PREBID RISK REVIEW TEMPLATE

Project Name / Location:

IC / Business: Date:

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Project Profile

Owner/Client Owner/Client

Location Owner/Client

Bid by ( L&T / S&A) Project Details

Project Schedule Type of Contract/ PMC

Nature of Contract
Project Valve
(LSTK, Item rate etc)

Brief Scope of Work FEED

Consortium Partner, if any

Any change in project value or scope of work
(% break up of SOW)

Front End Engineering

Design (FEED) / Project
Any other
Management Consultant
(PMC)

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Project Profile Continued…

Bid currency Owner/Client

Bid submission date Owner/Client

Bid validity Project Details

Bid bond Type of Contract/ PMC

Expected award date Project Valve

Performance BG FEED

Other Bank Guarantees Any change in project value or scope of work

Any Other LD sharing arrangement

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Client Profile

• First time client - Experience of other contractors with the client.

• Past experience with the client.
• Ownership structure (Shareholding pattern, JV / UJV, Management team /
decision maker)
• Financials (Revenue, EBITA, PAT, Net Worth & Debt to Equity ratio)
• Sources of project funding / financial closure

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Consortium / JV Details, if any

• Consortium / UJV / JV – Structure

• Rationale behind choosing consortium partner / due diligence

• Consortium / UJV / JV – Partners (Public/Private)

o Technical competence
o Financial details
o Track Record
o Liability sharing
o Operation of bank account

Give detailed scope of work along with scope split with

consortium partners, add new slide, if required

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Scope of Work

 Detailed Scope of Work (Including work split with consortium partner, if any and
breakup for Engineering, Procurement, Construction / Fabrication, Installation,
Commissioning etc. )

 Overall Project Plan Layout

• Process diagram
• 3D Model, if any

 Any specific Plant and machinery required including capex

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Project Site Profile

• Site Location Map & Photographs

• Socio-political profile – country / location (VISA issues, country specific
tax laws, custom law, labour regulation etc.)
• Access to Site (Nearest Road, Port, Airport, Railway Station, City /
Town)
• Climatic conditions
• Logistics route map
• Land availability
• Water / Construction power / Fuel – Availability for execution
• Environmental Clearances
• Geographical profile (Soil investigation, Seismic Zone & any other
issues)
• Local environment – people resistance, political issues
• Any other information

Above list is illustrative

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Major Project Milestones (sample)

12-Apr-15 12-Dec-17 12-Mar-18 12-Dec-18 12-Mar-19 12-Mar-20 12-Mar-24

0 33 36 45 48 60 108

Zero Date: Milestone Mechanical Commissioning

Notice of Award 1 completion

12 Months
LDP*
Completion
Certificate after
PGTR
48
Months
DLP

33 Months 3 months

12 Months

Additional Information, if any:

LDP* - Latent Defect Period

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Parametric Comparison with similar projects (Sample)
Technical Comparison
Description Bid Project Project 1 Project 2 Project 3

Built Up Area (Sqm) 24500 65500 11300 67000

Formwork
1.39 1.82 1.92 2.25
sqm/sqm

Reinforcement
64 103 66 108
kg/sqm

Ducting (MT) 628 608 295 740

Commercial Comparison

Description Bid Project Project 1 Project 2 Project 3

Limitation of liability 20% of CV 100% of CV 30% of CV 100% of CV

Overall LD Cap 10% of CV 15% of CV 5% of CV 20% of CV

Defect Liability Period

12 months 12 months 24 months 12 months
(DLP)

Above list is illustrative

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Client Obligation (Sample)

• Approval of drawings
• Free issue materials
• Work front availability / Shutdown
• Utilities provided by client
• Clearances (Safety, gate entry pass, permit to work etc.)
• Milestones certification – Client / PMC
• Invoice certification – procedure / timeline
• Contractual protection for non-fulfilment of client obligation resulting in
schedule delay, cost escalation, overstay cost etc.
• Any other

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Commercial Details

Payment terms Owner/Client

Defect liability period Owner/Client

Latent defect liability Project Details

period

Delay liquidated damages

Valve
(LD)

Performance LD FEED

Overall LD Cap Any change in project value or scope of work

Please specify if any deviation proposed for commercial clauses

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Commercial Details Continued…

Limitation of liability
Owner/Client
(value & timeline)

Intellectual property
Type of Contract/ PMC
rights

Force majeure Owner/Client

Governing law &

Project Details
Arbitration

Other clauses, if any Any other

Please specify if any deviation proposed for commercial clauses

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Legal aspects : Check list for Pre-bid review
Particulars Applicability (Yes / No) Remarks
General :

Have the tender conditions been checked up with the legal department ?

Are there any clarifications pending to be sought from the Client?

Qualification Criteria :

Do we qualify strictly as per tender conditions ?

Are there any ambiguities in the wordings of the qualification criteria that
need to be clarified with the Client ?

Change Order :

Is there a clear procedure laid down for change orders ?

Liabilities :

Are liabilities arising out of subsequent statutory changes in client’s scope ?

Is there any clause which leads to unlimited liability?

Is there a cap on the overall contractual liability & is there any adverse
conditionality for determination and fixation of the overall liability ? What is
the trigger point of the contractual liabilities?

Are consequential losses specifically excluded ?

Is there any clause in the BG which makes its tenure open-ended & the
liability under the BG detrimental to L&T’s interests ?

Is the liability joint & Several ?

Extent of L&T’s share in the liability when the liability event is triggered by
other members (JV/UJV) ?

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Legal aspects : Check list for Pre-bid review (Continued…)
Particulars Applicability (Yes / No) Remarks
Time extension :

Is there a time extension clause for delays due to Client’s default?

If yes, Whether the contract also allows compensation for indirect cost like
extended stay?
Indemnities :

Is there are events for which indemnity is to be provided by the contractor,

specifically provided eg. loss of life, damage to property/environment, etc ?

Force Majeure :

Does the definition include all events related to weather & other natural
calamities, acts of government, strikes, riots, political unrest and other similar
events specific to the project site ?

Is the notice period reasonable & sufficient ?

Arbitration & Governing Law :

Is there a clear Arbitration clause and the applicable law specified in the tender
documents ?

Is the arbitration under English law ? If not, is a change possible through

dialoguing with the client ?

Termination: Does the contract allow contractor to terminate / suspend the

contract?

Will contractor be compensated in case client initiate termination?

Change in Law: Is there a pass through for change in law under the contract?

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Tax Checklist

Applicability
Particulars Remarks
(Yes / No)

Review of scope of work and tax related clause by Taxation Department ?

Clear scope definition – Supply / Works Contract / Service ?

Nature of responsibilities of each party spelt out (Consortium / JV)?

Applicability of taxes mentioned clearly ?

Contract provides for reimbursement of taxes / duties / levies ?

Contract with ‘tax exemption clause’ – customer commits to provide

documents to support ‘exemption’ status ?

Customer agrees to reimburse in the event of non-availability of ‘exemption’

documentation or such documentation is not accepted by tax authorities ?

Impact of ‘exemptions’ considered in cost estimate ?

Provision for reimbursement of taxes in case of change of law or changes in

interpretation ?

Tax impact /cost of Site work considered in bid estimates ?

Is subcontractor taxes (Service Tax, VAT, Octroi) reimbursable by the client ?

Any other issues …….

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Environment, Health & Safety

Sl. no Critical points Remarks/Action plan

Requirement to work at height/ hazardous location/

1
difficult terrain etc.

2 Availability of trained EHS personnel

3 Any other special EHS requirement

4 Penalties attached to noncompliance on EHS

Diligence on past EHS performance of the likely Sub

5
contractor

Additional details:

Please indicate whether risks to environment (accident/ gradual )are covered

under Insurance Covers by the Client or to be taken by L&T.

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Insurance

Client Contractor
Coverage
(Yes / No) (Yes / No)
All Risk Marine Cargo
CAR / EAR
Comprehensive General Liability
Workmen’s Compensation & Employer’s Liability
Automotive Third Party Liability
Construction Plant & Equipment
Pollution & Environmental Liability coverage
Loss of anticipated revenue / Consequential
damages
Decennial liability / Latent defect / Perpetual
warranty cover

• Has insurance clauses been discussed with insurance team?

• Deductibles?
• Experience in similar past projects?

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Major Subcontractors/Vendors

Sr. No Services / Supplies Subcontractor / Major concerns

Vendors Name
1

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Manpower Resources Required (Sample)

600

500
No. of workmen

400

300

200

100

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Months
Total Man-months required

VISA Requirement

Localisation requirements

Training permit for entering job site

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Project Team

Total years Previous similar

Present project-
Key Positions Name functional
of experience where engaged
experience
Project Leader/ Director

Head of Project Planning

Project coordinator

Head of Supply Chain

Contracts Manager
Head of Finance
Cost Engineer
Head of Safety

Construction Manager

Site Administration &

Industrial Relations

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Project Cost Breakup (Sample)

Percentage (%)

5 10
5
Engineering
Supply
Project Management
30
Construction
40 Commissioning
Others

10

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Projected Cash Flow
100.00%
Pre-bid Cash flow
80.00%

60.00%

40.00%

20.00%

0.00%

-20.00%

Net prebid cash flow projected Cumulative Inflow Cumulative outflow

Assumptions for inflows

Interest bearing advances, retentions

Credit period for major materials

Peak cash requirements

Imputed interest as % of total cost in case of (-ve) cash flow

NPV of cash flows with discounting factor WACC@13% as a % of CV

Month 1 2 3 4 5 6 7 8 9

Inflow

Outflow

Net

Please exclude the capex while plotting the projected cash flow graph, also mention the capex required for the project

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Forex Exposure – Currency Risk (Sample)

Amount in Mn
Receivable Payables Net receivable
Currency
(A) (B) (C=A-B)
USD

EUR

JPY

INR

GBP

…..

…….

Note: Whether hedging cost is factored in the bid (Yes / No)

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Commodity Exposure (Sample)

Proposed Estimated price Proposed mitigation

Particulars sourcing MT (Respective methodology(Price
(Country) currency per ton) variation/hedging)
Steel (specify raw
materials required to
manufacture steel)
Copper

Aluminum
Nickel
Others
(Pls. specify)

Note: Whether hedging cost is factored in the bid (Yes / No)

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Monte Carlo Simulation

• VaR
• Contingency

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Learning from Similar Past Projects

Projects Name Major Issues Learnings

Project 1

Project 2

Project 3

….

….

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Risk Assessment Profile

SEVERITY CRITERIA PROBABILITY CRITERIA

Category Cost Overrun Category Criteria

A: Most likely >0.75
I: Catastrophic > 2 % of CV
II: Major 1% <S< 2% of CV B: Likely 0.5<P<0.75
III: Significant 0.5 %<S<1 % of CV C: Occasional 0..25<P<0.5
IV: Minor 0.25 % <S<0.50 % of CV D: Unlikely 0.10<P<0.25
V: Insignificant <0.25 % of CV E: Remote 0.0<P<0.10

Note : This slide is for reference only

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Risk Matrix (5X5)

Probability (P)
(0to1) 1,6
A -Most Likely
More than 0.75

B -Likely 2,7
0.5 to 0.75

C –Occasional 3,4
0..25 to 0.5

8,9,10
D –Unlikely 5,11
0.10 to 0.25

E –Remote
Less than 0.10
Severity(S) V Insignificant IV Minor III Significant II Major I Catastrophic
(As %age of Less than 0.25 0.25 to 0.5 0.5 to 1 1 to 2 More than 2
Contract Value )

Critical High Medium Low

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Risks - Assessment & Mitigation

Sr. Risk Owner

Risk Element Prebid Stage Risk Mitigation Plan
No (Name)
Political

1 Local unrest

Economical

2 Economic meltdown in Oman

Social
3 Omanisation challenges
Environmental
Execution challenges while
4
working in extreme temperature
5 Weather standby

Above ‘Risk Element’ list is illustrative

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Risks - Assessment & Mitigation

Sr. Risk Owner

Risk Element Prebid Stage Risk Mitigation Plan
No (Name)
Technological
First time execution of the new
6
technology
Site Construction challenges
7
(Rigging/ Rework/ Weld Repairs)
Legal
Non availability of OPAL CVC
(Compliance verification certificate
8
as per Oman Petroleum Society
standard)
9 Decennial liability
Financial

10 Forex variation

11 Commodity price variation

Above ‘Risk Element’ list is illustrative

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Competitors Analysis

Level of
Competitor Technical ability Financial health
Competitiveness

Above list is illustrative

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Bidding Rationale

Factor Rating Description

Core Business

Strategic Fit

Competitive Strength

Availability of Team /
Manpower

Risk Management

Attractiveness of
Returns

Rating
Excellent
Good

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