In the previous article, we discussed the first phase: “Technology/Contractor Selection” and the steps that are usually performed in this phase. This article will continue the discussion on the evaluation step which will include the technical side. Then, I will conclude the article by giving some information about the last step of this phase which is the final selection of the successful contractor.
PHASE I: Technology/Contractor Selection 1) Evaluation of Proposals (cont.)
In addition to the technical specifications, the contractor can provide some of the best available aspects of the latest technology of industrial plants. The contractor should provide a technology, which should be commercially viable and innovative, for example, the technology can include fewer cryogenic pumps by employing heat pump configurations.
The best technology available today is up-to–date and the configuration of the industrial plant has features such as economically justifiable measures of energy efficiency. Some of them are: optimized heat integration in both hot and cold ends as per good design practices; and well-designed processes with modern-day energy efficiency features, such as efficient column trays, optimized reflux ratios, optimized operations sequence, high efficiency rotating equipment, etc.
To comprehend the large number of technical and financial aspects—and compare and evaluate them in a proposal—is a Herculean task, but the general evaluation criteria and some related elements (see table below), can simplify the bid evaluation. The table is a sum of the vast experience that the author has had in various olefin plant projects and should assist in the evaluation of bids.
The data and information provided by the contractor should be categorized into various criteria then divided into different elements as per the following table:
GENERIC EVALUATION CRITERIA
For each criterion, the elements to be considered are presented. The contractor has to specify the element and its extent in the bid. For example, under the process technology criteria the first chief element is process description, which is supported by special features such as specific production data on yield and energy consumption, improvements from past technology, and innovations that have been proven to work well. The contractor has to present his case in terms of the technology used and the parameters mentioned. Similarly the contractor should provide details on the second factor—benefit—with emphasis on safety, reliability, operability, higher efficiency, improved yields, flexibility, ease of maintenance, easier expansion, etc., followed by the third element, values to client, which includes improved production and higher profitability. These factors guide the final assessment with regards to process technology.
For evaluation of the economic aspect, the contractor has to quote for the cost estimate of overall plant installation, rough estimated cost of raw materials, utilities consumption, including catalyst and chemicals, operating cost, etc.
The third focus that a contractor has to include in the bid is the demonstration aspect involving a reference plant list and contact person to check operation experience. The latest commercially proven developments should also be mentioned. The client may contact the listed client and assess his previous performance or to gain more information regarding the technology offered.
The evaluation and comparison of various bids received becomes easy for the client if he relies upon the criteria and the corresponding elements as described above. Based on these inferences, final technical recommendations can be made.
Generally, a weighting factor can be used for each element in the evaluation, based on the criticality and the importance of the element to the client. Results in terms of scoring values can then be obtained and used for a ranking of the contractors (both in technical and execution). This ranking then forms the basis for the final recommendations. The criteria depicted in the table could be prioritized as per the client’s convenience. In general, the first priority is process technology, followed by economic assessment, then commercial demonstration. The bid that is evaluated to have the highest ranking has the potential to be selected for award of contract.
4) Selection of the Successful Contractor Based on the evaluation outputs performed in the last step, ranking of the contractors in terms of technical as well as execution is established by the client to assist him in making the decision of the selection of winning contractor.
Another significant factor of course that client considers, along with the ranking results, is the offered price by the contractors for the agreed contract approach. In this area, the client usually conducts negotiations with the shortlisted contractors to reach acceptable price by the client. Finally, the client takes both the ranking results and final-and-best price to make the final selection of the successful contractor.
Summary: I will try to discuss the technology selection phase in more details in some articles in the near future.
In the next part of this series, we will discuss the second phase of the industrial project “PHASE II: Engineering & Procurement”.