Part II - General bid evaluation

(Excerpted from Steam/its generation and use, 42nd edition)

Once the specification has been prepared and proposals have been submitted, bids are evaluated. A consulting engineer may be used to help with the evaluation. Although the best bid is usually competitive, it is not always the lowest price. A thorough review must consider whether the supplier has offered the intended scope, and any exceptions to the specification must be evaluated. Bid evaluation generally includes a review of scope, operating ease, maintenance and operating costs, service, design features and hardware, construction features, schedule, project management and project team expertise, experience, commercial terms, and price.

Scope
Scope of supply may differ between suppliers. It is important to verify what items are included in each bid. Inconsistencies between bids can be resolved by discussions with the suppliers and by assessing a cost for discrepancies in the bid evaluation.

Operating ease
Design differences may appear among the product offerings. Seemingly minor design features can significantly affect the cost or reliability of operation. It can be valuable to have plant operators evaluate the benefit(s) of such design features.

Maintenance costs
Designs that require minimal maintenance provide ongoing cost savings. Many areas that previously demanded high maintenance have generally been eliminated from modern boiler designs. However, some components may still be high maintenance items if not properly designed. High-wear components, such as those found in coal-fired pulverizers, can vary widely resulting in significantly different annual maintenance costs. Some environmental control systems require more frequent maintenance outages or periodic retuning than others. These factors can be incorporated into the final evaluation.

Operating costs
Annual boiler operating costs can approach the initial unit investment. Therefore, fuel and auxiliary power costs should be quantitatively evaluated. Based on estimated fuel cost, discount rate and the predicted unit life, present values can be assigned to calculate annual fuel and power costs. Other operating costs include reagent usage for emissions control systems, wastewater flow rate (water treatment system cost), and solid waste disposal costs, among others.

After-sales support

The quality and capability of a supplier’s aftermarket services are important. An experienced staff can troubleshoot problems quickly and minimize costly downtime.

Design features

A thorough bid evaluation must review the equipment’s design and construction features and determine if certain technologies favor one supplier. Although some designs may present a low initial cost, accompanying higher maintenance requirements may quickly offset these savings.

Construction and installation
If the scope of work is limited to material supply only, the degree of shop fabrication and the extent of design for constructability offered by different bidders can vary and have a significant effect on the material installation cost. Although limited by transportation logistics and site access restrictions, the degree of shop fabrication can range from supply of many small components to large prefabricated modules. Even seemingly minor differences can result in significantly different field labor requirements that need to be evaluated.

Schedule
As-bid schedules should be compared to one another and to the specification. A shorter overall project schedule can reduce project financing costs or increase revenue through early completion and startup. However, early delivery of some equipment does not necessarily reduce the overall project span if that equipment does not fall on the project’s critical path.

Project management and project team

An equipment supplier’s project manager and key project personnel can greatly influence project execution performance. It is the responsibility of this project team to ensure that the specified product is provided in accordance with the contract schedule and within project cost constraints. It is in the buyer’s best interest to review and evaluate the experience and capability of the personnel that a supplier will assign to a project, especially if the project is large in scope, complex, or has extraordinary requirements.

Experience

Demonstrated success in executing projects using similar equipment with similar scope and complexity is an important factor to ensuring success of using a selected supplier. If the technology being selected has limited commercial experience, the buyer must depend on the supplier’s experience with similar technologies and ability to support performance guarantees. The buyer should contact organizations that have purchased similar equipment. Visits to operating installations can provide important insights.

Terms and price

Proposed payment terms and schedule should also be evaluated carefully. Differences in payment terms can represent a significant value to the project. Commercial terms and conditions essentially define the level of risk that a supplier will share with the buyer. The lowest evaluated cost can be achieved when the buyer and supplier share a reasonable amount of the project risk.

Read Part I - Specifying a Steam Generator