As the Vice-Chairman staff co-operative society estate development steering committee. I was recently asked to co-ordinate the re-award of the estate’s perimeter fence. A look at previous fence contract awarded in the past indicated that project was poorly done and so much money paid for little or nothing.
Upon assumption of duty, we asked for the scope of the previous contract and found out that there was none, other than quote on which the contract was negotiated and awarded. The intent was to find out what went wrong and we discovered that there was no proper selection process for the past contractor and he was paid without a measure of valued work pay mechanism.
In my capacity as the project adviser, I suggested the following:
A. Bidders’ selection through Technical pre-qualification.
In line with above, invitation was sent out to about twenty three contractors. Seventeen of them returned bid and six others did not. A panel with set criteria evaluated and twelve were successful into the commercial round. Presently, the commercial bid has just been concluded awaiting recommendation for award.
B. Payment to be based on earned value system
This met a lot of reservation from other members of the steering committee and the society’s management committee. When the process was explained, they accepted and asked that it be done similarly to the successful bidders during the commercial pre-bid meeting. – 1it was explained to the bidders that the days of poor quality and advance payment were over. They all agreed to abide with the new way of working.
2Criteria for payment will be based on the following:
i. Physical site inspection of extent or work.
ii Work must be in conformance with technical specification through QC inspection
Reports/Tests.
iii. Contractual obligations met.
The first test of the earned value system is in place already with the design consultant. Their milestone payment was reduced to earned value for not meeting up with design of a retaining wall stipulated in their scope; the true value of the retaining wall scope was deducted.
The general lesson learnt here is that we should use only contractors that are capable using the right selection process and pay for only what is deserved. As the project progresses, we shall be informed of its progress and final outcome.
References:
1. Pearl Garden Estate Minutes of meeting 21/12/2010, page 2 item 2.9
2. AACE Certification Preparation Course Material, Dr. Paul Giammalvo November 2010; Page 47 of 94.
Excellent topic, Monigha, but your treatment of it really isn't following the guidelines I am trying to get you to follow. (See Engineering Economy, page 27. table 1-1)
ReplyDeleteStep 1- You did a nice job of defining a very real and appropriate problem or opportunity......
But from that point on, you sort of fizzled out on me.....
Step 2- What were or are the feasible alternatives? You sent out a bid to 23 contractors but you failed to mention anything about the technical specifications? Did you make any improvements to them? Did you base your technical specs on a standardized WBS? Assuming you were going out for a fixed price contract, did you ensure that you had at least 85% scope defined? Did you even consider any kind of INCENTIVE CONTRACTING METHOD?
Step 3- Where is your QUALITATIVE or QUANTITATIVE assessment of the alternatives? Looks to me like you made decisions based only on your "gut feel"? Some of the things I taught you in class? While I am honored, I think you should do more of your own assessment in making future decisions. Based them on FACTS, not on what others tell you.....
Step 4- What was your selection criteria? For the design contractor? For the installation contractor? Was or should LOW PRICE or "BEST VALUE" be the criteria?
Step 5- I don't see any comparison between the alternatives?
Step 6- I see that you reached a conclusion, but it looks to me that you made it more on a leap of faith in what I told you in class rather than on the hard facts?
Step 7- While you were clear that you are using Earned Value to monitor and control the project (VERY good!!!) You failed to mention how you were going to monitor and control the PRODUCT of the project? What is the planned life span of the fence as designed? Maybe one of the contractors had a better design that while the initial investment was higher, the life span of the fence was longer? Or perhaps the maintenance of the fence may have been less?
See where I am going with this? Sure, you made some changes (and many of them were GOOD ones) but it looks to me like you missed exploring some possible alternatives that you are learning about, which may have been beneficial.
Bottom line- I am accepting this posting, but for the future, I am expecting to see you producing a more complete exploration of the feasible alternatives and coming up with recommendations/decisions based on hard numbers, not just what you learned in class.
To see a model of what I am expecting each week from you, check out what one of our top students is producing at W17 http://coolcce.wordpress.com/2011/01/21/week-17-0-%E2%80%93-burhanudin-%E2%80%93-delay-analysis-and-recovery-plan-for-piping-work-a-case-study/
This is where I need to get each of you......
BR,
Dr. PDG, back in Jakarta
Dr Paul thanks for your observations and well noted. However,the criteria for selection and all that we had but for the need to have blog under 500 word i didn't post all that. Just summarised more or less.
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