Applicable for Outsourced processes
To ensure effective control on Outsourcing.
3. REFERENCE DOCUMENTS
3.1 XXX Quality Manual,
3.2 Procedure for Correction and Corrective Action.
3.3 Procedure for Manufacturing.
3.4 Procedure for QA
3.5 Procedure for Purchasing.
4.TERMS & DEFINITIONS
4.1 Outsourced Processes:
An “outsourced process” is a process that the organization has identified as being needed for its operations and quality management system (QMS), but one which it has chosen to be carried out by an external provider outside the managerial control of your facility and may not be subject to the same QMS as your organization.
5.0 RESPONSIBILITY AND AUTHORITY
Contract Manager is responsible for review, establish and maintain this procedure and CE is responsible for the approval of this procedure. Project Manager and other concerned Manager are responsible for compliance of this procedure.
6.0 DETAILS OF PROCEDURE
6.1 Contractor Registration
The need for contractors will be identified by the contract executive. The need could arise out of the business plan or request by Project Manager. The pre qualification parameters will be defined at the organizational level by the Contract Manager. The parameters would include:-
- The minimum experience in similar work
- Minimum value of contracts handled by contractor in past in individual capacity.
- Acquaintance of contractor with city / local norms.
The Contract Manager will invite details from contractors. Invitation could be through a newspaper advertisement, word of mouth or through associates. The new contractor will be required to submit the following documents:
- Company Profile (legal entity status) of contracting firm
- Credentials and work done
- List of equipment
- Financial Statements (Balance sheet, Profit and Loss statement)
- Current project in-hand
- Staff Details and Plant and Machinery details
The eligibility of a contractor will be determined on the basis of information submitted vis-à-vis the pre-qualification parameters. If the parameters are not met, then the contractor will not be considered for registration and communication of the same will be sent to the contractor. In case the pre-qualification parameters are met a site visit will be organized at one or more projects of the contractor to get an understanding of the execution specific parameters like quality, finishing, safety etc. The observations of the site visit will be captured in a site visit report. The inspection team puts its observations in a site visit. Report and comprises of one representative each from execution, contract and quality department. The contract executive will then collect the information and prepare a contractor assessment report. The final assessment includes parameters like – market reputation (clientele/developers worked with in past), staff strength (labour – skilled/semi-skilled), equipment, etc. The type of work that can be awarded to the contractor will be decided by the contract Manager and the entry level rating of the contractor will also be decided. In case the contractor rating is not satisfactory the contractor will not be considered for registration and same will be communicated to the contractor and the details will be captured in the contractor database. In case the contractor rating is satisfactory the contractor details are captured in a registration form. The registration form consists of the following details:-
• Details of company – Name and type of entity, contact details
• Registration details
• Details of resources – plant and machinery, manpower, material
• Financial details – turnover, financial statements, latest income tax clearance etc.
A report of short listed contractors will be forwarded weekly to Contract Manager for approval. Contract Manager will review the details and rating of the new contractors. If the contractor and rating are not acceptable the contractor will not be considered for registration in the database and the details will be updated in the contractor database. In case the contractor and the rating are acceptable, the Contract Manager will sign the contractor registration form and the details will be updated in the contractor database.
6.2 Contractor Selection
Determination of method of appointment of contractor
The Contract Manager in coordination with Project Manager will decide the type of contract to be awarded. Types of contract can be classified as below:
• Lump-Sum Contract
• Item Rate Contract
• Turnkey Contract
• Cost Plus Contract
Based on the decision taken by Contract Manager , the contracts department personnel will determine the category of contractor required as well as the period of the contract. The contract can be awarded through three methods. Based on the requirement, contracts Manager will identify the best suitable method. Methods for appointment of contractors are:
1 Appointment through Tendering Process
2 Appointment through Competition Process
3 Appointment through Preferred Vendor Selection
6.2.1 Selection through tendering process
The contract Executive will prepare a tender document. The tender document will consist of : company covering letter, scope of work, bid qualification criteria, bill of quantity (BOQ), tender drawings/plans, technical specifications, standard terms of project, special terms of business, completion period, commercial terms (bank guarantee/performance guarantee/insurance etc.) cut-off date and time for the closing of the bid.
The tender document will be forwarded to Contract Manager for review. The required changes will be made by contracts department personnel in case of any changed recommended by Contract Manager and will be signed by Contract Manager. Registered contractors who are considered under tendering process category will be identified by contract executive from the contractor database. The contractors to be identified for bid are decided by contracts department in consultation with Project Manager/MD.
The criteria for identification are available & current work load of contractor apart from the experience in required job. A Notice Inviting Bids for the tender will be sent to the applicable media by the contract executive. Notice inviting bid for the tender should be sent minimum number of contractors. (Not less than 3). A signed copy of tender documents will be distributed to the interested contractors on the decided date.
Duly filled and sealed tender bids, both technical and financial will be received from contractors by the contract executive on the decided date. . Any bid, received after the cut off date/time, will not be considered valid for negotiation. Technical bid will be first evaluated by contracts department. The contractors who do not pass the technical bid will be rejected and the contractors who pass the technical bid will be considered further for price bid evaluation.
After the contractors are finalized for price/financial bid, a preliminary cost comparison is formulated. Rates quoted by contractors for every item will be compared with company’s expected rates. Based on the comparison, the list of items with rate variations more than tolerable limits of company rates will be prepared and contractors will be called for discussion for the same. If any anomaly is found in the discussion, contractors will be asked to submit the fresh bid for the identified items and based on fresh bids, cost comparison sheets will be prepared. If any anomaly is not found, the preliminary cost comparison sheet will be finalized.
Comparative sheets will be analyzed in detail and the same will be compared with budgeted cost. Rounds of negotiations will be conducted by contracts department. Details of every negotiation round shall be documented by the contract Executive. Based on the negotiations and comparative sheets, HOD contracts will finalize the contractor. Contractor finalization note shall be generated and will be signed by all the concerned parties.
6.2.2 Selection through Competition process
Contract Executive will prepare an inquiry for the work to be contracted and get approved from head of contracts. Once the inquiry is approved and signed by head, it will be forwarded to contractors selected from contractor database. Contract Executive will receive the quotes on date mentioned in the inquiry. Once the quotations are received, contract Executive will compare the costs of different quotations. Through comparative analysis, negotiation will be carried out with bottom three contractors.
Based on the negotiation, two lowest contractors will be determined and cost comparison sheet will be updated by the contract executive. Cost sheets of both the lowest contractors will be compared with company’s budgeted cost. The Contract Manager will carry out rounds of negotiation with both the contractors. Based on negotiations, contractor providing lowest rate would be considered and finalized note will be prepared. Finalized note will be sent to director for approval.
- If Managing director does not approve the contractor, contract manager will approach other contractors.
- If director approves the contractor, contractor will be finalized and detail contract agreement will be prepared.
Contract agreement will be signed by contractor and the Managing director. Selection for minor works based on standard rate list. BOQ for the minor works will be received by PM at site. The items under minor works shall be verified for its inclusion in the rate list. If the items are not included in the rate list, rate analysis will be done by PM with contract executive and the same will be forwarded to Contract Manager for approval. If the items are included in the rate list, the contract Manager shall identify whether suitable registered contractor is available or not.
- If the suitable contractor is available, the contractor shall be identified from the contractor database and will be finalized.
- If the suitable contractor is not available, contracts department will identify new contractors for the same. New contractors must get registered with the company. Follow the “contractor registration” process for new contractor’s registration. After the approval and registration, contractors shall be asked to quote for the concerned work. Cost comparison sheet will be prepared and the contractor will be finalized by the PM and contracts department.
6.2.3 Preferred Vendor
This type of contracting is preferred when organization decides to do a corporate tie-up with a particular brand/make for large volume of work valid for a period of time e. g. Cranes, Lifts, water pumps etc. Summary of the volume of contracts to be issued and volume of work and period of work shall be prepared by the contract executive.
Rate analysis of the items under this method will be carried out. Cost comparison sheet shall be prepared. Comparative sheet will be compared with the budgeted cost and will be forwarded to the Contract Manager for the discussion. If it is not found feasible, other modalities will be worked out. If it is found feasible, the item will be short listed for enquiry. As per the enquiry done, contract executive will receive the details of work for bulk orders. Based on the details, contracts executive shall identify the options for bulk orders. Vendors will be asked to quote for the selected orders. After receiving the quotes, comparison statement on various offers will be prepared. Contract Manager contracts will negotiate with the vendors and finalize the suitable vendor. After the vendor finalization, vendor note shall be prepared. Vendor Note includes the details of vendor & the agreement of bulk supplies. E.g. Percent of discount on the MRP prevailing at the time of requirement or flat rate for a year or two etc.
6.3 Preparation of work order
Based on the finalized details of the contractor, contract executive will prepare a draft work order and the same will be forwarded to the Contract Manager for approvals. After making necessary changes in the draft work order (if any), the final work order will be prepared by the contracts personnel and will be approved and signed by the Contract Manager.
6.3.1 Amendment of work order
Project Manager (PM) will suggest the amendment details to the contract manager. The need for the amendment is noticed by PM in case of any one of the situations:
- Scope of work getting modified due to site conditions (Extra work)
- Quantity of work getting modified beyond the limit stated in the contract (Extra items)
- Rate of one or more items in the Work Order getting changed due to site conditions
Impact of amendment on project cost and progress of the project will be noted by PM and the same along with the amendment details will be forwarded to the Contract Manager. After getting the approval from Contract Manager, new work order incorporating the required changes will be prepared by the contracts department. Amended work order shall be signed by the concerned persons.
6.4 Evaluation of Contractor
Contract Manager will identify the evaluation parameters for rating contractors. The evaluation parameters would include broad parameters like- Schedule adherence, material wastage, rework, safety measures at site, work quality, billing efficiency (errors and frivolous claims), interaction experience, etc. Contractor evaluation will be carried out every six months. Contracts Executive shall distribute the evaluation forms to the site, contracts personnel and quality assurance department. Contractor evaluation is to be carried out by awarding points for each parameter.
Contractors will be stratified as Grade A; Grade B, Grade C vendors respectively
Point Scoring Range
|Grade A||70- 100||Retain||Give bulk of business|
|Grade B||40 – 69||Retain||Ask for further improvement|
|Grade C||00-39||Discontinue||De list|
After evaluating the contractors based on feedback forms received from quality assurance department and site, if the contractor gets grade C, contractor will be de-listed and details of the same will be communicated to the concerned departments. Briefing on improvements needed for the work will be given to the contractors under Grade B. Key concerns of contractors will be understood and documented by the persons communicating with the contractors regarding improvement. A report on contractor evaluation will be prepared and forwarded to the HOD contracts.
7.0 RETAINED DOCUMENTED INFORMATION
7.1 Contractor Evaluation ( QMS F 083)
7.2 Contractor appointment processing time( QMS F 084)
7.3 Open work orders till date( QMS F 085)
7.4 Work awarded without work order( QMS F 086)
7.5 New contractors identified( QMS F 087)