Thesis Report

PROJECT REPORT ON
STUDY OF EXISTING PROCUREMENT SYSTEMS AND IMPACT OF

IMPLEMENTATION OF
e-PROCUREMENT
By
Arunima. D (AP19360)
Anandu Syrus (AP19364)
Anu Babu.T (AP19391)
Liz Ann Joe (AP19407)
PGP ACM 33rd Batch (2019- 2021)
Post Graduate Programme in
Advanced Construction Management (PGP ACM) – III Term
National Institute Of Construction Management And Research, Pune.

CHAPTER – 1
INTRODUCTION
1.1 OVERVIEW
The construction industry is a highly fragmented sector due to the conventional practices and
supply chains. This fragmentation inhibits the performance and effectiveness of construction
projects. Well-coordinated organizational strategies are required to enhance communication and
provide a clear understanding of the relationships and interdependencies among the stakeholders
involved. At the outset of construction projects, the managerial strategies include the selection of
appropriate procurement systems or building-delivery methods to secure the success of the project .
In addition to traditional, design and build systems, innovative procurement systems have been
developed such as improved private finance initiatives; public–private partnerships ; and specialist
task organizations.
Today, many theories have been developed to address the emergence of increasingly
complex organizational forms . Yet, none has investigated on the selected procurement systems in
terms of project management strategies and organizational forms. Since the internet arrived on the
scene as a supply management tool in the mid-1990s enterprises have tried to gain the benefit e-
procurement can deliver: cost reduction, process streamlining, improved contract compliance,
increased spend under management, and more.
Use of e-Procurement in Indian Construction industry has been very less. Due to increased
activity in this industry in recent years the projects have become bigger, complex and involves
unprecedented amount of huge funding and thereby huge procurement costs. Hence the stakes are
very high for interested parties. The decisions taken are of tremendous importance and involve
opportunity for more rewards and risks. That makes the use of e-Procurement all the more a
necessity for informed and smart decision making for the companies. Though e-Procurement holds
such a potential there seems to be restraint in organisations when implementing it. In India, a very
less amount of study has been carried out about the use of e-Procurement tool being used in E&C
companies, this thesis will help the companies to understand the huge potential of e- Procurement
and will be ready reference for them in this direction. E-Procurement’s benefits fall into two major
categories: efficiency and effectiveness. E-Procurement’s efficiency benefits include lower
procurement costs, faster cycle times, reduce maverick or unauthorized buying well organised
reporting information, and tighter integration of the procurement functions with key back-office
systems.
The purpose of this study is mainly to derive the extent to which e-procurement has been
implemented in Indian construction industry and we aim in finding out the barriers which are
preventing it for its implementation in construction industry. We also seek to search the future
potential and scope of e-tendering process in construction industry which is one of the e
procurement models.
1.2 BACKGROUND OF PROBLEM
Many developing countries like India are undergoing through major modernization process.
There are 243 Million internet users in India from the huge population of 1.237 Billion. The number
of users may increase to 500 Million by 2018. India will become larger than the US in terms of
number of Internet users by the end of 2014. Procurement is really a collection of processes that
involve many steps and interactions with the other departments of a company and with the
suppliers. Because purchasing costs typically run to 50% of operational costs, the procurement
process provides many opportunities for cost savings that can make a great difference to a
company's bottom line. The rule of thumb is that a 5% savings in purchasing costs can increase
profit by 50%, and would equally increase revenue by 50%, or a reduction in overhead costs of
about 20%. Traditionally, procurement was paper- and conversation-based, usually with
procurement officers interacting with long-time partners or well-known suppliers and purchasing at
fixed prices. In recent years, this has changed to a certain extent to become a strategic function.
Procurement officers seek suppliers that fit with a company's overall strategy. E-Procurement
involves moving the procurement process online to cut out steps and save money .In business, time
is money. So, a company can reduce the involvement of staff in purchasing by quickly issuing a
purchase order, the more it can reduce on operational costs. The use of internet has made the world
smaller and, through it, business transactions are conducted globally at a faster pace. The age of
connectivity has reduced distances and brought people closer. Today many companies use E-
Procurement as a strategic tool to compete with others. Research problems arise from the fact that a
lot of businesses are still relying on the traditional procurement and literature has provided limited
result on e- procurement practices.
Therefore, the researcher has selected to study the E-Procurement practices in the indian
construction industry.
1.3 OBJECTIVES
1. To study the present status and to compare E-Procurement systems in the construction
industry
2. To explore/ identify the difficulties faced in E-Procurement implementation.
3. To identify the reasons that has led to the implementation of E-Procurement in the
construction industry
4. To study the extent to which Information Technology (IT) tools are used in e-procurement.
5. To study the documents exchanged in E-Procurement through Electronic Data Inter change
(EDI).
6. To identify the scopes for further up-gradation of Information Technology (IT) to support the
E-Procurement process.
1.4 SCOPE OF THE STUDY
The aim of the present research is to study the E-Procurement practices and to elaborate on the
importance of e-procurement in today’s rapidly growing technological era by taking into account
whether organizations and firms really require adopting and implementing e-procurement systems
and solutions. Subsequently provide with comprehensive and solid information on how e-
procurement contributes in creating value to the procurement processes and what advantages and
benefits e-procurement can promise an organization when shifting from traditional procurement to
e-procurement. Additionally, this thesis aims to describe how e-procurement plays a vital role in
reducing costs associated with procurement and purchasing processes through the entire supply
chain.
CHAPTER 2
LITERATURE REVIEW

Thesis Report

Uploaded by

Copyright:

Available Formats

Thesis Report

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Thesis Report

Uploaded by

Copyright:

Available Formats

PROJECT REPORT ON

STUDY OF EXISTING PROCUREMENT SYSTEMS AND IMPACT OF

Anandu Syrus (AP19364)

Anu Babu.T (AP19391)

Liz Ann Joe (AP19407)

PGP ACM 33rd Batch (2019- 2021)

Post Graduate Programme in

Advanced Construction Management (PGP ACM) – III Term

National Institute Of Construction Management And Research, Pune.

1.2 BACKGROUND OF PROBLEM

1.4 SCOPE OF THE STUDY

You might also like