COMMERCIAL:

INTRODUCTION:
Commercial Department looks after commercial aspects of Hub Power station,
including procurement of material and services. Store of Hub Power Station also
comes under the umbrella of Commercial. Commercial also tackles activities related to
shipping. So to be concise, it (Commercial Department) supervises
Procurement
Contracts (Services)
Shipping
Stores

MAJOR ACTIVITIES:
PROCUREMENT:
Procurement generally involves purchasing of any equipment spares or stock items.
Generally a model no. of the equipment along with its description and quantity is
provided to Commercial for it replenishment. Sufficient information should be provided
for effective commercial negotiations.

CONTRACTS:
Contracts are generally services like requirement of manpower, overhaul of any
equipment etc. Since it is not definitive like purchasing of material, therefore TO
(Technical Officer) needs to attach a thorough scope of work. Scope of Work must not
be limited to but must involve the following:
Detail Of Work
Location Of Work
Period Of Performance
Deliverables Schedule
Applicable Standards
Acceptance Criteria
Special Requirements
Type of Contracts:
One off Contracts:
As the name suggests these are one off contracts for a specific type of work which is
not performed in routine or regularly.
Yearly Term / Rate Contracts:
Simple term Contracts: These contracts are for activities which are on-going or routine
or take place at regular intervals such as Janitorial Services, Medical Services etc.
Call off Term Contracts: These contracts involve services that may be required at any
time of year such as Crane Services, Stationary Supplies etc. These are enforced
when needed.
Term Rate Contract is generally used for Material Procurement Services.
Labour force working for contractors are required to bring Police Verification Certificate
as well as they need to be insured in case of any unfortunate event.
Whenever a contract or a PO is raised, Prices, Commencement Plan, Payment
Terms, LDs or Liquidated Damages, warranty or Retention Money is already agreed.
Retention Money is a certain amount of money that is withheld and paid after
completion of warranty time
Technical Officer is the main executioner of any activity or the one who
initiates a PR
Responsible Officer is responsible for TOs job and verifies any PR
Procurement Officer is from commercial Department who deals and
negotiates with the contractors on behalf of Commercial Department for
Contract, Services etc.

SHIPPING:
For equipment, that need to be imported, it is either shipped via sea or air. Shipping
documents include
Certificate of Origin
Commercial Invoice
Bill Of Lading/Airway Bill
Inspection Certificate
Certificate of Origin appraises the buyer with the origin of product.
Bill of Lading is issued by Shipping Line depicting that the good were received and
loaded. For Air Shipment Airway Bill is provided for the same purpose.
Inspection Certificate is issued when any inspection of the goods is carried out by a
third party.
For air freight a contingency of 10% is added in the budget while for sea it is kept as
3% to 5%. For Hub Power Station, a special relief is given for spare items through an
SRO (Standing Release Order) providing relaxation in taxes and duties.
GENERAL WORK FLOW:
Technical
PR Raised Officer

PR Responsible
Approved Officer

PR Routed
Procurement
to
Officer
commercial

RFQ
Generated

Tenders
Received And
Evaluated

Awarding
Of Tender

PO Raised

Work
Completed

GRN

Payment Finance

PR RAISING:
PR or Purchase Requisition refers to a request or a requirement either
Identified by stores for replenishment or procurement of stock spares and
stores items
Distinguished by TO or Technical Officer for non-stock items or additional
supply of store items or one-off items
Procedure:
Step 1:
Login into Maximo 7.1 ad open New PR request
Step 2:
Select
Priority (whether Production Threat, Critical, and Normal)
 PR Class (Material or Services)
PR Type (Direct Charge or Stock)
Local or imported items
Add attachments where required
Step 3:
Enter
Required Date of the Order
Check on Tab if rising PR for budgetary purpose or require approval before
order
Step 4:
Switch on PR Lines Tab and select:
Material type
Quantity as well as Unit Cost
Step 5:
Add GL Account (Account on which amount is to be charged):
First Four Digits ---- Account Code
Middle Two Digits ---- Cost Centre
Last Two Digits ---- Department
After completing the above mentioned steps save the generated PR and send it to RO
approval. For local purchase, lead time is generally 4 to 6 weeks whereas for imported
items it is kept at 3 months.
Direct Charge refers to those items that are not stock items, or
supplementary supplies of stock items or one off items
Stock items are those which are already in database of store are used
over regular intervals

REQUEST FOR QUOTATION (RFQ) or ENQUIRY:

After ROs approval, PR is routed back to Commercial on which Procurement Officer
starts working. Firstly RFQ is generated going through following steps:
Step 1:
Click on New Tab
Step 2:
Select:
Return Date (Date on which Tender is required from Vendor)
Copy PR lines to RFQ
Step 3:
Add vendors (At least 3)
Add whether vendors are local or foreign
Go to Reports Tab and generate Report and send it to vendors via E-mail
Step 4:
Change Status to Request Send to Vendor
If RFQ is sent to a single vendor (as in cases of OEM or when similar sort of work has
been accomplished within a year or cost of work is less than 1 lac), it is said to be a
Single Tender Action (STA). There is no need to make Comparative for such activity.
Approval of STA:
Up to 2 lacs Department Manager can approve
From 2 lacs to 5 lacs Business Group Member can approve
For above 5 lacs Station Manager can approve

QUOTATIONS:
Once quotations are received, Comparative is developed.
Go to Quotations tab
Add vendor quotation
Generate Report
Thus a comparative is formed and after consultation with TO tender is awarded to a
party via issuing PO. Hub Power Station does not compel one to award contract to the
lowest bidder.

PURCHASE ORDER:
After awarding Tender to one of the Vendors, click on Create Purchase Order to
generate Purchase Order.

RELEASE ORDER:
Certain Contracts Framework is already established and agreed with the Vendor.
These are generally term Contracts. The framework generally incorporates a list of
services required off and on by concerned departments. For such activities,
Commercial department need not to be involved since it does not involve process of
PR, Tendering etc.
For such instances a release order need to be issued through the following manner:
Step 1:
Click:
Start Centre
Requester Tab
 Look for Favourite Applications where last three items would be PO, Release
Order and Receiving

Step 2:
Go to Purchase Contract Module
Click Purchase Contract and enter Contract No. & Enter
Click Contract number and Contract will open
Go to Select Action and select Create Release PO
In Create Release Application, add required information
Step 3:
On the Requester Tab Release Order Module is available under Favourite Application
Click release Order
Enter Release Order Number and press Enter
Click Release Order Number and Release Order will open
Step 4:
In Release Order:
Select RO
Click PO Lines Tab and enter quantities
Save it and route it to RO for Release Order approval
Step 4:
After completion of work GRN need to be punched in Release Order
On the Requester Tab Receiving Module is available under Favourite Tab
Click Receiving
Enter Release Order and press Enter
Click Release Order Number & Receiving Module will open
List, Material Receipt and Service Receipt tab will be available
Click Service Receipt
Click Service Order Services
Select lines against which GRN needs to be punched, click OK and save the
record

PRE-TENDER MEETING:
In case of services, once of RFQ is done, generally Pre-Tender Meeting is called to
define scope of work to all bidders. It also includes site visits. Generally any
suggestions from Vendors are considered and sometimes scope of work is also
changed to incorporate these suggestions.

BANK GUARANTEE / LETTER OF CREDIT:

Bank guarantee is required by Hub Power Station in case of any advance payments of
more than 1 lac.
Letter of Credit is quite analogous to bank guarantee. For orders greater than
10,000$, LOC is required by Hub Power Station. In an LOC, bank of buyer and bank
of seller deal with each other. So in case of any hiccups, bank of the concerned party
will be responsible for any sort of compensation.

GOOD RECEIPT NOTE:

It is generally entered into the system on satisfactory completion of a task or receiving
of good.

STORE:
Store is generally responsible for the stock of stock items, its preservation and efficient
delivery. It consists of different zones starting from A and going till K. There are seven
storage area or ware houses at Hub Power Station all of which are listed below:
Main Store Sprays, WD-40, Motors, Coveralls etc.
Chemical Store All Chemicals
Hubco Store Boiler Modification Equipment, GAH
Spares, Turbine Studs etc.
Bulk-1 Lubricants, Oils, Insulations, Duct/
Furnace Sheet
Bulk-2 UPVC Fitting, Pipes, Iron Angles, Plate
Sheets
Bulk-3 Cold Storage Room, Sprays, Cleaners,
NDT, O-Rings, Buffer Solution
Gas Portal All gases
To issue an item from store following methodology is in place:
Issue Note:
To procure any item from store, an issue note is required. White coloured issue note is
used for issuance of normal items, pink for issuance of items used in outage and
green coloured (Return Note) for return of any item. Every store item has unique code
that is entered on issue note along with its description.

Simple Issue Note for Normal Items

Issue Note for Outage Spares

A special Access Issue Note is used for issuance of items after store hours. It must be
signed by Shift manager and then along with Security Staff, one can take the required
item from store. The record of issue notes is posted every day to maintain a complete
database and count of inventory.
Rejection Note:
A rejection note is also issued by Store in case of any unsatisfactory delivery of goods
or items, incorrect quantity etc.
New Sock Introduction Form:
To introduce a new stock, a New Stock Introduction Form is filled.

Correction Document:
In case of any mistake during issuance of item such as wrong coding or wrong
posting, Correction Document can be used to rectify the mistake and put things in
order.
Stock Movement:
For movement of any item from one code to another, Stock Movement document is
used.
Write-Off Documents:
This document is used to discard any item.
ITEM PRESERVATION AND INTERNAL AUDIT:
A special care is given to preservation of items, for which FIFO (First In First Out) is
used i.e. goods arriving first will be issued first so as to keep an efficient check on
items of expiry. Store also compensates for items that require temperature control. For
this purpose a cooling room is present generally comprising of electronic items. To
fortify from rusting and corrosion, greasing is also applied to certain metallic items.
Internal is carried out section wise to investigate any variance that may exist in the
actual stock and database due to wrong posting or wrong coding etc.
LS, LD, IS, ID (Local Stock, Local Direct Charge, Imported Stock, and Imported
Direct Charge):
A record of GRN is kept in files with names LS for Local Stock Items, LD for Local
Direct Charge Items, IS for Imported Stock Items and ID for Imported Direct Charge
Items. These are generally Delivery Chillan on which a serial number and year is
written. This serial number is then posted on PO for GRN confirmation on system.
Delivery Chillan is a document that is provided by the supplier on the
delivery of goods. It mentions a list of goods that are delivered.
INSPECTION NOTE:
For items that need to be checked for or verified, an inspection note is generally
issued to TO. He/she should inspect the item within 7 days. If not, GRN is punched
into the system.

INCO TERMS:
These are internationally accepted and recognized terms used in commercial
operations.