TENDER EVALUATION REPORT: PEDESTRIAN TRAFFIC … · 3. The Monitoring Pedestrian Traffic project was initiated in 2003 to count the number of pedestrians passing specific locations

F I N A N C E A N D G O V E R N A N C E C O M M I T T E E R E P O R T

Agenda Item 5.2

9 September 2008

TENDER EVALUATION REPORT: PEDESTRIAN TRAFFIC MONITORING SERVICES

Division Commerce and Marketing

Presenter Austin Ley, Manager City Research

Purpose

1. To seek Council approval to award a contract to Beonic Pty Ltd for the provision of Pedestrian Traffic Monitoring Services to the City of Melbourne.

Recommendation from Management

2. That the Finance and Governance Committee recommend that Council:

2.1. award the contract for Pedestrian Traffic Monitoring Services to Beonic Pty Ltd to purchase eighteen new sensors (to replace the existing eighteen sensors) and maintain them for a term of five years, with an option for a two year extension and otherwise in accordance with the negotiated terms and conditions of the contract;

2.2. approve the funding of this contract by:

2.2.1. committing an unbudgeted capital allocation of $303,570 for the purchase and installation of the eighteen sensors;

2.2.2. agreeing to meet the annual $36,377 service and maintenance costs from the annual operating budgets for 2009/10 to 2013/14; and

2.2.3. agreeing to continue to lease the existing sensors from the current supplier on a monthly basis, until the new sensors are installed. (This lease cost will depend on the time taken to install the new sensors and can be funded from the current 2008/09 operating budget, to a maximum of $174,000).

Background

3. The Monitoring Pedestrian Traffic project was initiated in 2003 to count the number of pedestrians passing specific locations in the city (the CBD and Docklands), 24 hours a day, seven days a week, at greater than 90% accuracy levels.

4. It provides “real time” pedestrian data which enables Council to:

4.1. determine the impact of events and the effectiveness of marketing campaigns on the level of pedestrian activity in the city;

4.2. measure tourism, transport planning and emergency planning initiatives;

4.3. compare the number of movements which occur across the city by foot, to other modes of transport, to inform transport policies and ecological footprint estimates;

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4.4. monitor the effectiveness of the Council Plan Strategic Objectives;

4.5. assess changes in city retail activity; and

4.6. assess the economic, social, cultural and urban design impacts of pedestrian traffic.

5. The project was the result of a comprehensive testing program over nine months in 2003/04, to determine the most reliable method to obtain the desired information to the level of accuracy required. This program demonstrated that it was necessary to engage an external supplier to provide the information, given the specialised nature of the systems and equipment involved.

6. Attachment 1 provides a diagram of the sensors and the nature of the information they provide.

7. The consultant that undertook the testing program considered the project to be unique in the world when first established. It has been featured in conferences on “walking” and has subsequently been replicated in other cities.

8. Council approved, in principle, the City of Melbourne entering into a long term contract for the Monitoring Pedestrian Traffic service at its meeting held on Tuesday, 24 April 2007, due to the lower cost compared to a short term (annual) contract. In addition, the longer term commitment to the system provides the opportunity to more effectively market the system to potential subscribers. These subscriber funds could be used to either reduce the cost to Council, or expand the system across the city to enable a greater understanding of, and modelling capacity for, pedestrian dynamics.

9. The scope of the required services includes:

9.1. the deployment of eighteen new sensors at the current sites as shown in Attachment 4;

9.2. the maintenance of the sensor network and systems, to the required accuracy and twenty-four hour availability; and

9.3. the provision of “real-time” data on pedestrian volumes to Council.

Current Arrangements

10. The current Monitoring Pedestrian Traffic service is provided by The Frame Group Pty Ltd. The current contract, tendered in 2005, was for one year with an option for a maximum of two extensions, subject to annual Council budget approval. Under this contract Council leases the pedestrian sensors at an annual cost of $260,000.

Rationale for putting out to tender

11. The rationale for going out to tender was to:

11.1. canvas the market place to ensure City of Melbourne obtains the best value for its money;

11.2. have greater negotiating power on price through the use of a five-year contract term;

11.3. reduce costs over the long term; and

11.4. provide the basis upon which potential subscriptions could be sourced, to enable either the cost of the system to be reduced or the number of sensors to be expanded across the city.

12. The current contract ended on 30 June 2008 as all options for extension had been exercised. The service is currently being provided on a month by month basis until Council approves the new contract.

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Key Issues

13. There are two options for contracting the service, both of which will enable the corporate cost reduction of 10 per cent to be achieved over the life of the contract whilst continuing to deliver high quality pedestrian data.

13.1. The first option is to purchase the pedestrian sensor hardware and reporting software and agree to contract to maintain the new sensors for a period of five years.

13.2. This second option is to lease the sensors for five years with the potential to extend this lease for a further two years.

14. Compared to the existing lease arrangement, which costs $260,000 annually, (equivalent to $1,300,000 over five years):

14.1. the “Purchase” option from the preferred tenderer, Beonic Pty Ltd would result in a total saving of $814,545 or 63 per cent over five years; and

14.2. the “Lease” option from the preferred tenderer, Beonic Pty Ltd would result in a total saving of $583,919 or 45 per cent over five years.

Tender Evaluation Process

Invitation to Tender

15. The timetable for the tendering process was as follows:

• 3 May 2008 - Tender advertised in “The Age” Newspaper; • 27 May 2008 - Tenders closed; and • September 2008 - Proposed award of contract.

Tender Evaluation Panel

16. The responses to the Invitation to Tender (ITT) were evaluated by a Tender Evaluation Panel (TEP) comprising:

• Team Leader Contract Systems - Full member (Chairperson); • Senior Research Analyst, Project Manager, Pedestrian Monitoring - Full member; • Team Leader Transport Planning – Full member; and • Council’s Commercial Investments Accountant – Advisory member (Finance).

Tender Responses

17. Tenders were received from the following organisations:

17.1. The Frame Group Pty Ltd;

17.2. TTM Equipment (NSW) Pty Ltd; and

17.3. Beonic Pty Ltd.

Tender Evaluation Panel Meetings

18. The Tender Evaluation Panel met on 3, 11, 19 and 26 June 2008 to evaluate the Tenders. The Panel met again on 1 July 2008 to finalise the Tender Evaluation Report.

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Evaluation Criteria

19. The following table lists the evaluation criteria that were stated in the ITT documents. The criteria are listed in order of importance, the most important being at the top of the list. The weightings for the evaluation criteria were declared to tenderers.

Evaluation Criteria Tender

Cost

• lump Sum Price; • unit Rate for variations; • specified personnel – Hourly and Daily Rates for Variations; and • hourly Labour Rates for Variations.

60%

Plan for Proposed Services

• work plan and methodology; • proposed organisational structure for this contract; • management support structure, services and systems; • innovation and technology; • data reporting systems; • proposed quality assurance processes for this project; and • proposed occupational health and safety processes for this project.

25%

Experience and Capability

• company organisational structure; • core business and main client base; • current commitments; • expertise in providing the services; • demonstration of past performance and referee reports; • resources: people and systems; • commitment to quality assurance processes; and • commitment to occupational health and safety processes.

15%

20. Tender interviews were not conducted with the tenderers but written responses were sought to various questions the Panel identified in its analysis of the bids received.

Results of the Tender Evaluation

21. A summary of the perceived strengths and weaknesses of the Tenderers and their scores were documented by the Panel. The relative ranking of tenderers, as determined from the total weighted scores, is shown in the Tender Summary Worksheet in Attachment 2.

22. The results of financial assessment for the five years of the contract are detailed in Attachment 2. Both purchasing and leasing options for the sensor hardware were canvassed with all tenderers during the evaluation of the bids, with purchasing proving to be significantly less expensive than leasing in all cases.

23. The Beonic Pty Ltd tender had the lowest cost for the purchase option, $101,059 less than the second lowest tender.

24. The Beonic Pty Ltd tender had the second lowest cost for the lease option, $52,938 more than the lowest tender, but would remain the preferred tenderer under this option due to its higher rating against the other tender evaluation criteria.

25. From the rankings of all the tender evaluation criteria, the TEP has nominated Beonic Pty Ltd as the Preferred Tenderer.

26. All members of the evaluation team concur with the recommendation.

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Performance Measurement and Monitoring

27. The invitation to tender listed two performance indicator’s to be used as ongoing measures of the performance of the tenderer. The performance measures were:

27.1. a minimum of 90% accuracy rate for each sensor; and

27.2. sensor breakdown of no more than three working days per sensor per month (unless resulting from external factors outside the contractor’s control).

28. The Council will monitor the contractor for performance to the above standards via:

28.1. an audit of all sensors every six months (at peak and non peak times); and

28.2. tracking of sensor availability throughout each month.

Pecuniary Interest and Probity Statement

29. No member of the evaluation panel has a pecuniary or personal interest in the tenders or contract.

30. The evaluation has fully complied with the Local Government Act 1989 and the Conditions of Tendering. No potential tenderer had access to the final specification prior to its release. All advice, written or verbal, provided to a respondent clarifying any aspect of the tender documentation was also provided to all other respondents. No tenderer was provided any advantage over other tenderers and all were treated fairly and equally during the tendering process. Information provided by tenderers which has been deemed confidential, has been protected and will not be disclosed. A consistent standard for all tenderers has been used in assessing any request for confidentiality by a tenderer/s.

31. Tenderers were provided a copy of Council’s Conditions of Tendering. These conditions state that canvassing of Councillors by any tenderer on any matter relating to the tender will result in automatic disqualification.

Time Frame

32. Once Council has assessed and approved this contract, it is anticipated that a letter of acceptance would be issued to the successful tenderer along with notifications to unsuccessful tenderers by 1 October 2008. Contract documentation will be prepared and signed in the first week of October 2008 with the new contract beginning on 1 October 2008 for a term of 5 years until 30 September 2013.

Relation to Council Policy

33. Council aims to deliver quality services that are responsive to business and community expectations, demonstrably cost-effective and subject to public accountability. Council is committed to delivering its services equitably and in a way that meets customer needs, minimises costs and recognises Council accountability.

34. This project relates directly to a range of Council policies such as:

34.1. Connected and accessible city (1.4 and 1.6);

34.2. Innovative and vital business city (2.1);

34.3. Inclusive and engaging city (3.5, 3.7 and 3.8);

34.4. Well managed and leading organisation (5.2 and 5.3); and

34.5. Financially responsible corporation (6.1.02).

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35. It links to the Council Plan through the key service outputs of:

35.1. measuring and reporting on our performance against individual plans, corporate objectives, industry best practices and relevant external frameworks and researching and reporting on the condition of the city; and

35.2. using information technology and communication systems to optimise service delivery, engage the community and promote innovation.

36. Key strategies which are supported by this project are:

36.1. Marketing Strategy: 2006-2012;

36.2. Transport Strategy: 2020: Moving People and Freight; and

36.3. Tourism Strategy: 2007-2012

Finance

37. The project is run by the City Research branch with an estimated staff resource allocation of five days per month or 60 days per annum (some $12,000 per year).

38. The current budget allocation for the Monitoring Pedestrian Traffic system is $260,000 per annum, based on a yearly contract. On this current basis the total cost for this project over five years would be equivalent to $1,300,000, not allowing for CPI increases, nor adjusting for the 10 per cent service review saving.

39. A detailed outline of the two options is provided below:

39.1. Purchase Option:

39.1.1. committing an unbudgeted capital allocation of $303,570 for the purchase and installation of the eighteen sensors;

39.1.2. agreeing to meet the annual $36,377 service and maintenance costs from the annual operating budgets for 2009/10 to 2013/14; and

39.1.3. agreeing to continue to lease the existing sensors from the current supplier on a monthly basis, until the new sensors are installed. (This lease cost will depend on the time taken to install the new sensors and can be funded from the current 2008/09 operating budget, to a maximum of $174,000).

39.2. Lease Option:

39.2.1. award the contract for Pedestrian Traffic Monitoring Services to Beonic Pty Ltd, to lease the eighteen sensors for a contract sum of $716,081, for a term of five years, with an option for a two year extension and otherwise in accordance with the negotiated terms and conditions of the contract; and

39.2.2. approve the funding of this contract by agreeing to meet the $143,216 annual lease costs from the annual operating budgets for 2008/09 to 2013/14.

40. At a total cost of $485,455 for five years, (comprising $303,570 capital cost in the first year and $36,377 service and maintenance costs per year for five years), the Beonic Pty Ltd quote for the option of purchase the sensors and maintenance contract would result in a total saving of $814,545 (63 per cent) over five years compared to the existing annual lease arrangement. It should be noted that the capital cost of the sensors will be depreciated over a five year period.

41. At total cost of $716,081 for five years, (comprising $143,216 per year for five years), the Beonic Pty Ltd quote for the option of leasing the sensors would result in a total saving of $583,919 (45 per cent) over five years compared to the existing annual lease arrangement.

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Attachments: 1. Diagram of Sensors and Information they provide 2. Tender Evaluation Summary Worksheet 3. Financial Analysis 4. Current Location of Pedestrian Sensors

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42. Both the purchase and leasing of sensors options are significantly less expensive than the current annual lease arrangement. The results of financial assessment for the five years of the contract are detailed in Attachment 3.

Legal

43. Legal advice has been given in relation to the monitoring pedestrian traffic project and will continue to be provided as required.

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Attachment 1 Agenda Item 5.2

Finance and Governance Committee 9 September 2008

1

ITT 3372 Diagrams of Sensors and Information they provide

Average Hourly Pedestrian Activity in June 07 by Day (6 Sites)

0

5000

10000

15000

20000

25000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23Hour of the Day

Counts MondayFridaySaturdaySunday

June Weekday vs Weekend

Pedestrian Sensor Installation

Awning

Counting zone ~8m sq

PedestrianSensor

Server

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Current Location of Pedestrian Sensors

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TENDER EVALUATION SUMMARY WORKSHEET LEASE

OPTION Contract Name: Monitoring Pedestrian Traffic

Contract No. 3372

Insert Highest Possible Score (required to automatically calculate weighted score) 10

Beonic Pty Ltd TTM (NSW) Pty Ltd

The Frame Group P/L

Evaluation Criteria Weighting %

Score Wghtd Score Score Wghtd

Score Score Wghtd Score

Price 60 9.20 55.20 10.00 60.00 5.40 32.40 Company Organisational Structure 2 7.00 1.40 8.00 1.60 8.00 1.60 Core business and main client base 2 7.00 1.40 6.00 1.20 8.00 1.60 Current commitments 2 7.00 1.40 1.00 0.20 8.00 1.60 Expertise in providing the service 2 7.00 1.40 6.00 1.20 8.00 1.60 Demonstration of past performance and referee reports 2 7.00 1.40 6.00 1.20 9.00 1.80

Resources: people and systems 2 7.00 1.40 6.00 1.20 9.00 1.80 Commitment to quality assurance 1 6.00 0.60 6.00 0.60 9.00 0.90 Commitment to OH&S processes 2 6.00 1.20 8.00 1.60 7.00 1.40 Work plan and methodology 5 7.00 3.50 5.00 2.50 8.00 4.00 Proposed organisational structure for contract 3 8.00 2.40 5.50 1.65 7.50 2.25 Innovation and technology 3 8.00 2.40 1.00 0.30 8.00 2.40 Data reporting systems 3 6.50 1.95 5.00 1.50 8.00 2.40 Proposed Quality Assurance Processes for project 5 7.00 3.50 1.00 0.50 9.00 4.50

Proposed OH&S processes for project 3 7.00 2.10 4.00 1.20 7.00 2.10 Management support structure, services and systems 3 6.00 1.80 5.00 1.50 8.00 2.40

113 84 127 TOTAL 100 83.05 77.95 64.75

TENDERER RANKING ... 1 2 3

Contract Name:Contract No.

10

Score Wghtd Score

Score Wghtd Score

Score Wghtd Score

Price 60 10.00 60.00 8.00 48.00 4.30 25.80Company Organisational Structure 2 7.00 1.40 8.00 1.60 8.00 1.60Core business & main client base 2 7.00 1.40 6.00 1.20 8.00 1.60Current commitments 2 7.00 1.40 1.00 0.20 8.00 1.60Expertise in providing the service 2 7.00 1.40 6.00 1.20 8.00 1.60Demonstration of past performance & referee 2 7.00 1.40 6.00 1.20 9.00 1.80Resources: people and systems 2 7.00 1.40 6.00 1.20 9.00 1.80Commitment to quality assurance 1 6.00 0.60 6.00 0.60 9.00 0.90Commitment to OH&S processes 2 6.00 1.20 8.00 1.60 7.00 1.40Work plan and methodology 5 7.00 3.50 5.00 2.50 8.00 4.00Proposed organisational structure for contract 3 8.00 2.40 5.50 1.65 7.50 2.25Innovation and technology 3 8.00 2.40 1.00 0.30 8.00 2.40Data reporting systems 3 6.50 1.95 5.00 1.50 8.00 2.40Proposed Quality Assurance Processes for project 5 7.00 3.50 1.00 0.50 9.00 4.50Proposed OH&S processes for project 3 7.00 2.10 4.00 1.20 7.00 2.10Management support structure, services & systems 3 6.00 1.80 5.00 1.50 8.00 2.40

114 82 126TOTAL 100 87.85 65.95 58.15

ATTACHMENT 1a - TENDER EVALUATION SUMMARY WORKSHEET PURCHASE OPTION

Beonic Pty LtdWeighting %

Monitoring Pedestrian Traffic

TENDERER RANKING ... 3

3372

Insert Highest Possible Score (required to automatically calculate weighted score)

Evaluation Criteria

1 2

TTM (NSW) Pty Ltd The Frame Group P/L

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ITT 3372 FINANCIAL ANALYSIS Purchase Option

Provider Y1 Y2 Y3 Y4 Y5 Total

Beonic Pty Ltd $339,947 $36,377 $36,377 $36,377 $36,377 $485,455

Detail

Capital Cost (18 Sensors) $303,570 Operational Cost (18 sensors) $36,377 $36,377 $36,377 $36,377 $36,377

Total Cost $339,947 $36,377 $36,377 $36,377 $36,377 $485,455

Lease Option


Beonic Pty Ltd

Lease Cost (18 sensors) $143,216 $143,216 $143,216 $143,216 $143,216 $716,081

Note 1: The Beonic Pty Ltd tender had the lowest cost for the purchase option, $101,059 less than the

second lowest tender. Note 2: The Beonic Pty Ltd tender had the second lowest cost for the lease option, $52,938 more than the

lowest tender, but would remain the preferred tenderer under this option due to its higher rating against the other tender evaluation criteria.

Comparison of the five year purchase and lease options to the current annual lease options


Existing Annual Lease $260,000 $260,000 $260,000 $260,000 $260,000 $1,300,000

Purchase Option savings -$79,947 $226,623 $226,623 $226,623 $226,623 $814,545

5 Year lease Option savings $116,784 $116,784 $116,784 $116,784 $116,784 $583,919

Note 1: The Existing annual lease option makes no allowance for CPI increases nor the 10 per cent

efficiency saving. Summary of Financial Analysis The Purchase Option from the preferred tenderer Beonic Pty Ltd would result in a total saving of $814,545 (63 per cent) over five years compared to the existing annual lease arrangement. The Lease Option from the preferred tenderer Beonic Pty Ltd would result in a total saving of $583,919 (45 per cent) over five years compared to the existing annual lease arrangement.

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Agenda Item 5.2 Finance and Governance Committee

9 September 2008

FINANCE ATTACHMENT


The purchase option recommended in the report is the most financially beneficial to the organisation in the long term.

As noted in the report there are no capital funds provided in the 2008/09 Annual Plan & Budget and agreeing to the recommendation without identifying savings in expenditure will result in a unfavourable impact on the Council’s cash reserves.

Joe Groher Manager Financial Services

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Agenda Item 5.2 Finance and Governance Committee

9 September 2008

LEGAL ATTACHMENT


When Council intends to enter into a contract for the purchase of goods and services valued at $150,000 or more (levels increased by Order in Council dated 7 August 2008), section 186 of the Local Government Act 1989 (“the Act”) imposes a duty on the Council by public notice either to invite tenders or to invite expressions of interest.

The Act does not require Council to accept the lowest tender.

Kim Wood Manager Legal Services

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Documents

TENDER EVALUATION REPORT: PEDESTRIAN TRAFFIC … · 3. The Monitoring Pedestrian Traffic project was initiated in 2003 to count the number of pedestrians passing specific locations