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Project planning within the energy sector (part 2 of 3)


This post is part two of a three part series on project planning.  Part one provides an introduction and some context, and bit on why project planning is important.  Part three looks at project planning within the private sector.  This post looks at some of the considerations when planning a project within the public sector.

Almost all of the larger projects I was involved with while at the City of Cape Town involved the procurement of goods or services from external parties.  This post therefore focuses on some of the key planning considerations in public sector (mostly municipal, but some principles apply to other spheres of government) procurement.  Projects carried out in-house still require upfront planning, to avoid spending unnecessary time and resources on publicly funded projects (paid for in staff time).

Municipal/governmental projects

How does (south african) government procurement typically work

Government projects are interesting although they can be infinitely frustrating at times.  Projects that require the services or products of external consultants, contractors or suppliers, need to follow the applicable procurement rules.  These are bound by municipal and national legislation, and internal procurement policies and processes.  These processes need to be fair, transparent and in the public’s interest, as you’re typically spending public funds.  A lot of work therefore goes into the development of procurement documentation, and project planning is an absolutely crucial stage of any public procurement process.

This documentation is made up of several parts.  There’s the stuff that legal and (in Cape Town’s case) Supply Chain Management put together.  This outlines the nature of the contract being entered into, what the rights and responsibilities of each party are, what documentation needs to be provided, and what securities or bonds need to be put in place (if applicable).  They’re also very sticky on where pages need to have been signed…  The legal stuff will vary, depending on the type of project being undertaken.  A request for quotations will look different to a request for tenders, or a request for expressions of interest.  But the concept remains.  The documentation forms a legally binding contract.  The municipality is required to pay for goods or services rendered, and the contractor is required to provide those goods or services.

And these goods or services are described in the project specifications.

[Solar water heaters installed on City clinics. One of my first energy projects for the munic.][3]
Solar water heaters installed one of numerous City clinics. One of my first energy projects for the munic.
project specifications and functionality scoring

Within these documents is the required scope of works or specifications, for which the contractor must develop their quotation for the goods or services to be provided.  This outlines the overall project intention, the reason for appointing the contractor, and the relevant project details.  It may include project specific items such as:

  • project outcomes and deliverables (e.g. 100kW solar PV rooftop installation);
  • any technical details that are to be complied with (e.g. mounting structure should not result in any compromise to the building’s waterproofing);
  • location;
  • time-frame and/or required completion date;
  • requirements relating to the methodology or procedures to be adopted by the contractor in the provision of services (e.g. quality assurance protocols);
  • compliance requirements (e.g. compliance with local standards, consents, authorisations, licences etc.);
  • documentation submission requirements (e.g. progress reports, quality reports, O&M manuals, certificates of compliance etc.);
  • communication obligations (e.g. weekly meetings, communication protocols etc.);
  • health and safety obligations (e.g. H&S site plan, H&S officer appointment etc.); and/or
  • any other technical requirements to be complied with.

Bidders are then required to develop a quotation for the provision of good and/or services, and these submissions are reviewed accordingly.  In order to review each submission fairly, the procurement documentation should require the same type of information from each bidder.  Bids are typically reviewed against functionality scoring criteria, contract price and, in the case of South Africa, economic impact criteria, to promote Broad Based Black Economic Empowerment objectives.

Procurement documents will differ in the way they review bids and appoint successful bidders.  Some may list functionality related items as go/no-go or gate-keeping criteria.  For example, bidders may be required to provide, say:

  • evidence of five years’ experience within the sector;
  • evidence that they’ve completed projects totalling at least 200kW of solar PV installation;
  • the name and experience details of a professionally registered electrical engineer on staff to inspect and sign off on the system’s design and installation; and
  • at least three references for completed projects.

If they cannot provide the information requested, they are unable to proceed to the next review stage (i.e. price comparison).

Alternatively, functionality scoring could be weighted and used in the overall bid review process.  For instance, the criteria above could be assessed and scored and given a weighting of 30%, and the overall contract price could be given a weighting of 70%.  The winning bidder may therefore be the one that has proven experience, but who may not necessarily be the cheapest.  The City of Cape Town moved away from this type of scoring methodology while I was there, and rather used functionality as gate-keeping criteria.

What matters is that the methodology to be used in assessing and comparing submissions should be explicitly stated, with no wiggle room for bidders to claim they were unfairly excluded or marked down.  Quite a lot of thought needs to go into the scoring criteria.

Typically, on tenders (maybe not so much on requests for smaller quotations), bidders will be invited to a clarification meeting, where the tender objectives will be outlined, and bidders can ask questions of clarity.  These meetings should be minuted, and the minutes should be distributed to all potential bidders. (This is why bidders should be required to provide contact information when they download or collect procurement documentation.)

Any other clarifications that arise following separate queries, or following internal discussions, should also be distributed to all potential bidders.

Challenges within government tenders/quotations
  • In a fixed price contract, any changes to the contractor’s scope of works may result in a price adjustment.  A loosely defined scope of works could therefore lead to numerous change requests or variations during project implementation, and this could use up a part of, or all, of the allocated contingency funds.  If these funds are exceeded, further budget may need to be allocated to the project, which can be time consuming (or even impossible).
  • Inappropriate functionality scoring can allow inexperienced or unsuitable contractors to be appointed as the successful bidder.  This could make the project harder to implement, could result in a lower quality of work, or could lead to disputes about the delivered goods or services, and their compliance with the stated scope of works.
  • Questionable interpretation and implementation of functionality scoring or other procurement processes can result in other non-successful bidders appealing the procurement outcome.  This could result in either delays during appeal review (if the original decision is upheld), a change in the appointed contractor or a further delay or cancellation of the entire procurement process/reissuing of the tender/RFQ if material concerns with the process are uncovered.
  • If it’s a new sector or field of work for the municipality, there may not be strong institutional knowledge about the subject, and it can be tricky to access external expertise to inform the development of the procurement documentation without compromising the competitive process to be followed.  This needs to be carefully navigated by the project planner – to ensure that the specifications are solid, robust and comprehensive, without opening the process up to accusations of anti-competitive behaviour.
  • Spending money can be incredibly tricky in the public sector.  Funds have to be on a department’s budget before they can even think about proceeding with a project.  This is typically fine if the department has funds allocated to it each year, but it can become trickier if the project funds have been received from a grant funding agency (as was often the case on sustainable energy projects in Cape Town).  There are typically two occasions during the year where the budget can be adjusted, and this needs to be taken into consideration with project schedules.  Money coming into the City from an external party does not result in the City being able to spend those funds immediately.  In addition, applying for the funding can be a project on its own.  As is getting all legal parties to agree on the funding terms.  Then you need to follow the same procurement rules to spend the money, regardless of the funder’s terms.  It’s often a complicated and long-winded process.  Which is why partnering with an NGO sitting (where else) outside of government can make a project run much more smoothly.  They are able to spend the money quickly, and the City can benefit from having their expertise involved in the project.  This bypasses all sorts of procurement processes within the City, which should be fine if you’re not spending public funds.