# Procurement

## **Procurement Department – Overview**

#### **Strategic Procurement, Cost Efficiency, and Supply Chain Management for Mega Construction Projects**

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### **1. Introduction**

The **Procurement Department at BEC Arabia** plays a **critical role in sourcing, acquiring, and managing materials, equipment, and subcontractor services** essential for delivering **mega construction projects** in Saudi Arabia. The department ensures **efficient procurement operations**, aligns with **cost control strategies**, and adheres to **regulatory and compliance standards** to support **timely and cost-effective project execution**.

Procurement operations are designed to:

* **Ensure timely acquisition of materials, equipment, and services**
* **Control costs, negotiate supplier contracts, and optimize procurement spending**
* **Ensure supplier and subcontractor compliance with KSA procurement laws and Etimad regulations**
* **Mitigate supply chain risks and prevent delays that impact project timelines**
* **Enforce quality assurance in procurement operations to meet project specifications**

The **Procurement Department collaborates closely** with the **Commercial, Finance, Project Management, and Logistics teams** to ensure **efficient supply chain management and contract compliance**, aligning with **FIDIC contract terms, Etimad e-Procurement regulations, and Saudi Vision 2030 construction industry standards**.

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### **2. Key Procurement Functions**

| **Procurement Function**                          | **Description**                                                                                          | **Integration with Other Departments**             |
| ------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -------------------------------------------------- |
| **Strategic Sourcing**                            | Identifies and prequalifies suppliers based on price, quality, and delivery reliability.                 | Finance, Project Management, Commercial, Logistics |
| **Tendering & Supplier Negotiations**             | Manages RFPs, RFQs, and vendor bidding processes to secure cost-effective contracts.                     | Contracts Administration, Commercial, Finance      |
| **Contract & Purchase Order (PO) Management**     | Ensures all procurement transactions comply with contractual terms and financial approvals.              | Legal, Finance, Project Control                    |
| **Supply Chain Risk Management**                  | Mitigates risks related to supplier non-performance, market fluctuations, and regulatory non-compliance. | Risk Management, Quality Control, Logistics        |
| **Procurement Compliance & Regulatory Adherence** | Ensures all purchases align with Saudi procurement laws, VAT regulations, and Etimad requirements.       | Legal, Finance, Regulatory Authorities             |

**Benchmark:** **100% of procurement transactions must be financially approved, contractually aligned, and compliant with KSA procurement regulations.**

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### **3. Strategic Procurement Approach**

#### **3.1 Procurement Planning & Demand Forecasting**

* Works with **Project Control and Engineering Teams** to determine procurement needs based on project schedules.
* Aligns procurement schedules with **project execution timelines** to prevent supply shortages.
* Conducts **demand forecasting** to optimize bulk purchasing and cost efficiency.

**Key Deliverables:**

* **Annual Procurement Plan & Demand Forecast Reports**
* **Supplier Market Analysis & Cost Projection Reports**

**Benchmark:** **Reduce procurement cycle times by 15% through efficient planning.**

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#### **3.2 Vendor Prequalification & Supplier Management**

* Implements a **strict prequalification process** to ensure suppliers meet financial, technical, and compliance requirements.
* Maintains a **preferred supplier list (PSL)** to streamline procurement operations.
* Conducts **supplier performance reviews** based on cost, quality, and delivery KPIs.

**Key Deliverables:**

* **Supplier Prequalification & Performance Evaluation Reports**
* **Approved Supplier List & Vendor Risk Assessments**

**Benchmark:** **90% of procurement transactions must be conducted with prequalified suppliers.**

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#### **3.3 Tendering & Supplier Negotiation Strategies**

* Conducts **competitive bidding and cost benchmarking** to ensure value-driven procurement.
* Negotiates **long-term contracts with key suppliers** to ensure price stability.
* Ensures **contractual compliance with FIDIC procurement and payment terms**.

**Key Deliverables:**

* **Bid Analysis & Cost Comparison Reports**
* **Procurement Contract Risk Assessments & Compliance Logs**

**Benchmark:** **Achieve at least 10% cost savings through competitive sourcing strategies.**

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### **4. Contract & Procurement Compliance**

#### **4.1 Contract Management & Procurement Policy Compliance**

* Ensures all **Purchase Orders (POs) and procurement contracts align with financial budgets and approval limits**.
* Maintains **compliance with FIDIC procurement regulations and Etimad e-Procurement laws**.
* Works with the Legal and Commercial teams to **resolve contract variations and disputes**.

**Key Deliverables:**

* **Procurement Contract Approval Logs & Legal Compliance Reports**
* **Contract Variation & Financial Risk Assessments**

**Benchmark:** **Zero contract disputes due to procurement non-compliance.**

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#### **4.2 Procurement Financial Governance & Cost Control**

* Implements **spending controls to prevent unauthorized purchases and procurement fraud**.
* Ensures all procurement transactions **align with approved project budgets**.
* Conducts **cost-benefit analyses for high-value purchases** to optimize financial decision-making.

**Key Deliverables:**

* **Procurement Cost Control & Variance Analysis Reports**
* **Procurement Financial Compliance Audits & Fraud Prevention Logs**

**Benchmark:** **100% financial accountability and compliance in procurement spending.**

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### **5. Risk Management & Supply Chain Resilience**

#### **5.1 Supplier & Supply Chain Risk Mitigation**

* Implements **supplier risk assessments** to identify financial, quality, and delivery risks.
* Develops **alternative sourcing strategies** to prevent supply chain disruptions.
* Works with Quality Control to **enforce material and equipment compliance standards**.

**Key Deliverables:**

* **Supplier Risk Exposure Reports & Contingency Plans**
* **Procurement Supply Chain Resilience Audits**

**Benchmark:** **Maintain supply chain reliability above 95% with minimal procurement delays.**

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#### **5.2 Logistics & Inventory Optimization**

* Ensures **on-time material deliveries through integrated procurement-logistics coordination**.
* Implements **inventory control measures** to prevent excess stock accumulation and material shortages.
* Aligns procurement schedules with **warehousing and on-site material handling requirements**.

**Key Deliverables:**

* **Logistics Efficiency Reports & Inventory Optimization Plans**
* **Procurement Lead Time & Delivery Performance Analysis**

**Benchmark:** **Reduce procurement lead times by 20% through logistics integration.**

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### **6. Digital Procurement & ERP Integration**

#### **6.1 Procurement Systems & Digital Automation**

| **Technology**           | **Functionality**                             | **Application in Procurement**                             |
| ------------------------ | --------------------------------------------- | ---------------------------------------------------------- |
| **ERP System**           | Procurement Cost Control, Supplier Management | Ensures real-time financial tracking & approval workflows  |
| **Aconex**               | Contract & Procurement Compliance Management  | Tracks procurement approvals, variations & payment records |
| **Power BI Dashboards**  | Procurement Analytics & Cost Reporting        | Provides real-time supplier performance tracking           |
| **Etimad E-Procurement** | Government Procurement Compliance             | Ensures legal compliance for public sector procurement     |

**Benchmark:** **100% of procurement transactions must be digitally tracked and auditable.**

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### **7. Conclusion**

The **Procurement Department at BEC Arabia** ensures:

* **Cost-efficient and strategic sourcing of materials, equipment, and subcontractor services**.
* **Strict adherence to procurement regulations, FIDIC contract terms, and Saudi Etimad e-Procurement requirements**.
* **Seamless procurement integration with finance, commercial, and project management teams**.
* **Comprehensive risk management strategies to prevent supplier failures and procurement fraud**.
* **Real-time procurement tracking through ERP, Aconex, and Power BI analytics**.

By **implementing structured procurement policies, compliance frameworks, and supplier risk mitigation strategies**, BEC Arabia ensures **efficient, cost-controlled, and legally compliant procurement operations** that drive **successful project execution and financial sustainability**.
