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King Fahd University of Petroleum and Minerals College of Environmental Design Construction Engineering & Management

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

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King Fahd University of Petroleum and Minerals College of Environmental Design Construction Engineering & Management

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  1. King Fahd University of Petroleum and MineralsCollege of Environmental DesignConstruction 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

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

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