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Procurement Process in Larsen & Toubro Epc: by Deepak Bhatt 063015

This document provides an overview of Larsen & Toubro's (L&T) engineering, procurement, and construction (EPC) division. It discusses L&T EPC's business sectors and regional offices. It also summarizes L&T EPC's material management, resource planning, subcontracts management, and challenges faced on specific projects like a sugar cement plant and rolling mill project. Key procurement and project challenges discussed include quality issues, location difficulties, decision-making factors, and risks at different project stages.

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Deepak Bhatt
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309 views

Procurement Process in Larsen & Toubro Epc: by Deepak Bhatt 063015

This document provides an overview of Larsen & Toubro's (L&T) engineering, procurement, and construction (EPC) division. It discusses L&T EPC's business sectors and regional offices. It also summarizes L&T EPC's material management, resource planning, subcontracts management, and challenges faced on specific projects like a sugar cement plant and rolling mill project. Key procurement and project challenges discussed include quality issues, location difficulties, decision-making factors, and risks at different project stages.

Uploaded by

Deepak Bhatt
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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PROCUREMENT PROCESS IN LARSEN & TOUBRO EPC

By Deepak Bhatt 063015

L&T EPC
An Engineering & Construction major is the largest and most reputed

companies in Indias pvt sector. Business of ECC division is divided in six business sectors. ECC division are headquarters in Chennai & Kolkata with 7 regional offices and 250 project sites. Specialized functions in Highways & Roads Airport Bridges Hydroelectric Dams & Bridges Structural Engineering Quality Systems etc.

MATERIAL MANAGEMENT
Includes procurement from both indigenous as well as

oversees markets, storage, logistics, inventory management at regional stores, disposal etc. Materials department at HQ deals with all policy matters, imports, exports, capital procurement, project procurement, high value purchases, rate contracts, system development & implementation, etc

RESOURCES PLANNING
Takes care of allocation, distribution and movement of Staff and

Plant & Machinery to meet the requirements for deployment in various regions and overseas across the company. Resources department as a focal point helps the Operational Units to optimize the productivity by maintaining a balance between the availability and the requirement of resources (Staff and Plant & Machinery). It also facilitates the process of decision and deployment of equipment from external agencies as needed.

SUB CONTRACTS MANAGEMENT


Subcontracting is one of the major inputs in the execution of projects.
The main areas of focus are streamlining / standardizing of

systems/procedures, registration, making available the track record and rating of the subcontractors based on their performance through a suitable on-line system. Importance is given for training of subcontractor labour to suit requirements.

VICAT SUGAR CEMENT PLANT


SCOPE OF WORK
Construction of civil structures, structural fabrication and mechanical

equipment erection including supply of TMT, structural steel and cement for setting up a green field dry process cement plant having a capacity of 7500TPD . The project commenced in October 2010 with a duration of 22 months which was later amended to 29 months due to significant addition in the scope of work.

CHALLENGES FACED
Quality Problem-The elevation of the pre heater was

165m, erection of cyclones and mechanical structures in parts could lead to quality problems in terms of welding and alignment. locational challenge-One of the locational challenges that were faced by the project team was the nature of soil condition, which was black clayey soil that made vehicular movement very difficult.

2.44 MTPA Thin slab caster & Rolling Mill (TSCR)


Scope of Work installation, testing and commissioning of different capacities of

transformers, HT/LT system switchboards. cable laying automation system, field instruments, associated earthing and lighting system etc., for different substations and process areas.
Challenges Faced

The primary and most critical challenge at the RMHS site is that the location is very scattered throughout the plant, measuring about 16 sq. km and installation of equipment are in either 60 to 70 m height or 10 to 20 m in depth.

Overcoming Challenges
Good resource and logistics planning.
Different gadgets were used for working at height & below ground

levels such as-Rope grab type fall arrestor & electroguards. Necessary training was provided to workmen for working at height. Equipment was lifted through crane upto certain elevation and the balance height was covered using chain pulley block. Emergency lights and torches were provided to the workers to avoid entrapment due to power failure during work.

Challenges Faced By L&T ECC


Decision Modelling Bidding phase decision
Decision: What is the Bid Price?

Alternatives: Contract Bid Price/ Reject Bid Request

Parameters: Project Specifications/ Project Schedule

Performance Measures: Extended Contract Profit/Financial Risk

Procurement Phase Decisions


Decisions
When to Buy What to buy Where to buy How much to order

Alternatives
3 months in advance/ 1 month in advance/Same day Major material/commodities/consumable s Local supplier/non local supplier/VMI An estimated/less than estimated/more than estimated

Stage of EPC Contract

Risks Political risks

Pre tender stage Political stability of the country; change in governments

Post bid stage Delay in approvals & land acquistion Environmental approvals

Execution stage -

Environmental risks

Unfavorable climatic condition Unfamilarity wth terrain,resettlem ent, utility shifting Forex & interest rate fluctuation Delay in payments etc

Technical risks

Insufficient primary research, tech requirement leading to inaccurate time & cost estimations. Cost estimates & financing assumptions -

Design changes/inadeq uacies, resource availabilty, site conditions Liquidity and credit shortage Economic downturn

Financial risks Contractual/legal risks

Kraljic matrix for L&T ECC


Bottleneck: land acquisition, scarcity of manpower. A construction associations interaction with construction industry participants reveals that construction projects are getting delayed due to around 40% shortage of skilled construction workers Leverage: IT technology, price fluctuations in raw materials like cement, steel, coal etc.

Routine: Consumables like stationery, etc.

Strategic: partnerships with other agencies for long term benefits.

THANK YOU

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