Chapter-1

INTRODUCTION TO HYDRO POWER PROJECTS

Hydro Power Projects are power generating units of modern infrastructure.

They have immense potential to generate sufficient & efficient power for current

requirements. Hydroelectricity is the term referring to electricity generated by

hydropower, the production of electrical power through the use of the gravitational

force of falling or flowing water. It is the most widely used form of renewable

energy. Hydropower is produced in 150 countries, with the Asia-Pacific region

generating 32 per cent of global hydropower. The cost of hydroelectricity is

relatively low, making it a competitive source of renewable electricity. Once a

hydroelectric complex is constructed, the project produces no direct waste, and

has a considerably lower output level of the greenhouse gas carbon dioxide (CO2)

than fossil fuel powered energy plants. Since hydroelectric dams do not burn fossil

fuels, they do not directly produce carbon dioxide. While some carbon dioxide is

produced during construction of the project, which is a tiny fraction of the operating

emissions of equivalent fossil-fuel electricity generation.

Compared to other Power Generation methods, Hydro Power Generations

have following advantages:-

1. Environmentally clean generation.

2. Easy Switch ON & OFF (Can be used for our regular power requirements &

also to enhance the Grid during peak power requirements between 6am

to 10 am & 6pm to 10 pm).

1
 3. Uses renewable source of energy (River Water).

Reservoirs created by hydroelectric schemes often provide facilities for water

sports, and become tourist attractions themselves. In some countries, aquaculture

in reservoirs is common. Multi-use dams installed for irrigation support agriculture

with a relatively constant water supply. Large hydro dams can control floods, which

would otherwise affect people living downstream of the project. Hydroelectricity

eliminates the flue gas emissions from fossil fuel combustion, including pollutants

such as sulphur dioxide, nitric oxide, carbon monoxide, dust, and mercury in the

coal. Hydroelectricity also avoids the hazards of coal mining and the indirect health

effects of coal emissions. Compared to nuclear power, hydroelectricity generates

no nuclear waste, has none of the dangers associated with uranium mining, nor

nuclear leaks. Unlike uranium, hydroelectricity is also a renewable energy source.

Compared to wind farms, hydroelectricity power plants have a more predictable

load factor. If the project has a storage reservoir, it can generate power when

needed. Hydroelectric plants can be easily regulated to follow variations in power

demand

A brief description of process- Hydro Power Generation: - A Dam is constructed

across the river in a location where maximum & sufficient catchment area is

available to hold the water with maximum Head (height of the water level in dam)

possible for the purpose of power generation. The Head of the water is a very

important factor for the capacity of generation. This basic detail is used in all

simple & complex calculation of load on each equipment & structures in the Hydro

Power Project. The water is then diverted to a Head Race tunnel (HRT- pathway

2
tunnel dug in the mountains to route the water from catchment area to reach the

turbine) through intake structure whose opening is through Trash Rack (Physical

structure designed like a mesh & made of steel to filter the larger impurities like

wooden logs, remains of dead animals & other material which flows along with the

river water) & De-Silting chambers (to allow the silts & other smaller impurities to

settle down before entering the HRT).

De-Silting chambers play a very important role in filtering out the Silts from the

river water. Water collected from natural rivers mostly contains a certain amount of

suspended sediment particles called the Silts. If Silts are not removed, it interacts

with almost all the equipment of power plant resulting in abrasion & hence eroding

the equipment which is undesired & connected with high expenses due to

renovations and operating restrictions.

After travelling through HRT the water reaches Penstock (almost a vertical pipe

- either inside the mountain or outside the mountain). The water attains maximum

pressure & velocity at the nozzle which is located at the end of penstock. The

nozzle sprays the water in form of jet on Turbine (They are the rotating component

designed according to the capacity & flow criteria) which in turn cranks the

Generator (Electrical component which connected to the turbine & this converts

the Mechanical Energy to Electrical Energy). Both the Turbines & the Generator

along with other supporting electrical equipment are placed inside the Power

House. After passing through turbine the water is then let out to the river stream

through Tail Race Tunnel (TRT). After generation the water is of no use for the

power project & has to be retained to the environment for ecological purposes.

3
The diagram of a typical Hydro Power Project is shown below in Diagram-1.

The Hydro Power Project under study here is Teesta Urja (With 1200MW

Generation Capacity) which is under construction across the River Teesta in the

state of Sikkim, India. The cost of construction & erection of such a huge plant

comes to around Rs. 6,000 Cr. The working area of Hydro Power Project which is

under study may be called as TEESTA SITE. The major activities in installation

process are as follows:

1. Construction of Access road (Hydro Power Projects sites are non-

accessible in most cases). The access roads are generally made by cutting

the mountains in the circumference of the mountain with required gradient.

This is one of the major bottlenecks of Hydro Power Project as no parallel

activity can be started without the access road.

4
2. Construction of Head Race Tunnel (HRT), Tail Race Tunnel (TRT), Power

House, Penstock (or Pressure Shaft) & Surge Shaft. These areas of

constructions are the operating areas where the water from the river flows

through to generate electricity.

3. Construction of Dam & De-Silting Chamber. These are physical structures

or the back bones of operating the hydropower project.

4. Construction of Switch yard complex. This is controlling unit of the quality of

electricity generated from the Hydro Power Projects. The frequency & other

parameters of the power generated from the hydropower projects are

monitored & controlled from here to match with the grids requirement.

5. Installation of Turbines, Generators & appropriate GATES for controlling

utilisable water. These are the operating equipment which converts the

energy from one form to another.

5
 Chapter-2

PROBLEM UNDER STUDY: - CHALLENGES OF SCM IN HYDRO POWER

PROJECTS

The SCM Challenges in any Hydro Power Projects are very crucial. As there is

large number of Construction equipment plying & large number of people working

at site towards a common goal of completing the project on time, each & every

hour is highly important. Halting of work even for a few hours are very expensive

as the idle time costs are very high compared to keeping optimum inventories.

Following are the major constrains faced by SCM in executing & operating in

Hydro Power Projects.

1. Geographical Constrains: - Almost all Hydro Projects are located on high

altitude & terrains so as to get the natural Potential Energy from the river

water by their natural head difference from the plain. The location of

availability of resource (River with high potential energy) is available in few

states in India. The states are Himachal Pradesh, Jammu & Kashmir,

Uttaranchal, Punjab, Sikkim, Arunachal Pradesh & other north eastern

states of India. The infrastructure development activity & road connectivity

of northern states are very good as compared to North-eastern states.

Government has restricted major road connectivity due to threats from

border countries like China. Hence the geographical constrains in the north-

eastern states is always a challenge.

Dam location is identified in such a location so that maximum catchment

area is obtained where maximum possible river water can be stored in order
6
to obtain high potential energy & uninterrupted supply of water. It is also

done by keeping in mind of using minimum dimensions of the Dam to be

constructed. The Power House location is identified such that the maximum

height difference can be obtained between the water level in Dam & the

Turbine. These locations are generally on terrains where the Glaziers melt

to form the river. The road connectivity to these locations are very limited or

in many cased there is no road connectivity.

Teesta site is no exception to this Geographical Constrains. The

location of Teesta site is in the North Sikkim district in Sikkim State. The

only surface connectivity is through road. All the material for construction

has to travel through the road.

7
 The connectivity road map to the site is as below.

A- Mangan (North Sikkim) B- Siliguri (West Bengal)

8
 Siliguri (West Bengal) which is about 150 km from Teesta site is the

nearest Major Market. And Siliguri has the surface connectivity through both

road & rail. Siliguri is considered the entry point to North eastern states of

India. The road between Teesta Site & Siliguri being in terrain & having

small & tiny water spills, there are many bridges in the way. The load

capacities of these bridges are very low. So Sikkim government has

declared load restrictions to be transported through these bridges. The load

restriction disturbs the movement of the bulk material requirement for a

Hydro Power Project.

Being terrain location, the roads are with many hair pin bends. The

rain fall in this area is also very heavy & due to this there have been so

many landslides witnessed in these roads. We have also witnessed

complete washout of roads in these areas & there have been in complete

cut-off between site & Siliguri for about 15-20 days. This is almost regular in

every monsoon. This has been real challenge to SCM many a times. The

material required for continuous construction activity had been held up on

the way from Siliguri to Teesta site due to no road connectivity to site. This

had forced management of Teesta Urja to keep sufficient critical inventories

at site for continuous construction activity.

Further to this, the other point to be discussed in geographical

constrain is the geographical surprises. The rock strata of the location of

tunnelling are studied thoroughly before the start of any tunnelling activity.

But even after that there are many possibilities to encounter not so good

type of rock (both soft & hard rocks are considered not so good type). This
9
 increases the consumption of rock tools, construction chemicals & other

critical items. If the rocks are very hard, then the consumption of explosives,

rock drilling tools etc., increases. Similarly if the rocks are very soft, the

blasting may take away more rock from the tunnels creating undesired

cavities in the tunnel. To fill these tunnels, the consumption of Cement,

Steel & other construction chemicals may increase. Also there are chances

for seepage of water from rocks, which increases the consumption rate of

construction chemicals for quick setting of Cement & shot Crete in the

tunnels.

The identification process & the identified materials as critical items

are discussed latter in this thesis. Due to this Geographical location

Constrain, the next constrain arises as Market Constrain & due to the

Market Constrains the third constrain arises as the Lead Time Constrain.

2. Market Constrains: - The material required for construction works in Hydro

Power Projects includes bulk materials (like reinforcement steel, structural

steel, cement, aggregates), special purpose construction chemicals,

explosives, construction equipment (like boomers, excavators, tippers,

loaders, cranes, diesel generators, pickup vans, ambulances etc.), tools

tackles, wire slings, welding machines & so on. The nearest market is

Siliguri (West Bengal) which is about 150 KM from Teesta Site & is not in

terrain. The range of material available at this location is very few & also the

cost of material at this location is high due to high demand area. Almost all

material required for the construction activity has to be brought from other

manufacturing locations directly. The methodology adapted to cater this

10
 market constrain is to have a transit store at Siliguri to handle materials

received from the manufactures directly. The details of the same will be

discussed in coming chapters of Transit Store.

3. Lead Time Constrains: - As discussed above, almost all material required

for Hydro Power Construction activity has to travel from other parts of

country (in some cases even from other countries), & also has to travel

through the critical road path between Siliguri & Teesta site, the lead time

for these material to reach Teesta site is more. Other than this there is also

the issue of local problems like Strike in West Bengal & nearby regions

which is very common & frequent in these locations. This lead to non-

operation of vehicles, non-availability of manpower etc. We had lost about

120 working days due to strike in year 2011. This directly contributes to

Time over run in project execution. This constrain is cyclic reaction or by-

product of other constrains.

Time Over run & Money Over run are the major problems faced by Hydro

Power Projects due to the above discussed constrains. All together the constrains

formed are vicious circle & our challenge is to break this vicious circle & operate to

complete the construction work of the Teesta Site without Time Over run & Money

Over run.

As a SCM team, our objective is to plan, frame procedures & operate on

Material Management to have uninterrupted works at Teesta site with minimum

working capital & inventory. As already discussed, there are so many materials

involved in various stages of setting up a Hydro Power Project. In this thesis we

11
will concentrate on the material used for the Construction & Tunnelling Activity as

this contributes to about more than 70% of works in Hydro Power Projects. If we

as a SCM team can manage material flow for this activity effectively, then it would

be achievement for the complete setting up of Hydro Power Project. The time for

procurement & mobilisation of the capital equipment is a challenge by itself, but we

in this thesis will mainly concentrate on the revenue items or regular consumption

material in the process of construction work. The next chapter will give clear

picture on Materials used in the construction & tunnelling activity. And the coming

chapter will provide clear picture on the process & methods used to overcome the

challenges faced by SCM in Hydro Power Project.

Chapter-3

MATERIALS UNDER INVESTIGATION

As discussed earlier, there are roughly about 15,000 number of materials used

in setting up of Hydro Power Project. As major part of material involved is for

Construction & Tunnelling activity, we would focus only on those materials. The

following categories of materials are investigated in this thesis.

1. Cement PPC grade Cement. This is used for construction foundation, for

lining the tunnel internal surface, construction of Dam, construction of

power house, construction of all structures in hydro Power Project.

2. Steel Reinforcement Steel (TMT), Structural Steel (Angles, Channels,

Beams, Plates). They are used for construction of all type of structures &

supporting structures.

12
3. Construction Chemicals Accelerator, Super Plasticizer, Micro fine

Cement, Resin Capsules, Cement Capsules, Poly Fibre, and Micro Silica &

Dispenser are major of them. All these are special purpose construction

chemicals used for different purposes. These are mainly used in tunnelling

activity to increase or decrease the setting time of cement, few of them are

used to provide extra strength to cement.

4. Rock Tools or Drilling Tools Button Bits (Different Sizes), Coupling

Sleeves (Different Sizes), Shank Adaptors (Different Sizes), Reducing

Couplings (Different Sizes), Extension Rods (Different Sizes), Pilot Adaptor

(Different Sizes), Reamer Bits (Different Sizes) & Drifter Rods (Different

Sizes). These rock drilling tools are used for drilling into the rocks on

mountains. These are of special shapes & sizes as per the rocks. After

drilling the rocks, the holes are then packed with explosive & then blasted to

create tunnel in mountains.

5. Tyres Tyres for Tipper, Loaders, Hydraulic Cranes etc. Due to the tough &

rocky road condition the tyre of the heavy earthmoving equipment get

damaged on higher rate. Hence these are also under consuming material

list which is under investigation.

6. Lubricants Hydraulic Oil, Engine Oil (15w40 & 20w40), Grease etc.

These lubricants are used for the heavy earth moving equipment.

7. Ribs- These are fabricated structure (of different sizes) to with stand the

loose rocks in tunnel. They are fabricated as per the design.

13
8. General Hardware & Consumables Nuts (Different Sizes), Bolts

(Different Sizes), Washers, Rock bolts (Different Sizes), Base plates, Cotton

waste (for cleaning), Paints (for tunnel markings-patterns for explosion),

Hook up wire (for connecting explosives with trigger), Loading Sticks (for

explosive loading in drilled holes of tunnel), Flanges with washers, MS

Pipes etc.

9. Hydraulic & Pneumatic Hoses & Fittings Heavy duty Hoses of different

sizes for different equipment along with their end fittings. As & when

required, the hydraulic hose is cut for desired length & used for the

hydraulic system using desired end fittings. This will reduce the cost of

hoses used as the OEM charges higher rates for these materials. This is a

process of indigenisation of OEM spare parts.

10. Electrical Cables & Accessories Cables (copper & aluminium with

different sizes as applicable for projects regular requirement), Lugs (for

above cable), Termination kit, Empire & HT tapes, etc. These are used for

electrical works at site for setting up illumination works, to set up dewatering

pump arrangement, to set up DG sets for particular works, etc.

11. Electrical & Illumination Fittings TPN Switched with HRC Fuse, Tube

light fittings, Tube lights, Halogen Holders, Halogen Tubes, etc. These are

for illumination work inside the tunnel. As the tunnelling progresses, the

illumination is setup accordingly.

12. Welding Electrodes & Accessories Welding electrodes (different

specifications for different purpose), Holders, Gas cutting nozzles, etc.

14
 These are used for site works like welding excavator buckets, for welding

the steel structures & supporting structures.

13. Ventilation Duct & Accessories Ducts used in Tunnel for Ventilation

purpose, Slings for holding it in tunnel, etc. After the blasting in tunnel face,

the explosives liberate sufficient amount of gases along with smoke. These

gases & smoke are ventilated through the ventilation duct. As the tunnelling

progresses, the ventilation is setup accordingly.

14. Explosives Detonators (With different Delays), Cordex Cable, Explosive

Mixture (Gelatine) etc.

15. Diesel For equipment & machine at site.

Out of above Diesel is procured from Siliguri office directly from oil Companies

(IOCL & HPCL). They have their depots near site location. The terms & conditions

are frozen for the supplies & only changing criteria is the price. The price is also

governed by the oil companies. Hence there is no further scope of negotiations in

this commodity. The only thing to note is planning the requirement for

uninterrupted supply of diesel. Further to this, moving a step ahead, we had

approached the oil companies to place diesel tank of about 9 KLtr for our site

requirement for which we had received the same & operating using the diesel

bunk.

The Explosives are procured by liaison team as it requires permission from

State Government for every purchase & the Magazine (where explosives are

stored) should be monitored continuously for stocks as that should not exceed the

maximum permitted capacity. Other than this, there is a requirement of regular

15
inspection by the government authorities of the magazine. Being a sensitive issue,

explosive purchase has to be handled in a specialised manner by the liaison team.

Out of above material, materials of all sizes & specification are not required

continuously. There are less than one hundred fifty items which are continuously

required on almost daily basis for smooth working of site without interruption.

These materials are technically named by SCM Team as CRITICAL ITEM. Other

items are procured as & when required by raising the requirement (Purchase

Requisition) by the project technical team & sending the same to the SCM

department for procurement activity. But for the Critical Items procurement, the

strategy is different compared to the normally required items. In this thesis we will

concentrate on these CRITICAL ITEMS. The process adopted for framing

procedures & operating methodology for having continuous flow of these

CRITICAL ITEMS.

Before going into details we will first have to list the items which have to be

placed under CRITICAL ITEM list. The following criteria are adopted for identifying

the critical items:-

1. Continuous requirement (requirement in every day work).

2. Without which there will be idle time for men & machinery at site.

The details of items under critical item list are provided in below Table-1.

Consumption
S No Type Description Specification Unit
/Day
1 CEMENT PPC Grade MT 33.33
2 VENTILATION DUCT 2000 mm Mtr 33.33
3 HIGH SPEED DIESEL Ltr 666.67
4 Rock Tools/ Drill DRIFTER ROD 4.3MTR R38/R32 No 2.00

16
5 BUTTON BIT R32x45 No 6.67
6 BUTTON BIT R32x76 No 0.33
7 BUTTON BIT R28x38 No 0.50
8 COUPLING SLEEVE R38xR38 No 1.00
9 SHANK ADAPTOR R38 No 0.50
10 Tools SHANK ADAPTOR Boomer No 0.33
11 REDUCING COUPLING R38xR32 No 1.33
12 COUPLING SLEEVE R32 No 0.83
13 EXTN ROD 3.7MTS R32 No 0.67
14 PILOT ADAPTOR R32 No 0.50
15 REAMER BIT 102 S45 No 0.50
16 RESIN CAPSUELS 40mm x 300mm No 416.67

17 CEMENT CAPSUELS 40mm x 300mm No 666.67

18 MICRO FINE CEMENT Injecrocem R160 Kg 1666.67
19 Construction ACCELERATOR Meyco SA 160 Kg 1400.00
Chemicals
20 SUPER PLASTICISER Rheobuild SP -1 Kg 466.67
21 POLY FIBRE Enduro-600 Kg 333.33
22 MICRO SILICA/SILICA FUME Kg 1666.67
23 DISPENSER Rheobuild 2000 PF Kg 20.00
24 HYDRAULIC OIL TH 46 Ltr 42.00
25 ENGINE OIL 15 W 40 Ltr 63.00
26 ENGINE OIL 20 W 40 Ltr 21.00
Lubricants
27 GREASE EP2 Kg 54.60
28 SERVONEUM100 Ltr 63.00
29 SERVOSYSTEM 46 S.S-46 Ltr 63.00
30 TYRE,TUBE & FLAP FRON 1000-20 (Lug) Set 0.33
31 TYRE,TUBE & FLAP REAR 1000-20 (Rib) Set 0.67
32 Tyres TYRE,TUBE & FLAP FRONT 8.25-16 (Lug) Set 0.27
33 TYRE,TUBE & FLAP REAR 8.25-16 (Rib) Set 0.33
34 TYRE TUBE LESS 23.5-25 No 0.20

WELDINGELECTRODEMARSHAL/
35 4 x 450 mm Pkt 3.33
WELDFAST (6013)4X 450MM

WELDINGELECTRODEMARSHAL/
36 3.15 x 450mm Pkt 3.33
WELDFAST (6013)3.15X 450MM

WELDINGELECTRODEMARSHAL/
37 4 x 450 mm Pkt 3.33
Welding & WELDFAST (7018)4X 450MM
Accessories
WELDINGELECTRODEMARSHAL/
38 3.15 x 450 mm Pkt 3.33
WELDFAST (7018)3.15X 450MM

WELDING ELECTRODE HARD

39 6.3 x 450 mm Kg 3.33
FACE (COBALARC 1M )
WELDING ELECTRODE HARD
40 4 mm Kg 3.33
FACE (DURIOD 650)
41 Electrical & CABLE ALUMINUM 1Cx16 Sqmm Mtr 100.00
Accessories
42 CABLE ALUMINUM 3.5Cx185 Sqmm Mtr 50.00
43 CABLE ALUMINUM 3.5Cx300 Sqmm Mtr 50.00
44 TAPE PVC INSULATION No 100.00
45 TUBE LIGHT 40 W No 5.00
46 EMPIRE TAPE 19 mm Rolls 3.50
47 H T TAPE 19 mm Rolls 5.00

17
48 PVC COPPER WIRE 0.75 Sqmm Rolls 1.00
49 PVC COPPER WIRE 1.00 Sqmm Rolls 1.00
50 PVC COPPER WIRE 1.50 Sqmm Rolls 1.00
51 PVC COPPER WIRE 2.5 Sqmm Rolls 1.00
52 TUBE LIGHT FITTING 40 W Set 5.00
53 TUBE LIGHT STARTER 40 W No 2.50
54 TUBE LIGHT HOLDER 40 W No 2.50
55 HOLDER FOR TUBE Starter 40 W No 2.50
56 LUG ALLUMINUM 300 Sqmm No 1.25
57 LUG ALLUMINUM 185 Sqmm No 1.25
58 LUG ALLUMINUM 120 Sqmm No 1.25

59 MAIN SWITCH TPN 630 Amp No 0.60

MAIN SWITCH TPN comp with

60 400 Amp No 0.60
HRC FUSE

MAIN SWITCH TPN comp with

61 320 Amp No 1.00
HRC FUSE

MAIN SWITCH TPN comp with

62 32 Amp No 2.50
HRC FUSE
63 HALOGEN TUBE 500 WT No 1.25

64 HALOGEN EMPIRE SLEEVES 4 mm No 0.50

65 HOLDER FOR HPSV LAMP Screw Type No 0.40

66 HALOGEN HOLDER 1000 WT Set 0.50

67 HYDRAULIC HOSE 1" 4 SP Mtr 2.50

68 HYDRAULIC HOSE 1" R2AT Mtr 2.00
69 HYDRAULIC HOSE 1/2" R2AT Mtr 3.33
70 HYDRAULIC HOSE 1/2" 4SP Mtr 1.67
71 HYDRAULIC HOSE 1/4" R2AT Mtr 1.67
72 HYDRAULIC HOSE 3/8" R2AT Mtr 3.33

73 HYDRAULIC HOSE 5/8" 4SP Mtr 3.33

74 HYDRAULIC HOSE 3/4" 4SP Mtr 2.50
1-1/2" Dia 14 Kg
75 PNEUMATIC HOSE Mtr 3.33
pressure
Hydraulic &
2" DIA 10 kg
76 Pneumatic Hoses PNEUMATIC HOSE Mtr 3.33
pressure
& Fitting
77 BRAIDED AIR HOSE 5/16" Mtr 3.33
78 END FITTING "F" 1"- 300 bar Set 1.67
79 END FITTING "F" 1/2"- 300 bar Set 1.67
80 END FITTING "F" 5/16"- 300 bar Set 1.67
81 END FITTING "F" 5/8"- 300 bar Set 1.67
82 END FITTING "F" 3/8"- 300 bar Set 1.67
83 END FITTING "F" 1/4"- 300 bar Set 0.33
84 END FITTING "F" 3/4"- 300 bar Set 0.33
85 END FITTING ELBOW TYPE "F" 1"- 300 bar Set 0.67
86 END FITTING ELBOW TYPE "F" 3/4"- 300 bar Set 0.67
87 Steel TMT BARS dia 25 mm Kg 666.67
88 TMT BARS dia 16 mm Kg 666.67
89 TMT BARS 10 mm Kg 50.00

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90 TMT BARS 20 mm Kg 200.00
91 MS PLATE 3.15 mm Kg 116.67
92 MS PLATE 5 mm Kg 166.67
93 MS PLATE 8 mm Kg 250.00
94 MS PLATE 10 mm Kg 166.67
95 MS PLATE 12 mm Kg 183.33
96 ISMC 100 x 50 Kg 116.67
97 ISMC 150 x 75 Kg 100.00
98 ISMC 75 x 40 Kg 133.33
99 ISMB 100 x 50 Kg 100.00
100 ISMB 150 x 75 Kg 100.00
101 ISMB 200 x 100 Kg 152.52
102 MS- ANGLE 40x40x4 Kg 66.67
103 MS ANGLE 40x40x6 Kg 66.67
104 MS ANGLE 50x50x5 Kg 100.00
105 MS ANGLE 60x60x6 Kg 100.00
106 MS ANGLE 65x65x6 Kg 100.00
107 MS ANGLE 75x75x8 Kg 116.67
108 MS PIPE 3" Mtr 50.00
109 MS PIPE 4" Mtr 50.00
110 MS PIPE 6" Mtr 50.00
111 MS FLANGE 3" No 16.67
112 Pipes & Fittings MS FLANGE 4" No 16.67
113 MS FLANGE 6" No 16.67
114 GATE VALVES 3" No 0.43
115 GATE VALVES 4" No 0.43
116 GATE VALVES 6" No 0.43
117 TMT Bar FE500 ( For rock bolt) 25 mm Kg 1333.33
118 Rock bolts ROCKBOLT WITH ACC. 25 mm x 4 mtr Set 83.33
119 MS BOLT & NUTS 5/8" x 2.5" Kg 10.00
120 HASSION CLOTH/JUTE BAG No 33.33
121 Spray paint 1 ltr pack No 1.33
Others
122 LOADING STICK 32MM 6 mtrs long No 1.67
123 Hook UP WIRE 90 mtrs roll Rolls 66.67

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 Chapter-4

CATEGORISATION OF MATERIAL

There are numerous methods on categorisation of material. In our project we are

using ABC analysis. The ABC analysis is a business term used to define an

inventory categorization technique often used in materials management. It is also

known as Selective Inventory Control. It stands for Always Better Control. Policies

based on ABC analysis:

CAT A: very tight control and accurate records.

CAT B: Less tightly controlled & good records.

CAT C: Simplest controls possible and minimal records.

The ABC analysis provides a mechanism for identifying items that will have

a significant impact on overall inventory cost, while also providing a mechanism for

identifying different categories of stock that will require different management and

controls.

20
 The ABC analysis suggests that inventories of an organization are not of

equal value. Thus, the inventory is grouped into three categories (A, B, and C) in

order of their estimated importance.

CAT A items are very important for an organization. Because of the high

value of these items, frequent value analysis is required in order to control the

inventory carrying cost. In addition to that, an organization needs to choose an

appropriate order pattern (e.g. Just- in- time) to avoid excess capacity.

CAT B items are important, but of course less important, than CAT A items

and more important than CAT C items. Therefore CAT B items are intergroup

items.

CAT C items are marginally important.

There is no fixed threshold for each class, different proportion can be applied

based on objective and criteria. ABC Analysis is similar to the Pareto principle in

that the CAT A items will typically account for a large proportion of the overall value

but a small percentage of number of items. Examples of ABC class are

CAT A 20% of the items accounts for 70% of the annual consumption

value of the items.

CAT B - 30% of the items accounts for 25% of the annual consumption

value of the items.

CAT C - 50% of the items accounts for 5% of the annual consumption value

of the items.

21
The following are the steps involved in ABC Analysis in this project are defined

below:-

1. Identifying the consumption pattern: - By past experience in Hydro Power

Project (availability of men, machinery & scope of work) & the geological

conditions of site (like rock conditions, lead time of materials, location of site

etc.) the consumption rate of each Critical Item are taken tentatively initially.

Every 10 days the consumption pattern is reviewed for any corrections

required. This is done for 3-4 cycles for understanding the stability of

consumption pattern. Once the consumption pattern is finalised it is

considered for further actions & process. But to remind, this is done

considering any further improvisation.

2. Price & Cost: - The actual unit site landed price of each critical item is

determined & the monthly purchasing volume in terms of cost is calculated

(unit price x units consumed per month). After determining the monthly

purchasing volume of each critical item, the categorisation of material is

done.

3. Categorisation: - The materials are classified to A category, B category & C

category. Technically CAT-A, CAT-B & CAT-C respectively. The figures are

declared to management & the proposal as below is provided to

management for their review. After the approval, the categorisation is as

shown below Table-2;

Category Monthly Procuring Volume

CAT-A > Rs. 10,00,000/-

22
 Between Rs. 50,000/- to Rs.
CAT-B
10,00,000/-
CAT-C < Rs. 50,000/-

The categorisations of the each critical item are shown in below Table-3.

Inventory
S Consumption
Description Specification Unit Unit Cost of 30 CAT
No /Day
days
1 CEMENT PPC Grade MT 33.33 4,200.00 42,00,000 A
2 VENTILATION DUCT 2000 mm Mtr 33.33 1,194.56 11,94,560 A
3 HIGH SPEED DIESEL Ltr 666.67 48.00 9,60,000 B
4 DRIFTER ROD 4.3MTR R38/R32 No 2.00 16,830.00 10,09,800 A
5 BUTTON BIT R32x45 No 6.67 2,958.00 5,91,600 B
6 BUTTON BIT R32x76 No 0.33 7,344.00 73,440 B
7 BUTTON BIT R28x38 No 0.50 2,550.00 38,250 C
8 COUPLING SLEEVE R38xR38 No 1.00 2,448.00 73,440 B
9 SHANK ADAPTOR R38 No 0.50 8,160.00 1,22,400 B
10 SHANK ADAPTOR Boomer No 0.33 6,120.00 61,200 B
11 REDUCING COUPLING R38xR32 No 1.33 2,754.00 1,10,160 B
12 COUPLING SLEEVE R32 No 0.83 1,836.00 45,900 C
13 EXTN ROD 3.7MTS R32 No 0.67 9,690.00 1,93,800 B
14 PILOT ADAPTOR R32 No 0.50 5,916.00 88,740 B
15 REAMER BIT 102 S45 No 0.50 5,916.00 88,740 B
40mm x
16 RESIN CAPSUELS No 416.67 40.00 5,00,000 B
300mm
40mm x
17 CEMENT CAPSUELS No 666.67 9.00 1,80,000 B
300mm
Injecrocem
18 MICRO FINE CEMENT Kg 1666.67 53.32 26,66,000 A
R160
Meyco SA
19 ACCELERATOR Kg 1400.00 35.30 14,82,600 A
160
Rheobuild SP
20 SUPER PLASTICISER Kg 466.67 30.50 4,27,000 B
-1
21 POLY FIBRE Enduro-600 Kg 333.33 331.50 33,15,000 A
22 MICRO SILICA/SILICA FUME Kg 1666.67 24.48 12,24,000 A
Rheobuild
23 DISPENSER Kg 20.00 110.60 66,360 B
2000 PF
24 HYDRAULIC OIL TH 46 Ltr 42.00 100.00 1,26,000 B
25 ENGINE OIL 15 W 40 Ltr 63.00 114.00 2,15,460 B
26 ENGINE OIL 20 W 40 Ltr 21.00 170.00 1,07,100 B
27 GREASE EP2 Kg 54.60 107.00 1,75,266 B
28 SERVONEUM100 Ltr 63.00 90.00 1,70,100 B
29 SERVOSYSTEM 46 S.S-46 Ltr 63.00 100.00 1,89,000 B
1000-20
30 TYRE,TUBE & FLAP FRONT*** Set 0.33 10,000.00 1,00,000 B
(Lug)
31 TYRE,TUBE & FLAP REAR*** 1000-20 (Rib) Set 0.67 10,000.00 2,00,000 B
32 TYRE,TUBE & FLAP FRONT*** 8.25-16 (Lug) Set 0.27 6,200.00 49,600 C

23
33 TYRE,TUBE & FLAP REAR*** 8.25-16 (Rib) Set 0.33 6,200.00 62,000 B
34 TYRE TUBE LESS*** 23.5-25 No 0.20 57,627.48 3,45,765 B

WELDINGELECTRODEMARSHA
35 4 x 450 mm Pkt 3.33 183.60 18,360 C
L/WELDFAST (6013)4X 450MM

WELDINGELECTRODEMARSHA
3.15 x
36 L/WELDFAST (6013)3.15X Pkt 3.33 183.60 18,360 C
450mm
450MM

WELDINGELECTRODEMARSHA
37 4 x 450 mm Pkt 3.33 482.46 48,246 C
L/WELDFAST (7018)4X 450MM

WELDINGELECTRODEMARSHA
3.15 x 450
38 L/WELDFAST (7018)3.15X Pkt 3.33 581.40 58,140 B
mm
450MM

WELDING ELECTRODE HARD

39 6.3 x 450 mm Kg 3.33 938.40 93,840 B
FACE (COBALARC 1M )

WELDING ELECTRODE HARD

40 4 mm Kg 3.33 158.10 15,810 C
FACE (DURIOD 650)
41 CABLE ALUMINUM 1Cx16 Sqmm Mtr 100.00 20.65 61,950 B
3.5Cx185
42 CABLE ALUMINUM Mtr 50.00 319.00 4,78,500 B
Sqmm
3.5Cx300
43 CABLE ALUMINUM Mtr 50.00 495.00 7,42,500 B
Sqmm
44 TAPE PVC INSULATION No 100.00 7.65 22,950 C
45 TUBE LIGHT 40 W No 5.00 31.62 4,743 C
Roll
46 EMPIRE TAPE 19 mm 3.50 17.85 1,874 C
s
Roll
47 H T TAPE 19 mm 5.00 26.52 3,978 C
s
Roll
48 PVC COPPER WIRE 0.75 Sqmm 1.00 291.72 8,752 C
s
Roll
49 PVC COPPER WIRE 1.00 Sqmm 1.00 389.64 11,689 C
s
Roll
50 PVC COPPER WIRE 1.50 Sqmm 1.00 586.50 17,595 C
s
Roll
51 PVC COPPER WIRE 2.5 Sqmm 1.00 954.72 28,642 C
s
52 TUBE LIGHT FITTING 40 W Set 5.00 163.20 24,480 C
53 TUBE LIGHT STARTER 40 W No 2.50 5.61 421 C
54 TUBE LIGHT HOLDER 40 W No 2.50 40.00 3,000 C
55 HOLDER FOR TUBE Starter 40 W No 2.50 5.36 402 C
56 LUG ALLUMINUM 300 Sqmm No 1.25 20.40 765 C
57 LUG ALLUMINUM 185 Sqmm No 1.25 14.38 539 C
58 LUG ALLUMINUM 120 Sqmm No 1.25 12.30 461 C
59 MAIN SWITCH TPN 630 Amp No 0.60 16,207.80 2,91,740 B

MAIN SWITCH TPN comp with

60 400 Amp No 0.60 10,253.00 1,84,554 B
HRC FUSE

MAIN SWITCH TPN comp with

61 320 Amp No 1.00 8,149.80 2,44,494 B
HRC FUSE

MAIN SWITCH TPN comp with

62 32 Amp No 2.50 1,028.16 77,112 B
HRC FUSE

63 HALOGEN TUBE 500 WT No 1.25 43.86 1,645 C

64 HALOGEN EMPIRE SLEEVES 4 mm No 0.50 7.02 105 C
65 HOLDER FOR HPSV LAMP Screw Type No 0.40 61.20 734 C
66 HALOGEN HOLDER 1000 WT Set 0.50 33.56 503 C

24
67 HYDRAULIC HOSE 1" 4 SP Mtr 2.50 809.03 60,678 B
68 HYDRAULIC HOSE 1" R2AT Mtr 2.00 445.32 26,719 C
69 HYDRAULIC HOSE 1/2" R2AT Mtr 3.33 215.22 21,522 C
70 HYDRAULIC HOSE 1/2" 4SP Mtr 1.67 559.06 27,953 C
71 HYDRAULIC HOSE 1/4" R2AT Mtr 1.67 150.96 7,548 C

72 HYDRAULIC HOSE 3/8" R2AT Mtr 3.33 188.70 18,870 C

73 HYDRAULIC HOSE 5/8" 4SP Mtr 3.33 602.76 60,276 B
74 HYDRAULIC HOSE 3/4" 4SP Mtr 2.50 705.57 52,918 B
1-1/2" Dia 14
75 PNEUMATIC HOSE Mtr 3.33 186.58 18,658 C
Kg pressure

2" DIA 10 kg
76 PNEUMATIC HOSE Mtr 3.33 250.92 25,092 C
pressure

77 BRAIDED AIR HOSE 5/16" Mtr 3.33 18.36 1,836 C

"F" 1"- 300
78 END FITTING Set 1.67 228.48 11,424 C
bar
"F" 1/2"- 300
79 END FITTING Set 1.67 51.00 2,550 C
bar
"F" 5/16"- 300
80 END FITTING Set 1.67 55.08 2,754 C
bar
"F" 5/8"- 300
81 END FITTING Set 1.67 51.00 2,550 C
bar
"F" 3/8"- 300
82 END FITTING Set 1.67 55.08 2,754 C
bar
"F" 1/4"- 300
83 END FITTING Set 0.33 54.06 541 C
bar
"F" 3/4"- 300
84 END FITTING Set 0.33 174.42 1,744 C
bar
"F" 1"- 300
85 END FITTING ELBOW TYPE Set 0.67 289.68 5,794 C
bar
"F" 3/4"- 300
86 END FITTING ELBOW TYPE Set 0.67 133.62 2,672 C
bar
87 TMT BARS dia 25 mm Kg 666.67 31.10 6,22,000 B
88 TMT BARS dia 16 mm Kg 666.67 30.50 6,10,000 B
89 TMT BARS 10 mm Kg 50.00 30.25 45,375 C
90 TMT BARS 20 mm Kg 200.00 30.15 1,80,900 B
91 MS PLATE 3.15 mm Kg 116.67 33.95 1,18,825 B
92 MS PLATE 5 mm Kg 166.67 33.80 1,69,000 B
93 MS PLATE 8 mm Kg 250.00 33.80 2,53,500 B
94 MS PLATE 10 mm Kg 166.67 33.90 1,69,500 B
95 MS PLATE 12 mm Kg 183.33 33.70 1,85,350 B
96 ISMC 100 x 50 Kg 116.67 32.85 1,14,975 B
97 ISMC 150 x 75 Kg 100.00 31.15 93,450 B
98 ISMC 75 x 40 Kg 133.33 32.90 1,31,600 B
99 ISMB 100 x 50 Kg 100.00 35.40 1,06,200 B
10
ISMB 150 x 75 Kg 100.00 33.10 99,300 B
0
10
ISMB 200 x 100 Kg 152.52 32.60 1,49,165 B
1
10
MS- ANGLE 40x40x4 Kg 66.67 32.10 64,200 B
2
10
MS -ANGLE 40x40x6 Kg 66.67 32.10 64,200 B
3
10
MS -ANGLE 50x50x5 Kg 100.00 32.10 96,300 B
4
10
MS -ANGLE 60x60x6 Kg 100.00 32.10 96,300 B
5

25
10
MS -ANGLE 65x65x6 Kg 100.00 32.60 97,800 B
6
10
MS -ANGLE 75x75x8 Kg 116.67 32.90 1,15,150 B
7
10
MS PIPE 3" Mtr 50.00 36.00 54,000 B
8
10
MS PIPE 4" Mtr 50.00 36.32 54,479 B
9
110 MS PIPE 6" Mtr 50.00 36.72 55,080 B
111 MS FLANGE 3" No 16.67 83.64 41,820 C
112 MS FLANGE 4" No 16.67 95.68 47,840 C
113 MS FLANGE 6" No 16.67 160.86 80,446 B
114 GATE VALVES 3" No 0.43 1,734.51 22,549 C
115 GATE VALVES 4" No 0.43 2,598.96 33,786 C
116 GATE VALVES 6" No 0.43 3,898.44 50,680 B
117 TMT Bar FE500 ( For rock bolt) 25 mm Kg 1333.33 31.00 12,40,000 A
25 mm x 4
118 ROCKBOLT WITH ACC. Set 83.33 710.00 17,75,000 A
mtr
119 MS BOLT & NUTS 5/8" x 2.5" Kg 10.00 60.00 18,000 C
12
HASSION CLOTH/JUTE BAG No 33.33 8.93 8,925 C
0
12
Spray paint 1 ltr pack No 1.33 200.00 8,000 C
1
12
LOADING STICK 32MM 6 mtrs long No 1.67 500.00 25,000 C
2
12 Roll
Hook UP WIRE 90 mtrs roll 66.67 40.00 80,000 B
3 s

After determining the categorisation, the items are reviewed & found that

number of items on CAT-B is highest compared to CAT-A & CAT-C. Considering

the value of materials, it shows that the inventory level of CAT-A has to be very

frequently monitored to reduce inventory carrying cost & CAT-C material can be

monitored flexibly. As this is a Continuous improvement process, few items may

(very rarely) shift from one CAT level to another.

Similarly the ABC analysis is also done for running spare parts of all the

equipment like Excavators, Boomers, Loaders, DG Sets, Tippers, Shot Crete

machine, compressors etc. But for study purpose, the ABC analysis of critical item

is only discussed.

On the basis of ABC analysis the stocking levels are determined which is

discussed in the coming chapters.

26
 Chapter-5

STOCKING LEVEL DETERMINATION

Considering the previously discussed constrains & there implications which lead to

halt of work, it was decided to stock these discussed Critical Items optimally.

Considering this scenario, there was probability that the work may come to halt for

upto 30 days due to these constrains. But other than this there were also

geographical surprises like poor rock surface of tunnel, damages due to heavy rain

etc.

Considering these uncertainties, the stock level of all critical items were

determined & decided the stocking will be done for all items with respect to

requirement for 30-45 days consumption. But as the monthly procuring volume of

CAT-A items are very higher, the stock level of CAT A items may be maintained

between 21-30 days of consumption. As the monthly procuring volume for CAT C

is very less & also considering the order processing cost (cost of man power &

stationery etc.), the stock level of CAT-C items are maintained for 45-90 days

consumption. For CAT-B items, it is maintained as 30-45 days itself.

By improving the stocking level using the ABC analysis there was

tremendous increment in savings in terms of inventory carrying cost. The savings

due to ABC Analysis (considering minimum stock levels in the specified range)

27
compared to the standard approach of keeping stock for 45 days as per the

constrains is shown below in Table-4.

Inventory-Stocking
Inventory-Stocking
CAT as per ABC Savings (Rs.) Savings (%)
for 45 days
Category
A 2,71,60,440 1,26,74,872 1,44,85,568 53.33%
B 1,73,20,007 1,15,46,672 57,73,335 33.33%
C 12,00,121 12,00,121 - 0.00%
Total 4,56,80,568 2,54,21,665 2,02,58,903 44.35%

The savings due to ABC analysis compared to the standard approach of

holding stocks for 45 days shows that, about 44.35% of effective savings in

inventory carrying cost. The savings on CAT A item is itself about Rs. 1.44 Crores

out of Rs. 2.71 Crores, which accounts to savings of about 53.33%. By just

monitoring 7.32 % of items on daily basis could reduce the inventory cost by about

Rs. 1.44 Crores.

Further to this, we god get volume discounts on CAT C items by increasing

the ordering volume. This also accounted for the saving in greater amounts. We

could also approach major authorised dealers due to these larger purchasing

volumes for CAT C items. This helped to receive quality materials from the

vendors.

As a second level of improvement, the CAT A items were monitored in very

much precision, that we could further reduced the inventory by stocking only for 10

days consumption compared to earlier stocking for 21 days consumption.

28
 The savings due to 2nd Level improvisation in ABC Analysis (considering

minimum stock levels of 10 days for CAT A items) compared to the standard

approach of keeping stock for 45 days as per the constrains is shown below in

Table-5

Inventory-Stocking
Inventory-Stocking Savings Savings
CAT as per ABC
for 45 days (Rs.) (%)
Category-2nd Level
A 27,160,440 6,035,653 21,124,787 77.78%
B 17,320,007 11,546,672 5,773,335 33.33%
C 1,200,121 1,200,121 - 0.00%
Total 45,680,568 18,782,446 26,898,122 58.88%

The savings due to 2nd Level of improvisation of ABC analysis compared to the

standard approach of holding stocks for 45 days shows that, about 58.88% of

effective savings in inventory carrying cost which is about 14.53% accounting to

Rs. 66.39 Lac compared to the 1 st Level. The savings on CAT A item is itself about

Rs. 2.11 Crores out of Rs. 2.71 Crores, which accounts to savings of about

77.78%. This is about 24.44% more saving accounting to Rs. 66.39 Lac more

compared to the 1st Level of ABC Analysis. By just monitoring 7.32 % of items on

daily basis could reduce the inventory cost by about Rs. 2.11 Crores.

There is another longer road route to reach Teesta Site from Siliguri, which

is expensive to transport materials. But CAT A material can be taken through this

longer route in case of road washouts as the inventory carrying cost s very much

higher compared to the transportation cost of the CAT A materials.

29
 Chapter-6

LEAD TIME ANALYSIS & DETERMINATION

Each item has different origin point & so has to be handled differently.

Hence lead time analysis & determination of each & every item is mandatory. Few

items are readily available off-the-shelf but few have to be manufactured according

to requirement of site. We here consider Lead Time as the time (in days) required

for the material required to reach site from the date of initiating the purchase

requisition. Lead time analysis will help SCM team to determine when the action of

procurement has to be initiated in order to deliver the material Just in Time (JIT

approach) at Site.

In normal procedure, once the requirement is identified by project the team,

it is passed to procurement department through purchase requisition. The

identification of requirement has to be promptly on time by the project team. To

reduce the possibility of lack in this due to documentation to pass till purchase

department from the project department, the SCM took over the responsibility of

maintaining the required stock at site within the determined level (to handle the

stock within the minimum & maximum levels). These levels are named as

Minimum & Maximum levels of stocking. The rule to be followed is very simple &

strict; no material in Critical Item list will exceed the maximum level or will reduce

below the minimum level. If stock exceeds the maximum level, then the inventory

carrying cost for the project will shoot up which is not acceptable at all & if the

stock reduces below the minimum level, then the probability of work getting held
30
(idle time of men & machine at site) increases which is also not acceptable. To

maintain critical items within these levels, the lead time analysis & determination is

very important.

Each item is studied in detail from the past purchase experience. The exact

lead time for each item is determined. The analysis also includes identification of

innovative methods for reducing the lead time. By reducing the lead time, the

inventory carrying cost can be drastically reduced.

31
 Chapter-7

TRANSIT STORES

Due to location constrains, vendors were not ready to deliver the critical

items to project site. This is just because of their fear for the high probability of

their trucks being held up on way to project site from their works. Because of this,

they demand for very high freight charges & also the detention charges if any. This

would increase the project cost tremendously. Siliguri (West Bengal) being a

location easily accessible & reachable to the vendors, vendors were agreeing to

deliver these critical items upto Siliguri. To receive these materials we created a

transit store at Siliguri. The objective of this transit store is to receive all the

material from various vendors & dispatch to the site on priority basis. This store will

be referred to as the Siliguri Store. From Siliguri to site, the material will be

transported to our project site by our transporter with whom we have agreed for

rate contract on each trip basis. Due to dangerous terrains, drivers for these

locations are specialised & there is a shortage in availability of these specialised.

Hence the arrangements of drivers are done by our self.

The material received at Siliguri store is reported to all the SCM persons

including site project persons on daily basis. Then the same is sent to project site

on priority basis. The dispatch details of all the material sent is reported to all

concerns. In site we have one Main store which will receive these dispatched

materials from the Siliguri store directly. They prepare the receipt of these material

in the same excel sheet stating whether received or not. Any discrepancies found

are then investigated on case to case basis.

32
 Different works at Project Site is done parallel to reduce the time consumed

for project work. Tunnelling are done on both phases simultaneously (for e.g. if

tunnelling is to be done for 15 km, then the phases are 1 at start point, 2 at 5 km, 2

at 10 km & 1 at end point). Each phase is called Adit. This will help in

simultaneous working at 6 phases. For example, let us assume that the time

consumed for tunnelling in convention method i.e., start to end for 15 km takes

365 days then by this Adit method, the time taken would be 130 days.

To feed to these Adit & the other work areas (like power house, Dam etc.) at

site, there are different small transit stores. The stock report of all these stores are

recorded & circulated to all concern. These reports are circulated so as to track the

exact situation of stock of critical items at site. Details of reports are discussed in

coming chapters.

The Main Store at Teesta Site is the receiving end & all the main

documentation during all material receipt is done in this Main store only. The

Transit stores at Adit have only the option of stock receipt from the Main stores.

The consumption on few Adit may increase or decrease due to geological

surprises, hence the Main store absorbs these stock shock & maintain the free

flow of material keeping the average consumption at Site normal.

33
 Chapter-8

OPERATIONS

The operation methodology of the designed frame work plays the important role.

The efficiency of the complete frame work is reflected only from the operation

methodology. Frame work is the planning process of how to operate the

mechanism of the SCM, but operation is the actual execution of the frame work.

Once the stocking level is determined & the lead time analysis is carried for

these Critical Items, then the objective is to maintain the stock level between the

minimum & maximum range. The Reorder level is determined by the stocking

levels & the lead time analysis. Initially the stock levels of all items were circulated

only once in a week, but to improve the stability, the stock level report (which is

called Critical Item Report) is circulated once every 3 days. Once we identify that a

material is reaching the reorder level, the material is procured in normal

procedure.

To reduce the procurement cycle & also the ease of procurement, few

further methodologies were adapted as follows;

> Rate Contracts

> Repeat orders

Considering the market fluctuations, few materials like Construction

chemicals, Rock tools/Drilling tools, tyres, lubricants, hydraulic & pneumatic hoses

& fittings etc. were considered for rate contracts for a period of six months to one

year depending upon the price fluctuations probability. The offers from all the
34
vendors were taken with clear instructions for rate contracts. Considering the

prices & over all discounts offered by each vendor for each type of material, the

rate contracts were frozen with competent vendor for each of these items. Further

additional items covering under these heads (with different dimensions) were also

added. By doing so, the purchase processing time reduced as the following activity

was not required to be done;

Sending RFQ (Request for quotation)

Offer evaluation

Preparation of comparative statements

Negotiations on terms & conditions

Similarly, by placing repeat orders (considering the orders placed for same

items not older than 2 months) the processing time or the cycle time of

purchasing activity reduced, hence enabling & achieving JIT (Just in Time) in

execution process.

For other material which did not fall under these criteria, the purchase

activities were to be carried out. Reinforcement steel (TMT) & Cement were

two commodities that had to be processed very quickly due to their price

volatility. For these commodities the following processes were adapted.

Reinforcement Steel: - The sizes required were of diameters of 8mm,

10mm, 12mm, 16mm, 20mm, 25mm, 28mm & 32mm. Initially the

manufactures available in the base market Kolkata were identified. The

35
 manufacturing facilities of each were jointly inspected by materials

management team & technical team. Further the quality certifications were

audited & the authenticities were confirmed. After this the competent

vendors were called for freezing the terms & conditions of the company.

The payment terms were agreed for 30 days credit, delivery within 7 days

from the date of order etc. Once the terms & conditions were frozen, then

the point of discussions was only on the rates. Every time when steel were

required, RFQ was sent & offers were received. Then on negotiation on

price factor, the orders were finalised.

Cement: - Portland Pozzolana Cement (PPC) was the requirement. The

market players at Kolkata were about six brands. All being well known

brand, the vendor evaluation was not necessary, but it was noted to take

the test certificate of all consignment. Even with these manufacturers, the

terms & conditions were frozen. The only changing criteria were the price.

To reduce the dependency & uninterrupted supplies, the order were split

between the lowest quoted (L1) & second lowest quoted (L2) vendor on

75:25 ratios respectively. But the ratio also was dependent on the difference

in price between L1 & L2.

Chapter-9

36
CONTINUOS TRACKING PROCESS

Many reports are circulated within the working group to continuously track the

stock availability at site for the critical items, to know the material movement

between the base stores at Siliguri to main store at site & to know the movement

of material between the main store & the Adit stores etc. These reports are

mandatory & analyses of the reports are done on individual buyer basis & also

reviewed within the SCM group on daily basis to control the activity & to improve

the activity. The daily monitoring of these reports helps in increasing the efficiency

of the execution of procurement. The following are the most important reports

circulated on daily basis within the team for monitoring the process.

Pending PR report- Showing the pending purchase requisitions with each

commodity buyers with ageing. This contains the PR no., date of PR,

description of each line item with complete technical specification,

Commodity buyers name, ageing of PR. The format of the same is given

below for reference.

Qt Uo Commodity Ageing
PR No PR Date Description Status
y m Buyer (days)
Bolt Joint Leak Of Pipe-
PR/TR/10000 01-03- 1096750371 Isuzu Prajeesh
2 No Pending 4
6 2012 Engine of Excavator Chandra
EX-210
Gasket Joint Bolt leak
PR/TR/10000 01-03- Of Pipe-1096300820- Prajeesh
4 No Pending 4
6 2012 Isuzu Engine of Chandra
Excavator EX-210
PR/TR/10000 01-03- Pipe;Fuel pump to filter Prajeesh
1 No Pending 4
6 2012 115415-8440 Chandra
Critical Item Report- Showing the current stock of the Critical Items, their

maximum & minimum levels & reorder levels. This also shows the average

per day consumptions for understanding the deviation of consumption

pattern from the considered pattern.

37
 Actual Avg.
Openin Closin Min Max
Specificati Uni Receip per day
Description g Issues g Lev Lev
on t t Consumptio
Stock Stock el el
n
DRIFTER ROD
R38/R32 No 45 10 6 49 42 60 2.00
4.3MTR

BUTTON BIT R32x45 No 225 70 0 295 200 300 6.67

BUTTON BIT R32x76 No 13 0 2 11 10 15 0.33
BUTTON BIT R28x38 No 27 10 5 32 22.5 45 0.50
COUPLING
R38xR38 No 36 10 8 38 30 45 1.00
SLEEVE

Material Dispatch Report- Gives complete details of material dispatched

from base store at Siliguri to main store at site.

Material Receipt Report- This report is against the material dispatch report

which clears the receipt of all material in good condition or in damaged

conditions or not received.

Siliguri Store Report- This gives material available at Siliguri store that is yet

to be dispatched or material returned from site for replacement due to

damage etc.

These are custom made reports as per requirement of the

information. These reports are prepared in Microsoft Excel sheets, hence

any number of information can be added.

Chapter-10

RECOMMENDATIONS

38
 The most important fact is that each Hydro Power Project is unique, and

similarly each construction site is unique. But the problems & challenges faced in

construction industry is similar. This project will help in clearly understanding the

problems faced by SCM team in any construction industry. The methodology &

ideology of this thesis can be used as a reference for designing the frame work for

operation of SCM in Hydro Power Projects.

The simple & effective points to be considered & evaluated in detail for

framing up of SCM operations are as follows:-

a. Material identification & categorisation.

b. Lead time analysis

c. Methods of stocking.

d. Continuous tracking & Controlling.

Bibliography

This project report is a piece of our actual SCM team work who actually

faced the challenges while construction of Teesta project. The knowledge of

39
 the team members who had wide range of theoretical & practical

experience in the field of SCM. Hence the reference here is the great team

headed by my guide. The spontaneous ideas which where redesigned &

remoulded as per requirement of project.

Wikipedia

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