Prequalification GUIDANCE...

Prequalification

GUIDANCE DOCUMENT

Supplement to the 2012 National Seminar Series for the Australian steel industry

Supported by the Enterprise Connect WIIN Program

Prequalification Guidance Document 2


CONTENTS

Prequalification – what does it mean? 4

Guidance document intent 5

Systems and Processes 6

Organisational structure 6

Stability of organisation 6

Senior management 7

Management of consultants, subcontractors and suppliers 7

Human resources/industrial relations management 8

Management systems 8

Quality management system 9

Financial capacity 10

Company experience 11

Occupational health & safety management system 11

Environmental management system 12

Technical capacity 12

Supply chain contribution 13

Where to from here? 14

Enterprise Connect 14

Australian Steel Institute 15

ASI industry directory 15

ASI environmental sustainability charter 16

Industry Capability Network 16

Acknowledgements 17


PREQUALIFICATION GUIDANCE DOCUMENT

PREQUALIFICATION – What does it mean?

Prequalification of suppliers is a risk mitigation strategy employed by many major contractors, builders and government authorities. The process does not consist of a one-off assessment but is, in fact, a continuous process of review.

The main objectives are to enable the assessment of the capabilities of suppliers and identify those with a requisite technical, managerial and financial capacity to deliver the contracted works in accordance with the specified requirements, minimising contractual risks.

Prequalification is not to be construed as a guarantee of work, but determines a supplier’s ability to tender for works on offer. This is usually, but not always, at the exclusion of those competitors who have not completed the prequalification process and would qualify your company as a ‘preferred supplier’.

Throughout the prequalification process, the Applicant/Supplier gives permission to the major contractor to carry out investigations that are considered as necessary to evaluate the application and determine whether it meets the relevant criteria. Such investigations include, but are not limited to, a company search, bank reference checks, Quality and/or HSE audits, etc. It is important to note that financial information submitted is treated as commercial-in-confidence.

The Applicant/Supplier is approved for prequalification based on an assessment of their capacity to undertake contracts of varying financial, technical complexity and risk categories.


GUIDANCE DOCUMENT – Document intent

The Australian Steel Institute (ASI) has recognised that the steel industry supply chain has the ability to represent its value to project proponents and major contractors in a more streamlined and vertically integrated manner.

This document is aimed at assisting the Supplier to firstly evaluate their internal systems and practices, implement improvements thereby providing the path to prequalifying for future tender opportunities.

For many small to medium enterprises (SMEs) this Guidance Document will provide new knowledge as to the high level of documentation requirements in areas such as safety performance, material traceability and sustainability.

It has been identified that some Australian SMEs require assistance to achieve world class standards in assembling business proposals and understanding the expectations of potential customers such as project proponents and EPCMs. This point was raised by the Federal Minister for Resources and Tourism, Martin Ferguson MP highlighting the Gorgon project in WA with 22 of the 25 tenderers failing to meet the prequalification requirements. Similarly, smaller projects have also reported the lack of expertise and refinement in tenders presented by local suppliers.

This Guidance Document clearly describes each of the prequalification requirements and how each member of the supply chain relates and contributes to that portfolio.


SYSTEMS and PROCESSES

ORGANISATIONAL STRUCTURE

An organisational chart shows the relationship between your company (the Applicant), parent and subsidiary companies where relevant.

It is normal to request for names and contact details of Principals, Directors and Partners.

An example could look as simple as follows;

Sam Bloggs Fabrications is a fully owned subsidiary company of Joe Bloggs Enterprises.

STABILITY OF ORGANISATION

Information requested will generally include:

Years under current structure

Years under current ownership (former names if applicable)

If the Applicant (or any of the former named companies) has been liquidated or entered into receivership, administration, bankruptcy, etc?

If the Proprietor, Principal, directors, managers or secretaries of the Applicant (or any of the former named companies) have been liquidated or entered into receivership, administration, bankruptcy, etc?

If the Applicant has had prior convictions or there are any current or pending proceedings?

Any demonstration that the Applicant has been successfully operating under its current structure and ownership (notably in the State or Territory) assists with providing confidence that the Applicant is a stable organisation.

Principal Company Joe Bloggs Enterprises

MD – Joe Bloggs Ph – 1224 9999

Email: [email protected]

Your Company Sam Bloggs Fabrications

MD – Sam Bloggs Ph – 1334 9999


mailto:[email protected]�

mailto:[email protected]�


SENIOR MANAGEMENT

In the interest of substantiating the professionalism of the Applicant, the Customer (major contractor) may request a resume to be attached for each of the senior managers.

It would be helpful to ensure that all senior managers periodically update their resumes and that you keep a copy of such documents on file. Resumes should sufficiently detail each manager’s level of knowledge, reporting lines and experience relevant to the scope of works under application.

As a minimum, the following should be included;

Current position and title

Current roles, responsibilities and reporting lines

Qualifications (including the validity or date of achievements)

Years employed by the Applicant / time in the current position

Managerial performance – awards or specific initiatives

Experience on live projects MANAGEMENT OF CONSULTANTS, SUBCONTRACTORS AND SUPPLIERS

A Major Contractor will often ask for information relating to the management of your supply chain.

It is normal practice for the Customer to request a full listing of all sub-contractors to be utilised by the Supplier with inspections of their premises often required.

Information could include;

Organisational policies

Communication plans

Meetings, workshops and survey procedures

Previous alliances and subcontractor forms

Which works would typically be subcontracted (eg; coatings applications, galvanising)

It is important to note that the larger the extent of using subcontractors and suppliers will significantly increase the level of ‘project management’ required on behalf of the Applicant.

A description of the individual work components carried out by consultants or subcontractors to complete the supply chain offer may be requested. Within this process, consult with your suppliers and subcontractors to extract documentation that relates to their services and most importantly, their policies and procedures for compliance to Australian Standards with third party accreditation certificates if available. This will greatly assist the Major Contractor to fully understand your offer to mitigate their risks.


It is also noted that sometimes a Supplier may employ an offshore entity, which may or may not be affiliated with the Supplier, to provide items required. This significantly increases the risk, inspection requirements and expediting costs for the client and offers a competitive advantage for a local supplier.

HUMAN RESOURCES / INDUSTRIAL RELATIONS MANAGEMENT

For the Major Contractor, this area of management is crucial for mitigating risk. Policies and evidence of performance in the management of human resources and industrial relations can include;

Human resource management policy

Human resource management manuals and procedures

Equal opportunity policy

Apprentice / trainee management

Details of previous industrial disputes and associated information/statistics, if any

Professional development/training programs available to your staff MANAGEMENT SYSTEMS

Applicants will nearly always be asked to demonstrate what management systems they have in place to be considered for prequalification.

Management systems supported by Third Party Accreditation Certificates, including the scope of the certification, are to be provided to the Major Contractor. If the Applicant’s managements systems are not Third Party Certified, then a comprehensive outline of the management systems in place need to be provided.

Examples of Management Systems are:

ISO9001

The International Organization for Standardization in Geneva, Switzerland ISO 9001 standard is focused on defining minimum business practices for the production and delivery of a company’s products and services through the implementation of a formal “quality management system”, or QMS. An ISO QMS is made up of certain processes, documentation and other formal practices that control internal company operations to ensure customer requirements are consistently met.

ISO14001

ISO 14001 is an internationally recognised standard through which an organisation can demonstrate an advanced level of competence in managing the environmental impacts of its activities and processes.


AS4801

Australian Standard 4801 sets out all requirements for implementing an occupational health and safety management system. These requirements may be used for auditing and certification purposes.

OSHAS18001

OHSAS 18001 is an international occupational health and safety management system specification. It is intended to help an organisation to control occupational health and safety risks. It was developed in response to widespread demand for a recognised standard against which to be certified and assessed.

ASI Environmental Sustainability Charter

This Charter is designed for downstream enterprises associated with steel manufacturing, fabrication or services to demonstrate a company’s approach to environmental improvement, particularly where a company is required to achieve an accreditation as a contractual requirement, and is designed to be used by regulators, environmental rating agencies and bodies such as the Green Building Council of Australia.

QUALITY MANAGEMENT SYSTEM (QMS)

Evidence of the Applicant’s QMS utilisation can include;

Audit reports – including references to positive comments relating to improvements to the QMS system. Third party accreditation certificates are often sought to ensure that your scope matches the requirements of the project. In some circumstances, the Customer will conduct their own audits or rely totally on external audits by a certifying authority.

Overview of how the QMS system has performed and improved, although this can be difficult to quantify.

Evidence of management review including minutes of meetings reviewing your QMS.

Non-conformances identified by the Applicant through its QMS and subsequent actions undertaken to address these issues (subject to commercial-in-confidence undertakings).

Supplying the company’s Quality Manual.

Typical Inspection and Test plans used to control processes.

Project Quality Manuals from a contract of similar size and complexity.

Index Sheet from a typical Manufacturer’s Data Record.


FINANCIAL CAPACITY

Information relating to the financial position of the Applicant is usually regarded as commercial-in-confidence. It is vital that the commercial viability of a Supplier is established to mitigate the likelihood of entering into financial hardship or administration during the contracted term.

Due to the variety of legal entities that the Applicant may fall under, the Major Contractor may request additional information to that of a single company to be supplied.

The Applicant will usually be requested to have the information they supply audited by a suitably qualified accountant (qualified as a Certified Practising Accountant, Chartered Accountant or Professional National Accountant). The cost associated with the initial financial assessment is sometimes borne by the assessing Major Contractor although additional information may be at the Applicant’s expense.

Information to be provided will often include;

Group structure including key Management details.

Audited annual report / financial statements for the past three years including balance sheets, P&L statements, cash flow statement, Director’s report and auditor’s reports.

Cash flow budget for the next 12 months including details of assumptions.

Management accounts – no more than three months old.

Debt facilities – type, amount, term, repayment arrangements, securities and undrawn lines of credit.

Capacity to borrow – including bank contact details and a letter from the bank on the Applicant’s available facilities.

Current bank balances including overdraft, leases, credit cards and guarantee of bank revolving facility.

Details of encumbrances over business assets.

Details of contingent liabilities including guarantees provided.

Details of any financial covenants by which the business must adhere for any loan facilities.

Details of any pending legal action against the company or its directors.

Availability of guarantees (financial or performance) including cross guarantees across groups.

Any other details relating to information that potentially may affect the financial position of the Applicant.


COMPANY EXPERIENCE

Most Major Contractors will require evidence of your company’s ability to undertake and complete works in a similar category. It is therefore beneficial to document information specific to each project which may in the future prove to be invaluable in the prequalification process.

The following details may be required for each project;

Project name, location and description.

Project contact details including administrator, superintendent, principal or client.

Contract sum, form and duration.

Start date and date for practical completion.

Photos and samples of plans.

Subcontractors and associated value of works – procedures for selection and performance assessment.

Brief description of the project management demonstrating an understanding and successful utilisation of management techniques.

Details of projects being within budget, on-time and to specification.

OCCUPATIONAL HEALTH & SAFETY (OH&S) MANAGEMENT SYSTEM

Evidence of your OH&S Management System needs to be provided including policy and associated plans. These may include;

Audit reports.

Workshop / onsite induction procedure examples.

Nominated key personnel details responsible for health and safety.

Documentation showing Lost Time Injury Frequency Rate (LTIFR) and Medically Treated Injury Rate (MTI) including workers compensation claims.

Management initiatives.

Compliance certificates.

State Workplace Regulatory Authority improvement notices or infringement notices and corrective actions undertaken / completed.

Typical HSE Plan for a project of similar size and complexity.

Knowledge and use of hazard recognition techniques like JHEA, Stepback, Take 5, etc.


ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

Applicants will be required to provide a copy of their environmental policy statement and plan.

Evidence of the EMS system utilisation may include;

Audit reports.

Membership of audited EMS programs such as the ASI Environmental Sustainability Charter.

Risk assessments – both internal and project-based.

Documentation of EMS performance showing examples of good management practices in projects where environmental issues were present, showing how these were dealt with to manage, mitigate or eliminate the issues.

Any prosecutions, notices or directions for legislative breaches by the Environmental Regulatory Authority, corrective actions undertaken / completed.

TECHNICAL CAPACITY

Technical capacity is measured by several means including the qualifications and expertise of the Applicant’s employees, specialised plant and equipment and management systems to ensure maximum safety, utilisation and value.

Applicants should consider providing;

Organisational Chart – showing positions, associated qualifications for senior positions and key personnel with responsibilities for Quality, OH&S, Environmental and Site Management.

Copies of all licenses and qualifications for all staff including trade qualifications, forklift, crane, dogging, site inductions, specialised computer software training, etc.

Specialised equipment list indicating functionalities such as size of workshop, overhead crane capacity, forklift capacity, beam-line, plasma, coatings capabilities, specialised welding through to in-house computer drafting/detailing, modelling and information transfer systems.

Demonstrated controls for external equipment hire or subcontractor equipment supplies including management systems to ensure compliance.


Supply Chain Contribution

Today’s steel supply chain works cohesively towards providing goods and services for projects in all segments of the market. Representation by many sectors of the supply chain such as steel manufacturers, distributors and fabricators, are made to project proponents and major contractors to demonstrate capability, capacities and assurance of compliance to standards in the supply offer. To this end, as a supplier, it is important to evaluate the contribution by your business to this process.

So why should you contribute to the ‘supply chain offer’?

The assurance of quality and compliance is a MAJOR concern for major Contractors and Owners. The Australian steel supply chain is a professional, world class supplier of goods and services. The Industry’s safety performance is regarded as a top priority and the assurance of compliance to Australian Standards is readily verified by third party accreditation. A great example of materials conformance to standards would include third party product accreditation such as ACRS. It is therefore important that the Customer is made fully aware of this vertically integrated chain of excellence.

How can you contribute to the ‘supply chain offer’?

Many companies within the supply chain currently have existing Quality Management Systems (QMS), Environmental Management Systems (EMS), Occupational Health & Safety (OHS) and Third Party Accreditation of Material Conformance to Standards (e.g. ACRS).

Opposite is an example of a management system certificate relating to Quality Management to ISO 9001-2008 which could be used to enhance the Tender offer.


Where to from here?

Firstly, we trust that this document has been helpful in providing an overview of Prequalification and how your business can achieve this goal. We also hope that as a member of the supply chain, future consideration will be given as to how you can contribute to the Tender offer.

The Australian steel supply chain is world class and can certainly compete in the global economy. It is a responsibility of all members of the supply chain to demonstrate the skills and expertise that sets us apart from offshore offers, mitigating risk for our customers.

ENTERPRISE CONNECT

Enterprise Connect offers comprehensive advice and support to eligible Australian small and medium-sized enterprises (SMEs) to help them transform and reach their full potential.

Eligible businesses are able to receive a comprehensive, confidential and independent Business Review free-of-charge on request.

Have you had an Enterprise Connect Business Review?

If you have, you can apply for the Tailored Advisory Service (TAS) grant.

The TAS grant gives you the chance to engage consultant(s) to make the improvements that your Enterprise Connect Business Adviser recommended in your Business Review. Enterprise Connect will reimburse your business half of the cost, up to a maximum of $20,000 (excluding GST) of engaging the consultant(s).

The types of improvements eligible for funding may include, but are not limited to;

• Supply chain management.

• Business and quality management systems.

• Lean manufacturing/office.

• Strategic and business planning.

• Resource management.

• Waste/resource management.

• People and change management.

• New product/service development.

• Diversification/economies of scope.

• Market access and development / Export strategy. You can find all the information you need at the Enterprise Connect website www.enterpriseconnect.gov.au or phone 131 791.

http://www.enterpriseconnect.gov.au/�


AUSTRALIAN STEEL INSTITUTE

The Australian Steel Institute (ASI) is Australia’s peak steel industry association promoting Australian steel in manufacturing and construction and representing the entire steel supply chain.

It is a not-for-profit organisation comprising three sustaining members, BlueScope Steel, OneSteel and Fletcher Building Group, plus a large number of company members, associates and individuals.

The majority of members are SMEs within the steel fabrication and processing segment.

Membership with the ASI has many benefits, but looking specifically at this subject matter, two are directly relevant.

Industry Directory

ASI members have the ability to list their businesses on the ASI Industry Directory. The Directory has a multi-functional search capability to find specific services and capabilities of member companies in a variety of categories including;

Associated Services

Coatings (corrosion and fire protection)

Cranes

Detailers

Engineers

Fabricators

Galvanisers

Insulation

Metal Building Products

Roll Formers

Steel Distributors

Steel Manufacturers

Steel Processing Services

Steel Sheds

Many customers utilise this directory to find businesses that are suited to the capabilities and capacities of their requirements for project supply.

More information can be found on the ASI website at:

http://steel.org.au/directory

http://steel.org.au/directory�


ASI Environmental Sustainability Charter (ESC)

The Charter group is made up of steel fabricators who have committed themselves to the ASI’s Environmental Sustainability Charter (ESC).

The ASI has worked with the Green Building Council of Australia (GBCA) to revise the Steel Credit available under the Green Star building rating system. There is now an extra credit point available for fabricators who are members of the ASI’s ESC group.

In relation to prequalification, ESC membership is in demand for all builders who are looking for points to attain their Green Star ratings. The ASI Charter membership affords a free point to builders, making ESC members valuable for warehouse, school, office, shopping centre and other construction where there is a green rating requirement.

The ASI has also established a Mentor for the Environmental Management System (EMS) to support the ESC Group to ensure all requirements of the Charter are met. Note that EMS refers to an Environmental Management System created to BS 8555 specifically for SMEs.

More information can be found on the ASI website at:

http://steel.org.au/asi-committees/environmental-sustainability-charter

INDUSTRY CAPABILITY NETWORK (ICN)

ICN is a national network of independent industry consultancies which are managed by industry and sponsored by State Governments to improve outcomes for local industry (Australian and NZ) and the local economy. ICN provides a unique range of services to project proponents and local suppliers, from 24 offices throughout Australia and one in New Zealand.

ICN Gateway

ICN Gateway is a connection point for buyers and suppliers looking to build perfect partnerships.

Suppliers can search projects and register their company's interest with just a few easy steps.

The ICN searches this information when a buyer approaches it looking for new products and services.

ICN Gateway can give buyers a glimpse of the comprehensive supplier information held by ICN. It holds more than 45,000 Australian and New Zealand companies and is complemented by its national network of technical consultants.

It is highly recommended that companies register with the ICN on the Gateway portal.

To register with ICN Gateway, visit the website:

http://gateway.icn.org.au/public/page/about

To speak with an ICN representative, your local contact can be found on the ICN website at:

http://www.icnnsw.org.au/

http://steel.org.au/asi-committees/environmental-sustainability-charter�

http://gateway.icn.org.au/public/page/about�

http://www.icnnsw.org.au/�


Acknowledgments The Australian Steel Institute would like to thank the Enterprise Connect WIIN program, an Australian Government initiative of the Department of Industry, Innovation, Science, Research and Tertiary Education for provision of funds for this program and acknowledge the contributions to this program by the following:

Enterprise Connect WIIN program WorleyParsons

Roads and Maritime Services (NSW) Transport Main Roads (Queensland)

Industry Capability Network and

the Australian steel industry supply chain

This document was prepared by the Australian Steel Institute on behalf of its members.

For further information, contact

PHIL CASEY State Manager - NSW & ACT

National Manager – Safety Group Tel: 02 9931 6605


MARCH 2012

Prequalification GUIDANCE...

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