Best Practice Procurement of Consulting Engineering Services Supported by the Construction Industry Development Board

1. Best Practice Procurement of Consulting Engineering Services Supported by the Construction Industry Development Board - CIDB

2. Introduction • 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. • Western Cape - marks the 5th 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 Delivery).

3. Introduction (cont’d) • Objectives: • To inform and capacitate clients and consulting engineers (as they are trusted/independent advisor and agent of client) with best practice in procurement • Inform Consulting engineers to appropriately respond to calls for consulting engineering services and to deliver these services in a true value–added context • to assist both the Client and the Consulting Engineer to better understand and implement the requirements of procurement contracts in terms of CIDB and Treasury legislation

4. Introduction (cont’d) • Objectives (cont’d): • The briefings also provide consulting engineers and clients a platform to make suggestions to the best practice procurement guideline manual, since the manual is a living document and which will be updated on a regular basis to reflect the reality of the challenges faced by our industry and will be available on http://www.cesa.co.za/  at no charge.

5. Introduction (cont’d) • The Manual contents follows typical steps in the procurement process : CHAPTER 1.   PROJECT LIFE-CYCLE - An outline of the typical project life cycle as background. CHAPTER 2.   CONSULTING SERVICES - A description of typical consulting services that can be provided by consulting engineers. • CHAPTER 3.   PROCUREMENT OF CONSULTING SERVICES - Legislation and objectives of procuring consulting engineering services • CHAPTER 4.   SCOPE - An expanded description of various elements of scope. • CHAPTER 5.   TENDER DOCUMENTATION FOR CONSULTING ENGINEERING SERVICES - Guidelines for preparing tender documentation for CE services. • CHAPTER 6.   VALUE – ADDED SERVICES - An expansion on the issues surrounding value that is obtained through CE services and pricing for these services. • CHAPTER 7.   EVALUATION OF TENDERS - Guidelines on the evaluation of CE tenders for services. • CHAPTER 8.   PERFORMANCE MONITORING – Suggested standard evaluation framework of CE performance.

6. 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 • At a reasonable level of compensation • Hence our Technical Briefing's theme is, ‘Walking together towards a Sustainable Procurement Environment’. Introduction : Sum-up

7. Right firm for the right job Three Relative Easy Questions for a House & Bridge Consulting EngineerQuestion # 1:How much does a house weigh? Question # 2:How much weight can a rural two-lane bridge Hold???

8. Qualified firm for the right job “… otherwise house becomes a bridge”

9. Competent firm for the right job “… a bridge that cannot be used”

10. Appropriate Consultant for the right job “… a house that cannot be used”

11. Right firm for the right job andQuestion # 3WOULD THIS BE COVERED BY PI, HOME INSURANCE, CAR INSURANCE, OR, DOESIT COME UNDER ROADSIDE ACCIDENT FUND ??? “… delivers questions rather than intended product”

12. SESSION 1 • 1.1 Background and Manual Overview • 1.2 The Foothold – Definitions • 1.3 The Project Life-Cycle • 1.4 Overview of Consulting Services

13. 1.1 Background and Manual Overview

14. BACKGROUND AND BRIEFING OVERVIEW • The Manual • Product of the Procurement Indaba, February 2008 • Need to collate a Best Practice Procurement Guideline Manual • and un-pack with CE and Clients. • Drawn up in collaboration with CIDB • (many thanks - CEO & Programme Manager : Procurement Delivery) • Purpose of the Manual and of this Seminar: • Educate and Guide both Consulting Engineers & Clients Bodies • Make the procurement environment conducive to enhanced infrastructure delivery in line with current legislation. • Procurement - Tendering • Procurement has undergone profound changes • Competitive tendering is here to stay enhance • Tendering for professional engineering service is unique • Lowest price – Less effort/ low level of technical skills – • No value added – high life cycle costs – poor performance/low quality of services

15. The Construction Industry Development Board (CIDB) • CIDB Mandate: Act 38 of 2000 • 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)

16. The Construction Industry Development Board (CIDB) • 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 the relevant requirement established in procurement documents • Avoid conflict of interest • Not maliciously or recklessly injure or attempt to injure the reputation of another party.

17. 1.2 THE FOOTHOLD – DEFINITIONS

18. 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 CIDB’s 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 • Contractor = not the CE • Engineering and Construction Works contract: includes construction, repair, maintenance, alteration, demolition etc of building and engineering infrastructures

19. Noteworthy Examples (cont’d) • 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 • Threshold = Monetary value of procurement contract above or below which a given procedure may be used

20. 1.3 The Project Life Cycle

22. THE PROJECT LIFE CYCLE (cont’d) 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

23. THE PROJECT LIFE CYCLE (cont’d) 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

24. 1.4 Overview of Consulting engineering services

25. OVERVIEW – CONSULTING 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

26. OVERVIEW – CONSULTING SERVICES (cont’d) Delivering Value • Services deliver most value in early project stages • Functionality & quality of the proposed service more important than Cost (Steps 1 to 3) • 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

27. REQUIRED EXPERTISE OVER THE PROJECT CYCLE

28. SESSION 2 • 2.1 How to Procure Engineering Services

29. HOW TO PROCURE CONSULTING SERVICES • Procurement - Tendering • Procurement has undergone profound changes • Competitive tendering is here to stay • Tendering for professional engineering service is unique • Services cannot be awarded based on price only

30. HOW TO PROCURE CONSULTING SERVICES • Important that Government recognises: • CE’s 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

31. TABLE : PILLARS OF PROCUREMENT

32. HOW TO PROCURE CONSULTING SERVICES Balancing Competition & Compensation in Procurement • Imperative to maintain balance between reasonable compensation (to ensure attractiveness of profession) while ensuring competition Primary Legislation Regulating Procurement • Refer to Table 3-2 in Manual (10 Acts) • Constitution, PPPFA, BBBEE, ‘Admin Justice’ Act, & CIDB Act • – organs of state • PFMA applies to National and Provincial Departments • MFMA - Municipalities • ‘Preventing Corruption’ Act - public & private sectors • Construction Sector Charter - all stakeholders • ‘Unfair Discrimination’ Act - State & all persons • Compliance with CIDB’s “Standard for Uniformity in Construction • Procurement” (SFU) – compulsory for organs of state

33. 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 Quality (Functionality) 3. Financial Offer and Preference 4. Financial Offer plus Quality & Preference • Prescribed by CIDB Standard for Uniformity (SFU) • Services must provide cost-effective & value-added performance • Depends on innovativeness, expertise and competence • Inclusion of Quality is ESSENTIAL

34. HOW TO PROCURE CONSULTING SERVICES – cont’d (2) Method 4 : Quality and Cost-based Selection (QCBS) – Recommended • Accords with CIDB’s SFU (Standard for Uniformity) • Based on CIDB’s Best Practice Guidelines for Competitive Selection • Method 4 applies in all but small minority of cases • Method 4 is MANDATORY for public bodies

35. HOW TO PROCURE CONSULTING SERVICES – cont’d (3) Competitive Selection Procedures

36. HOW TO PROCURE CONSULTING SERVICES – cont’d (4) CIDB Best Practice Guideline A7 Procurement of professional services 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) 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. Selection on basis of quality – does not necessarily mean the best quality available but quality appropriate for the assignment.

37. Calling for Tenders: • Scope of Work and Services (SOWS): • fully describe SOWS so comparable tenders are received • fully describe SOWS so reduce time & effort for tender preparation • Total Input Cost - for all tenderers can be considerable and for small projects can exceed the potential fee - with negative effect on: • finances of the service provider • overall economy of the project. • Guideline: • potential fee earned by consulting engineer should be 20 times greater than the cost of preparing an individual tender. • alternatively, cost to prepare a tender should not exceed approx 5% of the potential fee • this means that tenders should not be solicited for small projects, since the Fees earned are required to cover - Staff costs, plus overheads, expenses and profit

38. Calling for Tenders (cont’d) • 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 say a longer period (allows more effective employment of scarce engineering resources within the consulting engineering firm and the country) • Listing manuals and procedures as requirements so lengthy technical • proposals are not required (only proposed staffing & track record)

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

40. 3.1 Scope of Services

41. SCOPE OF SERVICES Definition Definition: “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)

42. SCOPE OF SERVICES (cont’d) Planning Studies, Investigations and Assessments (i) Consultation with the client or client’s 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 client’s 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.

43. SCOPE OF SERVICES – cont’d Scope of Services for Typical Design Stages

44. SCOPE OF SERVICES (cont’d) 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 CIDB Register of Professional Service Providers To be published by CIDB

45. SCOPE OF SERVICES (cont’d) 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 Client’s 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 Client’s requirements Price unnecessarily for Risks Resultant prices too low or too high Fails the interests of Client, Consulting Engineer and Project

46. KEY FACTORS IN DEVELOPING SCOPE

47. 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. For 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.

48. THE SCOPE OF WORK (cont’d) 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.

49. EXAMPLES OF SCOPE OF WORK

50. FURTHER EXAMPLES OF SCOPE OF WORK