Infrastructure delivery MODULE 11

TOOLKIT EDITION 1 2018

MODULE 11
Infrastructure delivery
MODULE 11 Infrastructure delivery

MODULE PURPOSE
This module describes the infrastructure delivery management framework applicable to municipalities and municipal entities.
Specifically, this module:
1. Describes the control framework for infrastructure delivery management, based on the National Treasury Standard for
Infrastructure Procurement and Delivery Management (SIPDM); and
2. Provides guidance with respect to the infrastructure delivery management process.

WHY
The infrastructure delivery management system presented in this module ensures:
1. Proper planning and preparation translates into minimal project disruptions and successful outcomes;
2. Constant focus on value creation; and
3. Management of quality.

OUTPUTS OF MODULE 11:

1. A city infrastructure delivery management system.
2. Completed packages in accordance with stated requirements.

KEY RELEVANT NATIONAL REGULATIONS, POLICIES AND STRATEGIES:

1. Broad-Based Black Economic Empowerment Act, No. 53 of 2003
2. Constitution of the Republic of South Africa, No. 108 of 1996
3. Construction Industry Development Board Act, No. 38 of 2000
4. Engineering Profession Act, No. 46 of 2000
5. Landscape Architectural Profession Act, No. 45 of 2000
6. Local Government: Municipal Finance Management Act, No.56 of 2003
7. Municipal Systems Act, No. 32 of 2000
8. National Archives and Record Services of South Africa Act, No. 43 of 1996
9. Occupational Health and Safety Act, No. 85 of 1993
10. Project and Construction Management Professions Act, 2000 (Act No. 48 of 2000
11. Quantity Surveying Profession Act, No. 49 of 2000
12. Standard for Infrastructure Procurement and Delivery Management
13. South African Bureau of Standards, 10845-1, Construction procurement – Part 1: Processes, methods and procedures
14. South African Bureau of Standards, 10845-2, Construction procurement – Part 2: Formatting and compilation of
procurement documentation
15. South African Bureau of Standards, 10845-3, Construction procurement – Part 3: Standard conditions of tender
16. South African Bureau of Standards, 10845-4, Construction procurement – Part 4: Standard conditions for the calling for
expressions of interest
17. Department of Public Works and the Construction Industry Development Board. National Immovable Asset Maintenance
Management Standard. Final Draft. July 2015.

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 Infrastructure delivery MODULE 11

CONTENTS
Module 11 Infrastructure delivery

11.1 INTRODUCTION 11.1

11.2 STAGE 0: PROJECT INITIATION 11.1

11.3 STAGE 1: INFRASTRUCTURE PLANNING 11.2

11.4 STAGE 2: DECIDE ON PROCUREMENT STRATEGIES 11.3

11.4.1 Delivery management strategy 11.3
11.4.2 Spend analysis 11.5
11.4.3 Organisational analysis 11.6
11.4.4 Market analysis 11.7
11.4.5 Procurement strategy 11.7

11.5 STAGE 3: PREFEASIBILITY 11.15

11.5.1 From portfolio planning to project planning 11.15
11.5.2 Strategic brief 11.16

11.6 STAGE 4: FEASIBILITY 11.17

11.7 STAGE 5: DESIGN DEVELOPMENT 11.18

11.7.1 From project planning to detailed design 11.18
11.7.2 Design development report 11.18

11.8 STAGE 6: DESIGN DOCUMENTATION 11.19

11.8.1 Stage 6A: Production information 11.19
11.8.2 Stage 6B: Manufacture, fabrication and construction information 11.19

11.9 STAGE 7: WORKS 11.20

11.9.1 From detailed design processes to site processes 11.20
11.9.2 Typical works’ activities 11.20
11.9.3 Works completion 11.21

11.10 STAGE 8: HANDOVER 11.21

11.10.1 Commissioning 11.21
11.10.2 Training 11.22
11.10.3 Safeguarding of works 11.22
11.10.4 Record information 11.23
11.10.5 Updating of the asset register 11.23
11.10.6 Completion of stage 8 11.24

11.11 STAGE 9: CLOSE OUT 11.24

11.11.1 Close out report 11.24
11.11.2 Completion of stage 9 11.24

11.12 CONCLUSION 11.25

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MODULE 11 Infrastructure delivery

LIST OF
Tables that appear in this toolkit

TABLE 11.1: Key deliverables and activities at project level 11.4

TABLE 11.2: Responsibilities for the core activities in each of the contracting methods 11.9
TABLE 11.3: Acts and statutory councils for professional services providers 11.11
TABLE 11.4: Summary – performance management formulae 11.12
TABLE 11.5: Conditions under which procedures provided for in SANS 10845-1 may be utilised 11.13
TABLE 11.6: Conditions under which procedures provided for in SANS 10845-1 may be utilised 11.15

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Infrastructure delivery MODULE 11

IV
MODULE 11 Infrastructure delivery

11.1 INTRODUC TION

The control framework for infrastructure delivery was defined in Figure 9.1 in Module 9. The process commences with project
initiation (Stage 0), followed by nine stages culminating in package completion at stage 9. There are a total of nine stage
gates, each with a defined end-of-stage deliverable, described in Table 9.1.

This module provides guidance on each of the nine stages of

the infrastructure delivery management control framework
as defined in the National Treasury Standard for Infrastructure
Procurement and Delivery Management (SIPDM). Key principles
embedded in this control framework are the need for proper
infrastructure planning as a requirement for value creation,
stage controls to ensure that informed decisions are made and
that risks have been considered and addressed as appropriate.

11.2 STAGE 0: PROJEC T INITIATION

In Stage 0 (Project initiation) projects, or groups of projects having a similar high-level scope and that address strategic
needs, business risks or opportunities that relate to the municipality’s legislated or sanctioned mandate, are appraised for
acceptance into firstly sectoral asset management plans and then the city’s strategic asset management plan. Such projects
or programmes can be identified in the process of preparing asset management plans, or such plans can accept project
programme proposals previously identified, or a combination of both.

The project or programme proposal will take the form of an initiation report that shall as a minimum:

Provide a project Outline key issues Outline options Indicate the Provide the
description and and solution that were high-level estimated project
high-level scope of options that were evaluated business case cost and indicative
work interrogated high-level schedule

However a project or programme proposal is included in a sectoral asset management plan, it must be appraised using documented,
objective decision criteria. Objective decision criteria can include factors such as city strategic objectives, legislative compliance,
national, provincial or regional priorities, risk exposure and reduction, financial justification and level of stakeholder support.
Guidance on deciding objective decision criteria is provided in Module 8. The decision-making criteria, findings, assumptions and
recommendations shall be documented in the initiation report. Stage 0 is completed when the initiation report is accepted.

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11.3 STAGE 1: INFR ASTRUC TURE

PLANNING

Sectoral asset management plans shall present a lifecycle plan for an asset portfolio(s) as defined in the city’s asset management
strategy, and this lifecycle plan shall present, amongst other items, programmes, projects or packages that require implementation
over a 30 year period, with sufficient level of confidence for inclusion in the medium term expenditure framework. Such a lifecycle
plan shall, for each programme, project or package:

Describe the Estimated total Geographical Any known Be aligned with

high-level scope project cost, location encumbrances all prescribed
of work proposed time and estimated planning,
schedule and timeframes for budgeting,
annual budget removing such monitoring
requirement encumbrances and reporting
requirements

Projects and programmes are generally and preferably included The strategic asset management plan therefore prioritises
in sectoral asset management plans through acceptance of and optimises the basket of project, programme and package
initiation reports and represent the capital and operating proposals as presented in sectoral asset management plans,
requirements of specific services and asset portfolios. The within funding limits, considering amongst others city strategic
decision to include projects or programmes into the sectoral objectives and spatial priorities and by prioritising projects
asset management plans was based on objective decision and programmes through corporate objective decision
criteria used to assess the viability of projects and programmes. making criteria. The instrument used to prioritise projects and
The totality of needs from various sectors, services and asset programmes at corporate level is the multi-criteria analysis
portfolios across the municipality may however exceed available framework presented in Module 8.
budget in the short to medium term. It is also possible that
Following prioritisation in the strategic asset management plan,
whilst individual projects or programmes at sector level may
sectoral asset management plans are aligned to the strategic
have merit, they may not support or may even contradict city
asset management plan, and both sets of plans are approved, at
strategic objectives, requirements or initiatives.
which point stage 1 is complete.

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11.4 STAGE 2: DECIDE ON

PROCUREMENT STR ATEGIES
11.4.1 Delivery management strategy

The municipality or municipal entity needs to develop a delivery management strategy that indicates how needs are to be
met for each category of spend through delivery mechanisms such a public private partnership, another organ of state on an
agency basis, another organ of state’s framework agreement, own resources or own procurement system.

The delivery management strategy is informed by a spend and by organisational and market analysis. Note that delivery management
strategies can be established at city-level, service or asset portfolio level, project or programme level, or even regional level. At the
city level, the delivery management strategy will state high-level preferences, objectives and directives applicable to the range of
infrastructure services and asset portfolios under the control of the municipality. Examples of preferences, objectives and directives
at the city level can include (this is neither an extensive nor synthesised list, but merely options and examples, elements of which
may or may not be relevant in the context of a particular city):

• Increase control over the infrastructure value chain to • Transfer infrastructure financing risks to the private sector, to
limit the city’s risk exposure to upstream provider shocks, the extent possible.
whether in supply capacity, cost or both (e.g. invest in energy • Minimise stock-holding by establishing suitable contracts
generating capacity, or bulk water storage and abstraction). and delivery arrangements with the supplier community.
• Invest in green infrastructure and closed-loop infrastructure • Optimise the maintenance capabilities of the city by
value chains to mitigate the impacts of climate change. modernising depots, workshops and stores. This includes
• Mechanise all infrastructure works to the extent that such the lay-out, equipment and functioning of these facilities,
actions will promote employee health and safety, improve as well as investment in staff competence and management
operational efficiencies, and enable the city to deliver better systems.
services and response times. • Actively promote PPPs with the private sector to fund the
• Seek opportunities for labour intensive employment in city’s infrastructure delivery programme.
both capital works and maintenance, in accordance with
guidelines published by the CIDB.
• Develop a capable construction industry in the local
economy by outsourcing all capital works delivery, as well
as the maintenance of all non-core infrastructure. Disinvest
from own construction and maintenance capabilities, except
maintenance capability of core infrastructure.

The examples provided above relate to city strategic objectives. They clearly do not relate to one particular project, programme, and
service or asset portfolio. Instead, they can be applied to all services, asset portfolios, programmes and projects, albeit to different
degrees depending on the nature of each service, asset portfolio or lifecycle delivery intervention. Such directives are articulated in
the asset management strategy contained in the strategic asset management plan (see Module 7).

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LEVEL OF DELIVERY
INCLUDED IN… FOCUS
MANAGEMENT STRATEGY
• Overall city spending power and spend by category
• Political and policy preferences and dictates (e.g. promoting SMMEs and
employment creation)
• City long term resilience
Strategic asset • Key risks and opportunities (e.g. limited number of CIDB Grade 9 & 10
City-level / corporate level contractors in the local economy, opportunities for economy of scale in
management plan
consolidating mechanical and electrical work across asset portfolios
• Infrastructure investment as a lever to achieve city strategic objectives
Guidance on key considerations in deciding on service delivery models is
provided in Figure 12.6 of Module 12.
• Interprets and supports overarching city strategic objectives
Sectoral asset
Service / sector level • Service delivery model, supply chain and asset portfolio optimisation
management plan
• Cost-effective and efficient service delivery
• Delivery mechanism in support of stated project or programme strategic
Project /
objectives
Project / programme level programme
• Satisfying unique requirements (e.g. community preferences for local
business plan
labour absorption in construction or maintenance works in their area)

TABLE 11.1: Hierarchy of delivery management strategies

Sectoral asset management plans both inform and follow the

directives of the strategic asset management plan and focus on
service delivery model issues in the infrastructure value chain
(e.g. for solid waste: waste collection, separation, reclamation/
recycling/composting and incineration or landfill disposal),
considering all relevant internal and external factors, risks,
opportunities and constraints. With reference to solid waste,
examples of key delivery issues to be considered could include
(not an exhaustive list):

• Regulatory requirements.
• Remaining airspace on existing landfill sites, permitted types
of wastes these landfill sites can receive, current and expected
waste volumes, the existence of private landfill sites and the
availability of suitable land for new landfill site development.
• Opportunities to generate energy from waste.
• Opportunities for recycling, reclamation and composting Project-level delivery management strategies, to the extent that
and the current involvement of the private sector and of they relate to a particular service or asset portfolio, will take
individual pickers. guidance from the sector or service level delivery strategy but
• Current waste collection capability and cost of providing the may be further tailored to serve particular objectives, such as by
service versus the service benefits and costs of outsourcing creating construction employment opportunities for the local
waste collection. community where the project is to be implemented.

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11.4.2 Spend analysis

A spend analysis, done correctly, allows the city to identify opportunities to leverage buying power, reduce costs, improve
operational performance and provide better management and oversight of suppliers, while improving relationships with
internal and external stakeholders.

The following methodology may be used to undertake the spend analysis, based on lifecycle needs presented in the lifecycle plans
of sectoral asset management plans:

a. Determine needs at asset group type level (e.g. new landfill b. Categorise the clusters into categories of spend, based on
site or an electricity substation) for capital works and at their commonality in respect of the following attributes, as
asset type level for maintenance works, following a bottom- relevant and quantify the level of spend per category:
up analysis approach (from component level upwards) for • Type of lifecycle activity (e.g. new asset creation,
existing assets, and a top-down approach for new asset maintenance, renewal, upgrading or disposal)
requirements. • Expenditure classification (capital or operating)
• One-of-a-kind projects or repetitive projects
• Potential for standardisation (e.g. high, medium and low)
• Time schedule urgency (e.g. high, medium, low)
• Organisational and managerial complexity (e.g. high,
medium or low)
• Technical complexity or level of innovation (e.g. high,
medium or low)
c. Identify spatial locations of needs per category of spend.
d. Identify needs which may occur simultaneously on the same
site.
e. List the high-level work activities (scope of work)

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11.4.3 Organisational analysis

The organisational analysis determines the city’s organisation capacity, capability and appetite to deliver projects and
programmes. Cities should consider all relevant factors related to organisational capacity and capability, inclusive of:

a. Cradle-to-grave capabilities to deliver and maintain assets,

per service/asset portfolio, to the level of asset group type:
• Prefeasibility studies/feasibility studies
• Design
• Securing necessary approvals or authorisations and
removing encumbrances
• Infrastructure procurement
• Construction
• Construction management
• Maintenance
c. Fixed productive capacity in the form of:
• Decommissioning/disposal of assets
• Own workshops and depots and their functions and
b. Type and level of professionals, artisans, labourers and output capacities.
other occupations required, available and whether the • Stores, inclusive of number, spatial distribution, size, layout
organisation possesses the right/surplus/deficit in capacity, and ability to receive, store and dispatch construction
and predicted short to medium shifts in such capacity, e.g. materials and equipment in good order (e.g. yards for bulk
the city’s engineers are on average 57 years old and capacity goods, stores designed for turning circles appropriate for
gaps are expected in the near future due to retirement. large delivery trucks)
• Production and extraction facilities such as municipal quarries
• Yellow fleet: the extent, composition, spatial availability,
and average vehicle availability and utilisation
• Fleet allocated for maintenance crews
• Specialised equipment
• Necessary organisational systems for infrastructure
delivery e.g. an organisational health and safety
programme tailored to the needs of specific activities and
asset types.

d. Organisational funding capacity.

The organisational analysis should also identify the organisation’s appetite for issues such as:

Increasing capacity Putting new capabilities Making use of private Risk appetite: assuming
in place finance or transferring risk to
other parties

More guidance on organisational considerations in selecting appropriate delivery models is provided in Figure 12.6 of Module 12.

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11.4.4 Market analysis

The market analysis describes the capabilities and characteristics of the market in relation to the spend needs of the city.
Consequently, the market analysis generally mirrors the aspects considered in the spend analysis and includes consideration
of similar aspects as identified for the spend analysis (capabilities and capacities).

Additional aspects to consider include:

• The number and grading of local contractors registered on
the CIDB register of contractors (limited/adequate/more
than sufficient).
• The extent to which the market is already involved in
infrastructure delivery, per service/asset portfolio and across
the lifecycle. Specifically analyse the following:

The existence of PPPs Private facilities The extent to which Framework agreements
owned and operated services are already in place but not yet
by external agents, outsourced or provided utilised
providing municipal under agreement
services e.g. private (agency or otherwise)
landfill sites by external parties

• Specific opportunities or risks.

• Needs of the local economy.

11.4.5 Procurement strategy

01 GENERAL
A procurement strategy contains the selected packaging,
contracting, pricing and targeting strategy, as well as the
procurement procedure for a particular procurement. The
procurement strategy must be informed by the spend,
organisational and market analysis and include the rationale for
selecting a particular option. As with the delivery management
strategy, procurement strategies can be developed at various
levels (city/corporate, service/asset portfolio or project/
programme levels).
Stage 2 is complete when the delivery and procurement
strategy is approved.

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02 ESTABLISH OPPORTUNITIES FOR USING PROCUREMENT TO PROMOTE

DEVELOPMENTAL PROCUREMENT POLICIES AND TARGETING STRATEGY
The SIPDM requires municipalities and municipal entities to promote broad-based black economic empowerment (BBBEE) in
accordance with the provisions of the Broad-Based Black Economic Empowerment Act and to also, where appropriate, promote
work opportunities for targeted groups and national development goals. Not less than 50% of points allocated to preference in a
points scoring system in the evaluation of tenders shall be allocated to BBBEE goals.

03 CONTRACTING AND
PRICING STRATEGY
Municipalities and municipal entities should select appropriate
contracting and pricing strategies for each package to be
procured. Municipalities and municipal entities may select from
the standard forms of contract for the delivery and maintenance
of infrastructure listed in Table 11.2, as suited for intended use.

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FORM OF CONTRACT CODE INTENDED USAGE

Construction Industry Development Board (CIDB)

CIDB Standard Professional

SPSC Professional services
Service Contract

CIDB General Conditions of An order form type of contract for low-value goods without any incidental
-
Purchase work or services on or before a specified date being required.

Simple, regional purchase of readily available materials or commodities

CIDB Contract for the Supply and
- which requires almost no management of the buying and delivery
Delivery of Goods
process, minimal testing, installation and commissioning on delivery.

CIDB General Conditions of An order form type of contract where low-value services on or before a
-
Service specified date are required.

International Federation of Consulting Engineers (FIDIC)

Building or engineering works of relatively small capital value, or for

Green
FIDIC Short Form of Contract relatively simple or repetitive work, or for work of short duration. Use for
Book
design by employer or contractor-designed works.

FIDIC Conditions of Contract for

Construction for Building and Building or engineering works designed by the employer (The works may
Red Book
Engineering Works designed by include some element of contractor-designed works.)
the Employer

FIDIC Conditions of Contract

for plant and design-build
for electrical and mechanical Yellow The provision of electrical or mechanical plant and the design and
plant, and for building and Book construction of building or engineering works.
engineering works, designed by
the contractor

The provision on a design and construct (turnkey) basis of a process or

FIDIC Conditions of Contract for Silver
power plant, of a factory or similar facility or an infrastructure project or
EPC Turnkey Projects Book
other type of development.

“Green field” building or engineering works which are delivered in

FIDIC Conditions of Contract
terms of a traditional design, build and operate sequence with a 20-year
for Design, Build and Operate Gold Book
operation period. (The contractor has no responsibility for the financing
Projects
of the project/package or its ultimate commercial success.)

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FORM OF CONTRACT CODE INTENDED USAGE

South African Institution of Civil Engineering (SAICE)

SAICE General Conditions of

GCC Engineering and construction, including any level of design responsibility
Contract for Construction Works

Joint Building Contracts Committee (JBCC)

JBCC Principal Building

PBA Buildings and related site works designed by the employer.
Agreement

Buildings and related site works of simple content designed by the

JBCC Minor Works Agreement MWA
employer

Institution of Civil Engineers (ICE)

NEC3 Engineering and

ECC Engineering and construction including any level of design responsibility.
Construction Contract

Engineering and construction which do not require sophisticated

NEC3 Engineering and
ECSC management techniques, comprise straightforward work and impose
Construction Short Contract
only low risks on both the employer and contractor.

NEC3 Professional Services

PSC Professional services, such as engineering, design or consultancy advice.
Contract

Professional services which do not require sophisticated management

NEC3 Professional Services Short
PSSC techniques, comprise straightforward work and impose only low risks on
Contract
both the employer and consultant.

NEC3 Term Service Contract TSC Manage and provide a service over a period of time.

Manage and provide a service over a period of time, or provide a service

NEC3 Term Service Short which does not require sophisticated management techniques, comprise
TSSC
Contract straightforward work and impose only low risks on both the employer
and contractor.

Local and international procurement of high-value goods and related

NEC3 Supply Contract SC
services, including design.

Local and international procurement of goods under a single order or

on a batch order basis and is suitable for use with contracts which do
NEC3 Supply Short Contract SSC
not require sophisticated management techniques and impose only low
risks on both the purchaser and the supplier.

TABLE 11.2: Approved forms of contract related to the delivery and maintenance of infrastructure

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Different types of pricing strategies are listed in Table 11.3 below. These can be broadly categorised in price-based and cost-based
strategies. When selecting a strategy, consider amongst others the following:

• The risks related to the delivery of the project, and the optimal
allocation of risk between the contracting parties;
• The level of innovation required;
• The extent to which information is complete, and will allow
accurate estimation of costs to be incurred in delivering or
maintaining the infrastructure;
• The time required to execute the contract;
• Allowing for suitable flexibility to accommodate scope
changes at reasonable cost; and
• Overall project complexity.

CLIENT’S RISK
PRICING
DESCRIPTION EXPOSURE TO PRICE
STRATEGY
INCREASES
Price-based strategies
Contract in which a contractor is paid a lump sum to perform the works.
Lump sum (Interim payments reflecting the progress made towards the completion of None
the works may be made.)
Contract in which a bill of quantities lists the items of work and the estimated/ At risk for increases in
measured quantities and rates associated with each item to allow contractors quantities, and errors
Bill of quantities
to be paid, at regular intervals, an amount equal to the agreed rate for the and omissions in the
work multiplied by the quantity of work actually completed. bill of quantities
Contract in which a contractor is paid the price for each lump sum item in the
Price list/price price list/schedule that has been completed and, where a quantity is stated Risk is limited to
schedule in the price list/schedule, an amount calculated by multiplying the quantity increase in quantities
which the contractor has completed by the rate.
Contract in which the contractor breaks the scope of work down into activities,
which are linked to a programme, method statements and resources and
Activity schedule prices each activity as a lump sum, which he is paid on completion of the None
activity. The total of the activity prices is the lump sum price for the contract
work.
Cost-based strategies
At full risk unless cost
Contract in which the contractor is paid for his actual expenditure plus a
Cost reimbursable is disallowed in the
percentage or fee.
contract
Cost reimbursable contract in which a target price is estimated and on At risk for a portion of
completion of the works the difference between the target price and the the cost as well as the
Target cost
actual cost is apportioned between the employer and contractor on an fee in excess of the
agreed basis. agreed target price

TABLE 11.3: Price-based and cost-based pricing strategies

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04 FRAMEWORK AGREEMENTS
A framework agreement is an agreement between an organ This enables the municipality (as employer) that entered into
of state and one or more contractors that establishes the such an agreement to procure engineering and construction
terms governing orders to be awarded during a given period, works, goods and services on an instructed or “call-off ” basis
in particular with regard to price and, where appropriate, the over a defined term, without any commitment to the quantum
quantity envisaged. The SIDPM allows municipalities to enter of work instructed. This may be achieved by issuing a package
into framework agreements with contractors by: (engineering and construction contract), batch (supply
• Inviting tender offers to enter into a suitable contract for contract) or task order (service contract) in terms of a framework
the required work, using stringent eligibility and evaluation contract during the term of that contract. Price in the context
criteria to ensure that contracts are entered into with only of a framework agreement can be a sum of money for which
those contractors who have the capability and capacity to something is purchased, the actual cost of acquiring something
provide the required goods, services or works; and calculated according to some specified measure, or an estimate
of what the transaction is worth.
• Entering into a limited number of contracts based on the
projected demand and geographic location for such goods, Framework agreements therefore contain prices for work to be
services or works. executed over a term, or cost parameters which enable prices
to be determined once the scope of work becomes known, or a
combination of prices and cost parameters. Some of the many
benefits of framework agreements include:
• They reduce the municipality’s need to repeatedly advertise
and engage the market for goods, services or works falling
within the scope of the agreement over the term of the
agreement;
• A municipality entering into a framework agreement
gains both assurance that goods, services and works will
be available when planned, and flexibility in managing
expenditure relating to the delivery and maintenance of
infrastructure over the duration of the framework agreement;
• Framework agreements limit the number of supplier
relationships to be managed; and
• Improved, collaborative supply chain relations can be
developed, allowing contractors to improve their internal
systems, deliver better project outcomes and to improve
their BBBEE status.

05 PROCUREMENT METHODS
AND PROCEDURES
METHOD REFERENCE DESCRIPTION
Method 1 Financial offer
The SIPDM allows certain standard procurement methods and
Method 2 Financial offer and quality
procedures, as provided for in SANS 10845-1, under certain
conditions as outlined in Table 11.4 and Table 11.5: Method 3 Financial offer and preferences
Method 4 Financial offer, quality and preferences

TABLE 11.4: Methods for evaluating submissions

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PROCEDURE CONDITIONS WHICH NEED TO BE SATISFIED IN ORDER TO UTILISE THE PROCEDURE

Competitive selection procedure

Nominated procedure Any procurement, the estimated value of which does not exceed a threshold in Table 11.6.
Any procurement, except where the cost of advertising or the evaluation of a large number of
Open procedure
tender submissions is disproportionate to the value of the work.
Any procurement where:
1. a contract requires for its execution a high degree of specialised input, or requires skills and
expertise that are not readily available;
2. a contract requires for its execution exceptional management skills or quality;
3. a tender submission requires significant tenderer inputs in order to respond appropriately to
requirements so that a financial offer may be determined;
Qualified procedure 4. it is desirable, in a large programme or project, to link packages of work to tenderers who
have the appropriate capacity and capability to compete against one another;
5. the time and cost required to examine and evaluate a large number of tender offers would be
disproportionate to the procurement;
6. for practical reasons, it is necessary to limit the number of tender submissions that are
received; or
7. the goods or services are not freely available in the market, or are manufactured solely for the
organ of state in accordance with that organ of state’s own specifications.
Quotation procedure Any procurement where the estimated value does not exceed a threshold stated in Table 11.6.
Proposal procedure using Services where tenderers are required to develop and price proposals to satisfy a broad scope
the two-envelope system of work.
Any procurement in which tenderers are required to submit technical proposals
Option 1
and, if required, cost parameters around which a contract may be negotiated
Proposal procedure using
the two-stage system Any procurement in which tenderers are invited to submit technical proposals
Option 2 in the first stage and to submit tender offers based on procurement documents
issued during the second stage
Procurement which involves readily available goods and does not exceed the threshold value
Shopping procedure
stated in Table 11.6
As for open competitive negotiations, but where:
1. a contract requires for its execution a high degree of specialised input, or requires skills and
expertise that are not readily available;
2. a contract requires for its execution exceptional management skills or quality;
Restricted competitive 3. a tender submission requires significant tenderer inputs in order to respond appropriately to
negotiations requirements so that a financial offer may be determined;
4. the time and cost required to examine and evaluate a large number of tender offers would be
disproportionate to the procurement;
5. for practical reasons, it is necessary to limit the number of tender submissions that are
received; or
6. a target price is tendered and finalised prior to the award of the contract.

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PROCEDURE CONDITIONS WHICH NEED TO BE SATISFIED IN ORDER TO UTILISE THE PROCEDURE

Any procurement where:

1. it is not feasible to formulate detailed specifications for the work or to identify the
characteristics of goods or works to obtain the most satisfactory solution to procurement
needs;
Open competitive 2. there are various possible means of satisfying procurement needs;
negotiations 3. the technical character of the goods or works, or the nature of the services, warrants the use
of competitive negotiations to realise the most satisfactory solution to procurement needs;
4. the purpose of the contract is research, experimentation, study or development; or
5. all of the tenders received in a competitive selection procedure are nonresponsive and the
calling for fresh tenders is likely to result in a similar outcome.
Negotiated procedure
Any procurement where:
1. a rapid response is required due to the presence of, or the imminent risk of, an extreme or
emergency situation arising from:
• human injury or death;
• human suffering or deprivation of human rights;
• serious damage to property or financial loss;
• livestock or animal injury, suffering or death;
• serious environmental damage or degradation; or
• interruption of essential services.
2. the required goods, services or works cannot technically or economically be separated from
another contract previously performed by a specific contractor;
3. only one contractor has been identified as possessing the necessary experience and
qualifications or product to deliver value for money in relation to a particular need;
4. the services, goods or works do not exceed a threshold value stated in Table 11.6;
5. the service or works being procured are largely identical to work previously executed
by that contractor and it is not in the interest of the public or the organ of state to solicit other
tender offers;
6. a professional service contract does not exceed a threshold value stated in Table 11.6 and
but can be based on time and proven cost;
7. the nature of the works, goods or services, or the risks attached thereto, do not permit
prior overall pricing; or
8. only one responsive tender is received.

TABLE 11.5: Conditions under which procedures provided for in SANS 10845-1 may be utilised

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THRESHOLD FOR A MUNICIPALITY

PROCEDURE (SEE TABLE CONDITIONS WHICH NEED TO BE SATISFIED
OR A MUNICIPAL ENTITY
11.5 AND SANS 10845-1) IN ORDER TO UTILISE THE PROGRAM
(RAND INCLUDING VAT)
The services, goods or works have a value not
R 75 000
exceeding a threshold
Negotiated
A professional service contract has a value not
R 200 000
exceeding a threshold
Nominated procedure Any procurement not exceeding a threshold R 1 500 000
Any procurement where the estimated value does
Quotation procedure R 200 000
not exceed a threshold
Supplies contract which involves readily available
Shopping procedure R 10 000
goods not exceeding a threshold

TABLE 11.6: Conditions under which procedures provided for in SANS 10845-1 may be utilised

11.5 STAGE 3: PREFEASIBILIT Y

11.5.1 From portfolio planning to project planning
Stage 1 (infrastructure planning) and stage 2 (strategic resourcing) focussed on portfolio planning processes. Stage 3
(prefeasibility) and stage 4 (feasibility) are concerned with project planning processes. Stage 3 involves the formulation of a
strategic brief that defines needs, project objectives, acceptance criteria, and client priorities and desired outcomes, and that
establishes the basis for the development of the concept report for one or more packages.

Prefeasibility and feasibility reports developed during Stages 3

and 4 are required on major capital projects or projects:
• That involve significant capital investment over several years
exceeding a threshold value defined in the SIPDM;
• Are not of a process-based, repetitive or fairly standardised
nature where the risk of failing to achieve time, cost and
quality objectives is relatively high;
• Are not building projects with or without related site works;
• Such reports may furthermore be required when
infrastructure has significant staffing and operation costs,
and the implications thereof need to be understood before
a decision is taken to proceed with an infrastructure project;
or when
• The municipality or municipal entity’s infrastructure Stages 3 (preparation and briefing) and 4 (concept and viability)
procurement and delivery supply chain management policy need to be repeated for each package if the acceptance at Stage
requires the production of prefeasibility and feasibility 4 is for the acceptance of a project comprising a number of
reports during stages 3 and 4 respectively. packages which are to be delivered over time.

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11.5.2 Strategic brief

The strategic brief shall as necessary:

a. confirm the scope of the package and identify any constraints, d. Identify risks that need to be mitigated;
including those relating to occupational health and safety; e. identify interfaces between packages as necessary; and
b. establish the project criteria, including the performance f. establish the control budget for the package, ownership
and reliability requirements, design life, service life of costs and schedule for the package or series of packages.
components, function, maintenance and replacement
requirements, mix of uses, scale, location, quality, value, time,
safety, health, environment and sustainability;
c. identify procedures, organisational structure, key constraints,
statutory permissions (e.g. environmental, heritage, social,
planning, building control), and utility approvals, policies
(e.g. environmental, developmental, social, maintenance or
facilities management) and strategies to take the package
forward;

The prefeasibility study shall as necessary:

Document the Shortlist the Provide a Provide preliminary Present the study
owner or user options that were preliminary design capital estimate outcomes
requirements considered for study options and the proposed
specification schedule

Section 9.6.4 describes the most common statutory permissions and authorisations required for
infrastructure projects. Section 5.3 provides guidance on responding to demand, whilst Section
8.2.3 offers guidance on identifying potential asset and non-asset solutions, to be considered in the
formulation and evaluation of options

Stage 3 is complete when the prefeasibility report or the strategic brief, as required, is accepted.

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11.6 STAGE 4: FEASIBILIT Y

Stage 4 builds on the work done in stage 3, and develops a concept report which establishes the detailed brief, scope, scale,
form and control budget and that describes the integrated concept for one or more packages. The concept report shall as
necessary:

a. document the initial design criteria and design options or the

methods and procedures required to maintain the condition
of infrastructure for the package;
b. establish the detailed brief, scope, scale, form and cost plan
for the package;
c. provide an indicative schedule for documentation and
construction or maintenance services associated with the
package;
d. contain a site development plan or other suitable schematic
layouts of the works;
e. describe the statutory permissions, funding approvals
or utility approvals required to proceed with the works
associated with the package;
f. include a baseline risk assessment for the package, and
a health and safety plan which is required in terms of the
requirements of the Construction Regulations issued in
terms of the Occupational Health and Safety Act;
g. contain a risk report linked to the need for further surveys,
tests, other investigations and consents and approvals, if any,
during subsequent stages and identified health, safety and
environmental risk;
h. contain an operations and maintenance support plan A feasibility report shall as a minimum provide the following:
which establishes the organisational structure required
a. Details regarding the preparatory work covering:
for the operation and maintenance of the works resulting
• a needs and demand analysis with output specifications;
from the package or series of packages over its service life,
and
and the office, stores, furniture, equipment, Information
and Communications Technology (ICT), engineering • an options analysis;
infrastructure and staff training requirements; b. A viability evaluation covering:
i. confirm the financial sustainability of the project; and • a financial analysis; and
j. establish the feasibility of satisfying the strategic brief for • an economic analysis, if necessary;
the package or series of packages within the control budget c. A risk assessment and sensitivity analysis;
established during stage 3 and, if not, motivate a revised d. A professional analysis covering:
control budget. • a technology options assessment;
• an environmental impact assessment; and
• a regulatory due diligence;
e. Implementation readiness assessment covering:
• institutional capacity; and
• a procurement plan

Stage 4 is complete when the feasibility report or the concept

report, as required, is accepted.

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11.7 STAGE 5: DESIGN DE VELOPMENT

11.7.1 From project planning to detailed design

Stage 5, design development, and stage 6, design documentation, comprise detailed design processes during which the
solution is developed to such a point that site processes can be actioned thereafter. Detailed design during Stage 5 involves
the selection of materials and components. This is often an iterative process of suggesting a component, examining its
predicted performance against the brief, and modifying selections if required.

Wherever practical and feasible, designs should consider asset The output of stage 5 is a design development report that
maintainability as appropriate given current technologies, costs develops in detail the approved concept to finalise the design
and relevant legislation, standards and codes of practice. With and definition criteria, sets out the integrated developed
respect to asset maintainability, the draft National Immovable design, and contains the cost plan and schedule for one or
Asset Maintenance Management Standard requires that entities: more packages. The design development report translates the
concept report into a document that describes what is to be
• require of its professional design staff or of professional
delivered. The report must describe how structures, services
service providers (e.g. consulting engineers or architects) to
or buildings and related site works, systems, subsystems,
design with maintainability in mind; and
assemblies and components are to be safely constructed,
• solicit functional requirements and recommendations from commissioned, function and maintained.
maintenance personnel for consideration and inclusion of
asset design specifications as appropriate. Outline specifications should be prepared to sufficient detail
to understand the operation and maintenance implications
of the design and compatibility with existing systems, plant
and equipment. The design should fit the budget parameters
established. To meet the brief, adjustment of either the
budget or the service life requirements may be necessary.
Where a specification is adjusted to meet cost constraints,
the maintenance and operation implications should also be
considered.
Record information describes what has been delivered. Record
information is therefore an after-the-fact updated version of the
design development report.

11.7.2 Design development report

The design development report shall as necessary:
• develop in detail the accepted concept to finalise the design
and definition criteria;
• establish the detailed form, character, function and costings;
• define all components in terms of overall size, typical detail,
performance and outline specification;
• describe how infrastructure, or elements or components
thereof, are to function, how they are to be safely constructed,
how they are to be maintained and how they are to be Outline specifications shall be in sufficient detail to enable a
commissioned; and view to be taken on the operation and maintenance implications
• confirm that the package or series of packages can be of the design and the compatibility with existing plant and
completed within the control budget or propose a revision equipment. Stage 5 is complete when the design development
to the control budget. report is accepted.

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11.8 STAGE 6: DESIGN DOCUMENTATION

Stage 6, design documentation, comprises two sub-phases as follows:

11.8.1 Stage 6A: Production information

Production information is developed during stage 6A of the design documentation stage. This includes the detailing,
performance definition, specification, sizing and positioning of all systems and components, enabling either construction
where the contractor is able to build directly from the information prepared or the production of manufacturing and
installation information for construction.

11.8.2 Stage 6B: Manufacture, fabrication and construction information

The information generated in stage 6A enables manufacture, fabrication and construction information to be produced during
stage 6B by or on behalf of the contractor, based on the production that is information-provided. This information enables
manufacture, fabrication or construction to take place.

Stage 6 is complete when the manufacture, fabrication and

construction information is accepted as being in accordance
with the production information. “ This information enables manufacture
fabrication or construction to take place”

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11.9 STAGE 7: WORKS

11.9.1 From detailed design processes to site processes

Stage 7 signifies the move from detailed design processes through to site processes. Site processes commence with stage 7:
works and end with stage 8: asset handover.

11.9.2 Typical works’ activities

The objective of the works process is to construct or deliver and install the works as per the approved production information
(e.g. specifications, etc.). The “start” and “finish” milestones for this stage are usually contractually defined and therefore subject
to the form of contract prescribed in the tender documentation. There are three basic milestones commonly associated with
constructions works, namely:

Giving access to the site by the Completing the works so that Correcting all defects before
client so that the contractor can the client or intended operator the end of the defects liability
commence with the works can occupy or use the works period.

The following activities are typically undertaken during stage

7 (works) in relation to the works:
• Provide temporary works.
• Provide permanent works in accordance with the contract.
• Manage risks associated with health, safety and the
environment on the site.
• Confirm that design intent is met.
• Correct notified defects which prevented the client or end
user from using the works and others from doing their work.
• Stage 7 can also include the design, supply and installation of
plant which is incorporated into the works.

The contract entered into regulates the responsibilities and behaviour of the parties to the contract, and the person responsible for
the administration of the contract on behalf of the municipality or municipal entity shall act as stated in such contract. See Section
10.5.2 in Module 10 for requirements related to contract management.

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11.9.3 Works completion

Stage 7 is complete when:

a. completion of the works is certified in accordance with the provisions of the contract; or
b. the goods and associated services are certified as being delivered in accordance with the provisions of the contract.

11.10 STAGE 8: HANDOVER

11.10.1 Commissioning
Commissioning is a collaborative process for planning, delivering and operating works that function as intended. Where the
assets created, installed, renewed, upgraded or reconfigured form part of a larger system or network of assets, commissioning
procedures need to be scheduled in relation to other services, processes or construction activities. This requires that
interdependency requirements are identified and considered as early in the project as possible, as they need to be included
in the designer’s outputs. Integrated commissioning along the following lines is recommended:

Precommissioning checklist

Identify all Establish the Compile Plan the

commissionable commissioning commissioning commissioning
systems hierarchy, i.e. the documentation, and ensure
priorities and the making reference adequate time
interrelationships to statutory allocation.
between systems requirements where
applicable

Commissioning checklist

Ensure that construction is Ensure that all commissionable Operate the works that are to be
complete and that identified systems are operational, e.g. commissioned at the identified
defects have been dealt with that pipelines have been loading and simulate all
cleaned and infrastructure eventualities to ensure proper
services connected operation

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11.10.2 Training

The handover stage shall include, as appropriate, the training of staff responsible for the operation of the delivered
infrastructure. The draft National Immovable Asset Maintenance Management Standard also requires that entities (such as
municipalities and municipal entities), require suppliers and contractors to provide maintenance manuals and training, as
appropriate, on the maintenance of new immovable assets.

11.10.3 Safeguarding of works

It must be stressed that there is a difference between achieving completion of the works in accordance with the provisions of
the contract and the handing over of the works to the owner, end user or those responsible for the operation and maintenance
of the works. Upon completion, or soon thereafter, risks associated with loss of or wear or damage to the works are no longer
borne by the contractor. It may therefore be necessary to make arrangements to secure and safeguard the works from the
time that the contractor’s liabilities cease until the time that the works are handed over.

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11.10.4 Record information

The objectives of record information include the following: The record information shall as relevant:
1. Provide those responsible for the operation, maintenance and • accurately document the condition of the completed works
management of the asset(s) with sufficient information to associated with a package;
effectively understand, budget, operate, care for, maintain and • accurately document the works as constructed or completed;
monitor the performance of the asset. More specifically, to:
• contain information on the care and servicing requirements
• understand how the designers intended the works, for the works or a portion thereof;
systems, subsystems, assemblies and components to
• contain information or instructions on the use of plant and
function;
equipment;
• effectively operate, care for and maintain the works,
• confirm the performance requirements of the design
systems, subsystems, assemblies and components to
development report and production information;
function;
• contain certificates confirming compliance with legislation,
• check, test or replace systems, subsystems, assemblies or
statutory permissions and the like; and
components to ensure the satisfactory performance of
works, systems, subsystems, assemblies and components • contain guarantees that extend beyond the defects liability
over time; period provided for in the package.
• develop routine and scheduled maintenance plans;
• determine stock levels for components and assemblies
that need to be regularly replaced; and
• budget for the operation and maintenance of the works,
systems, subsystems and components over time.

2. Provide information pertaining to the planning and

design of the works to inform refurbishments, alterations,
modifications, renovations and additions that may be
required from time to time.
3. To accurately locate the asset(s), measure its extent and value,
and capture associated information such as asset attribute
information in the asset register (see Module 3 for asset data
requirements).

11.10.5 Updating of the asset register

It is the project manager’s responsibility to provide the finance department with all necessary information, data and supporting
documentation to update the asset register. It should include all details relating to the completed works as required by the
city’s approved asset management policy and procedures. Depending on internal arrangements, the project manager may
also need to provide asset documentation and data to asset custodian departments, e.g. water treatment works as-built
drawings and O&M manuals are handed to the water and sanitation department.

GRAP 17: Property, Plant and Equipment, requires that assets

must be recognised (taken up in the asset register) when they
become available for use. In practice, assets or parts of the works
may become available for use prior to completion of stage 9
(close out). Whenever this happens, whether the asset(s) is used
or not, those responsible for the maintenance and updating of
the asset register should be notified.

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11.10.6 Completion of stage 8

Stage 8 is completed when the owner or end user accepts liability for the works.

11.11 STAGE 9: CLOSE OUT

11.11.1 Close out report
The close out report for the package shall outline what was achieved in terms of at least the following:

The performance parameters Unit costs of completed work or Key performance indicators
outlined in Section 12 of major components thereof relating to developmental
the SIPDM (Assessment of objectives
supply chain management
performance)

The close out report shall make suggestions for improvements on future packages of a similar nature. Such a report should also
comment on the performance of the contractor and, if relevant, include building tuning or similar reports.

11.11.2 Completion of stage 9

Stage 9 is complete when, as relevant, defects certificates or certificates of final completion are issued in terms of the contract, the
final amount due to the contractor in terms of the contract is certified and the close out report is accepted.

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11.1 STAGE 9: CONCLUSION

The SIPDM provides a logical framework for infrastructure delivery management. This framework provides both a “roadmap” for
infrastructure delivery as a high-level process, and a control framework to ensure that value for money is delivered in a timely
manner. The process commences with project initiation (stage 0) and terminates at conclusion of stage 9 (package completion
and close out). These stages are sequentially grouped into portfolio planning processes, project planning processes, detailed
design processes, site processes and close out processes. Specific steps and activities within these processes and stages may
depend on the nature of the project itself and the form of contract selected.

Processes within infrastructure delivery may, depending on the nature, complexity and availability of information, be iterative in
nature. There are also strong linkages with the asset management system (e.g. asset management plans as part of portfolio planning
in stage 0 and 1, and updating of the asset register in stage 8), the infrastructure procurement framework and the municipality or
municipal entity’s financial system.

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REFERENCES

Construction Industry Development Board (CIDB). 2010. Toolkit Delivery Management Guidelines, Practice Guide 2 – Project
Management. Available at: http://www.cidb.org.za/Pages/default.aspx (accessed on 11 September 2015).
Department of Public Works and the Construction Industry Development Board. July 2015. National Immovable Asset Maintenance
Management Standard. Final Draft.
National Treasury. October 2015. Standard for Infrastructure Procurement and Delivery Management. First Edition.

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