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
procurement in middle east ,dubai
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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.
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.....
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
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