NICMAR

NICMAR INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH

SCHOOL OF DISTANCE EDUCATION

ASSIGNMENT

NICMAR/CODE OFFICE

1. Course No.

PGPM 33

2. Course title

Materials & Logistics Management

3. Assignment No.

11

4. Date of Dispatch

07-08-2012

5. Last Date of receipt :

15-08-2012

of Assignment at CODE office

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

th

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 litres

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
cant be used with same ease as in crawlers.
Secondly it doesnt 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)
Tanker

Water

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

th

litres per 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

Bitumen procurement

= Rs 36,42,000/-

Total

= Rs 1,30,19,005/-

Contractors Profit = (13019005*15%)

= 1952851/-

Therefore

6,14,925/-

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.