The Point Based SystemThe Point Based System
For Contractor Selection For Award Of For Contractor Selection For Award Of
Construction WorksConstruction Works
Accelerating Bhutan’s Socio-Economic DevelopmentAccelerating Bhutan’s Socio-Economic Development- GNHC, MoWHS & MoF- GNHC, MoWHS & MoF
Outline of Presentation:Outline of Presentation:
1. The Point Based System1. The Point Based System
2. Reclassification of Construction Firms 2. Reclassification of Construction Firms
3. Schedule of Implementation3. Schedule of Implementation
4. e-tool for evaluation 4. e-tool for evaluation
1. Background:
Why the need for a new point based system?
A point based system in place prior to April 2009
From 1st April 2009, a pass/fail system was introduced that used a series of parameters on which a contractor needed to pass in order to qualify.
Both these systems however addressed the needs of a robust process only partly and suffered from some drawbacks.
Objectivity
1
Old Point Based System Current Pass/Fail System
Potentially possible for contractors to score low on some parameters and compensate by scoring high on others
But high weightage given only to experience related parameters
Possible to build-in incentives but not done
No reason for contractors to get incorporated, employ local people etc.
Rigidity
2
Incentives for best practices
3
Subjective evaluation on technical capability – manpower, equipment, performance
Requirements loosely defined; no quantification
-
+
-
+
-
-
Project specific requirements for manpower, equipment specified; one-on-one comparison done
No test for proven past performance
Stringent qualification criterion for each parameter
Must to pass on ALL parameters to qualify
Extremely difficult for young, promising contractors to qualify
Often leads to re-tendering
Incentives for best practices cannot be built in as by definition they will need to be pass/fail
Criteria
Need for a system that addresses their shortfalls of the both the systems while retaining the positive aspects
Need for a system that can evaluate contractors on parameters most critical in achieving good performance in Bhutan’s construction sector context, and
Need for a system that can give incentives to the contractors to adopt some of the best practices that will help in development of the sector in general.
The Point Based System:- Background contd..
Objectivity
1
Old Point Based System Current Pass/Fail System Proposed Point Based System
Project specific requirements for manpower, equipment specified; one-on-one comparison done
No test for proven past performance
Objective levels of achievement and scoring specified for all technical parameters
Project specific requirements clearly defined
Stringent qualification criterion for each parameter
Must to pass on ALL parameters to qualify
Extremely difficult for young, promising contractors to qualify
Often leads to re-tendering
Adequate flexibility to allow young, promising contractors to qualify
Weightage to parameters well in-line with their relative importance in project execution
Potentially possible for contractors to score low on some parameters and compensate by scoring high on others
But high weightage given only to experience related parameters
Incentives for best practices cannot be built in as by definition they will need to be pass/fail
Suitable incentives for local employment, commitment for VTI internships, incorporation etc.
Possible to build-in incentives but not done
No reason for contractors to get incorporated, employ local people etc.
Rigidity
2
Incentives for best practices
3
Subjective evaluation on technical capability – manpower, equipment, performance
Requirements loosely defined; no quantification
-
+
-
+
-
-
+
+
+
+
-
system’s advantage
system’s disadvantage
Criteria
The Point Based System of Evaluation:
The New Point Based
System
Technical Parameters
Financial Parameters
1. Capability2. Capacity3. Organizational
strength
1. Financial bid quoted by a Contractor
combination of technical and financial parameters
Two stage qualification & evaluation process:Two stage qualification & evaluation process:
Technical Parameters - 40%
Financial Parameters - 60%
Techno-Financial ScoreTechno-Financial Score
Lowest quoted bid among qualifying bids 60% -------------------------------- Financial bid quoted by x
40% of Technical score for x
1. First Stage : Technical Qualification1. First Stage : Technical Qualification
Technical Parameter (40%)
A. Capability – 50 points
B. Capacity – 25 points
C. Organizational Strength 25 points
A contractor needs to obtain a score of at least 60 points out of 100 to qualify for the next stage.
A. Capability – 50 points
1. Similar work experience - 102. Access to adequate equipment - 153. Availability of manpower - 154. Average performance score from previous work* - 10 Total - 50
points
Parameters above tests on the capability to execute the given work. Capability is taken to be a function of prior experience, their ability to
generate enough resources in form of manpower and equipment, and their performance track-record from previous works.
1 - Similar work experience (last 5 calendar years) Two options:-
a. the contractor can either be evaluated on the size of a SINGLE largest similar work that (s)he might have executed in the past
OR
b. on the aggregate size of THREE similar works that (s)he might have executed in the past
Scoring pattern for similar works:-Scoring pattern for similar works:-
Parameter Level of Achievement Score
Aggregate size of similar contract
(max 3) in the last 5 calendar yrs.
• > 175% of current project size
• 150-175% of current project size
• 125-150% of current project size
• 100-125% of current project size
• 75-100% of current project size
• < 75% of current project size
10
8
6
4
2
0
Size of the largest similar contract
executed in the last 5 calendar yrs
• > 100% of current project size
• 90-100% of current project size
• 80-90% of current project size
• 70-80% of current project size
• 50-70% of current project size
• < 50% of current project size
10
8
6
4
2
0
2 – Access to adequate equipments:
Allocate points to each equipment based on its importance:-
Equipments of Tier-I importance: 50 points Equipments of Tier-II importance: 30 points Equipments of Tier-III importance: 20 points
Total marks out of 100 to be scaled down to 15 100% marks if the equipment are owned and 75% marks if hired. Scoring on equipment is fundamentally similar to the way it has been done in
the pass/fail system
An illustrative list of prescribed equipments :
Nature of work Tier-I (50 pts) Tier-II (30 pts) Tier-III (20 pts)
Road construction Excavator Road roller, Paver, Vibrator
Air compressor, Tipper trucks, survey equipment
Building construction Bull-dozer, Concrete-mixer
Shuttering set, Crane truck, Dumper truck
Air compressor, Survey equipment
Road resurfacing Road roller Vibrator, Sprayer Air compressor, Tipper trucks
Road construction Excavator Road roller, Paver, Vibrator
Air compressor, Tipper trucks, survey equipment
Building construction Bull-dozer, Concrete-mixer
Shuttering set, Crane truck, Dumper truck
Air compressor, Survey equipment
An illustrative list of prescribed equipments :
Equipment Maximum marks Number required
Excavator 50 2
Paver 10 3
Vibrator 10 3
Road roller 10 3
Truck 5 4
Mechanical sprayer 5 2
Air compressor 5 1
Survey equipment 5 3
Total 100
3 – Availability of Manpower
The 100 points allocated is as follows:
Personnel position of Tier-I importance: 50 points Personnel position of Tier-II importance: 30 points Personnel position of Tier-III importance: 20 points
This parameter evaluates contractors on their ability to deploy personnel with suitable qualifications and experience
Scoring on manpower is fundamentally similar to the way it has been done in the pass/fail system
Allocate points to each of they key project personnel positions based on its importance
An illustrative list of manpower requirements:
Tier of importance Position Qualification/Experience Score
Tier – IProject
Manager
Graduate civil engineer with 10+ years of experience
Graduate engineer with 5-10 years of experience
Diploma engineer with 5-10 years of experience
Any other level of qualification or experience
50
30
15
0
Tier – IIProject
Engineer
Graduate engineer with 5+ years of experience
Diploma engineer with 5+ years of experience
Graduate or diploma engineer with 3+ years of experience
Any other level of qualification or experience
30
20
10
0
Tier – IIISite
Supervisor
Diploma engineer with 3+ years of experience
Personnel with formal training certification from VTI and at least 5 years of experience
Any other level of qualification or experience
20
10
0
4. Average performance score from previous work (0-10 pts)
The 100% performance score is composed of the following parameters:
1. On-time completion - (30%)
2. Quality of execution - (70%)
4 – Average performance score from previous work (0-10 pts)
This parameter gives points based on contractor’s performance score of the last 5 calendar years
To begin with, all contractors will have a default performance
score of 100%.
This score will diminish whenever a contractor defaults on any one of the parameters of performance
Performance score information system and will be institutionalized with the introduction of the new point based system.
As contractor execute more projects, this score will keep getting averaged out over the number of projects executed
1. First Stage : Technical Qualification1. First Stage : Technical Qualification
Technical Parameter (40%)
A. Capability – 50 points
B. Capacity – 25 points
C. Organizational Strength 15 points
A contractor needs to obtain a score of at least 60 points out of 100 to qualify for the next stage.
B. Capacity – 25 points
This category of parameter tests the contractor on his/her ability to generate adequate financial resources for executing the project.
The parameters covered under this category are:
1. Bid Capacity - 15
2. Credit line available (unused) - 10
Total - 25 points
1 – Bid Capacity (15 points)
A= Average turnover of the contractor over the last 3 calendar
years
N= Estimated duration of the project being tendered in years
B= Portion of other ongoing works to be completed in the period that overlaps with the current project’s duration (that is, N)
Bid Capacity = 2*A*N – B
Bid capacity having calculated, the scoring will be as follows:
Parameter Level of achievement Score
Bid Capacity
Bid capacity ≥ quoted bid
Bid capacity is between 80-100% quoted bid
Bid capacity is between 60-80% quoted bid
Bid capacity is between 40-60% quoted bid
Bid capacity is between <40% quoted bid
15
12
08
04
00
2 – Credit line available (Unused):-
- This parameter evaluates the contractor on his/her ability to raise credit from banks and other financial institutions to manage the working capital requirements of the project.
- The contractor will get a score based on a letter of credit from a bank that gives the amount of credit available to the contractor for the work to be awarded.
- Level of achievement on this parameter will be judged in terms of months of project cash flow for which the credit is available.
Scoring pattern will be done as follows:
Parameter Level of achievement Score
Credit line available (unused)
≥ 100% of estimated 3 month project cash flow90 – 100% of estimated 3 month project cash flow80 – 90% of estimated 3 month project cash flow70 – 80% of estimated 3 month project cash flow60 – 70% of estimated 3 month project cash flow<60% of estimated 3 month project cash flow
10
08
06
04
02
00
This sums up the scoring of 25 points under the “capacity” category in the technical score. We now proceed to the next category – “organizational strength”::
1. First Stage : Technical Qualification1. First Stage : Technical Qualification
Technical Parameter (40%)
A. Capability – 50 points
B. Capacity – 25 points
C. Organizational Strength 15 points
A contractor needs to obtain a score of at least 60 points out of 100 to qualify for the next stage.
C. Organizational Strength 15 pointsC. Organizational Strength 15 points
This category of parameters evaluates the contractor on how well the contractor’s organization is set up and functioning and how much is it contributing to the overall betterment of the sector.
The parameters under this category are:
1.Status (incorporated, proprietorship, JV etc.) - 052.Employment of local people - 103.Strength of special skill & knowledge base - 054.Commitment for internships to VTI graduates - 05 Total - 25 points
1 – Status (incorporated, proprietorship, JV etc.)
The scoring on this parameter will be as follows:
Parameter Level of achievement Score
Status (incorporated,
proprietorship, JV)
Incorporated company bidding alone
Incorporated company as the lead partner (>50% stake) in a bid by a joint venture
Incorporated company as a non-lead partner (<50% stake) in a bid by a joint venture
Any other (proprietorship, partnership etc.)
5
3
1
0
2 – Employment of local people - This parameter is designed to give the contractors benefit for employing local
people in construction jobs.
The scoring on this parameter are as follows:
Parameter Level of achievement Score
Employment of local people
≥ 50% project workforce to be Bhutanese
40 – 50% project workforce to be Bhutanese
25 – 40% project workforce to be Bhutanese
15 – 25% project workforce to be Bhutanese
≤ 15% project workforce to be Bhutanese
2 bonus points for contractors having Bhutanese
people in at least 20% of permanent positions
8
6
4
2
0
Organisational contd….Organisational contd….
3 – Strength of special skill & knowledge base
- This parameter is to encourage contractors to employ environment friendly and new and innovative technologies etc. in construction
The scoring on this parameter are as follows:
Parameter Level of achievement Score
Strength of special skill & knowledge
base
Use of metal scaffolding instead of bamboo
Use of non-polluting construction equipment
Use of other technologies or equipments so far not used in the sector
5
4
3
4 – Commitment for internships to VTI graduates
- This parameter is designed to provide incentives to contractors to facilitate the betterment of vocational training for construction in Bhutan
The scoring on this parameter are as follows:
Parameter Level of achievement Score
Commitment for internships to VTI
graduates
Internship opportunities for VTI graduates equivalent to ≥ 10% of project workforce
Internship opportunities for VTI graduates equivalent to 5-10% of project workforce
5
3
This sums up the scoring of 25 points under the “Organizational Strength ” category in the technical score.
Award of Work:-Award of Work:-
Contractors who obtain a score of 60 points or more on technical will move to the second stage.
In the second stage, the technical score from the previous stage will be combined with the financial bid to obtain the overall techno-financial score as given below:
**Work shall be awarded to the contractor obtaining the highest overall techno-financial score.
Lowest quoted bid among qualifying bids 60% -------------------------------- Financial bid quoted by x
40% of Technical score for x
2. New System For Contractor
Classification
Simplifications to the existing classification systemSimplifications to the existing classification system
Nu 4 million
PRESENT CLASSIFICATIONPRESENT CLASSIFICATION PROPOSED CLASSIFICATIONPROPOSED CLASSIFICATION
Nu 15 million
Name D
No. of contractors 2522
Limit on project sizes < 2 mn
Max. no. of projects 1
Name C
No. of contractors 285
Limit on project sizes 2-9 mn
Max. no. of projects 3
Name A B
No. of contractors 58 35
Limit on project sizes >19 mn 9-19 mn
Max. no. of projects 5 4
LARGE contractors No restriction on number of projects? Eligible for projects > Nu 15 million To be awarded projects based on the new point
based system proposed
MEDIUM contractors No restriction on number of projects? Nu 15 mn ≥ Project size > Nu 4 mn To be awarded projects based on the new point
based system proposed
SMALL contractors Maximum 2 project allowed at a time? Total works (all together) ≤ Nu 4 mn To be awarded projects based on the lowest bid
basis
Same as class B; equipment of class A
Should get incorporated within 1 year
Class Requirements
No requirements on track-record for being in any class – registration purpose Possible for new, promising contractor to enter higher class Adequate consideration for the large number of small contractors
Same as those for class C
One site supervisor
Incentive to those bidders who employ VTI site supervisor
Class –LargeClass –Largeallowable Range :- > 15 mnallowable Range :- > 15 mnmax No of Project :- max No of Project :- No limit No limit /5 /5 Nos.Nos.
Proposed System for Contractor Classification
Class –Mediumallowable Range :- 4-15 mnmax No of Project :- No Limit/ 4 Nos
Class –Smallallowable Range :- < 4mnmax No of Project :- 2 Nos provided the total amount is <4mn
3. Schedule of Implementation3. Schedule of Implementation
4. e-tool for evaluation
CDB WEBE-Software
Bid Invitation Stage
Up-load Tender
EnterName of the workEstimate AmountProject Duration
Enter RequirementsEquipmentsManpowerSpecial Strength
CDB Database
Work IDGenerated
Information gets
Stored
Evaluation Stage
Enter Work IDReceives Information from DatabaseName of the workEstimate AmountProject DurationSet Criteria (manpower, equipment etc.)
CDB Database
CDB WEBE-Software
(Enter ID)/CDB No.
Enter CDB No.Receives Information from Database for contractorSimilar ExperienceAnnual TurnoverPast PerformanceNos. of work in hand & value of works that overlaps with the current project
Enter other parameters:
eqip, m/p etc.
Repeat for each bidder – evaluation complete
Gets Storied in Database
CDB WEBE-Software
Work Completion stage
EnterDate of completionFinal AmountPerformance ScoreTimely Completion ScoreQuality Score
CDB Database
The past performance score of the bidder’s gets updated which will be used in the next bidding processWork awarded gets updated as completed
Tashi Delek
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