Local Procurement Policy

LOCAL PROCUREMENT POLICY ISSUED BY: RD on 29 August 2005, revised by GM on 4 February 2007 DISTRIBUTION: Procurement Engineer, Procurement Coordinator, Materials Controller, Store Keepers, Site Engineers, Manager Projects, Manager Construction, Manger Finance

Following procedures were evaluated and finalized in the local procurement meeting held on August 29, 2005.

1. All demands for local procurement must be processed through the local procurement department. Estimates and budgets shall be created before the "Demand Note" (DN) is initiated. Project bids/ estimates shall be used to budget the project requirements and filled in appropriate sections of the "Demand Note". Urgent demands maybe processed bypassing the under- mentioned procedures after approval from the management.

2. All "Demand Notes" (DN) shall provide as much material information as possible, i.e. specifications, brand names, required quantities, budgeted quantities, product codes etc. of required materials. The DN received at the Procurement Department shall contain the white and blue copies.

3. All demand notes shall be submitted to the local procurement department (Procurement Engineer/ Material Controller) with the date of submission clearly mentioned on the demand note. Procurement department shall verify that the submission date and the mentioned date are same. If both the dates are not same, the local procurement department shall write the submission date on the demand note and both parties should sign it.

4. All demand notes after submission shall be signed by the management for budgetary approval.

5. The Local Procurement Coordinator (LPC) prepares a "Daily purchasing schedule" based on the requirements. The "Daily purchasing Schedule" contains lists of items for required for sourcing, pricing and purchasing. The purchasers and the expeditors are sent to the local market to complete the tasks as mentioned in the "Daily purchasing schedule".

6. A DN status report (PRCT-1 form) shall be prepared every day by the local procurement department (preferably Material controller) and the report will be discussed in a meeting (Daily local procurement meeting) to be held every day from 2-3 PM between Material Controller and the purchasers/ expeditors. PRCT-1 form (Demand Note status report) after daily updates shall be emailed to the procurement engineer/ management everyday.

6. Every demand note shall be processed, related paperwork finalized and required materials purchased within 7 days of the submission date. These demand notes shall be termed as "Fulfilled Demand Notes".

7. There is no need to acquire quotations of materials which cost less than 10.00LD and which were purchased less than three months before the submission date.

8. If a demand note can not be fulfilled within 7 days of submission date, then it shall be sent to Procurement Engineer immediately with reasons of delay mentioned. Such demand notes are to be termed as "Unfulfilled Demand Notes".

9. All purchasers shall ensure that at least two quotations are acquired for all the demand notes. Purchasers shall not take more than three days to acquire quotations and also to verify them from the local market. All quotations submitted by the purchasers to the local procurement coordinator shall be complete as per specifications mentioned in the demand note. Any deviations in time required for acquiring quotations or material specifications shall be conveyed to the local procurement coordinator immediately. 10. After the pricing has been acquired by the purchaser, from the number of sources/ manufacturers in the local market, the concerned department may be contacted to approve the specifications. Samples may also be acquired to facilitate the selection process. After the final selection has been made, the expeditor shall contact the selected source and renegotiate the prices/ delivery dates and discounts etc.

11. The Local procurement Coordinator (LPC) prepares the comparative statement, based on the revised rates acquired by the expeditor. A separate comparative statement book is maintained for every individual project. The comparative statement is approved by the Procurement Engineer and the Management. After approvals, the blue and white copies of the comparative statement are given to the purchaser. The yellow copy stays in the comparative statement book for future reference. The purchaser receives the following before withdrawing money from the Finance department: a. Blue and white copy of the Demand Note b. Blue and white copy of the Comparative Statement c. Associated quotations and specifications etc.

12. The purchaser submits the blue and white copy of the DN and the blue and white copy of the Comparative statement to the Finance Dept. The Finance Dept verifies and keeps the blue copies for future internal costing. The Finance Dept returns the white copies of the DN and the Comparative statement to the purchaser alongwith the required funds. The purchaser proceeds with the purchase of the required material.

13. The purchased material is delivered to the Material Controller, who issues a MRN (Material receipt note) after including in the inventory and conducting necessary inspections. The Material Controller also enters the materials in the Material Management Database. The purchaser returns the following to the Finance Dept. a. Material receipt note b. Material inspection report c. Final Invoice (Fatoora Khullus) d. White copy of the DN e. White copy of the Comparative Statement

14. The Finance Dept verifies the documents submitted by the purchasers, enters in the Accounting Database and files them. The advance money given to the purchaser for the purchased material is cleared.

15. The Finance Dept prepares an expense summary sheet and gets it verified by the Procurement Engineer. The Summary sheets contain all the documents / receipts pertaining to a DN. After joint verification, the summary sheet and associated documents are filed by the Finance Dept.

14. A meeting will be called by the Procurement Engineer every two weeks on a Sunday to discuss the procurement status. Material Controller will submit a biweekly report in the meeting.

15. All matters requiring special consideration shall be conveyed to the management for necessary action.