Applicable for Outsourced processes
To ensure effective control of 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
The Contract Manager is responsible for the review, establish and maintain this procedure and CE is responsible for the approval of this procedure. The project Manager and other concerned Managers are responsible for compliance with this procedure.
6.0 DETAILS OF PROCEDURE
6.1 Contractor Registration
The need for contractors will be identified by the contract execution. The need could arise out of the business plan or request by the 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
- The minimum value of contracts handled by the contractor in past in individual capacity.
- An acquaintance of contractor with city / local norms.
The Contract Manager will invite details from contractors. The 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 the contracting firm
- Credentials and work have 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 within the past), staff strength (labor – 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 the 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 the 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 shortlisted contractors will be forwarded weekly to the Contract Manager for approval. The 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 the contractor
The Contract Manager in coordination with the 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 the 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, the contracts Manager will identify the best suitable method. Methods for the 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, the scope of work, bid qualification criteria, bill of quantity (BOQ), tender drawings/plans, technical specifications, standard terms of the 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 the Contract Manager for review. The required changes will be made by contracts department personnel in case of any change recommended by the Contract Manager and will be signed by the Contract Manager. Registered contractors who are considered under tendering process category will be identified by the contract executive from the contractor database. The contractors to be identified for bid are decided by the contracts department in consultation with the Project Manager/MD.
The criteria for identification are available & the current workload of the contractor apart from the experience in the required job. A Notice Inviting Bids for the tender will be sent to the applicable media by the contract execution. Notice inviting bids for the tender should be sent to the 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. The technical bid will be first evaluated by the 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 bids, a preliminary cost comparison is formulated. Rates quoted by contractors for every item will be compared with the 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 the contracts department. Details of every negotiation round shall be documented by the contracted Executive. Based on the negotiations and comparative sheets, HOD contracts will finalize the contractor. The contractor finalization note shall be generated and will be signed by all the concerned parties.
6.2.2 Selection through the Competition process
The contract Executive will prepare an inquiry for the work to be contracted and get approval from the head of contracts. Once the inquiry is approved and signed by the head, it will be forwarded to contractors selected from the contractor database. The contract Executive will receive the quotes on the date mentioned in the inquiry. Once the quotations are received, the contracted Executive will compare the costs of different quotations. Through comparative analysis, negotiation will be carried out with the bottom three contractors.
Based on the negotiation, the two lowest contractors will be determined and the cost comparison sheet will be updated by the contract execution. Cost sheets of both the lowest contractors will be compared with the company’s budgeted cost. The Contract Manager will carry out rounds of negotiation with both the contractors. Based on negotiations, the contractor providing the lowest rate would be considered, and finalized note will be prepared. The finalized note will be sent to the director for approval.
- If the Managing director does not approve the contractor, the contract manager will approach other contractors.
- If the director approves the contractor, the contractor will be finalized and the detail contract agreement will be prepared.
The contract agreement will be signed by the 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 the site. The items under minor works shall be verified for their 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 the suitable registered contractor is available or not.
- If a suitable contractor is available, the contractor shall be identified from the contractor database and will be finalized.
- If a suitable contractor is not available, the 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 registration. After the approval and registration, contractors shall be asked to quote for the concerned work. A 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 the organization decides to do a corporate tie-up with a particular brand/make for the 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. A cost comparison sheet shall be prepared. The comparative sheet will be compared with the budgeted cost and will be forwarded to the Contract Manager for discussion. If it is not found feasible, other modalities will be worked out. If it is found feasible, the item will be shortlisted for inquiry. As per the inquiry done, the contract executive will receive the details of work for bulk orders. Based on the details, the contract executive shall identify the options for bulk orders. Vendors will be asked to quote for the selected orders. After receiving the quotes, a 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, a vendor note shall be prepared. Vendor Note includes the details of the 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, the 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 contract’s personnel and will be approved and signed by the Contract Manager.
6.3.1 Amendment of work order
The 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 the 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 the Contract Manager, the new work order incorporating the required changes will be prepared by the contracts department. The amended work order shall be signed by the concerned persons.
6.4 Evaluation of Contractor
The 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 the site, work quality, billing efficiency (errors and frivolous claims), interaction experience, etc. Contractor evaluation will be carried out every six months. The contracts Executive shall distribute the evaluation forms to the site, contract 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|
After evaluating the contractors based on feedback forms received from the quality assurance department and site, if the contractor gets grade C, the 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 to date( QMS F 085)
7.4 Work awarded without work order( QMS F 086)
7.5 New contractors identified( QMS F 087)