Report on the Challenges in the Planning and Procurement of Services

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• Report on the Challenges in the Planning and
  Procurement of Services
• for the Ceres and van Rhynsdorp Correctional
  Facilities
• Portfolio Committee on Correctional Services
• 5 September 2012

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Purpose

• To respond to observations made by the DCS
  Portfolio Committee during their meeting of 22
  February 2012 regarding the procurement of the
  contractor and details of the contract for both
  Ceres and Van Rhynsdorp Correctional Facility

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Projects Initiation Professional Team

• DCS requested provision of additional
  accommodation for administration and inmates to
  address congestion in various prisons in the
  Western Cape and in the Country. Hence VAN
  RHYNSDORP AND CERES PRISONS were registered as
  projects by DPW.
• Registered Departmental Project Manager was
  appointed to lead the professional team which
  comprises of Private Engineers, Architect and
  Quantity Surveyor .

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Projects Initiation Professional Team -
continues

• The appointment of the professional team was done
  through routine assignment of consultants
  Roster
• Each project had a dedicated professional team in
  order to maximize performance and focus
• The professional team members involved on the
  project are registered with their relevant
  professional councils

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ObservationPROCUREMENT PROCESS VAN RHYNSDORP

• DPW advertised this tender on open procedure on
  27 July 2007.
• Procurement Strategy included inter alia the
  following requirements
• CIDB grading of 8GB or 8CE
• Minimum Contract Participation Goal percentage of
  20 was required

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ObservationProcurement Process Van
Rhynsdorpcontinue

• Cost analysis and pre tender estimates were done
  by professionally registered Quantity Surveyor
• Pre-tender Estimate was R 219,989,562.00
• The estimate was based Kimberley Prototype
• Contract Price Adjustment was included
• Tender Amount R 192,876,930.64
• Variance is R 27,112,631.36

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ObservationProcurement Process Van Rhynsdorp
Continued

• 3 Tenders were received on 12 September 2007
• 1 tenderer was declared non-compliant due to not
  meeting the minimum points for quality
• 1 tenderer was disqualified as they did not have
  the required CIDB grading

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ObservationProcurement Process Van Rhynsdorp

• Highest point scored tenderer was recommended as
  the bid adhered to all requirements set and the
  tenderer had the required cidb grading.
• Cidb grading 8GBPE
• Contract Participation Goal Percentage tendered
  47.41
• Tender recommendation was accepted by the Bid
  Adjudication committee and tender was awarded on
  12 October 2007
• The site was handed over to the contractor on 7
  November 2007

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Van Rhynsdorp - Cost Analysis

• Actual Tender Amount is R 192,876,930.64
• Current Expenditure R 275 695 477.39
• Variance between tender Amount and Expenditure to
  date R 82,818,546.75 (30.04)
• Costing model applied by was based on Historical
  Information(Kimberley) and Cost for Resources
• The variance increased due to the following
• Additional work requested by the User Department,
  outside the original scope of works.
• Change of specifications for materials to meet
  client needs and enhance compliance, post
  sign-off of project deliverables.
• Failure to account for topography and
  geographical location of facilities

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ObservationProcurement Process Ceres

• DPW advertised this tender on open procedure on
  25 April 2008.
• Procurement Strategy included inter alia the
  following requirements
• CIDB grading of 8 GB
• Minimum Contract Participation Goal percentage of
  20

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ObservationPROCUREMENT PROCESS CERES- Continue

• Cost analysis and pre tender estimates were done
  by professionally registered Quantity Surveyor.
• Pre-tender Estimate was R 212,646,407.00
• The estimate was based Kimberley Prototype
• Contract Price Adjustment was also included
• Costing model applied by Historical Information
  (Kimberley) and Cost for Resources
• Actual Tender Amount R 182 712 542.62
• Variance is R 29 933 864.38

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OBSERVATIONPROCUREMENT PROCESS CERES
CONTINUED

• 7 Tenders were received on 28 May 2008
• 3 Tenders were disqualified as they did not have
  the correct cidb grading
• Highest point scored tenderer was recommended as
  the bid adhered to all requirements set and the
  tenderer had the required cidb grading.

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ObservationProcurement Process Ceres
continued

• CIDB grading of 8 GBPE
• Contract Participation goal percentage tendered
  43.7
• Tender recommendation was accepted by the Bid
  Adjudication committee and tender was awarded on
  11 July 2008
• The site was handed over to the contractor on 5
  August 2008

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Ceres - Cost Analysis

• Actual Tender Amount R 182 712 542.62
• Current Expenditure R 193 229 166.23
• Variance between tender Amount and Expenditure to
  date R 10 516 623.61 (5.44)
• The variance increased due to the following
• Additional work requested by the User Department,
  outside the original scope of works.
• Failure to account for topography and
  geographical location of facilities

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Form of contractsDetails of contracts

• Most of the activities on both projects related
  to buildings and civil works. The form of
  contract found to be suitable and relevant to
  both projects was
• Standard JBCC 2000 Edition 4.1 March 2005 this
  document is not part of the documentation, but is
  referred to as the basis of the contract
• Special conditions of Contract DPW 04 EC

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Shortcomings identified in contracts and how to
overcome in future

• Shortcomings in processes have been identified
• Sketch plan approval was duly obtained before
  tenders were invited user client changes still
  occurred due to the fact that these facilities
  were of the first new generation facilities to be
  built and lessons learnt at Kimberley was
  incorporated in the building during construction
  phase
• Enough time must be allocated for the planning
  phase of a project
• Risk assessment of tenders to be comprehensive as
  the cidb grading is correct, but experience in a
  specific field may be limited

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Planning Phase

• Challenge Time frame between approval of sketch
  plans and tender documentation is often too
  short. Often due to pressure to get on site and
  show an expenditure. The result is detail
  planning must be done during the contract
• Proposal Realistic time frames must be set and
  communicated. Expectations must not be created
  where delivery cannot take place

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Planning Phase

• Challenge The geotechnical survey completed at
  the beginning of the planning was not
  comprehensive enough to indicate problems on soil
  conditions resulting in delays and extras due to
  rock, high water table levels, etc.
• Proposal The DPW must ensure a comprehensive
  geotechnical survey and increase the amount of
  trial holes required in order to ensure that
  surprises in site conditions do not occur.

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Planning Phase

• Challenge The standard drawings and documents
  that existed were not comprehensive enough to
  allow planning without changes required. The
  lessons learned from Kimberley was incorporated
  during the construction phase
• Proposal The DPW with assistance of DCS must
  develop comprehensive standard drawings and
  specifications that must only be adapted to suite
  a specific site.

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Procurement Phase

• Challenge At time of the evaluation of these
  tenders the method of risk assessment of
  contractors implemented was restrictive mainly
  based on the CIDB grading of the contractor and
  quality criteria set that did not include for all
  issues
• Proposal The DPW has introduced a risk
  assessment concentrating on technical and
  contractual ability as well doing a commercial
  risk in line with the CIDB prescriptions. This
  must be further enhanced by developing of quality
  (functionality) criteria that are fair and
  objective

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Procurement Phase

• Challenge Contractors that are responsive in all
  criteria and will pass a risk assessment, but can
  be over committed if too many projects are
  simultaneously awarded to such companies.
• Proposal A difficult challenge to resolve! The
  DPW to engage with National Treasure and the CIDB
  to develop criteria that can be used to ascertain
  if a proposed contractor will be over committed
  if more projects are awarded

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THANK YOU