ISLAMIC REPUBLIC OF PAKISTAN

IRRIGATION DEPARTMENT GOVERNMENT OF THE PUNJAB

PROJECT 1 OF PUNJAB IRRIGATED AGRICULTURE INVESTMENT PROGRAM ADB LOAN NO. 2299 - PAK

REHABILITATION AND UPGRADING OF BRANCH CANALS AND DISTRIBUTARY SYSTEM COVERING KHANEWAL CANAL DIVISION

Contract No. LBDC/ICB-06A

Volume I

PRICE BID EVALUATION REPORT

APRIL, 2013

LBDC Consultant A Joint Venture of NESPAK, MML, MMP & ACE

Rehabilitation and Upgrading of Branch Canals And Distributary System Covering Khanewal Canal Division Contract No. LBDC/ICB-06A

Volume-I Price Bid Evaluation Report

Table of Contents
Volume I: Price Bid Evaluation Report
1. INTRODUCTION ............................................................................................................................. 1

1.1 1.2 1.3 1.4

2.

General................................................................................................................ 1 Opening of Price Bid ............................................................................................ 1 Basic Data and Exchange Rate ........................................................................... 2 Bid Evaluation Review Committee ....................................................................... 2 Arithmetic Check, Corrections and Conversion to Local Currency ....................... 2 Commercial Terms and Conditions ...................................................................... 3 Adjustment of Prices for Labor and Materials....................................................... 3 Selection of Bids and Ranking ............................................................................. 3 Analysis of Prices ................................................................................................ 3 Domestic Preference Scheme ............................................................................. 4 Comparison of Price Proposals and Determination of Lowest Evaluated Bid ....... 4

EXAMINATION OF PRICE PROPOSALS ..................................................................................... 2

2.1 2.2 2.3

3.

EVALUATION COMPARISON OF PRICE PROPOSALS ............................................................. 3

3.1 3.2 3.3 3.4

3.4.1 Lowest Evaluated Bid .......................................................................................... 4 3.4.2 Examination of Unbalanced Prices of Lowest Evaluated Bid ............................... 4 3.4.2.1High Unit Rates and Prices ................................................................................. 4 3.5 Reasonableness of Price of Lowest Evaluated Bid .............................................. 5
4. CONCLUSIONS AND RECOMMENDATIONS .............................................................................. 5

LBDC Consultant

A Joint Venture of NESPAK, MML, MMP and ACE

Rehabilitation and Upgrading of Branch Canals And Distributary System Covering Khanewal Canal Division Contract No. LBDC/ICB-06A

Volume-I Price Bid Evaluation Report

Appendices
Appendix 1 : Record of Bid Opening Appendix 2 : Project Director, PMU letter dated 25-03-2013 regarding Opening of Bids and Bid Evaluation Appendix 3 : Exchange Rates as on 11-Dec-2012 as issued by State Bank of Pakistan Appendix 4 : Basic Data Sheet Appendix 5 : Notification Regarding Constitution of Bid Evaluation Review Committee Appendix 6 : Consultants letter to Bidder No. 5 for Clarification of Price Bid Appendix 7 : Bidder No. 5 reply to Consultant regarding Clarification Appendix 8 : Table of Summary of Bid Prices (Arithmetic Corrections/Currency Conversion Correction and Corrected Bid Prices) Appendix 9 : Table of Compliance with Commercial Terms and Conditions Appendix 10 : Table of Bid Price Comparison with Corrected Prices and Price Adjustment Appendix 11 : Table of Prices for Section of Works as Percentage of the Total Bid Prices Appendix 12 : Table of Comparison of Early Work/ Parts of the Work Appendix 13 : Table of Comparison of Rates for Key Items of Work

LBDC Consultant

ii

A Joint Venture of NESPAK, MML, MMP and ACE

Rehabilitation and Upgrading of Branch Canals And Distributary System Covering Khanewal Canal Division Contract No. LBDC/ICB-06A

Volume-I Bid Evaluation Report

1. INTRODUCTION
1.1 General The Islamic Republic of Pakistan has received a loan from the Asian Development Bank (ADB) towards the cost of Project 1 of Punjab Irrigated Agriculture Investment Program (Lower Bari Doab Canal Improvement Project). Part of this loan will be used for eligible payments for rehabilitation and upgrading of branch canals and distributary systems covering Khanewal canal division, for which these bids were invited. As per instruction of the ADB and Invitation for Bids (IFB) issued, the ADB Single Stage, Two Envelope Bidding Procedure was adopted for this procurement. In accordance with the Single Stage, Two Envelope Bidding Procedure of ADB, the technical bids of the five (5) bidders who participated, were evaluated. The technical bid evaluation report for subject Contract was submitted to ADB with the following two (02) bidders who were considered responsive to the requirements of the bidding documents and qualified for opening of their Price Bids: i) M/s Ghulam Rasool & Co (Pvt.) Ltd ii) M/s NEIE1-LAC Pvt. Ltd ADB approved the above recommendations under cover of letter dated 15 March 2013. Both the bidders were informed in writing on March 16 2013 that their technical bids had been considered responsive to the requirements of the bidding documents, and were invited to attend the Price Bid Opening process at 11:00 hrs on 25 March 2013 in the Committee Room of PMU LBDC Improvement Project, Canal Bank Mustafabad, Lahore. On the same date, non-responsive Bidders were also requested to collect their unopened Price Bids. 1.2 Opening of Price Bid The Price Bids were opened at 11:00 AM on 25 March 2013 in the Committee Room of PMU LBDC Improvement Project, Canal Bank Mustafabad, Lahore as scheduled, by the Bid Opening Committee in the presence of authorized representatives of the bidders. The Bid Opening Committee examined the original envelopes containing price proposals of the two (2) technically responsive bidders, which were kept under the custody of Project Director, PMU LBDCIP. The members of the Bid Opening Committee were satisfied that the envelopes containing Price Bids of the two responsive bidders, have the same seal and position as it was at the time of submission/ opening of Technical Bids on 08 January 2013. No tempering was observed of any envelopes. The representative of respective bidders were also requested to check the condition of the envelope of their respective price proposal and asked if they had any objection. There was no objection from any bidders authorized representatives. The two (2) original envelopes of Price Proposals of the respective bidders were opened. The bidders names, the amount of bid prices, any discounts were announced and recorded as under: Bidder No. 1 2 Bidder Name
M/s Ghulam Rasool & Co (Pvt.) Ltd M/s NEIE-LAC Pvt. Ltd

Bid Price (Rs.) 3,739,823,345/5,296,638,359

Discount (Rs.) 1,500,000,000/-

Net Price (Rs.) 3,739,823,345/3,796,638,359

North East China International Electric Power Corporation

1 A Joint Venture of NESPAK, MML, MMP and ACE

LBDC Consultant

Rehabilitation and Upgrading of Branch Canals And Distributary System Covering Khanewal Canal Division Contract No. LBDC/ICB-06A

Volume-I Bid Evaluation Report

The Bidder No.3 offered no discount whereas Bidder No.5 offered a discount of Rs. 1,500,000,000/- from its bid amount. The record of bid opening was prepared soon after the bids were announced and a copy of the record of bid opening was forwarded to ADB on the same day i.e 25 March 2013 (Appendix 1). Both of original Price Bids alongwith one copy of each bid were then handed over by the Executing Agency (EA) to the Consultants on the same day for evaluation in terms of their Consultancy Services Contract already existed vide PMU, LBDCIP letter No. PMU/LBDCIP/IPD/5594 dated 25 March 2013 (Appendix 2). The Consultants has carried out its evaluation in accordance with the provisions of the bidding documents and following ADB guidelines. 1.3 Basic Data and Exchange Rate The exchange rates used for the evaluation were the selling rates officially prescribed for similar transactions by the State Bank of Pakistan on the date 28 days prior to the date of submission of the bid i.e. 11 December, 2012. Relevant circular of State Bank in this regard is attached as Appendix 3. Basic information pertaining to the bidding is summarized and attached as Appendix 4. 1.4 Bid Evaluation Review Committee A bid evaluation review committee was constituted by the EA to review the recommendations of the Consultants vide Notification No. SO(EVL)/1-22/2006 dated 19 January 2013 (Appendix 5) regarding evaluation of bids for Contracts No. LBDC/ICB-06A and LBDC/ICB06B, before submission to ADB. Composition of the committee is shown in Table 2. Table Bid Evaluation Review Committee Sr. No.
1 2 3 4

Name
Syed Mahmood ul Hassan Mr. Khalid Hussain Qureshi Mr. Aamir Raza Mr. Ijaz ul Hassan Kashif

Status
Convener Member Member Member

Designation
Project Director PMU LBDCIP Addl. Secretary (Tech.) Irrigation Department Director Engineering, PMO (M & E) SPRU Director Procurement, PMO Barrages

2. EXAMINATION OF PRICE PROPOSALS

The price proposals submitted were first examined to ensure that the bidders had submitted the Form of Price Bid, the priced Bill of Quantities, Form of Schedule and Tables of Adjustment Data and whether these documents had been prepared properly and signed as stipulated in the Instructions to Bidders. Documents of both the bidders were satisfactory as all bid documents were prepared and signed properly by the authorized persons. 2.1 Arithmetic Check, Corrections and Conversion to Local Currency Each priced Bill of Quantities of both the bidders were checked for arithmetic errors and corrected in accordance with the stipulations in the bidding documents. No arithmetic error was observed in Priced Bill of Quantities of Bidder No.1. However, some arithmetic errors were observed in the Priced Bill of Quantities of Bidder No.2 which were corrected in accordance with the stipulations in the bidding documents. Pursuant to SubClause 27.1, the bidder was requested to confirm his concurrence vide letter LBDC/ICB06A/5224 dated March 27, 2013 on the arithmetic corrections made in BOQ during evaluation. A copy of this letter is attached as Appendix-6. The Bidder confirmed his
LBDC Consultant 2 A Joint Venture of NESPAK, MML, MMP and ACE

Rehabilitation and Upgrading of Branch Canals And Distributary System Covering Khanewal Canal Division Contract No. LBDC/ICB-06A

Volume-I Bid Evaluation Report

agreement on the corrected amounts. His reply is attached as Appendix-7 with this report. However, Bidder No.1 has demanded 65% payment in local currency and 35% in foreign currency (US$), whereas Bidder No. 2 has quoted 100% payment in local currency. Bidder No.1 has used currency conversion rate 1US$= 97.15 Rs., whereas applicable exchange rate should be the selling exchange rate 28 days prior to the deadline for submission of bids i.e the selling exchange rate on 11 December 2012, as published by the State Bank of Pakistan. The published rate was 1US$= 97.2868 Rs. Currency conversion correction was thereof applied to the bid of Bidder No.1. Summary of Bid Prices after arithmetic correction and currency conversion corrections of both the bidders in tabulated form is attached as Appendix 8. 2.2 Commercial Terms and Conditions Both the bidders accepted the commercial provisions of the bidding documents. Appendix 9 shows the details of the compliance to commercial terms and conditions of both the bidders. Hence, no price adjustment for commercial terms and conditions was required as shown in Table of Bid Price Comparison with Corrected Prices and Price Adjustment attached as Appendix 10. 2.3 Adjustment of Prices for Labor and Materials Data filled by both the bidders in Tables of Adjustment Data, (i.e. Table A-Local Currency and Table B-Foreign Currency) were reviewed in detail. Both the bidders have not provided the base value of the indices due to unavailability of the same in the market. These base rates may be incorporated in the table (for the month of December 2012) at the event of the award of Contract to the lowest evaluated bidder.

3. EVALUATION COMPARISON OF PRICE PROPOSALS

3.1 Selection of Bids and Ranking The arithmetically corrected bid prices including discounts and price adjustment for commercial terms & conditions have been summarized in tabulated form, attached as Appendix 10. The ranking of both the bidders in order of the lowest bid price is as follows:
Bidder No. 1. 2. As Opened* (Rs.) 3,739,823,345/3,796,638,359/As Corrected* (Rs.) 3,739,823,345/3,796,630,116/-

Name of Bidder M/s Ghulam Rasool & Co (Pvt.) Ltd M/s NEIE-LAC Pvt. Ltd

Ranking 1 2

Variation 1.52% High

*Discounted Bid Prices after correction

3.2 Analysis of Prices As a guide to the examination of prices quoted in the bids, prices quoted by both Bidders for each bill were examined, as a percentage of the total bid price and compared with percentages of each other and also with the corresponding percentages of the Engineers Estimate. On the basis of this review, it has been observed that %age of total bid price of only two bills (Bill # 2 & 9A) of Bidder No.1 are 3 to 5.5% higher than the %age of total cost of the corresponding bills of the Engineer Estimate whereas rest of the bills have minor differences.
LBDC Consultant 3 A Joint Venture of NESPAK, MML, MMP and ACE

Rehabilitation and Upgrading of Branch Canals And Distributary System Covering Khanewal Canal Division Contract No. LBDC/ICB-06A

Volume-I Bid Evaluation Report

Similarly %age of total bid price of three bills (Bill # 1, 2 & 9A) of Bidder No.2 is almost 3% higher than %age of total estimated price of the corresponding bills of the Engineer Estimate, rest of the bills have minor differences in this respect. It has been noted that both the bidders have quoted high unit rates vis--vis bid prices in comparison with the Engineers Estimate. M/s GRC lowest evaluated bidder has quoted 25 to 225% and M/s NEIE-LAC(JV), the second lowest has quoted 30 to 318% higher than the Engineers Estimate. It may be concluded that both of the bidders have quoted exceptionally higher rates than the Engineer Estimate. The detailed comparison of both the bidders is shown in Appendix 11.

3.3 Domestic Preference Scheme Both of the bidders are domestic bidders hence margin of preference shall not be applicable for comparison of bids. 3.4 Comparison of Price Proposals and Determination of Lowest Evaluated Bid
3.4.1

Lowest Evaluated Bid

The corrected and adjusted prices for both of the bidders were evaluated in detail as have been shown in Appendix 8. As that comparison shows, the lowest evaluated price bid is that submitted by Bidder No. 3 for a total evaluated bid price of Rs. 3,739,823,345/- comprising of local currency component (Rs 2,553,449,277/-) and foreign currency component (US$ 12,194,605/-).
3.4.2

Examination of Unbalanced Prices of Lowest Evaluated Bid

Comparison of unit rates and prices, particularly for early work items of the lowest evaluated bid with average rates of the other bid and the Engineers Estimate were carried out as follows:
3.4.2.1 High Unit Rates and Prices

The scope of Works under the Contract mainly comprised: (i) (ii) (iii) Earthwork Items like Excavation & Compaction Canal Lining items like PCC on level and slope RCC Structures items like RCC and Steel

Rates of aforementioned key items of BoQ of the lowest evaluated bid were compared with those of the Engineers Estimate (Reference Appendix 13). Comparison of rates showed that the quoted rates were 48.63% to 162.81% higher than the Engineers Estimate. (i) High Unit Rates and Prices in Early Work Items/Parts Those work items/parts which are to be carried out in the six months are considered early work items/parts. For this purpose several items from the Bill No.1 [General items] and Construction of F.O offices were taken to evaluate high unit rates and prices. Variation of more than 50% in rates of some of the early work items of Bidder No.3 was observed. The unit rates and prices in Early Work Item/ parts are observed with high unit rates and prices.

LBDC Consultant

A Joint Venture of NESPAK, MML, MMP and ACE

Rehabilitation and Upgrading of Branch Canals And Distributary System Covering Khanewal Canal Division Contract No. LBDC/ICB-06A

Volume-I Bid Evaluation Report

3.5 Reasonableness of Price of Lowest Evaluated Bid The lowest evaluated bid submitted by Bidder No. 3 is almost 103.7% higher than the Engineers Estimate. Engineers Estimate was based on MRS first bi-annual 2012 (February to July 2012). A comparison of the rates of key items of work with Engineers Estimate has been made and shown in Appendix-11. Most of the unit prices for the works are generally on the higher side as compared with the Engineers Estimate. Particularly unit rates and prices of key Items No.2.07, 8.13, 9A.02, 9A.03 and 9A.04 of BOQ are exceptionally high. The bids were received on 08 January 2013, therefore there is difference of about one year between the Engineerss Estimate and the quoted rates. By applying the updating factor of ____%( taken from____), the Engineers Estimate is worked out to be Rs._________. Similarly by comparison of the bidding rates trend on recent awarded contracts of LBDC/ICB-04 and LBDC/ICB-05 shows ____% and ____% higher than the respective Engineers Estimate.

4. CONCLUSIONS AND RECOMMENDATIONS

Based on the detailed evaluation as presented in this report, it is concluded that the bid of Bidder No. 3 is the lowest evaluated and substantially responsive bid. The lowest evaluated bid is _____%age higher than the updated Engineers Estimate. In the light of paras 2.61 to 2.63 of ADB Procurement Guidelines following two (02) options after consultation with ADB are given: Option 1: Option 2: Rejection of all bids being substantially higher than the existing budget and inviting new bids Instead of calling new bids, negotiate with the lowest evaluated bidder for a reduction of the bid price

It is therefore recommended to seek approval of the ADb for Option 2 for negotiation with the lowest evaluated bidder M/s Ghulam Rasool & Co (Pvt.) Ltd for reduction of bid prices upto reasonable limits. Although it is almost 103.7% higher than the Engineer Estimate but at the same time it is only 1.52% lower than the second lowest bid of Bidder No.5, meaning thereby that the rates and prices of both the bidders are closely compatible. However, negotiation may be made with the lowest evaluated bidder, pursuant to the provisions of Para 2.63, ADB Procurement Guidelines which is reproduced hereunder for ready reference: Where all bid prices substantially exceed the cost estimates, the borrower may, instead of calling for new bids, and after consultation with ADB, negotiate with the lowest evaluated bidder for a reduction of the bid price. It is therefore recommended that the Contract may be awarded to Bidder No. 3 (M/s GRC Pvt. Ltd.) after negotiation in accordance with ADB procurement guideline.

LBDC Consultant

A Joint Venture of NESPAK, MML, MMP and ACE