STEP BY STEP ACQUISITION MANAGEMENT FOR PROJECTS IN

THE BUILDING SECTOR

CONSTRUTORA IBEN LTDA.

CONSTRUTORA IBEN LTDA.

ACQUISITION MANAGEMENT FOR A PROJECT INCLUDES THE PROCESSES NECESSARY TO ACQUIRE PRODUCTS AND SERVICES FROM OUTSIDE THE ORGANIZATION. IT INCLUDES PURCHASING PLANNING, ORDERING, QUOTATIONS AND PROPOSALS, EXECUTION, ADMINISTRATION AND CLOSING.

THE PLANNING PROCESS CREATES THE NECESSARY REFERENCES FOR THE PURCHASER TO PERFORM ALL OTHER ACQUISITION RELATED PROCESSES. PURCHASE ORDERING, ON THE OTHER HAND, IS THE CONSUMMATION OF THE NEED TO PURCHASE SOMETHING, EITHER PREDICTED ON PLANNING OR NOT. IT COMPLEMENTS PLANNING INFORMATION, INDICATING WHO REQUESTED IT, IN WHICH QUANTITIES, ON HOW URGENT A BASIS AND AT WHICH IMPORTANCE LEVEL, PROVIDING MORE SOLID GROUNDS FOR THE SUBSEQUENT PROCESSES.

PURCHASES REPRESENT ON AVERAGE 66% OF THE COSTS FOR A BUILDING PROJECT. FOR HIGHLY OUTSOURCED PROJECTS, SUCH FIGURES CAN GO RISE BEYOND 90%, AND THE PERFORMANCE OF SUCH PROCESS IS RELATED TO OTHER SUCCESS PARAMETERS IN ADDITION TO THE COST, SUCH AS TIME, QUALITY, RISKS, COMMUNICATION, SCOPE, INTEGRATION AND HUMAN RESOURCES, WHICH MUST BE INCORPORATED TO THE ACQUISTION REQUIREMENTS.

HOW TO MANAGE ACQUISITIONS AND ESTABLISH PERFORMANCE MEASURING METRICS?

WE WILL ANSWER THIS QUESTION BY DESCRIBING STEP BY STEP THE MAJOR ROUTINES IN ACQUISITION MANAGEMENT FOR PROJECTS IN THE BUILDING INDUSTRY.

CONSTRUTORA IBEN LTDA.

ACQUISITION PLANNING MUST SPECIFY THE DESCRIPTION OF WHAT MUST BE PURCHASED AND ITS TARGETS. TOTAL SUM OF THE PURCHASES IS EQUAL TO THE VALUE CONSIDERED AS COSTS IN THE BUDGET, WHEN THEIR PERFORMANCE IS EQUAL TO 100%.

LIST OF PROJECT SERVICES

WORK PACKAGES TARGET THE WORK PACKAGES DESCRIBED BELOW CORRESPOND TO THE ACTIVITIES, SERVICES OR DELIVERIES THAT MUST BE PERFORMED SO AS THE PROJECT INCLUDES ALL OF THE NECESSARY WORK FOR ITS SUCCESSFUL CONCLUSION. EAP’S DICTIONARY MAY BE REQUESTED TO PROVIDE FURTHER DETAILS ON EACH WORK PACKAGE

THESE COLUMNS CORRESPOND TO THE QUANTITIES AND VALUES SPECIFIED IN THE BUDGET SPREADSHEET THAT WERE USED AS THE BASIS FOR THE COMPOSITION OF THE OBJECTIVE COST OF THE PROJECT. ANY ACQUISITION EXCEEDING SAID LIMITS SHALL BE AUTHORIZED BY THE MANAGER.

ITEM CATEGORY DESCRIPTION OF THE SERVICE START CONCLUSION UNIT QTY $ UNIT.

MATERIAL $ UNIT. WAGES

$ UNIT. CHARGES

$ UNIT. TOTAL

$ TOTAL

24,135,882.58

.001 A OPENING and preparation of a box measuring up to 40cm for paving 09/22/11 09/28/11 m² 3,215.98

2.88

4.34

0.35

7.56

24,323.68

.002 ABrickwork SHED for water service entrance and hydrometer, sizes 0.65x 0.85x0.30 m 09/15/11 09/16/11 un

1.00

404.29

56.67

66.44

527.40

527.40

.003 ASHED for fire extinguisher in carbon steel plate, with hose with Ø 65 mm (2 1/2'') x 30 m 04/17/12 12/31/12 un

1.00

762.79

41.15

48.26

852.21

852.21

.004 APROVISIONAL SHED in woodwork performed at the work site for storage of materials and tools (including 4 times re-use) 06/03/09 04/27/12 m²

240.00

59.81

112.28

127.88

299.98

71,994.27

.005 A FINISHING of concrete surface with electrics mechanic trowel 08/14/12 12/31/12 m² 420.00

0.18

2.55

2,01

4.74

1,989.92

.006 A “Burnt” concrete surface FINISHING 01/24/11 06/13/14 m² 534.48

1.21

2.35

2.76

6.32

3,378.08

.007 AWIRE FENCE for sport court , in galvanized steel or PVC wire, fixed on galvanized steel tube frames, height: 1m 08/14/12 12/31/12 m

32,00

118.54

6.29

7.38

132.21

4,230.72

.008 AWIRE FENCE for sport court , in galvanized steel or PVC wire, fixed on galvanized steel tube frames, height: 4m 08/14/12 12/31/12 m

70.00

211.08

15.10

17.70

243.88

17,071.50

CONSTRUTORA IBEN LTDA.

ANOTHER IMPORTANT INFORMATION ON PLANNING FOR THE PURCHASER IS THE RANKING OF PURCHASE ITEMS IN ABC ORDER, ACCORDING TO ECONOMICAL RELEVANCE, AND ESTIMATE THE QUANTITIES THAT WILL BE CONSUMED ALONG THE TIMELINE ACCORDING TO THE PLAN.

MATERIAL CHRONOLOGICAL ABC CURVE

MATERIALS TARGET THESE COLUMNS CORRESPOND TO THE QUANTITIES AND VALUES SPECIFIED IN THE BUDGET SPREADSHEET THAT WERE USED AS BASIS FOR THE COMPOSITION OF THE PROJECT COST GOAL. ANY ACQUISITION EXCEEDING SAID LIMIT MUST BE AUTHORIZED BY ITS MANAGER.. jul/12 ago/12 set/12

ITEM CATEGORY DESCRIPTION OF THE SERVICE UN. QTY

$ UNIT. TOTAL

$ TOTAL 1st FORTNIGHT

2NDFORTNIGHT

1st FORTNIGHT

2nd FORTNIGHT

1st FORTNIGHT

2nd FORTNIGHT

.001 ACover for external fire extinguisher in carbon steel plate (width: 0.60m / height: 0.90m / depth: 0.17m) un

1.00

157.48

157.48 0.058 0.062 0.058 0.062 0.058 0.058

.002 A Muriatic acid l 2.68

1.35

3,.1 0 0 0.038 0.306 0.287 0.287

.003 A Carbon steel-50 cmd thick gauge 12.5 to 25mm (1/2” to 1” ) kg 5,065.75

2.58

13,069.64 0 0 0 0 0 0

.004 ABrass fire hose adapter (storz side diameter: 2 1/2 '' / female side diameter: 2 1/2 '') un

58.00

33.47

1,941.26 0.116 0.124 0.116 0.124 1,116 0.116

.005 A Adhesive for PVC tubing kg 58.88

26.69

1,571.44 0.079 0.048 0.054 0.081 0.634 0.719

.006 A Waterproofing additive l 502.39

2.48

1,245.93 6.75 7.2 17,904 8,174 6.86 6.86

.007 A Waterproofing and laminating additive in mortar powder kg 1,754.05

6.56

11,506.54 2,314 2,468 32,815 53,897 27,642 71,982

.008 A Mineral fertilizer 10-10-10 NPK kg 359.50

1.44

517.68 0 0 5,054 40.43 37,903 37,903

CONSTRUTORA IBEN LTDA.

THE ROLE OF THE PMO IS TO ESTABLISH THE PLAN, ESTABLISH THE PURCHASING PROCESS POLICIES AND ESTABLISH THE PURCHASE MONITORING AND CONTROL METRICS. IDA (ACQUISITION PERFORMANCE INDEX) IS FUNDAMENTAL FOR THAT PURPOSE, SINCE IT SHOWS THE DEVIATION IN PERFORMED PURCHASES, COMPARING PERFORMED TO PROGRAMMED PURCHASES.

IDA = PERFORMED PURCHASES SUCCESS PARAMETERS / PROGRAMMED PURCHASES SUCCESS PARAMETERS.

WHERE IDA > 100% =POSITIVE PERFORMANCE, AND IDA < 100% =NEGATIVE PERFORMANCE

PERFORMANCE INDICATORS

CURRENT INDICATORSINDICATES THE PERFORMANCE OF ACQUISITIONS FOR THE PROJECT; IDA = 100% CORRESPONDS TO 100% COMPLIANCE WITH THE ESTABLISHED GOALS AND OBJECTIVES; DESIRED IDA > 100%

CATEGORY GOALBETTER

MEASUREMENTCURRENT

MEASUREMENTSERVICES 100.00% 103.00% 99.00%MATERIALS 100.00% 112.00% 108.00%GLOBAL IDA FOR THE PROJECT 100.00% 107.50% 103.50%

CONSTRUTORA IBEN LTDA.

HOWEVER, PURCHASING IS NOT RESTRICTED TO PLANNING AND INDEXES. THE GOVERNANCE OF A PMO MUST BE CAPABLE NOT ONLY OF MEASURING PERFORMANCE, BUT ALSO DISCIPLINING THE PROCESS BEHIND THE SUCCESS OF ACQUISITIONS.

PURCHASE MANAGEMENT MUST BE FOLLOWED UP ALONG ITS ENTIRE LIFE CYCLE AND PRIORITIZED IN ORDER TO PROVIDE GUIDANCE TO THE PURCHASER.

THE 05 PROCESSES DEFINING OPENING AND CLOSING OF EACH PURCHASE ARE SEQUENTIAL AND MUST ALWAYS UNDERGO ALL OF THE FOLLOWING STAGES:

CONSTRUTORA IBEN LTDA.

PURCHASE REQUEST

BY DEFINITION, IT IS THE PROCEDURE TO REQUEST THE PURCHASE OF PRODUCTS AND SERVICES NECESSARY FOR THE PERFORMANCE OF THE WORK.

THE MAIN DELIVERABLE OF SAID PROCESS IS THE DETAILED SPECIFICATION OF EACH ITEM TO BE PURCHASED, INDICATING BRANDS AND SUPPLIERS, IN ADDITION TO DETERMINING THE TECHNICAL RELEVANCE OF THE PRODUCT FOR THE “XYZ” CRITERIA, WHERE “Z” CORRESPONDS TO ITEMS OF HIGHER TECHNICAL RELEVANCE, CONSIDERED AS INDISPENSABLE FOR THE PERFORMANCE OF THE PROJECT, “Y” IS THE MEDIUM RELEVANCE AND “X” THE LOWER RELEVANCE, AND “ABC” ANALYSIS, WHERE “A” CORRESPONDS TO ITEMS OF HIGHER ECONOMIC VALUE, “B” TO MEDIUM VALUED ITEMS, AND “C” IS THE LOWER VALUE, INDICATING THE IMPORTANCE OF A GIVEN PURCHASE.

PURCHASING DEADLINE INFORMED IN WEEKS INFORM HOW URGENT IS A GIVEN ACQUISITION. ACQUISITION PRIORITISATION WILL BE DONE VIA AN URGENCY AND IMPORTANCE GRAPH.

CONSTRUTORA IBEN LTDA.

PURCHASE REQUEST

TEMPLATE FOR AN URGENCY AND IMPORTANCE GRAPH.

CONSTRUTORA IBEN LTDA.

PROPOSALS AND QUOTATIONS

BY DEFINITION IT IS THE PROCESS OF IDENTIFYING SUPPLIERS, REQUESTING AND COLLECTING PROPOSALS AND QUOTATIONS FOR THE SUPPLYING OF PRODUCTS AND SERVICES SPECIFIED IN THE PURCHASE REQUEST.

THE MAIN DELIVERABLE FOR SAID PROCESS IS THE QUOTATION AND EQUALIZATION MAP FOR THE PROPOSALS OF SUPPLIERS.

PURCHASE PERFORMANCE

BY DEFINITION IT IS THE PROCESS OF ANALYZING QUOTATIONS AND PROPOSALS, NEGOTIATING REQUIREMENTS (DEADLINES, PRICES, QUALITY), TRANSFERRING RISKS TO THE SUPPLIERS AND AWARDING OF DOCUMENT FORMALIZING THE COMMERCIAL AGREEMENT WITH THE SUPPLIER.

THIS PROCESS DEMANDS SPECIAL ATTENTION AND IS DIVIDED IN STEPS TO ILLUSTRATE THE SUB-PROCESSES NECESSARY FOR ITS PERFORMANCE.

CONSTRUTORA IBEN LTDA.

PURCHASE PERFORMANCE

THE AUTHORIZATION IS TO BE APPLIED UNDER A POLICY OF MAXIMAL VALUES FOR DIRECT PURCHASING EXEMPT OF AUTHORIZATION.

IT IS NECESSARY TO DEVELOP AN EXCLUSIVE PRESENTATION TO DISCUSS IN DEPTH THE “NEGOTIATION” THEME. LET’S LIMIT OURSELVES TO REMEMBER THAT, IN ADDITION TO THE COSTS, RISK TRANSFERRAL, DEADLINES, QUALITY REQUIREMENTS AND ACCEPTANCE CRITERIA ARE SOME OF THE MAJOR POINTS TO BE NEGOTIATED.

LASTLY, THE CONTRACT DOCUMENT IS A SUMMARY OF THE PREVIOUS PROCESSES, THEIR CLAUSES DESCRIBE ALL NEGOTIATED REQUIREMENTS AND THE SPECIFICATIONS FOR THE PURCHASE.

THIS DOCUMENT SHALL ACCOMPANY THE PURCHASE UNTIL ITS CLOSING (CONCLUSION), SERVING AS COMPLIANCE PARAMETER FOR ALL OTHER PROCESSES.

FOR CONFLICT RESOLUTION, THE CONTRACT IS THE MAJOR REFERENCE, EITHER FOR AMICABLE RESOLUTIONS OR LEGAL ACTIONS.

CONSTRUTORA IBEN LTDA.

PURCHASE ADMINISTRATION

BY DEFINITION IT IS THE PROCESS THAT FOLLOWS UP PURCHASE FROM THE RECEIPT TO THE ACCEPTANCE OF THE SERVICES OR PRODUCTS.

THE MAJOR TOOL FOR THIS PROCESS IS THE ANALYSIS OF COMPLIANCE BETWEEN: TAX RECEIPT X PURCHASE ORDERS X ACTUAL DELIVERY. ALL THREE MUST BE COMPLIANT FOR RECEIVING TO BE CONCLUDED.

PURCHASE CLOSING

IT IS THE CONCLUSION OF THE SUPPLIER COMMITMENT IN DELIVERING THE CONTRACTED PRODUCT OR SERVICE AND OF THE COMMITMENT BY THE COMPANY TO PAY ACCORDING TO THE CONTRACT.

CONSTRUTORA IBEN LTDA.

PMBOK®

PMBOK® 4th EDITION WAS USED AS REFERENCE FOR THE CREATION OF THESE PROCESSES, THE PURCHASE REQUEST PROCESSES, AND THE COLLECTING OF PROPOSALS AND QUOTATIONS WERE INCLUDED TO CONTEXTUALIZE THE VITAL IMPORTANCE OF SUCH STEPS FOR THE PERFORMANCE OF AN ACQUISITION.

IN PRACTICAL TERMS, WE KNOW THAT THE PURCHASES GET “STUCK” IN THESE PROCESSES DURING REQUEST BASICALLY FOR SIMILAR REASONS: THE LACK OF DETAILED SPECIFICATIONS DOES NOT ALLOW THE PROCESS OF COLLECTING PROPOSALS OR QUOTATIONS TO CONTINUE.

IN A SIMILAR VENUE, QUOTATIONS THAT ARE NOT EQUALIZED DO NOT ALLOW FOR PROPOSAL COMPARISON AND PERFORMANCE OF THE PURCHASE.

THERE IS THE NEED TO ESTABLISH GOVERNANCE OVER SAID PROCESSES, AS WELL AS A PLANNING SIMILAR TO THE ONE INITIALLY SHOWN IN THIS PRESENTATION, IN ORDER TO ALLOW PURCHASING TO FLOW IN CONSONANCE TO THE NEEDS OF THE COMPANY.

LEARNT LESSONS ARE RELATED TO THE ONGOING IMPROVEMENT OF THE TEMPLATE FOR PURCHASE REQUESTS AND CONTRACT MINUTES PREVENTING ORGANIZATION, SCORING OF SUPPLIERS AND IMPROVEMENT ON RELATIONSHIP NETWORKING.

THE TREND WILL BE FOR US TO OBSERVE PURCHASE PERFORMANCE INDEXES GETTING BETTER AS THE ORGANIZATION GROWS MORE MATURE.

CONSTRUTORA IBEN LTDA.

WRITTEN BY

EDUARDO MILITÃO ELIAS, MBA / PMP®ID 1396759

SPONSORED BY

CONSTRUTORA IBEN LTDA., RCP PMI®ID 1463462