Inform Ractice Note - CIDB
inform practice noteconstruction industry developmentIssued by the Construction Industry Development BoardDevelopment through partnershipconstruction procurement and deliveryPractice Note # 6COMPETITIVE SELECTION OFMay 2007PROFESSIONAL SERVICE PROVIDERS (Version 2 – February 2008)Content1.2.3.4.5.6.Introduction. 2Professional registration. 2Differentiators as a means of selection . 3Evaluating the potential quality of a service that is offered . 4International selection methods. 4Recommended practice . 5Synopsis:.The Policy Strategy to Guide Uniformity in Procurement ReformProcesses in Government issued by the National Treasurycontains four high level objectives, one of which is to “replacethe outdated procurement and provisioning practices ingovernment with a supply chain management function and asystematic competitive procedure for the appointment ofconsultants.”.This practice note identifies the fundamental reasons forprocuring professional services and the key considerations inengaging professional service providers, discusses professionalregistration with a statutory body and identifies a number ofdifferentiators between professionals and professional serviceproviders that form the cornerstone of any competitive selectionprocess. A practical means of quantitatively evaluating thepotential quality of a service is outlined and an overview ofmethods of selection that are used internationally is presented.Recommended approaches to the creation and maintenance oflists of pre-qualified professional service providers, thenegotiation of contracts, the solicitation of tender offers andevaluation criteria are presented.Board: Prof Raymond Nkado (Chairperson) Cecil Rose (Deputy Chairperson) Nazir Alli Lwandile Kona Nyeleti Makhubele Cannon Noyana Gavin Strydom Lungile Mchunu Gregory Steele Sisa Ngebulana Shereen Tebogo Bogosing Nyiko Gudlhuza Marten Govender Ronnie Khoza (CEO)cidb’s inform practice notes provideguidance and clarity in achieving clientobjectives in construction procurement anddelivery. Practice notes inform clients andpractitioners on how to embrace bestpractice and to deal with issues that mayarise. They are aligned with, but do notreplace regulation.
1.A profession may be regarded as:‘an occupation in which an individual usesan intellectual skill based on anestablished body of knowledge andpractice to provide a specialised servicein a defined area, exercising independentjudgement in accordance with a code ofethics and in the public interest.’UK Inter Professional GroupIntroductionThe professional services are procured within the constructionindustry to: provide services including those relating to the design andsupervision of construction work, for limited periods withoutany obligation of permanent employment;benefit from superior knowledge, transfer of skills andupgrading of a knowledge base while executing anassignment; orprovide independent advice on the most suitableapproaches, methodologies and solutions of projectsThe key considerations in engaging professional service providersare:There are a number of internationalapproaches for the regulation of aprofession, including:Licensing whereby an area of workrestricted by statutory licensing cannotbe undertaken by an unlicensed person.Registration which involves the settingof standards, the keeping of a registerof qualified persons and the award oftitles.Specialist Lists or a non-statutoryvoluntary listing of professionals whohave met a defined standard ofcompetence in a specialist area,typically administered by a professionalor trade body. the quality of the outputs or deliverables of the servicesatisfy client requirements and expectations;the service is provided with the reasonable skill and carethat is normally used by professionals providing suchservices; andthe advice is independent from any affiliation, economic orotherwise, which may cause conflicts between theprofessional service provider’s interests and those of theclient.2.Professional registrationA number of statutory councils have been established in SouthAfrica to regulate various professions in terms of the followingActs:Engineering Profession Act, 200027. (1) The council must in consultation with the CBE,voluntary associations and registered persons, draw upa code of conduct for registered persons and maydraw up a code of practice.(2) (a) The council is responsible for administering thecode of conduct and the codeof practice and must ensure that the codes areavailable to all members of the public atail reasonable times.(b) The council must provide the CBE with copies ofboth codes.(3) All registered persons must comply with the codeof conduct and the code ofpractice and failure to do so constitutes improperconduct. Architectural Profession Act, 2000Engineering Profession Act, 2000Landscape Architectural Profession Act, 2000National Scientific Professions Act, 2003Planning Professions Act, 2002Professional and Technical Surveyors' Act, 1984ProjectandConstructionManagementProfessions Act, 2000Property Valuers ProfessionQuantity Surveying Profession Act, 2000Typically, these Acts empower the various statutorycouncils that they create to determine competencystandards for the purpose of registration, consider anddecide on applications for registration, keep a registerof registered persons, draw up and publish a code ofconduct for registered persons and investigatebreaches of such codes as improper conduct.Practice note # 62 of 8
Professional registration with a statutory body in a nutshell meansthat the registered person has satisfied the entry competencystandards to a category of registration and is bound by aprofessional code of conduct. Where such bodies establishcontinuing professional development requirements, registration isindicative that the registered person is maintaining his or her skillsand competencies3.Differentiators as a means of selectionThe identification of differentiators is the corner stone ofcompetitive selection process. No two professionals havesame intellectual abilities, experience or skills. Neither doprofessional service providers have the same capabilitiesproficiencies. Differentiators form the basis for competition.anythetwoandThe proficiency of a professional person in relation to a task orproject is invariably a function of his education, training,experience and contextual knowledge. Professional registration,degrees and diplomas may be used as indicators that a personhas suitable levels of education and training, while a record ofwork and the writing of an approach paper to an assignment maybe used as indicators of experience and contextual knowledge.The execution of previous projects in a particular practice area isalso an indicator of contextual knowledge.The design and supervision of construction works is by far themost commonly required professional service sought within theconstruction industry. Support staff and, depending upon the sizeand nature of the work, other professional staff are required toprovide the required service. The management of the team,internal systems and controls, the available equipment and officeinfrastructure, the manner in which the business is structured andrun as well as the “corporate” memory (i.e. that which haspreviously been done) of the service provider all have a profoundimpact upon the quality of the service and the end result. Asuccessfully completed project of a similar nature is an indicator ofcapability and proficiency.Levels of remuneration for services performed are yet anotherdifferentiator. Cost to perform an assignment varies markedlybetween professional service providers, based on factors such asspecialisations, expertise, previous experience, overheadstructures, organisational dynamics and the productivities ofindividuals. Profit margins also vary, as do the remuneration ofprincipals and senior staff members.Another differentiator in the South African context is the degree towhich a professional service provider has embracedtransformation imperatives along racial and gender lines.A balance between the aforementioned differentiators needs to bemade when comparing professional service providers. Thecompetitive advantage offered by professional service providers ina number of areas needs to be considered, particularly in the lightof the downstream impact of the service. For example the3 of 8Practice note # 6The most appropriate solution is notnecessarily the cheapest design solution.Furthermore, the consultant’s ability todevise the most appropriate solutiondepends on expertise, training and, mostimportantly, experience. It follows thatpurchasers wishing to identify the mostappropriate solution should implement aselection process that:Leads to the selection of theindividual or team that is bestqualified to undertake the particularassignment, andEmploys the experience of this teamto develop the scope of services toensure that all opportunities foradding client value are provided forwithin the project.Federation of Canadian Municipalitiesproficiencyremunerationquality ofservicetransformation“Engineering design” typicallyrepresents 1 to 2 percent of the overalllifecycle cost of a project, withconstruction accounting forapproximately 6 to 18 percent of thecost. All the rest—80 to 93 percent ofthe lifetime asset cost—is accountedfor by operations, annual and capitalmaintenance and decommissioning.Federation of Canadian Municipalities
operations and maintenance cost over the lifetime of a facility, willdepend on how well these professionals carry out their work.4.Evaluating the potential quality of a servicethat is offeredThe quality of the service offered by different professional serviceproviders, or for that matter, a joint venture (consortium) ofprofessional service providers, can be qualitatively compared byobjectively rating a number of quality criteria / indicators that arepertinent to the specific scope of work associated with a project.Commonly encountered quality criteria Response to (ability to relate to) the proposed scope of work/projectdesign which establishes the manner in which the respondent ortenderer intends to perform the contract Adequacy of proposed work plan and proposed methodology Organization, logistics and support resources Availability of resources Demonstrated managerial ability appropriate to the size and nature ofwork Control procedures Qualifications and competence of the key staff (assigned personnel) inrelation to the scope of work Demonstrated experience in comparable projects Demonstrated experience with respect to specific aspects of the project Experience (familiarity) in the region, or similar regions (local conditionsor knowledge) Performance record in similar projects (past performance) Quality assurance systems which ensure compliance with statedemployer’s requirements Communication/facilitation skills Sound knowledge of the employer’s policies or work procedures (or both) Transfer of knowledge and systemsA practical way of doing so is to: identify a number of qualitycriteria that are pertinent to theproject;assign a weighting to each of thecriteria, based on their perceivedimportance to the project;objectivelyrateeachprofessional service provider asbeing poor, satisfactory, goodand very good in relation to suchcriteria;allocate scores of 40, 70, 90 and100, respectively, to suchratings; andcalculate the weighted score andtotal the weighted scores for allthe criteria.Professional service providers whoseaggregated score is 60 % or lessshould be rejected as being underqualified for the assignment.Example of the rating and scoring of a professional service providersPoor(score 40)Satisfactory(score 70)Good(score 90)Very good(score 100)Technical approach and methodologyThe technical approach and / or methodology is poor / is unlikely to satisfy project objectives or requirements. Thetenderer has misunderstood certain aspects of the scope of work and does not deal with the critical aspects of theproject.The approach is generic and not tailored to address the specific project objectives and methodology. The approachdoes not adequately deal with the critical characteristics of the project.The quality plan, manner in which risk is to be managed etc is too generic.The approach is specifically tailored to address the specific project objectives and methodology and is sufficientlyflexible to accommodate changes that may occur during execution. The quality plan and approach to managing risk etcis specifically tailored to the critical characteristics of the project.Besides meeting the “good” rating, the important issues are approached in an innovative and efficient way, indicatingthat the tenderer has outstanding knowledge of state-of-the- art approaches.The approach paper details ways to improve the project outcomes and the quality of the outputs5.International selection methodsThere are a number of methods used internationally to selectprofessional service providers, including:Practice note # 64 of 8
quality and cost based selectionSingle-source selectionwhereby the tenderer who scores theSingle-source selection of consultants does not provide thehighest number of points for quality andbenefits of competition in regard to quality and cost and lacksprice is awarded the contract;transparency in selection and could encourage unacceptablequality based selection whereby apractices. Therefore, single-source selection should be usedcontract is negotiated with the tendereronly in exceptional cases. The justification for single-sourcescoring the highest number of points forselection should be examined in the context of the overallquality;interests of the client and the project.selection under a fixed budgetSingle-source selection may be appropriate only if it presentswhereby tenderers are provided with thea clear advantage over competition:available budget and are requested to for tasks that represent a natural continuation of previousprovide their best technical and financialwork carried out by the firm;proposals in separate envelopes and a where a rapid selection is essential (for example, in an.contract is negotiated with the tendereremergency operation);submitting the highest ranked technical for very small assignments; oroffer. when only one firm is qualified or has experience ofleast cost selection whereby tenderersexceptional worth for the assignment.submit technical proposals and financialproposals in two envelopes, the financialSUPPLY CHAIN MANAGEMENT:proposals of only those tenderers whoA GUIDE FOR ACCOUNTINGobtain a quality score above a thresholdOFFICERS OF MUNICIPALITIESare opened and the contract is awardedAND MUNICIPAL ENTITIESNationalto the tenderer with the highest scoreTreasurybased on price; andsingle source selection whereby acontract is negotiated with a single suitable tenderer.The method of selection is determined by the scope of theassignment, the quality of the service, the complexity of theassignment and whether or not assignments are of a routinenature.The calling for tenders and the evaluation of submissions is timeconsuming. In order to reduce the number of submissions made,clients may establish lists of pre-qualified professional serviceproviders and invite a limited number of listed professional serviceproviders on a rotational basis to submit quotations or tenders.Alternatively, clients may issue calls for expressions of interestand short list a manageable number of suitably qualifiedrespondents to submit tender offers.6.Recommended practice6.1Public sector requirementsThe Constitution of the Republic of South Africa requires that theprocurement system be fair, equitable, transparent, competitiveand cost effective. Procurement is also regulated in terms of theSupply Chain Management Regulations issued in terms of thePublic Finance Management act of 1999 and the MunicipalFinance Management Act of 2003. These regulations require that,wherever possible the appointment of professional serviceproviders be on a competitive basis.5 of 8Practice note # 6The system should include restrictedtendering procedures for preparingshortlists of consultants, and selectionmethods that are based primarily onquality considerations and have costconsiderations as a subsidiary aspect.World Bank, 2005
ConsiderationsA competitive selection processallows consortiums to be puttogether to offer clients best valueor to take advantage of preferencesoffered to secure participation bytargeted enterprises.The attractiveness and viability ofopening up a local office in ageographical area increases as thevalue and duration of a contractincreases.A “pre-qualified list” demands that aprofessional service provider have“in-house” capabilities and have anoffice in a geographic location.In order to ensure fair competition,the value of contracts awarded fromsuch a list needs to be relatively low.6.2Lists of pre-qualified professional serviceprovidersA ‘Pre-qualified list’ is a group of service providers who havebeen assessed as being capable of undertaking work in a certaincategory or discipline, in defined geographical locations, andwithin a defined financial range i.e. they are pre-qualified toprovide the service. Such lists are appropriate and ensure faircompetition where: services are regularly required;the tasks are of a relatively straight forward nature, involvingin the main, standard technologies within a single disciplinein terms of which inputs are relatively well known andoutputs can be readily defined;services are required within a geographical area at shortnotice, frequent interaction with the client or an affectedcommunity is essential or services are required tosupplement in-house capacity; andthe value of the contract is typically less than R1,5 million.Suggested prequalification criteriaOnly natural or juristic persons whose primary business is toprovide independent technology-based intellectual services toclients and which, if a sole practitioner, has a professionallyregistered person as a principal or if a partnership, closecorporation or company, has at least 50% of its partners,members or directors professionally registered.The process for establishing and utilising sucha list is as follows:Invite calls for submissions of interest foradmission to the list in appropriate media.2)Evaluate applications received to ensurethat those admitted to the list are capableof performing the service required in aparticular service area.The prequalification criteria should include:3)Admit to the list for a period not At least one full time employee who, in respect of a serviceexceedingthree years those respondentsarea, has:who have the capability to perform thei)appropriate professional registration;required service in a particular serviceii) work capabilities as demonstrated by client references,area.admission to a specialist listing or professional4)Depending upon the numbers, invite allregistration, as appropriate; andprofessionalservice providers in aiii) at least 7 years post graduate work experience.serviceareatosubmit tenders or invite minimum levels of professional indemnity insurance cover;on a rotational basis, not less than three possession of a valid tax clearance certificate;where the estimated contract value is demonstrable financial viability through the submission ofless than R200 000 and not less than fivefinancial statements for the previous financial year and thewhere the estimated contract valueaverage annual income per professionally registered staffexceeds R200 000.member being above a threshold value5)Publish awards made form the list on awebsite in a searchable data base.Other criteria, depending upon circumstances may inclu
Professional and Technical Surveyors' Act, 1984 Project and Construction Management Professions Act, 2000 Property Valuers Profession Quantity Surveying Profession Act, 2000 Typically, these Acts empower the various statutory councils that they create to determine competency standar
particular contract may amend these standard provisions. Goods Goods (Short Form of contract Who initiates payment claim Processing of claim Period within which Employer pays Supply contracts cidb General conditions of purchase - - within 28 days of receipt of a Supplier’s statement and where requir
VoIP SOLUTION FOR A PERIOD OF 3 YEARS Page 2 of 55 For cidb Witness Bidder Witness CONTENTS No. Description Page No. 1. SDB 1 - Tender notice and invitation to bid 03 2. SBD2 - Tax Clearance Certificate 05 3. Certificate of Authority for signatory 06 -07 4. SBD3.1 - Pricing data 08 5. SBD4 - Declaration of interest 09 - 10 6.
Professional and Technical Surveyors’ Act, 1984 Project and Construction Management Professions Act, 2000 Property Valuers Profession Quantity Surveying Profession Act, 2000 Typically, these Acts empower the various statutory councils that they create t
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