Best Value Procurement

a new and simple way to procure the best?

Warszawa, May 23
th
2014
1
Projects
Energy industry
Infrastructure
Research
PhD research on EU public procurement law
Effect of Quality in procurement procedures
Consultancy
Advisory / readiness reviews
Education
Tender evaluation
Mediation
J.H. Merema BBE LLM
2
dzie
dobry!
Long long time ago. building a canal
Employers Request for Tender
Both specifications and functional design
Little procedural rules
Whats so difficult?
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Complex projects
A lot of stakeholders
Time is precious
Environmental issues
A lot of rules
Innovative technology
But nowdays
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Contract authority (CA) has to follow tender
procedures it is not a free zone
CA has to accept the winning offer fear of
a forced marriage
CA is obligated to create a effective market
place with level playing field and to
stimulate fair competition
CA has public governance to deal with
instead of profit only
Public values in a political system are often
unpredictable and not always stable
Why is public procurement so special?
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During tender:
the promise department
(what the Client thinks he bought)
CAs dilemma: A bid is a promise
6
CAs dilemma: fulfilling the promise?
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After signing the contract:
The sorry department
(What the Client actually payed for)
1. Is the cheapest offer often the best
solution for your needs?
2. Is the company who offers cheaply
most of the time a expert and a
good party to work with?
Questions
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No, because our experience is that it
leads to:
Focus on legal aspects and formalities
Claims during procedure / after
awarding (nr. 2)
A lot of stress in project execution
Projects take longer
Projects become more expensive
We dont want that!
Answers
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We look for best value by answering these questions:
What is the best offer?
Who is the best expert for the project?
For contractors for public works
We focus on the quality of the bid - MEAT
For contractors and engineering services
We focus on the quality of the bid - MEAT
and on the level of expertise of the bidder - MEAT
Essence of Value Based Procurement
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We want to minimize risks from the beginning
We try to identify the Expert
Golden rule: we measure objectively!
Experts have to be SMART in their bid
Specific
Measurable
Achievable (and understandable)
Result-oriented (description of what)
Time tabled (description of when)
Usage of EU restricted procedure, or EU competitive
dialogue
Best Value Procurement: goals and conditions
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Bidders dont have to describe all the specific
solutions of the bid leads to a cheaper process
Important for bidders to understand the question
or needs of the Employer / Contracting
Authority leads to more discussion about value
instead of costs
We look for opportunities, not only for risks
again, focus on added value
We ask for realisation of functions, not
technicalities gives room for innovation,
optimisation and more quality of product and
process
Best Value Procurement: procedure
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Basics of BVP
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Selection Clarification Pre- award Project exec.
Simple
requirements
Non technical
(no criminals)
First technical
review
Risk assessment
Value added
Budget matching
Detailed
technical review
Basic
Engineering
Contract Sum
Risk management
Quality Control
(ISO9001)
Contract
management
Which products?
14
Selection Clarification Pre- award Project exec.
By references
based on
similar
activities
instead of
project-look-a
-likes
Approach Plan
Interviews
Conceptual design
Opportunity / risk
file
High level cost
break down (max
price)
Finalizing and
signing the
contract
Project delivery
Milestones
First BVP projects (2008-2012)
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Selection Clarification Pre- award Project exec.
approx. 5-25
bidders
3
1
5
Signing
contract
Best Practice (2013-now)
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Selection Clarification Pre- award Project exec.
3
1
Signing
contract approx. 5-25
bidders
Time schedule
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Selection Clarification Pre- award Project exec.
3
1
4 weeks 8-10 weeks 12-20 weeks
Signing
contract
RFT
approx. 5-25
bidders
Bid consist of:
Interviews
Risk plan
Project Capability Plan
Value Added Plan (conceptual design)
And
Milestone (for contractmanagement purposes)
Cost / Financial proposal (for contractmanagement
purposes)
Products in procedure
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National level: Ministry of Infrastructure
BVP used in tendering of 31 contracts
total value of 580.000.000 euro
15 projects completed and delivered
satisfactory
2014-2015: 20 more projects in pipeline
Local departments / agencies
BVP used in 100+ projects (est.)
BVP aspects are incorporated in normal MEAT
tenders
Experiences in NL
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Best Value Procurement works very good within
EU laws (both old 2004/18 and 2004/17
Directives and the new ones which should be
implemented in Q1 2016)
Tenderers keep interest of Client in mind during
tender nd project excecution
Tenderers (and Employer) have siginificantly
lower transaction costs
Tender takes less time than classical procedures
Goals accomplished
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more value for taxpayers money
a faster process to both sides
a cheaper process for Engineers and
Contractors
more focus on chances and values of CA
a foundation of continuing cooperation
after signing the contract between CA,
Engineers, Consultants and Contractors
What BVP has to offer
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Training and practice and
Training and practice and
Training and practice and
Effort on understanding - from both sides of the table
Work on communication skills of people involved
A functional view of the project
What BVP requires.
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Preparation is key: prepare a BVP procedure thoroughly
Create a centre point of knowledge (eg. a national
institute)
Do objective evaluations of the first BVP tender
procedures with all parties (client, consultants,
contractors)
Agree with each other to accept mistakes dont kill
the innovation from the start
Make transparency matter: fair play
Share your experiences, and learn from mistakes
(preferably the ones others make)
Lessons: Keys to success
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Best Value Procurement
a new and simple way to procure the best?
Warszawa, May 23
th
2014
24
j.merema@pro6managers.nl
+31 6 10 65 04 79
LinkedIn
Thank you!