Pre-Qualification – for Construction Contracts

Construction contracts are normally awarded to a qualified bidder who is having:

– Appropriate capabilities; and

– Other resources.

This can be achieved in two ways:

a) To verify whether the selected bidder possesses the required qualifications and experience before the contract award (post qualification);

b) To ensure that bids are submitted only by firms that have the necessary qualifications and experience (pre-qualification).

Hence Purpose of Pre-qualification is:

To ensure that bids are submitted only by firms, or a group of firms possess the necessary qualification in terms of:

a) Experience and past performance,

b) Financial capacity; and

c) Technical capability concerning personnel, equipment, and plant.

Prequalification is generally used for;

Large or complex civil works;

Design and Build or Turnkey contracts;

Supply and installation of expensive or technically complex industrial plant/equipment.

Advantages of pre-qualification:

For insufficiently qualified bidders;

• Avoid the expense of bidding;
• Encourage to form joint ventures.

For clients

• Protect from unqualified bidders;
• Indicate the number of firms interested in bidding;
• Reduces the amount of work/time involved in evaluating bids from unqualified bidders; 
• Assess the eligibility for domestic preference.

For qualified bidders;

• Encourages reputable contractors to bid;
• Encourage them to price their bids with the awareness that they are competing against other qualified bidders;
• Assures the bid will not be rejected on qualification grounds.

Disadvantages of pre-qualification:

• Increase procurement lead time;
• The client is required to review all prequalification applications;
• Collusion is easier among a limited number of bidders.

Pre-qualification Process;

• Advertisement;
• Issue of Pre-qualification Questionnaire;
• Receipt of pre-qualification applications;
• Evaluation of applications;
• Inviting all firms found capable of performing the contract to submit bids.

Evaluation of prequalification applications:

• Criteria comprise establishing whether the applicant has adequate:
• Financial capacity;
• Technical capacity;
• Relevant experience.

Methods of Evaluation

Two methods are widely practiced:

a) Scoring system:

b) Pass/fail criteria.

Scoring system:

Major features:

Establishment of groups and assignment of the minimum score;

• Assignment of sub-criteria to each group.
• Usually 3 groups;
•  Financial capability;
• Technical qualifications (management, staff, and equipment);
• Experience (including past performance).

Pass/fail criteria:

Major features:

Pre-qualification will be based on applicants meeting all the minimum pass-fail criteria of the predefined factors given in the prequalification document.

Factors considered:

• General construction experience;
• Financial position;
• Personnel and equipment capabilities.

Pre-Qualification Document

The pre-qualification document generally consists of:

a) Invitation for pre-qualification;

b) Instructions to applicants;

c) Letter of application; and

d) Standard forms to submit information.