ASSIGNMENT

NICMAR / SODE OFFICE

1. Course - GPBM 24

2. Course Title - Logistics and Material Management

3. Assignment No. -1

4. Date of Dispatch -

5. Last Date of Receipt -

Of Assignment at SODE office

Name: Mr. Prabhakar Prakash Shingrut

Course: GPCBM
Reg. No. 217-04-22-50914-2183
 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 : Developing & Construction of an International
Airport 30km away from a city.
Project phases : Phase I - Landing strip of 100m width

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).
th
d) Procurement of 1,50,000Litres of Bitumen. Duration of work 30days from 60 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 litre

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 can’t be used with same ease as in

crawlers.

Secondly it doesn’t 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 = 2 Trips x (3+3) km = 12 kms

Per hour fuel consumption = 12/2.75km per litre = 4.36 liter per hour

Total HSD cost = 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 = 2 minutes Filling by

excavator = 6 minutes Turning and moving

out = 2 minutes Total time consumed in filling

one dumper = 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 = 1,50,000 litres

Duration of work = 30 days from 60th day of starting of work

Source = Maharastra Lead time

= 45 Days Storage facility = 50,000

litres

Total consumption in 30days will be 150000 litres. Hence considering 5000 litres per

th
day after 59 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 = 30,00,000/- Ordering

cost = 9000/- Inventory cost assuming

minimum 8500 litres = 8500/- Total cost

= 3017500/-
Consider another case with 10 orders of 15000 litres

Consider as above cost of material = 30,00,000/- Ordering

cost = 15000/- Inventory cost

assuming minimum 7500 litres = 7500/- Total cost

= 30,22,500/- Consider another case with 5 orders of 30000 litres

Consider as above cost of material = 30,00,000/- Ordering

cost = 5000/- Inventory cost assuming

minimum 15000 litres = 15000/- Total cost

= 30,20,000/-
st
1 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:

st
1 order 0-45 days = 17321 litres

nd
2 order 1-46 days = 17321 litres

rd
3 order 2-47 days =11432 litres

th
Total stock on 59 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 = 9000/- Inventory cost

assuming minimum 8500 litres = 8500/-

Total cost = 3642000/- Hence

Total cost of Project will be as follows:

Earthwork cost = 109526x 80 days = Rs 87,62,080/-

Sand filling cost = 1,22,985 x 5 days = Rs 6,14,925/-

Bitumen procurement = Rs 36,42,000/-

Total = Rs 1,30,19,005/-

Contractor’s Profit = (13019005*15%) = 1952851/-

Therefore 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.