Procurement of Goods

PRMG 155 – Procurement Management

What are the Steps of Procurement of Goods?
• Compile Data
• Clearly define your requirements
• Decide on the type of procurement
• Issue Request for Quotation (RFQ)
• Collect quotations
• Evaluate quotations
• Negotiate prices
• Submit to the Engineer
• Issue Purchase Order (PO)
• Administer and Close Procurement
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Compiling Data
• Contractors need to compile data and prepare their
database on material characteristics, quality, sizes and
performance standards.
• Knowledge of available materials and products will enable
the Contractor to consider alternatives which comply with
the technical specification.

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Factors to be considered in
procurement of Goods
• Any vendor list by the Employer or Company approved
vendor list
• Availability of the Goods in the Market
• Long lead items
• Any operation and maintenance cost e.g. of equipment

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 Clearly Define Your Requirements
• Identify all goods that need to be procured.
• Identify whether they are temporary (e.g. stores, offices, printers, fences),
permanent (e.g. ceramic tiles) or consumables (e.g. nails, wires).
• Determine the quantity of the goods that need to be procured.
• Prepare a Schedule of Requirements including:
• a description of the goods to be supplied, supported by technical
specifications
• Required quantities
• the delivery schedule of the goods

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Decide on the type of procurement
 Open Bidding (rarely used)
 Selective Bidding
 Negotiated Bidding
 Single Source Procurement

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Issue RFQ
• RFQs should include the following information:
• The title and location of the Project
• Schedule of Requirements
• Due date for submission of quotations
• Whether firm price or fluctuating price
• Discount terms required
• Whether transfer to Site is required
• Any limitations on access to the site
• Any insurances required
• Taxes included or excluded
• Contractor’s Contact Person
• Purchase Order Terms and Conditions
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Sample form for RFQ
Project: XXX
Dear Sirs,
You are kindly requested to submit your best price for the
following items to be delivered to the site, as per the
attached specifications and requirements. If you have
queries in relation to this RFQ please contact XXX. Please
submit your quotation by XXX.

Yours faithfully,
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Collect quotations
• Quotations are collected from suppliers.

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Evaluate quotations
• Evaluate quotations as per the Tender Evaluation
procedures.

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Negotiate Prices
• Negotiate prices with one or more of the suppliers and request
further discounts.
• Sometimes, there is a need to negotiate the Purchase Order Terms
and Conditions.

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Submit to Engineer
• Prepare a material submittal (in case of permanent
supplies), if required, including the details of the supplier
and submit to the Engineer.
• Sometimes samples are submitted to the Engineer for
approval, as well.

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Issue Purchase Order (PO)
• When the Engineer approves the material submittal, if
required, related to the supplier, issue Purchase Order
to the supplier.

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Administer and Close Procurement
• Track the supply of goods
• Expedite shipment, if necessary
• Handle delivery
• Inspect items
• Receive any warranty documents
• Plan and maintain proper storage of the goods prior to use
on Site
• Handle storage of any surplus goods after the completion of
the project

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Administer and Close Procurement Cont.
• Make payment
• Keep accurate records to justify the process and any other
related decisions made in this regard
• Update your database
• Inform the Tendering Department with data required to
update their database

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