[UNIDO] Advising and Monitoring the Planning of a Technology Park

Advising and Monitoring the Planning of a

Technology Park

Guidelines for an ICT Park

in Iran

United Nations Industrial Development Organization

Advising and Monitoring the Planning of a Technology Park: Guidelines for an ICT Park in Iran

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These guidelines are based on a UNIDO technical assistance providing advisory services on planning a technology park in Tehran, Iran. The document has been

developed by Mr. Vijaya Raghavan, UNIDO International expert, with the support of MAGFA staff, beneficiary counterpart, UNIDO staff at Headquarters and in the

Field Office. Mr. Vijaya Raghavan is the President of VMA Consultants Pvt Ltd, India, a management consulting firm specialized in Technology Parks. He has been the founder CEO of TECHNOPARK, India’s first Technology Park, the President of International Association of Science Parks, Asian Pacific Division and a member of

the UNIDO team assessing Technology Parks in industrializing countries.

The presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of UNIDO.

Mention of firm and institutions names does not imply endorsement by UNIDO.

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2.1. Introduction 3

2.2. Goals of A Technology Park 3

2.3. Facilities and Services Provided by Technology Parks 4

2.3.1. Key physical facilities 2.3.2. Key support services 2.3.3. Important intangible benefits

2.4. Profiles of Tenant Companies in Technology Parks 7

2.5. Financing of Technology Parks 7

2.6. Policy and Regulatory Enablers 8 2.7. Principal Pre-conditions for Success of Technology Parks 9

2.7.1. Business Plan / Detailed Project Report (BP/DPR)

2.7.2. Site / location

2.7.3. Working environment

2.7.4. Niche-centric focus

2.7.5. Physical facilities

2.7.6. Terms of rental / lease

2.7.7. Telecommunications

2.7.8. Advisory support

2.7.9. Pro-active Park authority

2.7.10. Professional manpower

2.7.11. An entrepreneurial base, the source of quality tenants

2.7.12. Choosing the right tenants / projects

2.7.13. Availability of support industries

2.7.14. National / international networking

2.7.15. Public policies

2.7.16. Phasing of implementation


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3.1. The Dominant Characteristics of the ICT Industry 13

3.1.1. Technology-related issues

3.1.2. A strategic industry

3.1.3. A generic technology

3.1.4. An advanced infrastructure

3.1.5. Human capital needs of ICT industry

3.1.6. Globally standardised industry

3.1.7. Key lessons from international success stories in

promoting ICT

3.1.8. Introduction

3.1.9. Industry Association for ICT

3.1.10. Human resources

3.2. Recent Trends in the Global ICT Industry 16

3.3. ICT Industry in Iran 17 3.3.1. Introduction

3.3.2. Industry Association for ICT

3.3.3. Human resources

3.3.4. Infrastructure 3.4. Iran’s Readiness to Host a Technology Park 19

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5.1. Purpose and Structure of a typical RFP (Request For Proposals) 22

5.2. Review of the RFP prepared by MAGFA 23

5.2.1. Objectives of ICTP

5.2.2. The Tentative Blueprint of the ICTP as envisioned

by MAGFA

5.2.3. Scope of work

5.2.4. Terms and conditions

5.2.5. Phasing of the project

5.2.6. Instructions to firms submitting proposals


5.3. The Revised RFP 27

5.4. Revised Scope of Work 28

5.4.1. Strategic Framework

5.4.2. Business Plan/Detailed Project Report

5.4.3. Implementation Consultancy

5.4.4. Environmental Impact Analysis

5.5. General Provisions and Conditions 32

5.6. Requirements of Proposals Submitted 32

5.7. Instructions to Bidders 33

5.8. Evaluation Criteria and Award Procedures 33

5.9. RFP Schedule of Events 33

5.10. Administrative Information 33

5.11. Review, Revision and Acceptance of BP/DPR and Payment 33

5.12. Promoting and Releasing the RFP 34

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6.1. The Evaluation Process 35

6.2. First Mission of the UIE to IRAN 37

6.3. Contract Format 37

6.4. Subsequent Missions of the UIE to IRAN 38

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8.1. Conceptual Clarity 40

8.2. Alternative to an Escalator Strategy 41

8.3. The Phasing of the Project 41

8.4. Marketing 42

8.5. SWOT Analysis 42

8.6. Policy Support 43

8.7. Organisational Structure of the ICTP 43

8.8. Operational Management 44

8.9. Park Services 44

8.10. Financial Planning 44


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IINNTTRROODDUUCCTTIIOONN An industrial promotion agency, MAGFA, of the Government of Iran, a member country of the United Nations Industrial Development Organisation (UNIDO), decided to establish an Information and Communication Technology (ICT) Park in Tehran. Iran, with geographic proximity to Europe, Asia, the Middle East and Africa, though rich in natural resources and educated manpower, lagged behind many developing countries in industrial and service sectors. Iran had identified ICT as a potential area of growth. The decision to promote ICT and derive the benefits thereof was essentially inspired by the series of success stories of developing economies like India, Malaysia and others in the Far East, where the educational base was strong. Further, the possibility of replicating such success stories was higher in the case of ICT than most other sectors for the obvious reason that the principal pre-condition for its success was the availability of trained and talented human resources. Iran was finely poised to exploit this opportunity. Worldwide, Technology Parks have been used as a platform for promoting technology-intensive industries. Therefore, an ICT Park was seen as the right policy instrumentality for promoting high quality jobs. As part of the planning process Iran set up in-house teams to undertake a range of background studies, preparatory to the project. These studies covered the following areas.

Report on national ICT infrastructure

Laws and regulations governing domestic and foreign investments

Previous experiences of Technology Parks in the country

Preferences and needs of ICT firms in the country

Options for the site for the proposed park

Government IT-related institutional framework

Structure of the domestic IT market

Because of its extensive exposure to Technology Parks worldwide, UNIDO’s support was sought for planning and implementing the proposed ICT Park (referred to as ICTP in the rest of this document). UNIDO made available the services of Mr. Fabrizio Condorelli, concerned with industrialization in the developing countries in general and enterprise development through the promotion of Technology Parks and Incubators.


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UNIDO also brought in an international consultant, G. Vijaya Raghavan1, expert on Technology Parks, based in India, as the UNIDO International Expert (UIE) to provide a range of professional advisory services for the project. The choice of the UIE was guided by his hands-on experience in planning, implementing and managing a technology park in India, his wide exposure to technology parks worldwide, and his active involvement in the international science and technology parks movement. Particularly relevant was Raghavan’s understanding of the issues involved in setting up a technology park in a developing country. UNIDO defined the role of the UIE as outlined in Chapter 4.0 UNIDO and Iran, acting through one of its nodal agencies, MAGFA, jointly decided to prepare a Business Plan / Detailed Project Report (BP/DPR) as the first step towards the establishment of the park.

1 [email protected]


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2.1. Introduction Parks in developing countries have demonstrated that industry-specific infrastructure of world-class standards coupled with engineering and scientific talents at a fraction of the costs as prevailing in developed countries would represent a “product offering” of unmatched value for national and trans-national companies. Given the price such companies will be paying for such value-added services and facilities, a Park can generate decent surpluses and attractive returns for the promoters. The phenomenal growth of Science and Technology (S&T) Parks worldwide could largely be explained in terms of three broad factors: o Technology is recognized as a potent competitive advantage and has, therefore,

become a universal driver of industrial development. o Small and Medium Enterprises (SMEs) are playing an increasingly pivotal role in

technological innovation, employment generation, structural change and economic growth around the world.

o Accelerating the growth of modern SMEs which are knowledge-based and have high growth potential is contingent upon making available a comprehensive range of facilities and services, largely funded by public authorities, (at least initially), in order essentially to reduce the gestation time, start-up costs and overheads. S&T parks have been found to be the best institutional mechanism to take care of technology-intensive SMEs.

The concept and focus of technology parks vary from being highly university-centred in developed countries to Government-driven initiatives, in developing countries, for providing high quality facilities and services for high technology industries. 2.2. Goals of a Technology Park Although priorities could differ among the Parks, the principal goals of Science and Technology Parks have broadly been: o Technology development and diffusion o Stimulate the formation of new technology-based firms and the growth of existing

technology-based firms o Facilitating the growth of SMEs o Employment generation o Competence development – enhancing the competitiveness of existing as well as new

units in the region o Promotion of specific industries


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o Restructuring the industrial sector with the infusion of knowledge-based industries o Regional development and regeneration o Attracting large national and international companies thereby attracting inward

investments by creating world-class, world-scale physical facilities and proactive support services.

o Fostering networks between the tenants and between the tenants and their environment – local, national and international.

o Fostering spin-off firms started by academics thereby helping commercialise academic researches and strengthen university association with the Park

2.3. Facilities and Services Provided by Technology Parks A Technology Park, at the core, is a clutch of physical facilities and a portfolio of services. The physical facilities planned, the services provided and the quality as well as price of the total package offered should contribute to enhancing the competitiveness of tenants who move into the Park. Getting this range-quality-price matrix of the facilities and services offered right holds the key to the long-term success of an industry-specific, purpose-built infrastructure like the Park. The typical range of facilities and services provided in parks around the world can be classified into three categories: general physical infrastructure, industry-specific specialist infrastructure and support services. 2.3.1. Key physical facilities

Choice of SITE/LOCATION is one of the most critical decisions in the development of a Park. The following considerations are generally taken into account during the process of selection: o Should be close to an urban or metropolitan centre with adequate amenities

including education, housing, entertainment, shopping and health care. o Be linked by good public transport system and close to major road arterial

system. o Be close to institutions of higher learning. o Be close to a good airport, preferably an international airport. o Should offer the best balance between buildings and open area with scope for

landscaping to instill a park-like ambience. o Cost of land and scope for expansion

DEVELOPED PLOTS of different sizes with full infrastructural support – road, drains, sewers, lighting, security, etc. – for large independent companies for customised building for owner occupation represent a major facility. These parcels are either leased for long periods or sold outright.

Purpose-built, MULTI-TENANT BUILDINGS incorporating modules of different sizes with electricity, water, telephone and access to specific centralised services represent the most important physical facility in a Park. The size of the module may range from 10 sq. mtrs. for fledging start-ups to 1000 sq. mtrs. or more for medium sized companies for software development or industrial production.


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These are made available on affordable and flexible rental or lease terms. Each park will have a PARK CENTRE or CENTRAL FACILITIES CENTRE, which normally houses the park authority, provides a host of support services, available to tenants at reasonable rates, including conferencing, state-of-the-art communication, shared data bases/libraries, secretarial services, etc. Other industry-specific or SPECIALIST FACILITIES will include advanced telecommunication systems, Prototype and Pilot Production Centre, Tool Room, Calibration Laboratory, Environmental Testing Laboratory, CAD/CAM Facility and Testing/Quality Control Services. The range of ANCILLARY FACILITIES will encompass Cafeteria, Post Office, Bank, Gymnasium, Crèche, Guest House, etc. A Technology Park is a prestigious premium facility. Knowledge-based industries attract top, highly paid talents who demand high quality facilities and amenities. Almost always they need air-conditioned, clean and attractive working environment including pleasant surroundings. IT Industry (both the hardware and software components) is the most globalised industry with almost a universally standardized set of skill-sets, technologies, products and services and end-uses. Hence, a Technology Park attempting to attract national and international players has to take into account the key features of the ‘offerings’ of similar Technology Parks worldwide. The infrastructure to be planned to attract leading IT players will also have to reflect significant technological transformations taking place in the IT industry which will have a bearing on the range and quality of facilities and services to be incorporated in the Park.

2.3.2. Key support services

Technology-intensive small and medium scale enterprises and their promoters, a major proportion of tenants in a Technology Park, require a whole range of services particularly in their early stages of development. In fact, in regions without access to high quality facilities and services even large enterprises including MNCs might require a good deal of promotional support. The range, quality and cost-effectiveness of services could well differentiate one Park from another in terms of attractiveness to prospective tenants. The support and advisory services would cover: o Hassle-free, single-point support in getting statutory and other approvals o New business opportunity screening o Technology transfer, patenting and IPR o Preparing project report and Business Plan


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o Match-making between tenants and their clients o Accessing project finance o Training, Seminars and Workshops for capability building o Recruitment of employees o Operational Management o Secretarial o Networking o Full range of support for start-up firms under the Incubator Programme

2.3.3. Important intangible benefits

The benefits that tenants in a Park derive, however, go much beyond the obvious cost advantages or advisory support. The concept of co-operation is fundamental to Technology Parks. Technology Parks provide an organizational context in which collaboration is encouraged and reinforced between tenants, and centres of higher education and between tenants and companies outside the park. Parks need to develop networks, alliances, partnerships and opportunities with other Parks, Universities and Research Institutes. Such collaboration itself provides a source of competitive advantage. Parks foster innovative culture within their community. Interaction among scientists, promoters and clients through seminars, guest lectures, joint projects, sub-contracting work and shared facilities, amounting to creating and sharing knowledge. A Park should attempt to sustain a mutually self-supportive learning community of entrepreneurial tenants. The Park management will, therefore, have to play a strong role as a catalyst in the networking process. A Technology Park is a prestigious ‘premium product’. It offers a recognizable identity, a superior image – a brand equity – which supports the tenants and their products. It becomes easier to attract customers, suppliers, employees, business partners and media. This provides great leverage to small and medium enterprises. The Partnerships, the cooperation, the synergy and the image that a Technology Park helps promote, and the mentoring the Park management provides to those who require it give its tenants considerable advantage, which units of comparable sizes outside a Park have to go without.


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2.4. Profiles of Tenant Companies in Technology Parks Typically four categories of tenant companies are found in a Technology Park: o Small, technology- intensive, start-up companies; o Small / medium scale companies that are already in business; o Subsidiaries of large local companies or MNCs; and o Service companies Locating public institutions dealing with Science and Technology or with high-end education in a Park can provide a stimulus to the activities of the Park. The prevailing circumstances and priorities in a given developing country will determine the relative importance of the different categories of tenants it attracts. 2.5. Financing of Technology Parks The pattern of funding of Technology Parks worldwide has been determined by the roles and goals of the important stakeholders. Each Park is positioned at a point on a continuum. At the extremes of the continuum exist Parks, which are: o Totally funded by Government where commercial return on property is not the prime

objective because the benefits sought are technology development, job creation, industrial regeneration, economic growth etc.

o A completely commercial undertaking where a direct return on funds invested is

sought from the commercial property market via sale of land, rental income or capital growth on property assets.

Most Parks, however, fall somewhere between the two extremes; most seek some returns from land sales or rent or services to meet part or all of the costs. Such Parks attempt to generate enough surpluses to reinvest in the facilities and keep them state-of-the-art. University, a common sponsor of Parks in the developed world, looks at them as a vehicle for advancing its technologies and later, as a means of generating funds. National / State Governments or Local or Regional Authorities (especially developmental agencies) want to promote a Park because it generates new employment or helps promote industrial development, often in specific identified sectors. Such agencies may fund infrastructure facilities and provide other services like marketing/promotion assistance for the Park. They will also support start-up companies by providing grants, soft loans, guarantees or subsidies. A financing institution or a bank will consider a Park as a medium-term investment from which they may expect reasonable returns during the medium-term.


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They may provide equity capital to the Park and equity, soft loans and professional services to Park-based companies. Finally, a private developer may treat Park as a property venture from which good returns can be expected. They build the property and sell/lease to prospective tenants. A mixed model or Public-Private initiative is also an option pursued, mainly in the developing countries. Under this model, the initial funding is provided by public agencies and the management of the Park is handled by a private group which may sometimes have a financial stake in the Park. The important advantage of such a model is the autonomy the management enjoys, free from political or bureaucratic interventions. 2.6. Policy and Regulatory Enablers Pro-active government policies can play a role in the success of technology parks. The package of incentives could relate to those offered to tenants and those offered to the promoters or the developers of the Park. For the tenants:

International datacom Corporate tax benefits Duty concessions Relaxation in municipal laws Expeditious licensing procedures Hassle-free single-point clearances and approvals Investor-friendly labour and industrial laws Investor-friendly capital flow/foreign exchange regulations and repatriation rules Guarantees and assurances regarding service provisioning and quality Common facilities and infrastructure, which lower capital investments, mitigating

risks. For the promoters

Investment incentives like investment subsidies, grants, soft loans, interest subsidies

Income tax benefits Duty concessions Relaxation in municipal laws Provision of utilities Investor-friendly foreign exchange regulations and repatriation rules

The state / regional governments as part of their efforts to help create employment in specific industries, in addition to the above, may create institutions to promote human resource development in the relevant sectors.


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2.7. Principal Pre-conditions for Success of Technology Parks A Park is at once a development tool and itself a business. The Park management has to combine in itself the skills to effectively harness this development tool and to manage its affairs efficiently. The Park management has to take on the functions of a Development Manager – the original idea, feasibility analysis, defining the focus, determining the target market segment, dealing with authorities, sourcing finance, marketing the Park, etc. – and that of a Project Manager – construction and commissioning of the physical facilities on time and on budget and their continued operation and maintenance. The success of a Park depends on the success of its tenants. The steps to be taken by the Park authority to achieve high success rates among the tenants include: o Identifying and screening potential tenants to increase the number of quality firms

admitted to a Park; o understanding how their businesses operate and what features they see as benefits;

and o creating right kind of infrastructure, environment and facilities which give competitive

advantages to tenants

The Park authority should have mechanisms to facilitate charge fixing, revenue collection and mediate between the tenants and the developers, if the park authority itself is not the developer. Differential pricing policies, whereby startups or relatively small enterprises are offered lower charges, thus involving a level of subsidy, is an option to be considered. The Park management needs necessarily to take into account the local context, constraints and opportunities. The Park should be sufficiently linked to the infrastructure and economic realities of the region it intends to serve. Over-ambitious demand projections, facilities remaining under-utilised leading to financial difficulties and declining services are a far too familiar sequence of events in the case of inadequately planned facilities. Even the most carefully planned facility can be ruined by poor management during the post-commissioning phase. A Technology Park is a highly demanding developmental initiative calling for comprehensive evaluation of different options and careful planning and execution of the chosen option relating to each of the major parameters. The important pre-conditions for successfully planning and managing a Park are identified below. 2.7.1. Business Plan / Detailed Project Report (BP/DPR)

A professionally prepared DPR based on realistic assumptions and analyses reflecting national and international norms, practices and trends is the starting point towards the establishment of a successful technology park.


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2.7.2. Site / location

o To be appropriate and close to an urban / metropolitan centre with highly evolved socio-economic overheads, adequate human resources as well as other supplies and support services.

o The city to have good connectivity (transportation, telecom and datacom) with rest of the country / overseas.

2.7.3. Working environment

o Attractive, pleasant, stimulating o Air-conditioned offices and landscaped surroundings

2.7.4. Niche-centric focus

o Each Park to focus, at least initially, on a specific sector or sub-sector of an industry to ensure provision of industry-specific support.

Chasing too many sectors can prove to be counterproductive.

2.7.5. Physical facilities

o To be comprehensive, high-quality, with scope to accommodate expansion 2.7.6. Terms of rental / lease

o Flexible, competitive

2.7.7. Telecommunications

o State-of-the-art o Internationally competitive pricing

2.7.8. Advisory support

o Wide-ranging professional advisory on the different aspects of planning,

implementing and managing projects.


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2.7.9. Pro-active Park authority

o A highly professional, pro-enterprise entity with a high degree of autonomy committed to single-mindedly pursuing the goal of building a world-class, world-scale institution

o To act as a partner to each tenant o To have a commercial orientation. In the long-run, a Park has to be

financially self-reliant to be able to keep the facilities updated, renewed and to create new facilities.

2.7.10. Professional manpower

o The availability of skilled, disciplined and industry–specific manpower at competitive cost and qualified managerial talents with appropriate experience represent key determinants of the success of a Park

2.7.11. An entrepreneurial base, the source of quality tenants

o A pool of local entrepreneurs willing and competent (in terms of financial resources and intellectual capability) to take on high–risk/high-reward, technology-intensive activities is another important pre-requisite.

2.7.12. Choosing the right tenants / projects

o A Technology park is only as good as its tenants o Strong professional competence and financial stamina of chosen tenants o The techno-commercial parameters of the projects planned being sound

2.7.13. Availability of support Industries

o Component manufacturing base attracts OEMs in IT sector especially when more and more technology is embedded in components than in systems

o Facilities for mould-making, injection moulding metal working / plating etc of international standards are essential for attracting hardware industry.

2.7.14. National / international networking

o Park management to play a major role to forge partnerships, alliances and networks among / between / with:

• Park tenants; • Park tenants and outside companies, • Research institutes etc. outside the Park.


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2.7.15. Public policies

o Pro-active Government policies including a business-friendly tax regime o Internationally competitive and transparent rules, regulations, accounting

practices, IPR/patent laws etc. o Electronic governance enhancing investment environment for IT industry o Human resource development o An Institutional mechanism to plan, implement, monitor and continually

update the policies. 2.7.16. Phasing of implementation

o Careful phasing of the project to avoid over- investment (nor, in fact, under investment) in relation to requirements of the prospective tenants.


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33.. TTHHEE IICCTT IINNDDUUSSTTRRYY 3.1 The Dominant Characteristics of the ICT industry Information technology is considered the most strategic and generic of all technologies with an all-pervasive impact on rest of the economy. In fact, no other technology of our times offers as comprehensive an answer to enhancing the competitiveness of nations and quality of life of the people, as does ICT. The impact of ICT on rest of the economy has been so pervasive and momentous that it is characterised as a second industrial revolution. ICT is the fastest growing industry in the world and is poised to become the largest global industry. The important features of ICT industry are highlighted below: 3.1.1 Technology-related issues

Impermanence of technology is far too real. Incredibly fast pace of change and, hence, high mortality rates of current technologies are the dominant feature of ICT. No player in the ICT industry could stand still; everyone, all the time, has to reinvent oneself to survive. Transfer of ICT is not some form of sequential passing of the baton from the lab to the industry. ICT is characterised by a high degree of inter-relatedness and is highly systemic in nature. Whole range of networking is, therefore, a pre-condition for the growth of ICT. Technology generation and commercialisation require the involvement of talents from diverse disciplines working together as a team. Diverse talents, physical facilities, financial resources, structures and motivational devices needed to mobilise product teams being available at the same place, like in a technology park, can be a critical advantage.

3.1.2 A strategic industry

Because of its very high positive impact on employment, wages, labour skills, productivity and research – all contributing to economic growth of a country – ICT is treated as a strategic industry.


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3.1.3 A generic technology

Incorporation of ICT in production processes cuts cost, response time and improves product quality and performance. Most of the recent advancements in production technology like lean production, just in time, total quality control etc. have a strong ICT component in it. Business services, which provide strong competitive advantages to manufacturing, have changed dramatically by incorporating ICT innovations.

3.1.4 An advanced infrastructure

As a national information infrastructure, informatics is the lifeblood of a modern economy. Easy access to information (facilitated by good infrastructure) improves decision-making at all levels; aids effective public policy, accountability and governance; reduces transaction costs; contains the time needed to shift resources to high productivity/ high market opportunities. Japan, Korea, Taiwan and Singapore exploited ICT to improve traditional infrastructures. By building an advanced information infrastructure, like transportation and communications and developing national information infrastructure they attracted global industries and services and supported regional and international strategic alliances.

3.1.5 Human capital needs of ICT industry

ICT, specifically software development, has been and will remain a heavily people-intensive activity. ICT needs highly specialised skills the shortage of which acts as a serious constraint on the pace of expansion of the industry worldwide. The ICT revolution imposes tremendous demand for education and training calling for thorough revamping of curricula to strengthen education in mathematics, computer science, electronics engineering etc. Often, public policy interventions are essential to ensure the supply of adequate number of manpower with the appropriate range of skills of the right quality.

3.1.6 Globally standardised industry

Information Technology is the most standardised industry with globally standard technologies, skill sets, processes, hardware configuration, applications etc. Emergence of better metrics and measurement techniques, steady improvement in software engineering language and processes and increasing connectivity are further strengthening the process of globalisation of ICT industry.


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In-house software development has ceased to be an important component of business strategy in the developed countries. Outsourcing is the name of the game. Countries with large and growing pools of trainable and experienced English-speaking science and engineering talents at competitive costs, good transport and communication infrastructure, access to state-of-the-art software and hardware and an open and liberal economic environment will greatly benefit from the investment by the global ICT players who are constantly looking for new destinations.

3.1.7 Key lessons from international success stories in promoting ICT

The level of generation, absorption, diffusion and development of ICT has been highly uneven across the countries. A few realised the stupendous, all-pervasive benefits of the technology and went all out to put in place a powerful package of policy support. The two ingredients of the success formula have been the leadership and commitment of the Governments and the extensive Government-business collaboration. The single most important factor explaining the phenomenal growth of ICT industry in East Asia – Japan, Korea, Taiwan, Singapore and, to some extent, in Malaysia and Hong Kong, most recently India – is the total commitment of the Governments to promote the industry. The Government played several roles for stimulating and sustaining the growth of ICT industry. “....... coach and co-ordinator for the private sector (Japan), creator of private conglomerates to compete abroad (Korea), incubator and supporter of SMEs (Taiwan), integrator and strategist (Singapore) and infrastructure provider (Hong Kong)”. In the case of India, the Government played the role of an enabler to unleash the power and genius of the private sector. An equally dominant component of the strategy for the generation / diffusion of technology, particularly information technology, among the most successful countries is the close co-operation and collaboration between the government, private sector, trade and industry associations, universities and research institutes. In fact, given the inter-relatedness and systemic nature of the ICT industry, Government-industry collaboration is almost a pre-requisite for success particularly in technology development and diffusion.


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3.2 Recent Trends in the Global ICT Industry Within the ICT industry, there have been consistent shifts in terms of employment and turnover from hardware to software initially and more recently to ICT enabled services (ITES) including Business Process Outsourcing (BPO), contact centres, data management etc. The geographical location of the industry has also been shifting from the developed to the developing countries. Although US continues to be the dominant market for ICT, its dominance is progressively declining with markets in Europe, Asia-Pacific, Middle East etc growing at a brisker pace. IDC, the premier global market intelligence and advisory firm in the information technology industry and NASSCOM (National Association of Software and Service Companies), India have undertaken studies on the latest global trends relating to the industry. The following analysis and data are reproduced from the report. Global ICT-ITES spending is expected to grow at a Compounded Annual Growth Rate (CAGR) of 7.9 percent over 2004-08, the break-up of which is given below: [ICT spending comprises spending on: Hardware & Software Products, ICT Services (ICTS) and ICT-Enabled Services including Business Process Outsourcing (ITES – BPO)].

Global ICT-ITES Services Spend Forecast by Segment – 2004-08 USD Billion 2004 2005 2006 2007 2008 CAGRHardware 365.4 386.6 409.9 434.8 460.9 6.0%Software products 197.3 211.1 226.4 242.6 259.0 7.0%ICT services 399.8 422.6 449.7 467.6 510.4 6.3%ITES-BPO 447.7 497.8 554.8 614.9 682.5 11.1%TOTAL 1,410.2 1,518.1 1,640.8 1,759.8 1,912.8 7.9%

Source: NASSCOM / IDC The above study forecasts the following key trends in the global ICTS and ITES spending over 2005-08.

• Moderate growth in ICT spending as consumer spending softens and SME and enterprise spending witness marginal growth.

• Marginal slowdown in hardware spending, steady growth in software and services demand.

• Relatively slower growth in the mature markets of US, Western Europe and Japan. Emerging geographies such as Central and Eastern Europe, China and India to drive demand.

• Major market shifts in the consumer segment driven by continued digitization of media, proliferation and expansion of broadband options, rapid adoption of new converged devices and continued consolidation of industry players.

• Enterprise level innovation focused on mainstream business applications with an emphasis on ease-of-use computing.


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• Emphasis on cost reduction and increased process focus in the ICT / business services segments to drive increased leverage of the offshore model.

• Increased adoption of off-shore outsourcing as organisations adapt to the global sourcing phenomenon.

Among the segments expected to drive ICT spending growth are infrastructure software (including security), handheld devices, network equipment and outsourcing services. Security and software quality will be the key issues facing the software segment over the next few years. IDC forecasts a CAGR of nearly 7.0 percent over 2004-08 for this segment. The predictions further state that while the demand for ICT services, overall, is expected to grow at a CAGR of 6.3 percent during 2004-08, ICT outsourcing will witness the highest growth of 8.2 percent and project oriented services and support the lowest of 5.3 and 5 percent respectively, in this sector. A break up of the ITES-BPO Sector is given below. Within this sector, projected to grow at a CAGR of over 11 percent over 2004-08, most segments are likely to experience double-digit growth. Global ITES-BPO Demand forecast – 2004-08 USD Billion 2004 2005 2006 2007 2008 CAGR Human resources 10.8 13.2 15.9 19.0 22.5 20.2%Procurement 1.7 2.2 3.0 4.1 5.8 36.7%Finance and accounting 15.1 16.5 18.2 20.3 22.8 10.9%Customer care 44.9 50.5 57.3 64.6 72.4 12.7%Logistics 182.4 201.0 226.1 255.0 288.7 12.2%Engineering R&D 12.5 19.6 24.8 30.8 37.8 31.9%Sales and marketing 147.2 158.1 168.7 176.1 183.4 5.7%Facility operations and management 29.6 31.5 33.5 35.8 38.4 6.7%Training 3.6 5.3 7.3 9.0 10.7 31.3%Total 447.7 497.8 554.8 614.9 682.5 11.1%

Source: Nasscom, IDC

3.3 ICT Industry in IRAN

3.3.1 Introduction

In the late 1970 and early 1980s, large government-owned companies who provided the software and maintenance services to the government, the largest user of ICT, dominated the ICT sector in IRAN. During the last couple of decades, several small private software companies have come into existence. In 1978, an apex body was formed with the mandate to develop the country’s ICT agenda. The general framework of the agenda consisted of five major parts, namely:


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o Infrastructure o Commercial and Economical Services o Government Services o Human Resource Development, Cultural and Social Programmes o Employment and Industry Other governmental agencies provided a variety of promotional and support services for the ICT sector including incubators, seed money and infrastructure.

3.3.2 Industry Association for ICT

The country’s premier ICT industry association was formed in 1994 with the primary objective of being a catalyst for the growth of the ICT industry in IRAN. This association was a non-governmental, not-for-profit organisation supported by membership subscriptions. It promotes, develops and protects the interests of ICT companies in general and ICT software companies specifically, at both national and international levels. This is done by encouraging and fostering activities within the industry, as well as cooperation among members and other relevant associations and governmental bodies. Services offered by the association included:

Database creation Events organization Member services Domestic tender & bids Partnership with Government

The association classified its member companies based on the following activities and many of its larger members came to be active in a number of these areas including:

Mainframe services Assembly and services Peripherals sales & services Production & sale of computer parts Application development Sales & support of software packages System engineering ISP Networking Consulting Hardware services Training and research Tailor-made system

3.3.3 Human resources

Iran’s most important resource in the ICT sector was its educated and talented workforce. By some estimates the country had more than 70,000 university graduates in the ICT field that encouraged the government to plan a program to train 300,000 youths for jobs in the sector.


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3.3.4 Infrastructure

Easy access to computers, communication services and the Internet is crucial to the growth and development of ICT. The telecommunication network in IRAN was till recently in the public sector, but being opened to private sector competition progressively. The telecommunication channels included fixed and mobile lines, the national microwave network, Trans-Asia-Europe fibre optic project, satellite communication channels, ISDN and VSAT links.

3.4 IRAN’s Readiness to Host a Technology Park Many of the key ingredients, which are, in fact, pre-conditions for the success of technology parks were already in place in IRAN, including trained and trainable manpower, expanding infrastructure and the commitment of the government to this crucial sector. Further, the ICT market in the country was found to be in a phase of growth and presented a sizeable opportunity. A recent study of the industry had determined that the existing companies were longing for a facility of international standards, like a well-designed Technology Park. It was, however, noticed that the existing ICT industry was relatively less developed and lacked the critical mass required to rapidly ramp up. The share of the software sector was less than 30% of the total ICT industry and exports were miniscule. The Government constituted the single largest market for ICT. The industry had attracted very little foreign direct investment or investments from overseas citizens. Another characteristic of the industry was the small size of each enterprise and the lack of trust, openness and cooperation among them.


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44.. PPLLAANNNNIINNGG AANN IICCTT PPAARRKK IINN IIRRAANN:: RROOLLEE OOFF UUNNIIDDOO UNIDO is a specialised agency of the United Nations with the mandate to promote industrialization throughout the developing world. The mission of UNIDO is to “help developing countries and countries with economies in transition in their fight against marginalization in today's globalised world. It (UNIDO) mobilizes knowledge, skills, information and technology to promote productive employment, a competitive economy and a sound environment.” Promoting technology-intensive SME’s, in developing countries and countries in transition, on the platform of Technology Parks has been a major developmental initiative of UNIDO. As part of the promotional initiatives of UNIDO, the services of two technology park experts were made available to the MAGFA in planning the proposed ICTP:

Fabrizio Condorelli of the Industrial Promotion and Technology Branch of UNIDO, who was assigned the task of overseeing UNIDO’s involvement in the project and

G Vijaya Raghavan, President of a management-consulting firm based in India, specialising in technology parks and information technology, who was brought in as the UNIDO International Expert (UIE) for the project.

The role of the UIE was set out by UNIDO as follows: o To review the Request For Proposal (RFP) of the bidding for the preparation of the

Business Plan to set-up the ICTP with special emphasis on international clauses and regulations.

o To provide advisory assistance in the selection of the consulting firm to be recruited by MAGFA for the development of the Business Plan.

o To provide advisory assistance in the selection of national experts o To provide documentation to the MAGFA on best practices in the establishment of

ICT Parks elsewhere (based on UNIDO experience). o To monitor the Business Plan preparation according to assigned work-plan and

provide an assessment on reports submitted by the selected consulting firm and advise MAGFA on guiding the consulting firm towards realising the objectives of the project.

o To review and appraise the Business Plan prepared by the selected consulting firm and to provide advice to MAGFA on how to direct the consulting firm to finalise the Business Plan.

o To advise MAGFA on avoiding any possible gap. o To facilitate the establishment of relations between MAGFA and successful ICT

Parks in other countries


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Essentially the job involved the following key aspects: o Strengthening the RFP document drafted by MAGFA to international standards of

bid documents and sensitizing the document to the requirements of a technology park dedicated to promoting ICT industry.

o Advisory for the selection of the consulting firm for preparing the Business Plan. o Advisory for the selection of national experts. o Assistance to MAGFA in overseeing the preparation of the Business Plan to ensure

that the plan conforms to the pre-determined scope of work. The process of advisory and other support by the UIE involved extensive home-based effort and three missions to IRAN.


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55.. SSTTRREENNGGTTHHEENNIINNGG OOFF TTHHEE IINNIITTIIAALL VVEERRSSIIOONN OOFF TTHHEE RRFFPP 5.1. Purpose and Structure of a typical RFP Purpose: Planning an investment, whether in infrastructure or otherwise, warrants a detailed examination of its feasibility in terms of market, technical, financial and economic aspects. This process involves identifying and assessing those factors that directly or indirectly impact the project in the present and in the future. The DPR and its derivative, the Business Plan (BP), present the results of such an analysis. As part of selecting the right team of professionals to undertake such an analysis, an RFP is first prepared. The purpose of an RFP is to define the client’s basic requirements, receive proposals on how to meet these requirements and gain adequate information on the services offered by the bidders to help choose the most appropriate consultancy firm/s.

Structure:

Typically an RFP is structured as follows: o Introduction

• Statement of purpose • Background • Objectives of the initiative

o Scope of Work – Terms of Reference and Methodology o General Provisions and Conditions o Special Provisions o Requirements of the Proposals Submitted o Instructions to Bidders o Evaluation Criteria and Award Procedures o Schedule of Events o Administrative Information o Protocols for Review, Revisions, Approvals and Payments o Prescribed Formats and other Annexures. In consultation with MAGFA and UNIDO, the RFP was revised on the above lines. The salient features of the revised RFP are presented in the next section.


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5.2. Review of the RFP prepared by MAGFA The process of strengthening the RFP was to be undertaken in two steps:

Step 1: Offering comments on the initial version of the RFP document. Step 2: Revising the RFP to conform to international tender formats.

5.2.1. Objectives of ICTP

MAGFA had defined its vision of the ICTP, the major components of which were outlined in the RFP. The Park’s mission was envisaged as: “The Park intends to create the required foundation and framework for the development of the ICT industry in the Member Country. The proposed Park will provide an institutional context for promoting private ICT businesses, increasing the competitiveness of domestic ICT firms and cultivating the best of international processes and practices by attracting foreign investment and technology.” Specific objectives of the Park were:

o promoting synergy among the firms in the Park for mutual benefit; o facilitating foreign direct investment by streamlining rules and regulations; o nucleating high-tech start-ups by ensuring venture capital and other support

mechanisms; o creating a pool of skilled human resources in ICT; o accelerating the growth of ICT industry in the country by encouraging and

supporting exports, securing outsourcing contracts, attracting non-resident citizens as investors and promoters of projects and strengthening the domestic ICT industry by making it internationally competitive

5.2.2. The blueprint of the ICTP as envisioned by MAGFA

The Park was planned to be built at an appropriate location with easy access and proximity to air, rail and road terminals. It sought to incorporate: o Multi-tenant modules of different sizes suitable for small, medium and large

companies o Full range of support infrastructure like advanced data communication,

telecommunication, central facilities like training and conference facilities, convention centre, multiple meeting rooms, technical library, research workshops and data centre; amenities like cafeteria, banks, travel and transport, business centres, health clubs etc and a well laid-out campus with all utilities and services - legal, commercial, marketing, financial and administrative


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o Networking with Universities, Research Institutes and ICT Parks around the world

o A comprehensive package of professional support and incentives for the development of new ventures and the enhancement of existing ones

The Park would be implemented as a business venture and was expected to generate surplus to reward investors within a reasonable time frame.

5.2.3. Scope of work

The services required of the Consultancy firm/s, as per the initial version of the RFP prepared by MAGFA, were:

i. To work with the in-house project team in completing the ongoing studies performed by the in-house team of MAGFA ii. To augment the above studies in accordance with the needs for preparation of the required Business Plan iii. To prepare the Business Plan including a strategic framework and a detailed step-by-step process toward the establishment of the Park

The scope of work needed further clarity and specificity to avoid future disputes, particularly on the aspect of completing and augmenting the studies done by the in-house team. The prospective bidder to the RFP had no way of estimating, at the time of making the proposal, the amount of effort and time to be invested for augmenting the studies done by the in-house team. Ideally, this component had to be kept out of the RFP. This effort could be separately awarded to the selected consultancy firm/s on time and materials basis.

It was also mentioned that: “The business plan that will be prepared by the consultancy firm/s will include a strategic framework and a detailed step by step process of the next phases of the project towards the establishment of the park”.

The level of detailing required in the “step-by-step process towards the establishment of the Park” needed to be elaborated. In fact, with this requirement, the Business Plan effectively became a Detailed Project Report (DPR).


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A DPR, among other things, would include a Master Plan, which detailed the physical infrastructure requirements, services, amenities, utilities etc. While broad sketches and specifications could be part of the DPR, it might not include detailed architectural designs and drawings. Accordingly it was felt that the assignment be renamed as “Preparing the Business Plan / Detailed Project Report”.

It was mentioned in the scope that the consultancy firm/s shall specify the standards and norms to be followed in the creation of infrastructure and delivery of services, to ensure that the Park met international benchmarks.

The above made it necessary for the chosen consultancy firm/s to visit reputed Parks elsewhere in the world, unless the consultancy firm/s had already visited such Parks or had access to detailed information on them. Such visits should form part of the scope. It should be mentioned whether the cost of such visits would be paid extra on the basis of expenses or should form part of the consultancy fees. The other comments of the UIE regarding Scope of Work were: o The broad structure of the Business Plan had to be provided in the RFP. o Projects financed by the Government would probably need to establish

economic feasibility. In that case, the scope of work should include economic feasibility analysis and/or environmental impact analysis in addition to financial feasibility.

o In case JV partners were envisaged for the ICT Park, identifying and suggesting probable sources of such funding and the structuring of the bidding process to attract such investors as joint venture partners should be part of the scope.

o MAGFA should consider whether the actual bidding process should be done by the consultancy firm/s and if so it should be mentioned in the scope. Nevertheless financial closure should not be the responsibility of the consultancy firm/s.

o Scope of work should include recommending appropriate plans and strategies for marketing the Park to prospective tenants globally. The level of detailing needed should also be mentioned, which might include identifying potential anchor tenants and special packages necessary to attract them.

o The Government policy initiatives required to ensure the success of the Park might need to be deliberated on by the consultancy firm/s. This should form part of the scope.


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o Since one of the ongoing studies by MAGFA was on the laws and regulations governing domestic and foreign investments, it was presumed that the consultancy firm/s was expected to prepare investment guidelines for the use of tenants. This should be explicitly mentioned.

o The Scope might also include: • Preparation and review of legal contracts for investors and tenants • Recommended pricing of various tenant spaces and services • Recommendation on the institutional form of the Park • Recommendation on the Organisation Structure to implement the

project • Recommendation on the O&M Organisation for the running of the

Park once it commences operation.

o The RFP referred to possible continued collaboration of the chosen consultancy firm/s in the implementation of the project and the future phases. In such a case, the following might also form part of the scope of work of the RFP: • Preparation of bid documents for various contracts • Participation in pre-project activities like pre-qualification, evaluation,

tendering, negotiation and selection of contractors, service providers and suppliers for various infrastructure facilities and services in the Park

• Post-award monitoring of various contracts, ensuring adherence to quality standards, measurement of contractors’ works, scrutiny of contractors’ bills and recommendation of payments.

5.2.4. Terms and conditions

The UIE offered the following comments on the terms and conditions of the RFP. The project completion could not be stipulated as the obligation of the consultancy firm/s as project execution was not included in the scope of work. Instead, the RFP might say, Business Plan to be completed by such and such date and might ask the bidder to propose milestones for the implementation phase. Travel related expenses and other third-party expenses were normally paid extra at actual and not included in the cost of consultancy. Norms and maximum limits might be specified. The RFP had to take care of this.


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5.2.5. Phasing of the project

The following were the comments of the UIE on this aspect. There was a lack of clarity regarding the way the project was sought to be phased. The phasing into first phase, second phases etc. were to be clearly mentioned in the preliminary description. It seemed Phase I was the preliminary study by the in-house teams, Phase II the preparation of the Business Plan by the chosen consultancy firm/s and Phase III the construction of the Park. The Business Plan might identify other future phases.

5.2.6. Instructions to firms submitting proposals

The UIE commented as follows:

One of the instructions was that the proposal must contain:

o Technical Bid o Cost Bid

It might be mentioned that the bids shall be in separate envelopes. Earnest Money Deposit/ Bank Guarantee/ Power of attorney etc, required to be part of the bid had to be mentioned. The RFP mentioned that the bidding process was a limited one, but did not outline the prequalification criteria. The selection process might be defined in more specific terms, and a schedule of events provided. The qualification requirement of the bidder had to be defined.

5.3. The Revised RFP An RFP, in the first instance, introduces the background, role and goals of the organisation or the consortium of organisations planning a given activity for which the proposal is being sought. In the case of ICTP, the consortium comprised the industrial development arms of the Ministry of Industries of IRAN, represented by MAGFA, which would be implementing the project.


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Information about the current status and proposed phasing of the project helped the bidders to understand the progress achieved at the time of floating the RFP, the time dimensions of future activities envisaged and the specific timelines targeted for the consultancy for which the proposal was sought. MAGFA had launched major preparatory studies on specific areas, the abstracts of which were made available to bidders to have an understanding of the policy environment, status of the ICT industry, quality of infrastructure etc. 5.4. Revised Scope of Work The Scope of Work of the RFP was redefined as the preparation of Business Plan / Detailed Project Report (BP/DPR) for the ICTP. The bidders were also required to indicate their interest in Implementation Consultancy, which might be awarded to the consulting group selected for preparing the BP/DPR. The scope of work was enhanced to include economic feasibility analysis in addition to financial feasibility. If joint venture partners were envisaged, identifying and suggesting probable sources of such funding and the structuring of the bidding process to attract such investors as joint venture partners were also added to the scope of the assignment. The revised scope of work is elaborated below. 5.4.1. The Elaborated Strategic framework

The scope of the Strategic Framework was elaborated and addressed the following issues: o Need for the project in the context of national, regional and international

economies. o A set of recommendations to attract international firms for investments and

outsourcing. o The latest international standards, practices and learning. o Identifying world-class infrastructure facilities and support services required

by leading international ICT companies. o Lessons learnt from promoting and managing technology/industrial parks in

IRAN. o Road map to leverage the Park to help the domestic ICT industry become

globally competitive. o A detailed step-by-step process of the phases of the project. o An incentive structure for all stakeholders including the team that would

establish and manage the Park. o A framework for fostering link-ups with Universities and R&D institutes.


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5.4.2. The Business Plan /Detailed Project Report

The Scope of the BP/DPR preparation was strengthened to reflect the needs of global IT business and in line with the practices followed in establishing Technology Parks. The four fundamental questions, which would provide the backdrop in exploring the different facets of planning a Park, are: o What would attract potential investors to plan a project in a specific country? o In the specific country, what would attract investors to the proposed Park

focussing on a specific industry? In fact, some Parks focus on a specific segment (say, sub-set) of a specific industry.

o What needs to be done to make the tenant companies of the specific industry competitive in a given Park in a given country?

o How to configure the Park to make it attractive to prospective tenants as well as those who promote the Park?

The scope of Infrastructure Plan for the Park, the range of support services to be provided / marketing plans and strategies and other aspects were elaborated.

5.4.3. Implementation consultancy

The bidder was required to indicate the cost for overseeing the implementation and commissioning of the Park. However MAGFA reserved the right to separate out this component and award the consultancy for BP/DPR alone. The scope of the Implementation Consultancy was defined as follows:

o Preparation of bid documents for various contracts: the chosen bidder was

required to clearly identify the stages following the planning phase and prepare any document, with available information, required for the issue of bidding documents to implement (bids for next stage-follow-up activities, etc.).

o Participation in contract mobilization activities like pre-qualification,

evaluation, tendering, negotiation and selection of contractors, service providers and suppliers for various infrastructure facilities and services in the Park.

o Post-award monitoring of various contracts, ensuring adherence to quality

standards, measurement of contractors’ works, scrutiny of contractors’ bills and recommendation of payments.


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5.4.4. Environmental Impact Analysis (EIA) study

An environmental impact analysis on the following lines was initially considered, but subsequently dropped from the scope of the work since the activities envisaged were largely free from any adverse impact on the environment. We are, however, including in this document, the scope proposed for the EIA, for the sake of completeness.

Need for the EIA Study: An Environmental Impact Analysis is usually undertaken to meet a statutory requirement and is conducted as per the applicable statute. It discusses the possible effects of the project in certain issue areas identified as having the potential to experience significant impacts. “Significant impact” means substantial, or potentially substantial, change in any of the physical conditions within the area affected by the project including land, air, water, minerals, flora, fauna, ambient noise, and objects of historic or aesthetic significance. Broad Parameters of an EIA Study: The following table outlines a set of possible issue areas and the structure of the analysis. The table format is for the sake of easy understanding. The study report structure is likely to be descriptive text.

Issue Area

Present character of

the receiving environment (environment

likely to be affected by the project)

Potential impacts of the

project and the resilience

of the environment to the change

Significance A: Significant

and unavoidable B: Significant but mitigable

C: Not significant

D: Beneficial

Managing the impact

(recommended

mitigation measures)

Geology and soil

Surface and ground water

Flora and fauna

Land use and agriculture

Inhabitation History and aesthetics

Transportation and traffic

Air quality and ambient noise


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Tentative questions to ask

o Geology and Soil • Will the project cause the loss of a unique geological feature? • Is the area rich in metal and mineral deposits? • What will be the effect on surface and ground water? • Could the project substantially alter the existing drainage pattern of the

site or area, including the alteration of the course of a stream or river, in a manner, which would result in substantial erosion, siltation, or flooding?

• Could the project affect ground water deposits?

o Flora and Fauna • Does the project have any adverse impact on the flora and fauna in the

region?

o Land use and agriculture • Could the project physically divide an established community? • Will the project lead to adverse changes in existing land use patterns?

o Inhabitation

• Will the project lead to displacement of people? • Will the project cause serious public inconvenience/ health hazards?

o History and aesthetics

• Is the site of historical or aesthetic significance?

o Transportation and Traffic • Could the project result in a change in traffic patterns, including either an

increase in traffic levels or a change in location that result in substantial safety risks?

• Could the project conflict with adopted policies supporting alternative transportation?

o Air Quality and ambient noise

• Could the project expose sensitive receptors to substantial pollutant concentrations?

• Could the project create objectionable odors affecting a substantial number of people?

• Could the project result in changes in air movement or temperature? Other points to be covered in the EIA report:

o Limitations of the study (level of confidence in the predictions) o Specific (over-riding) factors to be considered in favour of the project:

Importance of the project, national/public interest etc. o Conclusions and Recommendations


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5.5. General Provisions and Conditions International bids incorporate general as well as special provisions and conditions to minimise ambiguity and the scope for litigation. The general provisions apply to all the tenders of a certain package or proposed works, whereas special provisions apply to the specific work being tendered. In case of conflict between clauses in the general and special provisions, the clause in the special provision prevails in the particular context. In the case of the RFP for the ICTP, no other tender was simultaneously being floated and, hence, there was no need for separating out general and special provisions. 5.6. Requirements of Proposals Submitted This section identified the specific requirements that the bidder had to comply with while submitting the proposal. It outlined the expected format and structure of the proposal.

o The proposal should be submitted in three parts as described below. • Parts I and II to be in a single cover and • Part III in a separate sealed cover.

o Part I: Technical Proposal

• Approach and methodology, description of tasks and timelines;

Anticipated man-days and resource requirements. The proposal should describe the bidder’s approach and

methodology for accomplishing the work requested. The information provided should be in enough detail to enable MAGFA to ascertain the bidder’s understanding of the tasks to be accomplished and should outline the various activities required along with timelines, effort in terms of man-days and resource requirements.

• Structure of the Business Plan / Detailed Project Report The bidder should provide a detailed structure of the BP/DPR

proposed to be prepared. A broad structure of the BP / DPR was suggested for the benefit of the bidder.

Detailed technical note on how the bidder proposed to accomplish the tasks outlined in the Scope of Work under Implementation Consultancy, if awarded to the bidder.


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o Part II: Bidder Qualifications and Experience

o Part III: Cost Proposal

5.7. Instructions to Bidders These instructions mainly related to bid submission and pre-selection. 5.8. Evaluation Criteria and Award Procedures The bid evaluation process adopted is elaborated in section 6.1, “The Evaluation Process”. 5.9. RFP Schedule of Events The Schedule of Events listed MAGFA’s best estimate of the timelines to be followed. MAGFA, however, reserved the right, at its sole discretion, to adjust this schedule, as it deemed necessary. Notification of any adjustment to the Schedule of Events would be provided to all bidders who had been issued the RFP. 5.10. Administrative Information 5.11. Review, Revision and Acceptance of BP/DPR and Payment


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5.12. Promoting and Releasing the RFP The goal of any RFP is to reach it to the largest number of the best possible prospective bidders to ensure the best bid. This process has necessarily to optimise the cost of reaching out to a large audience and the benefits of securing the most competitive bid. The RFP for the ICTP benefited from the wide reach and vast network of UNIDO, which afforded it publicity through its website Platech2. UNIDO also promoted the RFP among the leading Technology Park managers / consultants, who were known to UNIDO. The RFP was also extensively promoted within IRAN. Based on questions / queries received from prospective bidders, MAGFA suitably amended specific clauses of the original RFP. The deadline for final submission of proposals was consequently extended. The amended RFP was made available at the UNIDO website. Of the several bids received before the closing time, a few were rejected during the pre-selection screening. A few more were subsequently rejected during the technical evaluation before considering the remaining bids for cost and final evaluations.

2 www.unido.org/platech


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66.. TTHHEE SSEELLEECCTTIIOONN OOFF TTHHEE CCOONNSSUULLTTAANNCCYY FFIIRRMM//ss BBAASSEEDD OONN

TTHHEE RRFFPP As indicated earlier the role of the UIE included advisory for the selection of the consultancy firm/s based on responses to the RFP. Preparatory to this, appropriate tools - formats, scoring parameters etc. – were designed, describing what to look for while processing the technical bids, conforming to the overall evaluation criteria. Formats were also prepared for the computerised evaluation of cost proposals. These tools were finalised in consultation with MAGFA and UNIDO. 6.1. The Evaluation Process The evaluation process comprised pre-selection screening and the detailed evaluation. Pre-selection screening: This was essentially a go/no-go test which examined whether the bidder had fulfilled all the mandatory tender requirements like bid security, authorisation of co-bidders in case of consortium bidding and other requirements. If a bidder did not pass the pre-selection, no further evaluation was done. The detailed evaluation: The detailed evaluation involved a technical evaluation followed by a financial evaluation of those bids that passed technical evaluation. The scores were averaged with 70 percent weight for technical bid and 30 percent weight for cost bid. In some contexts, particularly relating to projects financed by international funding agencies, which attribute a greater importance to technical evaluation, a ratio of 80:20 is used instead of 70:30. Technical evaluation: Technical Bid Evaluation was done by an Evaluation Committee constituted for the purpose. Each member was provided with a proforma to be filled in individually. Subsequently, the Committee met and discussed the results to reach a consensus score.

The technical evaluation was based on a set of parameters, the importance of each was reflected in their relative weights.

The highest weight (30%) was assigned to the bidder’s experience in similar projects during the previous seven years, this being the most critical competency for proper fulfillment of the contract. The next highest (20% each) was assigned to the approach and methodology proposed, as well as to previous engagements related to technology parks. The format proposed for the Business Plan / DPR was awarded 15% weight.


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The various factors considered and their weights are listed below.

Parameter Relative weight

Qualifying threshold

Scope of Work 10% 2 Approach and methodology; description of tasks and timelines, anticipated man-days and resource requirements

20% 2

Structure of Business Plan / DPR 15% 3 Note regarding implementation 5% 2 Technology Park/ Park Manager/ Park Consultant/ other related engagement

20% 2

Projects undertaken during last 7 years and their relevance to this project

30% 2

Each parameter was scored on a 6-point scale by the evaluators based on the data provided by the bidder in the Technical Bid (Part I and II of the proposal). The scales translated as follows:

6: Superior enrichment 5: Surpassing expectation 4: Slightly above expectation 3: Slightly below expectation 2: Satisfactory 1: Unacceptable

For each parameter, a qualifying threshold was also prescribed. Bids scoring less than the qualifying threshold for any parameter were rejected outright.

The weighted technical score was calculated using the formula: Technical score, ST = (s1 w1 + s2 w2 + … + s6 w6 ) * 100/6, where: s1, s2, …, s6 represented the scores on the 6-point scale awarded to the six parameters and w1, w2, …, w6 the corresponding weights. The multiplication by 100/6 was to convert the scores, which were out of 6, to a percentage. Cost evaluation: This is a relative evaluation of all bids that passed the screening and the technical evaluations. The Cost Evaluation Score for a particular bidder is calculated using the formula:

Cost Score, SC = { (H–C)/(H–L) } x 100%,

where: C is the cost bid of the bid being evaluated, H is the cost bid of the highest bidder L is the cost bid of the lowest bidder.


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For example, if the highest and lowest cost bids are $ 150,000 and $ 80,000 respectively, H = 150,000 and L = 80,000. If bidder XYZ bids $ 100,000 then C = 100,000. The cost evaluation score is

100 x 50,000 / 70,000 = 71.43%

Aggregate score: The weighted average of the technical and cost scores in the ratio 70:30 was the aggregate score.

Therefore, Aggregate Score = 0.7 ST + 0.3 SC.

6.2. First Mission of the UIE to IRAN The first mission of the UIE was undertaken for a period of 7 days, during which the following were accomplished:

A presentation by the UIE to MAGFA on Technology Parks and what the potential Business Plan should achieve

The UIE participated in the process of evaluation of bids and ranked the bidders against the predetermined criteria

Discussions were held with MAGFA on various aspects of monitoring the progress of work and its modalities

The UIE participated in the subsequent discussions between MAGFA and the Overseeing Committee and between MAGFA and the successful bidder before the formal award of the contract

A draft contract, to be signed between the successful bidder and MAGFA, was also prepared by the UIE. This contract format is discussed in the next section.

6.3. Contract Format A typical contract addresses the following aspects:

o Details of the parties to the contract o Obligations of the contractor o Obligations of the purchaser (in this case, MAGFA) o Period of the contract and provision, if any, for extension o Contract Amount, to which the maximum liability of the purchaser is

limited o Penalty for delayed delivery on the part of the contractor and compensation

for delayed payment on the part of the purchaser o Provision for contract amendment o Provision for termination by mutual agreement or for termination upon

breach of terms of contract. o General provisions relating to the following and others as required:


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• Subcontracting • Conflicts of interest • Partial waiver of specific clauses / terms or conditions etc. • Independent contractor (no agency created on either side) • Force majeure • Compliance with Law and the Applicable Law • Completeness of this contract • Severability of clauses of the contract • Protocols for reporting and communications. • Performance bond • Intellectual Property and Indemnity • Confidentiality • Ownership of deliverables • Dispute settlement mechanism

6.4. Subsequent Missions of the UIE to IRAN A second mission was undertaken by the UIE before the award of the contract to help resolve some unanticipated issues concerning the award. After the first draft of the BP/DPR was submitted by the consultancy firm/s, the UIE made the third and final mission to IRAN. During this mission, the report was analysed and discussed with the consultancy firm/s and MAGFA. The Consultancy firm/s was advised to incorporate the improvements / changes / enhancements suggested by the UIE in consultation with MAGFA. The Consultancy firm/s subsequently submitted the revised BP/DPR, for further review.


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EEXXPPEERRTTSS MAGFA had decided to avail the services of two “National Experts / Consultants” who would associate themselves with the preparation of the Business Plan / Detailed Project Report. The experts would be in the areas of financial and legal affairs as well as engineering. The objectives of appointing the experts were two-fold:

o These experts would support the successful bidder (contractor) in the preparation of the BP/DPR, acting as effective interfaces between the contractor and the different constituencies in IRAN likely to be involved in or contributing to the project.

o The association of the national experts with the project would help facilitate

transfer of knowledge, from the contractor to the local experts, related to the planning of the technology park

The profiles of three principal National experts were reviewed by the UIE. Some of the candidates identified were interviewed and the recommendations communicated to UNIDO/MAGFA during the first mission of the UIE. As a result of an agreement with MAGFA, in consideration of national experts made available by the selected international consortium, the recruitment of national consultants was limited to an expert on legal and financial issues.


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The process of overseeing the preparation of the BP/DPR involved the reviewing, commenting on, recommending appropriate changes and contributing improvements to the following documents prepared by the chosen consultancy firm/s:

The detailed schedule of activities and timelines The questionnaires used for the survey of:

o Prospective tenants (ICT companies) o Universities and R&D Organisations

Strategic Framework

Business Plan and Detailed Project Report

An important component of the overseeing job was to ensure that the documents prepared reflected the requirements of and ground realities in a developing country like IRAN. Given the fact that most Technology Park consultancy firm/s tend to have been heavily focused on developed countries, “customising” the analyses and proposals to meet the requirements of IRAN accounted for most of the task of the UIE. The following presentation gives a flavour of the kind and range of customizing made in the context of ICTP. 8.1. Conceptual Clarity The consultancy firm/s seemingly started with an inadequate appreciation of the nature of the proposed ICTP. ICTP was planned to be an institutional mechanism for promoting investments in the ICT sector. That is, creating a campus comparable to the best around the world for attracting leading national and international ICT companies for setting up medium and large projects catering to the domestic and international markets. The Strategic Framework, in its initial draft, was based on an “escalator” strategy whereby research outputs from the Universities would be translated into products and services; subsequent commercialisation resulting in successful domestic companies growing to become large global players. This incubator model, though looked elegant in theory, was over-simplistic and extremely difficult to implement and benefit from in a developing country context. Universities in developing countries generate very little new knowledge of commercial value, especially in a sector like ICT.


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For instance, out of the total turnover of Indian software sector, only an extremely tiny portion can be attributed to projects based on R&D undertaken in a University or in a publicly-funded research organisation or even in a private enterprise. Promoting an Incubator for translating R&D findings into projects could at best be a small (but important) component of the total efforts of planning the ICTP. It was, however, inadvisable to distract initially the attention of the available organisational resources on concerns like commercialisation of technologies or Incubators. The core of the efforts had to be in setting up a world-class, world-scale ICT Park to attract the best of domestic and international ICT companies. 8.2. Alternative to an Escalator Strategy The UIE suggested an alternative strategy whereby the initial focus might be on attracting successful domestic ICT companies to the ICTP, giving them the best facilities and support services to enable them to leverage the growing domestic market as quickly as possible. The presence of such anchor companies will give a certain level of confidence and comfort to other domestic and international companies to become tenants of the Park. This approach did not in any way belittle the importance of attracting multinational companies which bring with them advance technologies and management practices besides global market opportunities. In fact, this aspect was ranked as the second highest perceived benefit by industry respondents to the survey. The UIE had also suggested the creation of a world-class IT Institute offering the best of full-time graduate and post-graduate programmes and a range of short-term programmes as a key resource for ICTP. Entrepreneurship development may also be considered as a post-graduate level programme at the proposed institute. 8.3. The Phasing of the Project The consultancy firm/s recommended that in the first stage a City Business Centre (CBC) be set up in an area of 10-15 hectares with an initial building of 30,000 sq. m involving an investment of US $ 15-20 million and capable of accommodating 10 companies and 3,000 professionals. It was also recommended that another building of the same size be promoted by private investors at the same site. In the second stage, a larger facility would be built in the city outskirts, implying multiple sites for the park. The UIE felt that such a distributed campus was not in conformity with international best practices. A single-location technology park will always have advantages compared to a multi-location one. The latter has to content with management time being ineffectively used, resources duplicated, increased overheads, inconvenience to tenants etc.


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8.4. Marketing Existing successful IT companies were rightly identified by the consultancy firm/s as the most promising initial tenants for the Park. Many of them had been contacted in this context but no detailed analysis was attempted to estimate the likely quantum of space that would be taken up by them. The UIE felt that to gain more definite picture of the demand for space, the companies which participated in the study may be divided into 3 categories: those most certain to take up space at the ICTP, those most likely to take up space and those likely. The estimated space requirements of these companies could be considered (100% of most certain; say 50% of most likely; and, say, 10% of the likely respondents or varying combinations thereof) and two or three sets of estimates could be arrived at in regard to the space that would be sold / leased out for different periods of time into the future. 8.5. SWOT Analysis The UIE felt there was some conceptual confusion in the SWOT analysis made in the Strategic Framework based on which the report was prepared. A SWOT analysis is essentially to design a strategy for an enterprise or institution or initiative to leverage its strengths and counterbalance the weaknesses so as to be able to exploit the emerging opportunities, simultaneously insulating the enterprise against potential threats. For instance, the Framework considered the high demand potential for ICT in IRAN as a strength whereas it should be looked at as an opportunity to be exploited with the right strategic initiatives. The Park and its tenants should closely study the sectors of ICT with the highest potential growth and design appropriate products and services to meet the emerging market requirements, on their own or in association with international players. In fact, such alliances by the Park tenants would also be the launching pad to enter export markets in the region. On the other hand, if we were to treat the demand potential in IRAN as a Strength we would tend to leave it as it is (why must one meddle with a strength!). A SWOT analysis, to be effective, should consider such fine conceptual distinctions. The identified weaknesses - like ‘No active project management team established yet’ - was not a real weakness as the whole project was still on the drawing board or in the conceptual stage. The absence of many successful, growing ICT companies in IRAN was a major weakness. So was the existence of too many bureaucratic controls and complexities in the legal / statutory / licensing environment in IRAN.


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The report considered as a threat, ‘the incompleteness of the legal and cultural environment in the country, Government centric structures and the closed economy’, whereas such issues were part of the Weakness. The SWOT analysis did not talk about market opportunities. 8.6. Policy Support The range of incentives available in IRAN for Free Trade Zones was exceptionally strong. Offering the same incentives to the tenants of the ICTP would be extremely helpful in attracting companies. In the initial phase, most of the tenants of the Park might not be export-oriented projects. If FTZ incentives were offered to the tenants of ICTP, regardless whether export oriented or not, it would act as a strong incentive. The UIE recommended that the consultancy firm/s should provide a note on:

Absolutely essential policy support required making ICTP an attractive investment destination for domestic ICT companies.

Highly desirable policy support to bring IRAN at par with other developing

countries like India, Malaysia and Dubai to attract international ICT companies. The UIE also observed that an important value proposition of the ICTP would be the single window clearance of all or most of the statutory requirements at the Park premises. The procedural requirements for prospective tenants to set up projects in the ICTP should be minimal and simple. Certain approvals could be automatic / waived / deemed upon filing a request. 8.7. Organisational Structure of the ICTP: The consultancy firm/s had proposed a mixed model - Government investment and private management – that looked appropriate. The UIE felt that the model might ideally be operationalised in a phased manner. Initially, to ensure that the committed Government funds for building up the facility and to meet the annual operational deficits were made available, the Executive Board of the Park would be the nominees of the relevant stake-holding Government departments. Additionally, the Park CEO might also be an influential official with the right contacts, authority and operational autonomy. The CEO ideally should have the visibility and credibility with business as will as University community. Below this level, the various services could be outsourced to the private sector. These included the park maintenance, accounting, business promotion, provisioning of various services and technical facilities.


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Once the operation stabilised and the TITP became self-sustaining, full-fledged private management including a private sector CEO could be considered. 8.8. Operations Management The consultancy firm/s recommended that the operational management of ICTP will be vested with four groups:

Marketing and Business Development, Finance, Land Development and Maintenance Animation and Park Services.

The UIE suggested a more appropriate nomenclature as follows:

Infrastructure Planning and Management Business Development Finance and Accounts Administration and Relations

The UIE suggested that the designations of key positions in the organisation structure may be according to international practices. 8.9. Park Services To avoid monopoly in services and consequent inefficiencies, the UIE opined that it was better that the park management (especially if Government / public) may encourage multiple service providers for security, cleaning, datacom, telecom, business centre etc. For consulting services, the Park management might maintain a pre-qualified list of consultancy firm/s for the use of tenants. 8.10. Review of the Project Financials The project financials prepared by the consortium were critically examined by the UIE. As indicated in Section 7.0, MAGFA had appointed an independent National Consultant (NC) for guiding the consortium on financial and legal matters relating to the project. NC also reviewed the BP/DPR. The UIE offered the following comments on the assumptions and projections of the project financials prepared by the winning consortium. Assumptions The BP/DPR envisaged two sites the first one in the City Centre and the other on the outskirts.


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Adequate provision needed to be made in the second property also for common use - roads, common infrastructure etc. As Business Services were not part of the Park’s core business, the financials associated with these need not appear in the Park financials. They should ideally be separate businesses in their own right, provided by independent service providers. The Park administration may take into account appropriate license revenue from such third party service provisioning. The costs assumed for capital equipment appeared to be on the lower side. Adequate provision was needed for office equipment like computers, projection equipment, library supplies, conference equipment etc. apart from furniture, vehicles and so on. Investment Budget The title “Project Cost” should be changed to “Preliminary and Pre-operative Costs” and should include cost of BP/DPR, company formation, engineering and architectural consultancies, salaries, expenses on operation, marketing, financing (interest etc) during the project period. The cost of engineering and architectural consultancy may, alternatively, be clubbed with the infrastructure costs namely land development and construction. Land Receipts The financials should have included costs involved in land transfers (registration etc.) and costs involved in owning the land (land taxes etc.) Income The projected income from sale of land was far too optimistic for the initial 3 years resulting in depicting a very rosy picture. IT companies, especially the small and medium ones of the kind projected in the DPR as the prospective tenants, were unlikely to buy land in the early years. Their preference would be for built-up space on rent/lease. Companies may buy land only after they have grown to a size of, say, over 1000 employees, unless the ICTP could attract large companies of this size in the early years. Projected Financial Statements The projected financials needed to be strengthened with 5-7 year projections of Balance Sheets and Profit and Loss Statements. Sensitivity Analysis Sensitivity analysis of the project to increases in land price looked inappropriate. For instance, when land price increased from USD 160 to 500 (212.5% rise), the sales revenue was also allowed to increase from USD 300 to 1000 (233.3% rise). Such an assumption did not constitute a realistic sensitivity analysis.


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Usually, when the sensitivity to cost hike was evaluated, the sales revenue may not be hiked simultaneously, in any case, not to matching levels. The Important Issues Addressed by the NC The NC was responsible to review the findings and recommendations of the consortium with specific reference to financial projections, assumptions regarding cost of capital and sourcing of funds and to offer comments on the draft legal documents accompanying the BP/DPR. NC also made suggestions on reducing the cost of the project, structuring the project financing and sensitizing the report to the local conditions and realities. Failure to identify site Since land had not yet been identified the project financials hardly reflected a true or meaningful picture of the investment involved. The NC recommended that the possibility of getting land free of cost or on a low cost 99-year lease right from the Government should be explored. Corporate structure The NC suggested a private joint stock company during the development phase and a public joint stock company during the operating phase. This is to enable the initial investors (namely, IDRO, ISIIE, HEI etc. ) in the private joint stock company to exit with a reasonable margin on their investments. Loan financing Appropriate changes were suggested in regard to the assumptions relating to the extent of loan, interest rates, repayment schedule to reflect the prevailing local situation. He also pointed out to consider carefully the cost of funding in the financials. Sensitivity Analysis The NC suggested a more rigorous analysis taking into account the possibility of fluctuations in off-take of built-up space, price of building services etc. The comments by the NC, largely confined to the financial and legal aspects of the project, were quite relevant and based on the conditions prevailing in the country, However, it would appear that the NC looked at the project more as a real estate proposition than a Technology Park, which demanded a more holistic treatment.


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9. CCAAPPAACCIITTYY BBUUIILLDDIINNGG AASSSSIISSTTAANNCCEE With a view to complementing the overseeing role with a capacity building one, a model for the management team for IRAN ICT Park was provided, detailing the roles and responsibilities of various key positions, along with the professional background and experience required of the incumbents. The positions elaborated were:

1. Chief Executive Officer 2. Head – Finance 3. Head – Infrastructure 4. Head – Marketing and Support


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PPAARRKKSS MAGFA and UNIDO decided to hold an international workshop on technology parks to which experts from within and outside the country could be invited to make presentations on their experiences. The objectives of the workshop were defined by the UIE as follows: o To gain knowledge on the “DOs and DON’Ts” of international best practices in setting

up and managing ICT parks. o To assess the interest of foreign companies in setting up ICT facilities in industrialising

countries and more specifically in IRAN. o To assess factors considered critical by a foreign company in deciding its ICT

investments in industrialising countries and more specifically in IRAN. o To present and promote “ICTP” to the international community (institutions and ICT

companies) to attract prospective tenants / investors. o To start (if a study tour is postponed) or follow-up (if a study tour is organised before

the workshop) technical and commercial links with renowned technology parks on possible cooperation in setting up, managing and sustaining ICTP.

o To build up the capacity of MAGFA in technology park development and so as to deal

directly with the winning consortium in the most critical issues of the ICT Park Business Plan and eventually explore opportunities for offering consulting services to planners of ICT Parks in the region.

o To test, complement and improve the analysis (especially the international positioning

strategy) carried out by the winning consortium, following the results of the “Round Tables” with foreign and local companies.

o To start developing an ICT database for evaluation of admission procedures, contract

formulation, marketing campaigns, etc.

3 The workshop, initially planned before the award of contract for the BP/DPR consultancy, was subsequently postponed.

Documents

[UNIDO] Advising and Monitoring the Planning of a Technology Park