Implementation – Tendering & Procurement
16.1 What is the process of procurement and tendering?
Procurement is the process of buying goods, works or services.
For instance, in terms of PPP, procurement comprises the process
of buying the basic infrastructure and services. This may,
for example, involve the acquisition of operation and management
services for a basic service such as water supply. Procurement
is often carried out by the process of tendering, rather than buying
products directly from a seller.
A company or organisation (the promoter, client or employer)
wishing to obtain goods or services will first specify its
requirements. Subsequently, it will open the bidding in a
process known as tendering. Interested companies can then submit
their proposals to the client (often a local government) to
meet these requirements. The government offering the tender will
then evaluate the bids to decide which offer best suits its requirements.
The company that has been successful in the tender process
will perform the work by contract.
The underlying objectives of procurement and tendering are
concerned with ensuring competition, which is viewed as
a key factor in achieving the twin objectives of:
- accountability in the spending of public money;
- transparency in the steps
of the decision-making processes.
Parties to procurement
In relation to the actual contract, there is a need to focus
on who is involved in a contract and what each of these actor’s
various obligations are. The most commonly used engineering contracts
recognise a “triangle of actors’: promoter; engineer;
- The promoter/client, otherwise known as the
employer, specifies, authorises and pays for the work to be undertaken.
- The engineer acts as an agent on behalf of
the employer. The duties of the Engineer include:
– evaluation of tenders;
– supervision of the work of the contractor;
– confirmation of whether or not the work
as been completed to specification; and
– mediation between the employer and the
contractor in case of dispute.
- The contractor (the bidder) successfully bids for
a contract and carries out the work required.
A typical case involves an urban government letting a contract
to a private sector company for the construction of infrastructure
improvements. The municipality is the promoter; it has planned
and designed the work, and is paying for it to be implemented.
The urban government promoter appoints an engineer, who is
usually in the full-time employment of the relevant government
department. In accordance with the procedures laid down, a
private sector contractor is then appointed to do the actual
The engineer has the important role of ensuring that the interests
of the promoter are met, and that the contractor is duly
paid for his/her efforts. The promoter wants the best value for
money and the contractor wants to secure a good profit; whilst
this dichotomy can involve an enormous range of complex and
contentious issues, satisfying the various interests often comes
down to ensuring that a “triangle of objectives” are
- Cost: has the work been completed within the costs agreed
in the contract?
- Quality: has the work been carried out in accordance with
what was specified?
- Time: has the work been completed satisfactorily within
the time specified?
See also Figure 16-1
The traditionally accepted objectives of procurement procedures
and contract documents are to ensure that works are executed
at the minimum cost that is consistent with the need to
achieve a product of acceptable quality within an acceptable
timeframe. Procurement procedures and contract documents
do this by reducing uncertainty, which in turn is done
- clearly defining who is liable to take any risk that
cannot be eliminated from the project; and
- providing information on the work to be carried out so that
all concerned are clear about what has to be done and what
their role is in doing it.
The role of the engineers in urban government is to ensure
that objectives relating to cost, quality and time
are achieved. The objective which is most difficult to assess,
and causes most concern, is the quality of the finished work.
The reality is that neither the engineers as supervisors nor
the government as promoters are primary stakeholders with a strong
motivation for ensuring that adequate work practices and standards