1. 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

2. Outline Definition Objective Procurement process Performance indictor
Improvement
Benefits
Conclusion

3. 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

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

5. 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.

6. Procurement Process : Planning Documentation Product Evaluation
Awarded
Administration
Inspection
Delivery

7. Begin
Planning
Documentation
Product Evaluation
Awarded
Inspection
Delivery

8. 1- Procurement planning
Input
Scope of work
Specification and drawings
Company resource
Signature mandate
Product estimated value

9. 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

10. 2-Documentation Tender documents Standardized forms Inquiry
Invitation letter
Purchase order
General terms and condition
Filing system

11. 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

12. 4-Contrcat Award
Notify successful tender and unsuccessfully tender of outcome
Compile contract documents
Formally accepted tender offer

13. 5-Contract Administration
Monitor supplier progress
Inspection
Shipment and delivery
Payment
Check compliance with quality

14. 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

15. 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

16. 1- Cause – Effect for long cycle times

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

18. Materials Non conformity Report

19. 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

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

21. Evaluation and Improvement (QFD)

22. 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

23. 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

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