Sharing and learning - ADB’s customized business opportunities seminar in Nepal improves quality of bidding documents

Article | 29 October 2020

In July this year, the Nepal Resident Mission organized the Business Opportunities Seminar (BOS), which it had done annually since 2012. It was held through online conference platform taking into account restrictions against group events. The ongoing pandemic will not stop NRM from undertaking one of the most important activities in ADB’s project management cycle.

Since 1966, ADB has provided almost $6 billion in financial and technical assistance to Nepal. This included awarding, 10,700 contracts worth $2.26 billion to contractors and suppliers and 2,237 contracts worth $195.03 million to consultants. It is very important, therefore, to ensure quality private sector proposals for ADB-financed projects for better performance and results.

From the perspectives of the private sector and other participants, BOS has been useful as it:

  • Presents a variety of business opportunities for a diverse range of stakeholders.
  • Promotes better understanding of ADB, how it is structured and how it operates.
  • Increases a contractor or a consultant’s chances of identifying the right business opportunities and possibly winning contracts.
  • Increases transparency on the process, helps bidders to prepare the best possible bids and get value for their money.
  • Offers an opportunity for the private sector to share their opinion on challenges when bidding for ADB projects.
  • Provides opportunities between ADB and representatives of the private sector to review the implementation progress of the action plan for risk mitigation.

Early sharing of business information

At the BOS, ADB explains about ADB’s operational cycle from the identification of a pipeline project through to project completion, and the types of opportunities to contractors and consultants throughout this cycle. The presentations include practical tips on how to find information using ADB’s Business Opportunities webpage on potential opportunities at each stage in the process.

The seminar has become popular among the business community in the country and is attended by over 200 participants every year consisting of members and representatives including the Federation of Contractors’ Association of Nepal (FCAN), Youth Community for Nepalese Contractors (YCNC), Society of Consulting Architectural and Engineering Firms (SCAEF), and Confederation of Nepalese Industries (CNI), among others. Moreover, foreign contractors working in Nepal were also invited.

“We take into account several factors before deciding on business opportunities and having detailed information about such opportunities is a necessary first step. This allows us to set aside some resources and prepare a responsive bid within specified time,” says Ramesh Sharma, Past President of Federation of Contractors’ Association of Nepal (FCAN).  “In the past, we had to wait for invitation for bids and had to purchase the bidding documents to even get basic information such as general qualification criteria, etc. Now we get to interact with ADB procurement specialists in person and get responses to our specific queries there and then,” adds Mr. Sharma.

Listening to each other

For ADB it provides an opportunity to learn from the private sector, to share, seek feedback and support for policy and practical reforms. The constructive feedback received at BOS was used when changing the overall procurement and bidding documents.

In 2013, an action plan was prepared by ADB Nepal to mitigate procurement, financial management, and contract management risks of ADB-funded projects. The action plan focused on improving procurement management which included, among others, promoting larger packages; rolling out of e-GP system;  and improved due diligence on syndicated bidding, The action plan identified issues like limited effectiveness of pre-bid meeting, lack of compliance by bid evaluation committee, incomplete bid submission, ghost Joint Venture partners, and bidders’ rate substantially lower than the Engineer’s estimate. These issues were also discussed during the BOS, including how the proposed changes would improve quality of proposals, quality of the procurement process, and quality of implementation.

In 2016, the Country and Sector Procurement Risk Assessment report was prepared to improve procurement performance and project delivery, also to assess the results of the 2013 action plan. As a result, ADB Nepal started working on adjustment of bidding documents. The risk assessment provided recommendations on the adequacy of technical proposals, meaningful participation of foreign contractors and major partners in case of joint venture (JV) during implementation (minimizing ghost contractors), and specifying the experience requirement of contracts of similar size and nature contracts. The points made during the BOS by private sector participants were used to finalize the recommendations of the risk assessment and subsequently, requests for proposals have been adjusted to reflect the ground realities. For example: mentioning of floor salaries for national experts has helped to minimize turnover of national experts. During the BOS private sector also provided feedback on these changes, and subsequently, adjustments were made.

ADB’s new procurement framework (NPF), approved in April 2017, adopted a risk-based procurement and fit-for-purpose arrangements that opened an avenue for a customized approach entailing transaction-specific methods and documents.  During subsequent BOS held in Kathmandu, contractors and consultants had been informed about the continuous adjustments in bidding documents and request for proposals.

“BOS organized by ADB is very useful to get updates on ADB’s procurement policy and procedures in addition to information on the opportunities under ADB funded projects. With the concept of “salary floor”, it is expected that there will be a minimal turnover of the key national experts. We view the BOS as a means of ADB’s collaboration with the private sector,” Said Mr. Tuk Lal Adhikari, President of SCAEF.

ADB and World Bank joint efforts

ADB and the World Bank have jointly supported the preparation of the Public Procurement Act and accompanying regulations in Nepal. ADB and WB actively supported procurement reforms, capacity building, strengthening of the Public Procurement Monitoring Office (PPMO, a public procurement regulator), and the successful rolling out of an e-GP system.

NRM and WB in Nepal agreed in 2019 to organize BOS jointly for enhancing collaboration with the private sector and resolving issues in the construction industry and consulting services by working closely with relevant government agencies.  With the joint efforts of the two MDBs, issues related to procurement and contract management may be resolved in a timely manner.

The market analysis based on opportunities from local and international market and close collaboration between market players is pivotal for achieving quality of output and value for money. Streamlined procurement management based on market knowledge is a pre-requisite for increasing disbursement, improving portfolio performance of ADB in Nepal, and ultimately leading to higher net resource transfer to the country.

This article is written by Narendra Chand, Senior Procurement Officer, ADB Nepal Resident Mission. For more information on how to participate in ADB organized Business Opportunities Seminar in Nepal, please write to [email protected] or visit ADB Business Center.