SAACE Membership survey June 1998

1
Welcome to CESA Presentation Best Practice
Guideline - Procurement of Consulting Engineering
Services

2

• Introduction
• Background
• The seminar is a culmination of the CE
  Procurement Indaba conducted under the banner of
  CESA during Feb 2008.
• A task team was established to draft a
  simplified step-by-step Best Practice Guideline
  Manual for Procurement Consulting Engineering
  Services.
• To be rolled-out to all the twelve regions of
  CESA.
• George - marks the 11th roll-out, where the
  manual is being launched.
• The manual was drawn up in collaboration with
  the CIDB, (many thanks to CEO Programme
  Manager Procurement and Delivery).

3

• Introduction (contd)
• Objectives
• To inform and capacitate clients and consulting
  engineers (trusted/ independent advisor / agent
  of client) with best practice in procurement
• Enable CEs to appropriately respond to calls for
  consulting engineering services and to deliver
  these services in a true valueadded context
• To assist both Client and CE to better understand
  and implement the requirements of procurement
  contracts ito CIDB Treasury legislation
• To provide CEs and clients a platform to make
  suggestions to the best practice procurement
  guideline manual (living document), which will be
  updated regularly to reflect the challenges faced
  by our industry.
• Manual is available on http//www.cesa.co.za/ 
  at no charge.
• Comments to wallym_at_cesa.co.za

4

• Introduction (contd)
• Outline of the CESA Guide/Briefing

Chapter 1.   Project Life-cycle background of typical project life cycle
Chapter 2.   Consulting Services - typical CES provided by CEs
Chapter 3.   Procurement of Consulting Services - legislation and objectives
Chapter 4.   Scope - expanded description of elements of scope
Chapter 5.   Tender Documentation for CES - preparing tenders for CES
Chapter 6.   Value Added Services value of additional CES
Chapter 7.   Evaluation of tenders - Guidelines on evaluation of CES tenders
Chapter 8. Performance monitoring Suggested framework for CPE.
5

• The technical briefings are geared towards
  creating a conducive sustainable procurement
  environment  to enhanced infrastructure delivery.
• Ensure that the right firm(s) are appointed for
  the right job
• Appointment at a reasonable level of
  compensation
• ensure continued existence and development of
  firm(s) and industry
• serve the best interests of public
• Hence the theme of our Technical Briefing today
  is, Walking together towards a Sustainable
  Procurement Environment.

Introduction Re-cap
6
Right firm for the right job
Example right firm for the right job Three
relatively easy questions for a House Bridge
Consulting Engineer Question 1   How much
does a house weigh? Question 2 How much
weight can a rural two-lane bridge Hold???
7
Qualified firm for the right job
otherwise house becomes a bridge
8
Competent firm for the right job
a bridge that cannot be used
9
Appropriate Consultant for the right job
a house that cannot be used
10
Right firm for the right job
And Question 3 Would this be covered by
PI, Home insurance, car insurance, or, does
it come under the roadside accident fund
??? ----------------------------------------------
--------------------------------------------------
----------------
We can all relate to this, e.g. 40 000 defective RDP houses to be flattened and rebuilt at a cost gt R1-billion.
                             
delivers questions rather than intended
product
11
Right firm for the right job
We can relate to this R4 million bridge swallows
a taxi!
                             
delivers questions rather than intended
product
12
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13

• SESSION 1
• 1.1 Consulting Engineers South Africa
• 1.2 Consulting Engineering Industry
• 1.3 The Foothold Definitions
• 1.4 The Project Life-Cycle
• 1.5 Overview of Consulting Services

14

• 1.1 Consulting Engineers South Africa

15

• CONSULTING ENGINEERS SOUTH AFRICA (CESA)
• History
• SA Association of Consulting Engineers (SAACE)
  established in 1952
• Voluntary association of independent CEs in
  private practice
• August 2008 - SAACE transformed to CESA
• Employing more than 22 000 people
• Members interests
• CESA seeks to promote interests of Members and
  Clients by
• Regular liaison meetings
• Publication of documents relating to profession
  
• Compiling Advisory Notes for Members and
  Clients
• Guidelines to Members on professional practice
  matters

16

• CONSULTING ENGINEERS SOUTH AFRICA (continued)
• Professionalism and Integrity of Members
• 1. In general
• ECSA registers professional individual
  engineers, technologists etc
• CESA registersprofessional CE Firms through
  membership
• 2. Credibility of applicants
• In business gt 12 months
• Nominated by an existing CESA member
• CIPRO registered - bona fides, directors
  governance structures
• Not fly-by night
• 3. Ongoing requirements
• Subject to CESA Code of Conduct gives Clients
  recourse
• Disciplinary Committee - non-compliance 
• Ownership/principals gt 50 Pr Engrs/Technos
  engineering focus
• No contracting work (construction) - no
  conflict of interest

17

• 1.2 Consulting Engineering Industry
• Consulting Engineering Industry Overview
• Construction Industry - Enabler Regulator

18

Consulting Engineering Industry Overview
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• THE CONSULTING ENGINEERING INDUSTRY
• The birth
• The word engineer first appeared in the 15th
  Century, in
• reference to a particular group of
  professionals in the military
• Associations formed to exchange experiences and
  to improve
• the status of engineers
• It was then legalised to safeguard the health
  and welfare of the
• general public
• The licensing procedures were intended to stop
  people from
• selling engineering services when they were not
  trained or
• qualified in the practice of engineering.

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• THE CONSULTING ENGINEERING INDUSTRY (continued)
• The present
• Take-over of engineering services by the
  un-qualified
• (e.g. Tenderpreneurs, tender syndicate, etc)
• Due to tendering process
• Which disregard engineering ability/technical
  competence of CE

21

• THE CONSULTING ENGINEERING INDUSTRY (continued)
• The future
• Competitive tendering is here to stay
• it must not be used to drive professional fees
  down
• The struggle continues professionalism,
  reservation of
• engineering work and use of appropriate
  procurement methods
• FIDIC Report Engineering Our Future

Change is upon us there is no future in the
status quo industry must adapt. --- Firms must
grow in capability and scope of services to meet
the client demands. We must move up the food
chain to a new set of value-added services for
our clients.
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THE WORLD WITHOUT ENGINEERS
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THE WORLD WITHOUT ENGINEERS
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The Construction Industry Enabler and Regulator
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• The Construction Industry Development Board
  (CIDB)
• Established by and gets its mandate from the CIDB
  Act (38 of 2000)
• Aims
• Promote sustainable growth of the construction
  industry and sustainable participation of the
  emerging sector in the industry
• Promote improved performance and best practice
  of public and private sector clients, contractors
  and other participants
• Promote procurement and delivery management,
  the uniform application of policy throughout all
  spheres of government, uniform and ethical
  standards all guided by a Code of Conduct
• Establish registers as a tool to systematically
  regulate and monitor the performance of the
  industry and its stakeholders
• Register of Contractors(RoC)
• Register of Projects (RoP)
• Register of Professional Service Providers
  (RoPSP)

26

• CIDB (continued)
• Register of Professional Service Providers
  (RoPSP)

27

• CIDB (continued)
• CIDB documentation/prescripts (www.cidb.org.za)
• Standard of Uniformity (SFU)
• Code of Conduct
• Practice notes
• Legislation
• Code of Conduct establishes certain standards of
  behaviour
• Behave equitably, honestly and transparently.
• Discharge duties and obligations timeously and
  with integrity.
• Comply with all applicable legislation and
  associated regulations
• Satisfy all requirements established in
  procurement documents
• Avoid conflict of interest

28

• CIB (continued)
• Monitoring role - CIDB can
• Conduct investigations
• Sanction offenders
• Suspend offenders from the CIDB RoC
• Issue fines to Employers up to R100 000
• Intergovernmental Relations Framework Act
  liaises with
• Treasury
• Public Protector
• Auditor General
• CESA/ CIDB Collaboration
• CESA consulted extensively with CIDB in compiling
  the Manual/Guide for Procurement of CES because
  CIDB
• Regulates public sector procurement (large CESA
  Client base)
• Complies with applicable legislation/
  regulations
• Authority to enforce compliance
• Good working relationship

29

• 1.3 The Foothold Definitions

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• THE FOOTHOLD DEFINITIONS
• Conformity of Terminology
• Terminology in Manual conforms with CIDB
  documentation and
• ECSA Guideline Scope of Services and Tariff of
  Fees
• Mainly aligned with CIDBs Revised SFU in
  Construction Procurement
• Noteworthy Examples
• Bid Tender
• Client he/she who engages the Consulting
  Engineer (CE)
• Construction Monitoring (administration of
  Construction Contract for
• verification only) new term
• Contract Agreement between Client and CE

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• Noteworthy Examples (contd)
• Engineering and Construction Works contract
  includes construction,
• repair, maintenance, alteration, demolition
  etc of building and
• engineering infrastructures
• Normal Services Typical services as in ECSA
  guideline tariffs
• Quality Totality of features of a service
  that bears on its ability to
• satisfy stated or implied needs
• Scope of Services Services undertaken by the
  CE in relation to the
• Scope of Work
• Scope of Work Portion of the Works for which
  the CE is engaged
• Tender Price Price submitted including all
  payment conditions, costs
• and disbursements

32

• 1.4 The Project Life Cycle

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• THE PROJECT LIFE CYCLE (contd)
• Steps 1 to 3 Identification, Definition,
  Feasibility
• Identifying the potential project often by
  Owner, Specialist assistance
• And Defining the best project to meet the need
• Reject unsuitable solutions, shortlist suitable
  alternatives
• Select the best project, based on technical and
  financial feasibility
• Steps 4, 5, 6 Concept Viability, Design,
  Procure
• Developing the project through all concept and
  viability stages, confirm viability
• Detail design of the project to procure
  construction
• Design can be a maintenance/operation assignment
• Procuring a contractor to construct proper
  tender/contract documents, proper evaluation of
  tenders

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• THE PROJECT LIFE CYCLE (contd)
• Steps 7, 8 Construct, Operate and Maintain
• Construction - from site handover to when Owner
  takes possession of the constructed project
• Final handover after Defects Liability Period
  expired and defects rectified
• Operation and Maintenance
• Usually by Owner - According to manuals and own
  procedures
• O M - May be contracted out
• Note CE may be appointed for any one, or all,
  of the steps 1 to 8

36

• 1.5 Overview of Consulting engineering
• services

37
CONSULTING ENGINEERING SERVICES

• Consulting engineering services include many
  Engineering Disciplines inter alia
• Agricultural
• Civil
• Construction Management
• Construction Project Management
• Electrical
• Geotechnical
• Mechanical
• Structural
• Transportation
• Specialist Engineering Services

38

• CONSULTING ENGINEERING SERVICES (contd)
• Deliver Value
• 1. Early project stages
• Services deliver most value
• Functionality quality of the proposed service
  more important than Cost (Steps 1 to 3)
• 2. After project is well defined
• Services are easier to determine
• Role of high level expertise reduces as project
  develops
• Efficient more routine tasks more important
• Correct/comprehensive contract documentation is
  vital

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REQUIRED EXPERTISE OVER THE PROJECT CYCLE
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41

• SESSION 2
• 2.1 How to Procure Engineering Services

42
HOW TO PROCURE CONSULTING SERVICES

• Procurement Tendering

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HOW TO PROCURE CONSULTING SERVICES (Contd)

• Important that Government recognises
• CEs are an important pool of expertise and
  skilled resources
• High standard of engineering and Infrastructure
  development vital for growth
• National Treasury policy statements
• It is necessary that certain minimum standards
  of quality and efficiency be achieved when
  appointing consultants
• Need to maintain a basic policy of competitive
  selection
• Legal Environment for consulting engineering
  services
• Constitution of South Africa
• System is to be Fair, Equitable, Transparent,
  Competitive, Cost effective
• Adopted by ISO in ISO 10845 series for
  construction procurement

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HOW TO PROCURE CONSULTING SERVICES (Contd)

• TABLE PILLARS OF PROCUREMENT

45
HOW TO PROCURE CONSULTING SERVICES (Contd)

• Procurement - Need to maintain a reasonable
  Balance between Competition Compensation

46
HOW TO PROCURE CONSULTING SERVICES (Contd)

• Primary Legislation Regulating Procurement

Constitution of the Republic of South Africa (Act No. 108 of 1996) - Section 217 states that government procurement systems must be Fair, Equitable, Transparent, Competitive and Cost Effective Constitution of the Republic of South Africa (Act No. 108 of 1996) - Section 217 states that government procurement systems must be Fair, Equitable, Transparent, Competitive and Cost Effective Constitution of the Republic of South Africa (Act No. 108 of 1996) - Section 217 states that government procurement systems must be Fair, Equitable, Transparent, Competitive and Cost Effective Constitution of the Republic of South Africa (Act No. 108 of 1996) - Section 217 states that government procurement systems must be Fair, Equitable, Transparent, Competitive and Cost Effective Constitution of the Republic of South Africa (Act No. 108 of 1996) - Section 217 states that government procurement systems must be Fair, Equitable, Transparent, Competitive and Cost Effective
Fair, Transparent, Competitive, Cost Effective Fair, Transparent, Competitive, Cost Effective Fair, Transparent, Competitive, Cost Effective Equitable Equitable
Public Finance Management Act (Act No. 1 of 1999) Municipal Finance Management Act (Act No. 56 of 2003) Construction Industry Development Board Act (Act No. 38 of 2000) Preferential Procurement Policy Framework Act (Act No. 5 of 2000) Broad Based Black Economic Empowerment Act (Act No. 53 of 2004)
PFMA MFMA CIDB PPPFA BBBEE
Public Sector Clients Public Sector Clients Public and Private Sector Clients Public Sector Clients Public and Private Sector Clients
Point to Note Compliance with CIDBs Standard
for Uniformity in Construction
Procurement (SFU) compulsory for organs of
state
Refer to Table 3.2 (pg 11-12) in Manual - 10 Acts)
47
HOW TO PROCURE CONSULTING SERVICES (Contd)

• Objectives of Procurement
• Procurement is engaging skilled professionals
  not purchase of a
• commodity
• Purpose of competitiveness is to ensure long
  term value for money not
• short term low cost design
• Transparency must encourage professionals to
  develop maintain
• their skills and expertise
• CIDB Guidelines can provide the necessary
  results
• Methods of Procurement
• 1. Financial Offer
• 2. Financial Offer plus
  Preference
• 3. Financial Offer plus Quality
  (Functionality)
• 4. Financial Offer plus Quality
  plus Preference
• Prescribed by CIDB Standard for Uniformity
  (SFU)
• Services must provide cost-effective
  value-added performance

48
 
HOW TO PROCURE CONSULTING SERVICES (Contd)

• CESA Recommends - Method 4
• Quality and Cost-based Selection (QCBS)
• Accords with CIDBs SFU (Standard for Uniformity)
• Based on CIDBs Best Practice Guidelines for
  Competitive Selection
• CIDB states - Method 4 applies in all but small
  minority of cases
• Method 4 is MANDATORY for public bodies
• However,
• the KwaZulu Natal High Court, Pietermaritzburg,
  case no 10878/2009 relegates functionality/
  Quality to a pre-qualification criteria(using a
  minimum threshold). Thus rendering Method 4 to
  be invalid.

49
HOW TO PROCURE CONSULTING SERVICES (Contd)
Competitive Selection Procedures
50
HOW TO PROCURE CONSULTING SERVICES (Contd)

• Points to Note
• 1. Quoting from CIDB Best Practice Guideline A7 -
  Procurement of professional services should be
  undertaken on
• demonstrated competence qualifications (for
  type of services required)
• capacity capability (to provide the quality
  of the service)
• fair reasonable Financial Offers (not only
  least cost)
• 2. Constitution requires procurement to be cost
  effective have best value outcomes in terms of
• quality,
• downstream life cycle costs,
• timing
• Financial Offer
• least resources to effectively manage control
  the procurement process.
• 3. Selection on basis of quality does not
  necessarily mean the best quality available but
  quality appropriate for the assignment.

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HOW TO PROCURE CONSULTING SERVICES (Contd)

• Points to Note (contd)
• 4. Calling for/ preparation of Tenders
• Scope of Work and Services (SOWS)
• fully describe SOWS - comparable tenders are
  received
• fully describe SOWS - reduce time effort for
  tender preparation
• Total Input Cost
• can be considerable - small projects can be gt
  potential fee jeopardise
• finances of the service provider
• overall economy of the project.
• Guideline
• CEs potential fee should be 20 times gt cost of
  preparing tender
• alternatively, cost to prepare tender should
  not gt 5 of potential CE fee
• potential CE fee has to cover - Staff costs,
  overheads, expenses and profit
• hence tenders should not be solicited for small
  projects,

52
HOW TO PROCURE CONSULTING SERVICES (Contd)

• 4. Calling for/ preparation of Tenders (contd)
• The following procedure should preferably adopted
  by client or CE (as agent of client)
• Consider grouping small projects together
• Request proposals for term contracts - where
  consulting engineer can support the client on a
  partnership basis for all small to medium
  projects over a longer period
• Listing manuals and procedures as requirements
  so lengthy technical proposals are not required
  (only proposed staffing track record)

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54

• SESSION 3
• 3.1 Scope of Services
• 3.2 Tender Documentation for Consulting
• Services

55

• 3.1 Scope of Services

56
SCOPE OF SERVICES

• Definition
• Scope of Services Services which a CE must
  provide in relation to scope of Work
• MUST be clearly defined to ensure proper pricing
  and clear and unambiguous understanding by
  tenderer
• In many instances this is lacking uncertainty
  and unrealistic pricing result
• Recommended listing DELIVERABLES to be produced
  by the CE, i.e. products of his work (studies,
  reports, designs, drawings, documents etc)

57
SCOPE OF SERVICES (contd)

• Planning Studies, Investigations and Assessments
• (i) Consultation with the client or clients
  authorized representative.
• (ii) Inspection of the site of the project.
• (iii) Preliminary investigation, route location,
  planning and a level of design
• appropriate to allow decisions on
  feasibility.
• (iv) Consultation with authorities having rights
  or powers of sanction as well
• as consultation with the public and
  stakeholder groups.
• (v) Advice to the client as to regulatory and
  statutory requirements, including
• environmental management and the need for
  surveys, analyses, tests and
• site or other investigations, as well as
  approvals, where such are required
• for the completion of the report, and
  arranging for these to be carried out
• at the clients expense.
• (vi) Searching for, obtaining, investigating and
  collating available data,
• drawings and plans relating to the works.
• (vii) Investigating financial and economic
  implications relating to the
• proposals or feasibility studies.

58
SCOPE OF SERVICES (contd)

• Scope of Services Stages for a Typical Project

59
SCOPE OF SERVICES (contd)

• Detailed examples (Appendix A)
• Refer to Appendix A, Numerous Normal Services
  tasks under Stages 1 to 6
• Includes Activities/Deliverables
• Recommended as a reference or checklist per stage
• Principal Consultant
• Refer to Appendix A, Additional Services to
  Normal Services
• Includes Activities/Deliverables
• Recommended as a reference or checklist per stage
  

60
SCOPE OF SERVICES (contd)

• Key Factors common to every scope, in Developing
  the Scope of Services
• Obligations of the Parties
• Health and Safety
• Sustainability
• Information Available
• Scope MUST reflect Clients intentions to enable
  tenderers to identify tasks and estimate times to
  be spent by personnel, and hence to quantify and
  price the tender
• Failure to prepare Scope of Services in
  sufficient detail
• Tenderer has to make assumptions
• Misinterpret Clients requirements
• Price unnecessarily for Risks
• Resultant prices too low or too high
• Fails the interests of Client, Consulting
  Engineer and Project

61
SCOPE OF SERVICES (contd)
Key Factors in Developing Scope Services - TABLE
62
THE SCOPE OF WORK

• Definition
• Not the same as Scope of Services of the
  Consulting Engineer
• Scope of Work portion of the Works for which
  the Consulting Engineer is engaged or the
  document which specifies and describes the
  supplies, services engineering and construction
  works to be provided (by the Contractor)
  including special requirements, constraints etc.
• Example
• A client wishing to construct a Casino complex
  consisting of three distinct components being the
  Building, a Parking Area and an access road, may
  appoint a consulting engineer to undertake Stages
  3-6 of the normal engineering services for the
  Parking Area. In this case the scope of services
  can be defined as set out in Appendix A while the
  scope of work may only involve the Parking Area.
  Some thought will have to go into preparing the
  scope of work as it interfaces with other works
  such as stormwater runoff from the building and
  the interface with the access road and gate
  house.

63
THE SCOPE OF WORK (contd)

• Points to Note
• The scope of work for each service provider
  should be carefully
• determined to ensure that no overlaps and
  duplication in terms of scope of work exist.
• In some cases the consulting engineer will be
  required to
• appoint specialist sub-consultants in which case
  the consulting engineer will ensure that no
  duplication in terms of scope occurs.

64
THE SCOPE OF WORK (contd)

• Examples of Scope of Work

65
THE SCOPE OF WORK (contd)

• Examples of Scope of Work (contd)

66

• 3.2 Tender Documentation for Consulting
• Services

67
TENDER DOCUMENTATION

• Purpose
• In line with principles and documentation of the
  CIDB
• To achieve uniformity, in interests of a more
  efficient industry
• Model for Uniformity
• CIDBs Construction Procurement Toolbox
• Process of Offer and Acceptance
• Tenderers provide inputs to complete their
  submissions (offers)
• These inputs to the contract to be concluded
  after acceptance of offer
• Separation of component documents
• Complete enquiry documentation critical to
  projects success
• CIDB tables to assist compiling documentation
  See Appendix B

68
TENDER DOCUMENTATION contd

• Documents relating to the Tender

69
TENDER DOCUMENTATION contd

• Documents relating to the Form of Agreement

70

• TENDER DOCUMENTATION (contd)
• Standard Coloured Pages/Dividers
• T1.1 Tender Notice and Invitation to
  Tender White
• T1.2 Tender Data Pink
• T2.1 List of Returnable Documents Yellow
• T2.2 Returnable Schedules Yellow
• C1.1 Form of Offer and Acceptance Yellow
• C1.2 Contract Data Yellow
• C1.3 Form of Guarantee/Securities White
• C1.4 Adjudicators contract White

71

• TENDER DOCUMENTATION (contd)
• References
• Revised Standard for Uniformity in Construction
  Procurement (SFU)
• CIDB Construction Procurement Best Practice
  Guideline C3 Adjudication
• CIDB Professional Services Contract
• PROCSA Form of Agreement
• FIDIC Client/ Consultant Model Services Agreement
• Standard Professional Services Contract by NEC

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73

• SESSION 4
• 4.1 Value-added Services

74

• VALUE ADDED SERVICES
• Value, Financial Offer, Quality
• Acceptance of lowest price denies opportunity to
  assess value
• Consulting Engineers are accustomed to tendering
  competitively
• Professional services, unlike products, are not
  well defined
• Requires careful descriptions in Scope of
  Services, Scope of Work
• Still a tendency to rely on price, ignore quality
  (Treasury Functionality)
• Remuneration should reward desirable performance
• What performance is achieved from the lowest
  price? (examples..)
• Life-cycle costs Eng. 2, Constr. 18, OM 80
  (2 dictates 98 !)
• Financial offers should reflect effort to
  optimise costs of project
•  Relationship between Financial Offer Quality
  (Effort) is not linear

75
VALUE ADDED SERVICES
76
VALUE ADDED SERVICES contd

• Life-Cycle Cost and impact on Project Success
• The procurement of consulting engineering
  services has the greatest impact on the
  life-cycle cost of the project, yet it is the
  least costly component
• Life-Cycle Cost
• Impact on Project Success
• Engineering
  Construction Operations
  Maintenance

10
50
40
60
20
20
77
VALUE ADDED SERVICES contd

• The Concept of Value
• Value should
• secure for the client value-for-money services
• achieve minimum life-cycle costs (long term value
  for money)
• Ensure the project will fulfill its intended
  purpose
• The tender process must allow the tenderer to
  show that
• value-for-money services are offered
• minimum life-cycle costs are critical to the
  projects success
• The Financial Offer will demonstrate the value of
  inputs offered
• Take Clients quality evaluation criteria into
  account
• Quantifying Value
• Needs to be a factor in considering tenders
• Include in determination of tender score
• Assess Preference, Quality, and Financial Offer
  (Price) individually
• Consulting Engineer to tender accordingly

78
VALUE ADDED SERVICES contd

• Guidelines for Pricing of Tenders the Golden
  Rules
• Project success relies on acceptance by client
  of the Consulting Engineers financial offer and
  conditions
• Consulting Engineer needs to have his interests
  protected
• Client needs to be comfortable with contract
  financial arrangements
• Golden Rules apply to preparation of the
  financial offer
• Golden Rule No. 1 Know the project requirements
• No two projects the same offer
• Must be a clear and unambiguous Scope clarify
  if necessary
• Determine methodology, inc. innovation,
  value-adding procedures
• Take Clients quality evaluation criteria into
  account

79

• ILLUSTRATION OF TOTAL COSTS
• Golden Rule No.2 Know your costs involved

80

• VALUE ADDED SERVICES (contd)
• Golden Rule No. 3 Know the Clients situation
• Able to produce and adhere to a clear and
  sufficient scope
• Ability to fund or timeously secure funding for
  the project
• Adequate resources to administer the contract
• History of fees paid on time
• Sufficient technical capability for reviews and
  approvals
• Need for development (training, mentoring, etc)
• Experience in using consulting engineering
  services
• Able to responsibly evaluate award
  consulting/construction contracts
• Finalising the Tender Price
• Feedback from Golden Rule No 3 is to be
  considered where aspects within Clients ambit
  must be examined, for influence on level of the
  financial offer

81

• VALUE ADDED SERVICES (contd)
• Adjustments from Golden Rule No 3
• Profit mark up
• Pricing for contingencies or risk
• Pricing work not called for but necessary (if not
  done by Client)
• Pricing for unrealistically tight or slack
  deadlines
• Pricing for work assumed but not required
• Adding a margin in lieu of qualifying the tender
• Provision for productivity delays to be expected
  in executing the work for the client
• Price Benchmarks
• Important to test pricing against a norm and
  indicate adequacy of price
• Appropriate Benchmark ECSA Guideline Tariff of
  Fees
• Percentage of Project Cost (sliding scale) x
  Factor for Stage and Type
• Also ECSA recommended hourly rates arrive at
  Benchmark Fee
• Adjust up or down for project concerned, with a
  Benchmark Multiplier, to get an Adjusted
  Benchmark Fee considering specific circumstances

82
VALUE ADDED SERVICES contd

• Benchmark Multipliers
• Specific circumstances
• Is scope complete and clear?
• Is Client well versed in procuring consulting
  services?
• Does Client have adequate resources for competent
  tender evaluation?
• Does Consulting Engineer have a successful
  project record with the Client?

Multiplier Circumstances
0.6 1.0 Favourable
1.0 Normal or Reasonable
1.0 1.6 Negative
83
VALUE ADDED SERVICES contd

• Specific circumstances (contd)
• Is project location advantageous for the
  Consulting Engineer?
• Will the risks perceived be easy or difficult to
  handle?
• Is level of complexity of the project normal or
  will it be very complex?
• Will the risks perceived be easy or difficult to
  handle?
• Is level of complexity of the project normal or
  will it be very complex?
• Does the Consulting Engineer have a low order
  book and need the work?
• Will start date and duration require price
  adjustment, if no escalation?

84
VALUE ADDED SERVICES contd
Specific circumstances Benchmark Multipliers Benchmark Multipliers Benchmark Multipliers
Favourable (0.6 1.0)/ Reasonable ( 1.0) / Negative (1.0 1.6) F R N
Is scope complete and clear? 1.0
Informed client 0.9
Previous appointments 1.2
Savings Previous experience 0.6
Project location 1.0
Staff cost, suited competent 0.8
risks perceived be easy or difficult to handle? 1.3
level of complexity of the project normal or will it be very complex? 1.0
Does the Consulting Engineer have a low order book and need the work? 0.7
AVERAGE ( this example) 0.94 0.94 0.94
85
VALUE ADDED SERVICES conclusion(1)

• Adjusted Benchmark (Yardstick) Fee
• Average of the sum of all the particular fees
  used
• Still based of ECSA recommended fee scales
• THERE IS NO SUCH THING AS A DISCOUNTED FEE

86
VALUE ADDED SERVICES conclusion(2)
87
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88

• SESSION 5
• 5.1 Evaluation of Tenders

89

• EVALUATION OF TENDERS 
• References
• CIDB Best Practice Guideline No. A4 Evaluating
  Quality in Tender Submissions (guidelines)
• CIDB Inform Practice Note No. 9 Evaluation of
  Quality in tender Submissions (overview)
• Evaluation of Tenders
• Applies where Quality consideration is an
  essential part of the evaluation process which
  should apply to the vast majority of tenders for
  Consulting Engineering services
• Procurement Method 4 generally appropriate for
  Consulting Engineering services (Quality and
  Cost-Based Selection)

90

• EVALUATION OF TENDERS 
• Method 4 Financial Offer plus Quality plus
  Preference
• Score Quality, rejecting all offers that fail to
  score minimum points for Quality, stated in
  Tender Data
• Score tender evaluation points for Financial
  Offer
• Confirm tenders eligible for preferences claimed
  and if so score tender evaluation points for
  preferencing
• Calculate total tender points
• Rank tenders from highest number of tender
  evaluation points to lowest
• Recommend Tender with highest tender evaluation
  points for award, unless compelling reasons not
  to do so

91

• EVALUATION OF TENDERS (contd)
• Evaluation criteria
• Essential that tender documents state evaluation
  criteria and scoring systems to be used in tender
  adjudication
• If a criterion is stated, clarity required how
  the criterion will be adjudicated and weighted,
  relative to other criteria
• CIDB Standard for Uniformity Sect. 4.4.3 calls
  for specific Tender Data
• Method to be used in evaluation
• Weighting between Financial Offer (W1), Quality
  (W2), and Preference (W3)
• Quantified descriptions of preferences incl. how
  granted and scored
• (Refer also to Construction Scorecard
  (Construction Sector Charter, Govt Gazette Board
  Notice 862 of 2009)
• Details of Quality Criteria and Sub-criteria and
  manner of scoring

92

• EVALUATION OF TENDERS (contd)
• Recommended Approach, to be Fair, Equitable,
  Transparent, Cost-effective
• Quality of outputs/deliverables to satisfy client
  requirements
• Service with reasonable skill and care of
  professionals
• Advice independent of any affiliation causing
  conflict of interest
• Repeat/straight forward projects
  Cost-effective design important
• Feasibilities, Complex projects experience,
  expertise important
• Weighting, Quality / Financial Offer is less for
  repeat type projects
• All tenders to have a minimum number of Quality
  points, to proceed
• Ratio Quality / Financial Offer plus Preferences
  depends on project value
• Preferential Procurement Framework Act
• Assignments under R500k value, Ratio 8020
  mandatory
• For higher value assignments, Ratio 9010
  mandatory
• (Threshold as in Pref. Procurement Policy
  Framework Act Regs)
• Refer Tables based on CIDB references with
  certain CESA adjustments, pertaining to Scoring
  against Ratings

93

• EVALUATION OF TENDERS (contd)
• Recommended Detail Procedure
•  
• Score Quality with 3 Quality reviewers, adjust if
  major scoring differences
• Reject tenders not attaining minimum Quality
  score, inform them in writing
• Inform tenderers of time date for opening
  Financial Offers and announce these at the
  meeting
• Calculate Final Evaluation Scores according to
  CIDB Standards for Uniformity
• Apply Definitions and formulae (see next slide)
• Mutually exclusive criteria recommended, to limit
  duplication
• Black persons are addressed in allocating
  Preferences
• Reviewers need to be experienced. If not
  available in the Client, then specialists or
  Consulting Engineers (unconnected with the
  tender) should be retained by the Client to
  assist with evaluations
• See recommended Tables and Examples

94

• EVALUATION OF TENDERS (contd)
• Definitions and formulae used
• Nev Total evaluated score
• Nm Score for Price
• Nq Score for Quality
• Np Score for Preferencing
• W1 Weight assigned to price
• W2 Weight assigned to quality
• Nm W1 x Pm/P where Pm is lowest qualified
  tender price received and P is tender price under
  consideration (2 decimal places)
• Nq W2 x S/Ms - where Ms is maximum possible
  quality score and where S is quality score for
  tender under consideration
• Nev Nm Nq Np - Tenders ranked from highest
  to lowest Nev with
• tender awarded to tenderer with highest Nev

95

• RECOMMENDED TABLES FOR EVALUATION OF TENDERS
• Table 7-1 Nature of Projects (5 types are
  defined)
• Feasibility Studies and Investigations (require
  specialised skills deliverable a report)
• Innovative Projects (require innovation,
  creativity, expertise and skills specialist
  advice needed is often identified in the project)
• Complex Projects (require high level of technical
  skills and resources may require skills other
  than normal engineering)
• Straightforward Projects (comprise straight
  forward tasks with standard technologies may
  need strong capacity and resources if project is
  large)
• Repeat Projects (Straightforward tasks with
  routine/periodic activities, eg maintenance to
  maintain Clients assets
• The Descriptions of each type show that the
  tenderers experience and
• capability are key, particularly in types 1 to 4

96

• RECOMMENDED TABLES FOR EVALUATION OF TENDERS
  (contd)
• Table 7-2 Quality Criteria and Points Scale for
  small projects
• Quality plus Financial Offer/Preference ratio
  8020 (i.e.. 20 points for BBBEE)
• Maximum points shown for 5 Project Types from
  Table 7-1 for BBBEE, Quality and Financial Offer,
  Financial Offer and Quality
• Higher points used for Quality in more complex
  projects and lower points for Financial Offer
• 9 Quality Criteria listed, from Adequacy of work
  plan to Demonstrable managerial ability
• Quality maximum points from (2) allocated to 9
  Quality criteria allocation to 5 of the 9
  Quality Criteria should suffice

97

• RECOMMENDED TABLES FOR EVALUATION OF TENDERS
  (contd)
• Table 7-3 Quality Criteria and Points Scale for
  large projects
• Quality plus Financial Offer/Preference ratio
  9010 (i.e.. 10 points for BBBEE)
• Maximum points shown for 5 Project Types from
  Table 7-1 for BBBEE, Quality and Financial Offer,
  Financial Offer and Quality
• Higher points used for Quality in more complex
  projects and lower points for Financial Offer
• 9 Quality Criteria listed, from Adequacy of work
  plan to Demonstrable managerial ability
• Quality maximum points from (2) allocated to 9
  Quality criteria allocation to 5 of the 9
  Quality Criteria should suffice
• Operation similar to Table 7-2

98

• RECOMMENDED TABLES FOR EVALUATION OF TENDERS
  (contd)
• Table 7-4 Indicators to be used when scoring
  tenderers on Quality Criteria
• Ratings, very good/good/satisfactory/poor
  (100/70/50/0) with descriptors, listed for 9 x
  Quality Criteria
• Note poor scores zero criteria are
  unacceptable for Consulting Engineering services
  (see descriptors)
• Ratings for 9x Quality Criteria are common to all
  Project types

99

• RECOMMENDED TABLES FOR EVALUATION OF TENDERS
  (contd)
• Table 7-5 refers to Qualification and Competence
  of Key Staff
• To be completed by Client when issuing tenders
• Shows 6 x typical staff posts Project Leader,
  Design Engineer, Materials Engineer, Contracts
  Engineer, Resident Engineer and Assistant
  Resident Engineer
• Shows 5 x Project types (Table 7-1) for each post
• Lists 6 x attributes for each post
  (qualification, experience thereafter ,
  registration, experience thereafter, involvement
  on comparable projects (past 10 years), project
  values (past 6 years)
• Client able to list preferred and minimum
  attributes, Tenderer fills in the Offer column
• Although Titles of Job posts state Engineer,
  Client may choose to use Registered Engineering
  Technologist or Registered Engineering
  Technician, depending on nature of project

100

• RECOMMENDED TABLES FOR EVALUATION OF TENDERS
  (contd)
• Table 7-6 Assessment example
• Shows a worked example for a complex project in
  the 9010 points system range with 5 of 9 x
  Quality Criteria addressed
• Weight assigned to each Quality Criterion
  addressed. Total maximum points for Quality
• Rating indicators from Table 7-4 applied to each
  Quality Criterion by 3 reviewers to give
  Reviewers scores and average scores
• Weights applied to average scores to give points
  for Quality, with total Points for Quality for
  tender under consideration
• Table shows 2 x sets of points for Quality
  results 1st set 2 outliers, 2nd set no
  outliers, after a repeat review by the reviewers

101

• RECOMMENDED TABLES FOR EVALUATION OF TENDERS
• CESA recommended changes to CIDB Tables
• (in using Tables 7-1 to 7-6)
• Table 7-4 Ratings, very good/good/satisfactory/poo
  r CIDB uses 100/90/70/40. CESA recommend
  100/70/50/0 because
• Descriptors for Poor (0) confirm unsatisfactory,
  i.e. unacceptable
• Good/Satisfactory mean nearly the same decrease
  Good to 70 to compare with Very Good (100)
  decrease Satisfactory 70 to 50.
• Actual application of weightings, Quality /
  Financial Offer depends on relative value of the
  two criteria, e.g. Quality scoring 80 to 85 and
  Financial scoring 50 to 100, Financial scoring
  can outweigh Quality scoring

102
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103

• SESSION 6
• 6.1 Performance Monitoring Consulting
• Services

104

• PERFORMANCE MONITORING
• This presentation
• Performance Quality Assurance
• Evaluation of CEs Performance process
• Pillars of PM
• Consultant performance evaluation scorecard
• Points to Note

105

• PERFORMANCE MONITORING
• Introduction
• Performance Evaluation of CEs is crucial in
  upholding advancing the standards of service
  from Consultants
• Benefits of performance evaluation.
• The client will know the level of service being
  delivered or delivered
• The client will get an indication as to whether
  his choice for consultant was correct
• Ensures integrity of the QCBS process
• Assist in the pre-selection and bid evaluation
• raise the standard of consulting engineering
  industry

106

• PERFORMANCE MONITORING
• Introduction
• Other uses (by Client, CIDB, ECSA, NT, CESA, etc)
• Disciplinary action warning
• Suspension of firm(s) registration
• Cancellation of registration
• Black listing the firm
• Black listing the professional

107

• PERFORMANCE MONITORING
• Performance Quality Assurance
• CE have a Quality Management System ISO 9001
  2008 QMS or of similar levels ( a condition of
  CESA membership)
• ISO requires firms to conduct Client Satisfaction
  surveys, analyse to show trends and confirm
  improvement.
• Enable flaws to be detected, thus avoiding more
  costly deviation corrections
• CE have adopted the principles of a Business
  Integrity Management System, ( Part of CESA
  members Code of conduct)

108

• PERFORMANCE MONITORING (contd)
• Evaluation of CEs Performance process
• NT assigns PM to CFO suggest done with Project
  Manager or Town Engineer
• The process must commence from the time of
  appointment and must continue until final
  completion of the project.
• Points to note during the initial briefing of
  the consultant
• The briefing must set a standard for performance
  and discuss the evaluation process, as well as
  describing the method of reporting required.
• Client should provide feedback, so that the
  consultant could improve if necessary

109

• PERFORMANCE MONITORING (contd)
• Pillars of performance monitoring
• Criteria must relevant
• Criteria clearly defined to allow consistent
  application confidential, rigorous and objective
  manner
• Conducted according to the Pillars of procurement
  and CIDBs Code of Conduct

110

• PERFORMANCE MONITORING (contd)
• Consultant performance evaluation scorecard
• CESA is proposing a comprehensive set of
  evaluation criteria for gauging the performance
  of CE.

111

• PERFORMANCE MONITORING EVALUATION SCORECARD

112

• PERFORMANCE MONITORING (contd)
• Points to Note
• Attributes choosing engineering consultants
• Technical competence
• Managerial ability
• Experience on similar projects
• Dedicated personnel available for the projects
  duration
• PROVEN PERFORMANE
• Local and/or local knowledge
• Professional independence integrity
• Conclusion - Turn to page 44

113
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114

• CLOSING REMARKS
• This technical briefing has been presented in the
  interests of a more efficient construction
  industry, enhanced through the use of more
  effective and uniform procurement
• would like to thank
• Consulting Engineers and their Clients for
  attending, and we wish you a safe onward journey

This technical briefing has been presented in the
interests of a more efficient construction
industry, enhanced through the use of more
effective and uniform procurement