List of Content: Materials Procurement (Kk-T-007: C-Lp3 - Is)

MATERIALS PROCUREMENT (KK-T-007: C-LP3 – IS)
LIST OF CONTENT
1.0 OVERVIEW OF ROAD WORKS................................................................ ( 4 - 5 )
2.0 OVERVIEW OF MATERIALS PROCUREMENT ..................................... ( 6 - 10 )

2.1 Drawing Introduction
2.2 Types Of Drawing
2.2.1 Tender Drawing
2.2.2 Construction Drawing
2.2.3 Schematic Drawing
2.2.4 Shop Drawing
3.0 DRAWINGS ........................................................................................... ( 11 - 14 )
4.0 SPECIFICATIONS ........................................................................................ ( 15 )
5.0 WORK PROGRAMME ........................................................................... ( 16 - 19 )

5.1 Introduction
5.2 Work Schedule
5.2.1 Scope of works
5.2.2 Duration of works
5.2.3 Sequence of works
5.3 Resources Requirement for Procurement
5.3.1 Manpower
5.3.2 Tools and Materials
5.3.3 Transportation
6.0 PROJECT BUDGET ..................................................................................... ( 20 )
7.0 Materials Procurement ................................................................................ ( 21 )

7.1.1 Quantities of Materials
7.1.2 Rate/Price
7.1.3 Labour (Manpower)
7.1.4 Contingency
8.0 COMPANY CASH FLOW....................................................................... ( 22 - 23 )

8.1 Introduction
8.2 Expenditure and Resources Planning
8.2.1 Profit and Loss Statement
8.2.2 Project Budget
©CIDB_2016 MS 1 daripada 36
8.3 Optimize Resources Usage

8.3.1 Loans
8.3.2 Credit
8.3.3 Terms and Conditions
8.4 Cash Flow Application
8.4.1 Projection
8.4.2 Current Liabilities
9.0 QUOTATION .......................................................................................... ( 24 - 28 )

9.1 Introduction
9.1.1Purpose and Types of Quotation Quotations serve a number of
purposes
9.2 Classification of Vendors
9.2.1 Construction Materials
9.2.2 Plant and Machinery
9.2.3 Tools
9.2.4 Products
9.2.5 Services
9.2.6 Oil and Gas
9.2.7 Manufacturing
9.3 Invitation to quote
9.3.1 Price
9.3.2 Standard and Conformance
9.3.3 Validity period
9.3.4 Terms and conditions
9.3.5 Mode of Payments
9.3.6 Warranty
9.3.7 Product Catalogue
9.4 Quotation Summary
9.5 Quotation Evaluation
10.0 Storage Layout Plan .................................................................................... ( 29 )

10.1 Introduction
10.2 Layout Drawings
10.3 Safety and security procedures
10.4 Storage Systems
11.0 INVENTORY CONTROL AND PROCEDURES ..................................... ( 30 - 36 )

11.1 Introduction
11.2 Inventory Planning
11.2.1 List of Materials
11.2.2 List of Catalogues
11.2.3 Purchase Requisition (P.R.)
11.2.4 Purchase Order (P.O.)
11.2.5 Delivery Order (D.O.)
11.2.6 Control Procedures
11.2.7 Stock Cards (Coding)
11.2.8 Stock Check
11.3 Inventory Database
11.3.1 Format
11.3.2 Procedure
11.3.3 Updates
11.3.4 Mill/Manufacturer Certificate
1.0 OVERVIEW OF ROAD WORKS

Infrastructure development is crucial to the nation’s growth and this is especially so for a
budding nation like Malaysia. Road linkages provide the mobility and connectivity
essential for economic development and social wellbeing. They serve diverse roles in
supporting these objectives. They function as inter urban and intra urban routes and
provide access to facilities we use in our daily lives. The main purpose of the road
structure is to provide a means of reducing the stress of pressure due to a wheel load to
a value which the ground under that structure can support (Ministry of Works, 2011). In
addition, nowadays, project implementation is being carried out by completely
outsourcing the work, whereby the PWD acts as the client which determines the scope
and work specification. This method is more practical as there are a huge numbers of
projects to be implemented.
Roads can be divided into Federal Roads (i.e., Toll roads and non-toll roads) and State
Roads (i.e., PWD Roads, Municipal/Council roads, and agriculture roads) as shown in
Figure 1 and 2 below.
Figure 1: Administration of Roads
Figure 2: Example of administration of roads – Penang
Apart from that, for further clarification on the materials used for paved roads, Figure 3a,
Figure 3b and Figure 4 illustrate the typical road cross section.
Figure 3a: Typical Cross-section for roads
Figure 3b: Typical Cross-section for urban roads
Figure 4: Typical Cross-section for roads
2.0 OVERVIEW OF MATERIALS PROCUREMENT

Procurement of materials for road works is the acquisition of materials at the best
possible cost in the right quantity and quality, at the scheduled time, from the right
source and delivered to the right place for the direct benefit of the overall budget.
Identification of materials to form completed roadwork can be obtained from drawings,
specifications, method statements, and work programme. The identification of materials
will give implication to the company’s cash flow in order to plan for the project budget.
Other than that, project control in term of storage planning and inventory are essential
to ensure efficient project management.
2.1 DRAWINGS Introduction

It is fundamental for road contractors to review and understand all drawings related
to the projects prior to tendering and commencement of road works. A thorough
understanding of the drawings will enable the contractors to visualize the project as
a whole and all individual work tasks so as to enable identifying of tools and
materials to facilitate procurement for the project.
Drawings are the means of graphically illustrating each phase of road construction
with elevation details, section drawings, site plan, details or change of road levels
according to the chainage.
2.2 Types of Drawings

There are various types of drawings (i.e., tender drawing, construction drawing,
and shop drawing) that will be produced by the consultants, contractor,
manufacturer, and supplier for the works to be carried out. Nowadays, most of the
road works drawings can be produced using computer softwares ( i . e., Bentley
MX Road, PDS, AutoCAD, BoCAD, STAAD Pro, etc.).
2.2.1 Tender Drawing
Tender drawings are issued as part of the tender documents to all
tenderers. The purpose of these drawings is to provide a clearer picture of the
nature and extent of the works described in other parts of the document to assist
the tenderers in pricing their bid. Tender drawings are prepared by the Client.
2.2.2 Construction Drawing
Generally, construction drawing furnishes enough information for the
contractor to complete the entire project. The drawing must provide sufficient
information on materials and specifications for the project. The drawing
must indicate the purpose of the drawing (i.e., ‘FOR CONSTRUCTION’).
The construction drawing will form a legal binding as part of the contract.
It is always the case that the set of construction drawing will assist the
contractor to identify materials required to complete the project. The contractor
will be able to estimate the quantity of materials such as asphaltic concrete,
crushed aggregate, sub-base material, drainage, signages, and other elements
related to the construction of road by going through the drawings. When read in
conjunction with the bills of quantities, the drawings enable the contractor to
determine the types of materials and the quantities of materials required to be
procured.
MATERIALS PROCUREMENT (KK
(KK-T-007: C-LP3 – IS)
In example, Figure 5 shows a plan and profile of a section of a road to be

constructed. From the plan, the contractor will be able to identify the limit of
work (R.O.W), super
super-elevation,
elevation, and number of berms on slope. Based on
the profile, the contrractor should be able to determine the finished road level to
be constructed.
Furthermore, Figure 6 shows t h e typical road cross-sections s from which the
contractor will be ab
able to identify types of materials to be used (i.e., asphaltic
concrete, crushed a aggregate, sand,, drainage and other elements related to
road construction).. With that, the contractor will be able to procurre for the work.
C O N T O H
FOR CONSTRUCTION
Figure 5: Construction Drawing- Plan & Profile
(KK-T-007: C-LP3 – IS)
C O N T O H
FOR CONSTRUCTION
Figure 6: C
Construction Drawing – Typical Cross-section
2.2.3 Schematic Drawing

Schematic drawings are line drawings presented in concise, graphical
symbolism whereby the engineer communicates to others the functional
relationship of the parts in a component and, in turn, of the components in a
system. The symbols do not attempt to describe in complete detail the
characteristics or physical form of the elements, but they do suggest the
functional form which the ensemble of elements will take in satisfying the
functional requirements of the component. They are different from a block
diagram in that schematics describe more specifically the physical process
by which the functional specifications of a block diagram are satisfied.
Figure 6a is an example of a schematic drawing for street lighting.
2.2.4 Shop Drawing
Shop drawings are detailed construction and fabrication drawings that show
the proposed material, shape, size and assembly of the parts and how the
system / unit would be installed. Despite the working drawings and
specifications prepared by the engineer are adequate for job pricing and
general construction purposes, it may not b e suitable for the fabrication and
production of many required construction products.
Shop drawings are required for almost every product that is fabricated away
from the project site. Manufacturer of the required materials often requests
that the contract (or construction) drawings be amplified by detailed shop
drawings that clarify the contract requirement. Such descriptive technical
submissions are prepared by the producers or fabricators of the materials and
are submitted to the main contractor and for approvals by the S.O/Engineer
before the items can be fabricated and supplied. In short, the shop drawing is
complementing the method statement for clarification of installation and
sequence of work.
Examples of shop drawings are those prepared for signboards, guard rails,
street lights, pre-cast materials such as “T-beam”, Girder Box, Culvert and
Drains, etc.
(KK-T-007: C-LP3 – IS)
C O N T O H
Figure 6a: Electrical Schematic Drawing
3.0 SPECIFICATIONS
Specifications provide a contractor with a written detailed description of the materials
and products that can be used, the standard of workmanship required, the
performance requirements and the condition under which the work is to be executed.
The document is normally divided into trades or elements of construction in much
the same sequence as they would actually be carried out.
It is a common practice in order to ensure uniformity, to use standard specifications
which are generally employed by the industry. In example, the JKR Standard
Specification for Road Works as showed in Figure 7 and Figure 8. Nonetheless, in
order to accommodate particular requirements of the project and modifications are
necessary, addendums to the standard specifications are prepared and enclosed with
the standard documents.
Specification forms part of the contract, and normally includes:
• Nature and extent of works inclusive of location, fabrication/ manufacture, etc.
• Terminology and definitions to clarify the meanings.
• Detailed description of material including type, size, density, grade, tolerances,
etc. (i.e., For crushed aggregate need to specify its density, size, grade
and water content)
• Date of last effective revision and revision personnel’s designation.
• Test methods for measuring all specified characteristics as per JKR
roadwork specification format.
• Performance testing requirements and certifications.
• Safety and Environmental considerations and requirements.
• Quality requirements, inspections, acceptance criteria.
The specifications is essential in the material procurement process as it describes in

detail, the materials that are required for various tasks in the project as identified in
the drawings and other documents with regards to quality, type, etc. As an
example, Figure 9 shows an abstract of the JKR Road Works Specification indicating
the materials required for prime coat (i.e., cut-back bitumen or bitumen emulsion of
RC-70 / MC-70 grade conforming to M.S 159) and tools to carry out the works ( i . e . ,
power broom, compressed air blower, etc.). From this, the contractor is able to
determine that he needs to procure cut-back bitumen, power broom, etc. in order to
carry out prime coating.
C O N T O H
Figure 7: JKR Standard Specification for Road Works
C O N T O H
Figure 8: JKR Standard Specification for Road Works
(KK-T-007: C-LP3 – IS)
C O N T O H
Figure 8: JK
JKR Standard Specification for Road Wor
orks
4.0 Method Statement

A method statement details the method or process of construction to be adopted
in carrying out a particular task including but not restricted to type and quantum of
plant and equipment, labour quantum, materials to be used, duration, etc. It should
highlight problems, limitation (i.e., work area), possible dangers or risks associated
with particular parts of the project. Other than that, Method Statement should suggest
the methods of control to be established, how the work will be managed safely in
accordance with Occupational Health and Safety Act and Regulations, etc. A method
statement, if necessary, should be accompanied by drawings, approved materials
specifications, design calculations endorsed by Professional Engineer, work program
and sketches.
A method statement is fundamentally a form of specification and its benefit to the

contractor with regards to material procurement a s it describes in detail the
materials that are required for a particular task in the project.
5.0 WORK PROGRAMME

5.1 Introduction
A work programme is the contractor’s plan in a graphical form indicating the
detailed sequence of work activities and critical milestones for the successful
implementation and completion of a project. Each programme should at the least
provide the following information:
• Principal activities
• Sequence of such activities
• Timing of such activities
• Critical activities and critical path
• Important milestones for submittals by the contractor (i.e., times of
submission of method statements, samples, shop drawings, etc.)
• Important milestones for employer / S.O ( i . e . , times by which submittals
need to be approved, works under Prime Cost sums need to be awarded,
possession and/or access need to be given, etc.)
Work programme can be presented in a number of forms. Some of the
common ones being (further explanations will be in LP 12: Project Management
Tools):
• Simple Bar Charts
• Gantt Charts
• Critical Path Method (CPM)
• Project Evaluation Review Techniques (PERT)
• Project Network Analysis
The form and level of content of a work programme principally depend on the type
of contract, size and complexity of the works and any express stipulations in the
contract. It is necessary for the contractor to manage the procurement of
materials as per sequence/program. The work program will enable the contractor
to schedule procurement and delivery of materials according to the construction
sequence.
5.2 Work Schedule

The schedule of works in a work programme is important to meet the critical point
in the process of procurement of materials as it indicates the scope of the various
work activities, their duration and sequence.
5.2.1 Scope of works
By understanding the various activities listed in the work schedule / programme
and synchronise with other documents (i.e., BQ, drawings, a n d specifications),
the implementation team will be able to identify the materials required at
various stage of a project.
As for road works, the scope of works can be divided into two (2), namely:
1. Construction of new road, and
2. Road rehabilitation
For construction of new road, the major activities are earthworks, pavement
construction and road furniture. Whereby, for road rehabilitation the main activities
are pavement construction or repair works with appropriate Traffic Management
Plan (TMP) at all times.
5.2.2 Duration of works
The durations allocated in the work programme for the various activities will
assist the implementation team in determining the appropriate time for
ordering and delivery of materials.
5.2.3 Sequence of works
Sequence of works is the chronology of activities in the Work Programme to be
carried out. The implementation team is to ensure the procurement of tools and
materials are carried out in accordance with the sequence so as to avoid delays
in implementation of work activities. This is to avoid premature ordering which
can negatively affect the project cash flow, leads to possible deterioration of
material quality and quantity, and occupy storage space unnecessarily.
As an example, on the work program in Figure 10, items 13 & 14 schedules
‘U’ drain 450 mm X 450 mm to be carried out between 18/10/2002 to
6/11/2002 and ‘U’ drain 600 mm X 600 mm between 21/10/2002 to
13/11/2002. As such, the implementation team is to ensure that the pre-cast ‘U’
drains are ordered and delivered by the suppliers to reach the site prior to
18/10/2002 and 21/10/2002 respectively so as to avoid any delays to the
duration allocated for those activities.
(KK-T-007: C-LP3 – IS)
C O N T O H
Figure 10: Work Programme
5.3 Resources Requirement for Procurement

One of the early steps to be taken by the implementation team prior to
commencement of actual physical works on site is to identify all resource
requirements that need to be acquired.
5.3.1 Manpower
By understanding the scope of works, duration and also the sequencing, the
implementation team should be able to determine the type and quantity of
labour required according to their trades for each activity.
5.3.2 Tools and Materials
For tools and materials, the work programme indicates the duration and
sequence of activities whereas the type and quantity o f t h e m a t e r i a l s
can be determined based on the BQ, specification and drawings.
5.3.3 Transportation
The work tasks, duration and sequence in the work programme enable the
implementation team to determine transportation requirements such as:
• Date of delivery
• Location to deliver
• For road works, there are various work zones with various activities along the
construction site which require specific material to be delivered to the specific
locations.
• Type and quantity of transport required for specific materials
It would also be prudent to find suppliers of materials who are located close to the
work site as this will enable prompt deliveries and reduce transportation costs.
(KK-T-007: C-LP3 – IS)
6.0 PROJECT BUDGET

Project budget is the total sum of money allocated for the particular purpose of the
project for a specific period of time. It is a formal financial express
ssion that shows
targets for revenues, cost o
of materials, expenditure, a n d profits.
The project budget is derived from the tender sum for which detaile ed estimates are
prepared involving various processes (i. e . , defining work tasks or activities, choice
of construction methods, e estimating activity durations), and various cost
c factors (i.e.,
materials, labour, direct sub
ub-contracts, plants and equipment, and supepervision).
In addition to estimate the budget, the project needs to take in account all
corresponding taxes, fees or other expenses not related with resources including
allocation for contingencies. This will help to give a total view of the project budget.
C O N T O H
Figure 11: Project Budget
7.0 MATERIALS PROCUREMENT

In most road construction projects, with the exception of some repair works, materials
contribute the biggest cost followed by plant and equipment and labour. Hence,
contractors place great emphasis on procurement of materials compared to
procurement of tools. The reason being, any changes in cost between that estimated
in the project budget with the actual purchase price can drastically affect the
profitability of a project.
7.1.1 Quantities of Materials
The quantities of materials to be procured for any particular work item are
determined by applying factors obtainable from estimating guides to the
quantity stated in the BQ or measured from drawing. For example, by
multiplying the quantity of 75mm thick premix as stated in the BQ of 10000m2
by a factor of 0.16 - 0.18 tonnes/m2 will provide the quantity of premix to be
ordered.
7.1.2 Rate/Price
The rate for any work item in the BQ is arrived at as a composite of the cost of
materials, tools, labour, plant and equipment, wastage, profit and overheads.
It is very important for the implementation team to monitor the variation of
prices in the market, availability of materials, and payment terms in order to get
suppliers who provide the best price with good service and payment terms.
7.1.3 Labour (Manpower)
Labour or manpower cost is another important factor in building up the rate for
any work item. It is also good practice in the case of certain materials and
tools, to look out for those that allow for lesser dependency on labour so as to
keep the overall cost low.
7.1.4 Contingency
A contingency sum is normally allocated in the project budget for
unforeseen circumstances that could occur during the execution of the project
where things do not turn out as planned.
8.0 COMPANY CASH FLOW

8.1 Introduction
A cash flow i s o n e o f t h e m a i n f i n a n c i a l s t a t e m e n t s t h a t estimate the
anticipated expenditure against anticipated income. A company cash flow is a
composite of all individual cash flows of the company’s projects and/or activities.
A cash flow needs to be consistently updated as a running cash flow to indicate to
decision-makers of any changes that need to be made. An individual project cash
flow that deviates from the original can burden and affect the overall company cash
flow. As such, when procuring materials and tools, the project implementation
team should be careful that no purchase made beyond the original anticipated
cost nor any premature ordering takes place.
8.2 Expenditure and Resources Planning

8.2.1 Profit and Loss Statement
A profit and loss statement, also called an income statement is a financial
document that shows the financial state of each construction work undertaken
by the contractor. The contractor should provide a separate expenditure
account for each project they undertake, where they are able to monitor the
projects’ status. The profit and loss statement can cover any period of time and
is most frequently issued at every quarter and every fiscal year. It is a quick
reference charting income verses expenses for the period of time it covers and
ends with net income.
8.2.2 Project Budget
Project Budget is the total sum of money allocated for the particular purpose
of the project for a specific period of time. It is essential to control
procurement of tools and materials within the approved budget and deliver the
expected tools and materials on time.
8.3 Optimize Resources Usage

8.3.1 Loans
Loan is a type of debt. It can be obtained from government approved financial
institutions or banks (i.e., HSBC, AmBank, Maybank, and many more). There
are 2 types of loans, which are secured and unsecured loans. A secured
loan is a loan in which the contractor as a borrower pledges some assets
(e.g. fully paid: buildings, real estate or machineries) as collateral for the
business loan or overdraft facilities. The contractor uses secured loan for
purchases of new or reconditioned tools and materials. Unsecured loans are
monetary loans that are not secured against the borrowers assets.
8.3.2 Credit
Credit is the provision of resources usage by contractors, which means they do
not reimburse the creditors immediately. These credit facilities are very
significant for every contractor with payment terms, where they are able to
purchase raw materials or hardware to carry out the work immediately and
make repayment according to specified date. Usually the suppliers,
manufacturer or contractors will provide 30 days payment terms upon their
relationships or past performance by the contractor.
8.3.3 Terms and Conditions

For any particular resources obtained, there will be terms and conditions
which the contractor needs to comply. It is advisable to have good relationships
and make repayment promptly so that the creditors or banks are able to service
or provide higher credit facilities in future.
8.4 Cash Flow Application

Cash Flow is the balance of the amount of cash being received and paid by
contractors during a defined period of time, sometimes tied to specific projects.
Common terms include Operating Cash Flow and Free Cash Flow. Measurement
of Cash Flow application can be used in order:
• To evaluate the state or performance of a business or projects.
• To determine problems with liquidity.
• To generate project rate of returns.
• To examine income or growth of a business based on accrual accounting
concepts.
8.4.1 Projection
Cash flow projection or forecasting is the modelling of a company or assets
of future financial liquidity over a specific timeframe. Cash flow usually refers to
the company’s total bank balances in which is cash minus debts (Hire
purchase loan/overdraft facilities). The direct method of cash flow projection
schedules the company’s cash receipts and disbursement. Receipts are
primary collection of account receivable from sales or sales of other assets,
etc. Disbursements include payroll, payment of accounts payable from recent
purchase or debt service. A cash flow projection is an important input into
valuation of assets, project budgeting and determining appropriate capital
structures in leveraged buyout transactions.
8.4.2 Current Liabilities
Liabilities are reported on a balance sheet and are usually divided into two
categories, Current and Long Term Liabilities. Current Liabilities are
reasonably expected to be liquidated within a year. They usually include
payables such as wages, accounts, taxes and account payables, short term
obligations (Hire Purchase Loan or Business Loan facilities) and others.
9.0 QUOTATION
9.1 Introduction
Quotations are written offers from various parties like suppliers, sub- contractors,
etc, for the materials, goods, services, sub-contracts, sub-labour, etc. that they
provide. In the process of procurement, the implementation team needs to obtain
as many quotations as possible for each individual item, a rule of thumb being a
minimum of three quotations.
9.1.1 Purpose and Types of Quotation Quotations serve a number of
purposes:
During the bid stage
Enables the contractor to submit a more realistic tender/bid rather than one
based on mere estimates and historic data
During the project implementation stage
Suppliers and sub-contractors tend to give further reductions to their
quotations when they know that the asking party has already secured a
project. Quotations received during the implementation stage enable the
implementation team to decide on the supplier/sub-contractor who can give
them the best deal with regards to price, terms of payment, quality,
deliverability, service, etc. so that the contractor can not only keep the
cost within budget but also maximize profit and expedite completion.
Quotations can be of a few types namely:
• Supply only
Here the supplier only sells the tools and materials and the contractor
has to arrange to collect the items himself. Normally tools procurement fall
within this category.
• Supply and deliver
The suppliers, sells and delivers to a location preferred by the contractor.
Procurement of materials like sand, premix, etc falls within this category.
Figure 10 is an example of this type of quotation.
• Supply, deliver and lay/install
This involves the full sub-contracting of portions of the overall contract.
For e.g. the contractor might sub-contract the whole of the guardrail works
where the sub-contractor has to supply and deliver the guardrails and
accessories to site and also install them. Management style contractors
who have secured major road works contracts tend to use this category.
(KK-T-007: C-LP3 – IS)
C O N T O H
Figure 12: Quotation
9.2 Classification of Vendors

For public sector projects, it is a requirement that for certain materials, contractors
should procure only those from an IKRAM approved list. Contractors carrying out
projects for certain agencies like TNB, Telekom, etc. have to adhere to the
requirement of procuring materials through the agency. Experienced contractors
maintain a good database of suppliers of construction materials, tools and products
classified in terms of type of product and further detailed as to quality, price
range, a n d location. Suppliers / vendors can generally be classified as supplying /
providing:
9.2.1 Construction Materials
It is important that contractors only procure materials from sources approved
and/or accepted by the client. Among the materials for road works are premix,
crusher run, sand, cut-back bitumen, etc.
9.2.2 Plant and Machinery
When looked at as individual items that are not directly incorporated into the
works but required for construction, plant and machinery are the probably the
most expensive items. As such, contractors are normally careful when
deciding on whether to purchase plant and machinery and will normally do
so only when they have continuity of projects that require a particular
plant/machinery. Otherwise they would normally rent.
9.2.3 Tools
Tools are generally hand held and can be of manual or mechanical type. In
procuring tools, contractors need to take note that in principle, the more
expensive ones are of better quality and last longer.
9.2.4 Products
Products are items like pre-cast concrete drain, culverts and road kerbs,
guard-rails, etc. produced from raw materials like sand, cement, aggregate, etc.
9.2.5 Services
There are companies or organizations that provide services that support
constructional activities project management, risk assessment, valuation, pre-
construction services, safety and health, etc.
9.2.6 Oil and Gas
These classes of suppliers primarily provide materials related to the oil and gas
industry like pipes, valves, etc.
9.2.7 Manufacturing
Manufacturing involves transforming raw materials into finished goods. Among
construction items that can be procured from this class of suppliers are
geotextiles, street lights, etc. With the emphasis on quality, many
manufacturers move to get their goods certified under ISO.
9.3 Invitation to quote

Upon identification of materials and tools that need to be procured, standard
invitation to quote documents are issued to pre-selected prospective suppliers of the
relevant products. This document shall primarily require the suppliers to provide the
following:
9.3.1 Price
Subject to other important considerations listed below, price is probably the
most important factor in selection of a supplier as it has a direct effect on project
budget and profits.
9.3.2 Standard and Conformance
The supplier has to indicate the standard or qualities of the product vide
specifications and their conformance to practiced standards like ISO, etc.
9.3.3 Validity period
The validity period of a quotation indicates the duration during which the
supplier would maintain his price after which he has the right to extend his
validity period or change his price. As such, contractors would be wise to
decide on a supplier and procure within the validity period.
9.3.4 Terms and conditions
While the invitation to quote from the contractor to the supplier might have its
own attached general terms and conditions, quotations submitted by suppliers
also normally state the suppliers’ specific terms and conditions. Hence in
deciding on the choice of supplier, it is pertinent to consider these terms and
conditions which sometimes are even in small print on the reverse side of the
quotation.
9.3.5 Mode of Payments
This indicates the manner in which the suppliers would expect payment for
tools and materials ordered e.g. vide company cheque, bank draft, telegraphic
transfer, letter of credit, etc. Suppliers of certain materials and tools also require
down payment.
9.3.6 Warranty
A quotation for certain products like traffic lights might indicate the provision
of a warranty by the supplier upon purchase of his product. This is in written
form indicating the guarantee given by the supplier on his obligation to provide
specific remedy such as repair or replacement in the event the product fails to
meet certain specific conditions normally of performance over a time frame.
9.3.7 Product Catalogue
It is essential for suppliers to attach a catalogue of their product with their
quotation as this will provide pictures and details of the product for easy
understanding of the prospective buyer.
(KK-T-007: C-LP3 – IS)
9.4 Quotation Summarry

This is normally presen
ented in tabulation form comparing the va arious quotations
received while also indiicating inherent conditions to any of the quotations. This
will enable the decision
on–maker to grasp in a glance the stattus of quotations
received. Figure 13 showws a sample of a Quotation Summary.
9.5 Quotation Evaluation

ion
Together with the quo otation summary, the procurement office er also normally
attaches an evaluation report in which he basically assesses s all quotations
received based on vari rious criteria like price, terms of paymen ent, quality, past
experience, etc. and m makes his recommendations. This evaluattion should have
taken into account the prrojects budgetary requirements in relation to
o the
t contractor’s
contract sum.
C O N T O H
Figure 13: Quotation Summary
10.0 STORAGE LAYOUT PLAN

10.1 Introduction
Storage Layout plan shows the divisions of space in storage, support areas and
aisles. There are several key factors used in computing the required storage
plan:
• Quantity of Inventory.
• Characteristic of storage f acility – stora ge limitations as stacking
height, floor capacity, structural clearance and other obstacles.
• Material C h a r a c t e r i s t i c – c a u s e t h e s t a c k i n g h e i g h t d e p e n d s
o n packaging or materials.
• Total W arehouses St o ra ge S p a c e – G ro s s s t o ra ge s p a c e wi t h i n
warehouse.
• Occupancy of net storage space – maximum net storage spare can be
hindered by ceiling heights.
• Aisles – the storage layout plan must include the aisles to prevent
placement-of material in inaccessible areas and loss of space.
• Security – it’s compulsory to prevent from theft or missing items.
Sometimes as the road works progress temporary storage areas will be
required to fabricate materials; rebar works and stores construction materials
needed for the project. This is to cut cost and time on delivery.
10.2 Layout Drawings

The layout drawings for storage should allocate areas for storage of tools and
materials with respect to frequency of use and convenience. Storage of all
hazardous materials such petrol, oil and grease need to be stored as prescribed in
Material Safety Data Sheet (MSDS). The layout should take into consideration
areas for fabrication, casting and bar bending activities.
10.3 Safety and security procedures
The contractor is responsible for the safety and security of tools and materials
stored in the site. Consideration should be given for handling and storage of
hazardous materials that are easily flammable. Provision of suitable fire
extinguishers, smoke detectors and other safety requirements shall be provided as
per MSDS and authority requirement.
Security in storage area should be considered for 24 hours regardless of public
holidays. All staff, visitors, vendors or a transporter who enters the storage area
should be recorded in the logbook. The security of the storage area can be carried
out by engaging security guards. In addition, CCTV can be installed at specific
areas to monitor security.
10.4 Storage Systems
Storage systems are to ensure a proper flow of tools and material. There should
be a system to control movement of tools and materials within the store. The
system should also include scheduling, transportation, ordering, and accounting
systems.
11.0 INVENTORY CONTROL AND PROCEDURES

11.1 Introduction
Inventory control plan is essential as inventory is the major expense for construction
companies. The goal is to keep onsite inventory as low as possible without running out of
any items. If purchases are made too early and there is too much inventory, capital may
be tied up, interest charges incurred on the excess inventory and materials may
deteriorate during storage or be stolen unless special care is taken. On the contrary, if
purchases are delayed and there is insufficient inventory, delays and extra expenses may
be incurred if materials required for particular activities are not available. Hence, a thorough
knowledge and understanding of the specific requirements for every job represent a
balancing act for the individuals involved in site management and specifically inventory
management.
11.2 Inventory Planning
Since improper inventory control has got implications on company cash flow and progress
of construction works, it thus important for the storekeeper/personnel in charge of
inventory to plan, draw up and administer proper inventory procedures. Some of the
aspects to be noted are:
11.2.1 List of Materials
A list of materials and tools in the store should be readily available at all times. The
storekeeper in-charge of the store needs to record the movement of tools and
materials moving in and out of the store and also of its whereabouts. The quantity of
each tool and material should be updated on a daily, weekly or monthly basis for stock
checking.
11.2.2 List of Catalogues
In inventory management, it is good practice to have a library of catalogues from
suppliers all filed up in an organized and systematic manner and a list of the
catalogues for quick and easy reference when procurement needs to be done.
11.2.3 Purchase Requisition (P.R.)
As part of an organization's internal financial control, the accounting department may
institute a purchase requisition process to help manage requests for purchases.
Requests for the purchase of tools and materials are documented and routed for
approval within the organization and then delivered to the accounting/purchasing
group.
The P.R. also states the date by which the items are required and the place or location
where the goods are to be delivered. A sample form of purchase requisition is shown in
Figure 12.
11.2.4 Purchase Order (P.O.)
P.O is a commercial document issued by a client or contractor indicating the type,
quantities and agreed prices for products or services. Sending a P.O. to a supplier
constitutes a legal offer to buy products or services. It also specifies terms of
payment, terms for liability and required delivery period. It is issued to the supplier after
the quotation from the supplier has been evaluated and accepted. See Figure 13 for
a sample P.O.
11.2.5 Delivery Order (D.O.)

A written document from the owner of goods (supplier) to someone who is storing or
keeping them (e.g. supplier’s own store or a warehouse company) instructing them to
release the goods to the firm named on the delivery order. A delivery order normally
only shows the quantity of goods or materials being delivered and not their value.
The signature of the site staff on the D.O. acknowledging receipt of the goods is
important because in the case of missing inventory or goods, it will be easy to trace and
question the signatory. Normally only certain person/persons are designated to receive
goods on site which is commonly the storekeeper. See Figure 14 for a sample of a D.O.
11.2.6 Control Procedures
Inventory control requires the tracing of all tools and material purchased, from in and
out of the store and also the whereabouts.
11.2.7 Stock Cards (Coding)
Stock Cards are used to record all receipts, transfers, and also able to see opening
balance, all transactions, and a closing balance for each item at any given point of time.
11.2.8 Stock Check
In road construction projects the site stores usually conduct stock checks manually
or via computers. Besides updating the tools and materials stock daily, weekly or
monthly, an audit check of the stock is also carried out periodically to prevent from
shortage and theft.
C O N T O H
Figure 14: Purchase Requisition
C O N T O H
Figure 15: Purchase Order
C O N T O H
Figure 16: Delivery Order

C O N T O H
Figure 17: Test Certificate
11.3 Inventory Database

The Inventory Control database is used to keep track of all the products,
purchase orders and delivery orders through inventory transactions. An unlimited
number of suppliers and manufacturers can be added. The progress of each
purchase order can be generated and tracked.
11.3.1 Format
The inventory database shall be formatted to do recording of the daily activities
of tools and material in/out purchasing, transferring and others.
11.3.2 Procedure
The procedure in Quality Management Plan or Project Quality Plan on the
requisition of materials, delivery of materials and stocking of materials have to
be complied at all times. The information of the materials shall be stored
using software or spread sheet by trained dedicated staff and monitored by
supervising officers. Transfer of materials form has to be filled once there is a
movement of materials from store to site.
11.3.3 Updates
The database should be updated at least on monthly basis for proper inventory
control related activities like procurement, stock movement and checking, etc.
11.3.4 Mill/Manufacturer Certificate
A Mill/Manufacturer Certificate or Test Certificate is issued for a component or
products that have successfully passed tests, meet all technical requirements,
comply with Malaysian Standards and are IKRAM approved/accepted with
authentication by SIRIM and IKRAM. Diagram 11 above shows a sample factory
test certificate.

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MATERIALS PROCUREMENT (KK-T-007: C-LP3 – IS)

2.0 OVERVIEW OF MATERIALS PROCUREMENT ..................................... ( 6 - 10 )

3.0 DRAWINGS ........................................................................................... ( 11 - 14 )

4.0 SPECIFICATIONS ........................................................................................ ( 15 )

5.0 WORK PROGRAMME ........................................................................... ( 16 - 19 )

6.0 PROJECT BUDGET ..................................................................................... ( 20 )

7.0 Materials Procurement ................................................................................ ( 21 )

8.0 COMPANY CASH FLOW....................................................................... ( 22 - 23 )

8.3 Optimize Resources Usage

9.0 QUOTATION .......................................................................................... ( 24 - 28 )

10.0 Storage Layout Plan .................................................................................... ( 29 )

11.0 INVENTORY CONTROL AND PROCEDURES ..................................... ( 30 - 36 )

1.0 OVERVIEW OF ROAD WORKS

Figure 1: Administration of Roads

Figure 2: Example of administration of roads – Penang

Figure 3a: Typical Cross-section for roads

Figure 3b: Typical Cross-section for urban roads

Figure 4: Typical Cross-section for roads

2.0 OVERVIEW OF MATERIALS PROCUREMENT

2.1 DRAWINGS Introduction

2.2 Types of Drawings

In example, Figure 5 shows a plan and profile of a section of a road to be

Figure 5: Construction Drawing- Plan & Profile

2.2.3 Schematic Drawing

Figure 6a: Electrical Schematic Drawing

The specifications is essential in the material procurement process as it describes in

Figure 7: JKR Standard Specification for Road Works

Figure 8: JKR Standard Specification for Road Works

4.0 Method Statement

A method statement is fundamentally a form of specification and its benefit to the

5.0 WORK PROGRAMME

5.2 Work Schedule

Figure 10: Work Programme

5.3 Resources Requirement for Procurement

6.0 PROJECT BUDGET

Figure 11: Project Budget

7.0 MATERIALS PROCUREMENT

8.0 COMPANY CASH FLOW

8.2 Expenditure and Resources Planning

8.3 Optimize Resources Usage

8.3.3 Terms and Conditions

8.4 Cash Flow Application

Figure 12: Quotation

9.2 Classification of Vendors

9.3 Invitation to quote

9.4 Quotation Summarry

9.5 Quotation Evaluation

Figure 13: Quotation Summary

10.0 STORAGE LAYOUT PLAN

10.2 Layout Drawings

11.0 INVENTORY CONTROL AND PROCEDURES

11.2.5 Delivery Order (D.O.)

Figure 14: Purchase Requisition

Figure 15: Purchase Order

Figure 16: Delivery Order

Figure 17: Test Certificate

11.3 Inventory Database

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