1. Procurement Process In
Construction Industrial Project
Module 2
Ken Hogan
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2. 1. Definition
2. Objective
3. Procurement process
4. Performance indictor
5. Improvement
6. Benefits
7. Conclusion
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3.  Definition
It is the process required to supply
equipment , material , service and other
resources needed to carry out a project that
satisfy customer
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4. Item Description Weight
1 Engineering 5%
2 Equipment / Material 65%
3 Construction 15%
4 Testing and Commissioning 10%
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5. 1-Setting procurement process requires 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.
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6. 1. Planning
2. Documentation
3. Product Evaluation
4. Awarded
5. Administration
6. Inspection
7. Delivery
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7. Begin
Planning
Documentation
Product Evaluation
Awarded
Inspection
Delivery
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8.  Input
1. Scope of work
2. Specification and drawings
3. Company resource
4. Signature mandate
5. Product estimated value
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9.  Output
1. Product list
2. Product supplier list
3. Type of procurement contract
1. Sole source
2. Single source
3. Competitive bids
4. Estimated product value
5. Approval to proceed with procurement
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10.  Tender documents
 Standardized forms
 Inquiry
 Invitation letter
 Purchase order
 General terms and condition
 Filing system
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11. 1. Price
2. Delivery time
3. Financial capability of supplier
4. Type of product
5. Historical of supplier
6. Supplier approaches
7. Workload existing and anticipated
8. Customer feedback
 Reference
 Approval
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12. 1. Notify successful tender and unsuccessfully
tender of outcome
2. Compile contract documents
3. Formally accepted tender offer
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13.  Monitor supplier progress
 Inspection
 Shipment and delivery
 Payment
 Check compliance with quality
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14. 1. Cycle times
 The different activities within PP
1. Milestone events
 Issuing R.Q - PO
 Approval of drawings
 Inspection
 Customs clearance
 Delivery
1. Management
 Project police
 Project Organization
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15. 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
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16. 16

17. 1. Shortage of materials
2. Out of specification
3. Incomplete delivery
4. Excess of materials
5. Damage and defective
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18. 18

19.  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
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20.  Review of performance indicator
 Review non conformity report
 Effect analysis regarding delays
 Costs and time cycles
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21. 21

22. 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 profit
7. Lower insurance cost
8. Improve cash follow
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23. 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
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24. 1. Delay at delivery
2. Delay on ordering
3. Delay on engineering drawings ( errors)
4. Repair and replacement at job site
5. Poorly planned inspection
6. 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 .
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