NICMAR NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH SCHOOL OF DISTANCE EDUCATION

ASSIGNMENT

NICMAR/CODE OFFICE

1. Course No. 2. Course title 3. Assignment No. 4. Date of Dispatch

: : : :

PGPM 33 Materials & Logistics Management 11 07-08-2012 15-08-2012

5. Last Date of receipt : of Assignment at CODE office

ASSIGNMENT You have been appointed as manager of materials management department of a construction firm. The company is asking you to prepare a manual on procurement of materials. Prepare a manual on procurement of materials by covering the following: 1. Factors to be considered for purchasing. 2. Source Selection. 3. Selection of Suppliers. 4. Scrutiny of offers. 5. Final purchase. 6. How to develop purchasing policies and procedures. 7. Formulate strategies for improving efficiency of procurement of materials department.

Name of the Project Project phases

: :

Developing & Construction of an International Phase I - Landing strip of 100m width

Airport 30km away from a city.

Work Description is as follows a) Cutting and dozing of 1,00,000cum of Earth. Average Height 0.75m. b) Transportation of 20000cum of surplus earth from site to dumping place 3km away from site (including spreading). Filling of 80000cum in landing strip. c) Bringing in 3000cum of sand from 20km (Including spreading and leveling at Site). d) Procurement of 1,50,000Litres of Bitumen. Duration of work 30days from 60th day of starting of work. Bitumen to be obtained from refinery at Bongaigon in Assam. Lead time upto site is 45 days. Storage facility available at Site 50,000litres Tank.

SCOPE OF WORK & DESCRIPTION OF EQUIPMENTS CONSIDERED SCOPE OF WORK Work involves developing and constructing a new International Airport 30 K.M. away from a city. This project is to be implemented in phases. In phase I, one strip of landing of 100m width is to be constructed in 100 days. The scope of work is as follows: I. Earthwork a) Cutting and Dozing of earth. Quantity 1,00,000 cum Height 0.75m b) Filling of available soil from above Quantity- 80,000 cum c) Transporting, dumping, from spreading of soil at 3 km distance Quantity- 20,000 cum d) Filling by outside sand obtained from 20 km distance including spreading and leveling at site. Quantity- 3,000 cum II. Procurement of Bitumen a) Transport and unloading of Bitumen Quantity- 1,50,000 litres

DESCRIPTION OF EQUIPMENTS CONSIDERED EARTHWORK EQUIPMENTS I) Excavators Crawler Excavator Crawler excavators are excavators mounted on chain crawlers which can be used for almost all terrain and type of soil and are suitable for slushy areas also. They have a long boom with a bucket and teeth arrangement at end for excavating collecting and dumping/ filling earth. These excavators have 360 degrees swing so can work in all four directions by standing at one place only. These excavators are available in different capacity normally used models are Ex 60, Ex 100/ Ck90/ PC 100, Ex 200/ PC 200 for small medium and big size depending on bucket and engine capacity type. Tyre Mounted Backhoe Excavator cum loader These excavators have multipurpose uses like in excavation, loading, unloading and shifting but they have limitation due to tyres and speed. These excavators have legs which provide some grip on slopes and difcult terrains but it cant be used with same ease as in crawlers. Secondly it doesnt have swing and it can work from either front or back and as per working side operator has to move his position. Lastly speed wise these excavators are slower than Crawler mounted as crawler mounted models are available in higher capacity models whereas only basic lower capacity model of tyre mounted excavators are available.

II) DOZERS Crawler Dozers These are crawler mounted locomotive fitted with a dozing blade. Availability of same is less than tractor dozers. Tractor Dozers These are dozers attached normal tractors easily available. Motor Graders These are tyre mounted special tractors with optional blade attachments between front and rear wheels and are used mainly for finishing works after dozing for final leveling and making super-elevation and camber etc. III) COMPACTION EQUIPMENT Rollers Tandem Roller This is a smooth wheeled roller with two rolling wheels of approximately the same width. Smooth Wheeled Roller It is most commonly used roller and compaction is achieved by the weight of the roller. Vibro Roller These rollers exert both static and dynamic pressures. It gives almost double compaction of its size of non-vibratory type.

IV) TRANSPORTING EQUIPMENT Dump Trucks These trucks are available in different capacity and are hydraulically operated for dumping material from rear body. Tractor with Hydraulic Trolley Tractors with hydraulically operated trailers are also a good options but capacity is less so more numbers are required. Tankers Tankers are trucks mounted with tanks to carry liquids, gases etc. This will be used in transporting water and bitumen to worksite. Bitumen carriers have thermal insulation.

CALCULATION OF PER DAY WORK

Equipment Output Main Equipment output in this type of work depends mainly on availability of supporting equipments and dumping areas. Faster the loading, faster the transporting and faster the unloading can be easily seen and the same cycle is repeated. Each set of equipment shall consist of one excavator, at least three dump trucks. Water tanker, dozer and roller can be shared with each two set of equipments. No. of these sets can be further decided on the basis of sequence, number of days required to complete each activity and constraints if any. As 100m wide strip is to be constructed in 100days which include following activities and quantities: As 83000 cum of earth and sand, together, will cover approximately 1107 m length of 100m wide strip considering average depth of filling as 0.75m. All this work is to be completed in 100 days. Excavation and dumping shall be planned to be completed in 80 days. So required excavation per day is 1250 Cum and same is to be transported to site or outside same day. Theoretically for this one no. excavator with 100 cum/ hour output for 12.5 hours working seems sufficient but practically, considering cycle time of dump trucks including time required for positioning loading etc., average output reduces to 60 Cum / hour. In this case 2 nos. excavators for 10.41 hours will be required which can be easily achieved even after time lapses for daily fuel filling, maintenance, lunch and tea breaks etc.. Each excavator is to be supported by 3 dump trucks of 10-15 cum capacity.

Cost of each equipment per day of work a) Excavator As per present market we can get excavator @ Rs 2,25,000/- per month excluding cost of fuel but including operating and maintenance cost So per day cost of hire = (Rs 225000/260 hours) x 10.41 Hours x 2 nos. = Rs 18018/Per day HSD (fuel cost) = 2 no. x15 litre / hourx10.41 hourx Rs 40/ litre = Rs 12,492/The total operating and fuel cost together for excavators (18018+12492) = Rs 30510 including all charges. (a) b) Dump Trucks Total 6 nos. dump trucks have been considered for two sets of excavators. Hire charges of Dump trucks = 4,000/- x 6 nos.(per day) = 24,000/-

HSD cost considering two trips of each dump truck to and fro 3km each distance will be calculated as follows: Distance traveled per hour Per hour fuel consumption Total HSD cost = 2 Trips x (3+3) km = 12/2.75km per litre = 12 kms = 4.36 liter per hour

= 6 nos. x 10.41 hours x 4.36 lit/ hour x Rs 40/ litre = Rs 10893/-

The total operating and fuel cost together for Dump trucks will be (24000+10893) = Rs 34893 including all charges.(b)

c) Dozer Hire charges of Dozer = 1,50,000 /260 Hours x 10.41 Hours = Rs 6,006/Per day HSD (fuel cost) = 15 litre / hourx10.41 hourx Rs 40/ litre = Rs 6,246/The total operating and fuel cost together for Dozer will be (6006+6246) = Rs 12252 including all charges.(c) d) Grader Per day cost of hire = (Rs 225000/260 hours) x 10.41 Hours x 1 nos. = Rs 9009/Per day HSD cost = 1 no. x13 litre / hourx10.41 hourx Rs 40/ litre = Rs 5,413/The total operating and fuel cost together for grader will be (9009+5413) = Rs 14422 including all charges(d) e) Roller Per day cost of hire = (Rs 120000/260 hours) x 10.41 Hours x 1 nos. = Rs 4805/Per day HSD cost = 1 no. x 8 litre / hourx10.41 hourx Rs 40/ litre = Rs 3331/The total operating and fuel cost together for roller will be (4805+3331) = Rs 9136 including all charges(e)

f) Water Tanker Water Tankers can be either hired or direct water quantity can be paid to supplier. Considering MDD as 1.9 and 11% OMC and natural moisture content as 6% we need balance 5% water quantity per day as follows: = 1250 cum x 1.9 x (11-6)%x 1000 litres = 1,18,750/Considering cost of water as 7 paise per litre including filling at source , transport and unloading at site cost of water required per day= 118750 x 0.07 = 8313/- including all charges(f) So total cost of excavation and filling in landing strip/ disposing in 3km away work per day will be (a)+(b)+(c)+(d)+(e)+(f)= Rs 1,09,526/Per unit cost will be = 109526/1250 Cum = Rs 88 per cum

Similarly for bringing in 3000 cum sand combination of excavator and tippers to be worked out as follows: Considering time for positioning dumper Filling by excavator Turning and moving out Total time consumed in filling one dumper = 2 minutes = 6 minutes = 2 minutes = 10 minutes

Minimum required dumpers 6 nos. per hour and first dumper should come back after 50 minutes. Distance of 20 km in loaded condition will be traveled in 40 minutes at a speed of 30km/ hour and same distance will be covered in 30 minutes at a speed of 40km/ hour while returning. Say 10 minutes more will be spent in turning and unloading. So

first dumper will be returning back to excavator in 80 minutes whereas excavator will be free after 60 minutes it means it can also load two more dumpers before starting second cycle of loading. It is obvious from above that 8 dumpers will be required with an excavator. Cost of excavator per day = Rs 15255 including all charges. (a)Dumpers Cost of Dumpers per day Hire charges of Dump trucks per day = 4,000/- x 8 nos. = 32,000/HSD cost considering Nine trips of each dump truck to and fro 20km each distance will be calculated as follows: Distance traveled per hour = 9 Trips x (20+20) km = 360 kms Per dumper fuel consumption = 360/2.75km per litre = 131 liter per day So total HSD cost for Dump trucks = 8 nos. x 131 litre x Rs 40/ litre = Rs 41920/The total operating and fuel cost together for Dump trucks will be (30000+41920) = Rs 71920 including all charges (a) (b) Dozer Hire charges of Dozer = 1,50,000 /260 Hours x 10.41 Hours = Rs 6,006/Per day HSD (fuel cost) = 15 litre / hourx10.41 hourx Rs 40/ litre = Rs 6,246/-

The total operating and fuel cost together for Dozer will be (6006+6246) = Rs 12252 including all charges (b) (c) Grader Per day cost of hire = (Rs 225000/260 hours) x 10.41 Hours x 1 nos. = Rs 9009/Per day HSD (fuel cost) = 1 no. x13 litre / hourx10.41 hourx Rs 40/ litre = Rs 5,413/The total operating and fuel cost together for grader will be (9009+5413) = Rs 14422 including all charges (c) (d) Roller Per day cost of hire = (Rs 120000/260 hours) x 10.41 Hours x 1 nos. = Rs 4805/Per day HSD (fuel cost) = 1 no. x 8 litre / hourx10.41 hour x Rs 40/ litre = Rs 3331/The total operating and fuel cost together for roller will be (4805+3331) = Rs 9136 including all charges (d) So total cost of bringing and filling sand in landing strip from 20km distance away work per day will be (a)+(b)+(c)+(d) = Rs 1,22,985/Per unit cost will be = 122985/625 Cum = Rs 197 per cum

SECOND BEST ALTERNATIVE Second best alternative is use of J.C.B. tyre mounted backhoe loader cum excavators and tractor levelers and tractor dozers but in this case J.C.B. has less bucket capacity and ultimately almost half the speed of work. Similarly tractors have less speed and capacity . It will be advisable to use combination of crawler and tyre mounted excavators. But in no case speed of work as achieved in alternative one can be achieved. Hence in all respect second best alternative is use of combination of crawler and tyre mounted excavators and dump trucks even of smaller capacity but numbers to increase to maintain speed of work.

PROCUREMENT OF BITUMEN Total requirement of Material Duration of work Source Lead time Storage facility = 1,50,000 litres = 30 days from 60th day of starting of work = Maharastra = 45 Days = 50,000 litres

Total consumption in 30days will be 150000 litres. Hence considering 5000 litres per day after 59th day. Consider cost of each litre of bitumen is Rs 20/- and each cost of ordering is Rs 1000/- and cost of storage per day per litre is Rs 1/-. EOQ =Under root ( (2AS)/(Ph))=Under root ((2x 150000x1000)/(20x0.05))= 17321L So there should be 8 orders of 17321 litres and 1 order of 11432 litres. Check for economic order quantity Consider as above cost of material Ordering cost Inventory cost assuming minimum 8500 litres Total cost = 30,00,000/= 9000/= 8500/= 3017500/-

Consider another case with 10 orders of 15000 litres Consider as above cost of material Ordering cost Inventory cost assuming minimum 7500 litres Total cost = 30,00,000/= 15000/= 7500/= 30,22,500/-

Consider another case with 5 orders of 30000 litres Consider as above cost of material Ordering cost Inventory cost assuming minimum 15000 litres Total cost = 30,00,000/= 5000/= 15000/= 30,20,000/-

1st order date at start of work = 0 and date of last order shall be such that there is no shortage of bitumen at end. Safety level to be maintained is as follows: 1st order 0-45 days = 17321 litres 2nd order 1-46 days = 17321 litres 3rd order 2-47 days =11432 litres Total stock on 59th day = 46074 litres

This can be easily understood by following table. Order Order Work Opening Closing No. Day Day Stock Received Consumed Stock 1 0 45 0 17321 0 17321 2 1 46 17321 17321 0 34642 3 2 47 34642 11432 0 46074 60 46074 0 5000 41074 61 41074 0 5000 36074 62 36074 0 5000 31074 4 18 63 31074 17321 5000 43395 64 43395 5000 38395 65 38395 5000 33395 5 21 66 33395 17321 5000 45716 67 45716 5000 40716 68 40716 5000 35716 69 35716 5000 30716 6 25 70 30716 17321 5000 43037 71 43037 5000 38037 72 38037 5000 33037 7 28 73 33037 17321 5000 45358 74 45358 5000 40358 75 40358 5000 35358 76 35358 5000 30358 8 32 77 30358 17321 5000 42679 78 42679 5000 37679 79 37679 5000 32679 80 32679 5000 27679 9 36 81 27679 17321 5000 40000 82 40000 5000 35000 83 35000 5000 30000 84 30000 5000 25000 85 25000 5000 20000 86 20000 5000 15000 87 15000 5000 10000 88 10000 5000 5000 89 5000 5000 0 90 0 0

Proper arrangement of required size of tankers with heating facilities shall be ensured. Storage tanks shall have proper insulation and heating facility also. Total cost of transportation will be @ 1.6 per MT per Kilometer and considering 2500 km distance from one side to and fro cost as per oil industry norms shall be Rs 3.2 per MT per KM. Hence total cost of Bitumen material = 150000 litre x 20/= Rs 30,00,000/Cost of transportation = 150000 litre x 2500x (2 x1.6/1000)x 1.04 Kg/cum = Rs 6,24,000/Ordering cost Inventory cost assuming minimum 8500 litres Total cost Hence Total cost of Project will be as follows: Earthwork cost = 109526x 80 days Sand filling cost = 1,22,985 x 5 days Bitumen procurement Total Contractors Profit = (13019005*15%) Therefore = Rs 87,62,080/= Rs 6,14,925/= 9000/= 8500/= 3642000/-

= Rs 36,42,000/= Rs 1,30,19,005/= 1952851/-

Total Project Cost = 14971856/-

As per above plan work shall be completed in given time schedule however some standby and back-up equipment will be required which will incur additional cost.