Price List

The price list available in the market includes terms and conditions of the
suppliers along with the price of material. A sample of price list is shown
below in table.
Net Prices

Following table shows an example for giving discount and finding net price of
the material after imposing sale tax.
Knowledge of Purchase System

• It is the prime responsibility of head of the purchase officer to know the

system of purchase and make the desired wiring material available for the
project in hand.

• It is also the duty of the purchase officer of the department to purchase the
material at lowest market rate.

• Purchase head also has to ensure that the project work which is under process
is not stopped due to shortage of electrical material.

The electrical material means, the wiring material, instruments and tools
required for the completion of electrical part of the project.
Objective of purchase

i. The market surveys should be conducted from time to time to know the
latest prices of the materials.

ii. The material should be purchased the quantity of which is on demand.

iii. The desired quantity of material for the project should be purchased on
lowest market rate only.

iv. The purchase officer should keep a record of latest rates of various items
likely to be purchased.

v. Some important material should be kept stored so that it is made available

in emergency.

vi. The purchase officer should seek approval from his senior officer before
initiating purchase system.
Objective of purchase

vii. The quality and quantity should be got verified from the officer-in-charge
team of experts appointed by senior officer before passing orders for
making payment to supplier.

viii. The account should be maintained in such a way that the cost of rejected
material (rejection made by a committee of experts) is deducted from the
bill of the supplier.
Procedure of Purchasing

The following sequence of procedure desired in completion of the project is

adopted to purchase the material:

i. Get Requisition from various sources

ii. Call of quotations from different firms/organizations

iii. Prepare comparative statements

iv. Make purchase order

Requisition
The demand of various items of material and quantity is obtained from various
departments of the project in hand. Hence list thus prepared is finally sent to the
purchase department. The list is to be submitted on a form called requisition
form which is available in every department.
Call of quotations
After receiving requisition from various departments, the purchase department issues
letters to several registered suppliers for calling rate list. Issuing registered postal letters
to various reputed suppliers for their competitive rates is called ‘calling of quotations’.
The quotations are called in two ways:
1. By sending individuals registered letters to the suppliers.
2. By advertisements in newspapers which is said to tender notice.
The advertisements through newspaper are called ‘Public Tender’ or ‘Open Tender’ and
the quotations called from registered suppliers are called ‘limit tender’. The issue of
quotation through newspaper depends upon quantity and cost of material to be
purchased but for small purchases, the rate list is called from suppliers through
registered letters.
Some emergency purchases are made directly by the purchase officer after collecting
quotations from local suppliers personally. Such quotations collected within limited
period are called short tenders.
An ordinary letter which is given to the suppliers for calling of quotations is given
Opening the tender or quotation
Normally, the tenders or quotations are received before the last date for receipt
of quotations. The tenders or quotations are registered in the receipt register
maintained in the office. The tenders or quotations are opened by a committee
of three responsible officers in the presence of suppliers or their representatives
on the date and time mention in the quotation letters. To ensure that there is no
change of rates after opening the tender/quotation, the committee of purchase
officers put their signatures on each page of quotation/tender. Another entry to
made on each quotation/tender is that the serial number of quotations opened
out of total number of quotations/tenders received in the office. This should be
clearly written on each page of the tender/quotation and entry circled. For
instance, if first quotation out of seven quotations is opened, it will be marked
1/7 in circle.
Comparative Statement
After opening the quotations/tenders, the purchase clerk prepares a comparative
statement on a form available in the office. The aim of preparing comparative statement
is to make a comparison of rates quoted by different suppliers. The lowest rates offered
by a supplier can be seen directly from a single page. The comparative statement thus
should include conditions and terms of supply offered by each supplier. The
comparative statement thus prepared should be thoroughly checked by an officer. A
committee of purchase officers, technical advisor and a account officer is constituted to
examine in detail, The rate and terms of supply offered by each supplier. The lowest
rates offered by each firm are marked for issue of supply order after ensuring that the
material offered for supply is exactly as per specifications. The firm selected for issue
of supply order is asked to deposit some earnest money because, in case the supplier
fails to supply the material within the due date, the earnest money is forfeited. In case
he supplies to whom letters of quotations are sent are asked to deposit earnest money
along with the quotations or tenders. This way, the supplier is bound to supply the
material in full.
Purchase Order
All the purchase orders must carry the following information:

1. Purchase order number and date.

2. Detailed specifications of the items as quoted by the supplier/ agreed additional
specifications, if any.
3. Value of the purchase order.
4. Name of the suppliers.
5. Due date of delivery.
6. Quantity of items ordered.
7. Taxes if any to be specified in the order.
8. Dispatch details as agreed to.
9. Mode of payment as agreed to, advance, discount etc.
10. Inspection system as agreed to.
Tender
Tender is an offer made by the supplier in reply to the letter of quotation for supply of material on
the basis of certain terms and conditions. Some money is deposited along the tender which is
called earnest money which is a guarantee by the tender that the party is bound to supply the
required material if its tender is found competitive but on pre-decided conditions only.

Tender Notice
For certain heavy purchases, the information to be made available through the prominent news
papers is called “Tender Notice”. Always the tender notice is given in all news papers of the
region.