Procurement of Goods for Construction Activities

By Eng. I.P. Seevaratnam

In the construction industry, there are a few key factors to decide the success rate of a project. Procurement and supply of appropriate construction materials on time within the allowed budget is one of those key factors. Team work, coordination, effective communication and identification of suitable suppliers/ manufacturers are some of the important tasks in the procurement process. Right quantities of the product with the right quality should be selected. In addition, the lowest possible price with recognized standards must be delivered on time to the construction site.

Government and Semi Government organizations in Sri Lanka should follow the Procurement Guidelines published by the National Procurement Agency (NPA) in the year 2006, to make sure that the Government fund is utilized economically, efficiently, fairly and transparently in procuring the Goods, Works and Services. NPA is the principal authority for formulating and updating the amendments to the guidelines. Further clarifications of the provision of the Guidelines may be sought from NPA.

As described in the Guideline, the relevant Procurement Committee (PC) and Technical Evaluation Committee (TEC) shall carry out the entire procurement process. There are several types of PC available and the suitable one has to be identified as per their authority limits. Defined PCs are,

• Cabinet Appointed Procurement Committee (CAPC)
• Ministry Procurement Committee (MPC)
• Department Procurement Committee (DPC)
• Project Procurement Committee ( PPC)
• Regional Procurement Committee (RPC) etc.

NPA will delegate the authority to handle the procurement activity to CAPC. The Chief Accounting Officer (CAO) will delegate the authority to handle the procurement activity to MPC, DPC, PPC, RPC etc. Secretaries of the respective Line Ministries, who are deemed to be the CAO of such Ministries. As per the value of procurement, relevant procurement committees will be selected according to the authority limits. Authority limits of each PC shall appoint MPCs, DPCs annually to different agencies or different categories to carry out the procurement actions.

Three officers should serve in any of the above procurement committees. The relevant TEC should be appointed by the NPA or CAO as per the limits of authority. TEC for CAPC should comprise of 5 members and for other PC’s TEC should have 3 members.

Responsibilities of the Procurement Committee are;

• Ensure the funds are available with Procurement Entity (PE)
• Review & accept the Procurement Time Schedule ( PTS) ( including the date of advertisement , issuing date of bid document , closing & bid opening dates )
• Acceptance of bid document
• Participating and directing the TEC in providing/ requesting clarifications where deemed appropriate
• To make the final decision after reviewing the evaluation report & recommendation of TEC.

Responsibilities of TEC are;

• Recommend & agree with PC regarding the PTS is in order to award the contract within the possible minimum period
• Review and approve the specifications
• Review and approve the pre-qualification documents/ bidding documents prepared by the (PE
• Direct the PE to obtain clarification from bidders in writing, participate in negotiations, if directed by PC
• Further, TEC may get assistance from any external consultant. However, services performed by the consultant during the procurement process should be under the guidance of the TEC.

There are various types of procurement methods available such as,

• International Competitive Bidding (ICB)
• National Competitive Bidding (NCB)
• Limited International Competitive Bidding (LIB)
• Limited National Competitive Bidding (LNB)
• Shopping
• Direct Contracting
• Repeat Orders
• Emergency Procurement
• Community Participating
• Two stage Bidding
• Two Envelope System
• Pre- Qualification.

The relevant method should be chosen depending on the nature of the procurement. Minimum period of bidding time shall be maintained, for ICB - 42 days, for NCB - 21 days, for LCB - 14 days and for Shopping -7 days. For emergency situations/ emergency procurement above mentioned periods may be reduced.

State Engineering Corporation of Sri Lanka (SEC) is one of the good examples for a Semi Government Institution which is following the NPA Guidelines, and is involved on Building & Road Construction, Casting of Precast & Prestressed elements, Mechanical & Electrical Services, Steel Fabrication, Building Services, Civil Engineering Consultancy Services etc. There are two separate divisions in the SEC; namely Supplies Division and Contract and Planning Division, to carry out the procurement of Goods and Works separately, headed by the Engineers. In this article the method used by the SEC in handling all the purchasing of goods as per the procedure given in the guidelines will be described.

SEC’s Procurement Procedure for Goods

Main duties and responsibility of the supplies division is to supply the materials on time, with the right quantity, with good quality and at the best price. At the same time we should follow the Government Procurement Guidelines and keep the records in order, to avoid audit queries in future. Writer had the privilege of serving as the Chief Supplies Officer of SEC from May 2015 to March 2017. A Letter of Appreciation was given by the Top Management & Board of Directors of SEC for her services as Chief Supplies Officer. Further, no Audit Queries were raised during the period in which purchases were made.

As we are Engineers, it is desirable to have a competence on Government Procurement Guidelines and a general idea on PTS, specifications, items availability in the market, available suppliers/ Manufacturers etc. for each and every item needed for construction activities. To minimize the period of procurement it is very important to do planning, organizing and implementation. As a Chief Supplies Officer he / she should balance the duties of supplying goods on time and keeping records appropriately as per the procurement guideline at the time purchasing is done. If it fails to keep the records on TEC/ DPC recommendation, then interest on documentation will be reduced after receiving the goods to the site. Therefore it is necessary to complete the documentation when ordering material from the supplier or Manufacturer.

Further, it is always very desirable to evaluate the supplier’s performance and keep the records for the future reference at the supplies division. It will significantly help to avoid inviting the suppliers who performed unsuccessfully, in the future. For common items for all sites such as reinforcement bars, Cement bags etc., the bids can be invited once for 3- 6 months requirement with the location of delivery clearly mentioned. Items like concrete cannot be purchased from every supplier, as nearby plants have to be identified and bids called. In case of Plant & Machinery procurement, it is better to proceed as Supply & Installation together. Because, in case if needed to use the warranty, the supplier may refuse to offer the warranty and give the reason as a fault made during the Installation, at a time of need later.

It is necessary to maintain effective communication with site officials on progress at site, as there is always a need for required goods to complete the particular work, to be supplied on time. Otherwise, it will lead to delays at the site. For example, for a concreting job, Plywood, Reinforcement Bar and Concrete should be supplied together. If one item is supplied late, the task could not be completed on time. So, the effort given to supply the other items on time will not be useful.

SEC is having their own Procurement Management System PMS (computerized web based system) developed internally. All the Purchase Requests (PRs) are sent to the supplies division with the approval of the relevant Manager/ DGM. Since it is developed by the SEC’s IT staff, it could be upgraded when & where it is necessary, and it is a user friendly system as well. Further, the supplies division obtains updated detailed procurement plans from each site and prepares the overall procurement Plan for SEC to be ready to supply the required goods on time.

As a Head of Supplies Division, it is important to maintain close communication with all the staff and the TEC and DPC members, to obtain necessary acceptance and approval where it is necessary to complete the procedures on time. Relevant information should be coordinated with the Chairman, Board of Directors, and other top management to keep them informed. Further, staff should be motivated, encouraged and facilitated enough to obtain maximum output. At the same time the Head of Division should be competent enough on Subject matters to educate staff when it is necessary and strict enough to get the work done within the stipulated time period. It is not advisable to purchase any item on pending approval other than in case of emergency. Due to the lack of planning and organizing most of the unwanted urgent situations are created in the whole procurement process. So it is a collective responsibility of Head Office staff and site officers and the relevant PC & TEC, to supply the goods to the site appropriately by satisfying the procedure given at the Government Procurement Guidelines.

 

Eng. Indra Priyatharshini Seevaratnam
(Bsc Eng (Hons), AMIE (SL))

Planning Engineer
State Engineering Corporation of Sri Lanka
Mobile No: 0772920642
E mail: indu.seev@yahoo.com