PPCC Training Manual 9 (1).doc

In an industrial plant in addition to the total life

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In an industrial plant, in addition to the total life cycle cost of the plant itself, one may also include the factor of the productivity o¥ toe p^arii an& determine the total life cycle cost per unit output. For example, in the procurement of a fertilizer plant or a steel bar mill or oil palm mill, the total cost will be divided by the rated output to arrive at "per ton of output" cost wmcrf wrifdecome rife (^ayrs'i^rctmipa^R/M' 52
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8.4.5 Evaluation Using A Merit Point System In some situations where evaluation and selection merely on initial purchase price is inadequate, evaluation of the full life cycle cost may be either too time-consuming or unwarranted' compared" for die cost of the pi-ociirement itself. In these cases, the evaluation can be carried out by assigning merit points or weightages for prices and other relevant aspects. The advantage of such a system is its simplicity and ease of application. The disadvantage is that the weight ages for different factors and the points within each factor must be properly allocated or the outcome will be distorted. Assigning points for some factors could be very subjective and thus open to manipulation, so the merit point system should only be used where the comparison of bids cannot be adequately based on price alone, and full life cycle costing is either impractical or unjustified. The weightages which would be acceptable for price and other aspects are indicated in supara. 26.5 alternative of the Standard Bidding Documents (SBD) for Goods. It must be ensured that the weightage for the price of the equipment and spare parts does not go below 70 percent in any case. 8.5 Application of Domestic Preference If domestic preference is allowed in bid evaluation, the ITB will so state and provide detailed procedures to be used in determining the eligibility for preference and the amounts. The following general guidelines should be borne in mind in the application of domestic preference in the evaluation for goods. Application of a preference margin is permissible only when the loan agreement provides for it by specific reference in the Procurement Schedule and the bidding documents specifically outline the procedure for its application; The goods for the procurement are "manufactured goods" involving assembly, fabrication, processing, etc., where a commercially- recognized final product that is substantially different in basic characteristics from its components and raw materials: The goods offered by foreign and domestic bidders are identified or comparable in respect of quality, size, capacity and performance: That, among the bid, there is a qualified domestic bid (Group A) which, irrespective of the nationality of the (eligible) bidder, has offered goods manufactured in the country that contain labour, raw materials and components from within the country which will account for more than 30% of the EXW price of the product offered and the production facility in which the goods will be
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