Accessing opportunities

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Accessing Opportunities

In partnership with ICN, get direct entry to ICN Gateway, as well as access to resources relating to procurement, contract bids, health, safety and environment, and IT, quality assurance systems.

ICN Gateway offers a new business source for suppliers and a sophisticated search service for project managers

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Introduction to ICN

ICN was created in 1984 in Victoria with offices in every state and territory in Australia and New Zealand. ICN is a business network that offers tailored Australian and New Zealand procurement solutions through a personalised consultancy service.

ICN Gateway offers a new business source for suppliers and a sophisticated search service for project managers. ICN’s role is to find the suppliers and service providers who are best equipped to meet the requirements of hundreds of projects across Australia and New Zealand.

Understanding Prequalification

Pre-qualification is a critical gate for suppliers where capabilities and practices are audited by the operator or the EPC/Tier 1 contractor. Firms to be invited for pre-qualification come from a variety of sources – operators, EPCM or EPC nominated, firms referred by industry groups, ICN nominations and firms identified by project personnel.

Pre-qualification involves establishing whether companies have the requisite technical, managerial and financial capacity to deliver the contracted works in accordance with the specified requirements, thus minimising risks. Companies are subjected to various investigations including:

  • Cost competitiveness – ability to deliver on time
  • Quality Systems & Certification – underpinning operational excellence and social licence
  • Experience – appropriate project management processes and expertise
  • Health – Safety – Environment (HSE) – vital for project execution and social licence
  • Product Information, licensing agreement and technical support
  • Industrial relations record
  • Financial record and systems
  • Business continuity plan and risk management strategies

Project proponents generally repeat the pre-qualification process every three years or so to capture key changes. An example of a pre-qualification package (Jacobs) is provided in the appendices to this document.

The ICN Network has developed the on-line portal – ICN Gateway that lists major projects, allows project proponents to detail their pre-qualification requirements and work packages and enables Australian industry to register their interest for a particular project.

Source: Maximising Victorian Industry Involvement in Australian Resource Projects (October 2012), Bremer+Company

Knowing the Procurement Processes

Company websites are a useful source of information. Aspiring suppliers should be familiar with the procurement material supplied by the majors as these percolate across the supply chain and affect all suppliers – see Rio Tinto’s guide on How to Become a Supplier.

The ICN Network can generally assist industry access major projects by leveraging its close relationship with both the Australian and the State Governments; the requirements for Australian Industry Participation (AIP) on the project, Enhanced Project By-Law Scheme (EPBS) proposals through AusIndustry, existing relationships with project proponents and the State/Territory local industry participation plan requirements.

Source: Maximising Victorian Industry Involvement in Australian Resource Projects (October 2012), Bremer+Company

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“Have a clear understanding of what you’re offering, and where the benefit is”

Resource Supplier Readiness Checklist

Can you devote the time, effort, and resources to become a supplier to the resources sector? Do you have the required skills and expertise in-house to supply resource projects? Download the checklist to see if you’re ready.

Tips for Accessing the Supply Chain

 
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Source: Maximising Victorian Industry Involvement in Australian Resource Projects (October 2012), Bremer+Company
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Victorian Industry Supply Base

ICN Victoria divides SMEs into two categories. The first category comprises companies that are already successful suppliers to the resources sector. These are companies that ICN can promote to purchasers based on their existing capabilities and track record. The major challenge for firms in this group is how they can access opportunities and broaden their engagement in the supply chain.

Many of these companies have pre-qualification status with purchasers, as well as having proven products and/ or services that are in demand within the industry, here or overseas. They have the necessary commitment, resources, skills and information to support sustained supply over the longer term. These firms could have the capabilities to participate in joint ventures to bid for bigger work packages.

The second category of companies are the firms that could potentially supply resource projects. ICN Victoria is developing its knowledge of these companies’ capabilities and assessing the support they require to enable them to compete for supply opportunities. Initial mapping by ICN Victoria has identified the following capabilities in these firms:

To further the objective of enlarging the pool of Victorian Industry Capabilites clients, ICN Victoria has a referral system to Australian Government and State programs that aim to help SMEs to improve their competitiveness. Referrals occur through ICN advisers, through the ICN Victoria website and through ICN‘s industry education program activities. Source: Maximising Victorian Industry Involvement in Australian Resource Projects (October 2012), Bremer+Company

“When demand is just picking up, and again when demand is starting to slow down, that’s when mining companies start looking for smarter, more efficient ways to do things. That’s when, as a METS business, you find the opportunities.”

Typical Process for Becoming a Supplier

Before approaching a mining or consulting firm, gain an understanding of how the company operates by going to their website to view the information provided. Mining Companies work closely with consulting firms when working on New or Expansion projects, exploration and in some cases, within their day to day operations. As these Consultants will often manage procurement functions, it is important to know them well. Check websites for Procurement Policies and Procedures or for the Company’s Code of Conduct/Ethics Policies. These statements will provide guidelines for acceptable behaviour of suppliers wishing to do business with their organisation. Important facts and information such as purchasing objectives, Conflict of Interest Policies, Ethical Considerations, Relations with suppliers, etc. are all covered in a company’s Procurement Policies and Procedures.
Aspiring suppliers should refer to websites of Tier 1 and Tier 2 firms and consultants to identify the details, by company, on who to contact. Some companies have certain days set aside to see suppliers. If so, schedule an appointment with the purchaser you would like to connect with. The ICN Network has comprehensive relationships across the sector and can assist in making contact. The quality of the relationship you build will directly impact on the work that you win. Regular contact with the pertinent parties helps a supplier to stay ahead of the procurement action and to identify local supplier opportunities and to follow these up.
Most companies prefer paperless information to reduce waste, as well as to receive the most current, up to date information so they can make it available to other departments. Companies searching for a new supplier will typically use the internet as a tool. This makes your company website an extremely important part of your company image.
A supplier can be invited to complete a supplier pre-qualification questionnaire. This provides important information about your company so that the requester can assess whether or not to use your company as a supplier. Pre-qualification is designed to reduce as much risk as possible to the resource company or EPC/M. The process can vary between companies however will adhere to the company’s policies. Pre-qualification will examine different elements of a company, some of which may include: • Quality certification – ISO 9001:2000, ISO 14001-2004 • Occupational Health and Safety (OH&S) • Training programs • Company stability/Financial review • Experience and reference checks • QA/QC system • Non-conformance process • Continuous Improvement process • Test procedures • Inspection process control • Previous work contracts/experience and value of contracts • Management team information/CVs • Execution or delivery team information
For on-site suppliers/contractors, the pre-qualification will be more rigorous, and will have a greater focus on health, safety and the environment. This may include information on: • Quality, Health, Safety and Environmental records • Safety certification • Liability insurance for workers and vehicles
It is important that suppliers follow the protocol outlined by each company regarding orders, change orders, invoicing, packing slips, freight, delivery and final payment of invoices. These details can have impact on the evaluation of a supplier and may result in a supplier being rejected as a “preferred supplier”. Even though you may be an excellent supplier with a good quality product and service, how you handle an order is important. You must follow through with your service from the start of the project until completion and start-up of the equipment in order to attain/maintain a preferred supplier status.
The majority of Mining Companies and Consultants have some type of consistent evaluation of suppliers either a standardised form, or as simple as an informal discussion. The criteria for evaluating suppliers may vary depending on whether it is an evaluation of a supplier of goods or a supplier of services. Common criteria for evaluations may include: • Quality of finished product • Delivery • Price • Safety • Compliance to specifications • Turnover packages • Mutually agreed upon performance standards • SAP Vendor performance module • Past history The frequency of evaluations will vary greatly. It may be a scheduled annual review, or may be tied to project schedules and completion/delivery dates.
Maintaining a healthy working relationship with your customer will ensure repeat business, and in some cases will result in obtaining a ‘preferred supplier’ status. This status is usually obtained through the EPCs and not through the Consultants. This may vary, if it is an EPC Project, or depending on the Policies and Procedures of the consulting firm. The benefits to being a preferred or contract supplier may include: • Increased business • Go to them first, before all others, for pricing • Put on preferred bidder’s list • Long term contracts • Exclusive arrangements A formal bid process may not be required, and the work may be awarded directly to a reliable, preferred supplier. This is more common for lower dollar value purchases. An example may be goods or services under $50,000. In some cases, it may be that the preferred supplier is short-listed, however will still be required to participate in a formal bid process and evaluation. A supplier may obtain a ‘preferred supplier’ status by: • Excelling in all aspects of their work • Proven service and supply • Competitive or advantageous pricing • Exclusive supply • Proprietary issues
Source: Maximising Victorian Industry Involvement in Australian Resource Projects (October 2012), Bremer+Company

Understanding Contracts

There are numerous types of contracts being used for mining projects and operations. The different types of contracts allow more or less flexibility, and allocate different amounts of risk to the supplier and the operator/contractor. The following table shows the different types of contracts and their typical use:
Time and Material
A contract that provides no profit incentive to the supplier for cost control or labour efficiency
Firm Fixed Price
The contract is for a firm price, or under certain circumstances may provide for an adjustable price. (It gives the supplier maximum incentive to produce efficiently and all financial risks are borne by the supplier.)
Fixed Price with Economic Price Adjustment
The contract allows for upward and downward revision (based on a scale such as the consumer price index) of the stated contract price.
Fixed Price Incentive Fee
The contract sets a target price, a ceiling price and variable profit formula. This is used when a target price can be established however exact pricing is impossible without payment of a contingency. (A ceiling price is agreed upon above which the purchaser would not pay regardless of the costs.)
Cost Plus Fixed Fee
A contract that minimises the suppliers cost responsibility. Supplier is reimbursed for allowable, allocable costs. The suppliers profit is fixed. The price of the contract is not fixed.
Cost Plus Incentive fee
A contract where the purchaser and supplier agree beforehand on a fee based on the target cost. If the supplier can reduce costs below the target both parties may share in the reduction. Under this contract the supplier can lose all or part of its fee, however all costs must be paid by the purchaser.
Cost Plus Award Fee
A cost plus contract where a supplier is offered an incentive award amount that may be earned (in part or full) based on the excellence displayed in contract completion time, cost of effectiveness, quality of work and technical ingenuity.
Source: Maximising Victorian Industry Involvement in Australian Resource Projects (October 2012), Bremer+Company