Article by Luis Nieto on LinkedIn
The management of Procurement of Equipment and Materials is a fundamental aspect in the management of EPC Projects, if not the main one. Given that in industrial projects the cost of Equipment and Materials constitutes a majority percentage of the total cost of the Project, knowledge of the procurement processes by all parties involved is important.
Procurement management is one of the three aspects of EPC (Engineering-Procurement-Construction) contracts that must be carried out by the main contractor of an industrial plant or infrastructure project when that is the type of contract selected.
Management implies the responsibility of purchasing, transporting, and delivering to the construction site the new materials, equipment, and systems that are the object of the installation. In the same way, the procurement of consumable materials that are useful for the work.
All of the above, are within the established schedule and planning.
So, then, the Procurement activity involves purchasing activities, but also logistics, supplier analysis, market situations, and advice to the engineering, construction, and management teams on decision-making for project execution.
Ideally, purchasing personnel should have adequate technical capacity to understand and know the technical characteristics of the equipment and materials specified by the engineering group. You must also know how to prepare the commercial part of the appropriate requisitions for each type of equipment, material or service to be contracted.
An essential point is the treatment of items with a long delivery time since their procurement must begin earlier and the planning of the project must be done taking these durations into account. Figure 1 shows a scheme of the actions and sequence of the search for these items. Normally it deals with process equipment manufactured according to project specifications, it is not mass-produced, it contains special alloy steels or other unusual alloy materials. They can be heating equipment, pressure vessels, boilers or ovens. It can be rotating mechanical equipment such as pumps or turbines of large dimensions and capacities. It is about electrical equipment of Sub-Stations or Transformers, cells with protection equipment and Control Panels. It can be materials such as large diameter pipes, in large quantities or special materials such as fiberglass. These can be large cables and special insulation and/or in large quantities.
Both the Engineering and Procurement groups must work in coordination so that the Construction group can have the equipment and materials to assemble the facilities according to the schedule.
The coordination of all activities in the project is a fundamental part of the project management process.
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