W3.1_Muslem_Assesing Tendering Options for Extranet Service Using Decision Matrix Analysis

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Problem Statement:
Extranet is an important element in OPWP procurement for the purpose of sharing tender documents and information with suppliers. Currently, OPWP does not utilize extranet, but relies on contracted advisors to provide this service. In some cases, advisors charge a cost for it as shown in the table below.

Project
Year
Cost of Extranet Service (OMR)*
Project A
2012
4,000.00
Project B
2013
0.00
Project C
2013
0.00
Project D
2015
0.00
Project E
2016
0.00
Project F
2017
20,000.00
Project G
2017
0.00
Project H
2017
0.00

 * Figures are indicative.
Studying historical data and current situation show that extranet service has been provided free of charge for most of our projects. However, the high cost of extranet service for Project F commands a need to study feasible options to procure the service for OPWP future projects.

Feasible Tendering Options:
Normally, there are three modes of tendering; Single Tender, Limited Tenders, and Open Tenders [1]. The three options will be assessed in this report using Decision Matrix Analysis.

Outcomes of Each Option:
Single tender provides a rapid lead time as it considers a single source with no competition. On the other hand, open tender allows greater competition, hence better chance to have competitive bids. According to PPP Certification, Open tender is the most common tendering process [2]. Limited tender might produce similar outputs to open tender for this service as potential tenderers are most likely to be local, and hence similar service cost. The added advantage of limited tender is the slightly shorter tendering period.

Selection of Criteria:
In its procurement, OPWP always adheres to its obligations that are set by the Authority for Electricity Regulations (AER). This is a key criterion for this assessment. OPWP also seeks to increase competition in order to receive competitive bids due to the economic purchase obligation that OPWP has to adhere to. Another criterion is the procurement timeline due to the need to procure the service within three month timeframe which is the period from advisors appointment to the release of Request for Qualification (RfQ) of a project.

Analysis and Comparison of Options:
The following table compares each option against the selected criteria.
Criteria
Meets OPWP Obligations
Better Competition
Faster Delivery time
Total
Weights
3
2
1

Single Tender
0
0
3
3
Limited Tender
3
4
2
9
Open Tender
9
6
1
 16

OPWP’s obligations do not allow to adopt Single Tender Mode. This option can be easily disqualified.

World Bank guidelines indicate that limited tender may be suitable where there is a limited number of suppliers, or other reasons that might justify moving away from open tender [3]. Limited tender is less competitive than open tender due to the smaller pool of competition to provide the service [4].

In term of tendering timeline, excluding single tender, limited tender offers a shorter tendering process by approximately 10 days which are the usual period of tender purchase for open tender mode. However, the set three month timeframe is sufficient for both types to be conducted, even when considering the 40 day tendering period as set by Tender Law.

Recommendation and Selection of Preferred Option:
Open tender is the best option for this procurement as shown in the analysis above. It is recommended that the procurement for extranet service shall not be triggered unless advisory bids of future projects indicate a need. This is because extranet service in most OPWP projects is procured by advisors at zero cost as highlighted earlier. However, RfP Documents for the service shall be prepared in advance. Although open tendering is favorable, it could face the risk that the tender advertisement might not reach to all potential tenderers. To deal with this risk and have better competition, it is recommended to conduct a market screening prior release of tender, and notify potential tenderers of the advertisement.

Performance Monitoring:
Extranet portal requires annual maintenance post implementation. This shall be handled by IT Department, along with log-in authorization requirements. The management of extranet portal, including documents update, will be handled by project managers in PD Department.

References:
[1] Central Vigilance Commission (ND), Tendering stage, PDF. Retrieved from; http://cvc.nic.in/3%20Tender%20Stage.pdf [19 November 2017].
[2] PPP Certification (ND), Main Types of PPP Tender Processes. Retrieved from; https://ppp-certification.com/ppp-certification-guide/2-main-types-ppp-tender-processes [20 November 2017].
[3] World Bank (2011), Guidelines Procurement of Goods, Works & Non-Consulting Services; Under IBRD Loans & IDA Credits & Grants by World Bank Borrowers. PDF. Retrived from; http://documents.worldbank.org/curated/en/634571468152711050/pdf/586680BR0procu0IC0dislosed010170110.pdf [20 November 2017].
[4] Australian National Audit Office (2015), Limited Tender Procurement. Retrieved from; https://www.anao.gov.au/work/performance-audit/limited-tender-procurement [20 November 2017].

Comments

  1. Dr. PDGDecember 6, 2017 at 6:01 AM

    Excellent case study, Muslem..... Now that you have picked open tender, of the 13 types of CONTRACTS which one would be most appropriate for you to use? (Don't forget to include the various incentive types in your analysis)

    BR,
    Dr. PDG, Jakarta

    ReplyDelete

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