1

Module 2Ken Hogan

Procurement Process In Construction Industrial Project

1. Definition 2. Objective 3. Procurement process 4. Performance indictor 5. Improvement 6. Benefits 7. Conclusion

2

Definition It is the process required to supply equipment , material , service and other resources needed to carry out a project that satisfy customer

3

Item Description Weight

1 Engineering 5%

22 Equipment / Material Equipment / Material 65%65%

33 Construction Construction 15%15%

4 Testing and Commissioning 10%

4

1-Setting procurement process requires to supply equipment , materials and other resources to carry out in constructing industrial project right the first time right the first time and every time.and every time.

2- Monitoring performance indictor to help

manager to prevent and reduce problem that can affect the procurement process.

5

1. Planning2. Documentation3. Product Evaluation4. Awarded 5. Administration 6. Inspection7. Delivery

6

7

Documentation

Product Evaluation

Awarded

Begin

Delivery

Planning

Inspection

Input 1. Scope of work2. Specification and drawings 3. Company resource4. Signature mandate 5. Product estimated value

8

Output1. Product list 2. Product supplier list3. Type of procurement contract

1. Sole source2. Single source3. Competitive bids

4. Estimated product value5. Approval to proceed with procurement

9

Tender documents Standardized forms

Inquiry Invitation letter Purchase order General terms and condition Filing system

10

1. Price 2. Delivery time3. Financial capability of supplier 4. Type of product 5. Historical of supplier6. Supplier approaches 7. Workload existing and anticipated 8. Customer feedback

Reference Approval

11

1. Notify successful tender and unsuccessfully tender of outcome

2. Compile contract documents3. Formally accepted tender offer

12

Monitor supplier progress Inspection Shipment and delivery Payment Check compliance with quality

13

1. Cycle times The different activities within PP

2. Milestone events Issuing R.Q - PO Approval of drawings Inspection Customs clearance Delivery

3. Management Project police Project Organization

14

4. Cost Indicator No of days in warehouse No of days in customs No of days correction / repair No of changes to air transportation Time from arrival till installation

5. Referential values Amount of PO No and amount of change orders Delivery / invoicing

15

16

1. Shortage of materials2. Out of specification 3. Incomplete delivery 4. Excess of materials 5. Damage and defective

17

18

Whether the procurement satisfied the stated objective

Whether needs and expectation have be meets

Whether the procurement process should be improve

How external factors such regulation , standard component have change

Whether the process improve cost saving

19

Review of performance indicator Review non conformity report Effect analysis regarding delays Costs and time cycles

20

21

1. Improve company and project reputation name 2. Achieving customer satisfaction and increase

market share 3. Reduce rework and mistake 4. Standardized forms 5. Reduce warranty period 6. Increase profit7. Lower insurance cost8. Improve cash follow

22

The problem present on procurement are of different types and origins. The most detected problem :

Planning Delay on issuing specification for quotation Delay on informing supplier

Supplier To many obstacles and clauses delay

negotiations Poor explanation about items Later purchase makes system expensive , air

freight and urgent

23

1. Delay at delivery2. Delay on ordering3. Delay on engineering drawings ( errors) 4. Repair and replacement at job site 5. Poorly planned inspection6. Lack of information on site about arrival for some supplier 7. Changes to air transportation to make faster delivery

Using PP indicator and periodical report is tools to monitor and prevent delays

Using IT ( email , scheduling etc ) will help in reducing delay and closely monitor the product progress for necessary action .

24