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National Treasury Asset Management Seminar Proposed Standard Terms of Reference

This paper provides standard terms of reference for the appointment of consultants in the municipal sphere, ensuring transparency and accountability in the process. It covers various aspects such as selection methods, contract management, performance evaluation, and skills transfer.

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National Treasury Asset Management Seminar Proposed Standard Terms of Reference

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  1. National Treasury Asset Management SeminarProposed Standard Terms of Reference 25 November 2010

  2. Introduction Consultants assist in a wide range of activities : • Financial services, consulting engineers, procurement services , policy reform management , etc. • The appointment includes various processes; • selecting; • contracting; • monitoring • Consultants should only be engaged • lack of necessary skills; • resources to perform; • accounting officer cannot be reasonably expected either to train or to recruit people in the time available. • Public funds are allocated in the process of appointing consultants and the significance of it being prudent and transparent in a manner which is fair and effective. • These actions entail cohesion of measures, accountability and responsibility, established by the respective Municipality and the identified consultant.

  3. Purpose The purpose of this paper is to provide standard terms of reference for the appointment of consultants in the municipal sphere.

  4. Legislative Framework • Section 217 of the Constitution Act No. 108 of 1996 • MFMA Section 110 (1) (c) specifies that Chapter 11 of the MFMA is applicable • SCM Regulation 35 • MFMA Circular 2 of 2004, paragraph 4 • Practice Note Number SCM 3 • Construction Industry Development Board (CIDB) Practice Notes • The Guide for Municipal Accounting Officers

  5. Process of appointing consultants • Reasons for appointing consultants • Appointment by means of a formal contract • Selection methods • Preparation of Terms of Reference (TOR)

  6. Preparation of Terms of Reference (TOR) • The scope of the services described should be compatible with the available budget. • The Accounting Officer should prepare the Terms of Reference. • The TOR should clearly define: • the task directive (methodology); • objectives; • goals; • scope; • background information. • Timeframes linked to various tasks should be specified, as well as the frequency of monitoring actions.

  7. Preparation of Terms of Reference (TOR) • The respective responsibilities of the Accounting Officer and the consultants should be clearly defined. • The evaluation criteria should include at least the following: • Consultants experience relevant to the project; • The quality of methodology; • The qualification of key personnel; • The transfer of knowledge (where applicable).

  8. Construction Related Contracts • Eligibility criteria in terms of CIDB related contracts. • Bid evaluation methods in terms of CIDB related contracts: • Method 1: Financial offer • Method 2: Financial offer and preference • Method 3: Financial offer and quality • Method 4: Financial offer, quality and preference • Evaluating quality offered in submissions in terms of CIDB related contracts.

  9. Contract Management • Monitoring and evaluating contractor performance and outputs against project specifications and targets. • Take remedial action if performance is below standard. • The respective responsibilities of the Accounting Officer and the consultant should be clearly defined in the contract. • An ongoing analysis of progress towards achieving planned results, with the purpose of improving management decision making.

  10. Analysing Risks Municipalities must be able to mitigate risk in the following areas: • Selection method; • Scope of works (Clear Deliverables); • Evaluation criteria/process; • Pricing; • Adjudication Process; • Contract Management (Monitoring the contract output); • Effective Dispute Process.

  11. Performance Management • The Accounting Officer must evaluate the consultant’s performance. • The consultant must exercise due diligence in accordance with prevailing standards in executing the project. • The contract should indicate measures the Municipality can implement if the deliverables in the consultant’s contract cannot be achieved. • Modifications to the contract may only be concluded by mutual agreement. • Substantial extension on the stipulated time of the contract must be subject to approval by the Accounting Officer.

  12. Transfer of knowledge and skills • The terms of reference should indicate the objectives, nature, scope and goals of the training programme. • Details on trainers and trainees • Skills to be transferred • Timeframes • Monitoring and evaluation arrangements to enable consultants to estimate the required resources. • Transfer of skills should at all times be part of the deliverables of the contract and never a verbal agreement or “gentlemen’s agreement”.

  13. Remuneration • The consultant should not receive any remuneration in connection with the project except as provided in the contract. • The payments may be at regular intervals (as under time-based contracts) or for agreed outputs (as under lump sum contracts). • Payment provisions, including amounts to be paid, schedule of payments, and payment procedures, should be agreed upon during negotiations.

  14. Concerns related to the appointment of consultants • Drafting the terms of reference can be intricate and have an adverse effect in fulfilling the provisions of Section 217 of the Constitution. • Municipalities do not consider life-cycle costs and quality of work in the planning stage. • Multi-year projects are often condensed into single-year projects which do not aid long term strategic projects, lasting services to communities and overall value for money. • Procurement and provisioning activities often operate in isolation from management activities, with minimal or no linkage to budgetary and strategic planning. • Lack of uniformity in documentation causes uncertainty and inefficiencies in the process of procurement. • Lack of professional skills.

  15. The way forward • The following needs to be addressed to enhance service delivery: • Resources; • Timeframes of contracts; • Quality; • Life cycle cost; • Identifying possible solutions for all critical concerns. • More interactive consultation between consultants and Municipalities.

  16. Conclusion • The appointment of consultants in the municipal sphere has become critical for municipalities to spend on its capital budget. • If the challenges and concerns are not addressed, service delivery will be compromised. • Emphasis on skills and competencies of procurement practitioners and consultants at large. • Retrospective analysis should be conducted on a regular basis. • Best practices should be shared between municipalities to eradicate poor performance. • Effective and efficient service delivery should be the core of any project. • Misinterpretation of Supply Chain Management legislation should be eradicated, for example Regulations 32 and 36.

  17. THANK YOU! DANKIE! ENKOSI!

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