Saturday, November 20, 2010

Message to the Irish Department of Finance

The feedback I'm getting from consultant colleagues in relation to the hoops they have to go through to certify money in interim accounts is interesting. Basically the Engineers working on behalf of the Local Authorities must have every item accounted for when only producing an Interim Certificate. This sounds ridiculous to a certain degree. For example the other day I could not get a 'sum on account' certified on an interim certificate for Engineer's phone calls (payable under the contract and I estimated a reasonable gross value on the job to date at€500.00). The Interim Certificate or Payment wouldn't be made until such time as the phone bills were produced. Fair enough policy when you think about it......

This attention to detail is not the fault of the Engineer but was due to the audit's going on within the DOF ever since the GCCC forms were produced (over 3 years now). In the old days sums on account would be paid for such an item. In general we would gather the phone bills on a quarterly basis for submission or even wait until final account stage and then submit the full documentation.

This leads me to a Message / Question to the Department of Finance:
Why the hell didn't you guys take as much care with everything else you were supposedly in control of over the last 5 years?

It's a pity the other ills that fell on this Country weren't kept in check in such a similar fashion as our Construction Industry.

Oh wait a minute .........Then again it doesn't surprise me why such focus was on the Construction Industry (Public Sector Area of the Market) as we were the ones getting bad press for the last 10 years or so (project overruns, wrong initial cost projections...... blah de blah).

This Government was led more by what the papers and media were saying rather than what the country's real citizens and real honest to goodness workforce were saying. As long as the Fianna Fail machine was keeping the press happy they were happy and nothing else really mattered.

Sunday, October 10, 2010

New Procurement Guidlines for SME's Now Available

AT LAST SOME GUIDANCE NOTES ON THIS - AS FOLLOWS: Further Relevant links will be uploaded at a later stage.


The small and medium enterprise (SME) sector is significant to the economy and public procurement can be a valuable source of business for SMEs. It is particularly important that small and medium sized businesses are not hindered in competing for contracts that they could perform effectively. In this context guidance[1] is now issuing which aims to have contracting authorities structure and run their competitive processes for public contracts in a manner that facilitates increased participation by SMEs, while they continue to ensure that all public sector purchasing is carried out in a manner that is legal, transparent, and secures optimal value for money for the taxpayer. The guidance is not designed to favour the SME sector over other sectors but rather to provide SMEs with a level playing field in competing for public contracts. This is in line with EU policy on increased SME participation in public procurement.[2]

Under the Capital Works Management Framework, there is a maximum of sixteen main criteria to be assessed in determining the suitability of a contractor for the award of a public works contract. In addition, there are up to seven sub-criteria for each of the four different roles relating to health and safety that a contractor may have to fulfil on a project. The criteria chosen for each project should be picked from the menu of the above referenced criteria and sub-criteria. In order to reduce bureaucracy and simplify the tendering process, applicants are no longer to be asked to supply detailed evidence of capacity (e.g. bank references, audit accounts, company turnover, company balance sheets, professional indemnity insurance etc.) at suitability stage (open or restricted). Instead they are to self-certify[3], provide third party certification certificates3 and use self-declaration certificates3 to confirm compliance with minimum standards for the relevant criteria in the suitability questionnaire. The only evidence that may be requested for qualitative assessment is that indicated in the table below. The details that the certificates/ declarations cover can be verified at tender evaluation stage (open) or after short-listing[4] (in a restricted procedure). The key consideration in relation to suitability criteria, particularly turnover, is that the level chosen should be justified and proportionate to the needs of the contract.
[1] Department of Finance Circular 10/10, together with “Guidance for Public Contracting Authorities: Facilitating the Participation of SMEs in Public Procurement”, and this Guidance Note The first two of these documents are available on document 26.

[2] “European Code of best practices facilitating access by SMEs to public procurement contracts”, Brussels: 2008. Available on-line at:

[3] As indicated in this document.

[4] Contracting authorities should consider increasing the number of candidates that they short-list to safeguard against a number subsequently not being able meet the commitment made in the declarations when checked resulting in those candidates being dropped from the competition before tenders are invited.


The use of “restricted” tendering procedures, which require potential tenderers to show that they meet certain requirements (viz. pre-qualification) before they are invited to submit tenders, is often cited as a barrier to SME participation, especially if contracting authorities set unnecessarily high capacity levels. In order to address such concerns about pre-qualification criteria, the restricted procedure for tendering competitions should no longer be used for advertised contracts for works and related services with an estimated value up to €250,000. This means that the open procedure of competitive tendering will be the norm for advertised contracts up to this level.

Note: The revised arrangements in this document are effective from 13 August 2010

In order to facilitate self certification, third party certification and the use of declaration certificates, the blue areas below (refer to DOF website for tables) indicates where these can be provided. The areas in green show where information in relation to scale and complexity can be requested at a later date. For the green areas, contracting authorities should consider selecting, as the norm, the ’Submit on Request’ option on the Suitability Questionnaire. Furthermore, in order to address concerns about overly restrictive pre-qualification procedures, there is now a requirement to advertise contracts in an open procedure for works up to €250,000[1] (excluding design-and-build contracts – where an independent design consultant is engaged).

Wednesday, September 22, 2010

Facilitating SME's in Public Procurement - is it too little too late?

The department of finance issued a circular back in August in relation to new guidance for the procurement of public works.

These new guidelines are aimed at facilitating Small and Medium Enterprises (SME's) and ensuring that the public works market remains open to these companies.

Is the publication of this circular too little too late?

The basic changes of the new guidance and the changes pertinent to the construction sector can really be synopsised in 2 paragraphs as follows:

1 - The 'dual' stage / pre-qualification procedure for projects valued below €250,000 is now history.

Prior to this change the local authorities and other contracting authorities were using the two stage system or 'dual stage' where companies had to first make a shortlist. These shortlists are usually no more than 10 candiates and more often than not they are limited to just 5 candidates (particularly where the NRA were involved), whom then get to price the actual work.

The drawing up of these shortlists of contractors for each individual project, are derived from the first stage of the 'dual' stage by means of a pre-qualification questionnaire competition, or a beauty contest. These documents created a huge additional workload for small family run operators who in the current climate weren't geared up to undertake the completion of these PQQ's. In my own experience I have carried out some of these PQQ applications and this involves multitudes of paperwork for projects that would be for example €500k, and this was just to get the chance to price the work.

2 - The vast amount of paperwork will now no longer be requested until the pricing stage is completed, i.e. the winning bidder or bidder who is coming under consideration for the project will be asked for their insurance, tax clearance, bond undertaking, company structure etc only after the price is submitted and they are deemed the most economically advantageous.

One would imagine that these new guidance issues are as a result of lobbying by ISME, IBEC the CIF and various other groups working on behalf of SME's.

Is it too little too late or is it a case of any change to the current process is a step in the right direction?

Personally I believe it is a bit of both, i.e. they could have stretched the threshold to €500k or even €750k, however in this climate I'm sure any change where SME's will be allowed enter the market is a good one.

Sometimes its best to weigh up whether a change like this will work and function the way it should by way of everyday examples:

The DOF has stated (in this circular) that the SME sector is a very important business sector for the economy and that they are not hindered from competing for Contracts.

Example: Joe Bloggs Civil Contractor has done small culvert type bridges and many other structural concrete works down the years as a small sub-contractor to one or two of the 'mega' motorway contractors. He can't pre-qual to the pricing stage for a medium type standard bridge due to alleged lack of experience and also because he won't gain enough marks in the PQQ system ahead of the 'mega' lads he has worked for in the past. How does Joe ever build a bridge or how does Joe every compete in the market if it will be closed to those who have only built bridges in the past? Will this new system allow Joe as an experienced SME get into the bridge construction market? It is highly unlikely as one doubts there will be a bridge in this new process valued below the €250k threshold, whereas if the threshold was €750k at least Joe has a chance. Even if there was a bridge project at the €250k value then the parameters set down by awarding authorities on a larger bridge project (where Joe would have to pre-qualify) would in fact hinder Joe.

This is where an opportunity has been missed by the National Procurement Service and the Department of Finance.

Another flaw is the evaluation of the projects. Who values the projects and states whether they are within the threshold or not? Is it the awarding authorities? If so what is their basis of calculating if a job falls within the threshold or not?

This blogger also notes that the National Procurement Service was set up in 2009, another quango set up slap bang in the middle of a recession? Where the hell was this outfit during the boom when we had work to procure?

The DOF circular paragraph 6 is interesting reading. Its almost as if the DOF are only now letting the local authorities know that there is an agency in place to help them with procurement matters!!

Finally, if this NPS is around then what are the National Public Procurement Policy Unit (NPPPU) working at these days? I do know they run the excellent etenders website which I note is been copied by local authorities / public authorities in cities and countries around Europe presently, so well done to them on that front but could they not also manage to carry out the role of the National Procurement Service also?

Here is the link to the relatively new circular discussed above:

Wednesday, June 30, 2010

Recession in Ireland is Over

Technically anyhow, Irish Times article attached above.

I haven't had much time to publish lately due to this bloody recession with chasing work and chasing money but at least I still have a job (for now).

I would estimate that it will be at least another 18 months before the construction industry picks up.

At least the figures today will boost market confidence and boost the service sector and people will be less frugal and perhaps consumer spending might pick up again.

This should lead to more jobs. More than likely any jobs will be re-employment ones and I can't see house building in the private sector commencing again for another 12 months at least.

Any positive news is welcome however and if this leads to job creation and an decrease in the unemployment pay role and an increase in the tax take this should have the knock on effect of stimulating public sector infrastructure spending.

More anon.

Wednesday, March 31, 2010

NAMA - Good Indo Article

This article in today's Irish Independent synopsises the 'major' players and properties involved in a simple and clear format.


My guess on the 'haircut' wasn't too far away:

Wednesday, March 24, 2010

Are the Public Servants Holding Constructors to Ramsom in Eire?

Greetings colleagues. I haven't published for a while but I make no apologies for this.

Chasing work has kept me busy. Similar to many people in Ireland in our Industry I've a house to pay for and a family to keep. Work is very very scarce indeed.

As a matter of fact for the first time in 12 years as a permanent employee for a long established Civil Engineering Contractor I now fear for my job security and I'm even gearing myself up to get plan 'B' into operation which will most likely involve freelance work.

Freelance work would not pose any fear for me as during the boom years I managed to squeeze in a Post Graduate Contract Law Course and a Post Graduate Arbitration Course. However having a steady job and job security was very comforting and regardless of the Public Sector pay cuts and their pension levies they still have the comfort and security of knowing that they have a job to go to every Monday morning.emm(?)

The current situation in the Civil Engineering market is diabolical to say the least. Sources tell me that some Public Sector Area's are failing to release Contract Documents where funding is in place. If this is true then it is an almighty scandal as the chain affects of not issuing necessary infrastructure work is catastrophic as this will only lead to further job losses in the industry.

I do know for a fact that my company has completed pre-qual after pre-qual in the period May 2009 until mid-February 2010 and for the large majority of these pre-qual competitions not even the pre-qual result was published.

This is crippling small and medium Civil Contractors around the Country and in the long term only add to the Public Spending Bill by virtue of the fact that another 40,000 construction personnel are expected to be unemployed for 2010.

If the government start acting now and the Public Servants are made to start releasing tenders immediately then some of these jobs would be saved and important infrastructure works would commence.

Some such project examples are as follows:
Lough Forbes Water Treatment Works - First advertised in May 2009
The Metals Dun Laoighaire - First advertised in May 2009
Grange Bridge in Kilkenny - First advertised in May 2009
Ballymahon and Granard Water Treatment - June 2009
River Fergus Flood Alleviation - September 2009
Belcamp Lands Remediation - January 2010
Embankment Road Extension Tallaght - February 2010

All of the above are 2 stage select tenders (pre-qualification competition first) yet all but one of these projects has yet to reach the second stage; the pricing stage. Why is this?

In the meantime the other projects that were advertised in the back end of 2009 and so far this year have been few and far between, so one wonders where the so call 'Capital Spend' promised in the last budget is going?

My guess is that the government are holding off until the NAMA transfers have commenced properly or else perhaps some Public Sectors are acting in a similar fashion to our friends in the Passport office. Maybe funds are in place for Contracts but the Public Servants are on some sort of work to rule and not bothering to issue the tender documents?

I noticed in the Sunday Business post at the weekend that the Department of Finance are reviewing the PPP model and now deem it bad value for money.

This blogger and many more amongst us and even people with a level Pass C leaving certificate maths would realise this. The Government pumping the circa € 110,000,000 subvention into the Kilkock - Kinegad bypass motorway PPP back in the day was a complete disgrace.

This amount of cash, at the time, would have built 15 to 20 km of motorway on its own without having the necessity for a toll.

Anyhow, as soon as this Blogger hears more on the DOF review I will post some thoughts and comments. However, it would appear to be a more than likely a Fianna Fail PR move in order to ditch the Metro for a few years without upsetting the Greens too much.

You know what ... all of the above reminds me of something familiar.......................

Wednesday, January 6, 2010

Public Works Contracts for Minor Civil and Building Works (IRELAND) - Important Amendment

Remarkably for personnel in the Construction Industry a new version of this Form of Contract was published on 4 November 2009 last - follow this link or copy and paste it for the downloadable version...

What is so remarkable about this new publication is that it appears to have taken place completely under the radar of Contractors. Colleagues of mine say that I was the first to inform / notice this new issue. I only noticed it lately on receipt of a tender.

On a very quick perusal so far the most significant change / amendment to the August 2007 version of the Form of Contract is the amended Sub-Clause 10.6.4 (extract below with the change / amendment highlighted in bold).

10.6.4 The Employer’s Representative may conclusively direct that additional or substituted work required as a result of a Compensation Event be determined (in full or in part) on the basis of the cost of performing the additional or substituted work, compared with the Contractor’s cost
without the Compensation Event, determined as follows:
(1) the number of hours worked or to be worked by each category of work person stated in the Schedule, part 2D, and engaged on the work to which the Compensation Event relates, on or off the Site, multiplied in each case by the tendered hourly rate for that category stated in the Schedule, part 2D (But if any of the tendered hourly rates are less than 75% of the relevant rate in the construction industry registered employment agreement current on the Designated Date, they will be read instead as 75% of the relevant rate in that agreement) and
(2) the cost of materials used in that work, taking into account discounts and excluding VAT, plus the percentage adjustment tendered by the Contractor and stated in the Schedule, part 2D (But if the percentage adjustment tendered is negative or blank it will be read as 0%) and
(3) the cost of plant reasonably used for that work, whether hired or owned by the
Contractor, at the rates in the document listed in the Schedule, part 1K (as that
document may be modified according to the Schedule, part 1K) plus or minus the
percentage adjustment tendered by the Contractor and included in the Schedule, part
2D (But if the percentage adjustment tendered is a deduction of more than 100% it will be read as a deduction of 100% or if the entry is blank it will be read as 0%). If the document listed in the Schedule does not give a rate for a plant item, a market rental rate shall be used, plus or minus the percentage adjustment.

The 'old' sub-clause 10.6.4 relied totally on the tendered rates filled out in the schedule to the Form of Tender. The obvious problem with this was that tendering contractors were leaving the schedules blank (which they were allowed to do) in order to minimise their overall tender total and thus give them better chance of winning a particular contract. Assuming that schedules on hourly rates were left blank at tender stage would have appeared to be a technical breach of clause 5.3 "Pay and Conditions of Employment" or the "GAMA clause" as it has become known. This is the clause where Contractors are bound by both Law and the Contract to pay the agreed rates of pay per current industry employment agreements. Perhaps the amended clause 10.6.4 now tackles this anomaly.

One thnig it does tackle and where it sheds some light for Contractors is that the sub-clause forms part of the Valuation of Change Orders or Adjustments to the Contract Sum Clause 10.6 (as a Result of Change Orders).

The hurdles or steps to take in evaluation of Change Orders are Similar to the Old IEI or ICE form of Contract where 3 cascading rules are followed, these are,
1 - Pricing Document (BOQ) Tender Rates used for evaluation for Work Similar to that in the tender BOQ and in similar conditions to that work Priced in the Original Tender.
2 - Works that are not of a similar nature or not carried out in similar conditions then tender rates are used as a basis of evaluation.
3 - If 1 or 2 cannot lead to the evaluation of the change order then the Employers Representative makes a 'fair valuation'.

So the next step is then 10.6.4 (we don't know how an employers rep is supposed to make a fair valuation?) - where hours and rates are utilized and thus a Contractor's worst case scenario is to suffer a 25% loss on his labour costs (assuming the schedules are not filled in at correct employment agreement rates by the contractor in his org tender). If a Contractor has the schedule completed correctly (i.e. at his labour cost rates) and a dispute occurs during a project regarding the valuation of change orders then one would assume that the Contractor at worst will recover his cost based on the test of sub-clause 10.6.4?

One flaw with this amended clause is that where a Contractor hasn't the registered rates compiled in the schedule of his tender then the Employers Rep will have to calculate what 75% of the registered rate is, how will he / she carry out this task?, i.e. a Contractors Cost isn't just the Nett rate per the published registered agreement but the obvious on-costs such as employers PRSI, levies, insurances etc that have to be factored onto the registered agreed hourly rate. This perhaps is a discussion for another day as well as any other changes that may be included in the November 2009 version of this Form of Contract.