Sunil Bhattacharya
January 2010

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WHAT DO WE UNDERSTAND BY PROCUREMENT OF
“PLANT DESIGN, SUPPLY, AND INSTALLATION” UNDER
BANK PROJECTS--SOME KEY CONCEPTS
WHEN TO USE THIS TYPE OF CONTRACT
SOME IMPORTANT AND SOME UNIQUE TERMS USED
AND WHAT DO THEY MEAN
SINGLE AND TWO STAGE BIDDING
STRUCTURE OF BIDDING DOCUMENT AND SOME
IMPORTANT PROVISIONS
IMPORTANT PROCUREMENT ASPECTS
KEY DIFFERENCES FROM PROCUREMENT OF GOODS
AND WORKS
WATCH LIST TO AVOID COMMONLY ENCOUNTERED
PROBLEMS
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 CONSTRUCTION OF A FACILITY THAT INCLUDES SPECIALLY
ENGINEERED PLANTS AND EQUIPMENT INVOLVING THEIR DESIGN,
SUPPLY, INSTALLATION AND COMMISSIONING AND AT TIMES
CONSTRUCTION OF CIVIL WORKS UNDER A SINGLE RESPONSIBILITY
CONTRACT
 APPLICABLE BANK GUIDELINES: “GUIDELINES PROCUREMENT UNDER
IBRD LOANS AND IDA CREDITS OF MAY 2004-REVISED OCTOBER 2006”
 APPLICABLE SBDs ON BANK’S WEBSITE FOR USE UNDER ICB:
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I) “PLANT DESIGN, SUPPLY AND INSTALLATION” OF APRIL 2008 FOR
PROJECTS WITH PCN ON OR AFTER OCTOBER 15, 2006; AND
II) “SUPPLY AND INSTALLATION OF PLANT AND EQUIPMENT “ OF MAY
2005 –REVISED JUNE 2007 FOR PROJECTS WITH PCN PRIOR TO OCTOBER
15, 2006
BOTH DOCUMENTS ARE NOT DESIGNED FOR “TURNKEY” TYPE OF
CONTRACTS THAT ARE ACCEPTABLE UNDER BANK PROCUREMENT
GUIDELINES
 BANK NORMATIVE GUIDELINES ON FRAUD AND CORRUPTION IS
APPLICABLE FOR PROJECTS WITH PCN ON OR AFTER OCTOBER 15, 2006
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“TURNKEY” TYPE CONTRACT IS ONE WHERE A
SINGLE ENTITY TAKES TOTAL RESPONSIBILITY TO
PROVIDE A FULLY-EQUIPPED FACILITY READY FOR
OPERATION AT THE “TURN OF THE KEY” AND
PROVIDES KNOW-HOW, BASIC AND DETAILED
DESIGN AND ENGINEERING, IS RESPONSIBLE FOR
ALL PROCUREMENT, SUPPLY AND INSTALLATION
OF PLANT AND EQUIPMENT AND CONSTRUCTION
OF THE FACILITY INCLUDING ANY CIVIL WORKS
UNDER ONE SINGLE RESPONSIBILITY CONTRACT--
GENERALLY A LUMP-SUM CONTRACT WITH MUCH
HIGHER RISKS BORNE BY CONTRACTOR
DEGREE OF EMPLOYER’S INVOLVEMENT IN DESIGN
AND ENGINEERING IS MINIMAL
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 EMPLOYER ESSENTIALLY REMAINS RESPONSIBLE FOR HIS
DESIGN AND ENGINEERING PROVIDED FOR THE CONTRACT
 EMPLOYER PROVIDES TECHNICAL SPECIFICATIONS AND
DRAWINGS AS HE THINKS ARE ESSENTIAL FOR TECHNICAL
AND PERFORMANCE CHARACTERISTICS AND REQUIREMENTS
 CONTRACTOR TAKES RESPONSIBILITY FOR DESIGN,
ENGINEERING, MANUFACTURE, INSTALLATION,
CONSTRUCTION AND EACH ACTIVITY AS OFFERED BY HIM
AND ACCEPTED IN THE CONTRACT THAT ARE REQUIRED TO
COMPLETE THE FACILITY FOR THE PURPOSE INTENDED
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 CONTRACTOR HAS THE RIGHT TO DISCLAIM
RESPONSIBILITY FOR THE DESIGN , DATA,
DRAWING, SPECIFICATIONS GIVEN BY EMPLOYER
 RESPONSIBILITIES OF EMPLOYER AND
CONTRACTOR UNDER BOTH SBDs ARE NOT
MATERIALLY DIFFERENT ALTHOUGH DETAILS OR
EXTENT OF DESIGN, ENGINEERING AND
SPECIFICATIONS PROVIDED BY THE EMPLOYER
FOR EACH TYPE OF CONTRACT MAY VARY
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 WHEN VALUE OF PLANT AND EQUIPMENT REPRESENTS
MAJOR PROPORTION OF CONTRACT AMOUNT; AND
 WHEN FACILITY CANNOT BE TAKEN OVER SAFELY
WITHOUT TESTING, COMMISSIONING AND OTHER
ELABORATE PROCEDURES BEFORE ACCEPTANCE
 EXAMPLES: DESIGN, SUPPLY AND INSTALLATION OF
TURBINES, GENERATORS, BOILERS, SWITCHYARDS,
PUMPING STATIONS, TELECOMMUNICATIONS, PROCESS
AND TREATMENT PLANTS UNDER POWER, WATER,
SEWERAGE, TELECOM AND SIMILAR PROJECTS TO BE
PROVIDED UNDER SINGLE RESPONSIBILITY CONTRACT
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 CONSULT RPM OFFICE OR OTHER SENIOR
PROCUREMENT STAFF AT EARLY STAGES OF
DESIGNING PROCUREMENT ARRANGEMENTS FOR
THE PROJECT AND BEFORE ADVISING BORROWERS
 CONTRACTS ARE GENERALLY COMPLEX AND LARGE
VALUE --MORE THAN $ 10 MILLION REQUIRING
ADDED ATTENTION
 DEPENDING UPON SIZE, NATURE AND
COMPLEXITY PREQUALIFICATION AND/OR SINGLE
OR TWO STAGE BIDDING PROCEDURES MAY APPLY
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PROJECT MANAGER
FACILITY
PLANT
CONTRACTOR’S EQUIPMENT
INSTALLATION SERVICES
COMPLETION
PRE-COMMISSIONING
COMMISSIONING
FUNCTIONAL GUARANTEE AND LIABILITY
OPERATIONAL ACCEPTANCE
DEFECT LIABILITY PERIOD
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SINGLE AND TWO STAGE BIDDING
 WHAT IS A SINGLE STAGE BIDDING?
 TECHNICAL AND PRICE BIDS ARE RECEIVED AT THE
SAME TIME AND BOTH PUBLICLY OPENED
IMMEDIATELY THEREAFTER
 WHEN AND WHY A SINGLE STAGE BIDDING IS
USEFUL OR NOT SO USEFUL
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USEFUL IF PROCUREMENT IS LESS COMPLEX
USEFUL IF EMPLOYER'S SPECIFICATIONS ARE CLEAR AND
LESS POSSIBILITY OF BIDDERS TAKING EXCEPTIONS OR
DEVIATIONS TO SPECIFICATIONS
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NOT SO USEFUL TO RESCUE A LOW BID FROM A QUALIFIED
BIDDER IF IT DEVIATED AS AFTER PRICE BID OPENING NO
CHANGES IN SUBSTANCE OR PRICE CAN BE PERMITTED
ADVANTAGE---PROCESSING TIME MAY BE LESS
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SINGLE AND TWO STAGE BIDDING
 WHAT IS A TWO STAGE BIDDING?
 TECHNICAL PROPOSALS AND PRICE BIDS ARE
RECEIVED AT DIFFERENT TIMES AND BOTH
PUBLICLY OPENED AT DIFFERENT TIMES
 AT FIRST STAGE UNPRICED TECHNICAL PROPOSALS
ARE INVITED BASED ON CONCEPTUAL DESIGN OR
PERFORMANCE SPECIFICATIONS
 AT THE SECOND STAGE FINAL TECHNICAL
PROPOSALS AND PRICE BIDS ARE INVITED FROM
THOSE THAT PASS THE FIRST STAGE EVALUATION
CRITERIA AND AFTER OBTAINING TECHNICAL
AND COMMERCIAL CLARIFICATIONS FROM THEM
AS NECESSARY
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SINGLE AND TWO STAGE BIDDING
 WHEN AND WHY A TWO STAGE BIDDING IS
USEFUL OR NOT SO USEFUL
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USEFUL FOR VERY COMPLEX PROCUREMENT OR OF SPECIAL
NATURE
USEFUL IF DUE TO COMPLEX NATURE IT IS UNDESIRABLE OR
IMPRACTICAL TO PREPARE SPECIFICATIONS IN ADVANCE
USEFUL IF HIGH POSSIBILITY OF BIDDERS TAKING
EXCEPTIONS OR DEVIATIONS TO BORROWER’S
SPECIFICATIONS OR MAY OFFER BETTER ALTERNATIVE
SOLUTIONS OR SPECIFICATIONS THAT MEET REQUIRED
PERFORMANCE AND FUNCTIONAL GUARANTEES
USEFUL TO RESCUE A BID IF IT DEVIATED IN TECHNICAL
SPECIFICATIONS AT THE FIRST STAGE BID BY SEEKING
CLARIFICATIONS AND MODIFICATIONS AS THERE IS NO
PRICES INFORMATION
DISADVANTAGE---PROCESSING TIME MAY BE LONGER
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
Employer issues bidding docs. including
Invitation to 1 st Stage
Bidding 
Bidders asked to submit technical-only proposals
Evaluation of Technical
Proposals
Clarification/Feedback
Meeting with Qualified
Bidders
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Employer evaluates technical proposals’
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Employer also verifies bidder’s qualification
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Bidders may be invited to discuss content of tech.
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Employer prepares minutes of required changes
Invitation to 2 nd Stage
Bidding
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Bidders invited to submit 2 nd stage bids including
Technical/Financial
Evaluation and Award
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Employer evaluates 2 nd stage bids per evaluation
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Award to qualified bidder with responsive, lowest evaluated 2 nd stage bid
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SINGLE AND TWO STAGE BIDDING
 DON’T BE CONFUSED---TWO STAGE BIDDING AND TWO
ENVELOPE SYSTEMS ARE QUITE DIFFERENT
 IN TWO ENVELOPE SYSTEM TECHNICAL AND PRICE BIDS
ARE RECEIVED AT THE SAME TIME BUT IN TWO SEPARATE
SEALED ENVELOPES—FIRST TECHNICAL BIDS ARE OPENED
AND EVALUATED --PRICE BIDS OF ONLY THOSE THAT ARE
QUALIFIED AND PASS THE TECHNICAL EVALUATION ARE
OPENED FOR AWARD BASED ON LOWEST EVALUATED
PRICE —PRICE ENVELOPES OF THOSE THAT FAIL IN
TECHNICAL EVALUATION ARE RETURNED UNOPENED—
NOT A GOOD PRACTICE—NON-TRANSPARENT AND NOT
RECOMMENDED
 PROCUREMENT GUIDELINES PERMIT TWO STAGE BIDDING
BUT DOES NOT MENTION ABOUT TWO ENVELOPE SYSTEM
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 Section I. Instructions to Bidders
 Section II. Bid Data Sheet
 Section III. Evaluation and Qualification Criteria
(Following Prequalification)
 Section III. Evaluation and Qualification Criteria
(Without Prequalification)
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 Section I. Instructions to Bidders
 Section II. Bid Data Sheet
 Section III. Evaluation and Qualification Criteria
(Following Prequalification)
 Section III. Evaluation and Qualification Criteria
(Without Prequalification)
 Section IV. Bidding Forms
 Section V. Eligible Countries
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 Section VI. Employer’s Requirements
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 Section VII. General Conditions (GC)
 Section VIII. Particular Conditions
 Section IX. - Contract Forms
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INSTRUCTIONS TO BIDDERS-
IMPORTANT PROVISIONS
 ELIGIBLE BIDDERS
 CONFLICT OF INTEREST
 FRAUD AND CORRUPTION AND AUDIT RIGHTS
 CLARIFICATIONS-SITE VISITS-PRE-BID MEETINGS
 AMENDMENTS OF BIDDING DOCUMENTS
 ALTERNATIVE BIDS
 DOCUMENTS ESTABLISHING CONFORMITY OF
PLANT AND INSTALLATION SERVICES
 BID PRICES AND DISCOUNTS
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INSTRUCTIONS TO BIDDERS-
IMPORTANT PROVISIONS
 CURRENCY OF BID AND PAYMENT
 BID VALIDITY AND BID SECURITY
 EVALUATION OF BIDS-TECHNICAL AND
ECONOMIC
 QUALIFICATION OF BIDDERS
 PERFORMANCE SECURITY
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CONDITIONS OF CONTRACT-
IMPORTANT PROVISIONS
 CONTRACTORS RESPONSIBILITY
 EMPLOYERS RESPONSIBILITY
 SECURITIES
 TAXES AND DUTIES
 INTELLECTUAL PROPERTY
 SUBCONTRACTING
 PROCUREMENT –CONTRACTOR’S PLANT
EMPLOYER SUPPLIED PLANT
 CUSTOMS CLEARANCE
 COMPLETION OF FACILITIES
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CONDITIONS OF CONTRACT-
IMPORTANT PROVISIONS
 COMMISSIONING AND OPERATIONAL
ACCEPTANCE
 PARTIAL ACCEPTANCE
 COMPLETION TIME GUARANTEE
 DEFECT LIABILITY
 FUNCTIONAL GUARANTEES
 PATENT INDEMNITY
 LIMITATION OF LIABILITY
 LOSS OF OR DAMAGE TO PROPERTY; ACCIDENT,
INJURY ETC.
 INSURANCE
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CONDITIONS OF CONTRACT-
IMPORTANT PROVISIONS
 CHANGES IN FACILITIES
 SUSPENSION
 TERMINATION-FOR EMPLOYER’S
CONVENIENCE—CONTRACTOR’S DEFAULT—BY
CONTRACTOR
 ASSIGNMENT
 EXPORT RESTRICTIONS
 DISPUTES AND ARBITRATION—DRB—
ADJUDICATOR [BD FOR SUPPLY AND
INSTALLATION]
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IMPORTANT PROCUREMENT ASPECTS
 BORROWERS REQUIREMENTS AND
PROCUREMENT STRATEGY-ARRANGEMENTS
 SPECIFICATIONS AND FUNCTIONAL
GUARANTEES
 BIDDER’S QUALIFICATIONS-PREQUALIFICATION
 PACKAGING
 BID PRICES
 BID OPENING
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IMPORTANT PROCUREMENT ASPECTS
 BID EVALUATION
 SEQUENCE OF COMPLETION TAKING OVER AND
OPERATIONAL ACCEPTANCE OF FACILITY
 PAYMENT TERMS
 BIDDER’S COMPLAINTS
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 KEY FACTORS TO BE CONSIDERED AT PREPARATION AND
APPRAISAL:
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BORROWER’S NEED ASSESSMENT-FEASIBILITY STUDY
SCOPE OF WORK –GREEN FIELD OR UPGRADING OR
REHABILITATION-IS INSTALLATION OR ONLY SUPERVISION OF
INSTALLATION-SIZE-COST-NATURE-COMPLEXITY-REASONABLE
COMPLETION TIME-NEED FOR EFFECTIVE COMPETITION
PAST EXPERIENCE OF IMPLEMENTING AGENCY IN HANDLING SUCH
PROCUREMENT
IN-HOUSE TECHNICAL EXPERTISE OF IMPLEMENTING AGENCY FOR
PREPARATION OF SPECIFICATIONS, MANAGEMENT AND
SUPERVISION OF CONTRACT-OPERATION OF THE PLANT-
INSPECTION INCLUDING STAGE INSPECTION AT FACTORY OR NEED
TO ENGAGE TECHNICAL EXPERT/FIRM
NEED FOR TRAINING
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 SOME IMPORTANT CONSIDERATIONS
 SHOULD MEET PROJECT NEEDS
 IS IT TOO DEMANDING OR REASONABLE
HAS MARKET AVAILABILITY BEEN
CHECKED?
 IS IT TOO DETAILED DESIGN BASED-OR
CONCEPTUAL OR PERFORMANCE BASED?
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 SOME IMPORTANT CONSIDERATIONS
 DESIRABLE CHARACTERISTICS MAY INCLUDE E.G.
MINIMUM GUARANTEED OUTPUT- PRODUCT
QUALITY AND APPLICABLE STANDARDS-PLANT
PERFORMANCE FACTORS -RELIABILITY-
FUNCTIONAL GUARANTEES-PLANT AVAILABILITY–
OPERATIONAL FLEXIBILITY AND SUCH OTHER
CRITERIA AS RELEVANT
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 SOME IMPORTANT CONSIDERATIONS
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DESIRABLE TO PROVIDE FOR COMPETITION BASED ON LIFE CYCLE
COST AND TO SPECIFY RELATED TECHNICAL PARAMETERS E.G.
 ENGINEERING CALCULATION AND WHERE APPROPRIATE
FORMULA TO DETERMINE MONETARY IMPACT FOR AN INCREASE
OR DECREASE OF EFFICIENCY ABOVE OR BELOW THE MINIMUM
REQUIRED OR IN COMPARISON WITH THE HIGHEST EFFICIENCY
OFFERED BY ANY BIDDER
DESIRABLE TO PROVIDE FUNCTIONAL GUARANTEES SUCH AS
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MINIMUM ACCEPTABLE PRODUCTION CAPACITY AND/OR
MAXIMUM LEVELS OF CONSUMPTION OF RAW MATERIALS AND
UTILITIES AND RESPECTIVE ENGINEERING CALCULATIONS FOR
CLAIMING LIQUIDATED DAMAGES IN CASE OF FAILURE OF
CONTRACTOR TO ACHIEVE CAPACITY SPECIFIED IN THE
CONTRACT—RATE OF LIQUIDATED DAMAGES SHOULD NOT BE
LESS THAN THE RATE USED FOR PURPOSES OF BID EVALUATION
AGGREGATE LIQUIDATED DAMAGES GENERALLY MAY NOT
EXCEED 10% OF THE TOTAL VALUE OF THE CONTRACT
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LIFE CYCLE COST METHODS
 COST TO OWN AND OPERATE ITEM DURING ITS
USEFUL LIFE
 INITIAL PURCHASE PRICE
 ADJUSTED FOR EXTRAS, DELIVERY, VARIATIONS IN PAYMENT
TERM, ETC.
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 VALUE OF ADJUSTMENTS ADDED TO BID PRICE
OPERATING COST DURING LIFE OF ITEM
 FUEL, SPARE PARTS, MAINTENANCE, (X YEARS)
 ANNUAL COSTS DISCOUNTED TO NPV
OWNERSHIP COST DURING LIFE OF ITEM
 ECONOMICAL USEFUL LIFE (X YEARS)
RESALE OR SCRAP VALUE DISCOUNTED TO NPV
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LIFE CYCLE COST METHODS
 EFFICIENCY COST METHOD
 CAPITALIZE DIFFERENCES IN EFFICIENCY IN
OPERATION OF ITEMS, i.e. Boiler, Turbine,
Transformer, etc., DURING LIFE
 PRODUCTIVITY COST METHOD
 DETERMINE LIFE CYCLE COST PER UNIT OF
OUTPUT FOR COMPARISON PURPOSES
 LIFE CYCLE COST OF PLANT (X YEARS) NPV
DIVIDED BY TOTAL UNIT OUTPUT OF PLANT
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LIFE CYCLE COST METHODS
EVALUATION USING LIFE CYCLE COSTING FOR THE
PROCUREMENT OF A 500 MW COAL-FIRED POWER STATION
BOILER COMPLEX
BIDS WILL BE EVALUATED ON LIFE CYCLE PRINCIPLES BY
EVALUATING THE INITIAL COST AND THE COST OF OPERATION
OF THE PLANT OVER A PERIOD OF 20 YEARS. THE EVALUATION
OF THE OPERATING COSTS WILL BE BASED ON THE
CAPITALIZED COST FOR EACH PERCENT OF BOILER EFFICIENCY
ABOVE THE MINIMUM ACCEPTABLE, AS SPECIFIED IN THE
TECHNICAL SPECIFICATION, DISCOUNTED TO PRESENT VALUE
AT A DISCOUNT RATE OF 10 PERCENT. THE EVALUATION WILL
BE ON THE FOLLOWING NORMS:
31

LIFE CYCLE COST METHODS
EVALUATION USING LIFE CYCLE COSTING FOR THE
PROCUREMENT OF A 500 MW COAL-FIRED POWER STATION
BOILER COMPLEX
1. BID PRICE FOR THE BOILER AND MANDATORY SPARES.
2. PRICE FOR SPARES REQUIRED FOR THE FIRST FIVE YEARS OF
OPERATIONS, CAPITALIZED TO PRESENT VALUE AT 10
PERCENT DISCOUNT.
3. ADJUSTMENTS TO BID PRICE FOR OMISSIONS, DEVIATION
AND EXCEPTIONS TO TECHNICAL AND COMMERCIAL
CONDITIONS IN THE BIDDING DOCUMENTS.
4. CAPITALIZED COST SAVINGS FOR BOILER EFFICIENCY AT THE
RATE OF US$500,000 PER EACH 0.1 PERCENT ABOVE 80
PERCENT.
5. CAPITALIZED COST FOR THE AUXILIARY POWER
CONSUMPTION AT US$2,000 PER KW.
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EVALUATION USING LIFE CYCLE COSTING FOR THE PROCUREMENT OF A 500
MW COAL-FIRED POWER STATION BOILER COMPLEX
1. INITIAL COSTS
ALL FIGURES IN USD
(IN THOUSANDS)
A C
TOTAL QUOTED PRICE, INCLUDING 185,000 200,000
MANDATORY SPARES
2. ADJUSTMENTS
3,000 --(A) FOR OMISSIONS IN MANDATORY
SPARES
(B) COMMERCIAL EXCEPTIONS
(delivery, payment terms)
15,500 12,000
(C) TECHNICAL EXCEPTIONS 28,000 24,000
(omission of equipment, capacity shortage, etc.)
INITIAL COST 231,500 236,000
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EVALUATION USING LIFE CYCLE COSTING FOR THE PROCUREMENT OF A 500
MW COAL-FIRED POWER STATION BOILER COMPLEX
ALL FIGURES IN USD
(IN THOUSANDS)
A C 3. ADJUSTMENTS FOR
FOLLOW-ON COSTS
(A)CAPITALIZED COST OF SPARES
FOR FIVE YEARS
(B) CAPITALIZED COST SAVING
FOR HIGHER EFFICIENCY
( C) CAPITALIZED COST OF AUXILIARY
POWER CONSUMPTION
TOTAL ADJUSTMENT FOR
FOLLOW-ON COST
4. TOTAL EVALUATED COST ON
LCC PRINCIPLES
RANKING
40,000
-12,000
5,000
33,000
264,500
2
-18,000
7,000
17,000
253,000
1
28,000
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LIFE CYCLE COST METHODS
BID EVALUATION USING LIFE CYCLE COSTING
OIL PALM PLANT
THE EVALUATION AND COMPARISON OF RESPONSIVE
BIDS SHALL BE BASED ON THE TOTAL LIFE CYCLE
COST FOR SIX YEARS, PER UNIT OF OUTPUT. THE LIFE
CYCLE COST SHALL BE THE SUM OF THE INITIAL
PURCHASE PRICE OF THE PLANT AND THE COST OF
OPERATION IN ELECTRIC ENERGY FOR SIX YEARS OF
OPERATION OF A UNIT COST OF US$0.10 PER KWH,
DISCOUNTED TO PRESENT VALUE AT 12 PERCENT.
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LIFE CYCLE COST METHODS
BID EVALUATION AND COMPARISON
ALL FIGURES IN USD (IN THOUSANDS)
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1. INITIAL COST
2. OPERATING COST PER YEAR
OPERATING COST FOR 6 YEARS
NPV AT 12 PERCENT
A
9,500
(1,200)
4,933
B
10,300
(1,000)
4,111
3. TOTAL LIFE CYCLE COST
4. OUTPUT PER YEAR (TONS)
14,433 14,411
3,600 4,000
5. EVALUATED COST PER TON OF OUTPUT 4.01
6. RANKING 2
3.60
1
A-12 MILLION KWH @ .10 PER KWH
B-10 MILLION KWH @ .10 PER KWH
36

 QUALIFICATION AND EXPERIENCE REQUIREMENTS
WILL DEPEND ON NATURE AND COMPLEXITY
 SHOULD NOT BE SET TOO HIGH OR TOO MANY
 KEEP IN VIEW INDUSTRY PRACTICES FOR
CONSTRUCTION OF REQUIRED FACILITIES IN
DESIGNING MINIMUM QUALIFICATION CRITERIA
 SPECIFY RELEVANT AND REASONABLE MINIMUM
CRITERIA FOR BIDDER’S TECHNICAL CAPABILITY,
FINANCIAL RESOURCES AND PAST EXPERIENCE
INCLUDING THAT REQUIRED FOR MANUFACTURERS
AND SUBCONTRACTORS OF CRITICAL ITEMS
 INCLUDE STANDARD FORM OF MANUFACTURER’S
AUTHORIZATION (NOT IN SBD FOR S&I)
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DECIDE EARLY ON PREQUALIFICATION AT PREPARATION
OR APPRAISAL
GIVEN LARGE VALUE AND COMPLEXITY, COST OF
PREPARING BIDS BEING HIGH, TO SOLICIT INTEREST OF
QUALIFIED BIDDERS AND TO ASCERTAIN EXPECTED LEVEL
OF COMPETITION, PREQUALIFICATION IS NORMALLY
REQUIRED AND RECOMMENDED
IN CERTAIN CASES E.G. WHERE COST OF PREPARING BIDS
IS NOT VERY HIGH OR OTHER JUSTIFIABLE REASONS E.G.
URGENCY-- PREQUALIFICATION MAY BE OMITTED IN A
TWO STAGE BIDDING
FOLLOW ALL STANDARD RULES AND PROCEDURES FOR
PREQUALIFICATION AS PER GUIDELINES AND STANDARD
PREQUALIFICATION DOCUMENT
38

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MAIN CRITERIA
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GENERAL EXPERIENCE
SPECIFIC EXPERIENCE IN CONSTRUCTION OF SIMILAR FACILITIES –HOW
MANY AND HOW FAR BACK IN TIME HAVING SUCCESSFULLY
COMPLETED? ANY OTHER SPECIFIC WORK EXPERIENCE UNIQUE TO
PROCUREMENT IN QUESTION
MANUFACTURER’S AUTHORIZATION FOR MAJOR ITEMS NOT
MANUFACTURED BY CONTRACTOR AND/OR OTHER RELEVANT
DOCUMENTS SUCH AS LICENSING AGREEMENTS WITH
MANUFACTURERS
MINIMUM QUALIFICATION REQUIREMENT FOR MAJOR ITEMS
INCLUDING THOSE PERMITTED OR LIKELY TO BE OFFERED BY
SUBCONTRACTORS
IF LONG TERM OPERATION AND/OR MAINTENANCE SERVICES ARE
REQUIRED THEN DEMONSTRATED EXPERIENCE FOR SUCH SERVICES
OVER A PERIOD OF TIME
FINANCIAL RESOURCES—AVERAGE CONSTRUCTION TURNOVER
INCLUSIVE OF INSTALLATION AND OTHER SERVICES AND CASH FLOW
PERSONNEL AND EQUIPMENT IS CHECKED AT PRICE BID STAGE
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PACKAGING
 IMPORTANT CONSIDERATIONS
 OTHER FINANCIERS-- PARALLEL OR JOINT FINANCING –
AGREE ON BIDDING AND REVIEW PROCEDURES
 TO THE EXTENT PRACTICAL PACKAGING SHOULD BE
SUCH THAT MANUFACTURERS OF MAJOR PLANT AND
EQUIPMENT FOR FACILITY WOULD BE ABLE TO
PARTICIPATE BY OBTAINING ITEMS THEY DO NOT
MANUFACTURE FROM OTHER SOURCES ESPECIALLY IF
OUTSOURCED ITEMS DO NOT BELONG TO A
DIFFERENT CLASS OF INDUSTRY WHERE A SEPARATE
PACKING WOULD BE TECHNICALLY FEASIBLE
 VERY LARGE PACKAGES MAY REDUCE COMPETITION
DUE TO CAPACITY LIMITATIONS
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 BID PRICES SHALL BE INVITED AS FOLLOWS:
(SCHEDULES OF RATES AND PRICES IN SBD)
1.
2.
3.
4.
5.
6.
SCHEDULE 1-CIP FOR PLANT AND MANDATORY SPARES
SUPPLIED FROM ABROAD
SCHEDULE 2-EXW FOR PLANT AND MANDATORY SPARES
SUPPLIED FROM WITHIN EMPLOYER’S COUNTRY
SCHEDULE 3-DESIGN SERVICES
SCHEDULE 4-INSTALLATION AND OTHER SERVICES [OTHER
SERVICES TO INCLUDE TRANSPORTATION, INSURANCE,
TEMPORARY WORKS, OTHER CIVIL WORKS, OPERATION AND
MAINTENANCE SERVICES, TRAINING, ETC. INCLUDING ALL
TAXES AND DUTIES ON SUCH SERVICES]
SCHEDULE 5-GRAND SUMMARY TOTAL OF SCHEDULES 1 TO 4
SCHEDULE 6-BIDDER’S RECOMMENDED SPARE PARTS [NOT TO
BE INCLUDED FOR BID EVALUATION]
41

BID OPENING
 ALL BID OPENING WHETHER SINGLE OR TWO
STAGE BIDDING ARE PUBLIC BID OPENING
 STRICTLY FOLLOW THE RULES IN THE BIDDING
DOCUMENTS AND OPEN BIDS ACCORDINGLY AT
THE DESIGNATED PLACE AND AT THE SPECIFIED
TIME AND DATE
 GOOD PRACTICE IS TO ALSO READ ALOUD
 OPERATING COSTS WHERE APPLICABLE
 FUNCTIONAL AND OTHER GUARANTEE
PARAMETERS AND EFFICIENCIES OFFERED BY
BIDDERS
42

 SINGLE STAGE—
 DETERMINATION OF SUBSTANTIAL
RESPONSIVENESS
 NON-MATERIAL NON-CONFORMITIES
 ARITHMETICAL CORRECTIONS
 CONVERSION TO SINGLE CURRENCY (USUALLY
USING DATE OF BID OPENING TO BE SPECIFIED IN
BD)
 NO DOMESTIC PREFERENCE APPLIES
43

 SINGLE STAGE BIDDING
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 TECHNICAL EVALUATION
 MEETS MINIMUM ACCEPTABLE STANDARDS AND
PARAMETERS OF BD?
 MEETS FUNCTIONAL GUARANTEES AS PER BD?
 SUITABILITY IN TERMS OF ENVIRONMENTAL AND
CLIMATIC CONDITIONS SPECIFIED IN BD?
IF THE BID DOES NOT MEET MINIMUM ACCEPTABLE STANDARDS OF
COMPLETENESS, CONSISTENCY AND DETAILS AND SPECIFIED
MINIMUM (OR MAXIMUM, IF APPLICABLE) REQUIREMENTS FOR
FUNCTIONAL GUARANTEES THE BID WILL BE REJECTED AS NON-
RESPONSIVE
NO CLARIFICATIONS CAN BE ASKED OR PERMITTED THAT WILL
CHANGE THE SUBSTANCE OR PRICE OF THE BID
ALTERNATIVE BIDS IF ALLOWED IN BD IT WILL BE EVALUATED
44

 SINGLE STAGE
 ECONOMIC EVALUATION








BID PRICE EXCLUDING PROVISIONAL SUM AND CONTINGENCY IN
PRICE SCHEDULES
ADJUSTED FOR ARITHMETICAL CORRECTIONS
ADJUSTED FOR DISCOUNTS
ADJUSTMENT FOR QUANTIFIABLE NONMATERIAL
NONCONFORMITIES
CONVERSION TO SINGLE CURRENCY
ANY OTHER EVALUATION FACTORS AS PER SECTION III OF THE
BD
PRICE ADJUSTMENT AS ALLOWED UNDER PRICE ADJUSTMENT
CLAUSE OF THE CONDITIONS OF CONTRACT IS NOT TAKEN INTO
ACCOUNT
AWARD WILL BE MADE TO THE LOWEST EVALUATED BIDDER
DETERMINED QUALIFIED AS PER SPECIFIED CRITERIA
45

 TWO STAGE BIDDING
 FIRST STAGE TECHNICAL EVALUATION
 CHECK FOR COMPLETENESS IF GENERALLY IN
ORDER
 BIDS FOUND NON-RESPONSIVE OR NOT
MEETING THE MINIMUM LEVELS OF
PERFORMANCE OR OTHER CRITERIA OF THE BD
WILL BE REJECTED
 PRELIMINARY EXAMINATION OF ALTERNATIVE
BIDS
 DETAILED TECHNICAL AND COMMERCIAL
EVALUATION WILL BE CARRIED OUT FOR
REMAINING BIDS THAT PASSED THE TEST OF
SUBSTANTIAL RESPONSIVENESS
46

 TWO STAGE BIDDING
 FIRST STAGE TECHNICAL EVALUATION





CLARIFICATION OF FIRST STAGE TECHNICAL
PROPOSALS
EMPLOYER MAY HOLD CLARIFICATION MEETINGS WITH
BIDDERS ONE ON ONE AND ALSO ASK IN WRITING
BIDDERS WILL BE INFORMED ANY AMENDMENTS OR
CHANGES THAT THEY SHOULD MAKE IN THEIR
TECHNICAL PROPOSALS AND ALSO ANY UNACCEPTABLE
COMMERCIAL DEVIATIONS THAT SHOULD BE
WITHDRAWN AT THE SECOND STAGE SUBMISSION
EMPLOYER MAY ISSUE AN AMENDMENT TO BD
EMPLOYER WILL ISSUE TO EACH BIDDER A MEMORANDUM
“CHANGES REQUIRED PURSUANT TO FIRST STAGE
EVALUATION” GOOD PRACTICE IS THAT MEMORANDUM
IS SIGNED BY BOTH PARTIES
47

 TWO STAGE BIDDING
 SECOND STAGE BID EVALUATION
 BID IS DETERMINE SUBSTANTIAL RESPONSIVE IF IT HAS
PROPERLY INCORPORATED ALL MODIFICATIONS LISTED
IN MEMORANDUM “CHANGES REQUIRED PURSUANT TO
FIRST STAGE EVALUATION WITHOUT ANY MATERIAL
DEVIATIONS, RESERVATIONS OR OMISSIONS
 SECOND STAGE BID CONTAINING TECHNICAL OR
COMMERCIAL ALTERNATIVES NOT SUBMITTED AS PART
OF FIRST STAGE TECHNICAL PROPOSAL WILL BE
TREATED AS NON-RESPONSIVE
 REST OF THE BID EVALUATION AND AWARD
PROCEDURES IS SIMILAR TO SINGLE STAGE BIDDING
48

FLOW CHART (ATTACHED)
 PLANT PHYSICALLY AND STRUCTURALLY COMPLETED
 PRE-COMMISSIONING
 COMPLETION CERTIFICATE IS ISSUED
 EMPLOYER TAKES OVER AND RESPONSIBLE FOR CARE
AND CUSTODY
 COMMISSIONING AND/OR GUARANTEE TESTS
 OPERATIONAL ACCEPTANCE
 DEFECT LIABILITY PERIOD STARTS AT COMPLETION
OF FACILITY
49

50

TERMS OF PAYMENT
 SUPPLY ITEMS
 10 % ADVANCE
 80% UPON SHIPMENT(CIP)/DELIVERY TO CARRIER
(EXW)
 5% ISSUE OF COMPLETION CERTIFICATE

 5% ISSUE OF OPERATIONAL ACCEPTANCE CERTIFICATE
DESIGN SERVICES
 10% ADVANCE
 90% PRORATE
 INSTALLATION SERVICES
 10% ADVANCE
 80% UPON INSTALLATION WORK PERFORMED
 5% ISSUE OF COMPLETION CERTIFICATE
 5% ISSUE OF OPERATION ACCEPTANCE CERTIFICATE
51

BIDDER’S COMPLAINTS
 TAKE ALL COMPLAINTS SERIOUSLY
 ENTER IN COMPLAINT DATA BASE
 REPORT TO RPM AND OPRC FOR CASES
REQUIRING OPRC APPROVAL
 OBTAIN BORROWER’S CLARIFICATIONS AND
ENSURE THAT BANK’S NO-OBJECTION IS GIVEN
ONLY AFTER ALL ISSUES RAISED HAVE BEEN
ADDRESSED SATISFACTORILY
 REPORT TO RPM/INT IN CASES OF FRAUD OR
CORRUPTION ALLEGATIONS
 BEFORE SUGGESTING DEBRIEFING CONSULT RPM
52

Goods Works Design Supply and
Install
SINGLE STAGE BIDDING SINGLE STAGE BIDDING SINGLE AND TWO-
STAGE BIDDING
CONTRACT FOR
SPECIFIC QUANTITY OF
EACH ITEM
CONTRACT FOR
ESTIMATED QUANTITY
OF EACH ITEM
CONTRACT FOR
SPECIFIC QUANTITY OF
EACH ITEM
CONTRACT DOES NOT
PROVIDE FOR
VARIATIONS IN
QUANTITY
BID EVALUATION
EXCLUDING TAXES
AND DUTIES
CONTRACT PROVIDES
FOR VARIATION IN
QUANTITY WHICH IS
COMMON (VARIATION
ORDER)
BID EVALUATION
INCLUSIVE OF ALL
TAXES AND DUTIES
CONTRACT PROVIDES
FOR CHANGES IN
FACILITIES
BID EVALUATION
EXCLUDES TAXES AND
DUTIES FOR SUPPLY
ITEMS BUT INCLUDES
FOR OTHER SERVICES
53

Goods
Works
TYPE OF CONTRACT –
CONTRACT FOR SALE
ADMEASUREMENT
TYPE OF CONTRACT
Design Supply and
Install
MIX OF PROVISIONS OF
BOTH GOODS AND
WORKS
PRICE ADJUSTMENT
CLAUSE EXCLUDES
PAYMENT OF ADVANCE
PRICE ADJUSTMENT
CLAUSE APPLIES FOR
TOTAL VALUE OF
CONTRACT
COMMISSIONING IS
NOT APPLICABLE
BORROWERS MAY
APPLY DOMESTIC
PREFERENCE IN ICB
COMMISSIONING IS
NOT APPLICABLE
ELIGIBLE COUNTRIES
MAY APPLY DOMESTIC
PREFERENCE IN ICB
PRICE ADJUSTMENT
CLAUSE EXCLUDES
ADVANCE PAYMENTS
COMMISSIONING
REQUIRED
DOMESTIC
PREFERENCE IS NOT
ALLOWED
54

WATCH LIST TO AVOID COMMON
PROBLEMS
 DO IMPLEMENTING AGENCIES HAVE REQUIRED TECHNICAL EXPERTISE I) TO
PREPARE SPECIFICATIONS THAT WILL MEET THE PROJECT NEEDS AND ALSO
ENSURE BROADEST POSSIBLE COMPETITION AND TO EVALUATE TECHNICAL
PROPOSALS WHEN RECEIVED; AND II) FOR INSPECTION AND SUPERVISION OF
CONTRACT DURING IMPLEMENTATION? IF NOT LET CONSULTANT (S) BE HIRED
 DO BANK TASK TEAMS HAVE REQUIRED TECHNICAL EXPERTISE I)TO REVIEW
WHETHER BORROWER’S SPECIFICATIONS ARE CORRECT, REASONABLE,
UNAMBIGUOUS, FREE FROM ANY BIASES AND WILL MEET PROJECT NEEDS; AND
II) TO SUPERVISE TECHNICAL ASPECTS ARISING DURING BID EVALUATION AND
CONTRACT IMPLEMENTATION? IF NOT ENGAGE EXTERNAL EXPERT
 PLAN ADVANCE PROCUREMENT ACTION AND DECIDE EARLY ABOUT BIDDING
STRATEGY
 PRIOR REVIEW MINUTES OF PRE-BID MEETINGS AND CLARIFICATIONS
PROVIDED BY BORROWERS AT BID PREPARATION STAGE
55

WATCH LIST TO AVOID COMMON
PROBLEMS
 TRAIN AND FAMILIARIZE BORROWER AND THEIR CONSULTANTS
ABOUT BANK GUIDELINES AND BIDDING DOCUMENTS
 EMPLOYER SHOULD DESIGN SIMPLIFIED AND REASONABLE
QUALIFICATION REQUIREMENTS
 PARTICULAR ATTENTION TO PRICE SCHEDULES ESPECIALLY “OTHER
SERVICES” AND “CIVIL WORKS” TO BE QUOTED ON LUMP-SUM BASIS
 CAREFULLY REVIEW REASONS FOR REJECTION OF LOW BIDS
 IN A TWO STAGE BIDDING REVIEW CAREFULLY THE FIRST STAGE
TECHNICAL EVALUATION REPORT AS MANY PROBLEMS ARISE DUE TO
REJECTION OF POTENTIALLY RESPONSIVE BIDS
 BEFORE MOVING FROM FIRST STAGE TO THE SECOND STAGE ENSURE
BORROWER HAS CONSIDERED AND OBTAINED CLARIFICATIONS ON
ALL COMMERCIAL AND TECHNICAL ASPECTS OF THE BID AND EACH
BIDDER WAS INFORMED BY MOU ALL COMMERCIAL RESERVATIONS
THAT NEED TO BE WITHDRAWN AND AMENDMENTS TO MADE IN
THEIR TECHNICAL SPECIFICATIONS WHILE SUBMITTING FINAL
SECOND STAGE BID CONTAINING UPDATED TECHNICAL
SPECIFICATIONS AND PRICE
56

WATCH LIST TO AVOID COMMON
PROBLEMS
 WATCH FOR INTERNAL INCONSISTENCIES IN TECHNICAL AND
FINANCIAL PROPOSALS OF BIDDERS
 CAREFULLY CHECK OPERATIONAL AND MAINTENANCE COST AS
THEY REPRESENT A SIGNIFICANT PROPORTION BY VALUE FOR
EVALUATION PURPOSES
 CAREFULLY ADDRESS DEVIATIONS IN BIDS AS BIDDERS USE
TRICKY LANGUAGES WHICH MAY HAVE DIFFERENT
INTERPRETATIONS --CONSULT RPM AND LEGAL IF NECESSARY
 PRIOR REVIEW DRAFT CONTRACTS ESPECIALLY OF HIGH VALUE
AND IF BID EVALUATION WAS COMPLEX AND BORROWER’S
PROPOSALS WERE QUESTIONED IN THE FIRST REVIEW—
CONTRACT SIGNED SHOULD BE CONSISTENT WITH BID
SUBMITTED AND THE FORM OF CONTRACT ATTACHED TO THE
BIDDING DOCUMENT
 BORROWERS TO BE CAREFUL IN TAKING OVER OF PLANT AFTER
COMPLETION CERTIFICATE AND IF MAJOR DEFICIENCIES
REMAIN COMPLETION CERTIFICATE SHOULD NOT BE ISSUED
57

WATCH LIST TO AVOID COMMON
PROBLEMS





ISSUES CONCERNING CONFLICT OF INTEREST AND ELIGIBILITY
DO ARISE QUITE OFTEN AND SHOULD BE HANDLED WITH
GREAT CARE --BEFORE CONCLUDING BANK’S POSITION AT PRE-
OR POST BID STAGE RPM/OPCPR OR OTHER SENIOR
PROCUREMENT STAFF AND/OR LEGAL SHOULD BE CONSULTED
CONTRACT DISPUTE REVIEW MECHANISM SHOULD BE
OPERATIONAL AS SOON AS POSSIBLE (DRB OR ADJUDICATOR)
PROMPTLY REVIEW ALL ASPECTS OF ANY COMPLAINT FROM
BIDDERS
BORROWERS SHOULD USE BANK’S SAMPLE EVALUATION FORM
AND PROVIDE ANY ADDITIONAL INFORMATION AS
APPROPRIATE
BORROWERS SHOULD AVOID DELAYS IN BID EVALUATION AND
AWARD OF CONTRACTS LIKEWISE BANK SHOULD REVIEW AND
RESPOND PROMPTLY AS PER BANK’S SERVICE STANDARDS
58

DESIGN, SUPPLY AND INSTALLATION
59