Procurement & Contract Administration

Ijaz Ahmad
TOPICS TO BE COVERED IN THESE MODULES:
 PROCUREMENT OVERVIEW

 PREQUALIFICATION, EOI

 PEC, WORLD BANK, ADB BIDDING DOCUMENTS(RFP, IFB)

 PLANNING COMMISSION DOCUMENTS

 PPRA RULES

 GUARANTY, INDEMNITY

 INTERNATIONAL COMMERCIAL TERMS(INCOTERMS,2000)

 LETTER OF CREDIT
WHY STUDY PROCUREMENT & CONTRACT ADMINISTRATION?

 Nestle Management Trainees

 As a Project Manager (Module in PMP, Public Sector Org.)

 Be able to Economize Procurement (Ghazi Brotha, Imprejilo)

 One of the highest paying profession

 Competent Professionals are in high demand (Lawyer + Engg,)

CONTRACT ADMINISTRATION CONTEXT: PROCUREMENT
 Procurement of Goods, Works and Services
 International Federation of Consulting Engineers (FIDIC) forms of
Contract (www.fidic.org)
 PEC Forms of Contracts for Works & Services:
 Std Form of Bidding Documents (Civil Work) (FIDIC 1987-92)
 Std Form of Bidding Documents of Works for Smaller Contracts
 Std Form of Bidding Docs for Procurement of Works (E & M)
 Std Form of Contract for Engineering Consultancy Services (Time Based Assignments)
 Std Form of Contract for Engineering Consultancy Services (Lump Sum Assignment)
 Std Form of Contract for Engineering Consultancy Services for Smaller Projects

 Commercial Contracts Templates for B2B (www.smeda.org)

 Std Form of Contract for Goods (World Bank, ADB)
 Procurement Flow Chart
Amount of
Procurement
?
Petty
3 Quotations
Purchase
Up to 2 More Than 2
Millions Millions

Add on PPRA Add in News

Website Papers

Prequalify/ Prequalify/
EOI EOI

IFB/RFP IFB/RFP

LOA(AWARD) LOA(AWARD)
PREQUALIFICATION OF CONSTRUCTORS (PEC GUIDELINES)

S.No Category Total Marks

1 Work Experience 35

2 Financial Soundness 35

3 Personnel Capabilities 20

4 Equipment Availability 10

Details
 TYPES OF BIDDING DOCUMENTS

S.No Name of the Agency Source

http://www.pec.org.pk/Downloads.aspx#biddocs

1 Pakistan Engineering Council(PEC) Electrical & Civil Works &

Services
http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:20483254~menuPK:84284~pagePK:84269~piPK:60001558~theSitePK:84266~isCURL:

2
Y,00.html

World Bank
Goods, Works, Services

3 Asian Development Bank(ADB) Goods, Works, Services

4 JICA Works,?
 PPRA RULES ( WWW.PPRA.ORG.PK)

Rule No. Rules Title Page No

8---11 Procurement Planning 4

12, 42(b) Amount of Procurement 5, 19

36, 42(c,d) Types of Procurement 14,20

15, 16, 17, 18 Prequalification & Qualification 7

12, 13, 14 Advertisements (NHA’s Ex.) 5

20-----27 Methods of Procurement 9

Open, Evaluation and Rejection of

28-35 12
Bids
 PPRA RULES ( WWW.PPRA.ORG.PK)

Rule No. Rules Title Page No

Acceptance of Bids and Award of

38-41 19
Procurement Contract

43 Payments 22

Entry into force of the Procurement

44 22
Contract
Maintenance of Records and Freedom
46, 47 23
of Informantion

49 Arbitration 24

50 Mis-procurement 24

18, 19, 48 Black Listing 8, 24

 GUARANTY(CONTRACT)
Definition:
A guaranty is a conditional promise made with someone to pay
or do something, when someone else, who had promised to pay
or perform, fails or defaults.

Guaranty is always given in the nature of an assurance for the

performance of an obligation undertaken by another person.

Terminology:
1. Creditor
2. Principal debtor
3. Guarantor or Surety
 GUARANTY(CONTRACT)
1. The Principal Debtor :
Anyone owing an obligation to another person under a contract
is a Debtor of such obligation(the one for whom guaranty is
given)

2. The Creditor:
Anyone to whom an obligation is owed under a contract is called
a Creditor of such obligation.

3. The Gurantor (or Surety)

In a guarantied contract, a third person enters with reference to
the contract on the understanding that such person will ensure
the payment or performance promised by debtor in his contract
with the creditor.
 GUARANTY & SURETYSHIP
Guaranty:
It is a separate and distinct contract between the Guarantor and
the Creditor.
Example: Bank Guaranty

Suretyship(Tri-Partite agreement):
It is contract in the form of a joint undertaking of the Surety and
the Principal Debtor with the Creditor.

Surety and Principal Debtor are joint promisors and hence

answerable to Creditor jointly as well as severally.
Example: Insurance Guaranty
 INDEMNITY
Guaranty:
A contract in which someone promises another to save him from
a damage is called indemnity. It is derived from Latin root word
‘Indemnis’ meaning ‘without damage’.
Example: Bid Security
Terminology:
 Indemnifier: who indemnifies
 Indemnity Holder: the Beneficiary of indemnity.
Types of Indemnities:
1. Saving from the Loss
When loss is lurking on me, my indemnifier will take loss on him.
2. Making good the Loss
I must first bear the loss and then my indemnifier will
compensate my loss.
 TYPES OF GUARANTEES
 Bid Security

 Performance Security/Guaranty

 Mobilization Advance Guaranty

 Advance Payment Guaranty

 Secured Advance Security

 Retention Money Security

 Liquidated Damages Guaranty

 FIDIC FORMS OF CONTRACT(1985-95)

RED BOOK: YELLOW BOOK: ORANGE BOOK:

FOR CIVIL WORK FOR ELECTRICAL & FOR DESIGN-BUILD &
CONSTRUCTION MECHANICAL WORK TURNKEY
FIDIC HOME/RESOURCES/CONTRACT AND AGREEMENTS/PUBLICATION/Superceded FIDIC contracts (1985 - 1995)
CONDITION OF CONTRACT FOR CONSTRUCTION
MDB HARMONIZED EDITION(2005)

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