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Conventional Procurement

Overview

Preliminary Feasibility Study (PFS) was introduced in 1999 to encourage cautious approach to new large-scale projects by enhancing the efficiency of fiscal investment through verifying the feasibility of project in such aspects as its economic feasibility, policy analysis, investment priority, proper timing and financing methods by conducting general research on large-scale development projects.

Whereas a feasibility study focuses mainly on technical viability, PFS largely reviews economic and policy adequateness. Also, while a feasibility study is carried out by competent authorities, PFS is conducted by the Ministry of Strategy and Finance.

The National Finance Act, Article 38 serves as sound legal ground for PFS and stipulates that projects requiring not only the approval of the Ministry of Strategy and Finance but also the decision of the National Assembly must undergo inspection and verification in order to corroborate PFS, and that guidelines should be created to establish the criteria by which:

(1) the project will be selected
(2) an appropriate agency will be set up to conduct a PFS; and
(3) the method and procedures upon which the study will be based.

Management of Total Project Cost (TPCM), on the other hand, is based on Article 50 of the National Finance Act. The size, total project cost or period of a large-scale project set by the Presidential Decree should be agreed upon with the Minister of Strategy and Finance. To revise the size, total cost or period of a project already agreed requires the same procedure.

The purpose of TPCM is to enhance the productivity of fiscal spending and the quality of facility construction by rationally adjusting and managing the total project cost of construction work executed with government funds according to the project implementation stages. Through managing project costs and changes in the size of a project throughout all the project stages, ranging from basic planning for a public investment project to the stages after the start of construction work, the TPCM system aims at overseeing the expansion of the project size by a competent ministry or agency. Types of TPCM include Reassessment Study of Feasibility, Reassessment of Project Plan, Reassessment of Demand Forecast, and Assessment of Design Modification.

Role of PIMAC

PIMAC is in charge of conducting the entire process of Preliminary Feasibility Study in accordance to the General Guideline for Preliminary Feasibility Study and sector-specific standard guidelines which are developed and revised by PIMAC. It examines efficiency and appropriateness of a project by reviewing its economic and policy feasibility as well as investment priorities, and optimal investment timing, among others. The role of PIMAC in the area of conventional procurement also include development and revision of policies and methodologies as well as construction of government-procured infrastructure projects database.

Definition

Preliminary Feasibility Study refers to the verification and evaluation of the validity of a new large-scale project conducted in advance under the supervision of the Minister of Strategy and Finance in accordance with Article 38 of the National Finance Act and Article 13 of the Enforcement Decree of the Act in order to establish a valid budget allocation and fund management plan for new projects.

Purpose

The purpose of the Preliminary Feasibility Study is to prevent wasting of budgets and to uplift the efficiency in fiscal management by contributing to the transparent and fair decision of the new investment to a government project based on prioritization through the objective and neutral investigation of the validity of a large-scale government project.

Assessment of Project Plan

If necessary, the Minister of Strategy and Finance can review the appropriate project scale, total project cost, and efficient alternatives of the projects exempted from the Preliminary Feasibility Study based on the methods of Preliminary Feasibility Study and reflect the result in the budget proposal and the establishment of a fund management plan.

1. Reassessment Study of Feasibility (RSF)

The purpose of the Reassessment Study of Feasibility is to uplift the efficiency of fiscal expenditures by objectively reassessing the validity of the project that falls under certain categories in accordance with Article 50 of the National Finance Act and Articles 21 and 22 of the Enforcement Decree of the Act in the course of executing a project to restrict the increase of unnecessary project costs.

2. Reassessment of Project Plan

The purpose of Reassessment of Project Plan is to review, based on the RSF analysis methodology, the appropriate project scale, total project cost, and efficient alternatives of the projects that do not go through a regular RSF in accordance with Article 49 Paragraph 2 of the Guidelines for Total Project Cost Management. (TPCM)

3. Reassessment of Demand Forecast (RDF)

The purpose of reassessment of demand forecast is to enhance the efficiency of financial investment and prevent the waste of budgets in advance by closely managing the change in demand in large-scale public investment projects, which take a long period from planning to completion phase by phase, in accordance with Article 34 of the Guidelines for Total Project Cost Management (TPCM).

4. Assessment of Design Modification

The purpose of Assessment of Design Modification is to increase the efficiency of fiscal investments by reviewing the validity and the appropriateness of the scale of the change in design in relation to the change in the design of the project and the change of the total project cost of which was requested after the construction began, in accordance with Article 58 of the Guidelines for Total Project Cost Management (TPCM).

Law & Guideline
  • National Finance Act

    PDF
  • Enforcernent Decree of National Finance Act

    PDF
  • Operational Guidelines for PFS

    PDF
  • Guidelines for TPCM

    PDF
Technical Guidelines
  • General Guidelines for PFS

    PDF
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