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Systemic Improvement in Procurement Process

Systemic Improvement in Procurement Process

1.0 Brief Introduction:

A requirement of electrical system item “Auto Telephone System” was published through MDL open tender for P17A project.

1.1 Background:

As per the project requirement, the said open tender was floated on e-procurement site. Against this tender, five offers were received and after technical scrutiny price bids of four technically accepted bidders were opened. After opening of price bid, it was observed that the rates quoted by L1 bidders falls under “High Price Bid” criteria. After conducting three rounds of PNC, the said requirement was re-tendered because of unrealistic cost estimation.

After re-tendering, intimation was not forwarded to one of the bidders who had quoted in the previous tender for the same requirement.

After investigation, it was observed that the newly joined Executive had inadvertently missed out to intimate the bidder. After investigation it was revealed that unrealistic cost estimation was one of the reasons for re-tendering the requirement because cost estimation was prepared based on LPP only and for service part a lot of parameters (i.e. location of service, lodging, boarding & travelling charges) were not considered by the then dealing Design Executive while preparing Cost Estimation. Minor procedural lapses were also observed during processing of the procurement file.

1.2 Implementation:

As a systemic improvement, the following was suggested and the same was implemented through a memorandum from the Functional Director concerned.

(a) Proper study should be carried out by indenting Dept. on the basis of TSP prepared and same to be incorporated in PR while preparing the same.

(b) Dealing commercial executive should ensure that all details indicated in TSP was compiled in PR.

(c) If any new executive (who had not worked earlier in commercial) joins commercial Dept., proper training for a few days for sequential procedures/ sensitization of work/ SOP of commercial is required to be given.

(d) While preparing cost estimate, Design Dept. should look into the current market situation/market conditions/market trend and accordingly they have to prepare the same. It should not be based on LPP only.

(e) If any service parameters are required to be included in scope of work, then Design Estimate Dept. should consider location of service, lodging, boarding & traveling (to & fro) charges while preparing cost estimation regarding service parameters. It should not be based on only LPP.

(f) Every correspondence done with Vendor, indenting Dept. (user Dept.) as well as internal correspondence should be placed in file properly.

(g) Before forwarding documents to Vigilance Dept. for scrutiny, every dealing executive should ensure that the required and related correct documents are available in file in proper sequence.

(h) HOS/HOD should ensure that all suggestions, comments etc. indicated by superiors (CFA/FCA) during approval stage shall be properly followed by dealing executives. It should be compiled and superiors (CFA/FCA) be briefed once in a month.

1.3 Impact and Benefits:

With the implementation of the above mentioned Systemic improvement, the possibility of situations like “High Price Bid” because of unrealistic Cost Estimation may be eliminated. Also possible mistakes made by Executives who have just joined in Commercial Dept. can be avoided.


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  • Mazagon Dock Shipbuilders Limited,
    Dockyard Road, Mazagon,
    Mumbai - 400 010,
    Maharashtra, India.
  • Telephone No.:
    Board: +91 - 2376 2000, 2376 3000,
    2376 4000

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