SOP Purchase Department

1. Objective: To standardize and streamline the procurement process, ensuring the timely
delivery of materials and services, quality control, and cost-effective purchases on the
construction site.

2. Scope: This SOP applies to all purchases, including materials, equipment, tools, and
services required for construction operations. It covers all steps from identifying
procurement needs to the final payment to vendors.

3. Roles and Responsibilities

Purchase Manager: Oversees the entire procurement process, ensuring adherence to

budget, quality standards, and timelines.

Procurement Executive: Executes procurement activities, communicates with vendors, and

manages the order and delivery processes.

Site Manager: Identifies and submits material requisitions and communicates the site-
specific requirements.

Quality Inspector: Inspects materials to ensure they meet the required standards and
specifications.

Storekeeper: Manages inventory and ensures proper storage of materials.

Accounts Department: Processes payments and maintains financial records.

4. Procedures

Step 1: Identification of Procurement Requirements

1. Material Requisition Form (MRF) Submission: Site Manager or Construction Supervisor

identifies material needs and submits the Material Requisition Form (MRF) with details such
as:

 Material description, specifications, and quality standards (e.g., IS codes).

 Quantity required.
 Delivery location and timeline.
 Any special instructions (e.g., urgency, packaging).

2. Tracking Document: Material Requisition Form (MRF) is logged in the MRF Register for
tracking (Date, Requisition Number, Material Description, Quantity).

Step 2: Budget and Approval Process

1. Cross-check Budget: Purchase Manager verifies that the material or service fits within the
approved project budget.

2. Request for Additional Budget (if needed): If the requisition exceeds the budget, the
Purchase Manager prepares a Budget Revision Request for approval from higher
management.

3. Tracking Document: All budget-related communications are logged in the Budget Approval
Register.

Step 3: Vendor Selection and Tendering

1. Vendor Identification:

 Existing Vendors: Check if existing approved vendors supply the required materials.
 New Vendors: Issue a Request for Quotation (RFQ) to potential vendors, detailing the
materials, specifications, quantities, delivery timelines, and terms of payment.

2. Evaluation of Quotes:

 Review received quotations based on price, quality, delivery timelines, and vendor
reliability.
 Ensure that vendors comply with the required material standards and delivery
schedules.

3. Vendor Selection: Choose the most suitable vendor after evaluating the bids. The
selection process should be documented.

4. Tracking Document:

Record all RFQs, quotations, and evaluation in the Vendor Selection Register.

Step 4: Purchase Order (PO) Creation

1. PO Preparation:

Create a detailed Purchase Order (PO) based on the selected vendor’s quotation, including:

 Material specifications, quantity, price, and payment terms

 Delivery location, schedule, and penalties for late delivery.
 Any special conditions related to packaging, transportation, etc.

2. PO Approval: The PO is sent to the Purchase Manager for final approval before dispatching
to the vendor.

3. Tracking Document:
  The PO Register is updated with the PO number, vendor name, and material details.
 Maintain a PO Log with the following columns: PO number, vendor, material details,
date of issue, delivery due date, and status (pending, delivered, cancelled).

Step 5: Purchase Order Dispatch and Confirmation

1. PO Dispatch: Send the approved PO to the vendor via email or post and request
confirmation.

2. Vendor Confirmation: Ensure that the vendor confirms the PO terms, delivery date, and
quantity.

3. Tracking Document:

 Update the PO Log with vendor confirmation status.

 Maintain Vendor Acknowledgment receipts and communication in the Vendor
Communication Register.

Step 6: Material Delivery and Inspection

1. Material Receipt:

 Upon delivery, the Storekeeper inspects the material and verifies:

 Quantity against the PO.
 Quality based on the specifications outlined.
 Condition of the material (damages, defects).

2. Inspection Report: A Material Inspection Report (MIR) is prepared by the Quality

Inspector, and discrepancies are documented. The Storekeeper signs the Material Receipt
Register to confirm receipt.

3. Discrepancy Handling: If there are discrepancies (missing or damaged items), the Material
Discrepancy Report (MDR) is raised and sent to the vendor for resolution.

4. Tracking Documents:

 Material Receipt Register (MRR) to record all incoming materials with delivery
details, condition, and quantity.
 Material Inspection Report (MIR) for quality inspection results.
 Material Discrepancy Report (MDR) for damaged or incorrect material.

Step 7: Inventory Management

1. Material Storage:
  Store materials in a safe and organized manner based on type and requirements.
 Assign a unique ID to each material batch for traceability.

2. Inventory Tracking: Update the Inventory Register with material details such as receipt
date, quantity, location, and current stock levels.

3. Stock Replenishment: Regularly track material usage against inventory levels and submit
new requisitions when stock reaches the minimum threshold.

4. Tracking Document: Inventory Register to track incoming, current, and outgoing stock
levels.

Step 8: Invoice Verification and Payment Processing

1. Invoice Verification:

Upon receipt of the invoice from the vendor, compare it against the PO and MRR to confirm
that:

 The materials were delivered as ordered.

 The pricing matches the PO.
 Any agreed discounts or adjustments are applied.

2. Approval for Payment: The Purchase Manager, along with the Accounts department,
verifies the payment terms and processes the payment request.

3. Payment Processing: Make the payment based on the agreed terms and document the
transaction.

4. Tracking Document:

Vendor Invoice Register: A record of all vendor invoices processed for payment.

Payment Approval Register: To track approved payments, payment dates, and amounts.

Step 9: Vendor Performance Review

1. Performance Evaluation:

 After material delivery, evaluate the vendor on:

 Delivery timelines.
 Material quality.
 Responsiveness to inquiries and issues.
2. Feedback and Vendor Rating: Provide feedback to the vendor and assign a performance
rating.

3. Tracking Document: Vendor Performance Review Register to document the evaluation

process, vendor feedback, and ratings.

5. Records and Documentation

The following records must be maintained for auditing and tracking purposes:

 Material Requisition Form (MRF).

 Vendor Quotation Register.
 PO Register.
 Purchase Order Log.
 Material Receipt Register (MRR).
 Material Inspection Report (MIR).
 Material Discrepancy Report (MDR)
 Inventory Register.
 Vendor Invoice Register.
 Vendor Performance Review Register.

6. Monitoring and Auditing

Quarterly Audits: Perform regular audits to ensure compliance with procurement processes,
budget adherence, and inventory management.

Periodic Review: Regularly review vendor performance and update the vendor database to
reflect reliable suppliers.

7. Key Performance Indicators (KPIs)

 Material Delivery Timeliness: Percentage of deliveries made on time.

 Cost Savings: Total cost savings achieved through competitive vendor selection.
 Quality Compliance Rate: Percentage of materials received that meet required
standards.
 Vendor Reliability Score: Vendor performance ratings based on delivery and quality.

8. Revision and Updates: The SOP should be reviewed annually or whenever significant
changes in the procurement process, project scope, or technology occur.