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Session “Best practice for the procurement of services”

Session “Best practice for the procurement of services” Award of construction-related services (architect-engineer services, project management, local construction supervision, etc ) – practical examples Wolfgang Berger & Manfred Essletzbichler EBRD-Consultants, WOLF THEISS

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Session “Best practice for the procurement of services”

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  1. Session “Best practice for the procurement of services” Award of construction-related services (architect-engineer services, project management, local construction supervision, etc) – practical examples Wolfgang Berger & Manfred Essletzbichler EBRD-Consultants, WOLF THEISS Kiev, November 2012

  2. Agenda Intellectual services - refresher Table for the assessment of descriptiveness vs. non- descriptiveness Case Studies Case study I: Local construction supervision for a hospital project Case study II: Structural planning for renovation of a motorway bridge Best practice examples – lessons learned

  3. Intellectual services – refresher (1) “Services […], insofar as the nature of the services to be provided is such that contract specifications cannot be established with sufficient precision to permit the award of the contract by selection of the best tender according to the rules governing open or restricted procedures” (Art 30 (1) c EU-PPD) Characteristics of “intellectual services” Services which do not (necessarily) result in the same outcome Main objective is the solution to an assignment by intellectual “work” Creative or innovative element in order to solve the problem / the task to be performed Conceptual activity Complete and exhaustive (prior) description is impossible (however, outcome or assignment can be described) Clear and definite description of service would “anticipate” the solution and therefore “torpedo” the purpose of the tender Bids are not comparable without negotiations

  4. Intellectual services – refresher (2) Indicators for “Non-descriptiveness” (1) Bidders determine the exact scope of services and quality through their bids ! Various possible solutions ! Solution depends on bidder ! Unclear allocation of risks ! No “standardized” behaviouror process for bidder High complexity of the scope of services High number of different interests Size (and complexity) of project Number of components and parts Number of parties involved Number of planning stages and coordination rounds

  5. (Non-) Descriptiveness (1) Table for assessment of descriptiveness as to design of works (1)

  6. Difficult circumstances on premises; number of building parts, stages of realization… (Non-) Descriptiveness (2) Variety of CAs, users, planners, etc; reconstruction… extensive single step works (partial works, phases of works)… Project execution with high level of innovativeness or risk potential; monument preservation requirements…

  7. Manufacturing costs € 5.000,-; plain premise; topographical survey is available; harmonized placing of object and test sounding; established ground water surface (Non-) Descriptiveness (3) Example: basement of modular home

  8. Manufacturing costs € 110.000-; difficulties in obtainingpermits; inventorydocumentsavailable; reconstructionofheating; structurally simple solution; inclusionofkindergarden in reconstruction; worksduringschoolvacation (Non-) Descriptiveness (4) Example: annex to kindergarden

  9. Manufacturing costs € 22 Mio,-; reconstruction during business operations; all general planning services (architecture, structural-constructive adaptation, building physics, HVAC, luggage conveyor belt)… (Non-) Descriptiveness (5) Example: airport terminal

  10. (Non-) Descriptiveness (6) Table forassessment after evaluation Only „supportingargument“! Verbal reasoningisalwaysnecessary!

  11. Case Study I - General (1) Project: construction of a public hospital in the north of Vienna 800 beds on a total area of 120.000m² Contracting entity Hospital Association owned by the city of Vienna ( “classic” contracting entity) Subject matter of the tender Local construction supervision (LCS) Estimated contract value Aggregated contract value of entire project approx. EUR 300 million Value of services EUR 15 million (based on the Chamber of Architect and engineer consultant's fee guidelines)

  12. Case Study I - General (2) Kind of service Priority services according to Annex II to the EU public procurement directives Architectural services; engineering services and integrated engineering services (etc) Tender procedure  Negotiated procedure (two stages) with prior EU-wide publication ! Pre-qualification stage Tender stage

  13. Case Study I - Pre-qualifcationstage (1) Deadline for submission of request to participate (RTP) 40 days  3 candidates proceed to second stage Proof of suitability Suitability to pursue professional activity Proof of trade registry or “list of architects and civil engineers” enrollment General professional reliability Confirmation by competent fiscal authority Excerpts from the criminal register in respect of all natural person in the candidates management

  14. Case Study I - Pre-qualifcationstage(2) Financial capability Annual turnover (2007-2009) of at least EUR 5 million per year (excl VAT) Professional indemnity insurance with indemnity limit of at least EUR 1 million per damage Technical capability (1) Reference projects  construction cost >EUR 30 million in health sector Categories for reference projects (general) LCS LCS fortechnicalbuildinginstallations in theareaof plumbing LCS fortechnicalbuildinginstallations in theareaofelectrical engineering LCS fortechnicalbuildinginstallations in theareaofmedical technology

  15. Case Study I - Pre-qualifcationstage(3) Technical capability (1) Reference projects Evaluation for reference projects (maximum of 8 reference projects  2 per category) Construction costs >EUR 30 million  3 points >EUR 70 million  7 points Relevance of reference project reference project was hospital, geriatric or rehab facility  points multiplied by 1,3 Additional point if project included (i) an surgery room, (ii) an ICU and/or (iii) was covered by the Austrian Public Procurement Act

  16. Case Study I - Pre-qualifcationstage(4) Key personnel Project leader At least 10 years of relevant work experience LCS and min 2 years with construction projects >EUR 30 million in health sector Project manager for each of the (remaining) three categories At least 8 years of relevant work experience and min 2 years with construction projects >EUR 30 million in health sector At least 50 employees for the last 3 years (2007-2009) on average

  17. Case Study I - Tender stage Award criteria Price (weighting 25%) “Professional interview” with key personnel (weighting 75%) (General) LCS project manager (max 30 pts) Answers time schedulingandscheduletracking Compliance withcostsanddeadlines Project manager LCS fortechnicalbuildinginstallations in theareaof plumbing (max 10 pts) Project manager LCS fortechnicalbuildinginstallations in theareaofelectrical engineering (max 10 pts) Project manager LCS fortechnicalbuildinginstallations in theareaofmedical technology (max 10 pts)

  18. Case Study II - General (1) Project: renovation of a motorway bridge (under traffic) Bridge length: 237m Contracting entity ASFINAG ( “classic” contracting entity) Subject matter of the tender Structural planning for the renovation of a motorway bridge Estimated contract value Aggregated contract value of entire project approx. EUR 12 million Value of services EUR 300.000 (based on the Chamber of Architect and engineer consultant's fee guidelines for bridge constructions HOB-B)

  19. Case Study II - General (2) Kind of service Priority services according to Annex II to the EU public procurement directives Architectural services; engineering services and integrated engineering services (etc) Tender procedure  Negotiated procedure (two stages) with prior EU-wide publication ! Pre-qualification stage Tender stage

  20. Case Study II - Pre-qualifcationstage (1) Deadline for submission of request to participate (RTP) 40 days 5candidates proceed to second stage Proof of suitability Suitability to pursue professional activity Proof of trade registry or “list of architects and civil engineers” enrollment General professional reliability Confirmations by competent fiscal authorities (no outstanding payments for taxes or social insurance; no insolvency proceedings) Excerpts from the criminal register in respect of all natural persons in the candidates´ management

  21. Case Study II - Pre-qualifcationstage(2) Financial capability Annual turnover (2007-2009) of at least EUR 5 million per year (excl VAT) Professional indemnity insurance with indemnity limit of at least EUR 1,5 million per damage Technical capability (1) Statement of the annual manpower for the last 3 years: >10 1 Reference project in the following categories Planning for bridge construction projects: >50m Planning for road construction: >3km Planning and/or LCS for other construction projects: >EUR 20 million Creation of plans in the field of bridge construction: >50m Creation of plans in the fieldofroad construction and guidence of traffic: >3km

  22. Case Study II - Pre-qualifcationstage(3) Selection Criteria Technical capability (1) Manpower: >25 (10 points) Reference projects (90 points; full points for 3 reference projects in all categories) References planning and LCS (45 pts) Bridge construction (25 pts) Road construction (15 pts) Other construction projects (5 pts) References creation of plans Bridge construction (25 pts) Road construction (20 pts)

  23. Case Study II - Tender stage Award criteria Price (weighting 25%) Quality criteria (75%) Concept for the construction works incl construction phases (30%) Economic efficiency (20%) Operation andmaintenance (20%) Esthetik (5%)

  24. Case Study II - Tender stage Subject of negotiations Content of the planning contract (specification of the content) Contractual conditions (liabilities, contractual penalties) Price

  25. Lessonslearned – selectionoftheprocedure Selection of the award procedure Local construction supervision (standardized contract) open procedure or restricted procedure (in case of a hearing) Planning services and LCS (non-standardized contract) negotiated procedure

  26. Lessons learned – provisions for conflicts of interests In order to prevent conflict of interests, bidders should be excluded from the award procedure if they may have such a conflict. Case 1: Contractor has a supervisory role (LCS) and an executive role (planning services or contraction works) in the same project. Case 2: Contractor has a supervisory role (LCS) and a (sub)contract with a contractor who has an executive role (planning services or contraction works) in the same project. Case 3: Contractor for planning services is the subcontractor of the construction company. All these constellations should be forbidden in the contract. In case of a breach: contractual penalty and right to withdraw from the contract.

  27. Lessons learned – principles financial and technical capability – award criteria The references for the financial and the technical capability should be appropriate for the provided services (-> impact on the number of bidders, competition and prices). The required references and award criteria shall not discriminate economic operators. ASFINAG uses for its projects standardized tender documents, that outline or in special cases even specify perimeters for the references and the award criteria:

  28. Lessons learned – financial and technical capability (1) References for financial capability: Annual turnover: max 2-3 times of the annual agreement price (excl VAT) Professional indemnity insurance limit: depends on the project volume: liability range: EUR 750.000 to 3 million Minimum < project volume 3 million Maximum > project 60 million

  29. Lessons learned – financial and technical capability (3) References for technical capability: Number of the average annual manpower for the last 3 years: max 1 or 2 times the manpower required. Reference projects: One reference project with half the size of the tender project should be sufficient Projects completed before (up to) 10 years have to be accepted Personal references rather than company references (exception: large projects) The project reference hast to be completed or assigned at least since one year (most of the project has to be completed).

  30. Lessons learned – award criteria (1) Relation price/quality: Planning services (intellectual service): 30/70 LCS-services or project management: 50/50 Quality criteria: Education and experience of the key personal Personnel development Reference projects Hearing (LCS): Competence of the key personal Quality of concepts (planning services) Evaluation by a Jury

  31. Lessons learned – award criteria (2) Reference projects: Principle: With two projects half the size of the tender project the bidder should be able to reach the full points Examples: Specific perimeters for reference projects: Length of a motorway: max 10km Length of a tunnel: max 1000m Length of bridge: max 80m -> no technical reason for projects with more length.

  32. Lessons learned – award criteria (3) Example evaluation table:

  33. Lessons learned – award criteria for LCS (1) Hearings: will only be used for large projects (increased time and evaluation effort) Restricted procedure (max 5 hearings) Purpose: evaluation of the competence of the key personal the project leader of the contracting authority organizes the preparation of the questions and answers for the hearing. The members of jury and the tenderers get the questions during the hearing.

  34. Lessons learned – award criteria for LCS (2) The hearing is structured in 3 topics a) Structure of the procurement procedure of the construction works and the tasks of the LCS-contractor b) Structure of the construction contract, anti-claiming, the tasks of the LCS-contractor c) Specific technical details of the project

  35. Lessons learned – award criteria for LCS (3) Combination hearing and multiple choice test: Multiple choice test for questions about topic a) and b). All the questions and answers, that could be asked, are available on an electronic platform. The questions for each tenderer are randomly chosen by a computer program. Questions about topic c) will be asked and answered orally.

  36. Lessons learned – awardcriteria All the quality criteria (e.g. key personal, reduction of the delivery time etc) have to be a part of the contract and enforceable Worst case: 70% weighting of the references of the key personal and this personal gets changed after the award of the contract -> contractual penalties for changing the key personal Penaltie cap: 50% of the agreement price

  37. Contact Dr. Wolfgang Berger Tel: + 43 / 050 / 10810686 Fax: +43 / 050 / 10810682 E-Mail: wolfgang.berger@asfinag.at ASFINAG Rotenturmstraße 5-9 1011 ViennaAustria

  38. Contact Mag. Manfred Essletzbichler Tel: + 43 / 1 / 51510 – 5350 Fax: +43 / 1 / 51510 – 665350 E-Mail: manfred.essletzbichler@wolftheiss.com WOLF THEISS Attorneys-at-LawSchubertring 61010 ViennaAustria

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