summer internship project report on 'e-procurement' sui southern gas company

Internship Project Report

On

By

S. Salman

Iqra University

ST-4/B, Block 14, Sir Shah Suleman Road, Gulshan-e-Iqbal, Karachi. Contact: (+9221) 9902 1000 www.ssgc.com.pk

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SUMMER INTERNSHIP PROJECT REPORT

on

Advantages of E-Procurement and recommendations for the

implementation of E-Procurement

at

“Sui Southern Gas Company”

Submitted in Partial fulfillment of the requirements for Internship Certificate.

Submitted by:

S. Salman

Iqra University, Karachi.


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ACKNOWLEDGMENT

In this highly complex society no work can be accomplished by a single individual but needs

inspiration and sincere guidance of intellectuals.

With an overwhelming sense of obligations, I avail this opportunity to express my deep sense of

gratitude to Mr. Muhammad Ahmed Siddiqui GM and Mr Shakeel DCM (Complaint Cell) who

gave me the opportunity to work with Procurement Department.

I emphatically express my profound thanks and heartfelt gratitude to my guides Mr. Saeed

Ullah Jan, Mr. Ozair Qazi, Mr. Zikar Kapadia, Mr. Mustafa Iqbal, Mr. Hassan Ansari, Mr. Humair

Shaikh, Mr. Irtaza Raza,Mr. Naem Baqir, Miss.Tehzeeb Fatima, Mr. Daniyal, Mr. Qadeer Ansari,

Mr.Ahsan Ahmed, Mr. Abdul Qadir, Mr. Khalid Memon, Mr.Imran Mari and Mr. Bilal Altaf for

their valuable guidance, timely suggestions and constant encouragement during the entire

Internship period.

It is my privilege to express my profound thanks and gratitude to Mr. Gufran Ahmed for his kind

encouragement and benevolent guidance at every step during the course of my training.

Finally, I thank all those who helped me directly and indirectly during the course of my summer

Internship at SSGC.


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ABSTRACT

The main activity of SSGC is the Transmission and Distribution of Natural Gas to domestic and

commercial consumers. This involves various activities like survey, fitting, managing,

transportation etc. It requires the technical expertise of experts and various equipment’s of

material to achieve the mission. Most of these materials are of both domestic and foreign origin

and their procurement requires definite criteria to be followed.

This project was undertaken to study the procedures involved in the procurement of the goods

and services items centrally at SSGC embedding all the rules and regulations to be followed as

per PPRA being followed and implement e-procurement techniques how it will benefit SSGC in

the field of procurement,.


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EXECUTIVE SUMMARY

I, S. Salman a student of Iqra University, Karachi, got an opportunity to carry out my internship

project in Sui Southern Gas Company, Head Office Karachi. This prestigious organization is the

only Natural Gas supplier in Sindh and Baluchistan regions.

During my internship tenure at SSGC, I strived to investigate and study the Procurement system

thoroughly. The objective of my project is to highlight the benefits of the e-procurement

process and recommendations for its implementation to the parent organization in terms of

reduced material and operating costs, improved compliance, and increased total spend under

management. This is a new and exciting area of study with unprecedented benefits if the

opportunities are identified and pursued.

In order to achieve the aforementioned objective, I carried out a thorough preliminary research

of the entire procurement process. I had a detailed study of the existing documented records of

such procurement process. I also had several brainstorming sessions with my fellow executive

trainees and my senior company executives regarding the indispensable benefits of this system

This report shows how new dimension such as online purchasing, e-Tendering etc. can be

added to the procurement system which enables the company to get the quality product at the

most reasonable prices, earn more profit and take part in improving Pakistan’s economy.


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Table of Contents

Description Pg. No.

Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Abstract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Company Description

About SSGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Mission & Vision . . . . . . . . . . . . . . . . . . . . . . . . . . 7

E-Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9

Advantages & Disadvantages of E-Procurement . . . . . . . . . . . . . . . . . . . . . 10-11

Procurement Process at SSGC

Procurement Cycle at SSGC . . . . . . . . . . . . . . . . . . 11-14

Departmental Structure . . . . . . . . . . . . . . . . . . . . . . 14

E-Procurement Advantages for SSGC . . . . . . . . . . 15

Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16


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Company Description

About SSGC

Sui Southern Gas Company (SSGC) is Pakistan’s leading integrated gas Company. The company

is engaged in the business of transmission and distribution of natural gas besides construction

of high pressure transmission and low pressure distribution systems.

SSGCL transmission system extends from Sui in Baluchistan to Karachi in Sindh comprising over

3,220 KM of high pressure pipeline ranging from 12 – 24″ in diameter. The distribution activities

covering over 1200 towns in the Sindh and Baluchistan are organized through its regional

offices. An average of about 388,828 million cubic feet (MMCFD) gas was sold in 2009-2010 to

over 2.5 million industrial, commercial and domestic consumers in these regions through a

distribution network of over 37,000 Km. The company also owns and operates the only gas

meter manufacturing plant in the country, having an annual production capacity of over

750,000 meters.

The Company has an authorized capital of Rs. 10 billion of which Rs 6.7 billion is issued and fully

paid up. The Government owns the majority of the shares which is presently over 70%.

The Company is managed by an autonomous Board of Directors for policy guidelines and

overall control. Presently, SSGC’s Board comprises of 14 members. The Managing

Director/Chief Executive is nominee of GOP and has been delegated with such powers by the

Board of Directors as are necessary to effective conduct the business of the company.


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Vision

"To be a model utility providing quality service by maintaining a high level of ethical and

professional standards and through optimum use of resources."

Mission

"To meet the energy requirements of customers through reliable, environment-friendly and

sustainable supply of natural gas, while conducting business professionally, efficiently, ethically

and with responsibility to all our stakeholders, community, and the nation."


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What is e-Procurement?

E-procurement is the electronic implementation of the procurement cycle. It is the technology-

enabled acquisition of goods and services required by an organization at the best value

obtainable. The goal is the right product or service, at the right place, at the right time, at the

right price in the most efficient manner possible.

Objectives of e-Procurement

• To act as the catalyst for procurement reform

• To enhance transparency, monitoring and control in procurement process

• To bring in economies of scale through aggregation of demand

• To reduce cost of doing business for both government and suppliers

• To establish level playing field and “fair” competitive platform for the suppliers

Procurement Cycle

Procurement is a cycle that consists of up to nine steps, depending on the value and complexity

of the buy as well as organizational policies. At a minimum, it starts with need identification

(and requisition), proceeds to the generation and delivery of a purchase order (possibly after

one or more approvals), and results in the acceptance of an invoice and an eventual (e-)

payment. For high rupees and / or more complex purchases, the process will usually include

the generation of a goods-receipt or acceptance of labor hours through a time sheet or other

mechanism; multi-way matching and reconciliation of the purchase order, goods receipt, and

invoice.


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E-Procurement Trends in the Global Marketplace: Government Sector

Some governments in mature economies are adopting e-procurement more extensively as it

provides structure, audit trails and transparency of transactions. However, governments in

emerging markets are often unaware of the benefits that e-procurement can provide. World

Bank research has also found some reluctance by governments in adopting a system that is so

fully transparent.

Certain basic requirements need to be fulfilled before an e-procurement system can achieve

maximum potential in government. These are recommendations by the World Bank which

include expanding ICT services, guaranteeing a secure online environment, development of

standards and processes, and most importantly, for purchasers to be trained.

The Ideal Environment Necessary for E-Procurement to Flourish:

Developed internet in country system, in use by suppliers and buyers , business culture which

supports competition strongly driven by competitive end profit motivation and willing to adopt

new technologies, strong commercial culture, actively competitive markets for MRO goods

availability of market wide systems which support information exchange and link buyers and

sellers ,e.g. telephones, faxes internet, newspapers, television and advertising developed

transportation links for the delivery of goods roads couriers , extra national supply options

available to buyers media, financial infrastructure available to facilitate payments for e

procurement transactions e.g. banking services, online transfer via e-banking. These all exist in

our marketplace so we are ready to advance to the next level.


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Advantages of e-Procurement:

Cost Saving:

As the e-procurement is based on computers, all the purchasing to supplying process and

details are on computers which save cost of paper and human energy to deliver files for

different formalities from one sections to another.

Tracking:

Centralized tracking of transactions enables full reporting on requisitions, tender inquiry,

technical evaluation, price comparison, and evaluation report and purchase order. E-

procurement advantages extend to ensuring all the record available from the companies

Intranet to authorized department.

Time Saving:

It saves allot of time, if the information is posted online on SSGC website for the required

material to be purchased with complete description.

Disadvantages of e-Procurement:

The Buy-side Issues

Complexity of Procurement Procedures.

Organizational Resistance.

Lack of IT Skills among employees.

Lack of resources with Public-Private-Partnership Government.

The Sell-side Issues

Difficulties in changing over to new systems of tendering.

Low levels of technological Skills.

Difficulties in access to site.

Resistance to change.


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The ‘e-Procurement system’ side

Difficulties in establishing & maintaining the system.

Lack of Financial resources for maintenance & transaction handling.

Concerns of

Confidentiality of bids

Authenticity of bids

Procurement Process at Sui Southern Gas Company

Procurement Cycle at SSGC

CC(Complaint

Cell)

SPM (System

Plannig and Monitoring

T.E (Tender Enquiry)

T.R. (Tender Room)

User (Fro Tech.

Evaluation)

ORM (Order REcord

Monitoring)


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1. User:-

Process stats with the need of good or service. First the user will send Purchase Requisition

to System Planning and Monitoring (SPM) section of procurement department to purchase

the required goods or services.

2. System Planning and Monitoring (SPM):-

After the requisition has been received, SPM will generate requisition, usually SPM only

generates Service contracts requisition. Other task of SPM section is to do Scrutiny of

requisition to check the availability in stores, check for errors, mistakes, incomplete

information or other query if not mentioned by user for further processing else it will

return it to user for correction.

3. Complaint Cell (CC):-

Complaint Cell abbreviated as CC. its plays a very important role in procurement

department at SSGC which act as a monitor. After passing from every section, file goes

to CC for any error or mistake made by respective section for correction. But at intial

level after passing from SPM file reaches CC for evaluation and then goes to Tender

Enquiry.

4. Tender Enquiry (TE):-

Tender Enquiry's job is to make Tenders based on rules and regulations instructed by

PPRA. There are there types of tenders

1. Local Tender

2. Foreign Tender

3. Service Contracts

They are further classified on the basis of worth,

Normal Enquiry (Below 2million):-


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In Normal Enquiry, tenders are posted on SSGC and PPRA websites from where

Suppliers/bidders can take details and take part in submitting their quotations.

Press Tender (2million and above):-

Press tenders are posted on SSGC and PPRA websites also advertised in 2

newspapers (1 Urdu and 1 English) from where bidders may be notified for details.

T.E also Solve bidders Queries and Issues Normal Tenders.

Service Contracts:-

They only deals with the services required for SSGC new or old projects.

5. Tender Room (TR):-

When the Press Tenders have been published over websites, Bidders can purchase

tenders from Tender Room by submitting a pay order of worth rs 500/ along with

required documents. Usually they are asked to submit NTN Number with their Official

letter for purchasing of tender, if the service are of engineering purpose then they have

to submit Pakistan Engineering Certificate (copy) as well.

Major tasks of Tender Room are:

Selling of Tender documents (terms and conditions etc).

Opening of bids.

Entering record of Bids and quotations quoted by bidders.

6. Order Record Monitoring (ORM):-

After the bids opening ORM generates Evaluation Report, Commercial Evaluation and

price comparison list. Technical specifications documents submitted by bidders are

sent to user for evaluation. After completion, bidders are categorized as Complaint and

Non-Complaint on the basis of their quotation and specification of any technical items.

Then the Complaint bidder is issued Purchase Order (P.O.)

Other ORM tasks are Freight Forwarding, Negotiation of price and delivery schedule.

It also includes arranging of budget.


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GM

DCM (SPM)

Manager

CM(T.E)

Manager

CM(VM/ORM)

Manager

CM(Project)

Manager

DCM(Shipping)

Manager

DM(ERP)

Assistant Manager

Deputy Manager

Executives

DGM

7. Enterprise Resource Planning (ERP):

ERP works as an IT representative they design System and do analysis based on

requirement. It also generates Reports and logs.

Other ERP task are Training of users to handle the system and software on which they do

daily routine work.

Managing and looking after EDMS and all other problems and queries related to system.

Departmental Structure


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E-Procurement Advantages for SSGC:

Cost Saving:

SSGC can get benefits from the implementation of e-procurement as it can save thousands of

rupees on papers, file covers and Stationary which are purchased in a huge quantity for the

processing of Procurement cycle.

Tracking:

Centralized tracking of transactions enables full reporting on requisitions, tender inquiry,

technical evaluation, price comparison, evaluation report and purchase orders. E-procurement

advantages extend to ensuring all the record available from the companies Intranet to

authorized department.

Time Saving:

It will save time of buyer and seller both if the information is posted online on SSGC website for

the required material to be purchased with complete description so the supplier does not have

to visit the organization and purchase specifications of the tendered items and ask for queries,

rather they can download it through Company’s website. It will also save time of respective

section whom will not have to solve queries of individual suppliers directly.

Using technology:

E-procurement advantages can only be fully realized when the systems and processes to

manage it are in place. Software tools are needed to create the standard procurement

documentation are: electronic requests for information (e-RFI), requests for proposal (e-RFP)

and requests for quotation (e-RFQ) which SSGC have implemented and are used on daily basis.

These are proven methods to source goods and make the framework agreements that offer the

best prices.


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RECOMMENDATIONS

e-Tendering system should be introduced which may include the features like:

Uploading of Tender/ RFQ

Downloading of Tender documents by contractors/suppliers

Online submission of tenders by bidders

Opening of bids

Auto-bid evaluation

Technical bid evaluation is sometimes handled manually

Automating this requires a well-functioning contract

Technical evaluation through a computerized system will be very time saving option

which can save man power who analyzes and matches all the descriptions and

specifications. This will also help in reducing Errors and there will be lesser chances of

corruption after comparing its Technical with system submitted by user and bidder.

Create a system which will only accept the Bidder with lower price quoted or categorize

the selection criteria of bidder for Example: if the bidder is to be selected on the basis of

quality then the ORM department can click on the Quality button which will select the

bidder providing best quality in ascending order.

A Standardized Form (like one with given options) for Bidders to add the details of the

‘Bids Quotation’ and ‘Specifications’ of the goods or services can will be an effective

step to reduce many problems like error, time, corruption and man power.(for

reference online job portals forms are good example)

Bid Opening Price comparison report can be mailed to suppliers or uploaded on SSGC

websites to motivate new and old suppliers to offer lesser prices in comparison to

opened bids which will be beneficial for SSGC.

summer internship project report on 'e-procurement' sui southern gas company

Career

eprocurement process

eprocurement techniques

procurement department

field of procurement

procurement system

advantages of e

implementation of e

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