Eligibility Criteria of Contractors based on Experience

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Eligibility Criteria of Contractors based on Experience

Post by RDV @ GP3i on Sun Mar 01, 2009 7:55 pm

Sec. 23.6.2, Item 3, provides as follows:

"3. To be considered eligible and qualified to bid for a contract, a prospective bidder must have the following:

a) successful experience as contractor in the completed construction, in the last five (5) years, of at least one (1) work of a nature and complexity similar to the works under the contract to be bid. To comply with this requirement, the cost of the completed single works cited should be at least seventy percent (70%) of the Approved Budget for the Contract/Estimated Contract Cost of works under bidding, adjusted to current prices using the National Statistics Office consumer price indices available at its website, such being verifiable from the completion certificates; and

b) an annual turnover from all works averaged over the last three (3) years equal to one hundred percent (100%) of the Approved Budget for the Contract/Estimated Contract Cost.

Contractors under Small A and Small B categories without similar experience on the contract to be bid may be allowed to bid if the cost of such contract is not more than fifty percent (50%) of the Allowable Range of Contract Cost (ARCC) of his registration. For this purpose, the classification of contractors vis-ŕ-vis the ARCC shall be based on the Guidelines as prescribed by the PCAB.

For the procurement of infrastructure projects, a contract shall be considered “similar” to the contract to be bid if it has the same major categories of work.
"

My question are:

Does the term "without similar experience" refer to a contractor who/which still has the required minimum experience of five (5) years, but his experience is not "similar" (in terms of the major categories of work) to the contract to be bid? Or does it allow a contractor under Small A and Small B categories even without experience?

My previous interpretation to the the provision in IRR-A is that contractors under Small A and Small B categories may be allowed participate even if they do not have the experience yet (since they are just starting and being categorized as Small) and are allowed to gain experience but they can only participate if the ABC is not more than 50% of their ARCC.

Now, I have some doubts on my original interpretation, because of the use of the term "similar", although of different usage, one referring to "similar experience" and the other "similar to the contract to be bid".

Has GPPB clarified this already? If not yet, maybe a clearer provision would help.
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Eligibility Criteria of Contractors based on Experience

Post by dlsn on Tue Mar 10, 2009 10:12 am

The way I understand it is that the experience requirement is for at least 1 work of similar nature and complexity completed within the last 5 years. The 5 year-period does not pertain to the years of experience or length of existence of a contractor, but the relevant period from which projects of similar nature will be considered.

This means that regardless of the length of existence of a contractor, it will not be considered eligible if it has not completed at least 1 similar work within the last 5 years. Thus, the phrase "without similar experience" translates to a Small A or Small B contractor's absence of a completed similar work within the last 5 years.
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Re: Eligibility Criteria of Contractors based on Experience

Post by RDV @ GP3i on Tue Mar 10, 2009 11:09 am

dlsn wrote:The way I understand it is that the experience requirement is for at least 1 work of similar nature and complexity completed within the last 5 years. The 5 year-period does not pertain to the years of experience or length of existence of a contractor, but the relevant period from which projects of similar nature will be considered.

This means that regardless of the length of existence of a contractor, it will not be considered eligible if it has not completed at least 1 similar work within the last 5 years. Thus, the phrase "without similar experience" translates to a Small A or Small B contractor's absence of a completed similar work within the last 5 years.

Thank you for the clarification, dlsn. My understanding (before) is that an eligible contractor should have at least 5 years experience. After reading the provision again, you may be right. In other words, even if he has only 2 years experience, if within the last 5 years he has completed a project of similar nature and complexity of the project to be bid and it is at least 75% of the ABC/Estimated Contract Cost, then he is eligible as far as experience is concerned.

However, in the IRR Consultation Overview Powerpoint Presentation of the GPPB-TSO (http://www.gppb.gov.ph/irrb/materials.asp), it says that one of the salient features of infra projects in the draft IRR is "longer track record", which is "experience, in the last 5 years, of at least 1 work of similar nature and complexity". It appears (to me) that there are at least three (3) conditions to be met: 1) at least 5 years experience; 2) at least one (1) work of similar nature and complexity within the last 5 years; and 3) the value should be at least 75% of the ABC/ECC.

If it is not 5 years, should it be at least 3 years? My confusion is due again to the following requirement, which appears (to me) as the 4th condition:

"b) an annual turnover from all works averaged over the last three (3) years equal to one hundred percent (100%) of the Approved Budget for the Contract/Estimated Contract Cost."

Can you give an example on how this will be computed?

Finally, you are clarifying that Small A and Small B contractors should also have the same length of experience as bigger and more experienced bidders, BUT they may be exempt of the 2nd condition (similar work in terms of nature and complexity), however they can bid only up to 50% of their ARCC? Did I get it right?
Thanks. Very Happy
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Experience Requirement for Infra

Post by dlsn on Tue Mar 24, 2009 8:29 am

I see the cause of the confusion, and apologize for having caused it. The slide title failed to reflect the exact meaning of the revised provision. Nevertheless, I think we have clarified that the clause "in the last 5 years" does not pertain to the length of existence/experience, but refers to the period under consideration.

On the length of experience, item (b) appears to require a minimum of three years considering that the annual turn over, which should be equal to the ABC, will be taken from the average of all works conducted within a three year period. However, the minimum experience requirement may be inferred only from the provision. There may be a need to clarify this matter. Also, the provision failed to cover situations where the annual turn over of a bidder's works averaged over the last two years is already equivalent to the ABC.

On the computation, I may have to refrain from giving a sample now inasmuch as I do not yet have a good understanding how it is computed. I have heard it explained a couple of times, but I am yet to really get a good grasp of it. As engrjhez mentioned in another topic, most people hate math although we often use it. I'll just post a sample computation as soon as I am confident I can explain it and not cause more confusion.

Lastly, considering the steepness of the requirement, do you think it is better to limit this to foreign assisted projects only, and have the original requirement (50% single largest contract) apply to domestically-funded projects?
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Re: Eligibility Criteria of Contractors based on Experience

Post by RDV @ GP3i on Tue Mar 24, 2009 11:43 am

dlsn wrote:I see the cause of the confusion, and apologize for having caused it. The slide title failed to reflect the exact meaning of the revised provision. Nevertheless, I think we have clarified that the clause "in the last 5 years" does not pertain to the length of existence/experience, but refers to the period under consideration.

On the length of experience, item (b) appears to require a minimum of three years considering that the annual turn over, which should be equal to the ABC, will be taken from the average of all works conducted within a three year period. However, the minimum experience requirement may be inferred only from the provision. There may be a need to clarify this matter. Also, the provision failed to cover situations where the annual turn over of a bidder's works averaged over the last two years is already equivalent to the ABC.

On the computation, I may have to refrain from giving a sample now inasmuch as I do not yet have a good understanding how it is computed. I have heard it explained a couple of times, but I am yet to really get a good grasp of it. As engrjhez mentioned in another topic, most people hate math although we often use it. I'll just post a sample computation as soon as I am confident I can explain it and not cause more confusion..
A bit clearer now. You know the reason I asked for a sample computation of the annual turnover is exactly because of the situation you mentioned, where the averaged annual turn over for a period of even less than 3 years is already equal to the ABC.

dlsn wrote:Lastly, considering the steepness of the requirement, do you think it is better to limit this to foreign assisted projects only, and have the original requirement (50% single largest contract) apply to domestically-funded projects?
I think it is up to the procuring entities and the bidders (contractors) and their lawyers to cite their possible problems with the "steep" requirement of 70% SLCC.
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