PMB 440 case study #6 Badger Power Company (BPC)
The bid proposal evaluations for the engineering and the gas turbine-generator contracts have been completed by the responsible project group for the Badger Power Company (BPC). The Carter Engineering Company (CEC) is the clear choice for the engineering contract. CEC was rated the highest among the bidders in terms of technical capability and proposed technical approach. CEC intends to use a recently completed design from a different power plant as a reference design for BPC plant. The management team proposed by CEC is well known to BPC personnel having worked on previous projects for the Company. Although the wage rates proposed by CEC in its initial bud proposal were higher than those of the other bidders, subsequent negotiations with CEC resulted in a reduction of the wage rates to a level that is similar to the proposed wage rates of the other bidders. Cost Plus type contracts.
Technical evaluation of the bid proposals for the gas turbine-generator contract recommended the Universal Electric Company (UEC). UEC provided the Gas turbine- generators for the existing power plant for BPC. Although the technical evaluation team was impressed by the technical features proposed by International Power Company (IPC), the European bidder for the contract, they were not familiar with certain aspects of the design of the equipment. The evacuation of the fixed price bids for the contract indicated that the bid from IPC is one million dollars (five percent of the total price) lower than the bid from UEC. The utility in Minnesota that contracted with IPC for the gas turbine-generators for the recently completed power plant is well satisfied with the performance of the gas turbine-generator although they had some
communications problems with the foreign supplier. Janet White was impressed with the capabilities of the proposed management with IPC.
1. If the contract award decision is based upon the primary factors and weights for these factors that were selected for the evaluation for the gas turbine-generator contract, will you select the Universal Electric Company or the International Power Company? Explain your evaluation.
2. What general principles will you and Ed Gordon, the Vice President of Badger Power Company, consider in awarding the gas turbine-generator contract?
3. What types of contract vehicles are being discussed for the engineering contract and do you agree with that type of contractual vehicle and why?
4. Universal Electric and International Power submitted their proposed commercial terms with their bid proposals. Will you use their proposed terms or the commercial terms that were included in the Request for proposal for the work? Explain you answer.
5. Assuming a decision is made to award the gas turbine-generator contract to the International Power Company, what are the primary sources of information that will be used to prepare the contract for work? If this information is not all included in the written contract, can you at a later date require that the supplier provide services or equipment that were not discussed or written in the contract during the bid period? Explain a yes or no answer?
6. If it appears that the finalization of the terms for either the engineering contract or the gas turbine-generator contract will require extended period of time to obtain the agreement of both parties to the contracts, will you authorize the start of work on these contracts using a letter of intent? What are the advantages and disadvantages to the Badger Power Company in this approach?
7. What are the differences in future rights to technical drawing when using a Firm Fixed Price verses a Cost Reimbursable contracting vehicle?
8. How can BPC insure that the interviewed project management and technical staff from the vendors are used throughout the contractual efforts?
9. What is it necessary to define suppliers schedule and progress reporting requirements in the gas turbine-generator contract?
10.Will you schedule milestones that are used to measure the achievements of the incentive fee in the engineering contract be established in the contract or after the contract is awarded? Explain your answer.
Management of Project Procurement, C. L. Huston, The McGraw-Hill Companies, Inc. CS 20-1
I. Major Facts
(State here the major facts in bullet format, as you understand them. Make your statements clear and concise for your own understanding as well as for the understanding of the other students and the instructor.)
II. Major Problems
(State here the major problems, as you understand it. Emphasize the present major problem. You may wish to phrase your statement in the form of a question. In a few cases, there may be more than one problem. A good problem statement will be concise, usually only one sentence.)
III. Possible Solutions
(List the possible solutions to the major problem. Let your imagination come up with alternative ways to solve the problem. Do not limit yourself to only one or two possible solutions. Briefly note the advantages and disadvantages of each possible solution. Try to think outside the box.)
IV. Choice and Rationale
(State your choice from among your possible solutions and the detailed reasons for your choice. You may also wish to state why you did not choose the alternatives.)