Department of Architecture, University of Moratuwa, Sri Lanka

Program – Bachelor of Architecture – Level Five

Code and Title of paper: AP (5010) – MANAGEMENT – (Essay)

PREFACE

When a client (government or private) is seeking to have construction works carried out, some form of
procurement process will be involved. There are a variety of different methods for procurement, all of
which can be used for some level of construction works. Project tendering is the process by which bids
are invited from interested construction contractors to carry out specific packages of construction work.
It is a common procurement method to obtain construction services. The tendering process is an important
means by which a fair price and best value for undertaking the works is obtained.

The tendering process should adopt and observe the key values of fairness, clarity, simplicity and
accountability, as well as establish the concept of apportionment of risk to the party best placed to assess
and manage it. The principle of tendering is to ensure that true competition is achieved, and tenders
received are evaluated by applying certain criteria. These criteria may be expressed in terms of financial
matters, comprising a simple assessment relating to tender sums, or more complex financial evaluation,
including consideration of projected costs over the life cycle of the completed project. It can also address
other non-financial factors such as time, proposed methods, levels of capability, or sometimes a mixture
of all these criteria. All tenderers should be able to bid on an equal basis, meaning that they must receive
the same information and, most importantly, this information should be sufficient in content and accuracy
to allow them to properly assess the implications of the project and bid accordingly.

The tendering process is not always easy, and every activity in the tendering process has a time and cost
implication. Therefore, it makes economic sense not to overburden the tenderers with unnecessary
information requirements, and to concentrate on those which are relevant to the work which is to be
undertaken. Faced with competing financial pressures most construction contractors will carry out their
own assessment of the projects for which they wish to tender, and will be less inclined to bid for those
where the procedures involved are perceived as overly complicated or onerous. Also, since preparation
costs are included in their overheads, these will ultimately be passed on in the form of higher prices.

Major Projects & Demand Drivers in SRI LANKA

The construction of affordable housing has served as an important driver of construction activity in recent
years. It is expected to face demand-side pressures for the foreseeable future. In addition to affordable
housing, major Chinese investments are set to drive sector growth in the coming years, reshaping
Colombo into a global city in the process.

Port City Colombo aims to attract $13bn in primary investment to the city. It will serve as the centerpiece
to the broader Western Region Megapolis Master Plan (WRMMP), which forecasts 140 big-ticket
developments will take place over a 15-year period, at an estimated cost of $40bn. Thus, while
construction activities experienced a contraction in 2018, the industry is expected to increase its
contribution to GDP in 2019, provided that government-initiated construction projects materialize, among
them extensions of the Southern Expressway and Outer Circular Highway, and a new terminal at
Bandaranaike International Airport, as well as various projects proposed under the WRMMP.

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ONGOING AND NEWLY COMMENCED CONSTRUCTION PROJECTS IN SRI
LANKA
Refer Annexure 01

A. PROCUREMENT METHODS
International Competitive Bidding (ICB) –
ICB shall be used: when the capacity of the domestic contractors, suppliers and service
providers are limited and the advantage of ICB is evident
National Competitive Bidding (NCB) –
NCB is the competitive bidding procedure that shall be generally applicable for most
Government of Sri Lanka funded projects.
Limited / Restricted International Competitive Bidding (LIB)
and Limited/Restricted National Competitive Bidding (LNB) –
These procedures are followed when the invitation to bid is directly addressed to a pre-
selected list of international or national suppliers or contractors. The procedure is chosen
when only a few sources are available.
Direct Contracting –
Direct contracting is a means of Procurement of Goods or Services or Works from a
single supplier source
Two Stage Bidding –
For Turnkey contracts or contracts for large complex plants/equipment or information
technology systems or Works of a special nature, all of which require innovative
approaches, or where the problem of technically unequal Bids are likely to be
encountered, a two-stage bidding procedure is recommended.
Two Envelope System –
Two envelope system may be used in circumstances such as “turnkey”, “design and
build” or “supply and installation” contracts, and where alternate types of technical
proposals are possible. In the two-envelope system, bidders are required to submit their
technical and financial proposals simultaneously, but in two separate envelopes.
Technical proposals are to be opened first and reviewed to determine their response to
specifications and the financial proposal shall be opened in public.

B. BIDDING DOCUMENTS
Initiation of Drafting Bidding Documents
Contents of Bidding Documents
Standard Bidding Document (SBD)
Invitation to Bid
Instructions to Bidders
Eligibility of Bidders
Bid Validity period
Bid Security
Option 1 – Bid Declaration
Option 2 – Bid Guarantee/Cash Deposit
Clarity of Documents
Clarifications
Evaluation Criteria
Conditions of Contract (Draft Contract to be issued)
Price Adjustment
Performance Security
Liquidated Damages
Dispute Resolution
Specifications

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 C. INVITATION TO BID AND CLOSING/OPENING OF BIDS
Issuance of Bidding Documents
Bidding Period
Submission/Receipt of Bids
Rejection of Late Bids
Public Bid Opening

D. BID EVALUATION

E. AWARD OF CONTRACT
Recommendation/Determination of Contract Award
Appeal Board
Award of Contract
Letter of Acceptance
Signing of Contract
Performance Security
Debriefing
Execution of Contract
Publication of Contract Award
Default
Contract Administration
Certification of Completion of Works
Variation Orders – Works
Contingency Provision
Extension of Time

TASK
Each student is requested to select a project from Annexure 01 or from a project which will have
the same intensity and complexity. Two students cannot decide on the same project and each
student should have access to required information to respond to the assignment.
A. Preliminary explanation on the project
B. Policy adapted and the methodology followed in selecting and awarding the project to the
applicable contractor. Basically, the tender process, the procurement system, the tender
document, tendering stages and the decisions made in the evaluation stage. [Students are
strongly advised to consider above A, B, C, D, E and F and their subtopics as guidelines]
C. The impact on the procurement system and the process of procurement in the end result,
performance of the contract by the chosen contactor.
D. What could have been in the alternative if there had been drawbacks and or what are the
lessons learnt if there had been successes.

E. Your suggestions for areas of improvement to the systems adopted and the process itself.

Date of Introduction: 15th September 2020

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