Article #150 How Can Online Bidding Help in Supporting Lean Construction Management Best Practices by Reducing Wasted Effort and Paperwork?

Outsourcing is one of the risk response strategy actions to transfer project risks. One of the standard practices in capital projects is outsourcing part of the project’s scope of work to third-party entities that could be more qualified and efficient in delivering the outsourced scope of work. Project owners can outsource the project’s scope of work to consultants, contractors, and suppliers, and contractors can outsource the project’s scope of work to subcontractors and vendors. Those entities, also known as sellers, will be invited to bid on the outsourced scope of work so that they can submit their best technical and financial proposals. Accordingly, the buyers, who could be the project owner or contractor, can decide on the project’s scope of work that should be awarded.

In addition, there is a growing trend among buyers to use online bidding when receiving sellers’ technical and financial proposals. Online bidding helps reduce the massive volume of exchanged hard copy documents used in traditional bids, which sellers are required to submit. In addition, online bidding will also shorten the time needed to submit the bids, especially when bids are received from different geographical locations. Finally, it will provide the content of the submitted bids in a ready-to-use electronic format that helps the buyers to perform the needed technical and financial appraisal and analysis of the submitted bids.

PMWeb is one of the Project Management Information Systems (PMIS) that has online bidding as one of the ready-to-use modules. Nevertheless, to ensure that the online bidding is executed in a structured and proper approach, the buyer must first define the scope of work that will be outsourced and the qualified bidders or sellers who will be invited to bid. This scope of work will become the basis for creating the procurement packages, which will generate the online bids that the sellers need to complete and submit. Further, it will enable the buyer to review and analyze the proposals received in the procurement module to decide who should be awarded the contract.

PMWeb Pre-Bid module is used to create all those bid packages that will be outsourced. The Pre-Bid module allows capturing the line items of the outsourced scope of work and the entities qualified to bid on this scope of work when it is tendered out.

The bid package procurement page will be generated by selecting the Generate Procurement command for approved bid packages. The procurement package will automatically capture the information in the pre-bid module, including the bidder’s list and the bill of quantity items that the bidders need to provide their rates against.

In addition, the items that the technical scoring will be assessed will be added to the procurement package. The technical scoring items can be defined as the same for each package, project, program, and enterprise as an overall or can be specified for each bid package. The list of technical scoring items could include, for example, copy of experience reference letters, project delivery method statement, copy of the quality management plan, copy of the HSE management plan, copy of the bid bond, confirmation that the buyer did not blacklist the company, confirmation of any claims and litigation against the buyer, copy of the seller trade license among others. Each technical scoring item could have the available points to score and the weight from the overall technical scoring.

Should bidders be required to confirm that their bid prices comply with specific requirements, such as retaining the services of a third-party HSE auditor, among others? The Procurement package Clauses tab can be used to add all those compliance requirements? Again, those could be added directly to the predefined clauses list or the procurement package. In addition, the specification tab allows adding user-defined fields that the bidders will be asked to complete when they submit their online bid.

The attachment tab in the procurement module will include the Issued for Bid (IFB) documents, such as drawings, specifications, and other documents that the sellers need to review and use to prepare their bid submissions. Those documents will be uploaded and stored in their designated folder or sub-folders in the PMWeb document management repository. The manager must select the “Included in Bid” option for all documents in the online bid. Of course, the attachments could consist of other documents that will not be shared with the bidders. For those, the “Included in Bid” field must be kept blank.

When the bid package is complete and ready to be issued, the buyer must send the invitation to bid (ITB) to the qualified bidders. The Notification command will be selected on the procurement module to send those invitations. An email message will be created to notify the selected bidders of the bid. PMWeb, by default, will add the contacts of the qualified bidders in the “BCC” field so that the bidders do not know who is invited to bid. If bidders need to be aware of the other invited bidders, those contact emails will be moved to the “To” field from the “BCC” field. If there is a need to add other emails, whether they were already defined in the PMWeb companies’ module or not, this is possible by adding those emails to the “Manual CC” field. The notification tab in the procurement module will be automatically populated with the sent emails.

All invited bidders will receive an email with the bid invitation, which will have a hyperlink to the online bid document. The bidder usually has a temporary but secured PMWeb login and password to access PMWeb and the online bid record. All bidders must provide the rates for the bill items’ values and respond to other requirements in the online bid. PMWeb allows adding a field for Non-Disclosure Agreement (NDA) where the bidders will not allow to submit the bid without accepting the NDA. Similar to the notification option used to send the invitation to bid, the online bid has the same command, which the bidder can use to send bid queries to the buyer.

When the bidders submit their bids, the procurement module will be automatically updated and populated with the submitted online bids’ values. The bid items tab will display the approved cost estimate for each line item along with the bid price received from each bidder for each line item.

The procurement module allows the buyer to approve the best bidder and award the contract. PMWeb allows generating the commitment for the successful bidder from the procurement module. A report can be designed in the desired form and format to summarize the results from the submitted bids and how they compare with the approved cost estimate and identify which bidder was awarded the contract. The PMWeb default “Procurement Form” is a form that details the approved cost estimate and submitted bids. The form can be modified and designed in any desired shape and format to meet the buyers reporting requirements.

About the Authorfounder

Bassam Samman, PMP, PSP, EVP, GPM, is a Senior Project Management Consultant with over 35-year service record providing project management and controls services to over 100 projects with a total value of over US $5 Billion. Those projects included Commercial, Residential, Education, and Healthcare Buildings and Infrastructure, Entertainment and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication, and Information Technology projects. He is thoroughly experienced in project management, including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training, and business development.

Bassam is a frequent speaker on Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 35 years, he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe, and South America. He has written more than 250 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for over six years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), an accredited Planning and Scheduling Professional (PSP), an Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE), and a Green Project Management (GPM).

Bassam holds a Master’s in Engineering Administration (Construction Management) with Faculty Commendation from George Washington University, Washington, DC, USA, Bachelor in Civil Engineering – from Kuwait University, Kuwait, and has attended many executive management programs at Harvard Business School, Boston, USA, and London Business School, London, UK.


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