CEM 515 Done by: Abdulkarim Sulais King Fahd University of Petroleum and Minerals College of Environmental Design Construction Engineering & Management Department Procurement Process In Construction Industrial Project CEM 515 Done by: Abdulkarim Sulais

Outline Definition Objective Procurement process Performance indictor Improvement Benefits Conclusion

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

Industrial Project Cost Distribution Item Description Weight 1 Engineering 5% 2 Equipment / Material 65% 3 Construction 15% 4 Testing and Commissioning 10%

Objective 1-Setting procurement process required to supply equipment , materials and other resources to carry out in constructing industrial project right the first time and every time. 2- Monitoring performance indictor to help manager to prevent and reduce problem that can affect the procurement process.

Procurement Process : Planning Documentation Product Evaluation Awarded Administration Inspection Delivery

Begin Planning Documentation Product Evaluation Awarded Inspection Delivery

1- Procurement planning Input Scope of work Specification and drawings Company resource Signature mandate Product estimated value

1- Procurement planning Output Product list Product supplier list Type of procurement contract Sole source Single source Competitive bids Estimated product value Approval to proceed with procurement

2-Documentation Tender documents Standardized forms Inquiry Invitation letter Purchase order General terms and condition Filing system

3-Product Evaluation Price Delivery time Financial capability of supplier Type of product Historical of supplier Supplier approaches Workload existing and anticipated Customer feedback Reference Approval

4-Contrcat Award Notify successful tender and unsuccessfully tender of outcome Compile contract documents Formally accepted tender offer

5-Contract Administration Monitor supplier progress Inspection Shipment and delivery Payment Check compliance with quality

Performance indicators of PP Cycle times The different activities within PP Milestone events Issuing R.Q - PO Approval of drawings Inspection Customs clearance Delivery Management Project police Project Organization

Performance indicators for PP 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

1- Cause – Effect for long cycle times

Materials Non conformity Report Shortage of materials Out of specification Incomplete delivery Excess of materials Damage and defective

Materials Non conformity Report

Evaluation of the Procurement Process 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

Evaluate of procurement process Review of performance indicator Review pf non conformity report Effect analysis regarding delays Costs and time cycles

Evaluation and Improvement (QFD)

Benefits of Procurement process Quality management Improve company and project reputation name Achieving customer satisfaction and increase market share Reduce rework and mistake Standardized forms Reduce warranty period Increase profit Lower insurance cost Improve cash follow

Finding and Conclusion 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

Finding and Conclusion Delay at delivery Delay on ordering Delay on engineering drawings ( errors) Repair and replacement at job site Poorly planned inspection Lack of information on site about arrival for some supplier 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 .