Procurement Process in Networking Lecture o7 Advanced Computer Networks (ACN) 545

Mr. Thilak de Silva.BSc. Eng., MSc, CEng, FIE(SL), FIET(UK), CITP(UK), MBCS(UK), MIEEE (USA)

M.Sc. in IT - Year 1 Semester II - 2012

ExpenditureBegetTender Document / Bidding

DocumentRequest for proposal – RFPStakeholders of Procurement ProcessContents of Tender DocumentCalling for Tender DocumentContract Document

M.Sc. in IT - Year 1 Semester II - 2012

At the end of this session you will understand about the entire Procurement Process of an organization and about related artifacts such as Tender document, Request for Proposals, Contract document etc.

M.Sc. in IT - Year 1 Semester II - 2012

In an organization there are two main types of expenditure

Capital Expenditure Buying equipments, cost for a new building etc.

Operational Expenditure Maintenance, paying salary etc

M.Sc. in IT - Year 1 Semester II - 2012

If a new network will be implemented every thing falls under Capital expenditure.

If expanding an existing network buying new equipments falls under Capital expenditure.

Equipments for maintenance falls under Operational expenditure.

M.Sc. in IT - Year 1 Semester II - 2012

Annual budget Any budget that is prepared for a 12-month

period. An annual budget outlines both the income and expenditures that are expected to be received and paid over the coming year.

Monthly budget Any budget that is prepared for time period of

a month. A monthly budget outlines both the income and expenditures that are expected to be received and paid over the coming month.

M.Sc. in IT - Year 1 Semester II - 2012

Almost all the companies prepare this.

The allocated budget for operational and capital expenditures are specified.

M.Sc. in IT - Year 1 Semester II - 2012

Operational

Capital

When requesting a new investment requester should convenience the need, ROI, benefit etc.

If it is accepted requester should provide a detailed analysis of expenses.

After series of discussions if it is needed it is placed under budget.

Once the annual business plan is approved, the procurement process starts.

M.Sc. in IT - Year 1 Semester II - 2012

Includes specifications of equipments. Includes Bill for Quantity. Well defined.

Problem – If there are more adequate equipments vender can not suggest because everything is well defined

M.Sc. in IT - Year 1 Semester II - 2012

Includes specifications of equipments. Includes Bill for Quantity. Well defined.

Problem – If there are more adequate equipments vender can not suggest because everything is well defined

M.Sc. in IT - Year 1 Semester II - 2012

A tender document or a RFP has two parts.▪ Technical proposal and▪ Financial proposal

We first analyze the Technical proposal and then we do a technical evaluation. By looking at that the suppliers will be shortlisted.

Then the Financial proposal of those suppliers will be opened and shortlist from them again.

Then cost will be analyzed and the least cost supplier will be selected.

M.Sc. in IT - Year 1 Semester II - 2012

When doing the technical and financial evaluations we can assign a weight for each, like,▪ 60% for Technical evaluation▪ 40% for Financial evaluation

By looking at the final percentages we can select the most weighted supplier.

But this should be done prior to the calling of tenders.

M.Sc. in IT - Year 1 Semester II - 2012

User DepartmentFinance DepartmentProcurement DepartmentTender BoardTechnical Evaluation Committee

M.Sc. in IT - Year 1 Semester II - 2012

M.Sc. in IT - Year 1 Semester II - 2012

After selecting the suppliers, Procurement department send a letter of

intension to supplier Supplier submits the reply. Supplier submit the performance bond. Sign the contract.

Section 01 : Instructions to bidders.Section 02 :Tender Conditions.Section 03 : Scope of work.Section 04 : Technical specificationSection 05 : Compliance scheduleSection 06 : Price schedule

M.Sc. in IT - Year 1 Semester II - 2012

M.Sc. in IT - Year 1 Semester II - 2012

M.Sc. in IT - Year 1 Semester II - 2012

10% is kept until warranty period expires.

Once the warranty period expires Final testing is done and if it is fine the rest of the payment is also done.

M.Sc. in IT - Year 1 Semester II - 2012

M.Sc. in IT - Year 1 Semester II - 2012