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MATERIAL PROCUREMENT IN CONSTRUCTION INDUSTRY 2019
CHAPTER-1
INTRODUCTION
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1.1 Definition:
 Material procurement is process which ensures agreeing on terms and acquiring goods,
services or works from an external source.
 Mostly tendering and bidding used for procurement in construction industry.
 The process of procurement ensures that the buyer gets best quality of goods and
services at best possible price.
 Many corporations and public bodies often define processes intended to promote fair
and open competition for their business while minimizing risk, such as exposure to
fraud and collusion
1.2 History:
 History of procurement can be seen thousands of years back.
 People even before hundreds of years back used procurement systems which can be said
to be unique now days.
 There were trade of different products, goods and services between people of different
provinces.
 People or can say traders visits different markets in different provinces for buying
goods.
 They often buy in good exchange of other goods and materials which they bring from
their provinces.
 These were systems practiced before the introduction of currency.
 After introduction of currency it was easy buying goods and services then past.
 Though this was not the part of the material procurement but still was a base
procurement system we should know.
 When there were different rulers that were ruling different provinces of Indian
subcontinent astonishing structures were made which were not possible without proper
procurement services.
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 Let’s take an example of one of the 7 wonders of earth and a symbol of heaven the
“TAJ MAHAL”.
 Total 20000 workers were working on this mega structure.
 Materials were used from all over India and Asia which were transported by a total of
1000 elephants.
 Different mechanisms were used for lifting and pulling water, marble, etc.
 At that time the total cost of building Taj Mahal was around 52.8 billion Indian rupees
(as of year 2015).
 This was a great example of a Mega structure and we can imagine the procurerment
system to be so complex in 1600’s to perform such a big construction operations.
 Later in 19th and 20th century tendering and bidding system was introduced in by
britishers which still practiced.
 During age of computerized works, online bidding and tendering was introduced for
trading goods and services and still practiced today.
 Although small construction industries still donot use online trading.
1.3 Objective of material procurement:

 To provide a better communication facility for process of selling, buying, and delivery of
goods.(through internet)
 To enhance buying products in wholesale with proper storage facilities.
 To encourage waste management.
 Encourage small scale industries to make use of online transactions.
 Effective use procurement can make the cost price of project reasonable and benefits
buyers.
 Fraud does not take place if proper procurement services are performed.
 Better transportation system can be achieved.
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1.4 Scope:
 Junagadh district is located in Saurashtra region of Gujarat state of India.
 Junagadh is located on 21.520 degree North and 70.463 degree East.
 Junagadh is 7th largest city in Gujarat, located at the foot of Girnar hills, 355 km south
west of state capital Gandhinagar.
 It is located at an elevation of 107m above m.s.l.
 Temperature varies from 28 degree Celsius to 33 degree Celsius between March and June
and 10 degree Celsius to 25 degree Celsius between November and February.
 Junagadh is located in seismic zone iii region which means earthquake up to a magnitude
6.5 on the Richter-scale may be expected.
 It records a rainfall of 1000mm to 1200mm annually.
1.5 Need of Project:

 Buyers get best product.
 Buyers get goods and services at best price.
 Transportation facilities are greatly achieved.
 Time consumption is greatly reduced
 Miscommunication between buyers and sellers avoided
 Records can easily be tracked.
1.6 Types of procurement:

 Generally there are six methods of procurement used by any company
 These can be known by different names but has similar working.
 Following are the methods used for procurement in a company:
A. Open tendering
B. Restricted tendering
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C. Request for proposal

D. Two-stage tendering
E. Request for quotations
F. Single source procurement
1.6.1 Open tendering:

 Open tendering is a competitive bidding system
 In this type of bidding system different companies are allowed to bid on
goods, services, etc openly.
 Open tendering advertise locally, have unbiased and technical specifications.
 They have objective evaluation measures and open to all qualified bidders.
 Be granted to least cost supplier sans contract negotiations.
 It encourages competition to buy and sell goods at an good value.
 Though this method is mostly not recommended for large and complex
process.
 Complex requirements are not suited for this type of procurement method.
 Time consuming is also a great disadvantage.
 The company which is procuring faces a lot of complications.
1.6.1.1 Advantages:
 Everyone can apply, favourism can be avoided.
 Best price is obtained due high competition.
 Fresher’s and their firms gets chance to enter into the market.
 Employment rate can go high as more new firms get opportunities.
 There can be a change and introduction of latest technology.
 New client-contractor relation is achieved.
1.6.1.2 Disadvantages:
 Sometimes contractor selected might not properly execute the project
due to no experience.
 Waste of time.
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 Evaluation of timing can be more because all documents have to be

checked.
1.6.2 Restricted tendering:

 Restricted tendering only has a limited amount of request for tenders that can
be sent by a service provider.
 This is also known as selective tendering.
 Like the open tendering it can also be said competitive but the competition is
amongst selected or can say limited to certain agencies.
 A team decides a set of guidelines which are to be referred for selecting
suppliers and service providers.
 This method ensures the best qualified company or firm to procure the
services as they are sorted from a selected group of agencies.
 Contracting authority sends invitation to participate in tendering process
which are selected and all necessary documents have to be submitted
 After all process and verification and sorting is done best firm is selected by
the contracting authority.
1.6.2.1 Advantages:
 Only selected firms which are competent are invited and best of them
is selected.
 Cost of tendering is reduced as economic use of resources, reduced
tender documentation and shorter tender period is achieved.
 Selection of suitable and experienced contractor.
 Time saving.
1.6.2.2 Disadvantages
 For new contractors availability of work is reduced.
 Cost of tender might go high then open tendering.
 Collusion can occur easily.
 Favoritism can be practiced.
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1.6.3 Request for Proposals (RFP)

 RFP is a common term used all across the world.
 Basically clients seeking for a manager for their firm they send their RFP to a
manager through social media.
 It includes document stating why the firm is best for the project.
 Also, many suppliers and goods provider submit their RFP to the procurement team
for review.
 If a service provider or a supplier understands a brief about quality service
management then winning bid is his more favorable to him/her.
 One of the best service providers or suppliers are always hunted by the procurement
teams.
 Sometimes a client has to prove his ability to please the procurement team.
 Generally, agencies write a RFP’s are of two envelope proposal.
 The procurement team has to review the proposal without knowing the financial
component of proposal which is sealed in the second envelope.
 If the procurement team is satisfied with the proposal then only the second envelope
is opened.
 This ensures that proposal which best fits is selected.
 The proposal which best fits with all the qualification as well as the price is selected
 If a proposal is less qualified and has a lesser price is not negotiated.
1.6.3.1 Advantages:
 Introduce you/clients to new suppliers, ideas and energy.
 Systematize a process for selecting vendors.
 Provide evidence of a fair selection process.
 Get existing vendors to step up and justify their services and keep the
business.
 Contribute to a very clear vision of what is needed, how and by what
deadline.
 Build a clear idea of pricing, value and available resources. Creating a
competitive environment for bids might reduce the resulting contract
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cost or increase the scope of work offered, enhancing value (at least
client-side).
 Create better awareness of your brand and services.
 Cost more (in terms of selecting a vendor) than signing a favored
vendor without an RFP.
 Create bureaucracy.
 Require a formal screening process, multiple reviews, meetings,
presentations, follow ups.
 Take a while.
 Generate more paperwork and perhaps a vendor Q&A session to
answer queries from prospects developing responses
 Engage other departments, like legal, buying/procurement, finance.
 Nix the participation of good vendor prospects who think RFPs are too
risky or low-yield.
1.6.4 Tow Stage Tendering

 In this two stage tendering method two procedures are used.
 There are two stages in each procedure.
 As this can be time consuming it is disadvantageous for many procurement teams who
seek to complete the project in a time limit.
 As an advantage this method allows a wide room for discussion for both the parties.
 The first procedure is very similar to the RFP method as discussed above.
 The procurement team receives a proposal with two envelopes – one with the
proposal itself and one with the associated financial information.
 The difference is the bidder is required to submit a technical proposal that highlights
their solutions to fulfilling the requirements as specified by the procuring
department.
 This proposal is scored according to the relevance of the solution to the needs of the
procurer.
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 The highest scored proposal is invited for further discussion in an attempt to reach
an agreement.
 After the final agreement for the technical proposal is reached, the bidder is invited
to submit their financial proposal and then further discussions ensue to negotiate a
contract.
 The second procedure is much like the above, however, instead of the bidder
submitting a fully-completed technical proposal, a partial proposal is submitted.
 The methodology and technical specifications will be included but not to the fullest
extent.
 This allows room for even more customization and discussion.
 Once the highest qualified bidder is selected, they will be invited to submit a
thorough technical proposal along with a financial proposal.
 The technical proposal will be evaluated and only then will the financial proposal
be opened.
 The combined score of both the technical proposal and the financial proposal are the
grounds on which a bidder is contracted.
1.6.4.1 Advantages:
 Early appointment of the contractor, potentially bringing forward the
completion date of the project.
 Promotes a specific focus during the later stages of design on issues of
buildability and economic construction.
 Second-stage tender should be based on more complete information and
a better understanding of the scope of works, so the final account
should be closer to the contract sum.
 Opportunity to obtain contractor buy-in to the client’s viability model
through agreement of not to exceed costs at end of stage one.
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 Provides the client with the temptation to go to the market with
incomplete information, potentially resulting in an unenforceable first-
stage tender.
 Can be used to mask the inadequacy of design development on a
project.
 Additional cost of pre-construction fee.
 Costs of second-stage tenders tend to be higher because of negotiation
premiums and the inclusion of additional risk transfer allowances.
1.6.5 Request for Quotation:

 The request for quotations is a procurement method that is used for small value
procurements of readily available off-the-shelf goods, small value construction works, or
small value services procurements.
 This procurement method is also known as invitation to quote and shopping, and it does
not require the preparation of tender documents to the same extent as open tendering,
request for proposals or two-stage tendering.
 The invitations are not complex, and this method is considered non-competitive because
the procuring entity determines which contractors, suppliers or service providers to
request quotations from as long as a minimum of three are invited.
 This procurement method is used under conditions stipulated in the procurement legal
and regulatory framework and, accordingly, can be requested in writing: email, fax,
courier, but not telephonically.
 Sometimes there are limitations set on the period of time and frequency within which
this method can be used for the procurement of similar goods, work or services.
 This is to prevent the procuring entity from splitting requirements in order for them to fall
within the threshold level where the request for quotation method can be applied.
 Quotations received in response to a request for quotation should be first evaluated to
determine compliance with the technical specifications or scope of work of the
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requirement and also for compliance with administrative requirements of the request for
quotations.
 Only after the administrative and technical compliance determination, a price comparison
is made between firms found to be compliant, and then a purchase order is signed with
the bidder submitting the lowest price quotation within the stipulated delivery or
completion date.
1.6.5.1 Advantages:
 Procurement lead-time is significantly reduced given that there’s no
need to prepare solicitation documents, or to advertise requirements.
And the period for quotations submission is also equally reduced.
 The number of quotations received is limited to the number of bidders
quotations were requested from, so the selection process time is also
reduced.
 The procuring and/or requesting entities would usually have a pretty
good idea of where and from whom the goods, services or works can be
procured, so there’s a higher probability of response to the request for
quotations.
 Lends itself to irregularities because the procuring entity decides
which suppliers, contractors or service providers to send request for
quotations to, and competition is very limited.
 Could be abused as a result of the breaking of requirements into smaller
sizes in order to apply this method of procurement.
 Could easily lead to requesting quotes from a limited number of firms
even if the goods, services or works are available from a greater
number.
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1.6.6 Single Source
 Single source procurement is a non-competitive method that should only be used under
specific circumstances.
 Single source procurement occurs when the procuring entity intends to acquire goods or
services from a sole provider.
 This method should undergo a strict approval process from management before being
used. The circumstances which call for this method are:
 Emergencies
 If only one supplier is available and qualified to fulfill the requirements
 If the advantages of using a certain supplier are abundantly clear
 If the procurer requires a certain product or service that is only available from
one supplier
 For the continuation of work that cannot be reproduced by another supplier
 In the end, the type of procurement method you choose to use is highly relative to the
conditions of the procurement effort and the type of good or service being acquired.
 All procurement methods follow tight legal frameworks to ensure all standards are
being met and quality in the selection process exists.
1.6.6.1 Advantages:
 Having a single source means less work to qualify the source and probably less
administrative effort in dealing with only one supplier. This is a real advantage in a
highly technical product where significant engineering effort is required to qualify or use
a product.
 Since all of your volume is given to one source, the buyer has maximized his leverage
based on total quantity. The buyer should make sure that this point is emphasized during
the negotiations concerning price, delivery, etc.
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 The supplier should feel a special obligation to help the buyer in terms of availability, etc.
Again, in the process of awarding this business to the supplier, the fact that the buyer's
company is relying on the supplier for material availability should be made clear.
 It is more difficult for the buyer to be sure that he is keeping his company competitive if
there is only one source.
 In periods of tight supply, the buyer may be at a disadvantage in being able to ask other
suppliers to accept orders.
 Other suppliers may lose interest in trying to compete for the business if they see that a
sole source situation is likely to persist.
 There is a real risk if the single source has a catastrophic event, gets bought by your
competitor, has financial problems, etc.
1.7 Figures and Flow Chart:
Figure 1: E-procurement marketplace.
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Cost benefit
Supplier‟s Time benefit E-procurement

dimensions
adoption
Opportunity
benefit
Relationship
barrier
Figure 2: E-procurement Flow
Government aspect Organization aspect

E-procurement  Available
 Government implementation
leadership resources
readiness level  Decision-
 Human
resource makers attitude
management towards E-
 IT procurement
infrastructure  Internal
management Technology aspect organization
 Perceived characteristic
 Legal and
regulatory
benefits  External
 Perceived business
system
challenges relationships
Figure 3: Impact-Role-Factor Structure In E-procurement
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Figure 4: Supply Chain Diagram
Figure 5: E-Procurement Implementation
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Chapter-2
Literature Review
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2.1 Case Study: Construction Logistics

(Local procurement of construction materials, construction waste and recycling)
This case study describes the use of locally procured materials in construction and the reuse and
recycling of waste materials in order to minimize impacts upon the environment and costs to the
contractor
Overview
Scotland’s National Arena in Glasgow is part of the Queens Docks 2 development, providing a
state of the art national entertainment arena for Scotland. The building will be used for concerts
and other entertainment events including the Commonwealth Games and will seat 12,500 people,
making it the largest purpose built indoor arena in Scotland.
Scotland’s National Arena is currently under construction and is planned for completion in 2011.
The site is immediately north of the River Clyde in Glasgow and overlies a former dockland
area. The nature of the backfill is unknown but is thought to be made up of demolition material
from various sites in and around the Glasgow area.
Below the arena footprint lie two former dock walls which were previously supported by large
concrete anchor blocks and steel tie rods known as the Central Pier.
Farrans have been responsible for the installation of 401 Rotary Bored piles of 600mm and
900mm diameter to a depth of approximately 22 metres below finished ground level, and a
complicated reinforced concrete substructure and ground floor slab covering roughly 14,000m2.
Following a site investigation and also some local knowledge gained on a previous contract for
the SECC, Farrans decided to remove completely all of the known and unknown obstructions to
the piling works from the Central Pier area and employ a number of effective, efficient and
sustainable best practice techniques to complete the work. Such techniques included reusing
waste materials on site, procuring materials from local sources, employing a just-in-time material
delivery schedule and using a local off site facility to recycle waste materials.
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Key Facts
 Client: Scottish Exhibition and Conference Centre.
 Foundations Contractor: Farrans.
 £125 million state of the art multi-purpose arena including a range of cafes, bars and restaurants.
 Foundations and floor slab contract worth £7.4million.
 Ground floor slab area of 14,000m2.
 Over 6000m3 of material reused resulting in cost savings of £139,000 and removing 560 vehicle
trips.
 Major materials procured locally within five miles of construction site.
 Just-in-time material delivery scheduling.
 Reuse and recycling of waste materials on site.
 Use of local off site waste recycling plant and batching plants.
Reuse of materials on site

Removing all the known and unknown obstructions to the piling works, not only provided
comfort with respect to obstructions, but also provided large amounts of concrete and sandstone
materials which could be crushed and reused on site to create a piling platform for the piling sub-
contractors. All hard materials on site were crushed or planed and reused on site. This operation
was carried out at the very beginning of the contract before the piling sub-contractor arrived on
site; hence there was no program clash in between the two operations.
Approximately 4660m3 of waste material, along with 1500m3 of roadway cold milled material
was crushed and reused on site. This has saved around 560 vehicle movements to and from the
development and reduced CO2 emissions by approximately 2,500kg. As a result there were
substantial economic benefits for the contractor, saving approximately £139,000 and significant
reductions in impacts upon the environment due to the large decline in vehicle deliveries.
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Local material procurement

The materials used in the construction were procured as locally as possible by Farrans, with the
exception of re-enforcing steel. For example, the 8,000m3 of concrete used in the slab and
foundations of the national arena all came from concrete batching plants within a five mile radius
of the construction site. Furthermore, the suppliers for the major drainage, pipeline and
waterproofing materials were all within five miles of the development.
Using locally sourced materials at the construction site helped to reduce vehicle miles for
deliveries, therefore reducing the project’s impact upon the environment in terms of CO2
emissions and other environmental impacts. Significant cost savings were also achieved.
All goods deliveries were pre-arranged in order to provide a robust just-in-time material delivery
schedule, so that materials arrived when they were required for use. This negates the need for on
site storage of materials, which not only improved the construction site logistics, but also
reduced the risk of damage to, or loss, of materials as well as reducing congestion and the
associated risks such as safety incidents.
Recycling of site waste materials

The large volume of excavation at the site lead to a significant surplus of materials and waste,
which was unable to be used further at the site. In order to minimize waste as part of the
construction process, any material that could be reused, was sent to the local construction
materials recycling facility a little over two miles from the site, run by WH Malcolms.
The recycling facility has been supported by over £350,000 of funding from WRAP to promote
waste recycling in the Glasgow area. The materials sent to the recycling plant by Farrans from
the National Arena development were crushed and sold on for further use as a capping material.
Conclusions
This case study demonstrates that adopting best practice logistics techniques in the form of local
construction material procurement can result in a reduction in vehicle miles which has a positive
impact on the highway network, the environment and construction costs. Further, the reuse of
waste materials on site and the recycling of waste at local plants can lead to a significant
reduction in vehicle trips and costs, as well as reducing waste to landfill.
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2.2 A study on materials procurement and management for small

companies
(Amitabha Bandyopadhyay and John DiMilia (Farmingdale state university, New York 11735).
Proceedings of the 2002 American Society for Engineering Education Annual Conference and
Exposition.)
The survey questionnaires were sent to 200 contractors selected randomly.An introductory letter
was included with each of them to explain the purpose and procedures. We received thirty four
(34) responses back. Almost all of them requested the result of the survey. Thirty of them
agreed to talk to us over the telephone. All thirty were contacted for further discussion and
clarification.
 Questionnaires
1) How many material suppliers does your company use on a regular basis for
estimating and purchasing general building materials?
2) What are the main reasons for using a material supplies? (Check in order of
importance)
 Very Important-
 Mod. Imp. -
 Somewhat Imp.-
 Not Imp-
 Best Price
 Prompt Delivery
 Good Delivery and Return Policy
 Variety of Stock
 Availability of Non-off-the-shelf items
 Quality of materials
 Questionnaires
3) How many material suppliers does your company use on a regular basis for
estimating and purchasing general building materials?
4) What are the main reasons for using a material supplies? (Check in order of
importance)
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 Very Important-
 Mod. Imp. -
 Somewhat Imp.-
 Not Imp-
 Best Price
 Prompt Delivery
 Good Delivery and Return Policy
 Variety of Stock
 Availability of Non-off-the-shelf items
 Quality of materials
5) What are the main forms of communication to material suppliers for price quotes
and material ordering? (Check in order of importance)
 Most of the time-
 Frequently -
 Sometimes -
 Never -
 Telephone
 Facsimile
 Two Way Radio
 In Person
6) Does your material supplier keep you aware of material sales and new materials?
(Check answer)
 Most of the time
 Frequently
 Sometimes
 Never
7) Does your company stock a large amount of standard building materials? (Check
answer that applies)
 Frequently
 Sometimes
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 Never
8) Does your company buy standard materials wholesale? (Check answer that
applies)
 Frequently
 Sometimes
 Never
9) What is the average size of a job contract for your company?
 0 to 10,000
 10,000 to 30,000
 30,000 to 100,000
 100,000 to 500,000
10) How many employees does your company employ at each job site?
 1 to 4
 4 to 10
 10 to 20
 20 to 40
 over 40
11) How many jobs does your company usually run at the same time?
 Survey Results
1. Main forms of communication:
a) Telephone – 69% most of the time,31% frequently.
b) Facsimile – 46% most of the time, 38% frequently. 16% some of the time.
c) Two-way Radio – 31% sometime, 69% never.
d) In person Radio – 1% most of the time, 54% sometime, 45% never.
2. Main reasons for using a material suppliers:
a) Best price – 77% very important, 15% moderately important, 8% somewhat
important.
b) Prompt Delivery – 84% very important, 16% moderately important Good Delivery
and Return policy – 54% very important, 1% moderately important, 45% somewhat
important.
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c) Varity of stock - 38% very important, 38% moderately important, 24% somewhat
important.
d) Availability of non-off-the-shelf items – 38% very important, 23% moderately
important, 31% somewhat important, 8% not important
3. Communication from material suppliers regarding new materials and sales– 0%
most of the time, 23% frequently, 64% sometimes, 13% never
4. Stocking standard materials – 10% most of the times, 10% frequently, 40%
sometimes, 40% never
5. Buying building materials wholesale – 27% most of the times, 13% frequently, 47%
sometimes, 13% never.
2.3 E-Procurement in Malaysian Construction Industry: Benefits and

Challenges in Implementation
(Mohd Nasrun Mohd Nawi, Rafikullah Deraman, Jibril Adewale Bamgbade , Faisal Zulhumadi, Salman Riazi
Mehdi Riazi,
School of Technology Management and Logistics, Universiti Utara Malaysia, Sintok, Kedah, Malaysia.
Faculty of Civil and Environmental Engineering, Universiti Tun Hussien Onn Malaysia, 86400 Parit Raja, Batu
Pahat, Johor Darul Ta’zim, Malaysia
Housing, Building and Planning, Universiti Sains Malaysia, Penang, Malaysia)
Literature Review
Studies have identified e-procurement as the hallmark and main concern of global e-Government
agenda Some studies also demonstrated e-procurement adoption as a complimentary procedure to e-
government systems in many countries. However, a dearth of deep understanding of theoretical and
practical underpinnings of e-procurement processes in public policy and administration could limit
the benefits inherent in its adoption. In the same line of thought, e-procurement benefits could be
adequately reaped by understanding the roles of Information Technology to run the procurement
procedure, considering the fact that system software and hardware makes the e-procurement easier
to understand. Furthermore, as technology progresses, various forms of online platforms tend to
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provide integrated packages like the social networks, that are capable of blurring the lines between
one form of technology and another. Besides that, e-procurement has also assisted in the provision
of online services through the internet. Another definition is where supplier and buyers exchange
goods and services using the internet and information technology application. An e-Procurement
system uses Internet based information and communication technology for purchase, where
processes like searching, sourcing, negotiation, ordering and receiving, and after- purchase review
are done with ease . As more users are connected via the internet, the application enabled
transactions or procurements with other entities over the internet. E-procurement uses integrated
information technology for entire procurement functions, from the beginning to the end that is from
searching, sourcing, negotiating, ordering, and receipt to post-purchase review. E-procurement has
become popular among businesses, industries and governments as a powerful tool to improve
effectiveness and efficiencies as well as service quality for organizations that has adopted it.
Benefits of Practicing E-procurement

Adopting E-procurement system has brought great benefits to the government and it has been noted
as a way by which governments can save management cost and become more efficient in
procurement of goods online . The main advantage that e-procurement can deliver include cost
reduction, process reorganization, improved contract fulfillment, among other benefits . The
significant cost saving of e-procurement to the government is in the reduction of cost and efforts of
processing the purchase order which can be manipulated electronically and reduction in inventory
costs and decrease in order fulfilment time. Identified four types of cost saving from using e-
procurement system. These include, order cost, administrative cost, lead-time order cost and
opportunity cost of capital. Thai, also alluded that practicing e-procurement provides quality
bidding, efficient timeliness, cost saving, minimizing efforts in doing business, reduce financial
risks and technical risks, and finally increase competition which lead to save cost of buying goods
or services at high prices. Also, public sector bidding is one of the best settings to implement e-
procurement of goods and services, considering the high transparency of information resulting from
electronic bidding . E-procurement system offers more effective and efficient procurement process
in line with the country’s transformation to the knowledge based economy (K-economy). It is a way
for the government to promote the widespread adoption of e-Business in the country. E-
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procurement helps provide latest product information and pricing to the government which is
available online. The system is supposed to be up to date with the latest information that will help
the buyer to make a more accurate procurement decision.
Conclusion
E-procurement is more than just a system for making purchases online. The system has been
implemented to achieve significant benefits such as cost savings and increase efficiency. Other
advantages in applying e-procurement system are faster government procurement process and
higher transparency compared to traditional procurement and tendering ways. The system helps
government agencies in making decision through providing easy access and relevant information
about each bid and competitors. Awarding process will be very organized and precise because the
decision committees will have better knowledge about theses bids and they could obtain better
pricing which will save a lot of unnecessary costs. It is important for the government to pay more
attention to the availability of infrastructure such as information technology for a better e-
procurement implementation. ICT tools are important to help increase effectiveness and efficiency.
Business communications, business process, cost reduction and cycle time, explore new markets
and business opportunities, increase transparency in contracts and overall competitiveness are fields
to be given more focus in improving the e-procurement system in the government agencies.
2.4 WHAT IS ELECTRONIC PROCUREMENT: A LITERATURE

REVIEW
Dr. Ch. SRI RAMA MURTHY M.Sc. (Env. Science) (Gold Medalist), LL.M., M.B.A.,
M.Phil., Ph.D. Assistant Commercial Tax Officer, Commercial Taxes Department, Markapur,
Prakasam District, Andhra Pradesh.]
ABSTRACT
The concept of electronic procurement has gained popularity over the last decade. Electronic
procurement systems experienced a diffusion in the late 1990s due to the proliferation and
25
advances of information technology and the Internet. There is a good literature emerged on the
concept of e-procurement covering different aspects like description, practices and applications.
This paper reviews reputed refereed journal articles dealing with the definition of electronic
procurement and examines the angle through which it is viewed. Based on the insights gained,
directions for future research are suggested.
INTRODUCTION
Electronic procurement (EP) is frequently defined as the sourcing of goods or services via
electronic means, usually through the Internet. Electronic data interchange (EDI) can be regarded
as a form of electronic procurement. Electronic procurement systems experienced a diffusion in
the late 1990s (Puschmann and Alt, 2005) due to the proliferation and advances of information
technology and the Internet, the tremendous potential savings achievable via this tool, and
possibly also because of the fear associated with the Y2K issue.
There are newer facets of electronic procurement proposed by De Boer et al. (2002). e-
MRO, web-based ERP is the process of creating and approving purchasing requisitions, placing
purchase orders and receiving the goods or services ordered via a software system based on
Internet technology; e-MRO deals with indirect items, Web-based ERP deals with product-
related items. E-sourcing is the process of identifying new suppliers for a specific category of
purchasing requirements using Internet technology. E-tendering is the process of sending
requests for information and prices to INTERNATIONAL JOURNAL OF
MULTIDISCIPLINARY ADVANCED RESEARCH TRENDS ISSN : 2349-7408
VOLUME 1, ISSUE 2, SEPTEMBER 2014 24
METHODOLOGY
Articles were selected from ProQuest gobal database, which includes a vast literature on e-
procurement and related topics. Articles were selected using keyword search with the term
“electronic procurement” and a total of 25 journals were selected to represent the sample for the
26
current study. The papers were downloaded and printed and those who were not available in
print or via electronic database were ordered via interlibrary loan.
Conclusions and limitations
This paper reviewed reputed journal articles dealing with electronic procurement and
examined them electronic procurement definitions wise. While many EP studies have already
been conducted, the potential is still large. This paper should serve as a motivation for
researchers to explore this exciting area even further, along the research gaps outlined above.
Some limitations exist with this research, which at the same time pose opportunities for
future studies. The main limitation concerns the fact that few journals may not have included in
the database taken for this study which may have provided valuable insight to the e-procurement
literature. Searching for related literature using the keyword ‘electronic procurement’ is also a
limitation. Searching with words like online procurement, online purchasing would have resulted
in another set of few relevant studies. As some articles could not be retrieved in full form,
abstracts were used in this paper hence leaving a chance that some important details may have
been overlooked. However, this review was not intended to provide a specific and thorough
review of each article, but to offer a broad picture of the concept of electronic procurement area
and its definition.
Future research may be carried out replicating this study searching with all possible keywords
and manually scanning the articles for electronic procurement research rather than relying on a
keyword search in academic databases.
2.5 “LITERATURE REVIEW OF ADOPTION OF

E PROCUREMENT PRACTICES BY CONSTRUCTION
INDUSTRIES"
27
Avinash Shukla
Research Scholar in Department of Business Administration, Faculty of Management
studies & Research, of Aligarh Muslim University, Aligarh
Dr Mohd Afaq Khan
Assistant Professor in the Department of Business Administration, Faculty of Management
Studies & Research, Aligarh Muslim University, Aligarh
Dr Mrinalini Shah
Professor Operations Management,Chairperson Entrepreneurship cell
Institute of Management Technology (IMT),Ghaziabad
Abstract:
Advent of information technology (IT) has provided more competitiveness in business operation.
Construction industry is also gearing up towards the more usage of information technology
driven platform. Cost is the main factor for construction industry. Construction Industry
Development Council of Indian (CIDC) has estimated that approx. 40-50% cost belongs to
material in total building project. Therefore, it is imperative to optimize the material purchasing
in construction activities. E procurement has emerged as panacea to address most of the
problems- cost saving, time saving and best quality, minimization of malpractices associates
with purchasing.We have reviewed 103 research papers from various countries and collated the
adoption practices of e procurement. Interestingly TOE and TAM model has used by many of researchers.
Introduction of construction industry

Construction is the Latin word (from com- "together" and struere "to pile up") means the arts and
science to form material, system and organization to build some structures. Building
Construction is the process of sequencing activities start from planning, design and financing and
continues until the structure is ready for occupancy. From being single activity to large scale
construction is the process of human multitasking. Normally, jobs are managed by project
manager, supervisors, site workers, architects and project engineers. Since these activities
involved the entire eco system of environment as well as human society. So it is very important
those involved with design and execution must consider the zooming of requirement,
28
environment impact, successful scheduling, budgeting, construction site safety and transportation
& logistic of building material.
Definition
Russell Sturgis distinguished between architecture as being artistic structure, where a building is
unadorned and can be "...poor...commonplace, ugly, insufficient, or otherwise of small
importance; " and the use of the word construction as meaning built using scientific principles in
a highly skillful way.
Conclusions
Below is the conclusion on the above detailed analysis on e -procurement adoption in
construction industry:
a) Construction industry adoption of e procurement is low compare to automotive industry. Since
automotive industry concentrates on mass production and nearly distribution to similar product.
On contrary, construction industry highly customized and every project is different from other
project. Adoption of e procurement can be improved in construction industry by showing the
value gain of manufacturing industries by using e procurement.
b) Main barriers in adoption of e procurement in construction industry are organizational,
technical, legal aspects
c) Main drivers in adoption of e procurement are transaction & administration cost saving,
reduce time, more transparency, improved communication between suppliers and buyers.
d) Practitioners can use develop various new techniques like build ability, construction ability,
innovation, lean construction, sustainability and value engineering various through critical
review of procurement method.
2.6 A Systematic Literature Review of Flexible E-Procurement

Marketplace
29
Sara Robaty Shirzad1 and David Bell2

Brunel University, Information Systems and Computing, London, UK,
1Sara.robaty.shirzad@brunel.ac.uk,
2David.bell@brunel.ac.uk
Received 31 May 2012; received in revised form 24 January 2013; accepted 28 January 2013
Abstract
During the Web era e-procurement has witnessed a steep rise in marketplace deployment; this
has been followed by a substantial number of failures. A number of larger technology providers
are now left to support both small and large businesses. Flexibility has been a key enabler in
supporting network evolution across a varied number of domains. The aim of this study is to
investigate flexibility around marketplace evolution, success and failure. In particular, explore
the inter-relationships between architectural flexibility and the evolving Web and Internet. A
systematic literature review (SLR) was carried out in order to uncover the changes that have
taken place over the past fifteen years. A conceptual model is produced early in the research in
order to provide contextual underpinning. We employed a manual search of 5 journals. Of the 22
relevant studies, one addressed research trends around e-procurement in pharmaceutical
organizations. Three addressed eprocurement in financial organizations. A number of flexibility
categories are uncovered by the SLR and then
used as a means to support flexible e-procurement marketplace (EPM) design and adoption,
recognising EPM evolution over the volatile study period. Flexibility categories are uncovered
and comprise technical, organisational, environmental and strategic (TOES) concerns.
Introduction
Considerable research has been conducted on electronic procurement marketplace (EPM) over
the past fifteen years. This topic has been a prominent feature of the information systems
research landscape over this period with a rapid growth and later consolidation in marketplace
numbers. Unsurprisingly, this EPM volatility has occurred during the early evolution of the Web.
30
The systematic literature review presented here explores and presents the interrelationships
between EPM research during this period and the changes and focus in the domains and
characteristics considered important. Flexibility is highlighted as a key factor when considering
which marketplace platforms to use - providing an opportunity for firms to increase overall
performance and better facilitate inter-organizational relationships and transactions [23].
Moreover, organizations are able to re-orientate to focus on the EPM’s as opposed to traditional
hierarchy-based economic activities and decision making. In unison with corporate change, the
Internet has changed the way in which organizations do business by the reshaping of traditional
buying-selling relationships, improving core processes, requirements and providing opportunities
to reach new markets. Globalization, deregulation, increased competition, mergers and
acquisitions, and the like all reveal organizations in transition, adapting to a continuously
changing business environment. In this dynamic context, in order to beresponsive to changes in
business requirements and environments, EPMs must provide quality products, services and
processes in order to gain market presence and competitive edge. One could infer that
marketplace flexibility is required to meet the quality needs of a diverse range of customers.
Conclusion
In this systematic review, we have synthesized and analyzed concepts, empirical findings, and
gaps in literature with the purpose of understanding the viability and likely evolution of EPMs
with respect to current and future flexibility requirements. The study uses a broad, multi-
dimensional perspective of EPM and flexibility. A conceptual EPM architecture is presented
early in the paper in order to provide context from which the review can be presented. The
architecture is derived from literature with the purpose of better understanding the flexibility
elements of EPMs and their importance over time with e-commerce and EPM evolution over the
study period directing framework design. The framework consists of four interrelated elements:
(a) technical, (b) organizational, (c) environmental and (d) strategic (TOES) concerns.
Unsurprisingly, the TOES flexibility types are central to this architecture and require
consideration when defining buyer-supplier interaction. At the same time, firms must also realize
that competition is not derived from organization-to-organization pressures, but also the EPM to
EPM landscape. Having such a strategic focus will help businesses avoid costly and in effective
31
mismatches between customer requirements to product characteristics. Meanwhile, the evolution

of Web from individual organization flexibility to cross-organization flexibility has resulted in a
requirement that the entire EPM platform be flexible. At issue is what specific EPM flexibility
components require consideration? Much has been written on the components of strategic
manufacturing flexibility. A brief summary of that literature has been provided. Our finding
shows that little consideration is typically given to the organizational and environmental aspects
of flexibility in current platforms however. This systematic review itself investigated flexibility
concerns around EPM. The 22 primary studies are distributed across Technical (12 papers),
Environmental (7 papers), Organizational (4 papers) and Strategic (12 papers) flexibility.
Considering our framework, the evolving Web and our profile of EPM flexibility research, it can
be argued that there is a strong relationship between our framework and the evolution of e-
commerce activities. The evolution of the Web has played a large part in the flexible nature of
EPMs over the review period. Web technologies have been adopted by EPM platforms in order
to support businesses of varying size with differing technological capability. The requirements of
an infrequent supplier of widgets require less technological integration than that of a key
supplier. The variation in technological integration with newer Web technologies provides
support for differing collaborations.
EPMs have also provided a channel for technology adoption by the vast network of buyers and
supplier in the market– supporting and distributing technologies within (or interfacing into) their
platforms.
32
CHAPTER-3
DATA COLLECTION
33
3.1 DATA COLLECTION:

 Table given below contains various quantities of different material and services in
Junagadh:
SR. NO. DESCRIPTION QUANTITY

1. Number of cement agencies 60
2. Number of sand lease 12
3. Number of stone crushers 70
4. Number of lime stone mines 13
5. Number of households
Rural 192682
Urban 118320
Total 311002
6. Number of mining workers 4611

7. Number of construction workers 9910
8. Lime stone powder (M.T.) 560173
9. Building Lime Stone(M.T.) 339328
10. Black trap(M.T.) 1124121
11. Ordinary Sand 1283934
12. Ordinary clay 4000
Table no. 3.1: No. of Companies and Quantity of Material
34
CHAPTER-4
METHODOLOGY
35
4 METHODOLOGY:
Figure 6: Flow Diagram For Methodology
There are two methods we adopted for better procurement practices:

1. e-Procurement
2. Single Source
4.1 e-Procurement:
4.1.1 What is e-Procurement ?

o e-Procurement or electronic procurement refers to the process of purchase and
sale of goods or services through electronic methods, primarily the Internet.
o It is an alternative to the manual process of procurement, and is certainly
superior to the latter in many respects.
o Organizations are increasingly opting for e-Procurement platforms, realizing its
potential to curb irregularities and unnecessary costs.
36
o Supply Chain Management is vital for any business. Organizations invest a lot of
resources in the process of procuring goods, services and raw materials.
o So, an efficient and stream lined procurement process is a huge advantage for
businesses.
o e-Procurement consists of Indent Management, RFX creation, e-Tendering, e-
Auctioning, Vendor Management and Contract Management among other
processes.
o An e-Procurement solution can automate the whole process, thus saving the
organizations from the hassle and irregularities involved in manual procurement.
o e-Procurement portals are designed for users to register as a buyer or supplier,
submit all the relevant documents online and take part in the tendering process
that follows.
4.1.2 Components of an e-Procurement suite
The e-Procurement suites may differ on the basis of what they offer to the user. The main
components of a typical e-Procurement suite are the follows-
1) Indent Management: This process is basically the first step involved in e-

tendering. Indent creation or the creation of requisition is undertaken, followed by
its evaluation and approval.
2) RFX Creation: RFX is a catch-all term for terms like Request For Proposal (RFP),
Request For Information (RFI), Request For Bids (RFB) and Request For Quotes
(RFQ). This step involves the creation of RFX and formulation of technical and
commercial qualification criteria. The RFX is then published and the prospective
bidders are invited.
3) Bid Submission: The interested bidders then register themselves on the e-

Procurement portal and submit their bids which would give detailed account of
their technical as well as commercial qualifications.
37
4) Bid Opening and Evaluation: Once the bids are successfully submitted, they are
evaluated and the vendors are scrutinized. Thereafter, the shortlisted vendors are
invited for e-Auction.
5) E-Auction: The e-Auction is then carried out for procuring the goods or services
under consideration. E-Auction too can be of several types depending on the
specific requirements.
6) Vendor Selection and Finalization: After the e-Auction, according to the

requirement, one or more vendors are finalized and the Purchase Order issued.
This step concludes the procurement process.
7) Vendor and Contract Management: This additional module is included to manage

and catalog the vendors and to evaluate their services.
4.1.3 How e-Procurement helps?
The manual procurement process has always been pestered by the inefficiency of
the system, lack of transparency, less accessibility and unwarranted expenditures.
E-Procurement platform can overcome these entire shortcomings and thus prove
to be a necessity for any business. The digitizing of the procurement process leads
to simplified workflow. It also makes the process equally accessible for everyone.
The salient benefits of e-Procurement have been listed below:
1) E-Procurement leads to considerable reduction in the time involved in the

procurement process.
2) A great deal of transparency results due to a successful implementation of

such platform.
3) An e-Procurement platform can drastically increase the market reach for

both buyers as well as suppliers.
4) E-Procurement can tackle the malpractice of cartel formation to a great

extent.
38
5) It ensures safety of all the information being provided by users. This data
safety is at times compromised in the manual procurement process.
6) Lastly, as e-Procurement platform reduces and simplifies the steps

involved, it also leads to a significant cost cutting.
4.2 Single Source:
 Single source procurement is a non-competitive method that should only be

used under specific circumstances.
 Single source procurement occurs when the procuring entity intends to acquire
goods or services from a sole provider.
 This method should undergo a strict approval process from management before
being used. The circumstances which call for this method are:
 Emergencies
 If only one supplier is available and qualified to fulfill the requirements
 If the advantages of using a certain supplier are abundantly clear
 If the procurer requires a certain product or service that is only available
from one supplier
 For the continuation of work that cannot be reproduced by another
supplier
 In the end, the type of procurement method you choose to use is highly relative
to the conditions of the procurement effort and the type of good or service being
acquired.
 All procurement methods follow tight legal frameworks to ensure all standards
are being met and quality in the selection process exists.
39
4.2.1 Advantags:
 Having a single source means less work to qualify the source and probably less
administrative effort in dealing with only one supplier. This is a real advantage in
a highly technical product where significant engineering effort is required to
qualify or use a product.
 Since all of your volume is given to one source, the buyer has maximized his
leverage based on total quantity. The buyer should make sure that this point is
emphasized during the negotiations concerning price, delivery, etc.
 The supplier should feel a special obligation to help the buyer in terms of
availability, etc. Again, in the process of awarding this business to the supplier,
the fact that the buyer's company is relying on the supplier for material
availability should be made clear.
4.2.2 Disadvantages:
 It is more difficult for the buyer to be sure that he is keeping his company
competitive if there is only one source.
 In periods of tight supply, the buyer may be at a disadvantage in being able to ask
other suppliers to accept orders.
 Other suppliers may lose interest in trying to compete for the business if they see
that a sole source situation is likely to persist.
 There is a real risk if the single source has a catastrophic event, gets bought by
your competitor, has financial problems, etc.
40
CHAPTER- 5
CONCLUSION
41
CONCLUSION:
With the advancement in technology and communication it is very important to develop with the
environment. In India still there are many businesses which are to be developed with
advancement of technology; one of it is construction industry. E-commerce is developing very
quickly in the nation and construction industry should developed same way. Many countries has
developed e-procurement service for better and transparent transaction. Through e-procurement
better quality and better price of construction material can be achieved. India is a developing
country and construction industry plays a major role in it. Though construction industry is
rapidly growing but it does not contribute as much it should, because of theft by contractors,
sellers, builders, etc. of taxes. E-procurement can be provided by mode of applications which
shows lists sellers of different construction company owners and builder which makes approach
simpler and misunderstanding can be avoided. Government can track transaction by sellers and
builders which help in generating enough revenue and avoid tax theft.
42
REFERENCE
 Case Study: Construction Logistics

(Local procurement of construction materials, construction waste and recycling)
 A study on materials procurement and management for small companies.
 E-Procurement in Malaysian Construction Industry: Benefits and Challenges in

Implementation.
 What is electronic procurement: a literature review.
 Literature review of adoption of e-procurement practices by construction industries.
 A Systematic Literature Review of Flexible E-Procurement Marketplace.
 Construction management book by R.P. Rethaliya.
 www.uspto.gov
 patents.google.com
43
ANNEXTURE
1.Business model canvas:
44
2. Empathy Mapping Canvas:
45
3. AEIOU Summary:
46
4. Product Development Canvas
47

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MATERIAL PROCUREMENT IN CONSTRUCTION INDUSTRY 2019

1.3 Objective of material procurement:

1.5 Need of Project:

1.6 Types of procurement:

C. Request for proposal

1.6.1 Open tendering:

 Evaluation of timing can be more because all documents have to be

1.6.2 Restricted tendering:

1.6.3 Request for Proposals (RFP)

1.6.4 Tow Stage Tendering

1.6.5 Request for Quotation:

1.6.6 Single Source

1.7 Figures and Flow Chart:

Figure 1: E-procurement marketplace.

Supplier‟s Time benefit E-procurement

Figure 2: E-procurement Flow

Government aspect Organization aspect

Figure 3: Impact-Role-Factor Structure In E-procurement

Figure 4: Supply Chain Diagram

Figure 5: E-Procurement Implementation

2.1 Case Study: Construction Logistics

 Client: Scottish Exhibition and Conference Centre.

 Foundations Contractor: Farrans.

 Foundations and floor slab contract worth £7.4million.

 Ground floor slab area of 14,000m2.

 Major materials procured locally within five miles of construction site.

 Just-in-time material delivery scheduling.

 Reuse and recycling of waste materials on site.

Reuse of materials on site

Local material procurement

Recycling of site waste materials

2.2 A study on materials procurement and management for small

2.3 E-Procurement in Malaysian Construction Industry: Benefits and

Benefits of Practicing E-procurement

2.4 WHAT IS ELECTRONIC PROCUREMENT: A LITERATURE

Conclusions and limitations

2.5 “LITERATURE REVIEW OF ADOPTION OF

Introduction of construction industry

2.6 A Systematic Literature Review of Flexible E-Procurement

Sara Robaty Shirzad1 and David Bell2

mismatches between customer requirements to product characteristics. Meanwhile, the evolution

3.1 DATA COLLECTION:

SR. NO. DESCRIPTION QUANTITY

6. Number of mining workers 4611

Figure 6: Flow Diagram For Methodology

There are two methods we adopted for better procurement practices:

4.1.1 What is e-Procurement ?

4.1.2 Components of an e-Procurement suite

1) Indent Management: This process is basically the first step involved in e-

3) Bid Submission: The interested bidders then register themselves on the e-

6) Vendor Selection and Finalization: After the e-Auction, according to the

7) Vendor and Contract Management: This additional module is included to manage

4.1.3 How e-Procurement helps?

The salient benefits of e-Procurement have been listed below:

1) E-Procurement leads to considerable reduction in the time involved in the

2) A great deal of transparency results due to a successful implementation of

3) An e-Procurement platform can drastically increase the market reach for

4) E-Procurement can tackle the malpractice of cartel formation to a great

6) Lastly, as e-Procurement platform reduces and simplifies the steps

4.2 Single Source:

 Single source procurement is a non-competitive method that should only be

 Case Study: Construction Logistics