Process Manual - Finalr1

STANDARD OPERATING PROCEDURE

SDL-PD-01801 Rev 0

Page 1 of ____

Effective 1 Nov. 2008

PURCHASE OF GOODS, EQUIPMENTS & SERVICESManager - Purchase Manager – Systems & Process VP - Purchase

Revision History

S.No. Version Date Author Description

Distribution List

Purchase department- Assistant, Executive, Managers, GM, VP and ED. VP’s of all departments/ division.All ED’s.

1.0 Purpose

The purpose of this procedure is to provide an efficient, effective and consistent way of purchasing goods, equipment & services. This procedure defines the standard work processes regarding the purchasing of Site material including Manual and Electronic Site Material Requisitions (SMRs), Indirect Materials/Goods used on Multiple Projects. (IMMP’s). This document establishes the process of requisitioning, approving, ordering, and receiving goods, equipment & services as well as tracking orders throughout the entire purchasing cycle.

2.0 Scope

2.1 This procedure is applicable to all projects under the administrative control of Sobha Developers Ltd (SDL). It addresses the responsibilities and work process for the origination and issuance of the Site material requisitions to Site Procurement for purchase.

2.2 Requirements for (Sub) contractors performing activities as described in Section 1.0 of this procedure are found in Standard Work Process Procedure ________________, (Sub) contractor Requirements.

2.3 In accordance with SDL Operating Instruction (Ref. _______________) , Standard Work Process Procedures, any deviation from this procedure shall be documented and approved in advance by the responsible Vice President (VP) and the Project Manager in-charge of Site Procurement.

2.4 This procedure is applicable to all domestic and International purchases of goods made under the administrative control of Sobha Developers Limited (SDL)

3.0 Definitions

3.1 Site Material Requisition (SMR)

An application located in Sobha Purchase Module (SPM), ERP based or a manual document used by Site Project Managers or Engineers to electronically or manually generate SMRs to request equipment, materials or services required for purchase, rental or subcontracting, during the construction of the project.

3.2 Direct Plant, Material and Services

Plant, Materials and/or services used as part of the permanent facilities or having a direct impact on the quality of completed work and/or Site services.

3.3 Indirect Plant, Material and Services

Materials and services used during construction, which do not become a part of the facility or plant or do not have a direct impact on the quality of completed work and/or site services. (i.e., temporary facilities, construction equipment, grinding wheels, files, safety tape, etc.).

3.4 Sobha Purchase Module (SPM) ERP based

Sobha's integrated supply chain and materials management system for Real Estate Development Projects and Contract projects. It spans from materials requirements planning through issue of materials to construction in the field. It is designed for use throughout the life of a project for both office and site procurement of engineered equipment, materials and services. Functions include requisitioning, purchasing, construction rentals, receiving, expediting, traffic & logistics, inventory control, and management of bulk and tagged components on a project. It links to engineering design/specification systems, document management, various supplier's systems, cost control and accounts payable.

3.5 Material Assignment Schedule (MAS)

A schedule that identifies the Plant/equipment, material and services required for the project, and the Sobha department responsible for developing the appropriate material requisitions.

3.6 Indirect Material/Goods used on Company wide Project Acquisition Group (CWPAG)

CWPAG is responsible for the formation, administration and coordination of Construction CWPA’s including items such as concrete formwork and shoring, scaffold, drilled-in anchors, safety supplies/equipment, consumables, small tools and temporary office facilities. The CWPAG has responsibility to administrate and coordinate such CWPA’s. However, VP (Projects / Contracts) has the clear responsibility to manage the supply, release, and budget adherence for any quantity on a jobsite that is obtained from such a purchase agreement.

3.7 Company wide Project Agreements (CWPA)

Agreements negotiated and administered by CWPAG personnel. Pricing or pricing formulas for materials and services covered by these agreements are established in the CWPA. Site procurement will execute blanket orders with not-to-exceed values, imposing the terms and conditions of the applicable CWPA. Refer SDL Policy (Ref. _____) and Procurement Instructions (ref ___) for appropriate use on specific projects.

3.8 Trend

An item of change to the project scope, pricing, unit rates, schedule, or intended plant quality that causes an addition or reduction to the trend base estimate including corrections for scope/estimate omissions.

4.0 References

4.1 SDL Operating Instruction (Ref_________), Standard Work Operating Procedures4.2 Standard Operating Procedure (Ref. ____) , (Sub)contractor Requirements4.3 Standard Operating Procedure (Ref. ________), Materials Receiving4.4 Sobha Corporate Policy , Procurement of Goods and Services4.5 Site Manual, chapter # , Purchasing4.6 General Financial Rules, SDL. 4.7 Rules and Regulations and Bye-Laws of SDL. 4.8 Schedule of Powers vested in various authorities / Staff of SDL

5.0 Method of Delivery

5.1 Purchase process

Procurement of stores through indigenous and foreign sources as required in accordance with the rules in force.

1. Preparing requisitions/ purchase indents.2. Checking of requisitions/purchase indents. 3. Selection of suppliers for issue of enquiries. 4. Issuing enquiries/tenders and obtaining quotations. 5. Analysing quotations and bids etc., and preparation of comparative statement

(quotation charts).6. Consultation with the Indentor for selection and approval of quotations and with

Accounts Officer for pre-audit. 7. Negotiating contracts. 8. Checking legal conditions of contracts. Consulting legal Officer. 9. Issue of Purchase Order. 10. Follow-up of purchase orders for delivery in due time.11. Verification and passing of suppliers’ bills to see that payments are made

promptly. 12. Correspondence and dealing with suppliers, carriers etc., regarding shortages,

rejections etc., reported by the Stores Department. 13. Maintenance of purchase records. 14. Maintenance of progressive expenditure statement, sub-head wise. 15. Maintenance of vendor performance records/data. 16. Arrangement for Insurance Surveys, as and when necessary. 17. Clearance of foreign consignments. 18. Keeping various Departments/Divisions informed of the progress of their

indents in case of delay in obtaining supplies. 19. Serving as an information center on the materials’ knowledge i.e. their prices,

source of supply, specification and other allied matters. 20. Development of reliable and alternate sources of supply. 21. It shall be particularly ensured:

i. that all purchase are made against properly authorized requisitions, and valid sanctions, showing the correct and detailed end-use.

ii. that all the materials requisitioned are duly ordered from the right source after full enquiries on most competitive price taking into account the trade discounts and tax benefits etc.

iii. that the right quantity of the goods consistent with the quality and the specification required is bought.

iv. that the deliveries of all goods are received within the stipulated period. v. that claims due to shortages or any other discrepancies are settled promptly. vi. that cordial and harmonious relations with all sections/divisions are

maintained for becoming an efficient service unit.

22. While receiving the planned requirement of the indentors, it should be prevailed upon the Indentors to certify clearly that the quantities indicated are definitely required for the project and specify the period within which the quantities indented will be consumed. It is the duty of the purchase section to check purchase indents against needs and suggest modification of quantities wherever necessary.

5.2 Process flow chart

STANDARD WORK PROCESS FOR FIELD MATERIAL REQUISITIONS AND PURCHASING

5.3 Requirements 5.4 Attachments

Assistant-Purchase(Nisha)

GM-Purchase

SDL & SGML(J.M.

Srinath)

Dy. Mgr. (Electrical)

(V.P. Ramesh

Mgr.Purchase

(Anil Thampan)

Dy.Manager Pur Santosh, Pandu, Naveen

Asst. Manager (Mallikarjun)

Mgr. Granite & Marble

(Utthaman VS)

Assistant(Rajesh

K.T)

AGM Purchase (Vishwanath.R)

Coordinating Cell

(P.G. SrinivasC.S. Mahesh) Manager SGML

(Pratish Babu)

Sr. Executive

Tilak Pur. Exe

Executive, Tiles & Plumbing items

(R.Ramesh)

Executive Purchase

Executive, PurchaseReshmaReddy

Executive, Purchase

(Archana Deshpande)

Jr. Executive Purchase(Anand S.)Jayaprakash

Sr. executive Power toolsExecutive

Power tools

Executive, PurChennai & Trivendrum

Sr. Exe Pur Bhuvaneshwar

VP-Purchase (Srikanth Kulkarni)

Asst Manager Chandigarh

5.5 Organization chart

5.6 Responsibility matrix

Process /Activity Responsibility Support

Vendor Selection

Checking the prequalification documents.

Visiting the factory / shop if required to evaluate the capacity / capabilities.

Vendor rating and approval Approval of trial order Procurement of materials at

right price, right time and right quality.

VP/ AGM / Manager

Procurement of materials and services as per the user’s requirements

Floating the enquiries to the vendor

Negotiating the best price and checking all the technical specifications.

Finalizing the purchase order /work order.

Executive & Executive coordinating cell

Prompt payment to the Suppliers

Coordinating with the project site for the GRIR to be entered in the ERP for the prompt payment to the suppliers.

Executive coordinating cell / Assistant

Vendor performance evaluation and review.

Vendor performance is evaluated on a quarterly basis.

Checking the Vendor evaluation rating received from the site.

Taking appropriate measures to improve the performance of vendor rating if required.

AGM/Manager

Vendor development

Locating and developing new vendors on monthly basis considering all cost reducing measures.

AGM/Manager

Scrap Disposal

Coordinating with the project stores to have the Updation of the scrap book.

Floating enquires to the vendors for the quotation.

Negotiation with the vendors for the best price.

Giving output to site to finalize the order

AGM/Manager

6.0 Interdepartmental Relationships – receivables and deliverables

Sr. DEPARTMENT INPUT (TO PURCHASE DEPT) OUTPUT (FROM PURCHASE DEPT)

01 MARKETING, SALES & CRM

Requirement of advertisement materials / gifts / hoardings.

Agency details etc. printing of brochure, banners etc.

Request and detailed information about Advertising agencies.

Requisition of maintenance materials during maintenance period.

Procurement of materials, issuing purchase order.

Work orders / annual contracts on agencies etc. for media advt. and printing of brochure, banners etc.

02 PROJECT

Indents for materials (PRs), Pending PRs / Materials list.

Feedback on vendors regarding the quality of the materials supplied at site.

Time schedule/ Execution Schedule. Technical inputs on materials when requested. Requisition for Work Order on

Subcontractors. Feedback on subcontractor performance. Information regarding rejected materials. Information regarding Capital Budget. Fixed assets. Verbal orders in case to be regularized.

Purchase Orders for materials indented. Lead-time Requirement. Status of PRs / Materials. Procurement schedule. Information regarding prices/ availability of

materials. Work contract finalization. Replacement of rejected materials as per the

standards one. Planning for the Inventory. Coordination on the technical feedback on

recommending fixed assets. Verbal orders are not encouraged.

03 ESTIMATION

Request for updated prices list of all materials on monthly basis.

Detailed estimates for all ongoing and forthcoming projects.

To ensure that sufficient quantity of materials has been incorporated in estimate for the respective month.

Copies of Purchase Orders/Work Orders as and when required.

Basic price list of all the materials including Tax structures etc.

Intimation of variations in Quantity. Monitoring of the rates considered in estimate

depending upon market fluctuations. 04 M&E Indenting the purchase requisition with material

specification and material delivery schedule. Follow up with purchase dept for timely delivery of

Placing of PO’s for indented materials. Providing all rates, discount structure & tax

structure for all the materials as and when

Sr. DEPARTMENT INPUT (TO PURCHASE DEPT) OUTPUT (FROM PURCHASE DEPT)

materials. Intimating to purchase dept in case of any changes

in the PR. Technical inputs on material on request.

required. Lead time, procurement schedule and status of

PR's / Material. Feed back for material delivery as and when

required. Information regarding prices / availability of

materials.

05HUMAN RESOURCE

Offer letters/ Appointment orders Confirmation letters Promotion letters Increment letters Commendation letters Rewards and incentives Training to meet identified needs. Preparation of key performance and performance

based appraisal

Staff Appraisals Human Resources Requirements Staff Training needs / Requirements Prompt closure of Quarterly manpower

requirements.

06 ARCHITECTURE

Request for samples along with rates. Approved drawing copies of MS Works. Recommendation for new products introduction.

Provide samples with rates for approval Providing technical details for the recommended

products and getting approval of the same.

07CHAIRMAN’S OFFICE

Inputs regarding strategy / vision Approvals for procurement of certain special items. Feedback on vendors Instructions to close pending purchase related

issues Capital budget

Monthly statement and status of affairs. Fortnightly Activity reports. Things to do once a fortnight to Chairman's

Office. Planning for inventory MIS reports Information regarding newly developed vendors

and products Innovative ideas.

08 MD's OFFICE Key inputs on long term rate contracts, business scenario & any relevant information.

Efficiency of the department

Provide status of procurement of key materials

Provide information on the changes in the market scenario / key developments from the

Sr. DEPARTMENT INPUT (TO PURCHASE DEPT) OUTPUT (FROM PURCHASE DEPT)

viewpoint of materials MIS reports Updating the department functions promptly Sanction / approval for capital items of high

value (key materials)

09FINANCE / ACCOUNTS DEPT

List of sundry creditors. List of pending GRIRs / POs / Invoices. Cheques to be issued to suppliers Reconciliation and rejected materials details. Information regarding PF / ESI / TDS / PAN Information regarding new rules and regulation

w.r.t. VAT/ ED / Service; tax / Customs.

GRIRs + invoice from suppliers for payment processing.

Statement of accounts from suppliers for reconciliation of payments.

Statement of Pending Payments. Vendor Tax registration details through ERP. Short closing of rejected and un replaced

materials purchase order. Information on vendors (Small scale / medium

scale etc)

10 R&D

Suggestions regarding economically and technically superior substitutes for material currently in use.

Licensing or certification of the Quality of products.

Compliance of requisition material. Sample and the specified details of the new

product to be introduced.

11 CORPORATE AUDIT

Audit Observations / Recommendations. Suggestions to improve the purchase order terms.

Compliance with audit recommendations

12 ADMIN

Arrangement of traveling / communication facilities. Arranging accommodation. Office stationery requirement. Providing proper security arrangements.

Request for Office stationery Printing Mobile and Land Telephones Office equipments Conveyance Ticketing Security arrangement Any other requirements within the

Administrative purview.13 QUANTITY Certification of rates / terms & conditions for Work order copies for vetting

Sr. DEPARTMENT INPUT (TO PURCHASE DEPT) OUTPUT (FROM PURCHASE DEPT)

AUDIT

work orders Certification of running bills for payments as per

work order terms and standard measurement terms

Clarification of rates To ensure that measurement can be done as

per the standard terms Monitoring that any reduction in vendor

payment and deduction in quantity, should be informed to Project / Purchase.

7.0 Evaluation methods7.1 Metrics

The following metrics have been defined.

1. Timely Procurement of ‘A’,’B’ and ‘C’ Class Items.

Metric: No. of items ordered

No. of items requisitioned in PR

2. Cost saving metric

Metric: Actual cost savings achieved during a quarter

Targeted cost savings.

3. * Vendor Performance Metric

Metric: No. of items delivered within time frame specified in P.O.

No. of total items ordered (A Class items)

* Rates and quality are taken into consideration prior to placing the order.

4. Vendor development metric

Metric: No. of new vendors developed

Planned number of vendors to be developed.

Targets will be set for the metrics. Performance will be reviewed periodically against

target and improvement actions will be initiated. Targets will be renewed annually.

8.0 Reporting systems( MIS) & Document control

8.1 Forms

The following formats are used by the department.

Sl. No. Annexure Particulars 1 I Comparison Chart

2 II Enquiry

3 III Checklist

4 IV Purchase request

5 V Purchase Order

6 VI Work Order

7 VII Vendor Pre – Qualification Form

8 VIII Vendor Rating Evaluation

9 IX Sub Contractor Performance Evaluation

10 X MIS Report

8.2 MIS8.3 Document records & filing

The following documents and records are maintained by the department. The

retention period of the documents and records are also mentioned.

S. No NAME OF THE RECORD RETENTION PERIOD

1 Purchase Requisitions 2 years

2 Comparison chart 2 years

3 Purchase order 2 years

4 Work order 2 years

5 Import purchase order 3 years

6 Minutes of meeting 2 years

7 Internal audit reports 3 years

8 Vendor Pre-Qualification 2 years

9 Vendor performance evaluation 2 years

10 Sub contractor performance evaluation 2 years

11 MIS Report 3 years

S. No NAME OF THE DOCUMENT RETENTION PERIOD

1 Internal documents. Permanent

2 General Procedures Manual. Permanent

3 Quality Assurance Manual Permanent

4 Updated price list of key items. Permanent

5 Directory of materials and products. Permanent

6 List of approved suppliers. Permanent

9.0 Other Requirements9.1 Strategy & Budgets9.2 Human resources & job role9.3 Space9.4 Infrastructure9.5 Tools/Software/ Technology used

10.0 Training methods

1.1 TRAINING PROGRAMME FOR NEW COMERS ORIENTATION

If a new employee in the Purchase Department joins without any previous training and experience and all his practical training has to be acquired on the job, he shall be given a week’s orientation i.e. an understanding of the jobs in terms of its own activities, objectives and responsibilities in relation to the museum’s policies and operations. For that purpose, his course of training shall consist of the following:

(a) Knowledge of purchasing principles, policies and procedures. (b) Knowledge of relevant rules from SDL– Sobha Purchase Manual(SPM)

etc. (c ) Knowledge of SDL’s developmental activities, equipment or productions,

if any. (d) Knowledge of materials and how they are used. (e) Knowledge of other departments and their work, and the Purchase

Department’s relationship with them and how they coordinate and help each other.

The above training shall be acquired under the guidance and supervision of the Manager- PMD and its progress shall be watched by him till its completion. The trainee shall undergo a simple test at the end of his week’s training. Its evaluation/rating shall go into his personal records. Similar training shall also be imparted on the incumbents joining Stores Department without any previous training and experience.

1.1 TRAINING PROGRAMME FOR SDL STAFF

10.1

11.0 Time lines

VARIOUS STAGES AND PROCESSING TIME FOR INDIGENOUS PURCHASE

Following are the various stages in the procurement of stores from indigenous sources along with optimum processing time:

1 Indent/requisition for purchase of stores from Division/Projects/Stores Officer

2 Notice inviting tenders/enquiries 1 to 3 days

3 Opening of tenders/quotations 7 to 14 days

4 Scrutiny of tenders/quotations and tabulation of comparative statement thereof

1 to 3 days

5 Selection of material by indentor 1 to 3 days

6 Pre-audit of purchase proposals by Finance 1 to 3 days

7 Formal sanction by competent authority 1 to 2 days

8 Placement of order 1 to 2 days

9 Delivery time *

10 Clearance from Railways, Road, Transport Companies, postal authorities, Airlines etc.

1 to 3 days

11 Passing and payment of bills (see item 17) 8 to 15 days 22 to 48 days

Plus delivery time

*Note: Minimum time for getting a material in store is 15 days from the receipt of indent in purchase section. It may take longer time if the indent is a long one with many items and/or if delivery time taken by supplier is long.

12.0PROCEDURE OF PURCHASE AND SANCTIONING AUTHORITY

Amount of Purchase Procedure Sanctioning Authority

Up to Rs.250 Cash purchase Project EngineerRs.251-500 Cash purchase as a very special

case after recording reasons for urgency

Project Engineer

Rs.501-1000 On the basis of lowest quotation out of at least 3 quotations

Project Manager

Rs.1001-10000 On the basis of lowest quotation out of at least 3 quotations

Such staff who are au-thorized by VP to accord sanction upto Rs.10,000/-

Rs.10001-20000 On the basis of lowest tender out of at least 3 tenders (limited tender)

VP - PMD

Rs.20001-50000 On the basis of lowest tender out of at least 3 tenders invited on open

VP- PMD

tender basis through press advertisement

Above Rs.50000 Refer to Executive Committee -

Note: All purchase shall be effected only after obtaining prior sanction from the competent authority. Proposals for ex-post-facto sanction shall not be admitted without VP-PMD’s approval.

13.0 Document References

13.1 Handbook of Import and Export procedures, orders issued by Government of India from time to time.

13.2 Rate and Running Contracts entered into by SDL from time to time. 13.3 India Trade Journal. 13.4 Hand-book of commercial firms. 13.5 Catalogues of foreign and indigenous manufacturers etc. 13.6 Books on materials management, Inventory Control by famous authors 13.7 Railway Goods Tariff, Terminal Tax, Sales Tax, Octroi and custom rules. 13.8 Directory of foreign and indigenous manufacturers. 13.9 Periodicals that report new concepts and techniques in Managing, Purchasing

and material activities.

14.0 Affected / Related Procedures 15.016.017.0

Method of Delivery

Procurement of stores through indigenous and foreign sources as required in accordance with the rules in force.

23.Preparing requisitions/ purchase indents.24.Checking of requisitions/purchase indents. 25.Selection of suppliers for issue of enquiries. 26. Issuing enquiries/tenders and obtaining quotations. 27.Analysing quotations and bids etc., and preparation of comparative

statement (quotation charts). 28.Consultation with the Indentor for selection and approval of quotations

and with Accounts Officer for pre-audit. 29.Negotiating contracts. 30.Checking legal conditions of contracts. Consulting legal Officer. 31. Issue of Purchase Order.32.Follow-up of purchase orders for delivery in due time.33.Verification and passing of suppliers’ bills to see that payments are

made promptly. 34.Correspondence and dealing with suppliers, carriers etc., regarding

shortages, rejections etc., reported by the Stores Department. 35. Maintenance of purchase records. 36.Maintenance of progressive expenditure statement, sub-head wise. 37. Maintenance of vendor performance records/data. 38.Arrangement for Insurance Surveys, as and when necessary. 39.Clearance of foreign consignments.

40.Keeping various Departments/Divisions informed of the progress of their indents in case of delay in obtaining supplies.

41.Serving as an information center on the materials’ knowledge i.e. their prices, source of supply, specification and other allied matters.

42. Development of reliable and alternate sources of supply. 43. It shall be particularly ensured:

a. that all purchase are made against properly authorized requisitions, and valid sanctions, showing the correct and detailed end-use.

b. that all the materials requisitioned are duly ordered from the right source after full enquiries on most competitive price taking into account the trade discounts and tax benefits etc.

c. that the right quantity of the goods consistent with the quality and the specification required is bought.

d. that the deliveries of all goods are received within the stipulated period.

e. that claims due to shortages or any other discrepancies are settled promptly.

f. that cordial and harmonious relations with all sections/divisions are maintained for becoming an efficient service unit in the museum/center.

44.While receiving the planned requirement of the indentors, it should be prevailed upon the Indentors to certify clearly that the quantities indicated are definitely required for the project and specify the period within which the quantities indented will be consumed. It is the duty of the purchase section to check purchase indents against needs and suggest modification of quantities wherever necessary.

Time Lines

6. VARIOUS STAGES AND PROCESSING TIME FOR INDIGENOUS PURCHASE6.1 Following are the various stages in the procurement of stores from indigenous sources

along with optimum processing time:

6.1.1 Indent/requisition for purchase of stores from Division/Projects/Stores Officer

6.1.2 Notice inviting tenders/enquiries 1 to 3 days

6.1.3 Opening of tenders/quotations 7 to 14 days

6.1.4 Scrutiny of tenders/quotations and tabulation of comparative statement thereof

1 to 3 days

6.1.5 Selection of material by indentor 1 to 3 days

6.1.6 Pre-audit of purchase proposals by Finance 1 to 3 days

6.1.7 Formal sanction by competent authority 1 to 2 days

6.1.8 Placement of order 1 to 2 days

6.1.9 Delivery time *

6.1.10 Clearance from Railways, Road, Transport Companies, postal authorities, Airlines etc.

1 to 3 days

6.1.11 Passing and payment of bills (see item 17) 8 to 15 days 22 to 48 days

Plus delivery time

*Note: Minimum time for getting a material in store is 15 days from the receipt of indent in purchase section. It may take longer time if the indent is a long one with many items and/or if delivery time taken by supplier is long.