The impact of evaluation and qualification criteria on Iraqi electromechanical power plants in construction contracts

1 Introduction

The successful construction project must pass through two phases (contracting and implementation), requiring the integration of several elements and criteria to accomplish these stages, which include economics, efficiency, accountability, excellent management, transparency, risk prevention and control, and justice in the contracting stage (time, cost, and quality in implementing stage). One of the most difficult challenges that the project may encounter is keeping harmony among the above-mentioned components and criteria; as a consequence, these aspects must be assessed and evaluated for factors to be integrated [1,2] and developed in business responsibility [3]. Electricity is vital to life and, therefore, crucial to the Millennium development goal. No civilization can grow, develop, and succeed in any sectors without it. Creating a sustainable, stable, and affordable energy supply is essential to meet society's basic needs and promote economic activity because it supports the possibility for investment, innovation, and new industries, which are factors that drive employment and growth [4].

Energy is one of the most basic needs of life, and it is also the lifeblood of civilization. It is an essential interaction between nature and society to achieve a higher living standard for human and industrial growth. Energy has been the backbone of technology for decades [5]. Contracts must be tailored to the specific circumstances of a major industrial plant project. However, contract forms that do not meet the participants’ (owners’ and contractors’) competencies and risk capacities are often adopted [6]. Most clients evaluated bids based on cost, and contractors were chosen based on the lowest price. Contractor failure often happens as a consequence of this undivided focus on cost, resulting in significant cost increase and project schedule overrun. Choosing an appropriate contractor for a project has a considerable influence on project performance. The contractors’ qualifications must be evaluated before tendering via pre-qualification to avoid selecting unqualified contractors. Projects in Iraq suffer from frequent problems such as going over budget, being delayed, and having poor quality. The fundamental reason is that contracts are awarded based on the lowest price. As a result, different evaluation criteria should be considered to overcome these issues [7], and all contracting entities have agreed that the average annual turnover and financial resources should be considered as the top barriers in Iraq that Ministry of Planning (MoP) should consider to guarantee the success of the standard bidding document (SBD) system in Iraq. In North America, choosing a contractor was nearly entirely dependent on the lowest bid. Qualification and evaluation criteria have caused significant debate in the public sector, where contractors are worried about bidding processes’ validity when public funds are used [8,9].

Entities in Egypt are concerned about selecting a suitable bid for construction projects. The project’s performance will be harmed if there is no proper and accurate technique for selecting the best bid [10]. Contractors for government refurbishment are chosen via competitive bidding. The unique features of these projects, such as complexity, ambiguity, lack of design details, and ambiguous scope, need a thorough approach for assessing bids. These projects have a limited number of bids submitted, significant disparities between submissions, and challenges evaluating the influence of non-price aspects of the bidders. It is vital to change the evaluation criteria requirements and determine the real capabilities and influence of non-price elements of bidders to enhance the bid quality, overall bid evaluation efficiency, and project success [11]. Effective communication is essential for success between design engineers, equipment suppliers, project managers, and owners [12]. Projects are often managed as systems, with the primary goals of meeting completion deadlines and budgets while adhering to quality standards [13–15]. Power plant bidding decision-making was a sophisticated system engineering that required real-time help from information technology. Thus, employing new information technology has become an issue for large power corporations. Soan intelligent decision support system (IDSS) is built based on a multi-agent intelligent decision support system, data warehouse, data mining, and online analytical processing. Compared to previous information management, IDSS has significant benefits in decision support. It might be useful for power plant bidding techniques and other semi-structural and unstructured challenges in the power market [16]. Economic and social progress is hampered by widespread corruption. Public construction projects, in particular, pose a significant risk of corruption since the public construction industry has been rated as the most corrupt for the last few years. However, significant attempts have been made to quantify national corruption [17].

The objective of this study can be summarized by assessing the Ministry of Electricity’s (MoE) approach to evaluate bids for the design, supply, and installation of a power plant in Iraq according to the governmental bid evaluation procedures (GBEP) and sectorial standard bidding documents (SSBD).

2 Scope and limitations

The Iraqi prime minister’s office claims that billions of dollars were spent on the power industry in previous era, sufficient to develop modern electrical networks. However, corruption, financial waste, and mismanagement have kept Iraq from resolving its electric power issues, resulting in civilians’ misery, exacerbated during the summer months. Most Iraqi power plants dated from 1955 until 1986, during the Gulf War of 1991, were not effectively repaired or serviced for almost a decade due to the lack of replacement parts and skilled workforce imposed by economic sanctions, with just a few tiny gas stations operational in 2003 [18,19]. Iraq’s other generating capacity flaws include inadequate availability, significant technical losses, and load barriers that affected it from meeting consumption needs. Most existing electricity generation plants are thermal, using crude oil, gas, and fire [20]. Dr. Alanbaki mentioned in the Iraqi economists’ network that the government of Iraq was suffering from an electricity crisis while the MoE’s overall allocations from 2005 to 2021 reached more than 80 billion dollars, as shown in Table 1 [21].

SSBD of design, supply, and installation of electromechanical works is a new document; there is a limited level of experience with it, developed and issued by MoP to support MoE’s general companies in implementing power plant construction projects. The research is limited only to investigating and assessing the impact of evaluation and qualification criteria that influence MoE’s decision for SSBD for the procurement of power plants in Iraq.

3 SSBD for plants in Iraq

The public procurement procedures are a key government instrument for boosting and focusing investment and development possibilities, improving the national economy, and enhancing local and federal government planning, budgeting, and monitoring capacities [22,23]. The SSBD has been certified for use in the construction of a plant related to the design, supply, installation, and commissioning of specially engineered plants and equipment, as well as the construction of civil works under a single responsibility contract when the value of the plant and equipment represents a major proportion of the contract amount; and when the facility cannot be taken over safely without testing, commissioning, and other extensive procedures before acceptance [24,25]. As a result, contractors are in charge of everything from design to supply to building, testing, and operation to takeover (acceptance) and maintenance by the employer (Contracting Entity) of the facility, and so on according to the SSBD for plants and electromechanical work.

The employer maintains the primary responsibility for contract design engineering. Technical specifications and drawings are provided by the employer to meet the technical and performance requirements. The contractor is responsible for the design, manufacture, supply, installation, and commissioning, or any other activity required to complete the project for its intended function. An electromechanical design, supply, and installation flowchart for a power plant project is shown in Table 2 [22,24,25].

The bids’ evaluation stage is the essential step of the procurement process since the selection of the best contractor is dependent on its successful completion [22,26]. The steps of GBEP in Iraq are mainly identified by MoP regulations and according to SSBD’s instructions (Sections 1 and 3) of forming a central committee for bid analysis and evaluation with high qualification members for evaluating technical, financial, and legal aspects and their functions as below:

1. Preliminary evaluation of bids,

2. Detailed evaluation of bids, and

3. Determination of bid award.

The recommendations of the committee for analyzing and evaluating the bids under SSBD shall submit to the endorsement of the central committee for audit and approval to award according to the financial powers entitled.

4 Research methodology

Three primary data gathering approaches were adapted: desk studies, interviews, and questionnaires. A desk study was primarily conducted by studying the public procurement system, such as the regulations of implementing governmental contracts, procurement processes, procurement planning, standard bidding documents, and key performance indicators in procurement issued by the MoP, the desk study’s goal was to investigate GBEP to recognize the factors influencing the procurement processes. Interviews were conducted with senior staff from MoP, MoE, private sector representatives, and procurement consultants to validate the consequences of the desk study and to develop and structure a questionnaire for fact collection regarding SSBD application in MoE for the construction of a power plant in Iraq by assessing the critical evaluation and qualification criteria and their impact on project success, collecting and tabulating the responses to calculate the relative importance index (RII) of all factors based on the MoE’s professional staff ranking, after which conclusions and support suggestions were developed based on the study’s results.

5 Analysis and results

There are 25 factors that influence SSBDs in GBEP applied by MoE distributed into three categories; three factors in technical evaluation, seven factors in economic and financial evaluation, and 15 factors in bidder qualification. Respondents were asked to rate the impact of each of these factors by scoring on a 5-point Likert scale, with 5 being the highest rating, with 1 being very low, 2 being low, 3 being neutral, 4 being high, and 5 being very high. The RII of each factor is computed by Eq. (1) as mentioned above. Table 6 illustrates the ranking of the 25 factors, which are organized by category, displaying the total ranking of the factors.

6 Conclusions

The Iraqi government by MoE owns all of the power plant construction projects funded by Iraq’s general federal budget. Achieving value for money is the most critical aspect of the bid evaluation process, which is carried out to choose a suitable contractor with financial and technical capabilities. In the Iraqi context, bid evaluation for government projects is based on GBEP, which is aligned with the public procurement system by MoP. Achieving value for money rather than focusing on the lowest bid is a critical aspect of the GBEP that must be controlled by the best value selection method based on the price and qualification of the contractor, and this selection requires the proper application of the SSBD of design, supply, and installation of power plant construction project as designed by MoP without neglecting or missing any requirements of the evaluation and qualification criteria to ensure project success, sustainable procurement, and it will eliminate the number and frequency of contractors’ claims and disputes. SSBD is also a tool for attracting sober foreign companies that will help in constructing a power plant per approved international standards and specifications, which in turn will contribute to the transfer of knowledge and technology and the development of the capabilities of national companies and staff by applying domestic preference criteria.

The author recommends the following suggestions:

• Early procurement process planning will assist MoE in completing the project successfully.

• Encourage MoE’s technical authorities in charge of the project to submit all of the project’s requirements, including acceptable technical criteria for a technical evaluation in the early stage of the procurement cycle, with project documentation to support the contractual staff in proper SSBD application to obtain the best bid and to reduce rejection of unresponsive bids.

• Clearly explain each document and its function in the tender document as an employer’s technical requirement in Section 6 of the SSBD.

• MoE’s contracting entities are accountable for the most effective use of evaluation and qualification criteria, such as considering power plant’s life cycle cost by applying net present value calculations when evaluating operation and maintenance costs over the plant’s life cycle to ensure that proper contractual processes are followed while also achieving transparency and conserving public funds.