The Point Based System

1

• The Point Based System
• For Contractor Selection For Award Of
• Construction Works

Accelerating Bhutans Socio-Economic
Development- GNHC, MoWHS MoF
2

• Outline of Presentation
• 1. The Point Based System
• 2. Reclassification of Construction Firms
• 3. Schedule of Implementation
• 4. e-tool for evaluation

3

• Background
• Why the need for a new point based system?
• A point based system in place prior to April 2009
• From 1st April 2009, a pass/fail system was
  introduced that used a series of parameters on
  which a contractor needed to pass in order to
  qualify.
• Both these systems however addressed the needs of
  a robust process only partly and suffered from
  some drawbacks.

4
Old Point Based System
Current Pass/Fail System
Criteria

• Subjective evaluation on technical capability
  manpower, equipment, performance
• Requirements loosely defined no quantification

• Project specific requirements for manpower,
  equipment specified one-on-one comparison done
• No test for proven past performance

1

-

• Potentially possible for contractors to score low
  on some parameters and compensate by scoring high
  on others
• But high weightage given only to experience
  related parameters

• Stringent qualification criterion for each
  parameter
• Must to pass on ALL parameters to qualify
• Extremely difficult for young, promising
  contractors to qualify
• Often leads to re-tendering

2

-
3

• Possible to build-in incentives but not done
• No reason for contractors to get incorporated,
  employ local people etc.

• Incentives for best practices cannot be built in
  as by definition they will need to be pass/fail

-
-
5
The Point Based System- Background contd..

• Need for a system that addresses their shortfalls
  of the both the systems while retaining the
  positive aspects
• Need for a system that can evaluate contractors
  on parameters most critical in achieving good
  performance in Bhutans construction sector
  context, and
• Need for a system that can give incentives to the
  contractors to adopt some of the best practices
  that will help in development of the sector in
  general.

6
Old Point Based System
Current Pass/Fail System
Criteria
Proposed Point Based System

• Project specific requirements for manpower,
  equipment specified one-on-one comparison done
• No test for proven past performance

• Objective levels of achievement and scoring
  specified for all technical parameters
• Project specific requirements clearly defined

• Subjective evaluation on technical capability
  manpower, equipment, performance
• Requirements loosely defined no quantification

1
-

• Stringent qualification criterion for each
  parameter
• Must to pass on ALL parameters to qualify
• Extremely difficult for young, promising
  contractors to qualify
• Often leads to re-tendering

• Potentially possible for contractors to score low
  on some parameters and compensate by scoring high
  on others
• But high weightage given only to experience
  related parameters

• Adequate flexibility to allow young, promising
  contractors to qualify
• Weightage to parameters well in-line with their
  relative importance in project execution

2

-

• Suitable incentives for local employment,
  commitment for VTI internships, incorporation etc.

3

• Possible to build-in incentives but not done
• No reason for contractors to get incorporated,
  employ local people etc.

• Incentives for best practices cannot be built in
  as by definition they will need to be pass/fail

-
-

7
The Point Based System of Evaluation
combination of technical and financial parameters
The New Point Based System
Technical Parameters
Financial Parameters

• Capability
• Capacity
• Organizational strength

1. Financial bid quoted by a Contractor
8

• Two stage qualification evaluation process

Technical Parameters - 40
Financial Parameters - 60
Techno-Financial Score
Lowest quoted bid
among qualifying bids 60
--------------------------------
Financial bid quoted by x
40 of Technical score for x
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1. First Stage Technical Qualification
Technical Parameter (40)
C. Organizational Strength 25 points
A. Capability 50 points
B. Capacity 25 points
A contractor needs to obtain a score of at least
60 points out of 100 to qualify for the next
stage.
10

• A. Capability 50 points
• Similar work experience
  - 10
• Access to adequate equipment
  - 15
• Availability of manpower
  - 15
• Average performance score from previous work
  - 10
• 
  
• Total - 50 points
• Parameters above tests on the capability to
  execute the given work.
• Capability is taken to be a function of prior
  experience, their ability to generate enough
  resources in form of manpower and equipment, and
  their performance track-record from previous
  works.

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• 1 - Similar work experience (last 5 calendar
  years)
• Two options-
• a. the contractor can either be evaluated on the
  size of a SINGLE largest similar work that (s)he
  might have executed in the past
• OR
• b. on the aggregate size of THREE similar works
  that (s)he might have executed in the past

12
Scoring pattern for similar works-
Parameter Level of Achievement Score
Aggregate size of similar contract (max 3) in the last 5 calendar yrs. gt 175 of current project size 150-175 of current project size 125-150 of current project size 100-125 of current project size 75-100 of current project size lt 75 of current project size 10 8 6 4 2 0
Size of the largest similar contract executed in the last 5 calendar yrs gt 100 of current project size 90-100 of current project size 80-90 of current project size 70-80 of current project size 50-70 of current project size lt 50 of current project size 10 8 6 4 2 0
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• 2 Access to adequate equipments
• Allocate points to each equipment based on its
  importance-
• Equipments of Tier-I importance 50 points
• Equipments of Tier-II importance 30 points
• Equipments of Tier-III importance 20 points
• Total marks out of 100 to be scaled down to 15
• 100 marks if the equipment are owned and 75
  marks if hired.
• Scoring on equipment is fundamentally similar to
  the way it has been done in the pass/fail system

14

• An illustrative list of prescribed equipments

Nature of work Tier-I (50 pts) Tier-II (30 pts) Tier-III (20 pts)
Road construction Excavator Road roller, Paver, Vibrator Air compressor, Tipper trucks, survey equipment
Building construction Bull-dozer, Concrete-mixer Shuttering set, Crane truck, Dumper truck Air compressor, Survey equipment
Road resurfacing Road roller Vibrator, Sprayer Air compressor, Tipper trucks
Road construction Excavator Road roller, Paver, Vibrator Air compressor, Tipper trucks, survey equipment
Building construction Bull-dozer, Concrete-mixer Shuttering set, Crane truck, Dumper truck Air compressor, Survey equipment
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• An illustrative list of prescribed equipments

Equipment Maximum marks Number required
Excavator 50 2
Paver 10 3
Vibrator 10 3
Road roller 10 3
Truck 5 4
Mechanical sprayer 5 2
Air compressor 5 1
Survey equipment 5 3
Total 100
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• 3 Availability of Manpower
• The 100 points allocated is as follows
• Personnel position of Tier-I importance 50
  points
• Personnel position of Tier-II importance 30
  points
• Personnel position of Tier-III importance 20
  points
• This parameter evaluates contractors on their
  ability to deploy personnel with suitable
  qualifications and experience

17

• An illustrative list of manpower requirements

Tier of importance Position Qualification/Experience Score
Tier I Project Manager Graduate civil engineer with 10 years of experience Graduate engineer with 5-10 years of experience Diploma engineer with 5-10 years of experience Any other level of qualification or experience 50 30 15 0
Tier II Project Engineer Graduate engineer with 5 years of experience Diploma engineer with 5 years of experience Graduate or diploma engineer with 3 years of experience Any other level of qualification or experience 30 20 10 0
Tier III Site Supervisor Diploma engineer with 3 years of experience Personnel with formal training certification from VTI and at least 5 years of experience Any other level of qualification or experience 20 10 0
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• 4. Average performance score from previous work
  (0-10 pts)
• The 100 performance score is composed of the
  following parameters
• 1. On-time completion - (30)
• 2. Quality of execution - (70)

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• 4 Average performance score from previous work
  (0-10 pts)
• This parameter gives points based on contractors
  performance score of the last 5 calendar years
• To begin with, all contractors will have a
  default performance score of 100.
• This score will diminish whenever a contractor
  defaults on any one of the parameters of
  performance
• Performance score information system and will be
  institutionalized with the introduction of the
  new point based system.
• As contractor execute more projects, this score
  will keep getting averaged out over the number of
  projects executed

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1. First Stage Technical Qualification
Technical Parameter (40)
C. Organizational Strength 15 points
A. Capability 50 points
B. Capacity 25 points
A contractor needs to obtain a score of at least
60 points out of 100 to qualify for the next
stage.
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• B. Capacity 25 points
• This category of parameter tests the contractor
  on his/her ability to generate adequate financial
  resources for executing the project.
• The parameters covered under this category are
• Bid Capacity
  - 15
• Credit line available (unused)
  - 10
• 
  Total - 25 points

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• 1 Bid Capacity (15 points)
• A Average turnover of the contractor over
  the last 3 calendar years
• N Estimated duration of the project being
  tendered in years
• B Portion of other ongoing works to be
  completed in the period that overlaps with the
  current projects duration (that is, N)

Bid Capacity 2AN B
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• Bid capacity having calculated, the scoring will
  be as follows

Parameter Level of achievement Score
Bid Capacity Bid capacity quoted bid Bid capacity is between 80-100 quoted bid Bid capacity is between 60-80 quoted bid Bid capacity is between 40-60 quoted bid Bid capacity is between lt40 quoted bid 15 12 08 04 00
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• 2 Credit line available (Unused)-
• This parameter evaluates the contractor on
  his/her ability to raise credit from banks and
  other financial institutions to manage the
  working capital requirements of the project.
• The contractor will get a score based on a letter
  of credit from a bank that gives the amount of
  credit available to the contractor for the work
  to be awarded.
• Level of achievement on this parameter will be
  judged in terms of months of project cash flow
  for which the credit is available.

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• Scoring pattern will be done as follows

Parameter Level of achievement Score
Credit line available (unused) 100 of estimated 3 month project cash flow 90 100 of estimated 3 month project cash flow 80 90 of estimated 3 month project cash flow 70 80 of estimated 3 month project cash flow 60 70 of estimated 3 month project cash flow lt60 of estimated 3 month project cash flow 10 08 06 04 02 00

• This sums up the scoring of 25 points under the
  capacity category in the technical score. We
  now proceed to the next category
  organizational strength

26
1. First Stage Technical Qualification
Technical Parameter (40)
C. Organizational Strength 15 points
A. Capability 50 points
B. Capacity 25 points
A contractor needs to obtain a score of at least
60 points out of 100 to qualify for the next
stage.
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C. Organizational Strength 15 points

• This category of parameters evaluates the
  contractor on how well the contractors
  organization is set up and functioning and how
  much is it contributing to the overall betterment
  of the sector.
• The parameters under this category are
• Status (incorporated, proprietorship, JV etc.)
  - 05
• Employment of local people
  - 10
• Strength of special skill knowledge base
  - 05
• Commitment for internships to VTI graduates
  - 05
• 
  Total - 25 points

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• 1 Status (incorporated, proprietorship, JV
  etc.)
• The scoring on this parameter will be as
  follows

Parameter Level of achievement Score
Status (incorporated, proprietorship, JV) Incorporated company bidding alone Incorporated company as the lead partner (gt50 stake) in a bid by a joint venture Incorporated company as a non-lead partner (lt50 stake) in a bid by a joint venture Any other (proprietorship, partnership etc.) 5 3 1 0
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• 2 Employment of local people
• - This parameter is designed to give the
  contractors benefit for employing local people in
  construction jobs.
• The scoring on this parameter are as follows

Parameter Level of achievement Score
Employment of local people 50 project workforce to be Bhutanese 40 50 project workforce to be Bhutanese 25 40 project workforce to be Bhutanese 15 25 project workforce to be Bhutanese 15 project workforce to be Bhutanese 2 bonus points for contractors having Bhutanese people in at least 20 of permanent positions 8 6 4 2 0
30
Organisational contd.

• 3 Strength of special skill knowledge base
• - This parameter is to encourage contractors to
  employ environment friendly and new and
  innovative technologies etc. in construction
• The scoring on this parameter are as follows

Parameter Level of achievement Score
Strength of special skill knowledge base Use of metal scaffolding instead of bamboo Use of non-polluting construction equipment Use of other technologies or equipments so far not used in the sector 5 4 3
31

• 4 Commitment for internships to VTI graduates
• - This parameter is designed to provide
  incentives to contractors to facilitate the
  betterment of vocational training for
  construction in Bhutan
• The scoring on this parameter are as follows

Parameter Level of achievement Score
Commitment for internships to VTI graduates Internship opportunities for VTI graduates equivalent to 10 of project workforce Internship opportunities for VTI graduates equivalent to 5-10 of project workforce 5 3

• This sums up the scoring of 25 points under the
  Organizational Strength category in the
  technical score.

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Award of Work-

• Contractors who obtain a score of 60 points or
  more on technical will move to the second stage.
• In the second stage, the technical score from the
  previous stage will be combined with the
  financial bid to obtain the overall
  techno-financial score as given below

Lowest quoted bid
among qualifying bids 60
--------------------------------
Financial bid quoted by x
40 of Technical score for x

• Work shall be awarded to the contractor
  obtaining the highest overall techno-financial
  score.

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• 2. New System For Contractor Classification

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Simplifications to the existing classification
system
Class Requirements
PRESENT CLASSIFICATION
PROPOSED CLASSIFICATION
Name A B
No. of contractors 58 35
Limit on project sizes gt19 mn 9-19 mn
Max. no. of projects 5 4

• LARGE contractors
• No restriction on number of projects?
• Eligible for projects gt Nu 15 million
• To be awarded projects based on the new point
  based system proposed

• Same as class B equipment of class A
• Should get incorporated within 1 year

Nu 15 million
Name C
No. of contractors 285
Limit on project sizes 2-9 mn
Max. no. of projects 3

• MEDIUM contractors
• No restriction on number of projects?
• Nu 15 mn Project size gt Nu 4 mn
• To be awarded projects based on the new point
  based system proposed

• Same as those for class C

Nu 4 million

• One site supervisor
• Incentive to those bidders who employ VTI site
  supervisor

Name D
No. of contractors 2522
Limit on project sizes lt 2 mn
Max. no. of projects 1

• SMALL contractors
• Maximum 2 project allowed at a time?
• Total works (all together) Nu 4 mn
• To be awarded projects based on the lowest bid
  basis

• No requirements on track-record for being in any
  class registration purpose
• Possible for new, promising contractor to enter
  higher class
• Adequate consideration for the large number of
  small contractors

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Class Largeallowable Range - gt 15 mnmax No of
Project - No limit /5 Nos.
Proposed System for Contractor Classification
Class Mediumallowable Range - 4-15 mnmax No
of Project - No Limit/ 4 Nos
Class Smallallowable Range - lt 4mnmax No of
Project - 2 Nos provided the total amount is
lt4mn
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3. Schedule of Implementation
37

• 4. e-tool for evaluation

38
Bid Invitation Stage
CDB WEB E-Software
CDB Database
Up-load Tender

• Enter Requirements
• Equipments
• Manpower
• Special Strength

Information gets Stored
Work ID Generated

• Enter
• Name of the work
• Estimate Amount
• Project Duration

39
Evaluation Stage

• Enter Work ID
• Receives Information from Database
• Name of the work
• Estimate Amount
• Project Duration
• Set Criteria (manpower, equipment etc.)

CDB WEB E-Software (Enter ID)/ CDB No.
CDB Database

• Enter CDB No.
• Receives Information from Database for contractor
• Similar Experience
• Annual Turnover
• Past Performance
• Nos. of work in hand value of works that
  overlaps with the current project

Enter other parameters eqip, m/p etc.
Gets Storied in Database
Repeat for each bidder evaluation complete
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Work Completion stage
CDB Database
CDB WEB E-Software

• The past performance score of the bidders gets
  updated which will be used in the next bidding
  process
• Work awarded gets updated as completed

• Enter
• Date of completion
• Final Amount
• Performance Score
• Timely Completion Score
• Quality Score

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• Tashi Delek