this is a report on Project procurement of management Saudi Pan Kingdom Company Procurement-plan (Final Project). its is a plan of Saudi Pan Kingdom Company Procurement-plan (Final Project)

1. PROJECT PROCUREMENT AND CONTRACTING
Muhammad mohsin (10506)
Ziyad bin hasan (11091)
Mazhar ()

2. Introduction
Saudi Pan Kingdom Company (SAPAC) is one of the leading and diversified Group
of Companies in the Kingdom of Saudi Arabia headquarters its office (Cordoba
area, Eastern Ring Road - North gate Economic Building 17 - Riyadh}. SAPAC is
operating in almost every City of Saudi Arabia with Regional Offices in Riyadh,
Arar, Hafer-aI-Batin, Tabouk, Makkah, Madinah, Yanbu and Eastern Province and
in addition to production unit for Asphalt, Cement Industries established in
different regions to support Construction Operations. The Saudi Pan Kingdom
Holding not only proven its skills in Construction Industry but also met the
increasing demand of growing Construction Sector in the Kingdom and also
proven its presence by providing the International Standard Construction
Products and Materials including Pipes, Steel, Cement & Concrete products.
SAPAC achieved its goals because of highly professional extremely dedicated
personnel who displayed real teamwork and solidarity every single day on Job.
Our personnel never lose sight for the following procedure and our priorities are
client satisfaction, Job quality, professional project management & functional
performance. More than thirty years ago SAPAC first started operation. SAPAC
rose strong and financially stable and pushed the construction sector forward
because it had strong foundations and self-sufficiency. SAPAC worked in all fields
particularly in Construction and Infrastructure as well as different areas such as
roads, bridges, sewerage systems and many more. SAPAC was there not only to
witness the introduction of this fertile land into the new millennium, but it was
more precisely one of the key factors that contributed in the development and
growth of the construction field in the kingdom. Today, thirty and more years
after, SAPAC has a spread of 16 branches across the Kingdom. SAPAC are
specialized in Buildings, Roads, Bridges, Tunnels, Water Networks, Sewage Works,
Treatment Plants and Micro Tunneling.
SAPAC started more than 30 years ago with clear vision and objectives. At start,
the focus was on infrastructure only, then SAPAC went through progressive
development according to well-established Business and Strategic Plans.

3. SAPAC believed in diversification, so the company went from infrastructure to
other disciplines and scopes, today SAPAC construct hospitals, hotels, railways,
tunnels, seaports, power, airports, treatment plants, etc.
Since SAPAC been founded; we believed in success factors; namely: humans,
tools, and processes. SAPAC invested extensively in these factors, today; we can
see that such investment is paying off as it’s clear now that SAPAC has been
founded on very strong pillars. SAPAC now can mobilize to any site in Saudi Arabia
within 72 hours. A distinctive capability.
Mission
Engineering, procurement, and construction of medium to mega projects for
public and private sectors utilizing our modern machines, talented trained staff,
international alliances, and integrated IT tools, fulfilling all requirements of social
responsibilities, safety, quality, and environment
Vision
To be the preferred EPC contractor in the region.
Services
 Infrastructure
 Water
 Building
 Tranporation
 Power
Poject procurement plan SAPAC
With these facts in mind, SAPAC has invested considerable time, efforts and
expenses in organizing and streamlining its material department. It has hired
Programmers, Schedulers, and Engineers to design procedures, forms and control
systems to effectively manage its material requirements.

4. SAPAC Management has contacts with most reputed firms / vendors not only in
the Kingdom even outside the Kingdom with whom it has been dealing in the past
for procurement of various materials and equipment for its projects. This benefits
the procurement department in obtaining information, collecting catalogues,
product data, shop drawings, specifications etc.
This material procurement plan is project specific for the material requirements.
1. PROCEDURES
1.1 At the start of execution, the Bill of Quantities is checked by SAPAC’s
Engineering Department associated with relevant project, adjusted
wherenecessary and complemented by detailed specifications of all the required
items.
1.2 A detailed material take-off list is worked out for the entire project from the
BOQ. The material procurement process is classified as follows:
 Long Lead Imported
 Long Lead Locally Manufactured
 Short Lead Imported
 Short Lead Local
1.3 The Material Take-Off list of the project is passed to the Scheduling
Department, for finalizing Material Procurement Schedule of long lead Imported
and locally manufactured materials. The Material Procurement Schedule covers
the following prime aspects:
 Date of delivery to site
 Purchase Order placement date
 Technical Evaluation and Commercial Analysis
 Inquiry Date

5. During project execution, other materials not listed in the master BOQ/MTO list
may be required. The site supervision staff will fill up the Material/Purchase
Request Form (Appendix II)
The Procurement Schedule will be submitted to Client for review and comments.
2. DEVELOPMENT OF PURCHASE ORDERS
The procurement process and the flow of inquiries to vendors from Request for
Quotation development through delivery is described below:
2.1 REQUEST FOR QUOTATION (RFQ) TO VENDORS
SAPAC Procurement Manager will collect all the required information/data from
the Project Field Engineer and prepare a complete RFQ package to
Vendors for floating by fax or courier like DHL (preference is given to Saudi
Arabian vendors, carriers and manufacturers).
RFQ do a complete package per item will include, but not limited to the following:
2.1.1 Project title / Bid due date / Validity of the proposal / Address of the
receiver and sender / Vendor data requirements / Delivery date at site.
2.1.2 Scope of work (design, supply, delivery, installation, testing and
commissioning).
2.1.3 Applicable Material Specification Systems, Project Specifications and
applicable Construction Drawings. Where a sub-vendor will be involved, the
SAPAC Procurement Divisions will require the vendor to distribute these
attachments to the sub-vendor as part of the order to sub-vendor.
2.1.4 Inspection and testing requirements per Specification requirements.
2.1.5 Listing of vendor Non-Material Requirements (NMR’s) items 601, 602 & 603
series of requirements such as instructions, procedures, drawings, specifications,
vendor inspection plans, and inspection and test records.
2.1.6 Providing information for providing spare parts and operating materials data
for new equipment purchased.

6. 2.1.7 Certification confirming compliance with Contract requirements.
2.1.8 Other special notes and requirements such as Client’s right to monitor and
visit plants and other inspection locations with or without prior notice to vendor.
NOTE: For all major equipment, a Requisition Package (Sample of RFQ Package)
will be submitted to Client for their review and comments, ifany, in order to
incorporate it prior to release of RFQ/Inquiries Package to vendors.
3. BID EVALUATION
Upon receipt of the Bid documents from the Procurement Manager, the vendor
will prepare the vendor inquiry status and send these to the engineering
department forreview and evaluation of the vendor’s data.
The SAPAC Procurement Manager, in conjunction with Technical Division and
Procurement QC Supervisor, will make the technical and cost evaluation of
thevendor’s technical data. The evaluation will be made on the following
information to select a successful vendor.
4. TECHNICAL EVALUATION
 Specifications
 Drawings (basically shop drawings)
 Data from catalogues
 Quality
 Date of delivery
 Property of the conditions suggested by Vendors
 Efficiency
5. COMMERCIAL ANALYSIS
The procurement department will make commercial analysis with regard to
following aspects:
 Ex-Factory price

7.  To-Site price
 Packing charges
 Inland trucking fee from the port of arrival
 Other additional costs
6. SUBMITTALS
For any equipment asset requirement over $ 10,000, the quotes will be obtained
from applicable Saudi Arabian manufacturers in addition to the Non Saudi
manufacturers and SAPAC will provide the required bidder’s information to Client
for purchase order placement direction – on an equalization summary package
against the Non-Saudi Manufacturers.
6.1 Vendor Recommendation
Upon completion of the vendor evaluation, the Procurement Manager will
recommend the selected vendor to the Project Manager on the quotation
evaluation sheet for the final determination of the successful vendor.
6.2 Transmittal for Approval
The Project Manager will submit the transmittal to the Client for approval of the
materials to be supplied and the Vendor.
Materials to be submitted are classified for review by Client as follows:
6.2.1 Class A -Major Equipment
Client/Engineer will review the technical submittal of the recommended vendor
and issue a No Objection Letter prior to PO placement. The Procurement Manager
will assign a unique
Identification Number (sometimes referred to as a ‘Dummy’ or
‘Pseudo’ P/O Number). This requirement must be followed to ensure this
equipment remain uniquely identifiable within Client’s material systems, custom
clearance and for Spare Parts Data Packages.
6.2.2 Class B - Bulk Materials

8. These requisitions will be submitted to Client/Engineer for review and comments,
as applicable.
7. PLACING PURCHASE ORDERS
7.1 Final Negotiation
The Procurement Manager will enter into the negotiations with the Vendor
approved by Client/Engineer in order to fix the price and all the items and
conditions which will be set forth on the purchase order.
7.2 Purchase Orders and Letters of Credit
The Purchase Order will be issued or Letter of Credit will be opened by the
Procurement Manager immediately after he receives the final approval of the
Client and after completing the final negotiation with the approved Vendor.
Material Procurement for imported and locally manufactured Long Lead materials
and equipment will be processed in accordance with the approved procurement
plan.
Qualified personnel will monitor procurement and Vendor performance.
7.3 Purchase Order Contents
7.3.1 SAPAC PO’s should include the following clauses, but not limited to:
 Warranty Pass through statement which identifies Client as beneficiary of
Warranties.
 Incidental services clause for vendor’s to provide technical representatives
as required for commissioning and start-up.
 “Non-Material Requirements are an integral part of these requirements,
and, as such, notwithstanding the terms of payment provisions in the
applicable conditions of purchase, purchase order payment up to the full
purchase order price may be withheld until all non-material requirements
are delivered and accepted by buyer”.
 Vendor will provide the following original manufacturer source information
for all material and NMR’s (documentation) supplied on this order:

9. Manufacturer name, address, sales order numbers, sales contact name,
telephone number and fax number”.
7.3.2 All procurement will be in accordance with the job specification.
7.3.3 New and unused material is required (No Reconditioned)
7.3.4 Standardization of materials within the design of the facilities isrequired.
7.3.5 SASO certificates processed by SAPAC are to be copied to
Client/Engineer.
8. REPORTS TO BE PRODUCED AND SUBMITTED
8.1 A weekly / Monthly Report including copies of un-priced purchase orders that
have been issued to be submitted to after acceptance by vendor.
8.2 A list of all materials/equipment purchased with unit cost above $10,000.
8.3 A monthly order material procurement status report, comprising the
construction procurement activity.
8.4 Saudi Vendors participation report at 50% and 100% completion of material
procurement.

10. 9. PROCUREMENT FLOW CHART

11. 10.EXPEDITING
SAPAC Procurement Manager will ensure that all Material will be available on site
on or before the scheduled date to use the same.
10.1 Transportation to the Site
If no defects are found and/or survey has been completed, the expediter will
arrange vehicle and equipment for the transportation company, and will notify
the following to the material control chief at the jobsite at least 24 hours before
the arrival at the site:
• Number and kind of vehicle
• Estimated time of arrival at the site
• Equipment required for unloading (forklift and crane)
• Cargo description and weight and/or volume
10.2 Safety Control during Transportation
The transportation expediter will ensure protection of cargo from normal highway
transportation inherent hazards incidental to highway transportation, even
though the loss during transportation is the responsibility of the engaged
transportation company.
11. ESTIMATED NUMBER OF PURCHASE REQUISITIONS
Purchase Requisitions are estimated to be in the range of 10 to 15 major items of
which are listed below, but not limited to:
•Concrete
• Asphalt
• Steel Rebars
• Camp and Office Consumables
• Other Accessories

12. 12ESTIMATED NUMBER OF PURCHASE ORDERS
Purchase Orders placed are estimated to be equal to the number of Purchase
Requisitions plus regular orders for bulk material.
Bulk Materials are listed below:
• Backfilling
• Sand / Cement
• Concrete
• Steel Reinforcement

13. 13. INSPECTIONS
13.1 Quality objectives
SAPAC QA/QC management will put all its efforts to achieve standards Prescribed
by Client/Engineer in procuring quality materials and equipment For the project
and assure that procedures stipulated in ISO 9001will be strictly Adhered to. The
Procurement QC Supervisor will be directly responsible forExecuting all
requirements stated in this document.
13.2 Quality control inspection
Quality control inspection by SAPAC will be carried out at the vendors shop At the
manufactures factory or the sub-vendor’s plant by qualified inspection
Personal/independent third party inspection agency approved by Client/Engineer
to accomplish the following:
•To assure that the materials or equipment is manufactured in the same Design,
dimensions and quality as specified and approved.
• Minimize the delays on the site.
•QC personnel will ensure that specifications and inspection requirements Are
properly transmitted to vendor sub-vendors at all of order placement.
The qualified inspectors/independent third party inspection agency will Perform
inspections on the materials and equipment during fabrication at the Factory and
before shipment, according to Contract requirements, to ensure That the material
or equipment is manufactured in the same design, dimensions And quality as
specified in the specification and approved by Client/Engineer.

14. The inspectors will report the result of inspection to Client/Engineer in
Accordance with the inspection list and if necessary, a joint inspection will
bePerformed
14. PURCHASE ORDER
In the procurement process, a purchase order plays a crucial role in ensuring the
smooth flow of goods or services and helps in maintaining accurate records of
purchases. Here are some key elements typically included in a purchase order:
Identifying the need: The first step would be identifying the need for certain raw
materials, products or services required for the business. This could be driven by
various factors like increase in customer demand, new product development,
replacement of old equipment etc.
Evaluating suppliers: Once the needs are identified, the procurement team would
evaluate potential suppliers that can fulfill those needs. They would evaluate
suppliers based on factors like quality, cost, delivery reliability, service etc. to
select the optimal suppliers.
Price negotiation: The procurement team would then negotiate with selected
suppliers to get the best price and terms for the required items. They would try to
get the lowest competitive prices and most favorable payment and delivery
terms.
Purchase requisition: The internal department or business unit would raise a
purchase requisition formally requesting for the purchase of required items. This
details the specifications, quantities needed and other requirements.

15. Purchase order: The procurement department would review the purchase
requisition and issue an official purchase order to the selected suppliers for
supplying the requested items. The PO would specify all details like specifications,
price, quantities, delivery dates etc.
Goods receipt and quality check: Once the goods or services are delivered, SAPAC
would check them to ensure they match the requirements mentioned in the PO.
This includes inspection of quality, specifications and quantities. Payment would
only be released after satisfactory goods receipt and quality check.
Payment: SAPAC would process the payment for the delivered items either on the
pre-agreed payment terms like 30 days or after goods receipt and quality check.
Payments are usually made electronically via bank transfers or wire transfers.
Follow up: Even after delivery and payment, the procurement team would follow
up with the suppliers to ensure any issues with the supplies are addressed
promptly and that the suppliers continue meeting the expectations and
requirements. Future business may depend on the performance of the suppliers.

16. 15. PROCUREMENT PERFORMANCE METRICS

17. Some important procurement performance metrics that Saudi Pan Kingdom
Company (SAPAC) can use to evaluate its procurement function include:
1. Cost savings: The amount of cost savings generated through negotiations
with suppliers, bulk buying, process improvements etc. This indicates how
much the procurement team has lowered the costs for the organization.
2. Spend under management: The percentage of total spend that is under
procurement department's control and is procured centrally. Higher the
percentage, better the performance.
3. Supplier performance: Metrics to track supplier delivery, quality,
responsiveness and overall performance. Poor performing suppliers need
corrective measures to improve performance.
4. Cycle times: The time taken for key steps in the procurement cycle like
sourcing new suppliers, issuing purchase orders, processing invoices and
payments etc. Faster cycle times improve efficiency and productivity.
5. Purchase order compliance: The percentage of purchases made as per the
standard purchase order process. Deviations need to be monitored and
compliance improved through training and controls.
6. Savings ratio: The ratio of cost savings versus the total procurement spend.
For example, savings ratio of 8% means the company saved 8 cents for
every $1 spent on procurement. Helps understand how much value
procurement contributes.

18. 7. Spend compliance to contracts: The amount of spend within the
organization that complies with existing procurement contracts. Needs to
be maximized to get the best value out of negotiated contracts.
8. Challenged invoices: The percentage of total invoices that were challenged
by the procurement team for issues like incorrect pricing, poor
performance penalties etc. Although needs to be optimized, a low
percentage could mean missed opportunities to challenge suppliers.
9. Electronic transactions: The proportion of procurement transactions done
electronically vs. manual processes. A higher ratio indicates greater
efficiency, accuracy and cost savings. Most top companies aim for at least
80% electronic transactions.
10.Customer satisfaction: Surveys and feedback from internal stakeholders
and suppliers to assess how well procurement meets the needs and how
satisfied they are with the function. Important for continuous performance
improvement.
Measuring and tracking key metrics like these helps Saudi Pan Kingdom Company
evaluate how well its procurement department is performing, identify any
process gaps or skill deficiencies and take corrective actions to boost its
performance over time. Procurement performance has a direct impact on the
company's success and profitability.
16.RISKS IN PROCUREMENT

19. Here are some of the major risks that Saudi Pan Kingdom Company (SAPAC) may
face in its procurement process:
Supplier risk: There is a risk that suppliers may not be able to deliver the required
goods or services on time or meet the quality standards. This could disrupt
SAPAC's operations and supply chain. They need to carefully evaluate suppliers to
mitigate this risk.
Price risk: Prices of raw materials and supplies can fluctuate significantly due to
various market factors. This could increase the costs for SAPAC if not managed
properly. They need to employ strategies like building long-term relationships,
bulk buying, hedging etc. to minimize price risks.
Payment risk: There is a risk of fraud, errors or delays in payments which could
impact SAPAC and the suppliers. They need to have a robust payment process and
audit controls to mitigate payment risks.
Compliance risk: Procurement needs to comply with various regulations around
sourcing, environmental guidelines, product standards etc. Any non-compliance
could expose SAPAC to penalties and reputational issues. Regular audits and
training help address this risk.
Specification risk: Inaccurate or incomplete specifications of goods and services
could lead to items not meeting the actual needs. This impacts productivity and
customer service. Tight controls and close coordination with internal stakeholders
help minimize specification risks.
Ethical risk: Unethical practices like bribery, corruption and human rights
violations in the supply chain could pose serious ethical and reputational risks.
Strict policies, audits, training and compliance monitoring help mitigate such risks.

20. Continuity risk: Relying on a limited set of suppliers could disrupt the supply chain
in case any of them face issues. Maintaining additional suppliers and a diversified
supply base helps reduce continuity risks.
Obsolescence risk: Technological changes could render some inventory and
assets obsolete, resulting in losses. Carefully evaluating lifecycles and
compatibility of critical items helps lower obsolescence risks.
Counterfeit risk: Counterfeit items could enter the supply chain, impacting
performance, brand reputation and safety. Working only with trusted licensed
suppliers and strict quality checks minimize counterfeiting risks.
Those would be some of the major risks Saudi Pan Kingdom Company should
watch out for and take mitigation steps in its procurement processes. Effective
risk management is key to a successful procurement strategy.