Procurement Process In Construction - Supply Chain Management

Summary

This video explains the crucial distinction between procurement and purchasing, emphasizing that procurement is a comprehensive process leading to the acquisition of goods or services. It outlines the steps involved, starting with identifying project packages, preparing a Request for Proposal (RFP), and gathering necessary documentation like drawings and specifications. The video further details the importance of prioritizing packages based on urgency and lead times, floating inquiries, and evaluating technical and commercial proposals. Finally, it discusses the approval process, drafting a Letter of Intent (LOI), and concluding with a formal contract, ensuring all parties are aligned and informed throughout the procurement journey.

Takeaways

• 📦 Purchasing is a function, while procurement is the overall process of acquiring goods or services.
• 📝 The first step in procurement is to create project packages that detail what needs to be procured.
• 📄 A Request for Proposal (RFP) is crucial and includes documents like drawings, specifications, and a Bill of Quantities (BOQ).
• 💰 Establishing a budget for each package helps in commercial evaluation and ensures cost control.
• ⏳ It's important to determine the timeline for when each package is required on-site, especially for long lead items.
• 🔍 Floating inquiries involves sending RFPs to potential subcontractors and tracking responses.
• ⚖️ Evaluation consists of technical and commercial assessments to ensure compliance with project specifications.
• 📊 A commercial comparison sheet is essential for comparing subcontractor quotes to facilitate decision-making.
• 🤝 Negotiations with the selected subcontractors are vital to finalize terms before obtaining approvals.
• 📑 After negotiations, a Letter of Intent (LOI) is issued, subject to project consultant approval before drafting a contract.

Q & A

What is the primary difference between procurement and purchasing?

Purchasing is the function of buying goods or services, while procurement is the overall process that includes purchasing along with the planning, sourcing, and management of goods or services.

What are project packages in the context of procurement?

Project packages are specific items or services identified for procurement within a project, such as wooden doors, painting, countertops, and other construction elements.

What does RFP stand for, and what is its purpose?

RFP stands for Request for Proposal. Its purpose is to solicit proposals from potential subcontractors by providing them with detailed documents about the project requirements.

What key documents are included in an RFP?

Key documents in an RFP include drawings, specifications, Bill of Quantities (BQ), responsibility metrics, budget, and the program of work.

Why is the Bill of Quantities (BQ) important in the RFP process?

The BQ is important because it standardizes the basis for quotes, allowing for easier comparison of offers from different subcontractors.

What should be considered when determining which packages to procure first?

Packages that are either long lead items requiring a significant amount of time to arrive or those that are needed immediately at the project's start should be prioritized.

What are the two main types of evaluations conducted after receiving quotations?

The two main types of evaluations are technical evaluation, which assesses compliance with specifications, and commercial evaluation, which compares pricing.

What is the purpose of a compliance statement in the technical evaluation?

A compliance statement details how the subcontractor meets the project's specifications and identifies any exclusions that need to be addressed.

What is a Letter of Intent (LOI), and why is it issued?

A Letter of Intent is a document issued to a subcontractor indicating an intention to award them a contract, subject to approval from the project consultant.

What is the final step in the procurement process as described in the video?

The final step is drafting and signing a contract with the selected subcontractor, which then allows the project manager to administer the contract terms.