NTPC LIMITED

CERTIFICATE
This is to certify that Ms. Neha Sharma , student of FOSTIIMA
BUSINESS SCHOOL , DELHI specializing in finance has completed
his two months (viz. 20TH APRIL TO 15TH JUNE , 2010) of summer
project on Project Procurement System, here at NTPC Ltd, sector-24,
Noida. The information submitted is true and original to the best of my
knowledge .

Mr. M.K IYER

Manager (FINANCE)
NTPC Ltd.(Noida)

PREFACE
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 This summer project is an integral part of the curriculum of MBA
(Master of Business Administration) from FOSTIIMA BUSINESS
SCHOOL , NEW DELHI

As student we only have learning knowledge, so there is a need for

practical implementation of the theoretical knowledge. Therefore this
summer training provides us the practical application & knowledge
about the working of an organization & helps me to understand the
corporate environment.

As a part of the MBA curriculum, this training will lead to

development of our “MANAGERIAL ABILITY & INTERPERSONAL
SKILLS”. At the institute we only acquire bookish knowledge but this
organization has trained me in the areas of Finance functions.

The main objectives of this summer training are-

1) Implementation of theoretical to practical knowledge.

2) To take the knowledge that how the financial function is done by
the NTPC.

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 ACKNOWLEDGEMENT

These eight weeks at National Thermal Power Corporation (NTPC) have

been a great Learning experience. It has been one of the most enriching
experiences for me to work along with the employees of one of the best
managed organizations, a company rightly considered as Maharatna in
the public sector of the company.
The entire project schedule & format were drawn & executed under the
guidance & supervision of my Project Guide. I have a deep sense of
gratitude & honors towards other officials who helped me throughout
my training.
I am deeply obliged to Ms. Minu Gupta (DGM-FIN) for giving me
the opportunity to undertake the project in her esteemed organization.
First of all, I am very grateful to Mr. M.K. Iyer (Manager
Finance) who has given me the proper guidance throughout the project.
He has given me the appropriate topic related to my studies so that I can
do better. He has given me his precious time & co-operation, without his
proper guidance it would not have been successful. He has been very
kind & helpful during my whole project.
Secondly, I am grateful to Mr. Y.R Dingra, Mr. M.K. Iyer, Mr.
Abhishek Khandelwal and Mr. D.I.Ponraj for their kind cooperation
& helping nature. They have guided me in a proper manner to conduct
my training.

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 Rest all the staff of different departments of NTPC LTD, who
helped me, are not only the matter of acknowledgement, but are also
authorized to share my success.

Neha Sharma

TABLE OF CONTENTS

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S.NO TOPIC PAGE NO

1 Introduction About Power Industry 7-14

2 Introduction About Organization 15-16

3 Area Of Work 17

4 Contract Management Process

Pre – Award Activities 18-44

Post – Award Activities 45-48
Contract Closing 49
5 E – Procurement 50-53

6 Conclusion 54-55

7 Findings 56

8 Suggestions 57-58

9 References 59

INTRODUCTION

INDIAN POWER INDUSTRY

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BEFORE INDEPENDENCE: The British controlled the Indian power
industry firmly before Independence. The then legal and policy
framework was conducive to private ownership, with not much
regulation with regard to operational safety.

POST INDEPENDENCE : Immediately after Independence, the country

was faced with capacity restraint. India adopted a socialist structure for
economic growth and all the major industries were controlled by public
sector enterprises. By 1970's India had nationalized most of its energy
assets, due to its commitment to social goals. By the late 1980's the
Indian economy felt the strain of the socialist agenda followed since
independence. Faced with a serious deterioration in public finance and
balance of payment crisis, the Union government as part of its policy of
economic liberalization allowed greater investment by private sector in
the power industry.

Power

Constitutional Position

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Power as a matter of legislative and executive competence falls in the
Concurrent List (List III of the Seventh Schedule to the Constitution of
India).Both the Parliament and state legislatures have the rights to pass
laws on the matter and any law passed by the Parliament overrides the
existing state laws unless

 The existing law is conserved or saved from such a repeal or

 A law passed by the state legislature receives acknowledgment
from the President of India.

POST LIBERALIZATION - Understanding the critical part played by

the power industry, the Union government passed several laws and
restructured the Power Industry to gear it up to meet the challenges
posed to the Indian economy post Liberalization.

Electricity Bill 2001

Learning from the experience gained through various reform initiatives,
the Indian government passed the Electricity Bill 2001.The Bill seeks to

 Consolidate and rationalize existing laws.

 To address the issues of developing industry including regulation,
power trading, non discriminatory open access, choice of
dispensing with vertically integrated state enterprises and
encouraging private enterprise.

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ENERGY CONSERVATION ACT 2001 - The Act was enacted by the
Indian government to facilitate stringent steps to ensure the efficient use
of energy and its conservation. A Bureau of Energy Efficiency was set
up to monitor and regulate the Power Industry according to the
provisions of the act.

Non Renewable Energy

Fossil fuels
The Industrial Revolution in Europe in the 19th century forced human's
to seek alternative sources of fuel to cater to the increasing demand.
Focus was shifted to fossil fuels as an alternate source of energy.

Fossil fuels were formed millions of years ago. They are nothing but
fossilized organic remains that after millions of years has been
converted into oil, gas and coal. Because this process takes a long time,
they are known as non renewable.

Coal
It is the most easily available fossil fuel in the world. It is mostly carbon
and is used as a combustion fuel, especially after the Industrial
Revolution. Coal can further be divided into lignite, bituminous and
anthracite. Lignite and Bituminous have lesser percentage of carbon and

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therefore burn faster. They are not environmentally friendly, Whereas
Anthracite has about 98% carbon and therefore burns slowly and is
more environmentally friendly. Coal can be found in both underground
mines and open mines.

Though Petroleum gained prominence through the 20th century, coal

still continues to be the most used raw material for power generation.

Oil and Gas

Oil and Gas are mostly found in underground rocks. Millions of years
ago when plants and animals died, they got buried in layers of mud and
sand. The earth's crust changed its shape and put immense pressure and
heat on the dead plants and animals. Over a period of time, the energy in
those plants and animals changed into hydrocarbon liquids and gases.
They then turned into chemicals called hydrocarbons .Most of the
hydrocarbons is found under the sea bed. Oil has a disastrous effect on
the environment and many scientists believe the main reason for global
warming

Natural gas is usually found near a source of oil. It is a mixture of light

hydrocarbons. It is lighter than air and is odorless. It is therefore mixed
with a chemical that gives it a strong odour and thereby easy to detect in
case of a leak. It is the cleanest burning fossil fuel.

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Renewable Energy
Because of the environmentally disastrous effect of non renewable
energy, an alternate source of energy which would not pollute the
environment and which can also be renewed was tapped. They are
known as renewable energy. The various types of renewable energy are

Solar Energy
It is the most easily available renewable resource. After the oil shock in
1970's many countries conducted research work to tap solar energy. It is
believed in the next few years millions of consumers across the world
would switch to solar energy. In India the Indian Renewable Energy
Development Agency and the Ministry of Non Conventional Energy
Sources are devising strategies to encourage the usage of solar energy. 

Solar energy can be used for cooking, heating, drying, distillation,

electricity, cooling, refrigeration, cold storage etc.

Hydel Energy
Energy available in fast flowing water can be used to generate
electricity. Waves occur due to the interface of the wind with surface of
sea and represent a transfer of energy. This energy can be tapped for
commercial purpose.

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Hydro Power
It is the one of the best, cheapest and cleanest source of power, though
large dams could have environmental and social repercussions. In view
of these problems associated with larger dams, experts have advocated
the construction of smaller dams. New environmental laws to safeguard
the planet from the effects of global warming have made smaller
hydropower projects more viable.

Wind Energy
It is the kinetic energy used for many centuries in water sports like
sailing and for irrigation. It converts kinetic energy into more usable
forms of power. Wind turbines help to convert the energy in the wind
into mechanical energy which can be used for generating power. Since
the late 1980's the viability of wind energy has gained in prominence
across the globe. In India the states of Tamil Nadu and Gujarat lead in
the field of wind energy.

Biomass
It is sourced from the carbonaceous waste of animals and is also the by
products from timber industry, agricultural crops, raw material from
forest, household waste and wood. It can be used to generate power with

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the same power plant that are burning fossil fuels and is very much
environmentally friendly.

It is being used in the western countries for applications such as

combined heat and power generation. In India 90% of the rural
households and 15% of the urban households use bio mass fuel.

Nuclear Energy
Nuclear energy can be created in nuclear reactors under strict human
control. The nuclear power can be generated by the fission of uranium,
plutonium or thorium or the fusion of hydrogen into helium. Nowadays
mostly Uranium is used for generating nuclear power. With a view to
increase India's dependence on nuclear energy to offset the energy crisis
in the country, the Indian government entered into an agreement with
the government of USA called the 123 agreement. This agreement aims
to assuage greater cooperation between the two countries in the field of
nuclear technology.

Future Trends

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 According to experts the private sector would play a greater role in
power generation and foreign investments would increase
considerable in his sector.
 The government of India’s Hydrocarbon vision 2025 gives in
details the guidelines for the policies in India for the next 25 years
to attract investment in exploration, production, refining and
distribution of petroleum products.

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 ABOUT THE ORGANISATION
NTPC, India's largest power company, was set up in 1975 to accelerate
power development in India. Today, it has emerged as an ‘Integrated
Power Major’, with a significant presence in the entire value chain of
power generation business. 
In the Forbes list of ‘World's 2000 largest companies, 2008’, NTPC
occupies 317th place. With a current generating capacity of 30,144 MW,
NTPC has embarked on plans to become a 75,000 MW company by
2017 .

Vision
"A world class integrated power major, powering India’s growth, with
increasing global presence."

Mission
“Develop and provide reliable power, related products and services at
competitive prices, integrating multiple energy sources with innovative
and eco-friendly technologies and contribute to society.”

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Core Values – BCOMIT

Business Ethics
Customer Focus
Organizational & Professional Pride
Mutual Respect & Trust
Innovation & Speed
Total Quality for Excellence

Power Generation
NTPC is emerging as a diversified power major with presence in the
entire value chain of the power generation business. Presently, NTPC
generates power from Coal and Gas. With an installed capacity of
30,144 MW, NTPC is the largest power generating major in the country.
It has also diversified into hydro power, coal mining and power
equipment.
The main activity of the organization is power generation and hence it
requires expert technical know-how and efficient allocation of money &
other resources. The technical know-how is provided by the Engineering
and R&D division whereas the efficiency in expenses is provided by the
Finance & Concurrence (Fin–Con) division.

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 AREA OF WORK

The area of work was in Finance-Concurrence division of Finance

department at NTPC. Different kinds of work undertaken:

Arithmetic Error Location

Financial Analysis
Bid Evaluation Report
NIT study
Cases on Audit of Contracts
Preparation of Monthly Information Statements (MIS)
Letter of Award

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 CONTRACT MANAGEMENT PROCESS

1. PRE-AWARD ACTIVITIES

Pre-award contract management system is one of the major sub-systems

of contract management system which has interfaces and inter-related
activities with various departments like Engineering, Quality Assurance,
Corporate finance, Cost Engineering etc. The pre-award contract
management system covers all activities from the stage of preparation of
draft Technical Specification to issue of final Letter of Award/
Notification of Award for contracts. Supporting activities like contract
packaging, Contract numbering, Cost estimate preparation, Qualifying
requirements approval, Finalization of work schedules are also covered
within this sub-system.

1.1. Contract Packaging

As the first step in procurement for a project, the total project works are
broken down into smaller, well defined `Packages’. This is done with a
view to optimize the number of contracts to be handled for better
planning, coordination and implementation of the whole project and at
the same time to execute the Project at an optimum cost. For break-

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down the total projects works into smaller packages, the following
factors are to be considered:

The packages formed should be compatible considering the

prospective bidders. Thus the contents of a package should be
interrelated in such a way that prospective Bidders can tie-up with
suppliers of the various equipments and services involved in order
to be able to bid for the entire package. This will ensure adequate
competition in bidding and consequent procurement at optimum
cost.

The packages formed should include such combinations of

equipment and services that can be advantageously engineered for
the preparation of specifications for bid documents and subsequent
product designs including manufacture/ construction drawings.

The packages formed must be mutually exclusive as well as

collectively exhaustive. Thus each package should be independent
of all other with regard to its content. The number of package and
their sizes should be at an optimum level for effective
implementation. It should be possible to clearly define the
responsibility for a package to individual Engineering
Coordinators to look after all technical aspects and Contract

19
 Coordinators to handle all commercial aspects of the packages.
The terminal points of each package should be clearly defined and
proper tie-ups of these technical points between packages ensured.

Availability of prospective bidders

Project execution schedule

Combination/ clubbing of equipment/services that can be

advantageously engineered.

Independence with regard to its work content and clear cut

terminal points for interfacing.

Project financing.

Organization setup.

Package List Preparation

System for finalization of contract package list for a project is provided

by ISO procedure no: CS-QS-P-091

•Contract package list is finalized by a duly constituted committee

comprising members from contracts (P&S), engineering, finance and
corporate planning departments.

•Contract package list is approved at the apex level i.e. by CMD

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1.2. Preparation and Finalization of Bidding Document

MNW (Master Network) is finalized by CMG and qualifying

requirements (QR) is finalized by a standing committee headed by
Director (Tech) with ED (CC&M), ED (Engg.) and ED (Fin) as its
members. Cost Estimate (CE) acting as an internal guide in broad
evaluation of the bids and in determining the amount of Bid security and
the cost of bidding documents are finalized by Cost Engg. group. With
the MNW, QR and CE, Bidding documents for Contract packages are
finalized keeping in view the principles of transparency, fairness &
equity and the procurement guidelines issued by the concerned funding
agency and in accordance with ISO quality procedure no. CS-QS-P-
092.

a.) Technical portion of bidding documents is prepared by Engg

Department .It comprises of Technical Specifications, Drawings,
Technical Data Sheets.

b.) Commercial portion of bidding documents is prepared by contract

department with relevant techno-commercial inputs from Engineering
and Corporate Monitoring Group. It comprises of Instruction to Bidders,
General Conditions of contract, Special Conditions of Contract, Bid

21
Proposal sheets. These are vetted by finance and engineering and finally
approved by GM (CS). A copy of finalized bid documents is send to the
funding agency as the case may be.

1.3. Tendering/bidding:

Normally an open tendering system for procurement is adopted by

NTPC during construction stage of a project. However depending on the
circumstances and the requirements, limited tendering or single
tendering system is also adopted in specific cases.

1.4. Qualification Requirements for Bidders:

Normally the post qualification procedure is adopted for determining the

capacity and capability of the bidders as to whether he would be able to
successfully execute the contract in case of award. The Qualification
Requirements (QR) has two parts, the Standard or General QR, which is
common for all contract packages, and the specific QR as finalized for a
particular package. In the notice inviting tender / invitation for bids only
the specific part of the QR is published. However the bidding document
stipulates the complete QR i.e. the standard part of the qualification
requirements as also the specific requirements for a particular contract

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package. The QR’s for each of the contract package are based on
intensive and well-researched interdisciplinary efforts and finalized by a
standing committee headed by the Director (Tech.). Such qualification
criteria inter-alia includes the status of a bidder i.e. manufacturer /
project executing agency, financial status, technical requirements to be
fulfilled etc. in case of post qualification procedure, the analyses of
bidders qualification data is carried out during the bid evaluation
process. Conformity by the lowest evaluated bidder to the stipulated
qualification requirements is a prerequisite for the award of the contract.
If required, a pre-qualification procedure is adopted for obtaining offers
only from pre-qualified bidders who meet the specified criteria. In case
of pre-qualification procedure, the bidders are required to furnish
documents/data to validate past performance, financial status, technical
capability, organizational capacity for specific works through a pre
qualification notice published in leading newspaper.

1.5. Bidding Documents

(a) In the pre- award contract management’ preparation of bidding

documents is very vital step as these execute the procurement policy of
the organization, procedures and regulations, lay the basis for
competitive bidding, describe the nature of goods and works for which

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bids are to be invited and later on become the basis for execution of
contract after the work has been awarded. For preparation of bidding
documents for the contract packages funded by external funding
agencies such as World Bank, ADB, OECF, SFD, KFW etc., NTPC
follows the standard bidding documents of the respective funding
agencies. However, if the standard bidding documents of any funding
agency are not available, the bidding documents in such cases are
developed based on the procurement guidelines and procedures of the
concerned funding agency. These documents are also revised from time
to time based on the experience gained during the course of execution of
various contracts.

(b) Contents of bidding documents

The format and content of bidding documents may slightly vary
according to the type and nature of contract. However, the bidding
documents generally consist of the following sections:
Sec 1 - Invitation for bids (IFB)
Sec 2- Instruction to bidders (ITB)
Sec 3- Bid Data Sheet (BDS)
Sec 4- General Condition of contract (GCC)
Sec 5- Special condition of contract (SCC)
Sec 6- Technical Specification (TS)
Sec 7- bid Form and price schedules (FP)

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Sec 8- technical data requirement sheets

Sec 1 - Invitation for bids

the IFB provides brief information to prospective bidders on loan/ credit
agreement (in case the package is funded by any external funding
agency), type of bidding procedure whether it is international
competitive bidding or domestic competitive bidding, description of
plant & equipment to be supplied and installed, qualification criteria for
bidders, important bid evaluation criteria and the schedule for issue of
bidding documents, receipts and opening of bids etc.

Sec 2 - Instructions to bidders

It provides necessary information to bidders enabling them to prepare
responsive bids. It normally contain the following information:
•A summary description of the scope of work;
•The eligibility criteria and qualifying requirements for participating
bidders;
•Procedures for clarifying and/or amending the bidding documents;
•Currency of bid price and payments;
•Price adjustment provisions;
•Requirement of bid security;
•Time period for completion;

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•Procedure and deadline for bid submission and bid opening;
•Bid validity period;
•Domestic/purchase preference, if applicable;
•Procedure for contract award

Sec 3 - Bid data sheets

This section is applicable for procurements under World Bank funding
and provides specific information to corresponding clauses in ITB for
each specific contract package. It provides Specific information to major
corresponding clauses of ITB such as price basis, bid currency, bid
security, bid validity, evaluation criteria, completion time, price
preference etc

Sec 4 - General conditions of contract

This section stipulates all the rights and obligations of the parties and the
terms and conditions applicable for contract execution. Some of the
major provisions of the general conditions of contract include definition
and interpretation of contract terms; subject matter of contract;
payments; work execution; guarantees and liabilities; settlement of
disputes and governing laws etc.

Sec 5 - Special conditions of contract

26
The special conditions of contract complement and modify the general
conditions of contract for taking into account the contract-specific
requirements. The clauses in this section provide contract-specific
information in respect of corresponding clauses in GCC. Some of the
major clauses which supplement the provisions of GCC are governing
laws, settlement of disputes, scope of work, payments, completion time,
contract price adjustment, contract securities, LD for delay, defect
liability etc.

Sec 6 - Technical specification

The technical specifications are normally fully descriptive and give
complete requirements in respect of plant &equipment/services required.
It generally contains the following:

•Intent of specifications
•Scope, terminal points and specific exclusions.
•General technical conditions as applicable to a specific contract.
•Standards.
•Design criteria, technical design specifications.
•Performance parameters and guarantees.
•Performances guarantee tests.
•Shop and site tests.
•Special inspection requirements, if any.

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•Drawings.
•Construction/erection conditions.
•Bill of quantities.
•List of mandatory spares.

Sec 7 - Bid form and price schedules

It provides formats for bid form, price schedules and attachments to be
filled in by the bidders to complete their bids. An indicative list of
schedules/attachments covered in this section is as follows:

(a)Bid price along with its break-up

(b)Details of major items of supply or services proposed to be Sublette
by the bidder.
(c) Commercial and technical deviations
(d) Guarantee declaration.
(e) Price adjustment data.
(f) Special maintenance tools and tackles.
(g) Work completion schedule.
(h) Additional information, if any.
(i ) Alternative bid.

Sec 8 - Technical data requirement sheets

28
It provides formats for technical information to be furnished by the
bidders. It identifies nature and the extent of required details and manner
in which they are to be presented by the bidders. This section also gives
the list and formats (whichever applicable) for the information required
from the bidders after the award of contract to him.

1.6. Issuance of invitation for bids

The invitation for bid (IFB)/notice inviting tender (NIT) for all Contract
packages is given wide publicity in various Newspapers, Websites and
reputed trade journals for information of bidders having relevant
experience. A copy of NIT/IFB is also forwarded to each of the
Embassies/High Commissions of member countries of funding agency
for publication of the same in Business magazines/trade journals of their
respective country, in case of International Competitive Bidding. Text
of NIT/IFB is also concurred by Engineering and Finance. Abridged
NIT is published in one leading news paper in each region and one local
language news paper after sending the approval to Corporate
Communication Dept and detailed NIT is hosted on website
ntpctender.com. Further in case of ICB detailed NIT/IFB are to be
published in ITJ and other International Forum besides, it is also sent to
the embassies of the various countries of the bidders to whom the
invitation is intended to be sent.

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The Following are the modes of Tendering:

1. Open Tender - is issued for indent value of Rs. 15 lacs or above,

require long delivery time, through public advertisement in two or
more leading newspaper of all-India repute in addition to one or
two local newspaper of the area, where the work is to be executed
of supplies made, may be issued. Qualification requirement could
also be specified in the tender advertisement where considered
necessary, so that only reliable parties are invited to quote .

2. Limited Tender : by invitation to sources already registered with

NTPC or having proven performance in past, for indent value
below Rs. 15 lacs and for reasons of urgency or any other reason,
the reason therefore will be recorded in writing and approval of the
competent authority obtained.

3. Single Tender : by invitation to single source on grounds that the

item to be procured is of a proprietary nature or on account of
standardization or on ground of requirement. In case of proprietary

30
 items certificate to that effect will have to be issued by the indentor
at the appropriate laid down level in each case.

4. Spot Tender : By visiting market and issue of spot enquiry through

representatives to the vendor who are dealing with the desired item.

1.7 Cost of Bidding Documents:

The cost of bidding document to be charged from the prospective

bidders and the exchange rate to be adopted for computing, the cost of
the same when documents are issued to the foreign parties are stipulated
vide circular no.CS-QS-C-570

Cost Of Tender Documents : In case of open tender the tender

documents fee shall be decided on the basis of estimated value of the
indent before going for advertisement. Accordingly, the same shall be
fixed as per the following guidelines:

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SI.No. Estimated value of Indent Cost of Tender
Document

1. Upto Rs. 10 lacs Rs. 200/-

2. Above Rs. 10 lacs and Upto Rs.25 lacs Rs. 300/-

3. Above Rs. 25 lacs and Upto Rs.50 lacs Rs. 500/-

4. Above Rs. 50 lacs and Upto Rs. 100 lacs Rs. 750/-

5. Above Rs. 100 lacs and Upto Rs. 500 lacs Rs. 1500/-

6. Above Rs. 500 lacs Rs. 3000/-

1.8. Nomination of Tender Committee

Initiate proposal for the nomination/constitution of Tender Committee as

per DOP having members from Contract, Engineering & Finance for
evaluation of the bids and co-ordinate nomination and approval from
competent authority.

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1.9. Submission, receipt and opening of Bid Submission

In addition to communication sent to bidder regarding date & timings of

Bid receipt & opening display the venue & timings of Bid Receipt/
Opening at appropriate places for the convenience of bidders. Bids are
received in sealed condition at the place, date and time specified in the
NIT/IFB. Adequate notice will be given to possible tenders, which will
not be less than fifteen days. The notice period could be reduced in
suitable cases on grounds or urgency. Further, for limited tender
confined to local suppliers, or single tender, the period could be reduced
but so fixed as to be consistent with the suppliers ability to quote from
the point of view of time.

Inform Engg. & Finance member of TC about venue & timings of Bid
Opening and request them to depute their representatives to attend the
Bid Opening. Upon receipt of the bid, ensure that the envelopes/packets
comprising the bid are as per requirements of the procedure laid down in
Bidding Documents for submission of bids and that these are properly
sealed . Check the following before opening the bids:

•Letter of Undertaking,

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•Bid Security
•Certificate of Acceptance of Important Terms & Conditions Keeping in
view the very comprehensive (and therefore bulky) offers that may be
submitted, only the essential portions of the bids are read out during the
bid Opening. Normally, those items which have direct impact in
evaluation should be read out.
•Lump sum prices, and their break –up
•Prices (lump sum) for alternatives, if any
•Discounts offered, if any Minutes of bid opening are prepared by the
Contract Coordinator immediately after the bid opening and A bid
opening statement is to be prepared jointly by Corporate Contracts and
finance.

Tendering Document
Tenders will be opened on the due date and time indicated in the tender
enquiry, in the presence of authorized representative with proper
authority of the tenderers, if they wish to present themselves. The
tenders will be opened by purchase and finance executive nominated by
respective HODs. When the tenders are opened the name of all present
tenderers would be read out for the benefit of the tenderers present and
the quoted rates of each tenderer will be read out. Any omission or
irregularity such as absence of signature of a tenderers, absence of

34
earnest money deposit, references etc. may be pointed out on the spot for
the information of the tenders.
Alteration and erasures, if any will be initiated by all officials at the time
of opening. The quotations of each page of tender should be properly
numbered and attested by the officials. The prices and discounts portion
will be encircled and written in words and attested by the officials.
Number of corrections and cutting in the offer should be indicated.

In case of Two Part bidding system, the Part – I (Ist envelope) shall
contain the documents related to qualifying requirement including EMD
details and the Part – II (IInd envelope) shall contain the price bid and
other commercial terms and conditions.
Part I will be opened at the first instance and if the same fulfills the
qualifying requirement as per NIT then only Part II will be opened.
In case of difference in the rates quoted in figures and words, the amount
in words shall prevail.

Offer by Fax may be considered subject to the following:

The offer is received in time before the tender opening or the fax /
E-mail/Speed Post should have been received before the bid
closing time on the bid opening date.

The offer indicated basic and essential features of the tender.

35
 It is followed by a letter as a confirmatory offer which has been
sent by Registered Post at least one day before the scheduled date
of opening and has been received with a reasonable time.
The confirmation offer fully conforms in all respects to the offer
by Fax/ E-mail.

The bid opening date as notified to the bidder through enquiry should be
strictly adhered to. However, in case of unforeseen circumstances or due
to administrative reasons the bids are not opened on the due date, the
same shall be opened on the next working day at the same time without
any further approval. In case of holidays the bids received up to the time
of closing of bids on the next working day shall be considered for
opening.

Normally tenders will not be opened on the due date if the in time
response is less than three and put up to competent authority/ HOD
(M&CS) further decision regarding extension of bid due date / opening
of offers / consideration of late / delayed offers, whatever the case may
be.

Late and Delayed Tender

Late tenders are those, which have been posted on or after the due date
and received subsequently.

36
Tenders received through couriers after the bid opening time and date
shall be treated as late tenders.

Delayed tenders are those, which have been posted before due date but
received after the bid closing time and date.

Delayed tenders received through Regd. Post/ Speed Post with clear
postal stamp showing date of posting as before the tender opening date
and received within 6 working days of bid due date, may be opened and
considered with the approval of competent authority. In case a decision
on the tenders has been taken earlier to six working days, they shall not
be opened.

Delayed tenders, without superscription of tender enquiry No. and due

date will naturally be opened in normal course. In advertently such
tenders and offers received in open conditions may be returned to the
vendor immediately by the concerned executive with the approval of
HOD (M&CS).

Delayed tenders with superscription of tender enquiry No. and date and
time received by ordinary post shall not be opened and will be returned
to the party after finalization of the case except in case of meeting one or
more of the following criteria.

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 1. Scarcity conditions as reflected by lack of adequate response
where the No. of acceptance offers are less than three.
2. Lowest and acceptable tender is unreasonably high when compared
with the LPP.
3. Artificial manipulation of rates by formation of a ring suspected.
4. The mark of only one manufacturer has been offered for supply by
all tenders, irrespective of no. of quotations. This condition
normally obtains where tenders are stockiest of recognized make.
5. Where a substantial saving in foreign exchange is possible in each
case.

These delayed tenders will be opened and considered with the specific
approval of competent authority to accept the tender or head f the project
whatever the case may be.

1.10. Evaluation of Bids

The bids received and opened are evaluated by the Tender Committee.
The Committee determines the lowest evaluated bid for contract award
in terms of criteria for evaluation of bids stipulated in the bidding
documents and puts up its recommendation for the approval of
competent authority in accordance with the ‘Delegation of Powers’. The

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co-ordination of the committee meetings and finalization of Evaluation
Reports based on the decisions taken by the committee is the
responsibility of Contract Services. Technical Evaluation Report (TER)
is prepared by engineering member of the Tender Committee.
Commercial Evaluation Report(CER) is prepared by contracts Deptt.
with inputs from finance.
Bid Evaluation Procedure
An evaluation report is prepared by the tender committee after duly
examining the completeness and responsiveness of Bids submitted by
Bidders the purpose of the report is to determine the lowest evaluated
and substantially responsive bid and following procedure for the same.
The bid evaluation procedure consists of the following steps:

1.) Preliminary Evaluation

Short listing of bidders to be taken up for detailed evaluation is done by
the Tender Committee based on the following details furnished by
various bidders:
1. Check bid security & validity of bids
2. Check if bid properly signed, dated & stamped
3. Check power of attorney
4. Check JDU / JV agreement, if applicable
5. Check deviations to important conditions
6. Check if bids cover complete scope

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7. Check for computational errors
8. Check for material deviations
A statement of quoted prices is prepared.

Factors to Be Considered For Evaluation Short Listing

1. Bid price as per scope
2. Taxes and duties
3. Domestic, Price or other preferences
4. Differential price factors Preliminary Evaluated Price
= arithmetically corrected bid price
+
Taxes & duties (if applicable)
+
Adjustment for Functional Guarantees
+
Differential price preference

2) Detailed Evaluation
Detailed technical and commercial evaluation of short listed bidders are
done w.r.t. provisions of bid documents and necessary prices on account
of technical/ commercial deviations w.r.t. scope of work , technical

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compliance, deficiencies in type test and mandatory spares, guaranteed
parameters, work schedule are worked out.

Detailed Commercial Evaluation

CER is prepared by Contracts and includes the following:
•Statements of commercial deviations
•Cost compensation on each of these declared deviations.
•A Write-up on the detailed commercial evaluation
•List of clarification/confirmation required from the bidder.
•No cost of withdrawal will be provided for undeclared declarations

Detailed Technical Evaluation

A detailed technical evaluation is prepared by Engineering and QA&I.
This includes the following:
•Statement of technical deviations
•Cost compensation on each of these declared deviations
•A write-up on the detailed technical evaluation
•List of Technical clarifications/confirmations required from the bidder.
The Evaluation Report also contains the analysis of Qualification
requirements, Quality Assurance and Work Schedule aspects. The

41
Evaluation Report is put up to competent Authority. In case of contracts
financed by external agencies, the report is also sent to such agencies, as
required .

Evaluated Price = Arithmetically Corrected Bid Price

+
Taxes & Duties (If Applicable)
+
Deficiency in mandatory Spares
+
Adjustment for Functional Guarantees
+
Cost of Deviations (technical/commercial)
+
Facilities to Be Provided By Employer
+
Differential Price Preference

1.11. Award Recommendations

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•A qualified bidder’s after which is lowest evaluated technically and
commercially responsive is recommended for award, if the bidder meets
the necessary standards of capacity and capability.

•The Award recommendation has to be approved by NTPC competent

Authority, as per DOP, as well as the external funding agency (in case
involved)

1.12. Pre-Award Discussions and Finalizations of Contract

After necessary approvals, pre-award discussions with the recommended

bidder are conducted with the participation of Tender Committee
Members, Corporate Quality Assurance and Corporate monitoring group
(for finalizing work schedule).Following issues are tied up with the party
in course of discussion :
•Technical Deviations
•Commercial Deviations
•Quality Assurance Aspects/Plan
•Detailed schedule in the form of pert network
•Engineering information flow schedule
•Site mobilization plan

1.13. Placement of Letter of Award (LOA)/Notice of Award (NOA)

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Prepare draft LOA/NOA after approval of award and forward the same
to TC members for vetting. Further finalize the LOA/NOA incorporating
comment of TC members. Enter the details of LOA/NOA in control
register and issue the LOA/NOA to bidder in duplicate and take
acknowledgment on office copy. Expedite the acceptance of LOA/NOA
and furnishing of contract performance guarantee from contractor and
finalize the contract agreement within stipulated time. After satisfactory
resolution of all the points, and approval by Competent Authority,
contract is awarded to successful bidder in form of LOA/NOA.
Subsequent to issue of Letter of Award, the documents are finalized

1.14. Contract agreement

A contract agreement is signed normally within 30 days after placement

to LOA after the receipt of performance security for 10% of contract
price and it contains the following documents:
1. Contract Agreement and the Appendices hereto
2. LOA/NOA
3. The Bid and Price Schedules submitted by the Contractor
4. Procedures (as listed)
5. Terms and procedures of payment
6. Price adjustment
7. Insurance requirements
8. Time schedule
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9. List of approved subcontractors
10. Scope of work and supply by the employer
11. List of documents for approval or review
12. Functional guarantees

2. POST AWARD ACTIVITIES

Post award follow up is performed to

•Ensure timely deliveries of all equipments and supplies to site
•Ensure that erection and commissioning is done as per overall project
schedule .
•Identify in advance the factors that may affect the price schedules so
that necessary remedial action can be taken. Within contracts the
responsibility for all post award follow up of a particular contract is that
of the concerned contract coordinator. The contracts coordinator is
supported by expeditors who are required to monitor the manufacturing
status of a contract with respect to the detailed work schedule and
inspectors who are responsible for ensuring that the contractor confirms
completely with the Engg. Specifications and the other quality plans as
lay down in the quality assurance program forming part of the contract

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agreement. Expeditors and inspectors feed the contract coordinator with
the contract progress information. Engg Coordinators for each contract
are responsible for the coordination of all technical matters including
vendor drawing receipt, approval etc. They provide regular information
to the respective contract coordinators on the progress of such matters.

2.1. Post contract schedules

Manufacturing Schedule
After award of contract the further detail manufacturing schedule (L3
Schedule) based on L2 Schedule is reviewed periodically for the purpose
of detailed monitoring at the time of visits of expediting engineers /
contract coordinator to the work of the contractor.
Engineering information schedule
At the time of award of a contract, a detailed schedule is agreed with the
contractor for the flow of Engg. Information
L2 Network
The post award\ activities start after the placement of LOA/NOA. Before
issue of LOA/NOA a network consisting of many activities is agreed to
with the contractor, this network forms a part of contract agreement. The
Contract monitoring is based on this network.
Dispatch Schedule
Dispatch Schedule along with the likely package list is normally agreed
with the contractor after placement of letter of award.

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Schedule of bought out items
Procurement schedule of all the bought out items which are procured
from third party source are also identified after issue of LOA.

2.2. Major Post Award Activities

• Obtaining advance securities (responsibility of CS)

• Release of initial advance payment to the contractor
• Approval of sub-vendors
• Approval of drawings (responsibility- Engg)
• Approval of data sheets
• Finalization and approval of quality plans (responsibility- QA)
• Inspection/testing of equipment at supplier’s works (responsibility
- QA&I and Engg)
• Issue of amendments/modifications to the contract (responsibility- CS
in association with Engg)
• Co-ordination of work at project site including monitoring of receipt of
material, identifying space for contractor’s site office establishment,
ensuring timely receipt of contractor’s erection/ construction equipment.
• Dispatch/receipt of equipment
•Progressive/receipt payments

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2.3. Contractors’ Progress Reporting System

The contractor is required to submit monthly contract progress reports

covering all the aspects of contracts such as Engg. Manufacturing and
placement of order for sub delivery items. The reporting is done at the
activity level as discussed and agreed during pre-award discussion. The
contractors’ progress reporting system is based on agreed L2 network
The post award contract progress reporting system envisages initiation
of progress reports broadly by four departments namely Engg, Contracts,
project site and CMG. The Engg, contracts and project site initiate
reports at detailed activity level whereas CMG compiles these reports on
exception basis and initiates the report for top level management.
Periodic contract review meetings (CRMs) between employer and
contractor (responsibility- CS) Project review team (PRT) meetings on
monthly basis (responsibility- CMG, meeting is chaired by head of
project) Preparation of exception reports indicating hold ups/bottle necks
for close monitoring of critical areas (responsibility-CMG)

3. CONTRACT CLOSING

After fulfillment of all the obligations by the Contractor and completion

of warranty period, the Contractor is discharged of its obligations in the
Contract by formally closing the Contract to ensure that contractor has
fulfilled all obligations under the contract following certificates from

48
different Depts. of NTPC associated with contract is obtained before
closing of the contract. The system also envisages receipt of a ‘No claim
certificate’ from the contractor. After receipt of all the requisite
certificates, the contract is considered for formal closing after approval
of the competent authority.

E- PROCUREMENT
E-procurement is very important to achieve e-governance and for the
applicability of uniform procurement process to each unit. It has the
ability to reduce procurement costs by reduction in lead time, transaction
cost and cycle times etc. It also enables best practices and increases
vendor base. It also achieves savings in administrative and process costs.
NTPC Ltd is increasingly aspiring to implement e- procurement to
harness the potential of information technology for cost savings and
optimizing resource utilization. E- Procurement has been rolled out to
some package types1 and pilot projects have already been taken up by
various stations and at Corporate Materials.

Pre-requisites for e-Procurement

Essential Issues to be addressed in E- procurement are listed as,
Vendor Registration and Management.
Engineering document Exchange Control.
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 Online Internal Processes for Approvals of awards.

Release Purchase Order and its acceptance online. To get full advantage
of e-procurement, it is essential to streamline internally for
implementation:
Redefine the procedures and systems.
Adopt changing rules.
Make efforts for structural transformation to enable free flow of
information.
E-Procurement consists of following steps which generally are
followed in any manual system too but are automated through a Work
flow ensuring data & other procedural requirements.
Purchase Requisitions subsystem - This is for the internal use
and hence it is offline (intranet can be used).Various departments
in the company can raise purchase indents through this module.
This module is responsible for directing the requisitions to the
Relevant person, tracking of the approval or denial of the
Requisitions.

Generation of Enquiries - This module is through Internet. This

serves as the first interaction with the vendors. The System
Administrator in the company uploads the bid request for the
approved requisitions. The administrator has the flexibility to

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dynamically generate the forms for the bid by supplying the
necessary points. He can also upload a PDF or a simple word file
that consists of necessary information for the bid request.

Receiving of Bids (technical) - The vendors can upload the

documents - technical bid through this subsystem. If the enquiries
are in format of a form then the vendor has the option of filling the
form. The system provides for presenting the comparison matrix if
the entry is done through forms. This module also helps in tracking
of the adequate and inadequate responses, as decided by the
respective departments.
Commercial Bidding Module - Internet is used for this module.
Administrator can generate the forms for the submission of the bid.
Here the submission by the form is relevant for generating
comparison matrix.
Finance Approval - This is for the internal use. It is used for the
internal workflow like directing documents and data to the relevant
personnel. It is also used for approvals or denials and tracking the
documents.
Purchase Order Subsystem - This module helps in sending letter
of intent to the vendor in the e-format through the site and by
email; it helps in acceptance of the offer and the generation of the
purchase order.

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 Business process administration module - This module helps in
various administrative activities like adding vendors to the list of
approved vendors, specifying the parameters for determining the
necessary workflow, determining the users and their rights etc.

E-Procurement based on NTPC portal

One of the aspects of e-procurement that has emerged recently is the
development of procurement portals for corporate purchasing. The
committee was of the view that we should consider our own ability to be
a trading hub & have our Procurement Portal, which could provide
following advantages:
Opportunity to invite trading partners or registered vendors to
transact business with us on our portal.
Increased saving in time and money.
Total implementation of Workflow leading to linking of
technologies and tools together and will help in implementation of
total e-procurement.
Steps can be looked in detail at the time of ERP implementation.

CONCLUSION

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Contract/Purchase management activities at NTPC are one of the most
vital activities undertaken by the 25000MW Power Giant of India. The
process followed by NTPC is found to be very objective in nature and
very professional methods are in vogue.
We have learned the following while studying the system in NTPC:
(a) Advantage of the competition: NTPC tries to take advantage of the
Competition in the field of heavy engineering where foreign
manufacturers like MHI, GE etc. are competing with Indian
manufacturers like BHEL and L&T.
(b) Transparency: NTPC being a public sector company & to be free
from nepotism and favoritism has adopted a system where transparency
and automation is at their highest levels. Transparency is achieved by
the formation of a multi member bid-opening team and the bidders
submitting their bids in sealed packets where no one knows in advance
the quotation offered by a particular bidder. Automation here signifies
that almost all the contracts are awarded following the same procedures,
by awarding the contract to the lowest bidder that is L1 provided that the
lowest bidder qualifies himself technically too. Moreover the bid
documents are available on the website.

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(c)Cost reduction: Cost must be reduced by means of optimum
utilization of resources and the resources thus saved can be channelized
to more profitable segments. Cost estimation for the purpose of cost and
budgetary control is a very important aspect of learning during our
training in NTPC.
(d)Selection of proper contractor:  While an order is placed for
execution of any work, it must be awarded to a proper contractor. If
incapable contractor is chosen, he may not be able to execute the work
on time or he may abandon the work in between which will result in loss
of time, increase of cost and it disrupts the schedule for this package as
well as the project schedule. Hence assessment of capacity and
capability of the bidder which includes detailed financial analysis of his
capacity is considered as a very important aspect in the whole process.

FINDINGS

The tendering process requires too much of paperwork .

Certain steps like preparation of similar documents again & again,
cross checking of reports by different departments starting from
scratch, eats too much of time.
Lack in use of Intranet facility over the departments .

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Printing all the documents/bids, even of the bidders who have been
phased out in preliminary evaluation during E – Procurement .
Too much dependence & preference to physical source over
E -media.
E-Procurement has a limited application. It is applicable to certain
standardized project types only.
There is lack of Bidder awareness & training in E – Procurement.

SUGGESTION

Use of “Electronic Data Exchange System” can reduce wastage of

resources like paper, electricity etc.

Equity & transparency in the bidding and evaluation process are

being strictly followed in NTPC; however certain leakage of data
is possible because of involvement of multiple groups. This aspect
needs more attention.

While preparing costs estimate many times, last awarded rates are
taken which at times are quite old. Hence in such cases parallel
market Rates collection should be insisted upon.

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Some times in the bid documents the treatment of taxes and duties
in Evaluations are not clearly indicated. This leads to confusion.
These aspects Needs special care while reviewing bid documents.

In the Q.R. certain financial parameter like return on net worth etc.
are found to be needing attention as the same has been kept very
low and hence there are chances that are very poorly performing
company may enter as contractor .

In case of limited tender enquiry, the list of party needs to be

constantly upgraded so that good parties can find place.

While evaluating a bidder, some time the credentials of bidders are

3 year old. The status of bidder might have changed by this time.
Hence the status of recent year is suggested to be considered for
check their credentials.

“Document Mapping and Cross Checking” software can be used in

place of reading whole documents, reports again and again.

Use of “ Intranet Facility ” should be encouraged in NTPC for

printing , copying and distribution of inter office memos and
similar document

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 REFRENCES

www.ntpc.co.in
NTPC Manuals
Delegation Of Power handbook , NTPC
www.google.com
www.ntpceoc.com

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