One of the common practices in capital projects is outsourcing part of the project’s scope of work to third-party entities who could be more qualified and efficient in delivering the outsourced scope of work. Actually, outsourcing is one of risk response strategy actions to transfer project risks. Project owners can outsource projects’ scope of work to consultants, contractors and suppliers and contractors. In addition, contractors can outsource their projects’ scope of work to subcontractors and vendors. Those entities who will be outsourcing the work are know as the buyers and those will be considered to undertake the work are known as sellers.
For this risk transfer to be successful, there are two critical processes that need to be performed to ensure the successful procurement of the outsourced scope of work. The first process is to ensure that the companies who will be invited to bid, are technically and financially qualified to deliver the outsourced scope of work. The second process is to ensure that the bids received for the outsourced scope of work are complete, correct and not unbalanced to enable the buyer to select the best offer submitted by the sellers to award the contract.
Project Management Information Systems (PMIS) like PMWeb provides an out-of-the-box solution to digital transform the procurement function, also known as e-procurement. The PMWeb vendor prequalification module provides a comprehensive process to formally assess and qualify organizations who might be invited to bid on the outsourced scope of work. The second module is PMWeb online bid module where qualified organizations who have been invited to bid can submit their best offers online so they can be assessed by the buyer to select the successful bidder or seller. Of course, PMWeb other default forms and custom-built forms will be used to address the digital transformation requirement of all other related procurement processes.
The digital transformation of those two procurement processes are perfectly aligned with the growing demand for social distancing and work remotely requirements imposed by the current Covid-19 pandemic. Of course, the benefits of e-procurement go far beyond fulfilling those immediate needs. To start with, e-procurement will support the paperless environment requirement by reducing the massive volume of exchanged hard copy documents that are used in traditional prequalification applications and bids that sellers are required to submit. In addition, it will also support lean best practice by shortening the time to submit the prequalification and bids specially when those submissions need to be made by bidders who could be located at different parts of the world. Further, e-procurement will enforce the much needed requirement for transparency by providing the content of the submitted prequalification applications and bids in an electronic format that helps the buyers to perform the needed technical and financial appraisal and analysis of the submitted prequalification applications and bids.
PMWeb Vendor Prequalification Designer allows creating templates to be used by all entities who are interested in doing business with the project owner. The prequalification form will include predefined system fields, user-defined custom fields, system tables, user-defined tables and links to third-party websites. The user-defined data groups will let the project owner track any metadata that the vendor needs to provide. Those user-defined custom fields can be organized in tabs to make data entry easier for the vendors as well as better structured for the project owner. PMWeb Specification module will be used to define all those custom fields and the group they belong to.
The Custom Tables are needed to take into account the fact that the project owner must sometimes include in the registration applications a way for vendors to supply tables of information. Tables can be defined with fixed or variable number of rows for applicant-specific data, fields that are locked with predefined values or unlocked and fields that are required to be completed. If there is a requirement for the vendor to provide input values from a predefined list of values, PMWeb allows adding a list for which it will include list of predefined values to select from.
The Section Options table will enable the project owner to show/hide vendor application sections and edit their help text to provide the needed instructions for the vendors to provide the needed details. The table has six types for fields, Text, System Help, System Table, Custom Fields, Custom Tables and Custom Links.
- The two lines marked with a Type of “Text” appear as title and subtitle in the application page.
- The lines marked “System Help” are typically used as general instructions to the applicant and can be hidden.
- The lines marked “System Table” can’t be edited – except for their name and help text – but they can be hidden.
- The lines marked “Custom Fields” can be shown/hidden using the Custom Fields Section.
- The lines marked “Custom Tables” can be defined and shown/hidden using the Custom Tables Section.
- The lines marked “Custom Links” can be defined and shown/hidden using the Links Section
For vendors to complete the registration application design, vendors need first to register the company and contact details as well as provide the user name and password that they will use to complete the vendor registration. When the vendor clicks on the “Apply” button, a confirmation message will be automatically received from PMWeb to advise the vendor that the account has been created and now the vendor can proceed with the application process.
If the vendor decides to begin with the vendor application process by selecting the “Begin My Application”, PMWeb will display the application page with the fields and tables to be completed, whether those were system or user-defined custom fields and tables. The left section of the application will include the list of sections that the vendor needs to complete before submitting the application. Those fields included in the application could include text fields, currencies, text, values from pre-defined list of values and others. The vendor has the option to provide part of the needed information, save and exist the application and later on return to complete the missing information or edit the information that was provided earlier and complete the application.
The application form allows the vendor to upload and attach all supportive documents to the application submission whether those documents were requested in the application for or the vendor wants to submit to improve his submission. At the bottom of the application form, there is the signature box where the vendor needs to provide the date of the application, who was the authorized person submitting the application and the contact details of this authorized person. To complete the registration process, the vendor needs to select the button “Submit the Application”.
PMWeb Vendor Prequalification module will be automatically populated with the online registration applications submitted by the different vendors. This allows the designated project owner team to perform and record their due diligence tasks before approving the vendor as a PMWeb company. To formalize the due diligence process, PMWeb allows defining objective scoring list that will include all items that submitted vendor application need to be scored on. For each score item, PMWeb allows defining the available scoring point and the weight of the score item from the total score.
In addition to the objective and extensive vendor scoring list, PMWeb allows the project owner to get the feedback form his team who have had previous experience with the vendor to provide their personal rating of how good is the vendor on a scale of five. PMWeb allows capturing the details of all those ratings from the different project team members and create an average rating score for the vendor.
Similar to all other PMWeb modules, PMWeb Vendor Prequalification can be routed for approval using PMWeb Visual Workflow and, when approved, be used to automatically generate a new vendor record in PMWeb Companies module. The workflow will enable tracking the status of all vendors registration that are still in progress as well as capture the remarks made by each reviewer of the application.
The data captured in the vendor registration process will become available for the project owner team to report on it in any desired form and format. For example, the Vendor Registration Status report shown below is prepared to display the overall statistics on the vendor registration process. For example, there are three donut charts to group the companies who have submitted their registration by status, type of company and whether it is a new company or already registered but expired. The report will have a bar chart to group the applications that due diligence is still in progress by who is reviewing it. Finally, the report will include two histograms that will group all company by their business category and the second one will group companies by their nationality.
For the second procurement process, the online bidding, to be executed in a structured and proper approach, the buyer needs first to define the scope of work that will be outsourced and the qualified bidders or sellers who will be invited to bid. This will become the basis for creating the procurement packages which will be used to automatically generate the online bids that the sellers need to complete and submit. This will enable the buyer to review and analyze the received bids in the procurement module to decide on who should be awarded the contract.
PMWeb Pre-Bid module is the module 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 as well as the entities who are qualified to bid on this scope of work when it is tendered out.
For approved bid packages, the bid package procurement page will be generated by selecting the Generate Procurement command. The procurement package will automatically capture the information that were included in the pre-bid module including the bidders list and the bill of quantity items that the bidders need to provide their rates against and other details.
Should there be a requirement for the bidders 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 from the predefined clauses list or added directly to 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 submission. Those documents will be uploaded and stored on their designated folder or sub-folders in PMWeb document management repository. For all documents that will be included in the online bid, the bid manager needs to select the “Included in Bid” option. Of course, the attachments could include other documents that will not be shared with the bidders. For those, the “Included in Bid” field needs to be kept blank.
All invited bidders will receive an email with the bid invitation which will have a hyperlink for the online bid document. The bidder will usually have a temporary but secured PMWeb login and password to access PMWeb and the online bid record. All bidders need to provide the rates for the bill items values as well as well as respond to other requirements listed 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 can be used by the bidder to send bid queries for 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 also 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. Technical and financial bid appraisal reports 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 as well as identify which bidder was awarded the contract.
About the Author
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with more than 35-year service record providing project management and controls services to over 100 projects with a total value in excess of 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 complete 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 in topics relating to 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 more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).
Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.