BN-G-UE-202 Guide for Bulk Material Management Execution Plan and Procedures

Details: Last Updated: 17 September 2013

Company Automated Material Program
Definition of Material to be Handled
Quantity Bumping Philosophy
Placement of Blanket Purchase Orders
Material Requisitioning Against Blanket Purchase Orders
Bar Code Requirements
Tracking Over-Buy Quantities
Freight Traffic Plan
Packing and Freight Consolidation Plan and Procedure
Field Receiving and Reporting.
Warehousing
Material Picking Procedure
Backcharge Procedure
Overages, Shortages and Damage Procedures
Material for Field Change Orders
Surplus Material Disposition
Spare Parts Requirements for Bulk Materials
Insurance Plan and Procedures for Bulk Materials
Appendices

1. Company Automated Material Program

The Company Automated Material Program (RAMP) will be utilized on the .........
Project to track and control the inventory of bulk materials.

RAMP is used in conjunction with the Procurement Control System (PCS). The PCS system was developed specifically for material and document tracking within the Company environment. The system performs two major tracking functions related to the materials effort. First, it is used to schedule and monitor the flow of all procurement documentation from initial bid list development through RFQ and purchase order issuance. The RFQ issue, the receipt of quotations, bid comparisons, purchase order issue and purchase order acknowledgments are controlled by this system.

The second major function of the PCS system is material tracking and expediting from the time purchase orders are placed to the point at which materials are received at the jobsite. Because the system simultaneously displays the schedule date, current promise date and required date, project management has instant visibility into materials and equipment status on the job. This visibility can be crucial in helping to identify potential problems and to prescribe appropriate corrective action before the situation becomes critical. The PCS system provides for material tracking during the procurement phase of the project and is integrated into RAMP. RAMP allows for material control commencing at the time Material Take-off is performed. The resulting Bills of Material are downloaded into the PCS system during procurement and then transferred back into RAMP as final revisions once the purchase orders have been placed. When material receipt begins at the jobsite or marshalling yards, RAMP is the primary tool for material control. Shipments can be verified, against the records of RAMP and receiving data electronically relayed to home office personnel. RAMP will control the MTO quantities against purchased quantities and the fabrication requirements. This helps to keep home office personnel abreast of jobsite developments and can be vital to prompt resolution of damage or freight claims. Additionally, RAMP provides valuable traceability of materials within the jobsite ensuring that the proper materials can be directed to appropriate personnel with reduced risk of loss.

1.1 Description of the RAMP

RAMP provides the project with the ability to manage and control all aspects of the material cycle on the project. The system functions begin with the start of engineering specifications and continue through the identification of requirements, requisitioning and purchasing, receiving, warehousing, planning and issuing. The system maintains the current status of all material in the material control cycle.

The Company Automated Material Program (RAMP) provides a project with the ability to manage and control all aspects of the material cycle on a project. The system functions begin with the start of engineering specifications and continue through the identification of requirements, requisitioning and purchasing, receiving, warehousing, planning and issuing. The system maintains the current status of all material in the material control cycle. It also has the possibilities for generating and control labor cost for unit-rate type subcontracts.

RAMP is an efficient tool to help a project identify its material requirements, plan and schedule its material needs, and control and track the material purchased and used on a project. It provides an excellent method of controlled communication between engineering, material control, field warehousing, enabling all to work together in a co-ordinated and controlled manner. It provides an excellent tool for control of labor cost on unit-rate subcontracts. The system can be used for both bulk material and engineered equipment. RAMP provides the following features:

capable to handle any National/International standards and coding, such as:
- ASME, ANSI, BS, DIN, AFNOR, NEN, ISO, etc., and any combination of this.
services all commodities
module material management capabilities
location capabilities, e.g. area, unit, module, work breakdown structure, etc.
assembly features, e.g.: vents/drains/joints/etc.
metric, English size options, also mixtures of imperial and metric sizing and dimensioning
weights in kg, tons, Lbs, etc.
maintain 12-digit item codes, accepts client no’s in any format
handles decimals
multi-shop/field destination features
totally interactive
interfaces with other disciplines' systems
supplies a variety of material control, procurement, warehousing, and cost reports
different currencies in one project
simulation of virtual and actual material allocations.
maintain (local) authority requirements logs (certificates, reports, procedures, etc.)

The following is a description of the major functional areas of the system.

1.1.1 Engineering Specification

The specification processing feature of the system provides a method of identifying classes of material. Associated with these classes are the index numbers (item name) of the material and an allowable size range which both facilitates and controls material requirement processing from drawings. Additional information is also kept in the computer with the specification information which helps in the design, material control, construction, and operation phases of the project.

1.1.2 Material Catalogue

The catalogue is used to identify and control all material or equipment which will be used on the project. An item must be correctly identified on the catalogue and approved before it can be used on a specification, bill of material, requisition, purchase order, or be received or issued from the warehouse. Items are identified in the catalogue by an item code, an abbreviated item description, and a detailed description to be used for requisition and purchasing. The catalogue ensures that all phases of the material control function identify material consistently. Any change made to this catalogue is automatically reflected in all other processing areas affected.

1.1.3 Material Requirements

The material requirements function of the system is used to identify all material needed on the project. The material requirements can be input into the system as they are identified and taken off the engineering documents. All the material from the document is identified onto a Bill of Material (BM) for the document and becomes a requirement in the system. The BM is then used to identify material for requisition and purchasing and to control the material issue from the warehouse. The BM provides traceability for why material was purchased and where it was used.

1.1.4 Requisition and Purchasing

As material requirements are identified, they can be summarized into Material Requisitions. Requisitions are modified as required and can be used to request price and delivery from vendors. Once a vendor is selected, the requisition creates a Purchase Order. The Purchase Order is then used to track the material through the purchasing process and to identify the material as it is received at the jobsite. The Purchase Order identifies the material quantity and its price from a selected vendor. The status of purchase orders or requisitions can be accessed at any time either by their identification number or by the material item code.

1.1.5 Receiving

When material is received at the jobsite, it is received into RAMP through the receiving function. The material is received against the applicable purchase order, and simultaneously the warehouse on-hand quantities are increased and purchase order status is updated. A Material Receiving Notice (MRN) is automatically created which is distributed as required, and over-shipments are identified immediately.

1.1.6 Planning and Reservation

The Planning and Reservation function provides a way to interface project material control with the project schedule. The sequence of how material is required on the job from the project schedule can be entered for simulation into the system by defining work packages and assigning start/finish dates to them. The system will then determine if the material required is available in the warehouse and reservations could be made to match the schedule. This Planning simulation and reservation process will ensure that the material is used in the sequence specified by the project schedule.

1.1.7 Warehousing

The warehousing function of the system keeps track of all material that is in the warehouse by quantity and location. It also provides the ability to take periodic on-hand inventory counts to verify the system on-hand quantity with the actual on-hand quantity. If discrepancies are found, inventory adjustments can be made.

1.1.8 Issuing of Material

Material can be issued from the warehouse for field use by several methods. The first and most common is by BM. When issuing material against a BM, either an entire BM can be issued or individual items can be selected to be issued. As material is required to be issued, a warehouse Material Picking Ticket is automatically printed identifying what the material is to be used for, the quantity required and the warehouse locations to get the material from. As material is issued against a BM, a current status of remaining quantities is always maintained by the system.

1.1.9 Sub-Contracts

RAMP has the capability to calculate the unit of pre-fabrication and or erection operations per bill of material to arrive at unit of operations type quantities for labor type subcontracts.

1.2 Material Control Flowcharts

Three Flowcharts and Material Control Narratives display and describe the steps and interfaces from identification of the material requirement through fabrication and erection at the job site. The three flowcharts, one each for bulk civil/structural material, for bulk piping material and for bulk electrical and control system material are attached to this Bulk Material Control Execution Plan and Procedures as Appendices A, I and M.

2. Definition of Material to be Handled

This section lists the material to be handled by discipline, by origin or requirement quantity and by country of origin of the material.

2.1 Material Classified as Bulk Materials

2.1.1 Civil

reinforced concrete pipe and assembly materials
underground pressure pipe and assembly materials
underground non-pressure pipe and assembly materials
fire hydrants and monitors located at grade level
emergency showers and eye wash stations located at grade level
insulation and assembly materials for cathodic protection
pipe sleeve materials

2.1.2 Structural

To be determined per project requirements.

2.1.3 Piping

piping, valves, fittings, assembly materials
spool fabrications
elevated fire hydrants and monitors
strainers, steam traps
elevated emergency shower and eye wash stations
steam jacketing materials

2.1.4 Electrical

underground cables
above-ground cables

Remaining to be determined per project requirements.

2.1.5 Control Systems

underground Cables

Remaining to be determined per project requirements.

2.2 Materials Excluded from Bulk Material Classification

2.2.1 Civil

all materials not listed under 2.1.1

2.2.2 Structural

all materials not listed under 2.1.2

2.2.3 Architectural/Buildings

all materials

2.2.4 Mechanical Equipment and Vessels

all materials

2.2.5 Piping

expansion joints
snubbers
spring hangers
interlocking devices
special items
all pipe support materials

2.2.6 Electrical

all materials not listed under 2.1.4

2.2.7 Control Systems

all materials not listed under 2.1.5

2.2.8 Field Construction Site

all consumables
all temporary construction materials

3. Quantity Bumping Philosophy

Material Management will review material take-offs (MTO) data and apply a contingency percentage (bump) to determine the quantity of material to be requisitioned. This contingency percentage will vary based on the stage and quality of the MTOs.

Estimate take-offs are MTOs prepared using flow sheets, plot plans, routing transpositions and/or available sketches. Installation details will be developed and also used to define quantity requirements. For piping, take-off information will be inputted into RAMP to update the quantities used to establish the blanket purchase order (BPO) requirements.

This information will be 'bumped' and will be used as the basis to requisition material. Similar take-off procedures will be employed by Civil, Electrical and Control Systems, if applicable.

These MTOs will be continuously updated. The Piping bulk take-off will consist of a detailed MTO by line number and sketch sheets supplemented by MTOs from stress sketches, general arrangement drawings and CAD/RAMP interface information. For their bulk take-off, Civil will update their estimate quantities using grading and other site development drawings, foundation locations control plans as they are prepared and similar engineering information. Electrical does not make an estimate take-off as such.

Final quantity counts will be prepared from 'Approved for Construction (AFC)' drawings (downloaded from PDS Intergraph where applicable) and will reflect 'actual' requirements for bulk materials.

Although reference is continually made to the three stages for MTOs, no definitive break exists between the bulk and the final take-offs for a particular commodity. As the design progresses and the related material information is being developed and finalized, some of the design information will be in the 'Final' or AFC category, part will be of 'bulk' quality, while other information still will be in an 'estimating' or sketch format. Throughout the progression of the work to reach the final MTO stage, the take-offs will be continually updated to provide the Project with increasingly more accurate quantity information for use in establishing periodic material purchase releases against the BPOs.

The bumps philosophy for the stages of MTOs, by discipline, is presented below.

3.1 Civil

Based on the 10% Project estimate, the initial quantities of bulk materials are calculated using historical project data. The initial order of material to the site is determined with input from construction and procurement. Since reinforced concrete pipe has a short installation period, initial delivery must be of sufficient quantity to complete all work. The stock of other bulk materials at the jobsite must be maintained in quantities to prevent material shortages or delays.

3.2 Piping

The bump philosophy which will be used by Piping Material Management and is attached to this Bulk Material Control Execution Plan and Procedures as Appendix D. The bumping factors used shall be determined per project and applied in relation to the project design status of completeness. It is recommended not to apply any bumping on bulk MTO Quantities, to avoid, at the project completion, unrealistic over-buy quantities.

3.3 Electrical Systems

The bump philosophy which will be used by Electrical Material Control will be determined per Project requirements.

3.4 Control Systems

The bump philosophy which will be used by Control Systems Material Control will be determined per Project requirements.

4. Placement of Blanket Purchase Orders

Blanket purchase orders may be issued for the majority of the bulk materials. Quantities for determining the values for the BPOs will be based on the 10% estimate documents and by factoring from similar projects.

Requests for quotations for bulk materials and their resulting BPOs will be processed in accordance with the Procurement Control System (PCS) part of RAMP.

For specific details relating to these procurement activities please refer to the Procurement Control System (PCS).

5. Material Requisitioning Against Blanket Purchase Orders

5.1 Requisitioning

After BPOs are established, all bulk material requirements generated by the Engineering Office will be consolidated and requisitioned by procurement in accordance with the Material Control Flowchart and Narrative referred to in Article 1.2 above and attached to this Execution Plan and Procedure as Appendixes A, I and M.

5.2 Controls on Commitments and Expenditures

Controls on commitments and expenditures will be in accordance with the Procurement Procedures for this Project and this Material Control Flow Chart and Narrative.

5.3 Identifying and Tracking Project Quantities

Material Control identifies the new quantity requirements input into RAMP and process them for requisition in accordance with the Material Flow Charts and Narratives. Material Control will initiate contacts with Procurement initiating the requirements for any clarifications regarding material quantities or status of the material effort to enable them to properly apply the quantity bumping philosophy. Questions regarding out-of-specification or unique material requirements would also be discussed.

5.4 Expediting and Inspection

Expediting and Inspection will be conducted per guidelines in the Procurement portion of the Project Procurement Manual. Material Control personnel will control and report status on material quantity requirements for the Project.

6. Bar Code Requirements

(Development of this Section held)

7. Tracking Over-Buy Quantities

7.1 Over-Buy Tracking Criteria

Material Control will track and report over-buy quantities of bulk materials by three criteria:

buy quantity of over-buy;
by percentage of over-buy to total take-off requirement for this material;
and buy monetary value of over-buy.

7.2 Definitions of Over-Buy and Surplus Materials

So as not to confuse over-buy quantities with surplus quantities, the following definitions and distinctions are offered.

7.2.1 When the quantity of material requisitioned exceed the quantity determined by applying a bump factor to a particular MTO count, this excess is termed ‘over-buy’. An ‘over-buy’ can result under circumstances listed below.

7.2.1.1 Design changes modify the projected material requirement.

7.2.1.2 The bump philosophy was determined but incorrectly applied.

7.2.1.3 The MTO count to which the bump was applied was better than expected.

7.2.2 The material so requisitioned is classified as ‘over-buy’ until a more accurate MTO is available and the actual rate of field usage versus projected requirement is established.

7.2.2.1 Actual field usage considers not only the quantity to build the facility in accordance with the drawings and isometrics but also material consumed during rework and rerouting to adapt to field conditions and material lost to normal shrinkage.

7.2.3 Once the quantities requisitioned are determined to be in excess of requirements based on the above criteria, the excess quantity is then termed ‘surplus’.

7.3 Shipping Status Impact on Over-Buy Quantities

Based on the above criteria, it should be noted that the shipping status of the material is not a factor in quantifying over-buy or surplus material. However, the action taken by Material Control in the Operating Centre to reduce the over-buy or surplus quantity may be dictated in part by the shipping status.

8. Freight Traffic Plan

8.1 To be written by Procurement.

9. Packing and Freight Consolidation Plan and Procedure

To be written by Procurement.

10. Field Receiving and Reporting

During the construction phase, the Field Materials Manager will co-ordinate the receiving and unloading of materials at a designated receiving area. He will oversee and co-ordinate the receiving, marking and identification of incoming shipments.