A complete review of current tendering system must be carried out as a matter of urgency

Dear Editor,

It is not surprising to read the recent comments of the Hon. Minister of Finance recording dissatisfaction on the general poor performance of consultants and contractors on many state sector projects.

However, his dissatisfaction coupled with a suggested proposal to import better skills, calls for a serious revisit of the procurement systems for engaging consultants and contractors for construction projects in the State Sector.  Hence the following observations/comments are here offered for consideration by the National Tender & Procurement Administration Board (NPTAB), the Ministry of Finance and the Ministry of Public Infrastructure.

1.0)   Current Conditions and Required Good Practices

.01 There is no register of qualified architects or engineers to inform the selection of consultants for the various projects and the varying levels of skills required, bearing in mind architects for buildings and engineers for civil/structural works.  It is not unusual to see engineers being engaged for buildings while claiming to have a token architectural skill on their team.

.02         The consultants must produce an adequate level of design information to provide the basis for credible tendering and construction. A project is doomed from its inception where an unsuited consulting team is engaged.

.03 A successful major building project requires the involvement of a good architect/team leader supported by a well-qualified structural/civil engineer, building services engineer and quantity surveyor for effective cost control of a project.

.04  A highly questionable approach is the engagement of “project managers” who put together a list of skills with tenuous arrangements for their involvement on the project being bid for.  Such consultants often bid very low fees commensurate with the quality      of skills being offered by them.  Also it is not unusual to have persons claiming project management skills after having attended a weekend seminar on the subject.

.05  Further, a graduate architect or engineer attains the professional status of architect/engineer after a period of professional practice in their respective discipline.

In the architectural profession it requires a minimum of five years academic studies with two years of professional practice after which a professional practice examination is taken.  While there are some alternate provisions for mature persons to be considered, they should have gained their practice experience under the guidance/employment of a recognized architectural practice.  The same applies to graduates from the University of Guyana architectural degree programme.

During the period of practical training and thereafter, the duties of the architect  exposes him/her to a fair degree of project management and coordination of the work of the  other consultants. No doubt an engineering graduate may be similarly exposed for engineering projects, provided they are engaged with a reputable engineering practice.

2.0) Credible Tender Documents

.01   In recent times the writer has been shown tender documents for at least two major building projects in the State Sector that are highly deficient.  No architect, engineer nor quantity surveyor has been identified. Further, only layout drawings and scant bills of quantities overloaded with provisional sums were provided for tendering.

Note: Provisional sums are all subject to remeasurement/adjustment as the relevant work is completed.  This is not a reliable basis for cost control and results in unnecessary cost overruns on a contract.  It is not unusual for such items to result in delays due to the late or non-issue of the required documentation for timely construction.

3.0)  Codes of Conduct

.01 A professionally qualified architect and no doubt engineer is governed by a Code of Conduct that requires a level of competence and performance consistent with the high standards of their respective professions.  It also includes the bidding or undertaking of work that is within the competence of their organization or where necessary with firm arrangements for supplementary skills in place.

It therefore follows that a bidding consultant, who is not fully aware of the extent and quality of expertise needed to complete a project, cannot provide a reliable technical or financial proposal.  Unreliable proposals would most certainly negatively impact the service provided and result in cost and time overruns.

4.0 Selection of Contractors

.01  The eligibility of a contractor to tender for a project is the basis for an effective selection process. Demonstrated financial capacity, skills and organizational ability are all critical  to the successful completion of any project. What needs to be borne in mind is that such qualifications carry a cost which must be reflected in the tender sum. An unusually low   tender sum in comparison with the other bids needs to be fully examined.

.02         A quick perusal of the list of bidders for the various construction projects reveals some obvious questions.

The disparity in prices – are they all pricing from the same tender documents with or      without reference to the Engineer’s Estimate. Alternatively, some of the named bidders may be less qualified than others in the bidding.

.03 An example of this is in the recent tender results for an Extension of the Ministry of Business Head Office. Bids were received from five (5) contractors.

The Engineer’s Estimate (EE) was G$89.8M.  The lowest bid was G$88.7M (G$1.1M below the EE);  the next was G$99.9 (G$10.1 M above EE and G$11.2 above the lowest bid);  the highest of the remaining bids was G$132.3M.

The mean bid price of the other four tenders is G$115.025M, G$26.325M or 29.7%  above the lowest bid of G$88.7M.

Is there an error in the lowest bid;  it doesn’t seem logical that the other bidders may have all gone wrong in computing their bid.

.04  The other question is the proximity of the lowest bid to the Engineer’s Estimate.

Is there a fundamental discrepancy in the tender documents of which only the lowest bidder had become aware, thereby giving him an advantage in bidding?  Such as      excessive quantities for some items in the Bills of Quantities that may cushion lower rates for those items.  There is much room for collusion in such situations.

.05 Given the general rule that the lowest bid is considered the best – an award to that lowest bidder is most likely. But are there many cost implications in such an award?  Whatever, it calls for a thorough review applying all the available technical expertise to look beyond mere arithmetical checks of the entire process.  In such instances the comments/advice of the Design Consultant are essential.

Note – It seems that contract has since been awarded to the lowest bidder.

5.0) Observations

.01 In the scenarios described above it is apparent that there needs to be a clear understanding of the procurement objectives and their priority in a tender process.  To obtain a satisfactorily completed quality project the lowest price may not be the best; this seems to be the governing criteria;  conversely highest does not guarantee the best finished project.

.02  Resorting to the use of offshore consultants and contractors for the non international funded projects will certainly lead to the higher costs which are being avoided in the current system and improvements in quality may not be guaranteed. (See 5.05)

.03  The logical step is to first make the tendering procurement process more attractive to competent consultants and contractors, who, at much expense, prepare bids with an expectation of a level playing field.

The quality of the terms of reference/ scope of works for consultants and for    contractors, such as adequate drawings, specifications or bills of quantities, together with a reasonable time frame for the return of tenders, often determine the quality of the bids offered or whether it is worthwhile bidding for.

.04 A good example of the latter is the recent bidding for a hinterland project involving the supervision of major corrective works on a secondary school building.  As reported in   the media, six consulting firms were invited, one of which asked to be excused for ethical reasons due to a previous involvement in identifying the scope of required works that prevented his further participation on that project.  The given return date for the bids was five (5) days including the weekend. The bidding exercise included costing for fulltime on-site personnel, air travel to the location and other related costs. From information gathered by the writer after the bid opening, at least two of the remaining short-listed consultants felt that a serious bid could not be prepared in the limited time and abstained accordingly.

However, at the tender opening a letter was reportedly received from the sole  bidding consultant in which it is reported due to insufficient time a bid could not be    completed and it was     indicated that a further week was required.  A bid was submitted later and the contract was awarded to that consultant.

The apparent irregularities here are:-

  1. i) The above referred to letter does not constitute a bid; it is a request for an extension to bid and should have been submitted prior to the close of bidding.  It therefore should not have been considered a bid.
  2. ii) The other short-listed consultants should have been duly informed and given the opportunity to submit a bid during the extended period, this was not done.

iii)  The integrity and transparency of the above process must be open to questioning    since it leads to the bidding process being highly suspect.  Were special concessions  granted exclusively to one tenderer?

.05   Procurement of Offshore Skills

While such procurement is a valid requirement for projects with international funding, it is usually done within a framework of transferring technology and expertise to develop local skills.  Such a system is mutually beneficial where the local                 partner is able to provide guidance on certain local conditions such as climate, cultural    patterns/behaviours etc. –  soil types, engineering  and the engagement of local  personnel/labourers etc.

There are two major recent projects where that practice was ignored and resulted in     additional cost/delays:-

  1. i) The Arthur Chung Conference Centre which has been closed for major repairs, and
  2. ii) The Marriott Hotel which we have been recently told requires major maintenance

Both projects were carried out – design/build contracts – by solely Chinese personnel.

.06   It would be beneficial to all concerned to have a critical look at some of the major private sector projects, especially some of the successfully completed commercial banks and the basis of their procurement and where necessary identify any areas of weaknesses or strengths.

6.0 Conclusion

.01 As a consultant with well over four decades experience in the local construction industry with just enough state funded projects to count on both hands, the writer like some of   his colleagues, has little interest in submitting proposals in the state sector when:-

  1. i) The expected level of bids is not commensurate with the required inputs. Also if         perchance you win an award, be sure to have the financial resources to withstand delays    in receiving payments for work done.

An engineering colleague was recently bemoaning the fact that his payments are six  months in arrears and he has to continue working on that project.

  1. ii) The credibility of the bid documents is doubtful.

iii)  The process by which bids are assessed for presentation to the Tender Board is lacking inputs from well experienced technical persons.  Currently the entire process has many pitfalls, some of them may have been illustrated above.

.02  Consequently    the writer wishes to suggest that a complete and thorough review of the current tendering system, must as a matter of urgency, be carried out if we are to improve the quality of our completed construction projects and in a timely and cost effective manner.

Perhaps the Minister of Public Infrastructure, the Hon. Mr David Patterson, who is a highly qualified Quantity Surveyor and of long experience; and the Chairman of the NPTAB; Mr Berkley Wickham, a very experienced Engineer; given their long involvement in obtaining and assessing bids, may be allowed to contribute to that process, since both of these gentlemen are well aware of the systemic deficiencies in the current procedures.

Similarly the professional institutions such as the Guyana Institute of Architects, the Guyana Association of Professional Engineers and the local contractors association, should be actively involved and where necessary do their own house cleaning.

.03 Further, the procuring of bids is not an arm-chair exercise – crunching  numbers as for other goods and services, it requires much knowledge and experience in construction.

Coupled with that review should be an appraisal of the required skills available  within   the state and private sectors and where necessary initiate corrective measures in upgrading such personnel.

A study of the required skills levels for the expected development of our oil resources and the role of the construction industry in such development must not be treated lightly.

Finally there are so many things to be fixed or fine-tuned.  Perhaps if we start with a vision for Guyana and determine what is necessary to transform it into reality, may broaden our national perspective and avoid quick fixes. We had inherited from our colonial days high standards of professionalism which ad hoc decisions in the past have undermined or destroyed.  That mistake should be corrected and not be repeated.

There must be other views on this subject which, if brought forward may be of much value in the reforming of the procurement process.

Thanking you.

Yours faithfully

Albert Rodrigues, Dip.Arch., RIBA, MGIA.

Chartered Architect.

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