What is procurement?
Procurement is the overall process of selecting a contractor for a project. Procurement specifically related to dredging and maritime construction projects typically has several stages:
• Identifying the client’s objectives
• Developing options
• Studying the feasibility of the different options
• Determining the need for dredging
• Specifying the various requirements to fulfill the need
• Identifying potential dredging contractors
• Soliciting bids and proposals
• Evaluating these bids and proposals, and
• Awarding the contract.
The emphasis here is on identifying potential contractors, the tender procedure and awarding the contract. For a successful dredging project, a client should choose the contractor who offers the best value for money. That does not mean the least expensive contractor, but the contractor who has the appropriate equipment and performs the necessary services most economically.
Who is in charge of the procurement process: client? contractor? consultant?
In the end the client is always responsible for the procurement process. In certain procurement cases, for instance, for the annual maintenance dredging of a marina, a consultant is usually not needed. Since this is a recurring project and not unique, the client will normally have all the necessary knowledge in-house. In contrast, for large dredging projects, the client will probably not possess all the knowledge required to make a decision.
Most large and complex dredging projects are undertaken only once or maybe twice by a given client, generally a government entity or port authority. Contractors will undertake such projects far more often. This implies an experience and knowledge gap between the client and the contractors. The role of the consultant is to bridge this gap. Ideally a consultant will be involved from the start of the dredging project, that is, the planning phase, and a good consultant will advise the client on the requirements of the project, the pre-qualification criteria and on the pre-qualification itself, will (help) draft the tender documents and will advise on the review of tenders and the final selection of the contractor.
Why spend attention to the procurement process?
The procurement process is fundamental to the success of a dredging project. Ultimately the procurement will determine the allocation of tasks, as well as the allocation of responsibilities and risks amongst those involved in the project. If the procurement is successful the contractor, client and possibly consultant will, in collaboration, define the risks involved in delays, determine whether to ‘pull the plug’ if the project is not proceeding properly, and decide how and when to adjust course. And last but not least, a serious procurement process guarantees the best value for the client’s money, which is not necessarily the lowest price.
What is pre-qualification?
Pre-qualification is a first selection amongst potential contractors before bids and proposals are solicited. In the pre-qualification stage contractors can provide evidence of their qualifications prior to the actual tender process. Pre-qualification raises the quality of the competition by defining the range of each contractor’s attributes in terms of technical ability, craftsmanship, resources, equipment, financial stability, attitudes and experience. In other words: pre-qualification is the process of assessing whether a contractor is potentially able to execute the project in terms of quality, time and costs. The pre-qualification process makes sure that only qualified contractors proceed to the next stage of the procurement process – the tender process. Prequalification encourages the client to focus on priorities and needs prior to the final selection of a contractor.
How are the pre-qualification criteria determined?
The pre-qualification criteria are determined by the client with the advice of the consultant. The criteria should be objective, clearly stated, and apply equally to all prospective contractors. Excessive burdens on prospective bidders should be avoided and clients should not demand unnecessary formalities. For example, if original documents, certificates and attested signatures are required, it should be sufficient to receive those at the end of the bid evaluation procedure from the successful contractor or alternatively only from the bidders who are short-listed after pre-qualification.
What considerations are important for the procurement strategy?
In general there are two possible procurement strategies: the contractor can be selected at an early stage or at a later stage. Considerations may include:
• Time: how soon should the project be delivered?
• Cost: how important is knowing the final cost before committing to construction?
• Quality: what level of quality is required?
• Complexity: what level of (technical) complexity is involved?
• Flexibility: how likely are changes in requirements or externally enforced changes?
• Risk: what risk allocation is required?