information for ITB:

A. Name of Procuring Entity

B. Contract ID and name

C. ABC and funding sourceD. Date, time, and venue of Pre-Bid Conference

E. Procuring Entity’s address

F. Minimum work experience requirements of key personnel

G. Minimum equipment requirements

H. Validity period of bidsI. Validity period of bid security

J. Address and deadline for receipt of bids

K. Place, date, and time for opening of bids

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Part II, Sec. III – Gen. Conditions of Contract (GCC)

Part II, Sec. IV – Special Conditions of Contract (SCC)

Part II, Sec. V – Specifications

Part II, Sec. VI – Drawings

Part II, Sec. VII – Bill of Quantities (BOQ)

Pay Total

Item No. Description Unit Quantity Unit Price Price

(1) (2) (3) (4) (5) (6)=(4)x(5)

• PE shall specify data for Col. (1) to (4)

• Bidders shall fill in unit and total bid prices in Col. (5) and (6)

Part II, Sec. VIII – Forms

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Standard Bidding Documents (SBDs):• Philippine Bidding Documents – harmonized between GOP and ODA

agencies (ADB, WB, JBIC) – for national competitive bidding (NCB)• SBDs customized to agency – e.g., DPWH SBDs

BDs are for a particular contract, which shall adopt the SBDsbut with contract-specific info in:• IAEB Specs• BDS Drawings• SCC BOQ

SBDs and BDs should be downloadable at agency website.

FIDIC Conditions of Contract – for international competitivebidding (ICB)

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1-B. REVIEW OF MODULE 6

Module 6: Evaluation of Bids

Eligibility Screening

Preliminary Examination of Bids

Detailed Evaluation of Bids

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RECEIPT OF LOI AND CONDUCT OFELIGIBILITY CHECK – 1/6

Eligibility criteria:

Registered with agency w/ electronic registry (e.g., DPWH)

Legal requirements:

Citizenship: Filipino citizens/proprietors, or 75% Filipino ownedpartnerships/corporations/JV, or CDA-registered coops*

PCAB license for allowable range of contract cost, effective 01 July 2009*:

Small A ------ up to P 0.5 M Medium B --- up to P 200.0 M

Small B ------ up to P 15.0 M Large A ------ up to P 300.0 M

Medium A --- up to P 100.0 M Large B ------ no limit

Mayor’s business permit/city or municipal license* BIR tax clearance

Non-inclusion in blacklist

* Proposed in new IRR

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Technical requirements:

Work experience - Completed similar project >= 50% of ABC*

Financial requirements: either:

NFCC must = at least ABC*NFCC = [(current assets – current liabilities) K] - value of all outstanding

works under on-going and unstarted awarded contracts coincidingwith the subject contract,

where K = 10 if contract duration is 1 yr or less, 15 if duration is > 1 yr upto 2 yrs, 20 if duration is > 2 yrs

Credit line commitment must = at least 10% of ABC* Cash deposit certificate must = at least 10% of ABC

*Proposed in new IRR

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Documents needed for eligibility check:• Class “A” documents Legal documents:

1. DTI or SEC registration.*

2. Mayor’s permit/municipal license.* 3. TIN.

4. Bidder’s statement that it is not blacklisted.

5. Other licenses required by the entity.

6. Tax clearance

7. Tax returns filed and paid thru EFPS

8. Certificate of PhilGEPS registration. Technical documents

1. Bidder’s statement of on-going, completed and awarded but unstarted contracts –

with value of work, CPES, etc.*


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Documents needed for eligibility check: Technical documents (cont’d)

2. PCAB license for the type and cost of the contract to be bid.*

3. Statement of availability of (a) key personnel and (b) equipment (owned/

leased/under purchase) for construction. Financial documents:

1. Audited financial statements, received by BIR.*

2. Bidder’s computation of NFCC or credit line commitment or cash depositcertificate.*

• Class “B” documents

1. Joint venture agreement, in case of JV. Each JV member shall submit requiredeligibility documents.*

2. Letter authorizing BAC to verify documents.


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RECEIPT OF LOI AND CONDUCT OF

ELIGIBILITY CHECK - 5/6

Submission of LOI for Eligibility

Contractor may download LOI form from agency website, or

obtain hard copy from BAC.

Contractor submits accomplished LOI (with CRC in the case of DPWH).

Content of LOI:

LOI indicates:

Contractor’s intention to apply for eligibility

If found eligible, commitment to submit a bid and purchase BDs. LOI shall state:

Bidder has key personnel.

It has equipment available if awarded the contract.

It is not in the government blacklist.

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RECEIPT OF LOI AND CONDUCT OFELIGIBILITY CHECK - 6/6

It is not within relationships prohibited by Sec. 47 of RA 9184.

If its NFCC is less than ABC, it is submitting a credit line commitment orcash deposit certificate = 10% of ABC.

In the case of DPWH, it has updated its Contractor’s Info (CI) in theregistry of contractors, including status of on-going projects.

If necessary, it is nominating sub-contractors for specified parts of theworks.

In the case of a JV, it is submitting its JV agreement and special JV licensefrom PCAB.

Determination of eligibility

Processing of LOIs/eligibility documents to ascertain

eligible/ineligible contractors.

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RECEIPT AND OPENING OF TECH. ANDFIN. ENVELOPES AND PREL EXAM – 1/5

Components of Bid Technical Proposal

Financial Proposal

Contents of Technical Proposal1. Bid Security*

2. Authority of signing official*

3. Construction schedule and S-curve

4. Construction methods

5. Organizational chart for the contract*6. Contractor’s certification on key personnel for the contract (vs. min.

experience requirements)** Proposed in new IRR

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RECEIPT AND OPENING OF TECH. ANDFIN. ENVELOPES AND PREL EXAM – 2/5

7. Manpower utilization schedule

8. List of equipment pledged to the contract (vs. min. reqts)*

9. Equipment utilization schedule.

10. Affidavit of site inspection.11. Credit line commitment/cash deposit cert (10% of ABC).

12. Construction safety and health program of contractor.

13. Affidavit of compliance with labor laws and standards.*

14. Affidavit of compliance with contractor’s responsibilities under IRR

Sec. 17.7.1.*15. Affidavit of compliance w/ Disclosure provision under IRR Sec. 47.*

16. Other requirements specified in ITB.


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RECEIPT AND OPENING OF TECH. ANDFIN. ENVELOPES AND PREL. EXAM – 3/5

Contents of Financial Proposal1. Bid prices in the BOQ.*

2. Detailed estimates.*

3. Cash flow and payments schedule.*

Bid SecurityForm Min. amount

Cash, certified check, cashier’s check,

manager’s check, bank draft, L/C ------------ 1.0% of ABC

Bank guarantee --------------------------------- 1.5% of ABC Surety bond ------------------------------------- 2.5% of ABC

Foreign government guarantee -------------- 100.0% of ABC


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Validity Period for Bids and Bids Security

• Reasonable period as indicated in the BDs.

• Not exceeding 120 days.

Period for Receipt of Bids

Max period from 1st day of

ABC advt of IAEB to bid opening

P 50 M and below 36 calendar days

Above P 50 M 50 calendar days

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Preliminary Examination of Bids

Check Tech. Proposal vs. checklist to determine the presence

(pass) or absence (fail) of required documents. If Tech. Proposal passes, check Fin. Proposal vs. checklist to

determine the presence or absence of required documents.

Only the passing Tech. and Fin. Proposals will proceed to thedetailed bids evaluation.

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DETAILED EVALUATION OF BIDS –

1/2

Purpose of Bid Evaluation

To determine the Lowest Calculated Bid (LCB).

Criteria for Evaluation

• Bid must be complete: all required items in the BDs, including payitems in the BOQ, must be priced.

• Bid shall be corrected for arithmetical errors, inconsistencies,omissions and allowed discounts, to arrive at the calculated bids.

• Bids are deemed to include all taxes.

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DETAILED EVALUATION OF BIDS – 2/2

• In case of discrepancies:

Bid prices in words shall prevail over figures.

Unit prices applied to quantities per item shall prevail over total prices.

Actual sum of prices of component items shall prevail over stated total.

Unit cost in the BOQ shall prevail over detailed estimates.

• Any total calculated bid exceeding ABC shall be disqualified.

• Rank the total calculated bids from the lowest to the highest.

• The lowest is the LCB.

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POST-QUALIFICATION OF BIDDER WITH LCB

Procedure• Verification and validation of info in the bidder’s:

Contractor’s Information (in case of DPWH Registry)

Letter of Intent Technical Proposal

Financial Proposal

• Ascertaining bidder’s (incl. sub-contractors’) compliance with: Legal requirements – incl. licenses, permits, blacklist

Technical requirements – incl. no slippage of >15% or unsatisfactory

performance in any on-going project. Financial requirements – incl. any changes in NFCC.

If bidder passes the post-qualification requirements, BAC declares it asthe bidder with the LCRB.

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AWARD OF CONTRACT

Procedure

• BAC issues Resolution of Award to Bidder with LCRB, based

on Bid Evaluation Report and Post-Qualification Report.• HOPE approves Resolution.

• BAC prepares Notice of Award (NOA), HOPE signs it, BACissues NOA to winning bidder and posts it at website.

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1-C. REVIEW OF MODULE 7

Module 7: Contract Administration for Works

Finalizing and Approval of Contracts

Contract Implementation vs. GCC and SCC

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FINALIZING AND APPROVAL OFCONTRACT - 1/3

Contract Documents

A. Contract Proper

1. Contract Agreement (use standard form in SBDs) – by PE

2. Documents forming part of the Contract Agreement:

a. Bidding Documents for the Contract – by PE

(1) GCC (5) IAEB

(2) SCC (6) ITB

(3) Drawings/Plans (7) BDS

(4) Specs (8) Bid Bulletins (Addenda)b. Contractor’s calculated bid in the Bid form, including Tech and

Financial Proposals –by PE

c. Contractor’s LOI (and CI from the DPWH Registry) –by PE

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d. NOA with the contractor’s conforme – by Contractor

e. Performance Security as required - by Contractor

f. Credit line or cash deposit certificate at least equal to 10% of thetotal Contract price - by Contractor

g. PERT/CPM diagram and bar chart with S-curve - by Contractor

Note: Contractor shall submit docs d to g within 10 days from NOA.

B. Supporting Documents

1. Approved Program of Work

2. Obligation Request

3. Abstract of Bids as Calculated

4. Approved BAC Resolution declaring the LCRB and recommendingaward

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Performance SecurityCash, certified check, cashier’s/

manager’s check, bank draft ------------ 5% of Contract Price

Irrevocable letter of credit ----------------- 5% of Contract PriceBank guarantee ----------------------------- 10% of Contract PriceSurety bond---------------------------------- 30% of Contract PriceForeign government guarantee ---------- 100% of Contract Price

Contract Signing• Within 10 days from NOA.

Contract Approval• Within 5/15/25 days.

Notice to Proceed• Within 2/3/7 days.

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CONTRACT ADMINISTRATION - 1/7

GCC – Some important provisions Procuring Entity’s obligations (GCC 5)

Deliver ROW and government-furnished materials/equipment/plans

Contractor’s obligations (GCC 6)

Carry out works per contract, including start and completion dates, keypersonnel, etc.

Performance Security (GCC 7) Guarantee faithful performance of contractor’s obligations

Form and amount of security.

Sub-contracting (GCC 8)

Not more than 50%, by eligible sub-contractors nominated in LOI. Liquidated damages (GCC 9)

Failure to complete works within contract time, incl. approved extns.

Formula based on opportunity cost of uncompleted portions of works.

CONTRACT ADMINISTRATION 2/7Procurement Professionalization Project

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Defects Liability PeriodUnder Performance Security

Warranty PeriodUnder Warranty Security

ProjectCompletion

Final Acceptance

1 year 2/5/15

years

• Contractor assumes full

responsibility except thoseoccasioned by force majeure

• Repair within 90 days.

• Contractor shall be responsible forstructural defects except those caused

by third parties or force majeure.• Contractor is required to put up awarranty security, the form of whichshall be specified by the BAC.

GCC- Some important provisions• Warranty Security (GCC 12)

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GCC – Some important provisions (cont’d)

Warranty Security (GCC 12) – cont’d

Cash deposit/cash bond/L/C ----------------- 5% of contract price

Bank guarantee -------------------------------- 10% of contract price Surety bond ------------------------------------ 30% of contract price

CARI (GCC 14)

Proportional to accomplished portions of the work.

Termination (GCC 15-18)

Entity may terminate for: contractor’s default (e.g., 15% slippage),insolvency, unlawful acts, breach of contract.

Contractor may terminate for: govt’s failure to deliver ROW/materials, breachof contract (e.g., non-payment within 84 days), adverse peace and order.

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Resolution of disputes (GCC 20)

Per RA 9285.

Correction of defects (GCC 36)

Before end of defects liability period.

Advance payment (GCC 38)

15% max in lump sum, or ½ upon NTP and ½ upon mobilization, coveredby Performance Security, recouped from progress payments.

Monthly statements of work accomplished or progress billings (GCC

40/DPWH-GCC 41) To cover cumulative value of work accomplished.

Monthly certificates & progress payment (GCC 39/DPWH-GCC 42)

Certified by entity’s rep, net of previous payment, retention, etc.

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• Retention (GCC 41)

To cover uncorrected defects and third party liabilities.

10% on progress payment.

• Variation orders (VOs) (GCC 42) Cumulative VOs not > 10% of original contract price; or another contract

HOPE may authorize VO beyond 10%, but not > 20%, with sanctions ondesigner/official responsible.

• Suspension of work (GCC 44)

Entity may suspend for: force majeure, contractor’s failure to correctbad/unsafe conditions or carry out valid orders, changes in plans.

Contractor may suspend for: non-delivery of gov’t materials, non-paymentof contractor within 45 days, adverse peace and order.

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• Time extension (GCC 46)

Only when activities fall along the critical path of approved PERT/CPM.

Not for unfavorable weather or reasons already factored in the contract

duration, or inexcusable failure of contractor to provide eqpt/materials.• Price Adjustment (GCC 47)

No contract price adjustment or escalation, except for extraordinarycircumstances determined by NEDA and approved by GPPB.

Extraordinary circumstances under Civil Code:

a. Ordinary fortuitous events – typhoons, flooding, vehicular accidents, etcb. Extraordinary inflation or deflation – at least 2 standard deviations.

c. Extraordinary fortuitous events – fire, war, pestilence, earthquake, etc.

Use of parametric formulae and price indices.

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SCC – Some important provisions

• Intended completion date (GCC 1.17)

• Procuring Entity (GCC 1.22)

• Procuring Entity’s Representative (GCC 1.23)

• Start date (GCC 1.28)

• Description of the works (GCC 1.31)

• Dates of delivery of the works (GCC 5.1)

• Contractor’s key personnel (GCC 6.5)

•

Site investigation reports (GCC 10.1)• Type of structure and warranty period (GCC 12.3)

• Date of submission of as-built drawings (GCC 50.1)

• Amt to be w/held for failure to submit as-built drawings (GCC 50.2)

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2. DETAILED ENGINEERING – 1/15

2.1 Detailed engineering (DE) as prerequisite to biddingand award (Sec. 7 and 17.6 and Annex A of IRR):

• Based on feasibility or preliminary engineering study.

• Sufficiently carried out and approved in accordance withthe standards and specs prescribed by the head of theprocuring entity, as certified by engineering/design office.

• In accordance with provisions in IRR Annex A.

• Exception is design-build scheme.

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TIPS: DETAILED ENGINEERING

Refer to model TOR for DE (e.g., DPWH).

Need for certification from design office that DE was done

according to standards, including Value Eng’g and Quality Assurance.

Rule-of-thumb: budget for DE is 3-6% of construction cost.

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2. DETAILED ENGINEERING – 2/15

2.2 Scope of detailed engineering

a. Setting of design standards

b. Conduct of surveys and investigations.

c. Conduct of design analyses and preparation of design plans.d. Preparation of contract plans.

e. Preparation of technical specs.

f. Preparation of quantity estimates.

g. Preparation of cost estimates and ABC.h. Preparation of program of work including PERT/CPM.

i. Determination of contract packages.

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DETAILED ENGINEERING – 3/15

j. Preparation of site/ROW and resettlement action plans and

schedule.

k. Preparation of utilities relocation plan.

l. Preparation of EIS.m. Preparation of min. requirements of safety and health

program.

n. Preparation of equipment requirements.

o. Conduct of value engineering studies.

p. Determination of contract time or duration.q. Determination of warranty period.

r. Preparation of Bidding Documents.

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2.3 Discussion of DE Activities

a. Setting of design standards

In accordance with appropriate national/int’l standards and acceptedengineering design practices.

E.g., at DPWH, design standards shall be based on:

DPWH Design Guidelines, Criteria and Standards (Orange Book)

American Association of State Highway and Transportation Officials(AASHTO) for Highways and Bridges

American Concrete Institute (ACI) Standards

Technical Standards and Guidelines for Planning and Design of FloodControl, 2002, by Flood Control & Sabo Eng’g Center (FCSEC), DPWH

National Structural Code of the Philippines

Other relevant guidelines and standards

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a. Setting of design standards (cont’d)

For building projects, design shall comply with following laws,regulations and standards:

National Building Code (PD 1096) and its IRR. National Structural Code of the Philippines, Vol I – Bldgs, Towers, and

other Vertical Structures.

Local ordinances and regulations.

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b. Conduct of field surveys and investigations

• May include aerial, hydrographic, topographic, hydrologic, sub-surface, monumenting, geological, soils and materials, parcellary

and other surveys.• In accordance with agency guidelines, criteria, standards - e.g.,

DPWH Orange Book.

• Should provide input data for design and production of plans topermit quantity estimates with +/- 5 to 10% accuracy.

c. Design analyses and preparation of design plansand design reports

• Conform to national/international design guidelines, criteria,standards adopted by the agency.

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RED FLAGS: SURVEY DATA

Baseline field survey data - e.g., ground elevation/ cross- sections - are manipulated to overstate the quantities in the design – especially for earthworks.

No quality assurance to verify the integrity of the survey data.

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d. Preparation of contract plans/drawings

In accordance with agency guidelines and standards.

Incorporate at least the following: Site development plan.

Plans and profile sheets

Typical sections and details.

Structural plans at appropriate scales with details to set out and

complete the structure.

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RED FLAGS: PLANS/DRAWINGS

Plans are based on erroneous or manipulated data,thereby padding the quantities.

Major items are deliberately omitted in the design,necessitating variation orders during implementation.

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e. Preparation of technical specifications

• Use internationally/nationally accepted specs, e.g., DPWH Standard Specs forPublic Works & Highways, 1995/2004 (Blue Book)

Description of work Material requirements

Construction requirements

Measurements and payments

• Prepare Supplemental Specs for items not in Standard Specs.


Procurement Professionalization Project

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1. gain a basic understanding of the scope of the other aspects

of detailed engineering – from quantity estimates topreparation of BDs, including specific guidelines for costestimates and ABC, and PERT/CPM.

2. determine the adequacy or suitability of their outputs for

use in finalizing the BDs.

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f. Preparation of quantity estimates• Estimates with accuracy of +/- 5 to 10% of final quantities.

• Bill of Quantities (BOQ) is discussed below.

g. Preparation of cost estimates and ABC• Unit prices for work items based on market prices.

• ABC is discussed below.

h. Preparation of program of work

• Include estimates of work items, quantities and costs, andPERT/CPM diagram of project activities*.

*Refer to power point slides on PERT/CPM.

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i. Determination of contract packages

• Depends on kind and size of the project.

• Preferably small packages, without impairing tech. integrity.

• No splitting to circumvent laws and rules.

j. Preparation of ROW and resettlement plans

• Based on parcellary and socio-economic surveys.

• Land Acquisition and Resettlement Action Plans (LARAP)

should be prepared in coordination with LGUs/NHA.

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RED FLAGS: CONTRACT PACKAGES

Packages are too large vs. norms: limits participation to few big contractors.

Splitting to bring bidding to lower offices, where rigging is deemed easier to arrange.

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TIPS: ROW AND RESETTLEMENT PLAN

Refer to model LAPRAP document (DPWH) and RA 8794 and its IRR.

Check (a) land titles with RD, LRA, BL; (b) land prices vs.BIR zonal values and market prices; and (c) improvement costs vs. replacement costs.

Prepare resettlement plan with suitable site, compensation,and action program – in coordination with LGUs and NHA.

Ensure families are resettled before bidding.

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k. Preparation of utilities relocation plan• Include electric, water, sewerage, telephone, drainage, and other

utilities affected by the project.

l. Preparation of EIS• Done for a environmentally critical project or project in an

environmentally critical area as defined by DENR.

m. Preparation of minimum requirements for constructionsafety and health program• Conform to standards of DOLE.

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RED FLAG: EIS

Project is advertised even without ECC/CNC. This delays contract award/implementation.

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n. Preparation of equipment requirements

• Types, numbers and capacities of equipment based on:

Nature, volume, timeframe of works to be done.

Equipment productivity. Equipment cost (capital and O&M) per unit output.

• Utilization and operation of equipment for the works to conform withtechnical specs (e.g., DPWH Blue book).

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RED FLAG: EQUIPMENT REQUIREMENTS

Production and efficiency rates for major equipment are substantially understated vs. norms. These result in:

• Overstated equipment requirements.

• Inflated ABC.

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o. Conduct of value engineering (VE) studies*

• In DPWH, VE proposed for all projects costing => P50 M.

• VE will analyze alternative schemes of achieving projectobjectives to delete/reduce non-essential features and lessen life-cycle costs of the project, without sacrificing its structural qualityand integrity, while attaining its essential function, performanceand safety.

*Refer to power point slides on Value Engineering.

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RED FLAG: VALUE ENGINEERING

TOR for FS and DE does not include VE.

QA check shows VE was not adequately done according to standards, or not done all.

Consequently,

• Over-designed projects could not be checked.

• Opportunities for significant savings are missed.

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o. Contract time or duration

• Allow for rainy/unworkable days based on PAGASA records.

• Check if reasonable considering industry experience.

p. Warranty period

• 2/5/15 years depending on type of project.

• Included in conditions of contract (GCC and SCC).

q. Preparation on Bidding Documents (BDs)

• Discussed in Module 5.

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r. Design-build*

• As provided in Annex G, RA 9184 IRR: Agency sets design-construction performance specs, and contractor undertakes design

and construction.

• For fast-track projects, advanced technologies, small projects.

• Advantages: single responsibility, faster, promotes innovation andhigh quality, less administrative burden, firm costs, less collusion.

*Refer to power point slides on Design-Build.

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RED FLAG: CONTRACT DURATION

Contract duration is too long compared to industry practice and experience. This drives up the costs.

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BILL OF QUANTITIES (BOQ) – 1/2

Should be based on plans/drawings and specs, includingbreakdown into work/pay items.

Estimates of quantities with accuracy of +/- 5 to 10%.

Typical BOQ:

• Parts to be provided by the Procuring Entity: Pay items withcorresponding descriptions, units of measurement, and quantities.

• Parts to be provided by the bidder as its bid: Unit bid prices and totalbid prices corresponding to he pay items.

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BILL OF QUANTITIES (BOQ) – 2/2

BILL OF QUANTITIES - EXAMPLE

Part No. ________ Part Description: _________________________________

Columns (1 to (4) are to be filled up by the

Procuring Entity

Columns (5) and (6) are to be filled up by the

Bidder

Pay

Item

No.

Description Qty Unit Unit Bid Price

(Pesos)

Total bid Price

(Pesos)

(1) (2) (3) (4) (5) (6)103(2) Bridge excavation above

ordinary water level

471 cu. m In words: ___________

___________________

In figures: __________

In words: ___________

___________________


404 Reinforcing steel 33,793 kg In words: ___________

___________________


In words: ___________

___________________

In figures: __________405(1) Structural concrete 242 cu. m In words: ___________

___________________


In words: ___________

___________________


APPROVED BUDGET FOR THE

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APPROVED BUDGET FOR THECONTRACT (ABC) – 1/4

Factors to be considered in determining the ABC:a. Adequate DE with estimates within +/- 5 to 10% accuracy.

b. Compliance w/ standards and specs (e.g., DPWH Blue Book)

c. Use of appropriate construction methods.

d. Use of applicable const. industry norms and practices (e.g., production ratesfor equipment/labor; components of direct/indirect costs)

e. Use of feasible sources of construction materials.

f. Use of market prices of labor/materials/equipment, as-built costs

g. Reasonable risks and contingencies.

h. Inclusion of all relevant/legitimate costs of contractor.

i. Compliance with agency orders (e.g., DPWH DO 57). j. Rule-of- thumb or benchmark costs (ABC and major items) for similar works

k. Use of cost database, monitoring system, automated estimation if feasible.

l. Use of trained agency estimators and quantity surveyors.


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Cost elements:

• Direct cost (DC)(1) Cost of materials – cost at source, hauling, handling, storage, wastage(2) Cost of labor- salaries/wages, fringe benefits (leaves, SSS,13th month

pay, etc.)(3) Cost of equipment – bare/operated rental rates (ACEL), mobilization/

demobilization

• Indirect cost (IC)(1) Overhead expenses – supervision, transport, office expenses, premiums on

Securities/CARI/warranty, cost of money - normally not > 5 to 10% of DC

(2) Contingencies - normally not > 0.5 to 2% of DC(3) Miscellaneous - lab tests, etc., normally not > 0.3 to 1% of DC(4) Profit per year - normally not > OCC*[(n+2)/12]*DC(5) VAT = 12%*(DC+IC for (1) to (4))


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APPROVED BUDGET FOR THE CONTRACT – EXAMPLE

Construction of Modified Conventional Type Single Storey School Building

7m x 7 m floor area

Item No. Description Unit Quantity Estimated

Direct

Cost (EDC)

(1) (2) (3) (4) (5)

I Earthworks lot 1 4,892.50

II Soil Poisoning sq. m 59.5 3,272.50

III Reinforced Concrete

a. Concrete cu. m 9.84 37,432.50

b. Reinforcing Steel Bars kg 850.57 34,390.15

IV Masonry Works sq. m 72.50 22,138.90

V Fabricated Materials and Hardware lot 1 27,575.80

VI Cement Plaster Finish sq. m 154.00 17,089.00

VII Painting Works lot 1 16,135.00

VIII Roof Framing lot 1 58,571.54

IX Corrugated Metal Roofing lot 1 20,610.00

X Roof Insulation lot 1 13,525.00

Total


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RED FLAGS: ESTIMATES AND ABC

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RED FLAGS: ESTIMATES AND ABC

ABC (total and unit prices) substantially exceed benchmark prices by 15-30%.

If no quality assurance is done, quantities could be bloated

using manipulated survey and design data – thus padding the ABC.

Equipment production/efficiency rates are understated; material sources are too far; wastage is too large; indirect

costs are unusually high – thus jacking up the prices. Agency has no trained estimators.

VAT is double counted, especially for input materials.

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Modes of Undertaking DE

• Performed in-house by procuring/end-user entity if it has thetechnical capacity to do so.

• Assigned to specialized government agency (usually through

Memo of Agreement) – e.g., DPWH – if the entity is notcapable by itself to do the DE.

• Outsourced to engineering design consultants, especially forlarge and complex projects.