2015 ARKH-P6-Project Management

PROJECT CONTRACTS

Contract Award Process

PRESELECTION STEP/ MARKET SURVEY

Pre-selection means: thorough analysis of selected companies to check their capabilities to perform: technically, structurally, availability of means and personnel, reference for similar jobs.

The pre-selection process is not always needed (the company may have already enough experience of a specific market).

But it can be a very useful step when the knowledge of the potential contractor/supplier is insufficient.

The process may last several months: preparing a list of companies and a questionnaire , checking their data, visiting some of them if necessary, obtaining management approval for the final list.

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PROJECT CONTRACTS

Contract Award Process

HOW TO PERFORM THE PRESELECTION ?

Preparing the questionnaire:

Contractor side :all details, organisation ,references, consortium? JV? ….

Company side : why such a questionnaire, project description ,scope of the potential contract

The points to be clarified: competences, expertise, means, premises ,..

How and when to answer

Contacting potential contractors, checking their willingness to answer. Recommendation for consortium.

Confidentiality

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PROJECT CONTRACTS

Contract Award Process

INSTRUCTION TO TENDER

The document is to present the procedure to be followed by the potential contractors to submit their proposal to the Client adressing following aspects :

Definitions: tender, tenderer, work…..

Acknowledgement by tenderer

Closure date

Conditions of tender: cost of tender, partial or full answer, company acceptation and right to reject, …

Bid bond

confidentiality

Conditions for alternative tender

Validity of the tender

The way to take exceptions to the Company’s requirement

Clarification procedure

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PROJECT CONTRACTS Contract Award Process

Tendering Procedure

2 to 4 months

Tenders analysis (by Client)

Receipt and formal opening

Comparison

Clarification meetings

Additional submissions

Evaluation and recommendations

??Decision

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PROJECT CONTRACTS

Tendering Procedure Opening of the Tenders

Several philosophies exist for Tenders opening:

Same opening date

Technical opening date

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PROJECTS CONTRACT

Contract Award Process

Opening of final tenders and selection of the Contractor

After having checked that each tenderer has accepted (through his initialling) the Contract conditions, the Operator opens the commercial proposals.

The selection is made in principle on the lowest price basis, or at least on the most economical solution, based upon “Life cycle cost” (OPEX +CAPEX)

If it is not the case, the Operator is usually requested to document his decision, (detailed scored evaluations)

To accept at the last minute an uncontrolled price reduction from one contractor outside the normal competitive procedure would be :

Risky, as the Contractor will probably try to recover such reduction during the performance of the Contract

Unfair to the other Tenderers (and counter-productive for next project)

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PROJECT CONTRACTS

Contract Award Process

AWARDING THE CONTRACT

•Through a preliminary agreement (MOU, letter of intent)

•With conditions precedent (i.e. subject to state agreement)

•Full and definitive signing

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PLANNING & PROGRESS CONTROL

THE PLANNING FUNCTION: WHY ?

To determine the time required to achieve a Project

To optimize the cash flow in line with the Project requirements To provide the economics with schedule information

To follow-up the mobilisation of means (human resources and equipment To identify any potential deviations from the initial planning

To quantify the current progress (i.e. monthly percentage) To forecast the future taks and events

At any time during the project life

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PROJECTS CONTRACTS: WBS (Work Breakdown Structure)

Major Work Split = M.W.S.

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PLANNING PREPARATION

Planning (or scheduling) is one of the fundamental task and tools of the Project Management.

A Bar Chart is the most common way to schedule a project by non specialist.

A Bar Chart is easy to prepare, easy to read.

But a bar chart is not enough to evaluate a complex sequence of tasks.

A Bar Chart is totally insufficient to schedule a project.

A Pert network or CPM is in fact the only way to have a realistic view of a project, then bar charts can be produced from the network.

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