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procurement in middle east ,dubai

4 replies [Last post]
Tue, 2011-08-02 04:50
Sankar Vijayan
User offline. Last seen 4 years 8 weeks ago. Offline
Joined: 21 Sep 2010
Posts: 58
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Dear all,

I am working in an indian contracting firm.we are going to tender a project in Dubai.Projectwill be paid  in Dirham.Is there any procurement trick to maximise the profit by doing it in USD /Euro .Please Help

 

Regards

Sankar

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Replies

Wed, 2011-08-03 09:24
#1
Mike Testro
User offline. Last seen 3 days 15 hours ago. Offline
Joined: 14 Dec 2005
Posts: 4420
Groups: Building Information Modelling, Content Moderators, GPCCAR Editors

Hi Sankar

One way to minimise exchange rate risks is to "Buy Forward" the currency that you need from a broker at a fixed rate.

The broker then takes the risk.

Another way is to procure imports from a local merchant in local currency.

You will avoid the risk and inflate your tender.

Its a balance that has to be investigated.

Best regards

Mike Testro.

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Wed, 2011-08-03 07:07
#2
Arun Vasanth
User offline. Last seen 5 years 38 weeks ago. Offline
Joined: 12 Oct 2009
Posts: 200
Groups: GPC Qatar

Dear Sankar 

In the earlier contracts there was no  Price Escalation .But in new contracts the Clients and Maincontractors are mentioning 

about the Price escalation....

While Preparing the contract document u can freeze the Currency rates...

 

I mean as document preparing time the US dollar against Dirham may be 40 .If the exchange rate is increasing @ the time

time of Procurement u can claim for variation.I dont think that the client will approve this one because in the Fidic it is mentioning that the Bidding price in Local currency.....  

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Wed, 2011-08-03 06:18
#3
Sankar Vijayan
User offline. Last seen 4 years 8 weeks ago. Offline
Joined: 21 Sep 2010
Posts: 58
Groups: None

Dear Mike Testro,

Thank u Sir for your valuable reply .Sir Can u suggest some risk mitigations plans to reduce risk of such projects .

I am very new to such projects .Client is following FIDIC Condition of Contracts(lump sum).

 

Regards

Sankar

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Tue, 2011-08-02 07:14
#4
Mike Testro
User offline. Last seen 3 days 15 hours ago. Offline
Joined: 14 Dec 2005
Posts: 4420
Groups: Building Information Modelling, Content Moderators, GPCCAR Editors

Hi Sankar

There is no trick.

Your imports will be priced in the foreign currency and will have to be converted into the tender currency for your bid.

Changes in exchange rates is one risk that could go both ways.

You may wish to make a non responsive bid using multiple currencies thus putting the risk onto the owner but you would run the risk of your tender being rejected.

Best regards

Mike Testro

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