We develop special-purpose bid evaluation models for our public and private sectors clients who may be procuring contractors, which involve "life-cycle" cost and value elements. For example, in the case of an independent power producer (IPP) client developing a new power plant in a developing country. Our IPP client may have the contractual requirement to (or simply may choose to) conduct an international tender for qualified engineering procurement and construction (EPC) contractors and associated long-term maintenance (LTM) contractors which will be required to bid as an EPC+LTM contractor consortium. In addition, it is expected that each of the potential EPC+LTM bid consortia will be able to bring favorable bidder-arranged export credit agency (ECA) and/or import-export bank (Ex-Im) financing from various jurisdictions within their supply chains and potentially other bidder-arranged commercial or vendor financing. The challenge to our IPP client now is how to establish a bid evaluation regime that will allow the competitive tender award to be given the best economic value bid. In this situation, we would recommend to our IPP client that structure the tender where the best value "life-cycle" bid be derived from and evaluated by a standardized "bid evaluation model".
We develop "bid evaluation models" (BEMs) as standardized financial models applied in competitive bid evaluation processes. In the cases where DCS is mandated by our clients to provide competitive tender structuring & management services, we build BEMs for the purpose of evaluating the best risk-adjusted life-cycle bid based on the net present value (NPV) of the evaluated contractual payments (up-front and over the contractual period), guaranteed performance levels and the net cost of bidder-arranged financing. Under our previous example, we would develop a standardized BEM that would distributed to bidders via a virtual data room. The BEM will be secured and encrypted and only allow bidders to enter specific bid evaluation inputs into the model (all other inputs will be prescribed by the IPP client team and locked). The EPC+LTM+ECA/Ex-Im bidder will only be able to enter bids related to EPC and LTM pricing, guaranteed minimum performance standards (such as completion time, capacity, availability and efficiency) and the pricing and amortization profile of the ECA/Ex-Im and vender supported financing. These bid parameter inputs into the BEM in combination with other standardized (locked) model assumptions are used to determine the lowest NPV unit cost bid, which is the basis for the quantitative scoring element of the tender award criteria.
In addition to the aforementioned IPP (energy sector) example application, the BEM approach represents an added-value service that we can provide to any client conducting a competitive tender for goods and services, which have "life cycle" cost and value elements. This category generally includes any infrastructure, plant of production asset development procured through competitive EPC + O&M (or +LTM), EPC management (EPCM) + O&M (or +LTM), design-build-operate-maintain (DBOM) (or DBM) or O&M (or LTM) (and also to the extent that any include financing) tender methodologies.
We individually custom-build each and every one of our BEMs using standard Microsoft® Excel® software in a the most user-friendly manner possible. We provide a user manual and in-model user instructions for our BEMs which are to be used and handled by bidders in an efficient and user-friendly manner.
In addition to developing, updating and maintaining our own BEMs for our client advisory mandates, we also provide model review and audit services of bid evaluatio models produced by our clients or by another third-party model developer on behalf of our client. Model review and auditing services are often required by our clients (as an independent review or audit) in other transactions that DCS is not otherwise a party to.
DCS advisors are able to provide BEMs on a stand-alone basis on behalf of public and private sector clients who have mandated us to provide transaction advisory and/or competitive tender management services. In most cases, as BEM modeling services will be only one element of a larger project delivery program, DCS will also be providing other complementary services in relation to other transaction elements. Our preference is always to provide such comprehensive advisory services and coordinate all elements of the transaction, including BEM modeling services on behalf of our clients.
Under any sponsor or lender case financial modeling services mandate, DCS will draw from our vast global network of veteran industry expert advisor affiliates and our relationship consultants in order to assemble the most appropriate team to match the specific needs of the transaction at hand. This will always include leadership of DCS affiliate experts who possess decades of global transactional experience related to the specific sector and transaction type. In any BEM modeling services mandate, our preferred role is always to serve as the lead project/program manager. Within this role we are also able to assist in the selection and procurement (or subcontracting) and management of other advisors, including local and international legal, technical, economics, commercial/operational and other specialized advisors or other specialized advisors, as the specific transaction may require. To the extent that other third-party advisors are required, there are many value added advantages of allowing DCS to assist in the procurement of these advisors. First, DCS expert affiliates themselves possess many of required legal, technical, economics and managerial skill sets and we are best positioned to determine which additional outside third-party skill sets are required and which firms or individuals should be hired in these roles. Secondly, financial modeling is a very complex undertaking, requiring the management and coordination of many simultaneous workstreams. DCS advisors are experts inproject and program management services and are ideally suited to manage and coordinate a multi-dimensional advisory team most efficiently and effectively.
Complementing our BEM modeling services, DCS advisors offer the following complementary advisory services that may be applicable, dependent on the specific needs of our client.
DCS experts provide BEM modeling services in the following sectors that we specialize in. Please click on the below links to learn more about the sectors that we cover:
DCS experts provide BEM modeling services to the following categories of clients: