PPMS

The purchase and procurement phase in a project with an EPC approach, is one of the main phases of the project, which is directly linked to the engineering phase (as a commodity customer) and the construction and execution phases (as a commodity requester).

The PPMS (Procurement Project Management System) software is a comprehensive system for information management and activity control in the procurement phase of large   industrial projects, which embraces all purchase and supply processes of a project as follows:

Providing the purchase package

Upon collecting the MTO and MR documents of a commodity or equipment in the engineering unit, the procurement team starts its job. The documents provided by the engineering team, along with other relevant documents such as the maps and technical data, are attached to the purchase request and later sent to the PPMS software via the EDMS software. At this stage, the procurement team examines the documents imported into the PPMS software, creates a purchase package, and uploads all relevant documents in the PPMS software. During the process of purchasing commodities or equipment needed by the employer or the organization, the documents include all the assessment forms of the companies, NDA (non-disclosure agreement) document, tender documents, commodity purchase and supply instructions, standards, inspection instructions, list of the manufacturer and vendor companies, etc.

Identifying the vendor companies

Upon receiving the purchase documents from the engineering team and preparing its own documents, the procurement team begins the phase of identifying the vendor or manufacturer companies of the required product.

In almost all industries, there is a comprehensive list known as the Approved Vendors List or AVL that includes all the companies providing the relevant services in each field. The AVL contains a list of different vendor and manufacturer companies or their representatives, the competency of whom has been previously evaluated and approved by the employer through a specific process. The AVL is indeed a reference for selecting the companies that provided the services intended by the employer. Besides, the companies themselves can, assess, identify and approve the new companies to be included in the AVL list, or select a new list of the manufacturers and vendors for their own organization, and import it into the PPMS software.

Holding tenders and receiving bids (proposals) 

Once the manufacturer and vendor companies are identified, it is time to select the intended company through holding a tender. This phase includes a detailed process with different activities, during which registering all the details are of high significance.

The transactions that occur during the process of selecting the manufacturer or supplier of the commodity by the procurement team include: selecting the companies from the AVL list, obtaining the necessary approvals to invite the selected companies to participate in the tender, announcing and distributing the tender documents, obtaining the document classification certificate, sending the technical information and maps to further examine the companies, holding query sessions (question-and-answer sessions) and recording the obtained results, receiving the technical and financial bids (proposals), and examining the bids in all technical, financial, …fields.

In the Technical Clarification phase or final selection of the manufacturer or vendor company, the technical and financial proposals (bids) of the supplier companies are examined. This phase involves the exchange of information between the bidder companies and the employer (buyer) through the project procurement team and with collaboration with the engineering team. The engineering team, as the third dimension of this process, will be present until the technical approval or rejection of the vendor’s proposal.

Selecting the winner

The next step in the Procurement Project Management System is the winner selection phase, in which the procurement team sends the bid report along with a summery on tender’s documents and correspondences, to the organization’s decision-making authority (e.g. the trading commission) in order to select the winner of the tender.

Setting the contract

Selecting the winner is followed by setting the contract in the software. One of the features of this software is its capability to define the details of the contract, including the payment conditions, guarantees, commitments, etc., as well as setting the contract appendices in accordance with the files uploaded during all the previous steps.

Fabrication and inspection phases

Once the contract is signed by the two parties, Kick-off Meeting is held to begin the practical phases of the fabrication or purchase of the commodity. During the commodity fabrication or supply process, activities such as receiving the work progress report from the manufacturer/vendor company, financial payments, etc. are managed by the software.

Furthermore, in the commodity fabrication contracts there is a highly important process named inspection that starts with raw material supply and fabrication process. During all stages of fabrication, in addition to submitting a report, the manufacturer is obliged to provide Inspection Notification for the employer and the project agents inspection. Aside from receiving regular reports, the employer can visit the site and compare the project progress with instructions given and grant final approval.

There are mainly four types of inspection performed by the inspection team in a project:

• Raw material inspection
• Fabrication inspection
• Final acceptance test
• Pre-shipment inspection

In the Engineering Phase, the engineering team announces the ITP (Inspection Test Plan) of each commodity, as one of the technical attachments of the purchase request, to the procurement team and the manufacturer company. At all stages of construction, the employer’s inspectors or the employer’s inspection companies (Third Party) can inspect and test the goods under construction according to the instructions of ITP ,and present the results including the inspection report, NCR and… to the employer.

Before the shipment phase and once the fabrication is complete, the vendor company creates a Packing List of all portable items. Creating the Packing List is highly important for controlling the fabricated or non-fabricated items, informing the warehouse of the items that are ready for shipment and delivery, and most importantly informing the project manager of the proper installation and fabrication program with regard to the warehouse input.

Shipment phase

The shipping process begins as soon as the Packing list is ready. Depending on the volume, weight, financial value, and shipment type (e.g. foreign or domestic shipment, land, marine, or air shipment), this process includes various activities recording of which is very important in the PPMS system. Various documents including the permissions, the customs documents, the loading, shipment, and unloading documents, relevant invoices, and tens of other documents are all created in this phase.

Delivery of items to the site warehouse

Delivery of the items to the site warehouse is the final step of the purchase (Procurement) phase. Once the items are delivered to the project warehouse, the purchase process is finished and the storage process is started. Processes such as OPI, preparation of OSD tables, and eventually registration of MRR or MRS documents will be explained in the warehouse section.