Day-1 : Course Overview

Procurement definition and its flowchart

Different methods of work execution
Sample of Notice publish in newspaper

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Construction Project Management
(CPM)

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 3.1 Method of Work Execution
 Work can be executed either through amount or contract.
 If the work are executed by the owner itself, by hiring workers
and supplying materials and equipments
 The record of labor employed each day and the part on which
materials and equipment if any employed is maintained in book
keeping.
 It is useful when work is small and necessary to do immediately,
and the expertise are available within the organization.
 It saves the cost required for making profit by the contractor and
VAT also.
 It also helps to keep the staffs busy in the works as their work
division.

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 The Public Procurement Act, (2063-9-10) & The
Public Procurement Regulation, (2064-5-03) gives
the idea on Work Execution.
 Procurement” means acquisition of any goods,
consultancy services or other services or carrying out
or causing to be carried out any construction works,
by a public entity pursuant to this Act;
 Two types:
a) Traditional procurement
b) E-procurement

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E-Procurement website

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For Consulting services

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Day-2 : Course Overview

Different methods of work execution

Sample of Notice publish in newspaper
Sample showing Technical and Financial
proposal
Sample of Evaluation Criteria
Sample showing TOR Sample , RFP Sample

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 WORK EXECUTION :
 Define as the procurement of goods, Works and Consultancy
Services
 PPA , PPR along with the guidelines prepared by Public
monitoring office (PPMO) describes the different methods of
work execution as follows :
(1) By inviting open bids at international level,
(2) By inviting open bids at national level,
(3) By inviting sealed quotations,
(4) By procuring directly,
(5) Through participation of users' committee or beneficiary
group,
(6) Through force account.

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 Methods of work execution
Procurement of works :
 ICB/NCB/Sealed Quotations/Direct/Users
group/Special/Non-government/Amanat
Procurement of goods :
 ICB/NCB/Sealed Quotations/Direct/Users
group/Special/Non-government/Amanat
Procurement of consultancy services – Competitive (15 days'
notice of EOI & 30 days’ notice of presenting Proposals)
/direct
* EOI = Expression of Interest

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For procurement of goods, construction works or
other services:

(1) By inviting open bids at international level,

(2) By inviting open bids at national level,
(3) By inviting sealed quotations,
(4) By procuring directly,
(5) Through participation of users' committee or
beneficiary group,
(6) Through force account.

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Work Execution for Consultancy
services
(b) Procurement of consultancy service:
1. By requesting competitive proposals,
2. Through direct negotiations.

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 1 : By Sealed competitive Bidding
a) National Competitive Bidding (NCB)
b) International Competitive Bidding
(ICB)

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 National Competitive Bidding (NCB)

o 30 days notice in national newspaper/website

o minimum one responsive bid
o 90 (up to to 10 crore / 120(10 crore above) days bid validity and 120/150
days bid security validity
o 15 days notice for agreement
o One time withdraw or modifications
o Single or joint venture (maximum 3 and not less than 25% share)
o Selection notice for 7 days
o Contract can award if bid amount is not substantially higher than the
approved estimate
o Known as Local Competitive Bidding
 All the eligible bidders are invited to participate in bidding
 Tender notice to be published in national daily newspaper for two
consecutive days
 Also, tender shall be published in the concerned office
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NCB SAMPLE

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International Competitive Bidding (ICB)
 If the amount of work is huge and national/domestic
contractor cannot perform the job, eligible bidders are
invited from all over the world
o 45 days notice in national English newspaper or
international journal/website (English Language)
o minimum one responsive bid
o Single or joint ventures
 Information to be furnished in the bid by foreign
bidder
 Whether the bidder is having a local agent or not
 Name and address of the agent if any .
 Types of the service being provided by the agent
 Currency and procedure of payment to the agent
 Other agreement with the agent if any

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ICB-SAMPLE

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WHEN ICB IS CONDUCTED :
 When the construction works are complex and
special nature is to be followed
 When agreement enters into a donor agency
foreign goods or Constructions works has to be
procured from foreign assistance
 When the goods or services requested by the
public entity are not available under Competitive
prices from more then one construction
entrepreneur or supplier within the state of Nepal

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2: Sealed Quotation
o Estimate up to 2 million for construction work
(revised)
o Estimate up to 1 million goods
o 15 days notice in national or local newspaper
o 3 minimum quotations are required .
o 45 days bid validity and 75 days bid security
validity
o 7 days notice for agreement
o No withdraw and no modifications
o Contract only within or below the estimate amount

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SEALED QUOTATION SAMPLE

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FINANCIAL SAMPLE

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Amended Notice /Re-notice

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Letter to respective firm

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Request of proposal

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Technical Proposal Sample

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Financial Proposal Sample

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Eligibility and Responsive Form

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Financial Evaluation sample

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Technical Evaluation Sample

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Final Evaluation after getting score from
Technical and Financial Proposal

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3: Direct Purchases
o Minimum three quotation from standing list is required
if purchase is above 25000
o Estimate up to 5,00,000 for construction work
(revised)
o Estimate up to 3,00,000 for goods
o Estimate up to 15,00,000 for domestic products for one
time in FY
Can be done on following Cases:
a) If only one supplier has exclusive right to supply the
goods then it should be procured from that supplier
b) If only one supplier or consultancy services has
technical efficiency to purchase the requirement

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4:User Committee

o Up to 6 million ( 10Million amend)

o Up to one third of estimate – mobilization
 Main objective of this method is to create employment
and to have beneficiary community involvement

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5: Work through Force Account (Aamanat)

 It is the execution of the public works by using the

resources of the public agency of the government
without bidding or contract agreement
Can be done on following condition :
1) In case of emergency
2) When no contractor is interested to do work
3) Size, nature , Type of work, Location being
unsuitable for competitive bidding

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Questions:
1) What are the different method of work execution ?
Describe them in brief (7 marks )
2) List out the different method of procurement of goods or
services. Describe them (7 marks )

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 3.2 Contract
 According to Contract Act,2056 it is defined as “the agreement
between two or more then two parties to do or not to do
something which is enforceable by law”
 All contract are agreement but all agreement are not contract

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Elements of contract /Essential of a valid
contract
1. Offer and acceptance
2. Consideration
3. Capacity to contract
4. Lawful purpose
5. Possibility of performance
6. Free Consent
7. Certainity
8. Legal Relationship
9. Witten
10. Two or more then two parties
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1 : Offer and acceptance
 Offer may be general or specific
 If a person advance a proposal to a person who gives his
acceptance , then the contract exists
 If a person making proposal state, he should be given
notice or acceptance within a project at time but not
such notice is received then contract does not exists
 If a person dies or became Senseless before his pruposal
is being acceptance then no contract exists
 If no time limit is specified in the pruposal then it should
be completed within a definite period of time

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2 : Consideration
 It is the cause , motive or influence that induce a
contracting party to enter into the contract
 It is also defined as something of value that is exchanged
by contracting parties

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3 : Capacity to contract
 According to contract act 2056, From clause 3 following
Person are not allowed to enter in contract i.e
 Idiot
 Drunkard
 Inscence ( senseless)
 Children below 16yrs age

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 4: Lawful Propose

When two parties agreed to perform a job which is

against a country law , then the contract is invalid
 5 : Possibility of performance

Impossible contract is invalid

For ex : Parties agreed to launch rocket to the sun then the
contract is invalid since it is impossible
 6 : Free consent (permission )

Contract should not involve Fraud , Undue Influence , Deceit ,

Coercion ,etc if it is present then the contract is invalid
 7: Certainity /Possibility

Contract which cannot be carried out because of various

reasons are invalid
For ex : Contract after natural calamities destroyed the
agree-mental things then contract does not exits
 8 : Legal Relationship

Clear intention of both parties entering into the contract

Should have all necessary document required
 9 : Written

Verbal Agreement cannot be contract

10 : Two or more then two parties

Should have involvement of two or more then two parties

Contract as for enforceability :

a) Void Agreement
b) Valid Contract
c) Voidable contract
d) Void Contract

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Void agreement & Valid Contract

Void Agreement Valid contract

 It is done between two or  When all the documents

more then two parties in are present and two parties
which there occurs no have clear intention to
enforceable by law work then it is valid
contract

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 Voidable contract & Void Contract
Voidable contract
 As per contract act, following
contract are invalid /voidable if
the parties desire to make it
void. some activities are
1. Enter by undue influence
2. Contract having fraud of
misstatement
3. Forceful contract or Contract
against free consent
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Void Contract
 In two involving parties, if one is
disqualified then the contract is
invalid
 As per contract following
Contract are null/void contract :
1. Contract to statuary law
2. Not possibility of performance
3. Signed by incompetent parties
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Importance of contract :
 For making contract enforceable by law
 To specify whether the contractor must do and what the
owner must pay
 To specify the quality and quantity of work done
 To specify how will the contract get terminated
 To specify the time frame within which the contract is to
be finished and payment is to be made

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Classification on the basis of method
of payment :
1. Lump sum contract
2. Unit rate/ schedule of rate contract
3. Cost plus /cost reimursaible contract
a) Cost plus % of cost
b) Cost plus fixed cost
c) Cost plus fixed cost & profit sharing
d) Cost plus sliding cost

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1 : Lump Sum contract
 Construction work is carried
out as per drawing and
specification given by a client
within a fixed time and fixed
amount
 No detail estimate is required
 Whole work is checked with
drawing , specification and
Contractor is paid lump sum
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 Advantages:
 Actual cost of construction is
known before the start of the
work
 No account and record is to
be made
 Disadvantages:
 High risk to contractor
 Alteration or addition
becomes difficult
 Not useful for complex work
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2: Unit rate /Schedule of rate contract
 Mostly used in nepal
 If amount of quantity is changed then loss bear by owner & if
rate is changed loss is bear by contractor
 Project is breakdown into no of works , items, measure in unit
no , running meter , square meter , cubic meter ,etc
 Actual cost of structure or the construction work is carried
out by multiplying unit of measurement and rate
 Lowest successful bidder is awarded with the contract from
many competitive bidder

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 Advantages :  Disadvantages :
 Competition of fair base  Detail measurement is
 Lower risk to contractor required so it is time
dependent
 Actual cost of construction
is not known before start
of work

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3 : Cost plus /cost Reimursable contract
1 : Cost plus % of cost 2 : Cost plus fixed cost
 Oldest form of fee  In order to overcome
structure the abuse of cost plus
 Higher the amount of % of cost , fixed cost
cost higher will be paid approach is developed
to the contractor  Fixed amount of
 It is lucrative money is paid to
(profitable ) to contractor
contractor only

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 3 : Cost plus fixed cost & profit
sharing :
Provides a reward to the contractor who controls cost keeping
them at minimum
Fixed target amount is assigned for the construction work
25% of profit sharing is awarded to the contractor who complete
the work within the target amount
 4 : Cost plus Sliding cost :
 Variation to the profit sharing approach is the sliding fee which will not
reward the contractor for cost Under run but also penalizes the
contractor for cost over run

 Contractor fee =R*(2T-A) where, R= Base value usually 5% ,

T=Target amount , A= Amount taken by contractor to do work

For ex : Target = 1 crore , r=5%

Contractor A = 90 lakh so contractor fee =R*(2T-A) =5 lakh 50K

Contractor B= 120 lakh so contractor fee =R*(2T-A) =4 lakh

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