Evaluation criteria (Construction Guidance 3.7)

Effective date: 1 July 2018

Objective: To help Agencies in establishing criteria and undertaking the evaluation process.

Summary

Evaluation criteria should reflect the objectives of the procurement.

Agencies may, but are not required to, include an indication of the relative importance or weighting of the evaluation criteria in the tender documentation.

Any mandatory evaluation criteria must be disclosed as such in the tender documentation.

Mandatory evaluation criteria related to value for money, occupational health and safety management, industrial relations management and appropriate consideration of a supplier’s past performance must be included in the tender documentation.

Value for money does not necessarily mean lowest price. It means best value procurement outcomes based on a balanced judgement of financial and non-financial factors, taking into account:

• the total benefits and costs over the life of the goods, services or works procured
• environmental, social and economic factors
• any risk related to the procurement

This guidance describes the types of evaluation criteria and their disclosure in tender documentation.

Types of evaluation criteria

The evaluation criteria should be well targeted, clearly measurable and not excessive in number.

Agencies may decide to indicate the relative importance of evaluation criteria - for example, by listing any ‘desirable’ criteria in order of relative importance - to help tender participants to develop their response.

Evaluation criteria come in different forms:

• mandatory criteria, which are pass or fail criteria but are not generally included in scoring submissions
• criteria that are critical to the project objectives or context
• criteria that support a level of confidence in a tender participant’s performance
• criteria to distinguish value for money
• criteria to address broader government policies (for example the Local Jobs First - Victorian Industry Participation Policy)

Evaluation criteria should be linked to the project’s objectives to:

• help determine which response represents the best value for money
• help tender participants understand the drivers or constraints for the project, which may affect the way they develop their response

Example:

Projects on operational brownfield sites can require a careful strategy for staging.

Recommended evaluation criteria for assessing works

General criteria related to capability (or pre-qualification criteria):

• financial capacity
• organisational capacity
• previous experience
• resource availability
• performance capability
• environmental management
• quality assurance systems
• previous performance record
• occupational health and safety management
• industrial relations management

Project specific criteria:

• project personnel and their competencies
• the method proposed for the project including program
• a project health and safety management plan
• systems proposed for the project
• the capacity and current commitments of key personnel
• insurances
• the response to government policies that apply to the project

Recommended evaluation criteria for assessing construction services

General criteria related to capability (or pre-qualification criteria):

• organisational capacity
• technical and professional expertise and qualifications
• quality assurance systems
• previous experience
• innovative ability
• resource availability
• environmental management
• previous performance record
• occupational health and safety management

Project specific criteria:

• project personnel proposed and their competencies
• the method proposed for project
• systems proposed for the project
• the capacity and current commitments (particularly for key personnel)
• the response to government policies applying to the project

Mandatory evaluation criteria

Mandatory evaluation criteria must be set out in the tender documentation.

Mandatory evaluation criteria must be clearly identified as mandatory criteria.

Ensure that all suppliers engaged to perform Works or Construction Services satisfy the mandatory evaluation criteria set out in the Evaluation criteria (Construction Instruction 3.7) where the thresholds listed in the instruction have been met.

Where an evaluation criterion has been assessed as part of pre-qualification to a register:

• avoid requesting the same information in a tender process because this duplicates the pre-qualification process
• require the tender participant to confirm that they remain on the register
• require tender participants to confirm that their circumstances or response to the criterion remains the same as when last submitted to the register or earlier tender stage

Value for money

Value for money should focus on the costs and benefits of the response, as well as the risks associated with the proposal and the tender participant itself. Refer to the Victorian Government Purchasing Board’s Achieving value for money - Goods and services procurement guide for more information.

Occupational health and safety management

The mandatory occupational health and safety management criteria are set out in Mandatory evaluation criteria for occupational health and safety management (Attachment 1 to Construction Instruction 3.7).

Occupational health and safety management criteria must be used:

• for Works, where the value exceeds $750,000 (inclusive of GST)
• for Construction Services, where the value of the services exceeds $300,000 (inclusive of GST)

See the Detailed Guide on the mandatory occupational health and safety management criteria for more information about these criteria.

Industrial relations management

The mandatory industrial relations management criteria are set out in Mandatory evaluation criteria for industrial relations management (Attachment 2 to Instruction 3.7).

The Ministerial Directions for Public Construction Procurement in Victoria at Evaluation criteria (Direction 3.7) establish that mandatory evaluation criteria for industrial relations management must be used when assessing tender submissions for public construction when:

• in the case of suppliers of Works, the value of the Works (or Works component) exceeds $750,000 (inclusive of GST)
• in the case of suppliers of Construction Services, when Fair Jobs Code applies.

See the detailed guide on the mandatory industrial relation management criteria for more information about these criteria.

Considering a tender participant’s past performance

Consideration of past performance may include:

• experience on similar projects and performance
• references provided by the tender participant
• performance reports about the tender participant from previous work that are held by the Agency or the Victorian Government

Fair Jobs Code

The Fair Jobs Code is committed to ensuring that suppliers are recognised for treating workers fairly.

Requirements under the Fair Jobs Code applies to open tenders, Selective Tenders, or Limited Tenders, (and the resultant contracts) in the following circumstances:

An Agency may enter into a contract with a tender participant that does not hold a Fair Jobs Code Pre-Assessment Certificate, subject to sections 4.3 or 4.4 of the Fair Jobs Code.

The requirement to hold a Fair Jobs Code Pre-Assessment Certificate or to submit a Fair Jobs Code Plan Addendum is required in addition to any other industrial relations plan or occupational health and safety management plans as may be required under this Instruction 3.7.

Project specific evaluation criteria

Project-specific evaluation criteria:

• relate to the complexity or unique characteristics of the project
• often address potential risks or uncertainties and quality of design. including accurately interpreting functional requirements
• cover the ability to incorporate innovation, environmentally sustainable design or a level of flexibility
• apply government social procurement policies
• address specific site requirements
• address how time frames will be met
• demonstrate expertise in a construction method
• address how security requirements will be met

Project-specific evaluation criteria may be mandatory. For example, if a tender participant is required to hold a particular licence. Project-specific mandatory evaluation criteria must be clearly described as being mandatory.

Under the Value Creation and Capture Framework, evaluation criteria may address how a tender proposal can maximise social, economic and environmental value from the infrastructure investment. For example, a proposal to build a railway station could include criteria for incorporating retail or residential facilities to reduce the cost to government and maximise the value of the land.

Probity considerations in tender evaluation

It is essential that tender evaluation criteria, weightings and processes are developed in the tender development phase. This ensures that the tender documentation is drafted in a way that will elicit all the information that the tender evaluation team requires and avoids having to request unnecessary information after the tender is released.

Well-defined conditions of tender and evaluation criteria give tender participants a clear indication of the project’s requirements. This aims to prevent unproductive use of resources and unsuitable or misdirected responses.

Decisions on the selection of suppliers should be made via an independent and objective evaluation against the nominated evaluation criteria and supply conditions.

Evaluation criteria:

• should not selectively advantage or disadvantage a particular tender participant or group of tender participants
• should be based on objective measures that meet the primary procurement needs
• avoid using technical specifications or criteria that discriminate against international or interstate tender participants
• should not discriminate on the basis of foreign ownership where an Agency is required to comply with international agreements

The tender evaluation team needs:

• appropriate technical and commercial capabilities to assess the responses
• skills in communicating and negotiating
• the ability to maintain critical objectivity during the tender process
• to be free of any conflict of interest that might undermine the objectivity of the evaluation

Useful resources

Achieving value for money - Goods and services procurement guide (Victorian Government Purchasing Board, 2018)

Describes applying and measuring value for money in procurement.

Provides detailed information about the mandatory evaluation criteria for occupational health and safety management and guides how a supplier may demonstrate compliance with the criteria.

Provides detailed information about the mandatory evaluation criteria for industrial relations management and guides how a supplier may demonstrate compliance with the criteria.

Tools and support

The Construction Toolkit includes key documents, guidance and information about the Ministerial directions and instructions for public construction.

For further information about the Ministerial directions and instructions for public construction procurement, please contact the Construction Policy Team.