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A STUDY ON INVENTORY & STORE MANAGEMENT AT IVRCL LTD., HYDERABAD KOILSAGAR LIFT IRRIGATION SCHEME PROJECT
A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
Under the guidance of Mr.B.NAGARAJU DEPARTMENT OF FINANCE SRI GIRI COLLEGE OF MANAGEMENT (Affiliated to Osmania University) MEDCHAL,R.R(DIST)
A STUDY ON INVENTORY & STORE MANAGEMENT AT IVRCL LTD., HYDERABAD KOILSAGAR LIFT IRRIGATION SCHEME PROJECT
A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
Under the guidance of Mr.B.NAGARAJU DEPARTMENT OF FINANCE SRI GIRI COLLEGE OF MANAGEMENT (Affiliated to Osmania University) MEDCHAL,R.R(DIST)
DECLARATION
This project report Inventory Management, done and submitted to the University is an original work carried out by me and is not submitted to any other university or Institution for the award of any Degree/Diploma/Certificate or published any time before. The findings of this report are based on the information collected by me during the study period.
Name & Address of the Student M.CHAITANYA (MBA FINANCE) Regd .No: 225911672049
ABSTRACT
Stock control is the operation of continuously arranging receipts & issues so that stock balances are adequate to support the current rate consumption with due regards to economy. It is the mean by which material of the correct quantity & quality is made to be available as & when required in storage & ordering costs, purchase price & work in economy. It is imperative to manage efficiently & effectively in order to avoid unnecessary investments in them. The study pattern used in this study is face-to-face interaction. Most of the data has been gathered from stores department of the company. The various aspects covered during the interaction phase was need & features of inventory control. An attempt is made to cover each & every macros of functioning of inventory cell.
ACKNOWLEDGEMENT
Im grateful to Dr B.VENKAT REDDY, Principal, Sri Giri College of Management, for his blessings and encouragement through out my course of study.
I would like to extend my sincere thanks to Mr. B.NAGARAJU Asst. Professor, Sri Giri College of Management for his co-operation and valuable suggestions and extend my gratitude to all staff members of our MBA department, who either directly or indirectly assisted me in this project work.
I am thankful to MR.M.Mohan Reddy (Sr.AGM) & and my sincere Thanks to MR.MLN Babu (Accounts & Stores head). I would like to express my deep sense of gratitude & thanks to all Seniors & staff members of IVRCL Ltd., (KLIS Project, Marikal (Vill), Mahabubnagar (dist.), Andhra Pradesh) for their kind support and cooperation which helped me in gaining lots of knowledge and experience to do my project work successfully.
TABLE OF CONTENTS
Chapter No:
Title
Page No:
1 2 3 4
04 08 12
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a) Definition of Material Management
20
b) Objective of the Material Management
20
c) Function and scope of Material Management
22
d) Selective Inventory control, classification
5 6
43 46 48 48
51
c) Responsibilities & Authorities of personnel
53
d) Procedure for requisition of materials
56
e) Procedure for receipt of materials
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f) Procedure for storage of materials
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g) Procedure for issue of materials
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h) Procedure for periodic verification of quality deterioration of stores material
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i) Procedure for material handling
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j) List of equipments and measurement devices in store area
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k) Procedure for maintenance of safety
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l) Procedure for maintenance of quality records
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m) Procedures for collecting and disposal of waste material n) Procedure for disposal of waste material
75 79
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p) Management information systems
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q) Master list of formats
7 8 9
85 86 87
INTRODUCTION
Inventory management occupies the most significant position in the structure of working capital, Management of inventory may be defined as the sum of total of those activities necessary for the acquisition, storage, disposal or use of materials. Inventory is one of the important component of current assets. Inventory management is an important area of working capital management, which plays crucial role in economic operation of the firm. Every enterprise needs inventory for smooth running of its activities. It serves as a link between production and distribution process. There is, generally, a time lag between the recognition of a need and its fulfillment. The greater the time lag, the higher requirements for inventory. It also provides a cushion for future price fluctuations. In a complex industry like IVRCL Limited it studied clearly of how the thing are being performed and what is the real impact of these on industry and how effectively the inventory is utilized is interested to be known by researcher because of its great significance in the research. Inventory can be referred to as sum of the value of raw materials fuels and lubricants, spare parts, maintenance consumables, semi processed materials and finished goods, stock at any given point of time.
In large companies inventory place a most significant part of the current assets. The business has about 15 to 30% of inventories in total assets.
Inventory is composed of assets that will be sold in feature in the normal course of business operations. The assets which firms stores as inventory is anticipation of need are raw materials, work in progress and finished goods.
What is inventory?
Inventory means stock of materials control means regulate or check Inventory (dictionary) meaning is list of stock goods. Scientific definition of inventory is idle recourse of any kind having economic value. Inventory is detailed list of moveable goods which gives the quantity and value of each
production, repairs, maintenance and construction. Inventory is defined as the sum of the value of (stock at any point of time)
a) Spare parts b) Fuels & Lubricants c) Consumables & Tools f) Raw materials g) Work in progress Inventory Inventory control basically deals with
a) When would an order be placed (order level) b) How much should be ordered (order quantity) c) When to order d) How much to keep in stock without effecting consumption
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TYPES OF INVENTORY
This activity decides when inventory replacement is required and calculates inventory replacement quantities. This category of
a) b) c) d) e)
Regular consumption items Fast moving items Huge consumption annual movement items Multi-user department items Generally low value and low lead time items
2.
SURPLUS INVENTORY
Items which do not have immediate use, but they have a usage in future. These items are in excess of the units storage norms and are not likely to be used within a reasonable period.
Zero value items are items which have been returned by the user department or charged with new equipment to stores. These items are reusable. The value was booked against first consumption. Hence returned goods to stores do not carry any value. However, only the quantity should be included in the stores ledger.
These items should be separately stored. The charge of the same should be considered only for PARTA/Budgeting/MIS purpose.
Systematic procurement, location, storage and recording in such a way that desired degree of services to operating shops at minimum ultimate cost.
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a) b) c) d) e)
Positive approach is to control the inventory from beginning stage (procurement stage or PR stage).
Inventory is harder to move with longer it sits Increase in 20% sale = Reduction in 5% inventory so our aim should be to reduce the inventory. Inventory accounts are a) price (required negotiation) b) Service Level (% of demand fulfilling) c) Lead time (time required from feeling need to availability).
Business constraints : Government regulations, monopoly of supplier minimum quantity to accept, material availability in seasonal only. Transportation cost, once good will.
Accuracy
Accuracy timeliness is critical factors, material control activities, include determining needs.
Organization carry inventory to protect against possible loss of or uncertain lead time production against long and uncertain lead time.
12 TO GET A PRACTICAL INDUSTRIAL EXPOSURE THE TASK IS TO ANALYZE THE STORES MANAGEMENT OF IVRCL LTD. & TRACE OUT THE DRAWBACK OF THE CURRENT SYSTEM & GENERATING AN IDEA TO TOUCH HIGHER LEVEL OF COMPETENCY IN CONTROLLING THE INVENTORY. TO ANALYZE THE CURRENT ERP SYSTEM IN MANAGING THE INVENTORY TO ANALYZE THE MAJOR TO MINIMIZE THE INVENTORIES AND KEEP SURPLUS & OBSOLETE ITEMS TO MINIMUM KSLIS. TO ANALYZE THE INDUSTRIAL SUFFICIENCY IN MANAGING THE INVENTORY. TO ANALYZE THE MATERIAL REQUIREMENT PLANNING PROCEDURE. TO ANALYZE THE CURRENT PROCEDURE OF VENDOR DEVELOPMENT & RATING TO ANALYZE THE LATEST MATERIAL HANDLING SYSTEM AND METHODS TO ANALYZE THE QUALITY & QUINTITY OF MATERIALS IMPLEMENTATION TO IMPLEMENTATION OF INVENTORY PACKAGE TO WELL TRAIN ELECTRONIC SYSTEM HADLING TO KNOWN THE COMMUNICATION AND MIS (MANAGEMENT INFORMATION SYSTEM).
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The study has the following limitations: 1. 2. The limitations of ratio analysis can be applicable of the study. There may be approximation in calculating ratios and taking the figures from the annual reports.
Company Profile:
Name of the Company : IVRCL LIMITED
Established Year
: 1987 : MIHIR, 8-2-350/5/A/24/1B, Road No.2, Banjara Hills, Hyderabad -500034 Andhra Pradesh.
: IVRCL LTD., Koilsagar Project, Nr.Rice Mill, Raichur Road, Dhanvada Mandal, Marikal 509351 Mahabubnagar (Dist.).
Contact No.s
: www.ivrcl.com
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14 Major Divisions in IVRCL LTD. : Power Division, Water Division, Irrigation Division, Buildings, Electrical, Roads & Industrial plant Projects. KSLIS Project Value : 360.18 Crores
HOD of Stores
1) BHEL Pumps Materials, Cement, Steel, Aggregate & Sand etc 2) Spares of Mechanical Items 3) Consumable items.
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15 As India boldly moves forward to chart out its economic destiny, IVRCL is committed to be being a partner in progress. As always arousing hope and confidence by blazing new trails and living up to our promise that WE MAKE IT HAPPEN!
Project details of Koilsagar Lift Irrigation Scheme under Construction by IVRCL ltd., Company
The KSLIS Project in its entirety envisages lifting of water from the fore shore of Jurala Project to a total Height of 120M(viz) 58M in first stage and 62M in second stage and installation of 4 Nos. of 7.5 MW heavy duty pumps and motors. In the Process of completing the scheme works the magnitude of work involved is as detailed below.
Name of Canal Main Canal length Tunnel Length Delivery Pipe line Distributory Net Work Pumps & Motors
Stage-1 21.280Kms 7.949 Kms 220 RMT ---2 Nos of 7.5MW (Francis Turbine)
Stage-2 19.105 Kms 4.152 Kms 225 RMT --2 Nos of 7.5MW (Francis Turbine) ----
Total area involved 40.385Kms 12.101 Kms 445 RMT 182.450 Kms 4 Nos of 7.5MW (Francis Turbine) 50,250 Acres
Ayacut benefited
----
ayacut of 12000Acres, in
Mahaboonagar (dist.) Andhra Pradesh, ayacut has not fully developed. It is now proposed to lift water from fore shore of Jurala project in two stages to a total lift of 120m with 4 Nos. of Pumps of 10,000HP reach and to fill up the Koilsagar Project to stabilize the ayacut of 1200 Acres including a gap ayacut of 7500 Acres and to irrigate an additional 38250 Acres bringing the total to 50,520 Acres under the project at a quoted valve of Rs 360.20 Crores. In this process operation such as detailed investigation two tunnels of total length of 10.16 Kms, two pump houses, two surge pools, excavation of approach and gravity canal, CM & CD works, fixing of pressure mains and excavation of net work of distributory system is required to be done under the contracts. This Project work is in progress under the Company IVRCL Ltd.
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Fig No. 6
Details of KSLIS-1(Phase-1) Project: 1) Approach Canal Length 6.100Kms. 2) Pump House-1 Static Head 59m. 3) Pump House Motors Cap 7.5 MW 4) Gravity Canal Length 15.180Kms. 5) Tunnel length - 6.907 Kms. With 4.0m Dia. 6) Shape of Tunnel D-Shape 7) Delivery Pipe line 0.220Kms.
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REVIEW OF LITERATURE
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MATERIAL MANAGEMENT
Definition: We can define materials management as the function responsible for the coordination
of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to maintain possible economy in the project.
Primary Objective of materials management 2. Low Prices- to be lowest includes transportation: enhances profit 3. Low cost acquisition and possession- reduced handling and storage costs. 4. Continuity of supply alternative, captive suppliers, flexible suppliers 5. Low payroll costs- Low operation costs of stores personnel 6. Favorable supplier relations- supplier development. Secondary Objective of materials management
1 .Economic make-buy-Coordinating and assisting other departments in Make-Buy Decisions.
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3) Stores & Warehousing : This Involves physical control of materials, preservation of stores,
minimization of obsolescence and damage through timely disposal and efficient handling, maintenance of store records, proper location and stocking.
5) Inspection & Quality Control: Inspection involves critical appraisal involving examination,
measurement, testing, gauging and comparison of materials with relevant standards and make to suit our requirement.
6) Cost reduction through value analysis: Organized cost reduction analysis by which accountants analyze costs in products or procedure, the ranking of their elements in a descending order of magnitude and in informed challenge to each, starting with the most important.
7) Disposal of surplus/ obsolete material: It means final placement or riddance of wastes, excess, scrap etc., under proper process and authority with no intention to retrieve. Disposal may be accomplished by abandonment, destruction, internment, incineration, donation, sale, etc.
8) Distribution: Distribution means movement of goods and services from the source through the distribution channel, right up to the final user.
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INVENTORY CONTROL
A) To minimize idle time caused by shortage of inventory and non-availability of inventories as per requirement. B) To keep down capital investment in inventories, inventory carrying cost and obsolescence losses. C) Physical verification of inventory items.
It is an idle resource It can wipe out due profit If effects quality (stock makes work careless handing) It is not buffer (thing to exchange) It is not an asset (properly to pay claim) It never optimized (wish or desired) It not only occupies space but also the mind 21
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It will not start earring It gathers dust Move inventory carrying cost is spend on it
SELECTIVE CONTROL
WHY SELECTIVE CONTROL?
Literally thousands of items are kept in inventory by various organization. Periodic reviews of inventories of these items have to be under taken for effective inventory control. The under-lying idea of such reviews is to keep stocks at a low but at the same time keep the service percentage high. The problem is how to review such a large number of items. Is it necessary to have the same type of control for each and every item? An equally critical analysis of all items is very expensive and time consuming. Selective control of items with references to particular function under examination is the solution. Items should, therefore, be classified so that the more important amongst them receive greater attention.
CLASSIFICATION METHODS
Sl.No. 1.
Title ABC
2.
XYZ
3.
4.
5.
23 6. SDE ( Scare, Difficult, Easy to produce) 7. SOS (seasonal, off seasonal) Availability whether in particular season or in all seasons. Sources of availability
8.
9.
Age Analysis
ABC Classification:
ABC Stands for always better control or avoid bluff confuse. This method is based on annual consumption value, which is obtained by the multiplication of the unit price by the annual consumption quantity. For example, on an adhoc basis, the items accounting for an annual consumption value of more than Rs. (one) Lacs may be classified as A category and below Rs. 10000 may be the c category and in between these items will be the B category. A Items: are the top 10% of the items and accounts for 60% of the consumption value. B Items: are the next 30% of the items and accounts for 30% of the consumption value. C items: are the next 60% the items and accounts for only 10% of the consumption value.
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H.M.L CLASSIFICATION
H.M.L stands for:
H- High cost items (all unit cost) M- Medium cost items (all unit cost) L- Low cist items (all unit cost) Unit value is the criteria in HML classification.
V.E.D CLASSIFICATION:
VED stand for V- Vital E- Essential D- Desirable
S.D.E CLASSFICATION:
S scare items which are not easily available in the market D Difficult items-which are non available in the market E Easy items- which are easily available in local market.
G.O.L.F CLASSIFICATION
G.O.L.F stands for Government open market local market- foreign sources. Materials are classified according to nature of suppliers.
F.S.N CLASSIFICATION
F-S-N stands for F Fast moving items having consumption at least once in a year. S slow moving consumption in alternative year. N Non-moving consumption in least 5-6 years.
X.Y.Z CLASSIFICATION:
X Item is those items whose value is high while Z items are those items whose values are low. Understandably Y items fall in between two categories. 24
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S.O.S CLASSIFICATION
Some of items required are seasonal in nature and require special purchasing and stocking strategies. Many commodities especially of agricultural origin and seasonal in character have to be purchased at the best time. Operation research techniques would have to be used to obtain optimum results. The inventory system will have to balance between holding costs and lower prices at which it will be available.
Inventory turn over ratio is defined as the ratio of annual consumption value divided by average inventory holdings. This ratio is also called efficiency indicator. Hence, higher the inventory turn over ratio the better is financial out look and system is considered more efficient. There is considerable scope for improvement in the sphere.
Inventory turn over ratio= Annul issues in Rupees. /Average inventory in Rs. Express as percentage the ratio is to multiplied by hundred. This ratio is called efficiency indicator
If purchased in 1 Lot and consumption is 1 crores per month. Average inventory holding will be = 6.5 crores
26 Average inventory holding will be = 2.5crores Inventory turn over will be 4 approximate In second case capital locked up has reduced from 5 to 2.5crores and inventory turn over ratio increased to 4 from 2. It shows in second case released capital becomes available and organization has a) Borrow less capital. b) Less interest charges c) Fewer inventories carrying cost
Hence, higher the ITOR the better is financial out look and system is more efficient.
A. Efficient reduction of inventories. B. Discourage flabby inventory due to poor maintenance. C. Discourage Profit-making inventory held with speculative. D. Reduction in critical & non-critical items lying in stock since long period. E. Identification of obsolete/ surplus items and their disposal/utilization. ITOR in most of industries in India is around = 2
ITOR in abroad-developed countries is between 6 to 8. Our target for FY, 2006-07 is => 4
\
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PURCHASE MANAGEMENT
The Purchase is a main activity in the area of Materials Management. It is the most important function in any organization this is the place where money is spent out of the Organization .it decides the profitability of the company. It is studied that one percent saved in the purchase function improves the profit of the company as mach as 2 to 3 percent.
PRINCIPLES OF PURCHASE
Principles of Purchasing can be called by 7Rs. They are as follows:
1) Buying the materials at right price. 2) Buying materials of right quality. 3) In the right quantity. 4) At the right time. 5) From the right source. 6) At the right place. 7) With right mode of transport.
PURCHASE SYSTEMS:
We can classify the systems in the following manner:
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Price communication
RIGHT SOURCE Vendors rating Purchase research
RIGHT ATTITUDE
RIGHT TRANSPORTATION
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In this package inventory have so many options which are related to materials transaction. 1. 2. 3. 4. 5. 6. Masters Transactions Reports Accounts Approval Physical Verification Utility 30
31 7. 8. 9. 10. System Controls Change F.Y (Finance Year) Log off Exit
Masters: In Masters Options we have Unit of Materials like Nos., Kgs, MT, Pkt, Roll, Lots, Bags, Ltrs, Cum, Cufts & Mtrs. Here one can select the materials unit as per the type of description of material. In Masters Option Materials are classified into two types one is Consumable & other is Assets. In IVRCL Company materials are taken in digits system like consumables taken by 1 series and assets are 2 series. For consumables they divide the materials as :
1. Material Main Group (1001) 4 digits 2. Material Sub group (001) 3 digits
3. Material Sub-Sub Group (00001) 5 digits. Total 12 digits for each material. Similarly Assets also same as start with 2 digit. Transaction: In transaction first prepare the purchase order and then we have inward option thereafter we raise the MRN (Material Receipt Note) against the PO then give MRN approval.
Once MRN is approved in package these materials directly enters into stock statement and then only we raise issue note of that material. In this package materials are issued in FIFO (First In First Out) method.
Debit notes also issued through issue note by mentioning debt rate as per the Sub contractor Work in the cases where the sub-contractor rates are inclusive of cost of material. Aggregate materials are also similarly to common materials but here we have to enter Trip sheet vehicle wise. Apart from aggregate, in this option only. Sand, Metal & Boulders are also to be booked
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1. Purchase Details, 2. MRN Details, 3. Supplier wise Material receipt, 4. Issue note details,
Accounts Approval: After completing all entries, accounts approval is given to the entries. After this approval, the Store inventorys details will be posted into Accounts package.
Physical Verification: Here we will observe details of closing stock details. The physical verification has to be done periodically to arrive at the correctness of inventory
System Control: This option is for user permission settings. Change F.Y: Here we use this option for viewing cumulative/previous financial years details. Log Off: This is to Log off of present running year.
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INVENTORY ANALYSIS
Problems studied
In the study, efforts have been made to conduct a details analysis of inventory management functions in the IVRCL LTD. KSLIS Project-II. For this purpose detailed research has been conducted as under:
1. The Package system in which was in design in Visual FoxPro was studied in detailed. 2. Existing purchase system of the Board was observed. In which organization structure of procurement department, purchase policies, records relating to purchases were analyzed.
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34 3. Detail organization structure of stores of Controller of stores department, were studied. Inventories held in the stores, their receiving, issuing procedures, techniques of stores control adopted by the board were analyzed. 4. Treatment given to wastages, spoilage and dead inventory by the stores were taken. 5. Existing system of inventory control adopted by the board was studied. 6. New inventory control technique applied to improve the efficiency of material management department and to reduce cost of inventory.
Research Methodology
The relevant data and information have been collected from primary as well as from secondary sources. For collection of information software, pertaining to raw-material management general and purchase control as well as stores control. Level employees of the materials management services, IT, Central stores (Receipt & Issue), Human Resource Development, Finance & Accounts department of KSLIS-II. Direct interviews were also from the concerned department, of the board. This helped together actual prevailing conditions of purchasing, maintaining and controlling of materials/components. Moreover the site was also visited many times to study the inventory management systems in KSLIS II (Koilsagar lift Irrigation scheme stage-II).
PARTA SYSTEM
INTRODUCTION
INSURANCE PARTA SYSTEM was introduced by IVRCL LIMITED Company. It is setting targets for revenues and expenditures and comparison of actual against set standards. It is generally prepared for one financial year, but when there is any substantial hike in prices of raw materials and other expenses, It can be revised accordingly. Monthly variances in the expenses and the revenues are disclosed in the monthly MIS (Management Information System) report and measures are taken accordingly.
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35 PREPRATION OF PARTA
CAPACITY (Concrete/Metals from batching plant & from Crusher) For preparing a PARTA, first of all target is to be set of for batching plant as to the quantity of concrete is produced by the plant. Presently KSLIS Project is having 2 concrete Batching
plants and one stone crusher and their capacities are taken more than their rated capacity in PARTA.
CEMENT:
Cement is basic raw material for producing concrete. In this project mainly 43 grade Ordinary Portland cement is exclusively used. This grade of cement is being used as per the relevant provisions of contract agreement due to its fast setting time of concrete.
OILS:
Here Major Consumption of oil is HSD (High speed Diesel) and is being procured in bulk quantities for various types of machinery, heavy/light vehicles, DG Sets, Compressors etc. This item is classified as A Class item along with other major materials viz; Cement, reinforcement Steel, structural steel, aggregates, sand, dust and boulders.
STEEL:
This is one of the major materials for this field which is used in concreting works of various locations such as; Pump house, Building, Bridges, tunnels lining & main structures in Project. The definition of RCC i.e. reinforced cement concrete means containing of reinforcement steel in all concreting works.
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36 AGGREGATES:
The another major component of concrete works is crushed aggregates which is also termed as Metal. Normally two sizes i.e. 20 mm & 12 mm metal is being used in RCC works as per specifications laid down in the relevant standards.
A number of electrical and diesel driven water pumps are purchased for this project to effectively drain out the accumulated water in various locations of canals due to seepage or rains etc and the capacity of such pumps are ranging from 1.00 HP to 50 HP of different makes. To maintain the pumps in running condition all the time, several spare parts are being procured from time to time. This is one of the important item for execution of canal works.
PARTA for stores spares consumption and operation are fixed for normal as well as shut down. Store consumption is calculated by concerned engineers comparing the previous year
consumption & looking into the life span of spares. Continuous efforts are made to reduce the consumption of store & spares through residual life studies & by improving life period of stores & spares.
For controlling manpower expenditure time to time manpower studies are conducted through engineers and concerned officials. Salary & Wages PARTA is based on MANPOWER & AVERAGE SALARY. In the wages entire benefits such as PF (PROVIDENT FUND , BONUS & MEDICAL ALLOWENCES etc., which forms about 42-45% of total wages in evaluated in PARTA.
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37 MERITS OF PARTA SYSTEM It is the main tool for planning and budgeting. It helps the management in monitoring the day-today affairs of the company It is a tool for motivation to employees for achieving the targets. It helps in assessing the overall performance of the unit. It helps in financial working i.e. alluring any expenditure or curtailing any expenditure or taking any new project etc. It helps in monitoring the cost, as targets are well defined therefore the project as well as staff try to improve their efficiencies. It helps in reducing the variances. It helps in taking decision regarding payment of advance taxes etc. Since KSLISP is under Captive of IVRCL LTD., this PARTA system helps in planning the PARTA for its parent unit i.e. IVRCL LIMITED Company.
LIMITATION OF PARTA It is very difficult to anticipate the execution activities in advance. It has a bearing of certain government and legal regulation so it is very difficult to precisely project any price etc.
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Experience has proved that no inventory control mechanism can be effective and fruitful unless material procurement is controlled and regulated at the very procurement plan stage itself.
At KSLIS project, planning & maintenance department prepares the preliminary purchase requisition in the proposal from (rough/hand written) and send it for review to the inventory control cell. This purchase requisition motions the type of spares or consumables and its criticality in terms of purposed to be procured. The inventory control cell first determines the PR value on the basis of last procurement rate or quotation and assigns system material code. It also supplements information in respect of: Stock in stores Pending PR quantity with expected delivery Consumption pattern for past 2-3 months, and Delivery schedule, suitability, considering consumption plan
The planning engineer associated with the inventory control cell ascertains availability of material or its equivalent with other departments and gets same spares for use. He also explores possibility of using alternative material which may available in stock or purchase value of which would be comparatively lower.
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Inventory control cell prepares following monthly MIS report: o Comparative stock statement under-critical, non-critical items identifies increase/reduction vis--vis previous months consumption. o Statement on specific items with details, which contributed to increase in the inventory in the particular month along with further consumption plan. o The above report is discussed amongst the HODs during MRP (monthly performance review meeting). These are discussed with the Project-inCharge during review meetings.
and
Stock summary statement Physical verification of Major & consumable items (ABC Analysis) Vehicle Performance Report Age analysis of spares & other material.
requirement for is consolidated and after deliberation, the composite quantity with phased deliveries is communicated to the purchase department for placement of monthly, quarterly, annual/bi-annual orders. Items covered under the above exercise include:
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40 Cement of required grades Reinforcement Steel of various dias (8mm, 10mm, 12mm, 16mm, 20mm & 25mm) Various sizes of Aggregates, Sand, Bricks, Dust and Boulders etc HS diesel, oils requirement for maintenance for vehicles, machinery etc Structural steel such as ; Ms plates, Ms sheets, Ms Pipes & Scaffolding materials which are required for staging/scaffolding for construction of buildings & brides etc All spares & consumable items.
Based on the ABC analysis, consumable regular items are reviewed and their ROL/ROQ is revised annually. In certain cases if there is a departure from the norms/practices, ROL/ROQ are reviewed and revised midterm ROL/ROQ formulated for auto-identified by the stores department, cover the following major consumable groups: Cement capsules Valves, curing pipes Wooden Runners Bolts & Nuts Electrical Materials Welding electrodes Oils & Gases & ect.
PURCHASE DEPARTMENT
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The Purchase department work involves: Making purchases Vendor development & Rating Product development Marketing development
By information / Application from Manufactures & Vendor for enlistment Security of information Identifying or areas of vendors development Scrutinizing the reference Selected vendors send vendor assessment form Vendor evolution Enquiry floatation Review & registration
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STORES MANAGEMENT
Stores play a vital role in the operation of the company. It is direct touch with the user department in its day-to-day activities. The most important purpose served by the stores is to provide uninterrupted service to the executing agencies. Further, stores are often equated directly with money, as money is locked up on the stores. The functions of stores can be classified as follows:
1.
To receive raw materials, components, tools, equipments and other items and accounts for them.
2. 3.
To provide adequate and proper storage and preservation to the various items To meet the demands of the consuming departments by proper issues and accounting for the consumption.
4.
To minimize obsolescence, surplus and scrap through proper codification, preservation and handling.
5.
To highlight stock accumulation, discrepancies and abnormal Consumption and effect control measures.
6.
To ensure good housekeeping so that material handling materials Preservation, stocking, receipt and issue can be done adequately.
7.
To assist in verification and provide supporting information for Effective purchase action.
In India, owing to stiff supply positions, 4 to 6 months inventories are not uncommon and, in fact, for certain imported items, it could be as high as 24 months stock. In this context, stores management assumes greater importance.
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43 spent on land and buildings, interest on rent, repairs, maintenance; insurance, etc. Variable costs vary with the volume of throughput. They consist of handling costs, damages, deterioration obsolescence, etc. Obviously, when the throughput or the volume of goods handled is high, the total cost per unit comes low. This should be the aim of the stores manager in order to optimize the costs in stores.
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OVERVIEW
IVRCL Infrastructures & Projects Ltd., a Hyderabad based company, is one of the fastest growing constructions company in the country. It is a Engineering , procurement, constructions and maintenance company, executing infrastructures projects and operating in five domains, that is, water & environment, irrigations, power, buildings & industrial structures and transportation and executing the projects in all most all states of India and even abroad in other countries i.e. Srilanka, Dubai, Kenya & Nepal etc.
The materials form about 60% of the cost of any project. Hence materials functions are an important one in executing projects timely and more economically. The important activities and functions of the STORES DEPT are covered in the subsequent chapters.
The stores department, which is based at project site, is part of the administration function to serve the project department for timely execution of the project.
The stores department initiates purchase requisitions for locally available materials, to maintain the user specified minimum stock levels / reorder levels. The stores department also indents materials, as per approval note of project manager.
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46 The stores department also performs storage and issue of all types of materials which are required for the execution of the project. The storage areas for maintaining stocks of various materials are separately earmarked, depending on the type of materials stored. Manual as well as mechanical means are employed for smooth movement of materials.
An inventory package system has been implemented for overall process for the stores department.
Receipt of materials
Inspection of materials
Issue of materials
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The main objectives and their measurements of Stores are given below:
S.N o.
Target
Measurement Frequency
Record / Reference
01
Optimum Inventory
>10
Every quarter
Data Sheet
Max. within 3 Control time taken for preparation of MRNs days from the date of receipt of material Fixed Assets Nil Control difference in Book stocks vis--vis Actual stock A Category <1% B Category <3% C Category <5% Every quarter Every month Every quarter Annually Data Sheet Every month Data Sheet
03
Inventory Reconciliation
04
Loss of Material
5% of average value of
Six months
Data Sheet
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48 inventory 05 Training No. of training sessions in a year Maintain good store 06 Safety keeping and material handling methods in order to control accidents Zero Every month Not less than 2 Annually Data Sheet
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RESPONSIBILITIES:
1) To look after overall control of all site stores for better planning, storage, issue of materials, monitoring and maintaining records and reporting to HOD, (Accounts), Head office.
3) Reconciliation of major materials i.e. Quantity of materials issued, quantity used (theoretical) and balance quantity lying at the contractor area.
4) To initiate action for minimization of wastes and to reduce obsolescence, dispose off nonmoving scraps and obsolete items.
5) To facilitate better utilization of surplus stores of one site by effecting stock transfer to other site where there is a requirement.
6) To ensure timely arrangement of need based skilled manpower requirement for various sites and to take proper action, either to transfer from one site where there is excess staff to other site or recruit to fill the vacancies as per requirement.
7) To appraise the performance of the staff working in the department and to provide training on a continuous basis to afford managerial skills as per need and necessity. . 8) To co-ordinate with Regional offices, Divisional offices and Project sites for better utilization of materials in order to reduce inventories. 49
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9) To coordinate with accounts, planning, regional inventory controller, mechanical department etc, for timely arrangement of information to the Management
10) To provide timely arrangement of information for finalization of accounts and compliance of Audit reports.
11) To ensure implementation of inventory package in all the sites and to obtain and maintain stores data through package.
12) To ensure good house keeping and safety in all sites stores
AUTHORITIES:
1) To look after over all site stores functions and rendering reports to Regional / Divisional Inventory Controller, functionally and reports to project manager, administratively.
2) To receive materials, accept, storage, proper handling and issue of materials to project site and their proper recording and documenting on daily basis.
3) To take physical stock of fixed assets (F) and (A) category items, at the end of every month.
4) To ensure reconciliation of all major materials and Fuel along with planning engineer/mechanical department and timely submission of reports to H.O.
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6) To ensure timely arrangement of the required information for finalization of accounts and attending to audit observations.
8) To identify surplus material and inform Regional / Divisional Inventory controllers from time to time, for taking appropriate action.
10) To maintain good house keeping and safety in the department. . 11) To ensure adequate and appropriate fire fighting equipment and positioned in all storage places.
AUTHORITIES:
Purpose
PR
Scope
: This procedure covers for all items which are directly Execution of the project.
required for
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Reference
Method
1.1
For materials planned through the B O Q (BILL OF QUNTITIES) process, the B O Q document itself shall initiate the PR Processing initiate the purchase requirement. activity. The project Manager at site shall
1.2
The PR shall be raised in manually prepared document which contains full information clearly describing the material required including material specification, quality, and necessary. The PR shall also confirm
material code, UOM, delivery schedule and priority in terms of quantity, budget provision, providing local market rate and stock available at stores on that date etc.,
1.3
For PRs for bulk purchases shall be sent to purchase department at H.O. or R.O. duly signed by project manager and stores in charge at least 15 days in advance of
material requirement date. No indent for bulk purchase should be processed at site without prior approval of H.O.
1.4
The project Manager should also give firm commitment to H.O. indicating the date by which the required funds will be remitted for the purpose. The confirmation is to be sent to H.O. along with purchase requisitions. No action for purchase will be taken by H.O. without the receipt of PR duly signed by the project manager.
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53 2.1 For regularly required materials, the re-order level shall trigger the PR raising quantity. The minimum levels and re-order levels of materials shall be given by planning in-charge duly approved by project in-charge.
2.2 Based on minimum level and re-order levels. Site stores department shall raise material requisition for procurement of materials and PR shall be forwarded to R.O/ H.O.
2.3 The Indenter should specify clearly the delivery schedule of materials in the purchase requisitions. In case the materials required are not independent for execution of particular job, the Indenter has to specify that all materials are required and received at one point of time
2.4 For all small purchases, the PR should be sent to local purchase after duly approved by project manager at site for procurement
2.5 In case of locally available materials, stores should maintain low stocks in order to reduce inventories Part III - For Plant & Machinery / Scaffolding materials.
3.1
Project Manager shall forward requisition to H O addressed to Head (Mechanical) with a copy to Purchase Department and Planning Section.
3.2
No Machinery/shuttering materials should be shifted to other sites without release order from Head Office.
written
3.3
Purchase department shall initiate action for procurement after getting clearance from Head Office.
3.4
Before hiring any machinery for site, consent should be taken from Head (Mechanical) so as to ensure that our own machinery does not remain idle.
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RECORDS:
PURPOSE
: The purpose of this procedure is to define the method of receiving materials into stores and initiating inspection activities.
SCOPE
These procedures covered for all items which are Directly required for execution of the project.
REFERENCE
RESPONSIBILITY
METHOD:
1.0
Receipt of materials in stores: Materials are received from Suppliers, Head office and other sites, Clients supply, Returns from the works at site, and returns from the Sub Contractors at site.
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1.0
RECEIPT OF MATERIALS FROM SUPPLIERS: All types of materials received at site should under go SECURITY REGISTRATION in accordance with the applicable procedure.
1.1
1.2
After receipt of materials and delivery documents at the stores, the stores in-charge should verify the delivery documents of the following:
- Security inward stamp - Correctness of material w.r.t purchase order - Correctness of quantities w.r.t purchase order/ delivery documents. - Physical condition of the material
1.3 After verification, all the materials should be entered in a Register which is known as MATERIAL INWARD REGISTER (Format: IVRCL/DOC/ST/ 02). The material
received in the stores should be recorded date wise serially in this register in detail. A separate INWARD REGISTER has to be maintained for recording various Raw Materials such as Aggregate, Dust, Sand, Boulders etc materials received in serial order as per Trip Sheet numbers.
1.4 On receipt of materials at site from the suppliers, intimation has to be given to the indenting section for carrying out inspection of material. If the inspecting officer is satisfied that the supply is in accordance with P.O, recommends acceptance of the material. 1.5 There after, the stores in-charge should get system generated MATERIAL RECEIPT NOTE (MRN), (FORMAT: IVRCL/DOC/ST/03), noting down the reference to purchase order, suppliers invoice / challan no. & date, Description of material, quantity received,
accepted, rejected value etc., The MRN has to be signed by the stores in-charge, Inspecting
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56 officers and the Project Manager in token of acceptance of material. The serial number of MRN is system generated and the MRN should be prepared strictly in the serial order of inward entry in the material inward register. The copies of MRNs are to be given on need based to Purchase Department of HO/Site, Accounts Department and Stores Department. 1.6 The Stores in-charge should ensure that MRNs are prepared for all material received at the site and no material delivered at site left unaccounted at the end of the month, except in the case of rejections. The above procedure for preparations of MRN would apply to all materials received from the supplier other than aggregates like sand, bricks, metal,
2.0
2.1 On arrival of truck load of aggregates at site, responsible store / engineers should take the measurements of each load of materials and unloaded at stores stock yard.
2.2 TRIP SHEET: A trip sheet in triplicate has to be prepared recording the details of carrier no. Supplier name. Description, Quantity The trip sheets should be signed by the Engineers and stores in-charge and obtain the acceptance of the supplier or his representative in all the copies of the Trip Sheets. The duplicate trip sheet will be handed over to the suppliers in token of receipt of materials.
2.3 All the trip sheet books will be machine numbered and trip sheets will be continuous machine serial numbers. Trip sheet book should be used in serial order.
2.4 BILLS FOR AGGREGATES: The sites would prepare statement for bills every fortnight for aggregate materials received between 16th to end of the month within 5th of the following month and 1st to 15th before 20th of the month, enclosing all original trip sheets of the respective materials.
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57 2.4.1 The supplier should submit bills duly signed along with above statement and original trip sheets and the project manager should certify that the materials have been received and the claim is recorded in the stores.
2.4.2 Most Importantly, the stores-in-charge should ensure that the supplier of Aggregates, Sand, Dust and Boulders invariably submit us the statuatory payment receipts such as; Royalty and Seignorage etc as per Govt. Rules, or else the stores-in-charge should not entertain the trip sheets until receipt of above payment receipts.
3.0
3.1 For effecting transfer of any material / Asset between site / H.O., a stock transfer note (STN), (Format: IVRCL/DOC/ST/04) has to be prepared by the sending site furnishing full details. The STN should be exported though Inventory package system and a mail is to be given to the receiving site.
3.2 The receiver has to import the STN and acknowledge the receipt of material and also noting discrepancy / shortage / damage will be sent to the materials sending site for their record.
3.3.1 The materials received should be entered in the material inward register and in the stock ledger as per STN. No separate MRN need to be prepared. The STN will serve as MRN.
3.3.2 Most importantly, for shifting the material from one place to other, the prescribed Way Bills as per requirement of commercial tax authorities are invariably be attached with the STNs, to meet transit requirements. To know about the various types of Way Bills, the stores in charge is to inter frequently. act with Taxation Department at Head Office very
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4.1 Sometimes surplus materials are returned from work site or by sub-contractor. SRNs are to be prepared for all stock returns and entered in the inventory package system for valuation and giving credit to the party or work concerned for the materials which can be re-used, otherwise, they are to be treated as scrap and entered in scrap stock ledger.
5.0
CASH PURCHASES:
5.1
All cash purchases will be done only after approval of project in-charge.
5.2
5.3
All purchases should be made from registered vendors only having TIN number, that is tax invoice etc.,
5.4
For cash purchases at site, a consolidated MRN may be prepared on daily basis. This need not be prepared supplier wise unlike credit purchases.
6.0
STATIONERY PURCHASES:
6.1
MRN is to be prepared for the stationary purchase, like stapler, ink, pens, punching machine, files, erasers etc,. These items may be entered in a separate stationery register. And issues be made on stationary indent slips authorized by Head of the department.
6.2
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59 7.0 DEPARTMENTAL SUPPLIES (CLIENTS): The stores materials such as cement, steel, pipes, bitumens and other material being
7.1
supplied by the client and accountable to them shall be maintained in separate stock ledger in the formats as may be approved by the clients. MRNs should be prepared for the material received from client as per the contract. These materials come either on cost basis or zero cost basis. A separate set of form may be used for receipts and issue and quantity as per the requirement of clients. also for balance
8.0
8.1
It is a statutory obligations to maintain records for the fixed assets / current assets of the
company in the prescribed format which will facilitate to know the book balance of various assets and their cost, procurement of additional items /new items, proper deployment of assets by effecting inter site transfer of surplus assets, as per requirement of other sites, to work out hire charges / depreciation and cost and to safe guard the properties and maintenance.
8.2 MRN
8.3 should
All the Assets procured by the H.O. sites and received from other sites by be noted in a stock ledger styled as FIXED
transfers ASSETS
LEDGER(Format:IVRCL/DOC/ST/05)
8.4 Inter site transfers of assets should be affected only with prior approval of H.O. On such transfers to other locations, acknowledgement has to be obtained. On effecting the transfer, the Stores-in-Charge should obtain an acknowledgement from the receiving site which in turn should be sent to Head Office for proper accounting in both sites.
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9.1 The site should inform H.O. with full details of such assets which are to be covered by insurance. The insurance of such assets will be done at H.O.
9.2 While fixing policies for vehicles/machineries etc, items sold or discarded should not be included in the policy.
9.3 In case of H.O taken delivery of the materials on behalf of sites and again transferred to the site by separate transfers, and shortages are noticed, the site office should inform H.O. simultaneously and cost of such shortages is to be recovered from the party bills if settled at site, otherwise necessary action would be taken by H.O.
9.4 If the dispatches are covered by transit insurance, claims are to be lodged with the insurance company for transit losses, if any.
10.0
REJECTED MATERIALS:
10.1 In case of any rejection of materials, due to damage or non-confirming to the specifications, the purchase department / site / H.O. should be informed within 2 days, so that they will take up the matter with the supplier to take back the material & replace with good materials or refund the payment if any already made.
10.2.1 All rejected materials are to be entered in a separate stock ledger till they are returned or otherwise disposed off.
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RECORDS:
Sl.No
Ref No
Retention Period
Filing Sequence
Register
IVRCL/DOC/ST/02
3 Years
Manual
IVRCL/DOC /ST/03
Project Manager
3 Years
System Generated
System Generated
IVRCL/DOC/ST/05
3 Years
Manual
PURPOSE: The purpose of this procedure is to define the method for storage of materials in bins stores area / storage yard, after receiving inspection activities.
SCOPE:
This procedure covers for all items which are directly required for execution of the project.
REFERENCE:
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METHOD:
1.0
Purchased materials should be stored and issued for execution of the project after the acceptance of the material by the concerned departments on the material receipt note (MRN)
1.1
After receipt and approval of materials at the site, the stores department should take proper care for their storage in Bins or Racks at convenient places and protect
them from damage, losses, obsolescence etc., and to issue them wherever required for use in the works.
1.2
The materials are to be stored for easy identification of bins to avoid unnecessary delay in locating, and making physical verification of store items easily
. 1.3 Non-Bulk materials and shelf life items received from different consignments should be stored separately to facilitate FIFO issue.
1.4
The rejected materials are to be moved to a designated area and they should not be mixed with approved or accepted materials.
1.5
The site stores in-charge should periodically review the rejected designated area to ensure prompt return of the material back to the suppliers.
1.6
All hazardous materials should be stored separately, as per prevalent statutory regulations. The storage go down should be provided with proper ventilation. Material safety data sheets (MSDS) should be obtained from material suppliers and kept in stores for reference.
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SCOPE
This procedure covers for all items which are directly required for project.
execution of the
REFERENCE
METHOD:
1.0
Materials are to be issued only on a written requisition duly signed by Project in-charge or authorized person by him. This format is known as Material Issue Voucher(Format: IVRCL/DOC/ST/06)
1.1
The issue voucher should contain description, material code, quantity to be issued, and name of the work for which it is required, location / Area, contractor, etc., All shelf life items should be issued on FIRST IN FIRST OUT (FIFO) basis.
1.2
1.3
Issue of materials should be done only from accepted materials lying in stores. No rejected material should be issued.
1.4
The site stores in-charge is authorized to issue materials against materials issue voucher.
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64 1.5 After delivery of materials to the user, acknowledgement has to be taken on both the copies of issue indent. The original copy will be retained in stores and duplicate given to the indenter with materials.
1.6
The site stores in-charge should ensure that no material is issued without properly authorized material issue voucher.
1.7
All the material issue vouchers should be updated into the package system by stores department on day-to-day basis.
2.0
2.1
As per the requirement of the site Engineer, the stores department shall issue
all
aggregate materials such as Sand, Bricks, Metals, boulders etc., from the stock yard against material issue voucher.
2.2
In order to avoid multiple handling, the aggregate materials shall be directly unloaded at site as per requirement In consultation with Project-in-Charge.
2.3
The stores department has to obtain information from site Engineers about actual issue and theoretical consumption on a monthly basis.
3.0
3.1
When materials are dispatched from one site to another site, the materials should go with proper STN and also a gate pass in duplicate. One copy of gate pass will be handed over to the party. The security personnel at the gate will check the material being taken out with gate pass. After satisfying, he will affix a stamp CHECKED WITH GATE PASS on the STN and allow the materials to be taken out. The gate pass prevents pilferage, theft from the stores. any
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3.2
Further STOCK TRANSFER NOTE (STN)(Format: IVRCL/DOC/ST/04) is to be exported from Inventory Package, through E-mail. In order to import the document by the receiving site.
3.3
The material receiving site should acknowledge the receipt of material and duplicate copy of challan or e-mail message to sending site.
send
4.0
4.1.1 The materials are issued to sub-contractor or others on cost basis, as per the work order.
4.1.1 A clear indication may be given on issue indent to recover cost. The parties are to be debited at the issue rate along with approved overhead charges.
4.1.2 The site stores in-charge should also make monthly summary of debit notes party wise and recheck with accounts.
5.0
5.1.1 The sub-contractor shall draw the materials from stores against issue voucher, at free of cost as per work order conditions.
5.1.2 The sub-contractor shall be responsible for drawing the materials from stores, loading, transportations to the actual work site and unloading, proper storage and security/ safety of materials till the job is completed.
5.1.3 In case of surplus materials or scrap is available, the sub-contractor shall return the surplus material / scrap to stores at their cost.
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66 5.1.4 The sub-contractors are required to submit the reconciliation of materials at every running bill stage showing the theoretical consumption and actual consumption failing which there may be delay in releasing the payment. Any discrepancies found in the reconciliation resulting in losses / wastage beyond actual consumption, the cost of the same should be recovered from the sub-contractors bill.
6.0
6.1
All materials issued to outside parties on loan/returnable basis or for fabrication or for repairs are to be recorded in a separate register. RETURNABLE MATERIALS REGISTER (Format:IVRCL/DOC/ST/07)
6.1.2 A returnable gate pass (Format:IVRCL/DOC/ST/08) has to be prepared and issued to the party who will surrender the same to the security Personnel at Gate, while taking
the materials out of premises . 6.3.1 Security Persons will check materials and documents for all outgoing materials./ equipments and allow to leave only on conformity.
6.3.2 The site stores in-charge should keep track of the returnable material and necessary follow up is to be done.
6.3.3 When the materials are received back in stores, the same should be checked and if in order, take delivery, otherwise, justification to be given by the returning party or else cost of such material should be deducted.
6.3.4 A note of such returns should be made in the original returnable gate pass as well as loan register against the original entry.
6.3.5 In case of materials not returned by the party, the cost of the material with overhead charges is to be debited to the party.
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6.8
Tools & Tackles, personnel protective equipment and measuring instruments shall be issued to all on returnable basis by entering in returnable material register. In case of nonreturn of these materials, the cost of the same shall be recovered from the concerned personnel / contractor.
7.0
Receipt of materials, issued and balance quantities in clients account. 7.1.2 It is the responsibility of the stores-in-Charge to verify the quantities of all material issued by clients on monthly basis to avoid any deviation/variation.
8.0
8.1.1 Fuel and lubricants shall be issued to vehicles, machinery, plants & Equipments either directly from nearest fuel filling station or from stores against issue voucher
8.1.2 Fuel issue quantity is to be entered in vehicle Logbook (Format: IVRCL/DOC/ST/09) which will be available the Operator/Driver.
8.1.3 Stores shall maintain a separate register (Format:IVRCL/DOC/ST/10) for fuel issue to each vehicle / equipment.
8.1.4 Stores in-charge has to verify the mileage of each vehicle and any excess consumption of POL is observed, the issue should be brought to the notice of the concerned Engineer immediately.
9.0 9.1
HIRED EQUIPMENT / VEHICLES. The company may hire equipments / vehicles for execution of the project.
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9.2
Stores shall maintain separate register for hired materials / equipment deployed at site.
9.3
In case of any issue of spares or fuel to these hired equipment / vehicle, the same may recorded in the HIRED EQUIPMENT REGISTER and the cost of the same shall be recovered from the contractors bills as per Work Order conditions.
10.0
SCAFFOLDING MATERIALS:
10.1
Stores in-charge shall monitor strictly the issue of scaffolding materials and reviewed by project manager from time to time.
10.2
After the use, the scaffolding material should be cleaned and returned to the stores for proper storage.
10.3.1 To preserve the materials whenever required preservatives are to be applied in the threads of outer surface and in the surface of shuttering plates.
10.3.2 The use of shuttering materials as covers to drain / man holes should not be used.
10.3.3 Damaged materials/scrap should be disposed off with approval of H.O and after necessary accounting in the stores ledger.
10.3.4 For disposal of scrap, a minimum of 3 competitive quotations duly covering the statuatory taxes should be obtained and the material will be sold to highest bidder on collecting the amount in advance.
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69 RECORDS:
S.N o
Ref No
Retention Period
Filing Sequence
Indent
IVRCL/DOC/ST/ 06
3 Years
Manually
IVRCL/DOC/ST/ 04
3 Years
System Generated
IVRCL/DOC/ST/ 07
3 Years
Manually
IVRCL/DOC/ST/ 08 IVRCL/DOC/ST/ 09
3 Years
Manually
3 Years
Manually
Fuel/Lubricants/S 6 pares issue Register IVRCL/DOC/ST/ 10 Site Stores InCharge 3 Years Manually
METHOD:
1.0
Periodic verification of the quality of stored material should be carried out together with verification of the quantities by stores.
1.1
Periodic quality verification should include, at a minimum the following: Mix up consignments Storage period. Visual characteristics such as rusting of steel, cracking of rubber components, solidification of cement bags etc., Damage / deterioration of the containers / packing or any leakage etc.
1.2
Based on observations on verifications as mentioned above (1.1), the materials are to be retested or inspection to be carried out in case of any deterioration of material to determine as to whether the material is usable.
1.3
After verification or inspection, the materials are not confirming to specifications, those materials are to be moved to a quarantine area and disposed off suitably
. 1.4.1 Observations of periodic quality verification should be recorded in periodic quality verification report including the test report if any.
1.4.2 Site
stores
in-charge
should
initiate
appropriate
counter
measures
and
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PURPOSE
SCOPE
: This procedure covers for all items which are directly required for execution of the project
REFERENCE
RESPONSIBILITY:
METHOD
1.0
Various mechanical means such as forklift, trucks, trolleys, loaders, bulldozers wooden pallets wooden sleepers, etc are used, as appropriate, for handling materials.
1.1
Equipments need for handling materials should be kept clean to prevent contamination effect.
1.2
Damage of packaged materials, prevention should be ensured by training of personnel engaged in handling the materials.
1.3
1.4
1.5
PPE like safety helmets, Hand gloves and shoes are to be used.
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PURPOSE
: The purpose of this procedure is to list out the equipment & measurement Devices used in stores area.
SCOPE
METHOD:
1.0
List of equipments and measurement devices and areas of usage are to be listed.
1.1
REFERENCE
RESPONSIBILITY:
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73 METHOD:
1.0
Suitable Fire extinguishers / Fire hydrants in all storage areas should be maintained.
2.0
Suitable personnel protective wear like nose mask, hand gloves and gum boots should be provided whenever required.
3.0
Safety precautions pertaining to material handling shall be displayed at all required places.
4.0
Safety related matters should be revised periodically and pursued through the department meetings.
5.0
Name of the personnel trained in First Aid should be displayed in different areas of the department for easy accessibility in case of any emergency.
SCOPE
REFERENCE :
METHOD 1.0
Quality records required for providing evidence of any activity should be identified in the quality system procedure covering that activity.
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74 2.0 Designated storage area / provisions should be made to protect the records from damage and deterioration.
3.0
4.0
The files / storage provision should be legibly labeled so as to permit easy retrieval of the files / records.
5.0
Suitable provision should be made for keeping the old records required for reference.
6.0
Records which are maintained in the computer system should be protected suitably by backups and for data integrity and security.
PURPOSE
: The purpose of this procedure is to define the method for collecting material wastage and their disposal.
SCOPE
: This procedure covers for all wastage items which are generated during the execution of the project.
REFERENCE:
---
RESPONSIBILITY:
METHOD:
1.0
MATERIAL:
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75 1.1 Stores should collect all types of waste materials, such as tor steel, MS steel, SS, GI, Aluminum, Brass, Copper, Rubber, cotton, Plastic, waste oil, wooden and electrical scraps etc., . 1.2 All the receipts of scrap / waste materials are to be recorded in the Scrap Register as per Format (IVRCL/DOC/ST/ 11), on regular basis . 1.3 All waste materials are to be stored separately, without mixing.
1.4
While issuing spares for equipment and electrical items such as bearings, governors, discs, metal etc., the worn out spare parts must be collected by stores.
1.5
The stores in-charge should endorse on invoice of new items that the worn out spare parts have been returned to the stores, hence new items are purchased. Based on this endorsement, the accounts will make payment to the party.
1.5
The worn out spares are to be stored separately and to be issued for re use in case of emergency.
2.0
2.1
The accumulated scrap / waste materials shall be disposed off at least once in a year or earlier basing on the volume of quantity.
2.2
A minimum of 3 quotations for each category of waste materials, shall be obtained and a comparative statement is to be prepared. All the buyers mentioned in the comparative statement should have valid TIN/PAN.
2.3
A note with details of quantity and expected realization along with comparative statement shall be forwarded to H.O. for approval of Executive Director.
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76 2.4 After EDs approval, the sale order is to be issued in favor of prospective buyer and the full amount of realization should be taken by way of Demand Draft / Cheque.
2.5
After realization of payment for full value, the delivery is to be given to the buyer along with invoice with applicable VAT or CST and TCS.
2.6
This amount is to be accounted for in the respective site / regional office with the support of EDs approval attached.
2.7
One copy of invoice is to be forwarded to TDS section at H.O and the second copy of invoice is to be arranged to the accounts where VAT returns are being filed.
2.8
The above documents are required to be arranged on quarterly basis to accounts department, H.O.
3.0
SALE OF VEHICLES.
3.1
The procedure for sale of vehicles shall also be applicable as per the sale of scrap / waste materials as mentioned in 2.2 to 2.8.
3.2
After making full payment by the prospective buyer, the vehicle is to be handed over with transfer of R.C. Book. The applicable VAT or CST along with C form is to be charged.
3.3
3.4
The sale is to be affected in the fixed assets register by posting of necessary issue voucher.
PURPOSE
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SCOPE REFERENCE
METHOD:
1.0
The site stores in-charge should prepare a list of materials / assets available at site and send the same to H.O. / D.O. / R.O. in advance, through project manager.
1.1
The H.O. / D.O. / R.O. will issue necessary instructions about their transfer to other sites or for their disposal.
1.2
As per instruction of H.O. / D.O. / R.O. Stores has to dispatch material / assets to other sites or disposed off following the procedure.
1.3.1
Major stores records should be properly packed and listed out the important files, and other valuable documents which are to be dispatched to R.O. / D.O. / H.O. or central stores.
1.3.2
All loose items, waste materials and no longer required records etc., which are not useful, should be disposed off with approval of project manager.
1.3.3
All stores in-charge will be relieved only after proper material reconciliation of all major stores items and handing over all records and materials to the nominated persons as per project manager instructions.
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METHOD: 1.0 The identified training needs of the personnel working in stores are given, category wise, in the table.
2.0
3.0
Employee should be deputed to suitable training programs, as and when arranged by the H.O. / R.O
4.0
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79 TABLE:
Slno
TRAINING NEEDS - Quality system development and - Managerial development skills. - Implementation of inventory package. - Communication & MIS - Quality system implementation implementation
- Latest material handling system and methods - Electronic system handling. - Implementation of inventory package. - Employee development program - Quality system awareness
Workmen
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PURPOSE
: The purpose of this procedure is to define the method for timely providing Information to management.
SCOPE
: This procedure covers for all materials which are directly required for Execution of the project.
RESPONSIBILITY: Site stores in-charge / Regional or Divisional inventory controllers. METHOD: 1.0 STORES MATERIAL RECONCILATION:
1.1
The major material reconciliation is to be carried out on monthly basis by site stores incharge.
1.2
Reasons for deviation, between received quantity and issued quantity, are to be analyzed and reported.
1.3
1.4
The reconciliation of fixed assets are to be carried out, once in a quarter, by stores incharge as per format (IVRCL/MIS/ST/13).
2.0
2.1.1 The over all reconciliation of major material is to be carried out monthly basis,
by
stores in-charge/Regional or Divisional Inventory controller and project manager as per format (IVRCL/MIS/ST/14).
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81 2.1.2 Both the stores in-charges and project engineers shall assess the discrepancies.
2.1.3 If any losses observed, the reasons for the losses are to be ascertained and recorded in the register.
3.0
3.1.1 The major materials issued to sub contractors are to be reconciled, once in a month, by stores in-charge / regional or divisional inventory controllers, and project engineer as per format (IVRCL/MIS/ST/15).
3.2
Project engineer shall obtain and provide to stores in-charge that a statement of quantity issued, quantity used (theoretical) and balance quantity lying at the sub-contractor area duly signed by the project manager.
3.3
Incase of any shortages noticed with sub-contractor, the cost of the materials is to be recovered from the sub-contractor bills.
4.1.1 The statement showing the details of BOQ executed and billed to the client, and payments made to the sub-contractors, on quarterly basis, by Regional/Divisional Inventory controllers, as per format (IVRCL/MIS/ST/16).
4.1.2 Reasons are to be ascertained incase of paid quantities are more than billed quantities.
5.0
STATUTORY REPORTS:
5.1
Stores have to prepare and submit the following statutory reports to accounts department on quarterly basis.
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S.No. 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Document No. IVRCL/DOC/ST/01 IVRCL/DOC/ST/02 IVRCL/DOC/ST/03 IVRCL/DOC/ST/04 IVRCL/DOC/ST/05 IVRCL/DOC/ST/06 IVRCL/DOC/ST/07 IVRCL/DOC/ST/08 IVRCL/DOC/ST/09 IVRCL/DOC/ST/10 IVRCL/DOC/ST/11 IVRCL/MIS/ST/12 IVRCL/MIS/ST/13 IVRCL/MIS/ST/14 IVRCL/MIS/ST/15
Document Title PURCHASE REQUISITION MATERIALINWARD REGISTER MATERIAL RECEIPT NOTE (MRN) STOCK TRANSFER NOTE (STN) FIXED ASSETS LEDGER MATERIAL ISSUE SLIP RETERNABLE MATERIAL REGISTER RETURNABLE GATE PASS VEHICLE LOG BOOK FUEL & LUBRICANTS AND SPARES ISSUE REGISTER SCRAP REGISTER STORES MATERIAL RECONCILIATION FIXED ASSETS RECONCILIATION ALL MAJOR MATERIAL RECONCILIATION SUB-CONTRACTOR WISE MATERIAL RECONCILIATION
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83 16 17 18 19 IVRCL/MIS/ST/16 IVRCL/MIS/ST/17 IVRCL/MIS/ST/18 IVRCL/MIS/ST/19 BILLED QUANTITIES VS PAID QUANTITIES QUARTERLY CLOSING STOCK STATEMENT OF STORES ITEMS FIXED ASSETS STATEMENT QUARTERLY RECONCILIATION OF MAJOR CONSTRUCTION MATERIALS MRN AND PJV RECONCILIATION 20 IVRCL/MIS/ST/20 STATEMENT / EXTRACT OF MRN REGISTER
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84 6. The scrap lying at various locations is not being collected and stacked properly, leaving a room for mis-use or theft. The scrap should be periodically collected from all locations and stacked in Main store for proper security and further accountability and also to dispose off them at frequent intervals to lessen the burden as well as to gain income. 7. Periodical maintenance of the machinery, equipments, plants and vehicles is not being done owing to exigencies. However, a reasonable time should be fixed for their maintenance which would increase the capacity of utilization as well as life span.
CONCLUSIONS :
Since execution of project is by utilizing the machinery and manpower,
reach/control such as non-availability of required skilled/unskilled manpower and frequent break down of machinery/equipment, non-availability of major material in time or due to natural calamities etc or delay from clients in according approvals and decisions etc duly fulfilling their part of contractual obligations. Hence it is beyond prediction that the project would be completed well within time earning projected margin.
The project, when completed, would extend irrigation facilities to a total ayacut of 50250 acres in Mahbubnagar dist boosting up the cultivation in many villages as well as increasing the economy and life style of farmers.
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BIBLIOGRAPHY
Financial Accounting (By RP Trivedi) Financial Management (By IM Pandey) Fundamentals of Financial Management (By Prasanna Chandra) Detailed Project Report of IVRCL Limited Web sites www.ivrcl.com
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