Managing Capital Projects Life Cycle Stages: The Project Procurement Stage

One of the most common approaches in constructing engineering and construction projects is the design-bid-construct approach where the project owners will invite qualified contractor to bid on the project’s scope of work as defined in the construction documents. The project owner might also consider fast track the project delivery by dividing the project’s scope of work into bid packages where different contractors could be qualified to bid on one or more than bid package.

Companies Directory

Organizations need to maintain a single directory of all entities that they have either worked with in the past or might consider working with them in the future. Those entities include consultants, project management firms, contractors, suppliers, vendors as well as government entities and local authorities where permits and approvals are needed to be issued. PMWeb company directory provides a single repository for capturing those companies’ details. The captured data includes details on the entity staff and resources as well as their contacts. In addition, it includes details on their insurance documents, registrations, ISO certifications and other time-sensitive documents.

Prequalification

Nevertheless, companies who were qualified to participate on the organization’s projects might now not have the financial and technical capabilities to participate in future projects that the organization might offer. In addition, there are many contractors, suppliers and vendors that are new to the organization and need to submit their qualifications to be reviewed and assessed before they are invited to bid. PMWeb prequalification module provides the organization with a platform to design their prequalification requirement to capture the needed data to be provided by those entities who want to do business with the organization. The prequalification template also provides hyperlinks to government entities that the entity who are submitting the prequalification might need to register with like for example the Civil Defense, Municipality among others.

The organization can define their own prequalification scoring requirement where different prequalification items can be defined along with the scoring points and the weight they have from the overall qualification score. This will enable the organization project team member to adopt a comprehensive prequalification process but yet objective when it comes to assessing the capabilities of those entities. The prequalification module uses the same company code used in PMWeb company directory to highlight if the company is already qualified to be invited to bid or not.

Contract Agreements

The organization must ensure that they have the right contract agreements to enforce the terms and conditions required to transfer the risks to the third party or the buyer. The buyer could be the consultant, contractor, subcontractor, vendor, supplier among others. PMWeb allows the organization to maintain a repository of all type of contract agreements that the organization is currently using or planning to use on future projects. For each contract agreement, the organization can capture the details of all clauses along with the notes to be considered against each clause. Additional attributes for category and type can be used to identify the risk owner of those clauses. Using the attachment option, the contract agreement document can be uploaded and attached to the reviewed contract agreement.

Procurement Strategy

Using the same PMWeb cost estimate module which was the basis for establishing the project’s performance budget, the organization will identify the procurement strategy for delivering the project scope of work. The organization can have a single contract for delivery the project’s construction scope of work or divide into bid packages to fast track the project’s delivery. For each package, the relevant cost estimate line items will be selected. In addition, the organization can select the companies who will be invited to bid on the bid package scope of work.

Invitation To Bid

Depending on the organization’s procurement policy, they might decide to advertise for bids or send invitation to bid letters to those companies who are qualified to bid. PMWeb correspondence module will be used to issue those invitation letters which are usually pre-defined as letter templates that can be used when needed.

Using the PMWeb Notification tab, those invitation letters can be sent via email from within PMWeb itself. The advantage of doing so is that those invitations sent will be posted on the notification tab to provide the organization with record on when those invitations were send and to who.

Online Bidding

The invitation to bid letter will provide the bidders with the link to PMWeb online bidding module where on the specified bid submission dates, those contractors need to go online and submit their bids detail. The online bidding module includes tables for acknowledging the bid submission.

Evaluating Bids

The submitted bids will become automatically available in PMWeb procurement module. This will enable the organization to compare the submitted bids with the approved project cost estimate. This bid line items comparison is crucial for the organization to identify unbalanced bids including bids that are front loaded.

The bids data submitted by the contractors will become the basis for performing the commercial analysis for the submitted bids. In addition, the organization can capture the technical details of each bidder including bid bonds submission, past experience, registrations, and other items needed to do the technical assessment of each bidder. Similar to the commercial evaluation report, the organization will have the technical evaluation report.

Letter Of Intent

Based on the technical and commercial assessment of the submitted bids, the organization will select the successful bidder. This announcement is usually made by issuing a letter of intent to the selected bidder for which the organization conveys their intent to sign an agreement with them. The letter of intent is non-binding commitment to sign the contract agreement. PMWeb correspondence will be used to issue the Letter Of Intent for which the organization will usually have a standard letter template to be used.

Similar to other project life cycle stages, the project team needs to adopt the stage gate best practice to formally confirm that the SMART deliverables of the procurement stage had been formally submitted, reviewed and approved.